18 Feb 2013

Gold Never Really Made New Highs Yet


By Martin Armstrong: The high on gold on the AM London Fixing was $850 back in 1980. However, when we index this to the government CPI adjusting it for inflation, the 1980 high corresponds to a price of $2,305.18 in 2011 dollars. This is a far more important number than all the nonsense of fiat and hyperinflation. Gold in “real” terms has NOT exceeded the 1980 high yet even today. A 911 Porsche in 1980 was only about $50,000. So you are not there yet. For gold to back off, shake the weak players out of the trees, is a necessary and healthy thing that MUST take place to rejuvenate the market for the next blast to REAL highs. Even when there was a gold standard, inflation rises and falls and then gold moves opposite declining with inflation as assets rise against gold, and it rises in value during deflation as the dollar does today. There is NEVER a period when anything is ever fixed forever. Even behind the Berlin Wall there was a black market for West Germany marks and dollars.
This is the problem most people have. When I say there is sizable resistance in the 2300 level technically, this is actually supported by the real fundamental view from an inflationary perspective. Likewise, looking at gold only in dollars FAILS to grasp its true trend. Gold may decline as the dollar rises currently, but is it declining in terms of yen and euro? Everyone acts according to their own currency. If I recommend buying something in Mexico because it will double in peso terms but omit that the peso will decline by 75%, in dollars you will lose your shirt.

Saving America in three steps + Points to remember in the gun control debate

By Locust: America is trapped in insanity by law, just as I’ve been saying for seven years.
For that long I have repeatedly screamed and ranted that Public Law 107-40 (also known as the AUMF) was the bane of our existence, that we are trapped in a DAFT and insane perpetual war, and that we should draft California Congresswoman Barbara Lee as the People’s Candidate for President.
Here is what she recently said:
Rep. Barbara Lee (CA),
The administration is using the Authorization for the Use of Military Force passed by the House on Sept. 14, 2001, as one of the justifications for the lethal use of drones. As the only member of Congress who voted against this blank check, I believe now more than ever that we must repeal it.
And here is what I say and have been saying for seven years now:
We could already be out of this mess, but you haven’t done what is necessary.
I will put out these three steps yet again, and hope beyond hope that somehow this time they will take hold, and we can regain our peace and sanity.
1. Stop ignoring Public Law 107-40. We are losing our freedom because you ignore this evil and malicious law that granted unlimited and unchecked power to the Presidency. Barbara Lee is exactly right when she calls for the repeal of this egregious legislation, and that’s why I have repetitiously called for that repeal for, what was it, oh yeah seven long frickin’ years.
We must end Public Law 107-40 before it ends us. We are running out of time.

Horsemeat, Huntshit, and vice-versa - The Slog

There’s a horse’s ass 
in the health job
You’ll have to excuse me if the following observations are already played out in Blighty. I still don’t have internet access – I mean, it is only eight days when all’s said and done – here in deepest rural France, and thus I’m not party to any wider debate going on about the threats to public health in Britain. But the two main UK news items on this subject last week mark out very clearly just how little reality is applied to mainstream news coverage these days in the land of my birth.
I’m referring (if you haven’t already guessed) to How Horsemeat Horror Happened, and Health Hero Hunt goes NHS-Hitting. I have been listening to Radio Four digitally (via the telly) most days, searching in vain for even a scintilla of insight about what these news stories are really about, but shafts of light were there none. However, as it happens, on this occasion I do have some solid history and experience to bring to the party.
The “Oh-my-God-Jade’s-been-scoffing-Dobbin” episode has shown the British at their daftest and most gullible, I’m afraid. The media have reflected this in seeming unable to make their minds up about whether this is a story about eating poor dear horsey, or whether there really is a public health issue. The truth is that it isn’t about either of those things, it is a story about the traditional, innate criminality of the wholesale meat trade.
As a national culture, we attach the standard anthropomorphic values to horses because – as with cats and dogs – we have a sporting and quasi-domestic relationship with them. Having thus awarded them honorary human status, we believe we must not eat them, because that would be cannibalism. Thus all the French, Koreans and Chinese are cannibals, QED.

Disinfo Wars + UK vs USA Crime

Prince Harry scandals

UK BANNED Press TV: Prince harry and Scandals surrounding him. In his latest pose after coming back from Afghanistan mission he described killing Afghans as computer game. Human rights: Churchill ordered use of chemical weapons in Iraq 100 years ago. International: Britain and EU dilemma. How the British parties reacted to Cameron's latest remarks on EU. Some are wary of further European Union (EU) integration while some others even support withdrawal from the 27-nation bloc. Society: Britain's intelligence agencies are planning to install black box-style surveillance devices in the country's telecommunications network in order to monitor the UK public's online activity. Source

The Japanese Yen Is Still 80% Over-Valued

Tyler Durden's picture In the 40 years or so since the end of the Bretton Woods system, we have seen competitive devaluations occur again and again. However as SocGen notes, it appears Japan just keeps coming out on the losing side. Based on Real Effective Exchange Rates (REER), Japan's currency is 80% stronger now than in 1971 while the US (and South Korea interestingly) are about 40% weaker.

