Looks like our benevolent handlers in Congress just reached a budget accord and by the looks of it, they've kicked the can down the road once again. How will the stock market, currencies, and metals react tomorrow? Looks like the US dollar right now is hovering below 80 on the currency index. If it sags below 78 in the coming days, the metals should enjoy an upward ride. Meanwhile, silver and gold are showing signs of weakness...but that could just be a momentary fluke.
I'm hoping for another day in the green for EXK. We might be seeing signs of a "trend".....upwards. Lord only knows EXK is grossly undervalued below $4/share. GLTA
But News???? Just how many people buy that snake oil sold by GS? I like today's rise in metal prices but we have painfully learned over the last couple of years that one day does not make a trend. But who knows? Maybe today was the start of something good!
Fed Reserve governor Bullard comes up with a wonderful idea, start out with a "small" taper to acknowledge the recent improvement in unemployment rate (even though total number of workers in workforce has gone down 55,000 jobs since unemployment rate was recognized to be 7.8%).
"Fed could do 'small' QE3 taper to recognize job gains: Bullard" Yahoo Finance
Some Fed watchers have suggested the Fed injects as much as $110 billion per month of QE. Mainstream press always refers to the $85 billion "official" figure. So just what will be considered a "small" tapering? Perhaps they could reduce the free fiat creation by $1 million per month which would reduce the total monthly QE to $84.99 billion. Then they could wait a few months and see how the "small" reduction impacts the economy.
What a joke! If the Fed reduces purchases of U.S. treasuries, who will come into to replace the Fed as purchasers of a declining asset with virtually no return on investment? The Fed could care less about returns on U.S. bonds. Yeah....we'll see a meaningful taper in the near future......NOT!
I still have to ask. How much longer can an unbacked fiat system last where the central bank injects an annual $trillion of additional fiat into the system and the country continues to plow itself under in unpayable debt creation? It is just amazing to me that gold and silver have languished during the last 30 months while the Fed Reserve engages in the grandest monetary expansion experiment in the history of the earth. Silver and gold will have their day.....but not today!
Hey, News! Aren't government workers (federal and state) one of the largest classes of workers? And, of course, the rest of us pay their salaries and retirement benefits.....which are much less generous than all those WalMart employees.
Mainman! I rely on the historical fact which is that there has never been an unbacked fiat currency in history that has remained viable and not been flushed down the toilet. But we face the dilemma that irrational valuations can go on a lot longer than prudent investors can last (at least the saying goes something like that).
When the latest QE started up with a Fed announcement in late 2012 of a massive launch of more stimulus, I suspected PM's would gather steam and launch higher. Surprisingly to me, this never happened. $85 billion per month injections of free fiat currency into the marketplace garnered no upward momentum in PM's. I still wonder why!
But, perhaps I am in your camp. I prefer to go down swinging. When things do not make sense, why follow the herd going over the cliff. This fiat debacle just doesn't make sense to me and fundamentals will eventually catch up. And then you have fiscal policy, or lack thereof. And you have demographics of 10,000 baby boomers a year hopping on the Medicare bandwagon that is $88 trillion underfunded plus they draw on the underfunded social security system. How long can this merry-go-round continue to play out? My concern is that it may last another couple of years before the inevitable end game occurs. Because the verbal abuse from family is nearly intolerable. The family fails to perceive any problems with the current situation.
In the meantime, I bite my lip when talking to family about the wisdom of selling out PM investments and buying real estate, etc. I've lost my credibility and they refuse to listen.....for now! GLTU
General market is going up on both good and bad news on the economy. PM stocks go down on just about any news. And today was no different as the stock market shrugged off NFP numbers which suggest a taper may come sooner than later.
The Federal Reserve's balance sheet now includes over 1/3 of all outstanding treasury debt and, of course, the total rises each month with $45 billion of treasury purchases. But the Fed doesn't charge any interest on these treasury bonds.
" The Fed’s primary source of income is interest earned on the U.S. Treasury securities it holds; after covering expenses, the Fed distributes any profit back to the U.S. Treasury. For more information on the Fed’s structure, see the September 2003 Dr. Econ"
Since the U.S. never pays back any of it's debt but merely rolls it over every time it comes due, why in the world would the government encourage the Fed to start tapering. The government needs this free source of credit (which actually means "free cash") The interest expense on the country's massive debt load is rapidly declining month after month with the Fed continuously monetizing U.S. debt. Consequently, rising inflation which usually stimulates rising interest rates should not worry the government as it gets a free pass on paying any interest to the Fed.
