Friday, September 26, 2008

FEDs should consider to relaunch the banking system based on Google's Android.

Why not? Google's market cap is still bigger then all gold mining companies in HUI Gold Bugs Index. Company has the best banking motto "Do not be Evil". And its clicks are solid as gold or maybe even better. You click me your invoice I will click you back my payments click, click, click We all clicking will not be able to keep up with the FED printing money.

The End of Empire, US dollar and world as we know it.

This is it, the real decouple:

China Banks Cut Currency Trading With Foreign Lenders

"Sept. 26 (Bloomberg) -- China's banks are limiting foreign- exchange transactions with U.S. and European financial companies on concern tighter global credit markets will cause more failures.
Domestic banks are cutting trading with international firms in the interbank market, according to Zhuang Zhiqiang, a trader at Xiamen International Bank Co., which is partially owned by the Asian Development Bank. The move aims to control risks after the bankruptcy of Lehman Brothers Holdings Inc. stunned domestic investors, said Zhao Qingming, an analyst in Beijing at China Construction Bank Corp., the nation's second-largest lender.
``We've turned more cautious,'' said Zhuang, who is based in the southern Chinese city of Xiamen. ``Bank officials are worried about settlement risks as the ongoing crisis has weakened people's trust in U.S. banks.''
Washington Mutual Inc. today became the biggest U.S. lender to collapse and the nation's lawmakers have yet to agree on a plan to end the credit crisis. A Treasury proposal to buy $700 billion of troubled assets from financial companies using taxpayers' funds has been countered by a suggestion that holders of mortgage-related securities pay premiums into a fund that would insure their holdings.
Bank of China Ltd., the nation's biggest currency trader, has tightened control of foreign exchange trading with overseas banks, said a person at the bank, who asked not to be identified. Wang Zhaowen, Bank of China's Beijing-based spokesman, declined to comment today. "

Nevsun Resources is up 50% on 2.2 million shares.

Welcome to the Juniors mining world, stocks were beaten into the dust during recent crash in the market, but those with resources has become a great value play. Is the acquisition finally in the making here? Somebody is definitely interested.

Thursday, September 25, 2008

Lets Play Bailout

Canada Zinc Metals former Mantle Resources MTS.v starts trading tomorrow under CZX.v

RIMM dissappoints and tanking, will Google GOOG be next to miss?

Bailout is like Prozac keeps everybody happy until you remember the reason: Economy is in a grave danger. Google particularly exposed:
1. Even before recent market blow off its growth rate was deteriorating. With Financial sector under water its revenue streams are definitely effected.
2. Multiple market cap to FCF is unsustainable in a Bear market and nobody even The President is not questioning it any more.
3. US Dollar rally takes it toll on non US revenue and it will be lower this Q.

Bear Case continued:

TNR Gold TNR.v: Minera Andes MAI.v announces excellent metallurgical testing results for Los Azules

TNR Gold TNR.v has a conditional 25% back in right on 50% of the Northern part of the property. Company has recently announced that it has filed a lawsuit against "MIM Xtrata Argentina" in BC Canada to clear the status of Escorpio IV property in the proximity of Los Azules and to consider a 25% back in right "time condition" as contrary to the negotiated terms.
"SPOKANE, WA, Sept. 25 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to announce the receipt of excellent results from the metallurgical testing program completed as part of the Los Azules Project 43-101 Preliminary Assessment (scoping study) planned for completion by yearend. The test results show that the Los Azules ore material is amenable to conventional flotation recovery methods and that the overall metal recoveries and the copper concentrate grades are high.
Allen Ambrose, president of Minera Andes, said: "The positive metallurgical testing program shows that standard reagents and flotation methods can be used at Los Azules to produce a high quality saleable concentrate. Copper recoveries over 92% and copper concentrate grades over 30% copper indicate that flotation concentration would be the preferred process for all ore types, which are of medium hardness for grinding. Gold and silver grades are also sufficient to contribute payable precious metals to the concentrate."

President issues warning to US Dollar Holders.

What could make them run out of US dollar faster then President's warning on “Our entire economy is in danger”?
In the early morning the headline was: "President Issues Warning To Americans"
"WASHINGTON — President Bush appealed to the nation Wednesday night to support a $700 billion plan to avert a widespread financial meltdown, and signaled that he is willing to accept tougher controls over how the money is spent.
As Democrats and the administration negotiated details of the package late into the night, the presidential candidates of both major parties planned to meet Mr. Bush at the White House on Thursday, along with leaders of Congress. The president said he hoped the session would “speed our discussions toward a bipartisan bill.”
Mr. Bush used a prime-time address to warn Americans that “a long and painful recession” could occur if Congress does not act quickly.
“Our entire economy is in danger,” he said.
On Capitol Hill, Democrats said that progress toward a deal had come after the White House had offered two major concessions: a plan to limit pay of executives whose firms seek government assistance, and a provision that would give taxpayers an equity stake in some of the firms so that the government can profit if the companies prosper in the future. Details of those provisions, and many others, were still under discussion."

Wednesday, September 24, 2008

US Dollar, Gold and Bailout: Barrick ABX Sees `Large-Scale' Gold Buying on Bailout

The opinion from biggest gold producer is definitely worth more then all other subprime spins in the market:
"Sept. 24 (Bloomberg) -- Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by ``major, major'' holders of dollars who fear the effects of the U.S. government's bailout plan on the currency.
Central banks or sovereign wealth funds are among those likely to buy gold to diversify their investments and hedge against the risk of a weaker dollar, given the government's $700 billion plan to support the banking system, Munk said today.
``That impact on holders of U.S. dollars in China or Russia or Abu Dhabi or Kuwait is that they're going to say, `What is that going to mean for the U.S. dollar, and what alternative are we going to have?' '' Munk said in an interview in New York. ``So gold is going to have very powerful support.'' Munk, 80, founded Toronto-based Barrick in 1983 and made it the world's largest gold producer.
Gold has surged about 20 percent since Sept. 11 as investors shifted assets into precious metals as a haven after the bankruptcy of Lehman Brothers Holdings Inc. Treasury Secretary Henry Paulson plans a rescue fund to allow banks to dispose of devalued assets such as mortgage-backed securities."

