(next postings at approx. 9:30pm EDT today)

Covert Operations Under Way

In The Global Currency War?

In the latest Amphora Report, John Butler points out how recently Japan, Switzerland & New Zealand have openly intervened to weaken their currencies & several other countries have expressed a desire for some degree of currency weakness .. Butler examines the evidence of where covert intervention may possibly be taking place, perhaps in some cases where you would least expect it .. "There might indeed be an incentive at present for covert operations of some sort to weaken currencies without other countries noticing .. If the currency wars continue to escalate as they have of late, it seems reasonable to expect that covert interventions will grow in size, scope and frequency. As it is impossible for all countries to devalue against all others, however, this just raises the stakes in what is, at best, a zero-sum game. At worst, as countries begin to accuse one another of covert currency manipulation, the currency wars will morph into damaging trade wars with tariffs, taxes, quotas, regulations and all manner of restrictive trade practices that, collectively, could slam the brakes on what little global economic momentum remains." .. suggests the U.S. may consider employing its vast gold reserves in covert currency intervention operations in a desperate attempt to support the dollar because its goal of suppressing interest rates is being done through dollar-weakening money printing programs.

LINK HERE to download the latest report in PDF

Enrich (Not Beggar) Thy Neighbor

In The New Great Depression

Max Keiser interviews Jim Rickards* on why we don't need to worry about a recession - because we're in a depression!  .. discussion on Federal Reserve Chairman Ben Bernanke's, plan to not Beggar Thy Neighbor, but Enrich They Neighbor by jumping out of the printing plane together with simultaneous devaluations .. on gold, Keiser & Rickards suggest maybe it's the Chinese manipulating the price of gold, not the Federal Reserve? .. about 12 minutes

Currency Wars Intensifying

Yra Harris relates how the Swiss central bank is thinking about going to a formal negative interest rate policy & upping the floor on its 1.20 EUR/CHF currency peg to the euro, in an effort to help the Swiss economy .. Harris goes on to point out an op-ed essay by Chinese Professor David Li in the Financial Times complaining on Japan's new Abenomics currency-weakening policies - Li warns there could be retaliation by China against these policies through currency intervention or trade restrictions & says "Yen is a larger issue than whether North Korea launches a nuclear missile." .. Harris comments: "This is something to pay close attention to for an op-ed of this nature in an important global newspaper could not appear without the approval of the Chinese authorities. The Chinese are upset by the Japanese monetary policy and its global impact. This is the exact opposite response from Chairman Bernanke, who told Congress that the current Japanese policy was domestically oriented and the fallout would help the entire global economy. Again, no currency war here. I wonder if the FED and the Chinese are working from the same economic models? Hey Ben, better hope that the faithless begin to believe or the world economy will be brought to its knees."

LINK HERE to the commentary

Tapering?

The Federal Reserve Is Far More Likely To Do
Papering

"The Federal Reserve won't taper. 

They will paper. Rely on it."

- Jim Rickards*

16 Investing Rules To

Help Make You A Better Trader

From Dennis Gartman, courtesy of The Business Insider:

1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position… not ever, not never! Adding to losing positions is trading’s carcinogen; it is trading’s driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This is Not a Business of Buying Low and Selling High: It is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it, however, and fewer still embrace it.

6. “Markets Can Remain lllogical Far Longer Than You or I Can Remain Solvent.” These are Keynes’ words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break the most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In “good times,” even errors turn to profits; in “bad times,” the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we’ve known have the simplest methods of trading. There is a correlation here!

11. In Trading / Investing, An Understanding of Mass Psychology is Often More Important Than an Understanding of Economics: Simply put, “When they are cryin’, you should be buyin’!” And “when they are yellin’, you should be sellin’!”

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow… usually hard upon and always with detrimental affect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades. The older we get, the more small losses we take each year… and our profits grow accordingly.

15. Do More of That Which is Working and Less of That Which is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a “secret” to trading (and of life), this is it.

16. All Rules Are Meant to be Broken… But only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.

link here to the reference

Central Banks Should Be Manipulating Gold Higher, Not Lower

"There are many theories why the price went down. Simply put, there were more sellers than buyers. Now, of course, a lot of people have all kinds of theories that people manipulate the market down and so forth. That might be the case. I don’t have a clue .. It may be worthwhile to analyze why someone has an interest to manipulate the price of gold down .. Why — and I never overestimate the intelligence of western central bankers — why would someone in the west want to suppress the price and enable the Asian central bankers to buy gold at the depressed price? .. Central bankers have an interest to push the price up because they own most of the gold."

