“Depart from me, you accursed. For I was hungry and you gave me no food, thirsty and you gave me no drink, a stranger and you did not welcome me, naked and you did not clothe me, sick and in prison and you did not comfort me.' They answer, 'Lord, when was it that we saw you hungry or thirsty or a stranger or naked or sick or in prison, and did not care for you?' He answered, 'Truly I tell you, as you did not do it to one of the least of these, you did not do it for me.’”
Matthew 25:40-46
Gold is moving within a fairly well defined uptrending channel. It is at a minor resistance point, and has more room to the upside.
Oil is approching an oversold condition and the bottom of its trend channel.
The recent 'recovery' in the SP 500 deflated by gold is instructive. This should help those who see no recovery in the real economy, but were confused by the amazing spike in the US equity market. It was a monetary phenomenon.
Rickards has a target of $2,000 for gold in the near term, and $5,000 for the intermediate term.
ECB has capitulated on the monetization of debt and joined the Fed, but it is hard to see how this will really solve the problem.
Europeans are running to buy physical bullion, rather than paper pledges in a kind of a 'run on the bank' over fears of the future of the Euro.
The subject of the meeting in Zurich yesterday was for the G20 to discuss the composition and role of SDR's as a reserve currency.
Triffin's dilemma: need for a 'liquidity pump' to drive world trade, someone who is able to sustain deficits without going broke. Now that the US is going broke, a new source of liquidity has to be found.
Rickard views SDR's as pure fiat on a pro rata basis. He does not see any accountability on the part of the IMF or any sort of external control.
While I see some of his points, I think Jim is confused about the notion that the SDR is a 'basket of currencies,' that already exist, unless they are changing the basis of the SDR to debt of their own issuance. I was not at all clear on this, and I would be a little surprised if that is the case.
What the IMF has been proposing with the support of the BRIC countries, is to put the SDR forward as a 'clearing mechanism' for international trade. They are also actively lobbying for a recomposition of the SDR to shift some of the monetary authority from the west to the east.
If the SDR is a 'basket of currencies,' each with their own debt balance sheet, and the SDR is not intended to replace or supplant domestic currencies, and especially if the SDR contains some element of gold and silver, then I view it as a natural development from the Bretton Woods system, and the failure of the US Federal Reserve to responsibly manage its currency 'like it was a gold standard.'
The IMF is attempting to replace the US dollar as the world's reserve currency with a portfolio of major fiat currencies, with the notion that the result will be more stable, more diversely based. Again, an element of gold and silver would further strengthen it.
I could be mistaken in what the IMF intends. But I have seen nothing to indicate that yet, and I think for now that Jim Rickards is mistaken in the assumptions underlying some of his statements.
IF the IMF decides to create a fiat currency of its own, and call it the SDR, and base it solely on its own balance sheet, with an arbitrary ability to expand and distribute it, then it really is the beginning of a new world order, and a one world government. But for now I do not see that to be the case. I can find no statement on the IMF homepage to this effect.
Why not go directly to a gold and silver standard? The greatest obstacle is that the Anglo American nations, or more properly their central banks and politicians, would not accept it. It would be inimical to their monetary power and financial engineering. The US Federal Reserve will not even agree to be audited by its own government! And do you think they would agree to the constraint of an external gold standard? This is a highly political as well as economic topic, and to ignore that is to completely misunderstand what is happening.
An evolutionary path to something less arbitrary than the dollar, but not quite as strict as gold, is most likely. This is being driven by China and Russia and the developing countries, and on the other side of the table are the Anglo-American banks, and to a less extent, Europe, after having been whipped into place by assaults on its monetary union.
It is an interesting interview. I only caution that more details need to be given from the IMF on what they are doing before conclusion can be drawn. I have been expecting this for a long time, and it is a development that the BRIC countries have been lobbying to obtain. The Anglo-Americans exert considerable influence over the IMF. This is a classic struggle for power between the old world powers and the developing world.
This is not to say that I am comfortable with the IMF. I have attempted to lay out the parameters to assess what they are doing with respect to a basket and clearing house versus a completely new global currency. Since the US and UK hold inordinate sway over the IMF, we have to be aware of the possibility that the IMF could merely become a much larger successor to the Federal Reserve, and owned and controlled by the Anglo-American banking interests. This is why gold and silver are the ultimate solution, and why the status quo will oppose them with all their power.
His follow on discussion of how hedge funds and financial institutions can attack a nation's currency using derivatives is very worth hearing.
Click here to listen to the Rickards Interview on King World News.
Management does makes a difference.
The Central Fund's offering led by CIBC is allowing the underwriters and others given access to this offering to obtain a windfall, being given the right to purchase additional shares at 14.85.
Presumably this will create a weight holding down the premium to NAV of this fund until they have taken their profits by selling those units which they have obtained at discount prices. Perhaps this is not the case, and the news is misleading. But it would certainly explain the contraction in the premium when gold and silver are hitting new highs.
This looks to me like the habit of using an old, familiar method of obtaining funds that may be more suited to other times and different markets. Old habits die hard, and sometimes even harder when new competition enters the markets and changes are not made with the times.
Since CEF will be in the market buying gold and silver bullion, it drives up prices at the very time it is giving its bank underwriters a discount price on their stock.
Yes I understand the difficulty of selling a large tranche like that in the marketplace. But I would contrast this approach with that of PHYS and Sprott Asset Management, which managed to sell an equally large amount of units and buy bullion while continually providing the benefits to shareholders, and not to the banks with whom they are doing business.
To say I am not impressed by the CEF management would be about right. While I do not doubt they have the bullion they represent, I am disappointed by their method of obtaining the greatest value and consideration for shareholders.
I will flip their shares for a trade, but if I want to buy and hold something besides bullion when the metals are running I think there are better ways to play that trade. Some of the miners have higher beta and a better index to the metal moves. PHYS had been a great play but its premium now is a bit prohibitive for my taste. SLW is da bomb when silver runs but it too can get ahead of itself.
Still, you have to have something to hang onto when gold and silver are on a run like this. There is a huge surge of bullion and coin purchases in Europe because of worries about their currencies. When the currency concerns eventually spread to the dollar, which they almost certainly will, the buying will make what we are seeing now seem like a bump on the charts.
Bloomberg reports that GM Considers Buying back GMAC
Or starting a new unit.
Having its own financing unit will 'increase its profitabiltiy.'
"As a dog returns to his vomit, so a fool doth repeat his folly." Proverbs 26:11
AP
GM wants to re-enter auto financing
Tom Krisher
Tuesday May 11, 2010
DETROIT (AP) -- General Motors Co. executives want their own auto-financing arm so they can offer more competitive lease and loan deals, according to a person briefed on their plans.
The executives want to buy back the auto financing business from the former GMAC Financial Services or start their own operations, said the person, who asked not to be identified because the plans have not been made public.
A top GM executive has told dealers about the plans, the person said.
GM sold a 51 percent stake in GMAC Financial Services in 2006 when it was starved for cash. The new owners, led by private equity firm Cerberus Capital Management LP, ran into trouble in 2008 with bad mortgage loans and had to be bailed out by the federal government, which now owns 56 percent of the company.
Earlier this month, GMAC changed its name to Ally Financial.
GM dealers say that since GMAC is responsible for making its bottom line look good, it is less likely to lose money by offering to finance sweet lease deals or zero-percent financing. A GM-owned auto financing business would be more likely to "take a bullet" for the company to sell more cars and trucks, the person said.
Competitors, such as Ford Motor Co. or Toyota Motor Corp., control their own financing arms.
GM spokesman Tom Wilkinson said Tuesday that the company would not comment on speculation....