Monday, September 22, 2008

TNR Gold TNR.v drills 82.25 meters of 0.49% Copper at El Tapau

Canadian Junior Zinc play Mantle Resources MTS.v

What I like about the company: its focus on Zinc and Lead, and that its high grade deposit is based in BC Canada in a new mining district to be discovered by investment crowd.
1. Solid management: Varshney family is backing the project. Peeyush Varshney is CEO. Jim Mustard has joined the company last year after spending years as a VP and Senior Mining Analyst at Haywood Securities and literally seen hundreds of projects.
2. Location: BC Canada 24 mil tonnes of 7.6% Zinc and 1.5% Lead next to Cirque deposit of Tec Cominco and Korean Zinc J/V with 50 mil tonnes.
3. Value - Goods are in the ground: company is not loosing money during very low prices, deposit is open to expansion and drilling is under way. Company holds massive land package all along this region and around Tec Cominco/Korea Zinc claims. Blue sky potential of a new discovery could ignite the story.
4. Infrastructure requirements: Road has been built to the deposit and all major infrastructure is in place now for developing a mine.
5. Industry recognition: Lundin Mining LMC has 10% stake in the company and is considering it its strategic investment.
6. Valuation: Check comparables in recent acquisitions:
7. Visibility: Company is very active in presenting itself to industry majors.
8. Financing availability: During recent collapse in the Junior mining MTS.v holded relatively well, announced financing at CAD0.90 is a vote of confidence in the developing story.
9. Insiders: Constantly buying in the market.
10. Catalyst: Company is an M&A target for industry majors looking for stable country risk and mining friendly environment projects with high leverage to Zinc prices.

Zinc contrarian play in the inflation bailout times. MTS.v

So now when we are back into negative real rates and inflation is coming on I believe Zinc is worth our attention. Last time demand has picked up in 2003 when zinc went ballistic until mid 2006. It is recovery play on inflation expectation. Bailout will bring liquidity, demand will be recovering in western world and will still be strong in emerging markets. The problem with the price was that it forecasted increasing of production and Zinc surplus in 2009-2010. With spot price as low as 0.75 US/lb Chinese companies start cut production. Huge deposits which were supposed to come online are not in the pipe any more. Ozernoe deposit in Russia with more then 150 million tones of Zinc ore were supposed to be build into mine for 600-800 mil dollars. Now Lundin Mining is going out of the project and price tag has risen to 1.5 billion. Lundin Mining is struggling with low prices and high operational cost in Euro. Huge deposits are situated in Iran, Afghanistan or in Africa. Will you be able to finance them now? With record low inventories we are getting into rising demand. Housing market in USA will recover one day and even if it will happen in 2010-2011 you will not put new mines online within this time. Rising price will bring attention back into this market, this time most interesting will be deposits in a stable political environment which could be financed into production with infrastructure in place. Consolidation in the industry will be also very important driver.

US Dollar victim status of Global Bailout aknowledged by main stream media

You can not spin this bailout as dollar positive any more, another important observation will be in place. Once financial system will be out of panic mode and functioning normally with healthy financial institutions money will start to flow back into emerging markets with strong underlying fundamentals for growth putting more pressure on falling US Dollar.

From Bloomberg:

Dollar May Get `Crushed' as Traders Weigh Up Bailout

"The combination of spending $700 billion on soured mortgage-related assets and providing $400 billion to guarantee money-market mutual funds will boost U.S. borrowing as much as $1 trillion, according to Barclays Capital interest-rate strategist Michael Pond in New York. While the rescue may restore investor confidence to battered financial markets, traders will again focus on the twin budget and current-account deficits and negative real U.S. interest rates."
"As we get to the other side of this, the dollar will get crushed,'' said John Taylor, chairman of New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund firm, which manages about $15 billion."

Sunday, September 21, 2008

Global Bailout: it is going to be a flood of money printed.

We need to find a bottleneck where to profit from these liquidity avalanche: Gold will appreciate against all FIAT currencies.

"Sept. 21 (Bloomberg) -- Treasury Secretary Henry Paulson said he's confident several countries will take steps comparable to the $700 billion plan he proposed to buy bad mortgage-related securities to address the global financial crisis."

Taxpayers are on the line: Cost of WallStreet Bailouts.

US Dollar is a FIAT currency (IOU in effect) and backed only by a perceived value of AAA rating of US Treasuries. For maintaining this highest investment rating is crucial Treasury's ability to manage US Corp. cash flow (current account deficit) and solvency of this corporation at any given time: ability to run budget deficit without rising questions of its creditors, which could decide that they do not like to finance this company any more or that they need higher interest (Yield) payed to reflect higher risk. Taxpayers are the source of revenue, they are paying taxes, they include people and corporations. Payables are US Budget expenses (including undisclosed military ones) and its interest payments on debt outstanding. Difference is a Budget Deficit which is financed by additional borrowing by means of selling new Treasuries.
After recent nationalisations US Corp took on its books some "assets" which nobody wanted and disposition of some of them could even bring all system to a hold, so it will be difficult to assume that Wall Street is so stupid and Treasury is so bright that Taxpayers will get any additional value in a near term to help them to hold the load of servicing rising US Debt and Budget Deficit.
What is the load of Wall Street bailing out and taxpayers liabilities now?
1. Bear Sterns - 29 billion.
2. Economic stimulus - 150 billion.
3. Fannie Mae and Freddie Mac - potentially 250 billion (5.4 trillion of mortgage debt is owned or guaranteed by the government now (5% total loss of portfolio).
4. AIG - 85 billion.
5. Wall Street Bailout - 700 billion.
All these money will be taxpayers liability in any case, but you need them now, so you have to sell more Treasuries now. More goods to sell, less buyers - price is going down, yield is going up. Additional interest payments are added to taxpayer burden. With short term rates determined by FED low and Markets rates determined by Treasuries markets rising we are in a Negative Real Rate zone. Value of your investments in deposits or Treasuries is eroded. Government effectively is reflating its economy, printing more money to make its obligations worth less and to repay them in a debased currency. Gold as ultimate store of value is showing the real rate of inflation against all FIAT currencies.
How long can you continue this game: until buyers are willing to pay their "hard currency" for US dollar nominated assets.
Treasury Bubble will be last to burst, but this bust will be of epic proportions and will put US Dollar in a waterfall mode again.

Price of Bailout: Treasuries Junk status and Golden opportunity.