- Dr. Marc Faber*

link here to the reference

Rick Rule – 10 Questions For

Precious Metals Investors

Sprott's Rick Rule suggests investors in precious metals consider answering the below questions to check whether the drivers of the precious metals market have changed or not:

1. Is the financial crisis in the Western world over?

2. Have the G20 countries balanced their budget?

3. Did the commercial banks manage to become solvent?

4. Are interest rates positive or negative?

5. Is a global competitive devaluation to increase exports still ongoing?

6. Is the European periphery still financially challenged?

7. Do the Asian countries still have a cultural affinity with precious metals?

8. Which are the US budgetary issues and solutions?

9. Are the derivatives from large banks still a problem for economies and client portfolio’s?

10. Can liquidity solve the issue of insolvency?

Rick Rule's answers to the above questions currently suggests the precious metals market has remained unchanged - the set of circumstances that drove gold to $1900 and silver to $49 have not changed; only the perception of the facts has changed. From that point of view the most acceptable conclusion is that we are not at the end of the bull market .. likely that we are in a cyclical decline in a secular bull market.

LINK HERE to the essay

 

Is Gold Repeating

The Mid 1970s Behavior?

link here to the article

click on chart above to enlarge

 

Courtesy of Mike Luckovich

click to enlarge

Full Blown Japan Crisis Ahead

"They will have a bond crisis in the next couple of years. A bond crisis doesn't mean spreads widening. It means they lose control of rates and their currency."

- Kyle Bass*

link here to the reference

Deja Vu on the Hill: 

Wall Street Lobbyists 

Roll Back Finance Reform, Again

Rolling Stone's Matt Taibbi sees an annual tradition forming - spring rolls around, while nobody is looking, Wall Street attacks Washington & manages to take out any teeth from the government's financial regulatory head .. In the last 2 weeks, 2 major developments - a wave of deregulatory bills that snuck through the House with surprisingly bipartisan support, & a series of regulatory decisions by the Commodity Futures Trading Commission that will seriously weaken the already-weak Dodd-Frank reform legislation, particularly with regard to derivatives trades .. "This is the key to understanding how financial lobbyists succeed in getting what it wants on the regulatory front: They never stop. It's not a war of ideas, it's a war of resources. You march up the Hill with some crazy idea about overturning a bill prohibiting bailouts of companies that engage in risky derivative trades, you get knocked down, and you march up again, then you march up again, and again .. With each successive attempt, you peel off a few more Committee members in the House, slowly but surely weakening resolve. And while you're attacking on the legislative front, you also file a series of lawsuits that tie up the process by targeting reforms in court, and then you also send armies of lobbyists to sit in the laps of regulators during the rule-making process, so that key new laws (like the Volcker rule, designed to separate risky trading from federally-insured depository banking) are either written in reams of industry-friendly language, or delayed altogether."

LINK HERE to the essay

Why Sprott Sold Some Silver

To Buy Silver & 

Gold Mining Stocks

Sprott's Maria Smirnova understands the power of leverage  - she has seen the big impact even a small increase in the price of silver can have on silver mining companies .. Eric Sprott* believes silver stocks will outperform the metal in the next rally .. Smirnova: "We believe in the equities—for any commodity—for several reasons. Equities represent a leverage play on the underlying commodity. To use a simple example: Assume Company X can earn $5 when the silver price is $25/ounce ($25/oz). If the silver price increases 20% to $30, that extra $5 goes directly to the bottom line. This doubles the company's profits from $5 to $10. The silver price increases 20%; the profits rise nearly 100%—that is what I call leverage. In addition, mining companies benefit from production growth through exploration or acquisition. We look for companies that can find millions of ounces of silver or gold."

LINK HERE to the interview transcript

Gold vs. Dollar

"Ten years from now gold will still be an asset while who knows whether the dollar will still be around."

- Richard Russell*

courtesy of BMG Bullion

Where are the Bubbles?

Pragmatic Capitalism presents a list from UBS on where the bubbles might be .. "We take a restrictive definition of bubble. The asset has:

(1) to be valued beyond the reasonable bounds of fundamentals and

(2) could correct rapidly.

This leaves us with only five candidates.

(1) Risk free rates: Treasuries, bunds, gilts and JGBs

(2) Credit, particularly in Europe

(3) Real estate in Asia

(4) EM stock markets: Specifically: Indonesia, the Philippines and Thailand. We would also add Mexico on the grounds that it is expensive, illiquid and of 28 stocks that UBS covers in the region only 5 have Buy ratings.

(5) Australian banks."

link here to the reference