Posted by Wealth Wire
The debt-based monetary system creates an illusion of wealth. It allows for claims on real goods to significantly exceed the actual amount of real goods. You then have a number of people believing they have wealth, since they have claims (pieces of paper or tokens) showing that they have these real assets, whereas, in reality, if everyone was to claim the real goods, there would not be enough to go around.
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Interview With Ted Butler
Ted Butler is one of the better-known silver analysts (and longtime silver bulls) in the world. The founder of Butler Research, a monthly publication focused on precious metals, Butler has been pounding the table on silver since way back when it was trading for $4/ounce.
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By Marc Davis, BNWnews.ca
With potash prices spiking higher in response to surging global foods costs, the world’s most advanced “independent” potash project is in the cross-hairs of an increasing number of deep-pocketed suitors.
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Author: Brian Sylvester
Austerity programmes across Europe, continued debt problems in the US and further political uncertainty all point to a continued uptrend in gold prices, says Brien Lundin. A Gold Report Interview.
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By Michael Brush, MSN Money
Recent dips are giving us another chance to get in on the great gold rush. The factors driving the metal higher -- broken governments and fragile economies -- aren't going away.
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Author: Lawrence Williams
Speaking at GATA's sold-out Gold Rush conference in London, Eric Sprott affirmed his strong views on gold and his even more positive thoughts on silver.
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Edmund Conway
That's right: come Monday morning we will have managed to survive four decades of fiat money – though, given the chaos in markets in recent weeks, it is anyone's guess how much longer it will last.
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By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Silver has always been seen as less precious than gold, but it has certainly proved itself worthy of investors’ attention — and demand for it as a hedge against the world’s financial woes is likely to grow.
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Edmond J. Bugos
After launching the Shanghai Gold Exchange in October 2002, the exchange’s principals announced a three-part plan to liberalize trading: 1) establish a deferred delivery service (as physical transactions are settled pretty much the same day); 2) create gold-related investment products in order to promote domestic investment demand and create liquidity; 3) integrate the exchange into international markets – which includes expanding import/export licenses and allowing foreign entities to become members.
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Author: Amanda Cooper (Reuters)
Analysts believe that gold stocks could well take the upper hand after a long period of underperformance in relation to physical bullion as the flow of cheap money from the U.S. slows
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By The Economist
Striking gold is generally considered a slice of good luck. Owning it, however, is a sign that you fear the worst. Some people buy the yellow stuff because they think it looks pretty, to be sure. But the quintessential gold bug is an investor who expects every form of paper wealth to collapse, along with civilisation itself.
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By Marc Davis, www.BNWnews.ca
Though Nevada’s world-famous gold fields have historically yielded over 150 million gold ounces, they are still proving to be geologically fertile hunting grounds for exploration-minded junior mining companies. Two good examples are Auex Ventures and Fronteer Gold.
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By David Galland, Casey Research
While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.
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Author: Fayen Wong
SHANGHAI (REUTERS) -
London specialist consultancy GFMS reckons Chinese gold imports could exceed 400 tonnes in 2011 with silver, too, expected to exceed domestic supply.
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By William Mbaho, BNWnews.ca
Heightened global demand for vanadium especially from China, is prompting the global steel industry to aggressively seek out new supplies, especially in the U.S. where this 21st century metal is becoming increasingly indispensible. Even U.S. President Obama is championing this metal’s promise for green energy applications.
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Author: Geoff Candy
The yellow metals performance in the face of silver's washout last week was rather impressive and an addition to the factors why UBS expects gold to continue going higher this year.
Gold's performance last week, in the face of a drop of around 30% in the price of silver was rather impressive and, could be an indicator of things to come.
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By Marc Davis, www.BNWnews.ca
The quest to commercialize one of Latin America’s last undeveloped major gold deposits is one major step closer to a prospectively big pay day for its unlikely owner – a small gold explorer named Exeter Resource.
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By Debbie Carlson
Of Kitco News
After a sharp drop in prices this week, the outlook is hazy for precious metals price direction, but some analysts believe the metals could see the slide ending next week, at least for gold.
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Author: Lawrence Williams
Some observers think gold is in a bubble, but silver has been rising far faster. Can this momentum be maintained or is now the time to take at least some profits as the price closes on $50.
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Author: Jan Harvey (Reuters)
Silver rose to its strongest since 1980 and Gold hit five week highs on the back of growing unrest in the Middle East
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By Marc Davis, www.BNWnews.ca
Silver promises to become the next big buzzword among investors in 2011 and beyond, according to one of the investment industry’s most prescient and successful experts on precious metals.
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There are some bizarre things going on in the silver market at the moment, reminiscent of the supply shortages and high premiums witnessed in 2008. For starters, silver is currently in both short-term and long-term backwardation, suggesting there is higher demand for silver NOW than in the future.
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The Economist
Rising commodity prices both reflect and threaten the world’s economic recovery.
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Cheap, Industrial Silver is an illusion
From the beginning of the financial crisis in 2008, contrarian investors began murmuring about getting into gold and short term Treasuries. It was almost a mantra: gold and Treasuries… gold and Treasuries. Something missing?