Daily chart of 30 Year Treasury price is telling it all: rolling top is showing that buyers are demanding higher Yield and selling pressure is mounting. T Bills were trading almost at zero yield showing panic and flight to "quality" in frozen money markets in the middle of the week, after "bailout solution" these yields are sharply higher. The last resort of Reserve Currency of Choice - Treasuries are going to be downgraded to the Junk status by the market. It will not happen overnight, but we are getting there.
More and more voices heard about new financial security, the first nation to come out with Gold reserved currency could benefit enormously in this turmoil.
Bailout is the act of desperation. It is hard to think so looking at souring stock market in the last two days, but it is the reality. Government will buy out the worst assets from the system which has become worthless in the current markets and could bankrupt all US financial system.
Treasury Bubble is the last to burst with falling de facto Credit rating of USA Corp after taking on its balance sheet all this toxic waste from the banks. Inflation is here and can not be controlled in US at this moment, if you still believe that falling economy is always deflationary, just have look at Zimbabwe now or at Russia, or at Turkey in early 90s.
Tsunami of liquidity will make its way into the system it will not address systemic insolvency crises or derivative mess, it will only grease the wheels of a "free markets". Smart money will buy into strong underlying economics of Canada, Brazil, China, Australia and will take a protection in the form of Gold holdings. Countries with real Wealth reserves (contrary to systemic deficit in US) will build up their gold reserves and will continue to diversify out of dollars.

Gold: Short Selling by the Treasury appointed banks can not hide its shine in a Global Bailout.

You can manipulate markets only to a certain extend, now we know from the press that the world was on the doorstep to "meltdown of financial system" last week. Gold has finally decoupled from all baseless financial assets and FIAT currencies and showed a bold vote of confidence breaking out of down trend in one day gain of 85USD. Inflation in the form of extending money supply will flood the system, death clots will be taken out of veins main financial system and will allow to prevent total collapse. But while financials will be holding its domino together finding the way to unwind global derivative mess, Hard assets and Gold and Silver particularly will flourish in the Global Race for security, which is not associated any more with fallen "Rome", its currency and crippled corrupted financial system. After last week events short selling covering rally will be used by professionals to sell into strength and rise liquidity, more money will be allocated to Gold as protection in global portfolios - we are entering a new Bull Leg in the Gold market with Universal recognition of its Store of Value and Wealth in Inflationary times.

US Dollar Bailout Victim chart.

US Dollar is feeling the heat, "rally" has hit the roadblock and all this painted unprecedented manipulation in the "free" markets could become Bearish Flag pattern on the way to new lows. First intervention fueld short covering in the USD, then flight from other markets contributed to temporary dollar strength, global margin call in the weakest currency USD last week was the last dollar strength reserve. Tectonic shift in the market just before the "financial system meltdown" has send Gold 85 dollars higher returning its shine of the Save Haven of last resort, where US Dollar and Treasuries so spectacularly failed last Friday.

Saturday, September 20, 2008

Credit Default Swaps real reason for Bailout. AIG, MER. LEH, GS

Educate yourself and find out why you should not touch any of the financials full of "PlayStation Kids Default Assumption" products:

"AIG’s Dangerous Collapse":

Bailout will increase US Debt by 700 billion.

"Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

U.S. Treasury Proposal to Buy Mortgage-Related Assets: Text

Friday, September 19, 2008

Mother of Bailouts, US Dollar will not worth the paper it is printed on.

No details yet available, but one is for sure: US Government will buy bad debts on its books, more money will be created. Reflation, reflation, reflation. What is good: system will be saved and blood clots will be taken from the veins, for Gold, Silver and Commodities it is the best situation. Money supply will create rising inflation, credit will be available for developing mines and production. Confidence in US Dollar as a reserve currency of choice is out of the question and rising Gold at the moment of panic has shown its save haven status. Treasury yield will rise, buyers will demand more risk premium now, short term rates will be kept low: FED can not afford to raise them and I still confident that they will have to cut maybe in unison with other Central Banks. Negative Real Rates will provide fertile ground for our rising Gold, Silver and Commodities.

Will Canada shut down illegal Naked Short Selling?

Should Canada join the fight for protecting markets from illegal Naked Short Selling CDNX Venture Stock Exchange index will go at least 50% overnight. Markets are so illiquid that the shorts will be evaporated.
"Securities Regulators and State Attorney Generals Crack Down On Naked and Manipulative Short Selling
Dear Friends,
Let’s review the highlights of this important day:
Securities Regulators and State Attorney Generals came down hard on the practice of naked and/or manipulative short selling.
There was emphasis made on legal and illegal shorts that have had a habit of speaking poorly about situations they are short to others.
London followed suit to a reasonable but hopeful degree.
The Toronto Senior Exchange remains silent on the subject. If the TSX does not declare its participation by next week many companies who are suffering from these malicious actions, particularly those with dual Canadian and US exchange listings, will delist. Toronto listings will move to the London Stock Exchange while remaining with their AMEX, soon to be NYSE, listing facility. That strategy would maintain dual nationality listings.
A form of Resurrection Trust much touted today has no application to a derivative meltdown. Simply stated, it will not work. Those that favor this idea demonstrate their total lack of knowledge concerning what OTC derivatives are.
The stock market was impressed by the worthless concept of a Resurrection Trust plus the probability of naked short covering.
If the SEC really has zero tolerance for naked and/or manipulative short selling it is too late to borrow shares.
Gold did its usual major round number dance today. The dollar got a boost from the actions of US equities.
Respectfully yours, Jim"

Wednesday, September 17, 2008

TNR Gold TNR.v spins off Alaskan properties.