I think the chemistry between the government and the Fed has reached nirvana. If they were smart, they would step on the gas pedal and increase the amount of QE rather than slow it down (taper). Just imagine! When the Fed owns all the U.S. treasury debt, the country could eliminate the "unnecessary" interest expense on this debt which currently stands at an artificially low level of approximately $340 billion. And just like that....poof!....the government can spend that $340 billion elsewhere.
QE to infinity! What's wrong with this picture? Borrowing for free with no need to pay back is as close to free money as it gets. Or should I say free fiat? Money for nothin'...kicks for free!
The Weimar Republic enjoyed the same benefits of free fiat to pay their debts as well....at least for awhile.
Got gold? Got silver? Got EXK?
I'm also waiting for the price of silver to rise. I wonder which will arrive first!
2 years of depressed metal prices and no relief in sight. King World News, James Sinclair, and various other blogging sites keeping telling us that relief, as in a significant rise in metal prices, is close at hand. And that is exactly what EXK needs to enjoy. But many of us long term die hard PM investors are suffering not only declines in portfolio values, but also we endure the ridicule of family and friends who fail to understand the consequences of blatant money printing by central banks. It's like Chinese water torture listening to family members who correctly point out that abandoning of metal investments and plunging into SPX over the last 2 years would have created significant increase in wealth...rather than a massive decline. And.....they are correct!
So I continue to wait for the eventual collapse of the dollar and possibly the entire economy. Maybe it will happen this decade. And my portfolio is down about 50% from it's high while the SPX has returned 200% gains from it's 666 low which, of course, I have missed out on. Ouch. Somebody make the pain go away! LOL
I just got back from a trip to SE Asia. Bangkok has an incredible number of gold retail shops. Amazing. Certainly there is more interest in silver and gold in those countries than the U.S.
Most perplexing is the suggestion that Bitcoins will supplant gold as an alternative currency (to fiat paper). Impossible! The digital world of bitcoins is not only opaque (as in non-transparent) but obviously open to blatant manipulation.
So my question is....do I buy more physical at the current low prices? Very tempting. Or....just pay off bills with free cash such as the mortgage? GLTA
The phony statistics are screwing the precious metals......again. So EXK and other miners are pushed down deeper into the shadows. Ugh! This is getting ridiculous!
"Whopping 932,000 Americans Drop Out Of Labor Force In October. Participation Rate Drops To Fresh 35 Year Low. But more importantly, the number of people not in the labor force exploded by nearly 1 million, or 932,000 to be exact, in just the month of October, to a record 91.5 million Americans! This was the third highest monthly increase in people falling out of the labor force in US history. At this pace the people out of the labor force will surpass the working Americans in about 4 years." (From ZeroHedge)
So......everything looks just fine and the Fed can now start tapering like there is no tomorrow!
P.S. With so many people dropping out of the workforce and new jobs increasing (manipulated) beyond anyone's expectations, why did the unemployment rate rise? Some government minion dropped the ball on this one as the math would tell you a rise in unemployment would be impossible!
I suggest the new Mexican tax has pretty much been digested into EXK's stock price by now. Since I am convinced the silver price is close to an inflection point and will head higher and that EXK is a very successful miner in it's environment, I bought back half the shares I sold a few days back.
.....like anybody cares about my idiotic trading.... Ha ha. GLTA
Jumping hyenas! The dollar is soaring higher!!!
With U.S. unemployment rate expected to reverse trend tomorrow and jump an unusual .2% or more...today the dollar ignores what is coming down the road and celebrates Mario Draghi's surprise rate cut of the Euro. Nothing like the "race to the bottom" in fiat currencies to get FX traders into a trading tizzy.
Oh well. Tomorrow is a new day!
From Matt Taibbi of Rolling Stone:
"Here at home, virtually simultaneous to the Rabobank settlement, Fannie Mae filed a suit against nine banks – including Barclays Plc (BARC), UBS AG (UBSN), Royal Bank of Scotland Plc, Deutsche Bank AG, Credit Suisse Group AG, Bank of America, Citigroup and JPMorgan – for manipulating Libor, claiming that the mortgage-financing behemoth lost over $800 million due to manipulation of the benchmark rate by the banks.
And virtually simultaneous to that, JP Morgan Chase disclosed that it is currently the target of no fewer than eight federal investigations, for activities ranging from possible bribery of foreign officials in Asia to allegations of improper mortgage-bond sales to . . . the Libor mess. "The scope and breadth of risky practices at JPMorgan are mind-boggling," Mark Williams, a former Federal Reserve bank examiner, told Bloomberg.