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The Economist
Commodity prices are surging at a very early stage of the cycle
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By Frank Holmes
Wall Street has been calling gold a bubble since 2005 when it hit $500. Some media naysayers remained negative even as they wrote the headlines proclaiming record highs and saw gold rise almost 30 percent in the past 12 months.
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By Marc Davis, www.BNWnews.ca
The ‘Holy Grail’ of renewable energy – grid scale power storage – appears to be finally within reach. So is the ability to make electric cars far more practical or user-friendly.
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by Egon von Greyerz - Matterhorn AM
We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worth-less.
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The One-handed Economist
The establishment argument against gold comes down to the statement that it is a collectable that earns no yield. Art, rare coins, stamps and gold and silver bullion do not earn a yield. Stocks, bonds and real estate earn yields, so the prudent investor should focus on these assets rather than gold or precious metals.
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With gold well into record territory, investor enthusiasm is boiling over.
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If we continue down the same economic path that we have been following for the last four decades - and there is no indication that we won't even if we wanted to, or could, at this point - it is mathematically inevitable that gold and silver will approach infinity in U.S. dollar terms at some point in the future. Yes, approach infinity!
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Back with a Vengeance
Rising commodity prices both reflect and threaten the world’s economic recovery
The Economist
COMMODITIES are partying like it is 2008. The oil price stands at its highest since October of that year, just shy of $100 per barrel. World food prices—as measured by The Economist’s index—are back at their peak of July 2008. Copper prices, which have jumped by 17% since the start of November, are at an all-time high. The recent gains reflect reduced concern about global economic prospects, helped along by the Federal Reserve, which announced a second dose of quantitative easing in November last year.
The worry is that rampant commodity prices may cause another wobble in the world economy. Higher commodity prices act like a consumption tax, transferring income from households and companies which use the resources to companies and countries that produce them. As the producers tend to save more of their income than the consumers, more expensive commodities bear down on global demand.
The oil price has pushed the world into recession in the past, most obviously in the 1970s. Blame for the recent great recession is typically laid at the door of the financial crisis, but it is often forgotten that America’s economy was shrinking for nearly a year before the collapse of the investment bank Lehman Brothers.
James Hamilton, an academic at the University of California, points the finger at oil. He reckons that the rise in the oil price from early 2007 largely explains the downturn between the end of 2007 and the third quarter of 2008. Households tightened their purse-strings as they found themselves devoting almost 7% of their spending to energy. That share had fallen back to 5.5%, before the latest surge in oil prices began.
Outside America, food has a bigger share than energy in consumers’ shopping baskets—and thus in inflation too (see chart). In developing countries, rising food prices can be a human as well as an economic disaster. In Asia in early 2008 a spike in the price of rice led to widespread unrest and desperate attempts by governments to secure more supplies. In December in India, for example, food prices rose at an annual rate of 14%, and there has been a run on onions, a dietary staple.
As well as taxing consumers, or worse, dearer commodities push up overall inflation, as the latest numbers from the euro area and Britain show. Although textbooks suggest central banks should “look through” a one-off increase in commodity prices, which provides only a temporary boost to inflation, monetary policymakers fret about second-round effects.
With inflation now above the European Central Bank’s comfort zone and almost double the Bank of England’s target, pressure to raise interest rates is growing. So far, these central banks have held back, in view of the big cuts to public spending taking place, sluggish growth and idle resources. Unlike some emerging economies, where rates have been raised, these rich economies are far from overheating. But higher commodity prices may tip the balance of risks, causing policymakers to lose their nerve. Tightening policy would act as a further drag on growth, possibly threatening the recovery.
Some comfort can be taken from the fact that, although some commodity prices are above 2008 levels, inflation rates of commodities are still below what they were then. For instance, agricultural food prices are up 37% on a year ago, whereas in 2008 the rate of increase peaked at 75%. Jonathan Anderson, an economist at UBS, a bank, reckons that global food prices would have to rise by another 50% from current levels for headline food-price inflation to reach the heights of 2008. And he thinks that is unlikely: there is no sign of the massive energy and fertiliser price increases seen in 2008. That is partly because annual oil-price inflation is running at 17%, compared with 100% at its peak in 2008.
But the balance between oil supply and demand is a concern. Whereas recent increases in many food prices reflect temporary supply disruptions (such as droughts and flooding), the rise in the oil price is due to strong demand and stagnating production. Lutz Kilian, at the University of Michigan, suggests that unless energy consumption is reduced or new supplies found a full recovery from the financial crisis will push the oil price back to its highs of mid-2008.
Furthermore, commodity prices are rising at an early stage in the economic cycle. Jeffrey Currie of Goldman Sachs worries that, as American oil demand recovers, it will “bump up against” China, which is consuming 23% more oil than it did in 2007—as well as 63% more copper, 18% more cotton and soybeans and a few more cases of wine too (see next article). With the global recovery fragile and unbalanced, higher commodity prices are the last thing the world needs right now.
from PRINT EDITION | Finance and Economics
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