TNR Gold TNR.v spins off Alaskan properties in USA subsidiary in order to realise value which is not in the stock price now without expensive dilution in the company.. With recent developments interest in Alaska is rising with Barrick Gold ABX, Nova Gold and Northern Dynasty Minerals NAK. Gold vs Salmon vote has brought confidence to the mining companies in the region.
TNR Gold Corp.: Transfer of Alaskan Projects to New SubsidiaryWednesday September 17, 6:53 pm ET
"VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 17, 2008) - TNR Gold Corp. ("TNR") (TSX VENTURE:TNR - News; PINK SHEETS:TRRXF - News) is pleased to announce the incorporation of Bristol Explorations Co., Inc. ("Bristol"), a wholly owned US subsidiary. Bristol was incorporated in the state of Alaska and has obtained 100% of TNR's properties in Alaska which include the Iliamna project and the Shotgun project.
Bristol will focus on developing and exploring the Iliamna, Shotgun, and various Alaskan ventures. They have completed a $75,000 geochemical sampling program on Iliamna and results are pending.
TNR believes this new corporate structure will allow them to deliver enhanced shareholder value and focus on mineral exploration in Argentina and other areas of interest in South America. It will also allow them to participate in future developments in Alaska with its interest in Bristol, especially given the recent interest in the Iliamna region.
This news release has been prepared under the supervision of John Harrop, P.Geo, TNR's qualified person on this news release.
The Shotgun project is located 175 kilometres south of Donlin Creek within the Kuskokwim Gold Belt in Southwestern Alaska, an area emerging as a world-class gold district hosting more than 40 million ounces of aggregated gold resources. The Shotgun project includes a number of prospects, including Shotgun Ridge and nearby Winchester. Donlin is an intrusion-associated system and represents one of the largest undeveloped gold deposits in the world (see The Company believes that there are several key similarities between prospects in the Shotgun area and that of the Donlin Creek gold deposit as well as other intrusion-associated deposits.
In July 2006, TNR announced 210.5 metres of 1.29 g/t Au at Shotgun Ridge, which led to the identification of a feeder zone and leaves the mineralization open at depth.
TNR has earned a 50% interest from NovaGold Resources Inc. in the Shotgun project. To date there has been 4,095 metres of drilling at Shotgun Ridge and 1,653 metres at Winchester.
Previous work at Shotgun Ridge by NovaGold Resources Inc. has estimated a historical resource of 980,000 ounces grading 0.93 gram per tonne (g/t) at a cut-off of 0.5 g/t (National Instrument 43-101 non-compliant resources). The geology and style of mineralization at Shotgun is very similar to the Dome area of the Donlin deposit.
The Iliamna property is a claim in Alaska covering 412 sq km of land approximately 100km from the highly-visible Pebble deposit held by Northern Dynasty Minerals Ltd. The Pebble deposit contains an indicated mineral resource of 31 million ounces of gold and 18.8 billion pounds of copper, making it one of the world's largest deposits of its kind. Initial target definition at Pebble occurred in areas covered by glacial overburden and/or Tertiary volcanic rocks, as is the case at the Iliamna Project. In 2000, Rio Algom carried out several phased exploration programs including an airborne magnetic survey, reconnaissance geology, and IP/Resistivity surveys. These surveys led to the successful identification of several geophysical anomalies, including the Iliamna Project. The airborne magnetic survey successfully outlined three regional anomalies: the Pebble intrusive complex, the Nushagak anomaly, and the Kvichak anomaly, which includes the Iliamna property. Following the regional geophysical programs, site-specific IP/Resistivity Surveys targeted and successfully located several anomalies that are similar in size and characteristics to the Donlin Creek and Pebble deposits, including the Iliamna Project. Subsequent drilling encountered copper-gold mineralization in an intrusive setting at Iliamna's H Claims.
A total of 1883.1 metres of drilling have been completed between 2003 and 2006. Some holes intercepted low-grade altered intrusive consistent with that which would be found near the periphery of a mineralized system.
TNR is a base and precious metals exploration company focused on aggressively identifying new prospective projects as well as fostering work on its large portfolio of 17 properties in Argentina and Alaska. The company's focus over the next 12 months is the exploration and development of its Eureka, El Salto, and El Tapau in Argentina as well as Iliamna and Shotgun projects in Alaska.
On behalf of the board,
Gary Schellenberg, President
Statements in this press release other than purely historical information, historical estimates should not be relied upon, including statements relating to the Company's future plans and objectives or expected results, are forward-looking statements. News release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. Forward-looking statements are based on numerous assumptions and are subject to all of the risks and uncertainties inherent in the Company's business, including risks inherent in resource exploration and development. As a result, actual results may vary materially from those described in the forward-looking statements.
CUSIP: #87260X 109
SEC 12g3-2(b): Exemption #82-4434
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release. "

Juniors, Gold, Silver, Copper, Zinc Bullish case.

Juniors Sentenced to Death?
Gold May Rise to $950 an Ounce as Miners Lower Output
Long-term outlook for commodities strong, despite short-term volatility - Argus

Stockmarkets meltdown, Gold is flying high. SSRI, RGLD, SLW, AUY, MTS.v, TNR.v, SST.v

Trust is broken, system is falling apart. Too many bailouts and liquidity pumping and just a few solid assets without anyone promise and IOU squared by derivatives.
FED did not cut, but Gold is flying without it! Cut will come and will add to the fire.
All financial economy is build on Trust, there are very few tangible assets left. In commodities market and PGM you have your assets in the ground, defined by drilling and not just "PlayStation kids Credit Default Assumptions", you still need credit to build a mine, but you have tangible assets in a "safe" and if there is Demand for them you can build on its economics.
Today is a crucial day: with rising systemic risk finally Gold behaved as it supposed to be in a free market without government manipulations - Safe haven of last resort. Raise more then 85 dollars in a one day trade will bring Gold to the front pagers of newspapers in the world.
HUI and XAU are supporting Gold rise and showing final break out from falling apart general markets.
Game here was simple in a hindsight now: with the first margin calls in July Funds sold where they had a profit: commodities, fueling the Bear Raid of PPT intervention in Gold market. Today when assets are liquidated in a fire sell to cover derivative obligations in a reality of a tight credit markets it is very important that HUI and XAU have "decoupled" finally from general market.
Economics of Supply and Demand are very simple here: Stock market of the world used to be 51 trillion dollars. All we need here is 5% of it. Investors today have seen that Gold has decoupled of falling financial markets. Even if the markets will turn on the Election Rate Cut and all these liquidity pumped into the system, investors are going to Buy Gold as Insurance without any counter party risk. Assume 3% will go into physical markets of Gold, Silver, PGM and other commodities. It is 1.5 trillion dollars! They will just fly. With 1% going into HUI it will be 500 billion: it means all HUI companies will have to rise in their valuation 5 times. Now even divide everything by 2 - it is still Buy of a lifetime by any means.
Once this will happen the most "crazy and greedy" investors will take positions in Juniors: lets say 1% of all these money for the HUI: it is 5 billion - Juniors will have to rise Ten fold just to accommodate these demand for the goods in the ground.
These investors will meet money from Majors in HUI when they will start to buy resources and buy time which is the most precious ( in case of AIG bailout time was measured in 85 billions and 80% of the company respectively). They will spend another 10% of their valuation 50 billion
on buying into Juniors with resources.
You can play financials recovery as usual or you can chose the staff in the ground which today has received very bold endorsement from the Mr Market. (Mr Warren Buffet must be nearby now, they do like each other).
We need just 1% of the money running out of stock markets these days.
Silver is showing its monetary function as well and gain here will be even more dramatic once money will come back into the sector.

Argentina vote of confidence: Rio Tinto to invest $170 mln in Argentina port

"BUENOS AIRES (Reuters) - Global mining giant Rio Tinto (RIO.L: Quote, Profile, Research, Stock Buzz) plans to invest $170 million to build a terminal at Argentina's southern port of Bahia Blanca to export potassium chloride (potash), government official said on Tuesday.
The new terminal to handle the compound, used mostly to make fertilizer, will serve Rio Tinto's $900 million, Rio Colorado mine, to enter construction in Mendoza province this year."