The point of all of this is that any thought that the potential Chase settlement might begin a period of regulatory healing for it and other Wall Street banks appears to be wildly mistaken. If anything, the scope of potential liability for all the major banks, particularly in these market-rigging furors, appears to be growing in all directions.
One gets the feeling that governments in all the major Western democracies would like to sweep these manipulation scandals under the rug. The only problem is that the scale of the misdeeds in these various markets is so enormous that even the most half-assed attempt at regulation will cause a million-car pileup.
There's simply no way to do a damage calculation that won't wipe out the entire finance sector when you're talking about pervasive, ongoing manipulation of $5-trillion-a-day markets. That's the problem – there's no way to do a slap on the wrist in these cases. If they're guilty, they're done."
Market only "expects" October job numbers to come in at a dismal 100,000. But what happens if it comes in much lower? Unemployment rate is now forecasted to rise to 7.4%. With so much QE and interest rate manipulation by the Fed in this 5th year of "recovery", it appears the Fed will not be able to ease up on the gas pedal anytime soon. Full steam ahead......QE to infinity!
Meanwhile, silver and gold's expected price rise lurks in the shadows. PM's will have their day in the sun very soon!
But there's always a twist to this story...and that is how much our "transparent" government manipulates the data. Thank the lord there is a "birth/death rate" to consider as well as those nasty "seasonal adjustments." The BLS will be very busy in it's factory of redacted statistics.....(just pull out those statistics that hold back those rosy projections/picture).
Friday could be an interesting day! If unemployment actually increases to 7.4%, it might just spark the new trajectory upwards for silver and gold. I'm expecting a catalyst for metal prices very soon and this might just be it. We shall have to wait and see!
Correctomundo, Mainman. Silver and gold will eventually rise above previous highs....but when will this happen? There is an outstanding (must read) article on ZeroHedge website posted yesterday by Mike Maloney titled "Mike Maloney's Top 10 Reasons To Buy Gold & Silver". It will remove any doubts about holding onto your silver and gold investments.
And when will the PM's rise dramatically? Hard to say....but definitely within the next couple of years....if not the next couple of months.
What is truly amazing is that EXK just announced stellar earnings, silver is currently up a nickel, and EXK share price is now in the red. Does this make any sense whatsoever????
EXK should be saluted for such an outstanding quarter in light of depressed metal prices BUT how would the new Mexican taxes impact EXK's results? Well....you would have to subtract a little more than $2.5 million from net earnings (and hand it over to those wonderful government officials to distribute to....whomever....other than EXK shareholders). Here how that is calculated from today's earnings release:
New 7.5% tax on EBITDA ($29.3 million) equals $2.2 million
New 1/2% tax on gross revenue ($67.8 million) equals $340,000
Add them together and you get $2.5 million plus. Not too shabby. EXK still generated decent numbers even after figuring out the impact of the new tax (on future earnings, of course). Nevertheless, this new tax would have reduced net earnings by 20.3% if they had been imposed on this quarter's results. Now...that sounds like a more significant impact! Just how do you spin the numbers?
Has this 20% hit on future earnings been fully discounted into the price of EXK....yet? I dunno.
P.S. (Cheerleading effort) I'm still banking on EXK rising above $5/sh before mid-January primarily due to my expectations of rising silver prices before then. Mainman and I need to make some moolah on our Jan 14 calls! Ha ha
However, PM prices will likely increase as marginal producers go out of business thus reducing new supplies of metals. Reduced supplies and purportedly increasing demand for physical (China's huge imports as well as the U.S. Mint unable to supply "Eagles" to meet demand in the U.S.) should drive prices much higher. Got physical?
The two silver "darlings" in my PM investment portfolio, EXK and AG, unfortunately operate in Mexico.
Nevada will likely change their state constitution in 2015 to allow for increased mining taxes. It looks like it is coming! From Nevada's largest circulated newspaper:
"Leslie is optimistic that the mining tax will pass and two-thirds of legislators will raise mining taxes in 2015.
“Clark County voters want the mining tax raised,” Leslie said. “They wouldn’t dare not increase these taxes. The average person in the state cares about and understands the issue. The mining industry is tearing up our land and taking nonrenewable resources.”
Nevada Mining Association President Tim Crowley said the industry has not decided what steps it might take to induce voters to kill the tax resolution.
He did note, however, that gold prices are falling, a trend that would affect the Legislature’s ability to extract more taxes. Gold sold for $1,388 an ounce Friday, down $318 from six months ago.
“Nevada mining operations, like any business, have to adjust to changes in demand as well as increasing operating costs,” Crowley said. “While challenging, all mines are addressing the recent drop in gold value with the utmost seriousness and appropriately adjusting their business models.”