European Bank CEO Admits: "The Whole Thing Is Doomed"

Tyler Durden's picture As the European parliament attempts to create a budget and Draghi repeats how the temporary lull in European growth is merely a prelude to a growth renaissance in the second half of the year (not to be confused with the verbatim lie rehashed by European dignitaries in 2012, 2011, 2010 and 2009), it appears a few leaks of truthiness are seeing daylight in the disunion. In a shockingly frank interview, the CEO of Saxo Bank describes the Euro's recent rally as illusory and that "the whole thing is doomed," as the continent is not supported by a fiscal union. As Bloomberg reports, Lars Seier Christensen says he would be a "seller of the EUR at anything near 1.40," noting that "right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all." Confirming that the only thing holding the farce together is political not economic efforts, he sums the situation up perfectly: "people have been dramatically underestimating the problems."

Via Bloomberg,

Lars Seier Christensen, co-chief executive officer of Danish bank Saxo Bank A/S, said the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.
The whole thing is doomed,” Christensen said yesterday in an interview at the bank’s Dubai office. Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.”

Monetary Revolution Is Devouring Its Children - Jim Grant On Global Central Bank Currency Devaluation

Fukushima kids have skyrocketing number of thyroid abnormalities - report

 A recent report into the Fukushima Nuclear disaster of 2011 has shown that more than forty percent of children have thyroid abnormalities. Officials in protective gear check for signs of radiation on children who are from the evacuation area near the Fukushima Daini nuclear plant in Koriyama, March 13, 2011.(Reuters / Kim Kyung-Hoon) ­RT: The Tenth Report of the Fukushima Prefecture Health Management Survey, released earlier this week, with data up to January 21, 2013, revealed that 44.2 percent of 94,975 children sampled had thyroid ultrasound abnormalities. The number of abnormalities has also been increasing over time as well as the proportion of children with nodules equal to and larger than 5.1 mm and any size cysts have increased.
The report has also revealed that 10 of 186 eligible are suspected of having thyroid cancer as a result of the exposed radiation.

On Wednesday, the Fukushima Prefectural Government announced that two people who were teenagers at the time of the Fukushima No. 1 meltdown have been diagnosed with thyroid cancer, bringing the total number of cases officially confirmed by authorities to three. All have undergone surgery and are now recovering.
Around 360,000 youths at the time of the disaster have to be repeatedly checked to see if they have been affected by the radiation.

The Western Standard of Living is Over + Americans Prepare for Civil Unrest with Record Ammo Sales

Alex Jones examines how payroll tax increases and other measures are being used by design to contract the economy and implode the western standard of living, under Agenda 21. 1992 Rio conference head Maurice Strong made this clear when he stated, "Isn't the only hope for this planet that the industrialized civilization collapse? Isn't it our responsibility to bring that about?"

There Is A Winner In The Currency War

Tyler Durden's picture With the G-20 (and G-7) concluding with what appears to be a slap on the wrist and a wink-and-a-nod to Japan, it seems the game of competitive devaluation will continue. Much pixel and ink has been spilled the 'potential' winners and losers in such an evolving game, but as Bloomberg notes, there has been one winner in the last 10 years each time the world has fretted over "currency wars". As fear (and actuality) of currency wars flares, the USD has borne the brunt of the buying. From 2004's JPYtervention to Mantega's 2010 comments and each time in between, when competitive devaluation is on the world's lips, then the USD is implicitly bid as the currency du jour is offered to any and every willing carry trade riderthere is. The trouble is - for the lowly US investor - each time the USD is bid, so the US equity market has hit an FX-translated earnings hump and fallen back. So while talking heads will exaggerate the nominal performance of Japanese and British equity markets as their currencies free-fall, perhaps the US investor should be careful what they wish for.
As the world's reserve currency, the effect of a devaluation of a non-reserve currency (i.e. everything else) is implicitly to put upward buying pressure on the USD...

The Pareto Economy - Charles Hugh Smith

The Pareto distribution suggests that costs could be cut by 80% across the entire economy.
Economist Vilfredo Pareto's (1848 - 1923) data-driven discovery that 80% of the land in Italy was owned by 20% of the population led to the Pareto principle, known as the 80/20 rule. Research has turned up an astonishing range of natural and social examples of the 80/20 rule: fixing 20% of software bugs eliminates 80% of the tech support calls, 20% of the customers are responsible for 80% of the complaints, and so on.
The Pareto distribution is not a Newtonian law of precise prediction, it is a power law probability distribution: it projects probabilities and ranges, not exact numbers. For example, the top 25% of U.S. wage earners pay 87% of the Federal income taxes. The point is not precision but the basic distribution.
The 80/20 rule can be further reduced (80% of 80 is 64 and 20% of 20 is 4) to a 64/4 rule: the 4% "vital few" have outsized influence on the "trivial many" 64%. We can see the rough outlines of this distribution in income and taxes: The top 1% of taxpayers reported almost 17% of all taxable income and paid 37% of all income taxes; the top 5% reported 32% of all income and paid 59% of the taxes, and the top 10% earned 43% of the income and paid 70% of the taxes.
As I have often noted, most recently in The Fiscal Cliff's Structural Endgame (December 28, 2012), and Why the Middle Class Is Doomed (April 17, 2012), roughly 70% of all financial wealth is held by the top 5%. That is remarkably close to the 4%/64% distribution we would expect.
Can 4% of Homeowners Sink the Entire Market? (February 21, 2007) Answer: yes, 4% of mortgages defaulting collapsed the global housing bubble.