Monday, September 15, 2008

Is the Big Bang coming: FED rate cut by 0.5? Dow down 500.

More and more voices now not just about the Cut but the "Big Bang" as Pimco has put it: at least 0.5% Cut to 1.5%. Welcome to 2002 when new Gold market Bull has started, now we will go from higher base. Last time Pimco ask Treasury "to open the wallet" they get it: Fannie Mae and Freddie Mac was bailout over the weekend.

China Cuts Interest Rates

Time is to decouple. Difference is that Chinese stock market is already down more then 60% this year. So they are cutting at equivalent of DOW drop to 5000.
"Sept. 15 (Bloomberg) -- China cut interest rates for the first time in six years and allowed most banks to set aside smaller reserves as worsening credit-market turmoil and weakening export demand dimmed the outlook for economic growth.
The People's Bank of China reduced the one-year lending rate to 7.20 percent from 7.47 percent, effective tomorrow, and lowered the reserve ratio at the nation's smaller banks by 1 percentage point. The changes were in a statement on the central bank's Web site today."

Who will bailout US Dollar? LEH, MER, BAC, AIG, RGLD, SLW, SSRI, AUY, TNR.v, MTS.v

FED will cut rates: otherwise it is a "suicide option" for their friends: now it is apparent that domino bailout is in effect on the Wall Street. We still have room to go sharply down on fear metricks VOX, VXN, VIX.
Lehman Brothers LEH has filed for bankruptcy - FED did not protect it, Merrill Lynch MER is bought by Bank of America BAC for 50 billion, American International Group AIG is looking for 40 billion FED life support. Only chosen few will be saved - others will fight for themselves, financial assets will be unwind in the falling market. Selling pressure will add to selling pressure: FED needs buyers to prevent collapse, chosen few will get money with negative rate of return to taxpayers.

Last stage of operation should come into play: FED cut rates, awash market with liquidity, PPT will buy in the open market financial equity. They will try to talk all other central banks into rate cuts.

ECB, BOE to Pump Extra Cash Into Strained Money Markets

Anyway if systemic risk will be addressed by operations like BAC buying MER, US Dollar will go down and Gold will fly, against falling dollar and all other FIAT currencies. Ten global banks has created 70 billion dollar loan facility: time is not to fight the USD collapse, but to fight for financial system existence.

Today's action in Gold, Silver and commodities will be very important. Will Goldies finally decouple from financial economy mess and become new backbone of the Recovery?

Sunday, September 14, 2008

Bailout domino continued: Merrill Lynch MER on the street.

Rate cut will be just like gasoline on fire here for US Dollar. Gold will fly.

"Merrill and BofA begin acquisition talks
By Francesco Guerrera in London
Published: September 14 2008 22:13 Last updated: September 14 2008 22:13
Merrill Lynch is in talks to be acquired by Bank of America in a sign that the crisis gripping Lehman Brothers is forcing rival investment banks to seek partners to avoid suffering the same fate.
People close to the situation said Bank of America had entered discussions with Merrill after pulling out the bidding for Lehman in a dramatic about turn partly prompted by the US government’s refusal to supply financial help for a Lehman takeover."

Saturday, September 13, 2008

Gold Economics: What it Takes to Build a Gold Mine. CS

Sharpen your sword: education is first step to understanding:

Gold Market and Price Targets from Dundee Wealth Economics Toronto

Courtesy of Jim Sinclair from latest Denver Gold Show:

Size still matters - how big is market of Gold Companies?

I think it will be interesting to put some figures in perspective:

Credit default swaps market 45.5 trillion.
World stock market 51 trillion.
US stock market 21.9 trillion.
Mortgage securities market 7.1 trillion.
US treasuries market 4.4 trillion.
Google GOOG market cap 138 billion.
All 15 Gold/Silver mining companies in HUI Amex Gold Bugs Index 101 billion.

Credit Default Swaps - WMD in action: vaporising US Dollar and all FIAT currencies

Credit Default Swaps - WMD in action: vaporising US Dollar and all FIAT currencies.

Every bailout is triggering CDS "Credit Default Event" when market should be unwind and positions settled. Magnitude of the game is apparent from the picture above. Bailout of Fannie Mae FNM and Freddie Mac FRE has triggered settlement of contracts protecting 1.4 trillion in underlying assets.

How much will be in a case of Lehman Brothers LEH, AIG, General Motors GM, Washington Mutual WM?

Friday, September 12, 2008

Jim Rogers: Zinc and Silver and Gold will shine again: SST.v, SLW, SSRI, RGLD, AUY, MTS.v, TNR.v

Operation "Wash out" has hit first road block at USD 0.8 level.
This historical manipulation in the "free markets" will be remembered as a criminal attempt to change the natural cause of things. US dollar will be the victim, insiders from the Street will make tons of money, politicians will try to postpone day of reckoning, American families will pay for all this party in decades to come.
Until today it looked like new happiness was found: you can take as many debt as you like - your currency will only get stronger. Saudis are very motivated to keep the status in Washington DC and are pumping oil under 100USD, they need to keep in office the same guys who would like to bring democracy to the oil producing countries, next to them.
Problem is that you can run this circus only for a while: there are no friends on this party. Everybody is looking for himself: Chinese will be the first for this fire sell in commodities. Everybody is interested to keep USD alive, but motions are completely different. Everybody apart from Treasury would like to have it higher to sell and make its decline orderly so that they can get out of US Dollar positions. But here I am wrong: what ever Treasury is telling you about the strong dollar is not very true: the only manageable way out of these debts is to inflate it out, more money created - lower value of it.
Situation is very different in the world and rally in the dollar was explained as flight to safety and that there are bigger problems in Europe and outside USA. I have not heard recently that another country took overnight 5.4 trillion debt on its books. European Central Bank has told that they are not going to cut rates any time soon. German export is up 7% in July on falling Euro. China has announced that Europe has become the biggest export market for them. Europe will be comfortable in the range between 1.4 and 1.5 Euro for USD. What will happen with US export at a stronger dollar? Trade deficit recently widens to 62.2 billion vs expected 58 billion dollars.
We are waiting for this weekend news: who will be chosen victim to buy Lehman Brothers LEH and whether rate will be cut even before FED meeting. AIG has penned itself down for a bailout candidate as well. Auto guys are making rounds in order to get for "energy security initiatives" 25 billion dollars in loans.
TYX was flying today signaling that there is less appetite to buy any of the "triple A" staff at Yield below inflation rate.
On another side of trade Russians have announced that they will use their Reserve fund of over 600 billion dollars to buy into local market after 50% sell off. Chinese will be next with their 1.8 trillion in Reserves. Foreigners are taking money from emerging markets back to "safety" of US Treasuries? I like this particular spin - I would dare to tell you that US Treasury was buying with means of PPT from Cayman islands this staff to pop up the dollar and to keep its market together. As for emerging markets and foreigners there - I can not imaging how much should you pay anyone to make it happen: "Chinese strategy" in action. Russia, China and Brasil will be happy in the end to have opportunity to buy back their resources stocks or financials controlling financing for that matter with 50% discount - they can afford it. And wait to see them soon in Canada buying the same staff in the ground. USA is in different position here - deficit has ballooned to 407 billions before all these "weekend exercises".
New Bull Legs are started exactly at this stages of total desperation. Many were burned during this manipulation, no matter how clever you are when phone rings with margin call you are done. I have had these experience first hand and with very interesting amounts, so I do know what I am talking about. From many stupid actions recently I am grateful to myself that I get into this stage of our Bull market in the position that I am not forced to sell and still have "Dry Powder" for rock and roll using my proceeds from PUT options. Recent fire sell was caused by panic selling and margin calls liquidations, few hedge funds exploded and such clever guys as RAB Capital are negotiating freeze of redemption from their Special Situation Fund. Another option is fund liquidation.
Yesterday action was very important in the Gold market: when HUI and XAU rallied with Gold under pressure, it is first bullish sign. Today all Commodities, Gold and Silver were railing and just reminding what is the bull market means, when it is not interrupted. Any sign of life out there apart from All Important USA will drive this market back in no time. This things are still needed and they are not coming from the printing press. You have to find them, develop them, finance the mine and start production.
We are facing new stage in the Bull Market which will bring us to the new highs, discipline, home work and commitment will separate those who will make money and those who will participate in the show.
We are all lemmings in this investment world and we need guidance. Going together over the cliff nowadays is considered as a much better option then sitting alone. It is nice to have Jim Rogers on the same side of trade:
“Commodity prices will go up whether governments impose controls or not as there is a serious supply-side problem.”
He said the bull run in crude oil prices is not over yet and expects prices of sugar, cotton and coffee to rise sharply.
“Zinc and silver prices may also witness some upside,” Rogers said. He said despite the fall in gold, he is not selling the yellow metal and will buy more if it falls further."
I am acting as a contrarian and Zinc is attracting me these days, I like that Jim has mentioned it. Price has collapsed to 0.75 USD from 2.0 USD just within couple of years. At this level Chinese started to close production. All that supply calculated in new mines in years to come will not be materialised with recent financial situation and country risk aversion at these price level. Only the lazy once were not shorting it. Should the situation change and everybody will be on one side of trade long position will be the killer. Important as usual country, people, near term catalyst.
My favorite M&A target Zinc play today announced its name change:
All other guys are just waiting for a strong hands to run:
SST.v, SLW, AUY, RGLD, TNR.v to mention a few.
Action of Royal Gold RGLD as an early indicator for Gold is very interesting: stock has hold very well and did not collapsed as others with Gold decline. It could indicate that recovery will be explosive. But in the today real "free economy" world do not forget that you will become rich only if you are solvent at any given point in time to your riches.
Silver has been bitten down more then 50% and should it become unnatural as well and new money will come into the market highly leveraged Silver Wheaton SLW and its small brother Silverstone Resources SST.v will benefit handsomely.
TNR Gold TNR.v has recently decided to sign up new speculators in its club and provided a Sale with 0.16CAD today. Wait for a news on this one: legal action is under way and drilling programmes are well advanced.
I have taken profit from my USD500 Jan 2009 PUTs on Google, so many juniors are selling at value of their office equipment, so drills you are getting just for free and resources looks like nobody needs any more.
Should I be wrong and it is really the case that commodities will not be needed any more: my Google PUTs 430 and 370 will pay off for a few decades of candles supply and oil must be cheap as well to run my generator to enjoy my blogging or will we need Internet after all in those times? Do not get me wrong here: I do not like to read with candles!
I will be grateful if God will soon reveal his plan for positive outcome when real things and assets will be in demand, honesty will be respected and inflated financial assets will depreciate to there real value, discounted on all those relentless derivatives write on them.
I do not even ask that criminals will be put in jail, it will be too much and it is not our prerogative.

Tuesday, September 09, 2008

Bailout and US Dollar - operation "Wash out".

Operation "Election Jump Start Economy" consisted of two very important phases:
1. Painting in the chart reversal on USD by means of buying treasuries by FED and foreign Central Banks, trashing the Gold ans Silver market by going short in "Too big to fail" banks.
2. Bail out of Fannie Mae and Freddie Mac by monetising their debt and increasing government liabilities by 5.2 trillion dollars. On its asset side government is taking depreciating in value housing and diminishing cash flow from people unable to service their debt.
Immediately after announcement in Asia we saw the free market in action with USD falling against GBP to 1.78, AUD to0.83 and Euro 1.44. Gold went up to 819 USD/oz. After opening on Monday in USA Gold went under pressure again and USD rallied as a vote of confidence with rising markets.

Gold now is at very important threshold testing long line support at 777USD. Further rise in USD did not brought Gold lower then previous low so far and this week will be very important. Rally in the markets spiked by bailout faded today and we are very close to Election Rate Cut just to keep things together. Euro now is in comfortable zone at 1.4 level and further "rally" by USD will bring US export to a hold. Something has to give and very overbought USD now is very vulnerable to sell off from important resistance at 0.8 on USD index.

The only hope of PPT (plunge Protection Team) is that this manipulated "wash out" has taken out a lot of speculators and investors from Gold, Silver, commodities and Junior mining markets and when US dollar responds to natural force of gravity and continues its Bear trend its move down will be manageable.

Google GOOG is facing a legal challenge

Stock was under pressure yesterday in a rallying market, legal problems will not help its valuation which is already under constrain of falling multiple and slowing rate of growth. Another blow this quoter will come from strong USD when company will not be able to book a nice currency advantage from its international operations.
"Top Lawyer Is Selected As U.S. Mulls Google Suit

By JOHN R. WILKESeptember 9, 2008; Page B1
Washington -- The Justice Department has quietly hired one of the nation's best-known litigators, former Walt Disney Co. vice chairman Sanford Litvack, for a possible antitrust challenge to Google Inc.'s growing power in advertising.
Mr. Litvack's hiring is the strongest signal yet that the U.S. is preparing to take court action against Google and its search-advertising deal with Yahoo Inc. The two companies combined would account for more than 80% of U.S. online-search ads.
Google shares tumbled 5.5%, or $24.30, to $419.95 in 4 p.m. trading on the Nasdaq Stock Market, while Yahoo shares were up 18 cents to $18.26.
For weeks, U.S. lawyers have been deposing witnesses and issuing subpoenas for documents to support a challenge to the deal, lawyers close to the review said. Such efforts don't always mean a case will be brought, however."

Monday, September 08, 2008

TNR Gold TNR.v: Minera Andes MAI.v announces a mineral resource estimate of 922 million tonnes of 0.55% copper at Los Azules

TNR Gold TNR.v has a conditional 25% back in right on 50% of the Northern part of the property. Company has recently announced that it has filed a lawsuit against "MIM Xtrata Argentina" in BC Canada to clear the status of Escorpio IV property in the proximity of Los Azules and to consider a 25% back in right "time condition" as contrary to the negotiated terms.
Interesting information on mining in Argentina on Argentina and Mining 101.
"SPOKANE, WA, Sept. 8 /CNW/ - Minera Andes Inc. (TSX: MAI and US OTC: MNEAF) is pleased to announce the results of an independent resource estimate at the Los Azules Copper deposit located in western San Juan province, Argentina. The Inferred Mineral Resource, at 0.35% total copper ("CuT") cut-off, is defined by an area approximately 3.7 km by 1 km in size and contains a high-grade near surface copper core in the north (see attached drill map and long section). This resource estimate will form the basis of an economic scoping study (NI-43-101 Preliminary Assessment) planned for completion at yearend. In addition, the mineralized copper target remains open to the north and at depth.
At a 0.35% total copper cut-off, the Inferred Resource at Los Azules is 922 million tonnes grading 0.55% copper, containing 11.2 billion pounds of copper."

Sunday, September 07, 2008

Fannie and Freddie bail out will downgrade USA debt and US dolar better change its name.

Is it just a nightmare or we are serious here talking about "debt burden" like in any Third Word Country after "stabilising" IMF loan? With 5.2 trillion debt outstanding and 5% (we will come to discuss this figure later) interest payments by USA Corp. will be 260 billion dollars annually just to service these agencies debt, assuming that there will be no any dramatic Yield Rise in coming refinances demanded by potential buyers. To put it into perspective:
The FDIC oversees an industry-funded reserve, which currently stands at about $45 billion, used to insure up to $100,000 per account and $250,000 per individual retirement account at insured banks."
Every year you can build 6 FDIC funds to protect your citizens savings (here I have a question - does anybody still have any?) or make every year 6 Olympics games like they did in China (40 billion spent) in six different cities across USA. It will be nice to have "Bubble" pools all across the country in couple of years time.
The quality of assets which USA Corp. gets vs this "fixed" debt obligation are under question at least: Freddie, Fannie worse off than thought Housing values are still falling down and people are going away from their properties. More and more money will be printed to cover the gap.
Another food for thought with this kind of bail out and strain on the US balance sheet what government can do in another case of "Too big to fail"? Like GM or another investment bank?
Foreign buyers have cut dramatically on their appetite for Fannie and Freddie debt just before the bail out. Now when this debt will be substituted by Treasuries does it mean that its quality will be upgraded to their "AAA" status? I will think that contrary with deterioration of Federal Balance Sheet this debt quality will be downgraded. Buyers will demand discount on these "assets" in the form of higher yield. Next thing we will have to watch is TYX 30-Year Treasuries Yield, time of historical lows for the yield (now at 4.276%) is over, welcome to the 70s when Yield raise from below 8% in 1977 to over 14% in 5 years time. Should I remind how Gold behaved in those years?
Everything must be taken in comparison: recent intervention by central banks before "Operation Bail Out" was portrayed as "comparative" advantage of USA economical situation vs Europe troubles. I dare to think situation is different and magnitude of this intervention in the "free" markets will not be challenged by any other economy in the world or for this matter by all of the rest world economies combined. Europe CB and Bank of England have hold their respective rates at 4.25% and 5% last week. According to Jim Rogers China has raised its interest rates 7 times and increased Banks reserved requirements 15 times (!) in order to prevent overheating in the economy and take out pure speculation from its long term rising stock market.
Recent manipulation has brought new opportunities into the market :
1. Time is to sell USD assets using recent spike in its value.
2. It is The Inflation, forget about deflation and let FED to worry about it.
3. Sell Treasuries, buy Gold, Silver and commodities.
4. Emerging markets could be carefully considered on case by case bases as wave of new credit will penetrate the boarders.
5. Could not resist: this recent USD spike is not in favor of Google GOOG on shrinking market it has getting a nice boost from its overseas operation with falling US Dollar. Without that tail wind results are going to be on track showing slowing rate of growth further.
6. Oil is too political for me to consider any trade here, Saudi friends will help old buddies try to stay in office and can pump like there is no tomorrow, but long term life is going to be more like in 150-200 range at least.
"NEW YORK, Sept 4 (Reuters) - Foreign central banks reduced their U.S. agency security holdings at the Federal Reserve by $9.75 billion in the latest week to a total of $958.57 billion, according to data from the central bank released on Thursday.
The data may add to recent evidence that overseas investors are worried about the troubled mortgage giants.
The drop marked a seventh straight week of declines in offshore central bank holdings of bonds issued or guaranteed by government-sponsored enterprises like Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz), which have recently taken center stage in the U.S. housing crisis.
Overall, the Fed's holdings of U.S. Treasury and agency securities kept for overseas central banks, including Treasury notes and bonds as well as agency securities, fell by $13.48 billion to stand at a total of $2.395 trillion in the latest week ending Sept. 3, the Fed data showed.
Overseas central banks reduced their Treasury debt holdings by $3.72 billion to stand at $1.437 trillion.
Overseas central banks, particularly those in Asia, have been huge buyers of U.S. debt in recent years, and own over a quarter of marketable Treasuries."

Saturday, September 06, 2008

Jim Rogers on Fannie Mae FNM and Freddie Mac FRE bail out

This was recoded before recent decision:

Freddie Mac FRE & Fannie Mae FNM bail out and its downside for US Dollar.

Positive thinking manifesto.
According to the recent reports USA government is close to bail out Freddie Mac FRE & Fannie Mae FNM under the government control:

By Alison Vekshin and Dawn Kopecki
Sept. 6 (Bloomberg) -- Treasury Secretary Henry Paulson is preparing to announce plans to bring Fannie Mae and Freddie Mac under government control, seeking to halt the crisis of confidence in the companies that make up almost half the U.S. mortgage market. "
Now we can understand that operation in the open market by the world central banks in order to pop up the ailing currency US Dollar was the careful preparation for this bail out. I guess that too much is at stake to allow the newcomer get in the Washington DC mess. Georgia came in handy as well. With geopolitical risk economic worries are going on the second plan, choice is predetermined and USD is rising voting for USA military machine.
Without that intervention such a bail out could easily crash the US Dollar into another waterfall and make its "managed" depreciation impossible. Market manipulation has send USD dollar into Bear market reaction rally, Gold and Silver were trashed into the dust with investors running to the Exit. Investors confidence in Gold and Silver mining companies and Junior mining were shaken with a lot of casualties and money lost. Perfect storm in commodities market amplified by Bubble Vision commentaries on the end of the Commodities Bubble prepared the operation "Election Jump Start the Economy".
It came handy that few biggest US banks went short Gold just before the intervention in unprecedented amount. More details are in this great article.
What will be the consequences of such a bail out and why so many resources were put into this historical manipulation? At stake is a financial system of the world as we know it and its main reserve currency of choice US Dollar. This was the reason why European and Japanese central banks supported the intervention. All financial system is brought down to a still with toxic assets based on not only subprime mortgages, but also "primary" assets issued by Freddie Mac FRE & Fannie Mae FNM. Credit flow has dried out as confidence in a counterparty disappeared. Effective government overtaking of all liabilities issued by these agents means monetisation of this debt and its substitution effectively by government "currency" - Treasuries. More goods to sell with falling demand means lower prices. In case of Treasuries it means higher yield, real rates will go up. What about short term rates managed by FED? If after recent unemployment report anybody things about FED raising rates they better check their water supply. I will not be surprised if FED Cuts Rate in case the markets will tank further into the bear market territory. Welcome to the Stagflation world: Negative Real Rates (difference between FED short term managed rate and Real rate defined by the market in treasuries) like in the 2002 when Gold market was ignited to the new highs.
Threaten by deflationary pressures in the form of falling prices in housing, permanent Sales on the high street for squeezed consumer and falling financial assets prices on the Wall street FED will be always intentionally late to Raise the rate to fight inflation. Inflation is an increasing money supply be definition and with this bail out Pandora Box is open.
What is the magnitude of the situation? Both GSEs are holding and guaranteeing more then 5 trillion dollars in debt, it will go into the government books on the liability side in plus to the current 9.6 trillion dollars government debt. It is an astonishing 54% increase! Why is it negative for the US Dollar "value"? US dollar is a FIAT currency and supported only by perceived value of US government ability to collect revenues in the form of taxes and keep its supply "limited" to the real economic growth in goods and services produced by the USA Corp. When more money is chasing the same amount or falling amount of goods and services we have an inflation.
Let us make a quick "back of envelope" analyses of this M&A deal. USA Corp. is taken liabilities with fixed rates to be paid in the form of interest on Freddie Mac FRE & Fannie Mae FNM bonds to its holders like China, Japan, Russia, Middle East etc. On its assets side it is unwillingly getting falling in value houses as collateral for issued bonds. Assets are shrinking in value with falling house prices, cash flow is falling: people are not able to service their debt, late on payments and are walking away from properties. Common stock of USA Corp is going down - it is our "chosen victim" US Dollar. Then even worse is happening: in order to finance budget deficit and these adding to shortfall difference between fixed payment out to service debt and receivables from housing assets USA Corp is forced to borrow more to cover the cash flow gap.
Situation is becoming more complicated with need to save economy and its subjects from the bankruptcy: maybe Jim Cramer is right after all and USA Corp. will decide to extend mortgages and reduce the payments, US Dollar will be even under more pressure.
How will it play out into our investment approach:
1. Worst case scenario: USA is brought to the corner, depression is looming, elections are falsified, Iran is nuked and war with Russia started for resources. I do not know what to do or even how to live in such situation.
2. Goldilocks scenario: new way of building wealth is found. Make money and take profits; losses will be taken by the crowd - tax payers and they are happy to do it and even asking for more. USD is rallying further, markets are rallying, housing overnight is 30% up. I will write a book "You can do it too", get famous and will make my fortune by selling it.
3. "Positive scenario". FIAT currencies are chosen victims. Bail out is taking out the strain from the financial markets, foreclosures are managed by reducing rates and extending maturity. European agents are using the same medicine - inflation is a world wide normal cause of things. Rates are cut world wide to jump start the economy, government debt is substituting the debt of "falling agents" real rates are negative and all currencies are depreciating against real assets. New credit will make its way into the economy, but not into absurdly priced assets like standard housing or modern paintings, money will chase real resources and go into infrastructure which will make possible to build a new wealth. Gold and Silver will become more and more carrying its monetary function of value preservation, they will appreciate against all FIAT currencies, then will be mania stage with its following collapse. Trust is shaken about "last reserve of confidence" of USA, globalisation as a form of securing global resources market in exchange for Coca-Cola and Bubble Gum is finished, world is becoming more connected and fragmented at the same time. West has accepted the End of Empire stage, its last Prime resource - Military Machine is taken out of political and very costly equation. USA has concentrated on internal problems, new powers are rising, multipolar world is established with "fair" price for diminishing resources, which are rising in their value with rising demand from growing population. Nothing will be perfect as usual: it will put more strains on Supply side. Quality assets in a stable politically situations will be in the big demand. USA Markets will be in a range bound mood between greed, new credit chasing new opportunities and returning reality of hangover with derivative losses making its way throughout the system. One of the complications: WEST will have to reduce its quality of life style under the burden of debt service at least for a while in return for stability. EAST will be catching up with WEST in a new found consumerism happiness.
Deflationary camouflage has made its task: buyers in the commodities and PGM are scared, speculators are ruined, hedge funds are shutting down with fire sell now.
Time is to buy real assets with the best value, best management and best positions to benefit from recent historical event.
Those which are on the radar screens and will benefit first like Silver Wheaton SLW, Silver Standard SSRI, Royal Gold RGLD, Yamana Gold AUY.
Risky plays where fortunes could be made are in Juniors.
I am not along this time for sure: clever money are already all over the story and even Used to Be Smart (UBS) guys are making interesting observations.
Back at UBS the Bank states that it has seen "unprecedented" gold demand from India, from European consumers and from other Asian clients, that demand is very strong in Turkey and the Middle East and that it should pick up in Italy as of early September as the holiday season draws to a close. UBS is not alone in seeing this interest, with some Indian jewellers having to turn away clients and, with the Wedding and Festival seasons imminent, demand is expected to remain robust for the next few weeks. Diwali (the Festival of Lights, which is a very important Hindu Festival, the largest gift-giving and shopping festival in India and most popular for gold purchases, falls this year on 28th October."