October 28, 2020 
 Wednesday 
 
 

Forum
Topic:
Gold Enters Major Bull Market

       

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 By bluejay

11/21/2008  10:07AM

Last on gold is $796.90

Got gold?

From Jim Sinclair's website this morning:

Depression #2 Here We Come

Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time's running out. We're already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:


1- America's credit rating may soon be downgraded below AAA

2- Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"

3- Congress has no oversight of $700 billion, and Paulson's Wall Street Trojan Horse

4- King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets

5- Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year

6- AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers

7- American Express joins Goldman, Morgan as bank holding firms, looking for Fed money

8- Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states

9- State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt

10- State, municipal, corporate pensions lost hundreds of billions on derivative swaps

11- Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up

12- Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns

13- Fed also plans to provide billions to $3.6 trillion money-market fund industry

14- Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars

15- Washington manipulating data: War not $600 billion but estimates actually $3 trillion

16- Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs

17- Commodities down, resource exporters and currencies dropping, triggering a global meltdown

18- Big three automakers near bankruptcy; unions, workers, retirees will suffer

19- Corporate bond market, both junk and top-rated, slumps more than 25%

20- Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall

21- Unemployment heading toward 8% plus; more 1930's photos of soup lines

22- Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists

23- China's sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai

24- Despite global recession, U.S. trade deficit continues, now at $650 billion

25- The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities

26- Now 46 million uninsured as medical, drug costs explode

27- New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt

28- Outgoing leaders handicapping new administration with huge liabilities

29- The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises

30- At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan's Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America's problems will take years and will burn trillions.

He sees "nothing but large increases in the deficit ... I think it would be worse than the depression. ... Before I go to sleep at night, I wonder if tomorrow is the day Moody's and S&P will announce a downgrade of U.S. government bonds." It'll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."

Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. 'I just want to get people thinking about this, and to realize this is a road to disaster,' said Whitehead. 'I've always been a positive person and optimistic, but I don't see a solution here.'"

We see the Great Depression 2. Why? Wall Street's self-interested greed. They are their own worst enemy ... and America's too.
 By bluejay

11/21/2008  9:06AM

GOLD $793.00 Up $48.40

It looks like the shorts and Hank Paulson's Treasury team have gotten the MESSAGE:

China may buy 128,000,000 ounces of gold.

The big difference here is that China represents a cash buyer as opposed to a fraudulent manipulating seller.

The day is coming when gold will be back in the monetary system out of necessity not out of choice.

China's mulling over the addition of 4,000 tons to their central bank holdings is significant.
 By bluejay

11/20/2008  2:29PM

Gold $744.60 Up $9.70
Silver $8.92 Down $0.27
Gold/XAU Ratio 10.63
Gold/Silver Ratio 83.48
DJ Industrials 7552.29 Down 444.99
Crude Oil 48.70 Down $4.92
US Dollar Index 88.22 Up 0.44

The big news today is the Dow Jones Averages crashing under the big 5000 day moving average support area at 7800 with a close of 7552.29.

A bit of good news for gold today was its breaking loose from its recent lock step action that had been maintained by the Treasury each time the general market sold off. The action in gold today is viewed as being quite positive. Could China have been buying gold today to account for the metals improving relative strength?

If the DJ Averages stay under 7800 during the weeks ahead there could be serious long term damage ahead for the DOW.

Some of the highly leveraged banking stocks are hemorrhaging to the point that depositors may soon be facing a crisis of their own in wondering what is safe anymore.
 By bluejay

11/19/2008  9:20PM

Last on gold is $736.90.

It was reported yesterday by a Beijing paper, Guangzhou Daily, that its central bank is considering the purchase of 4000 tons of gold. This equates to their possibly acquiring 128,600,000 ounces of gold.

China currently holds $1.9 trillion in reserves mainly in US paper products. If China did commit to purchasing 4000 tons this would use up only about 5% of their reserves.

Jim Sinclair made the following comment today, "Once 21,000 bars have been taken(from COMEX) the paper gold’s reign over the price of gold is over." 21,000 bars times 100 ounces equals 2,100,000 ounces of gold. I'm not sure if the COMEX bars are in 100 ounce lots but I figued it out that way to get total ounces anyway. If this is not correct, would someone please correct me.

The bottom line: There is a sizable potential buyer indicating, unofficially, that they may have a need for 128,600,000 ounces of gold. Where is this gold going to come from if China goes ahead with their possible buy program? What will COMEX do if China comes knocking with intentions on taking delivery?
 By bluejay

11/19/2008  9:36AM

Last on gold is $735.20.

Gold at one time was higher this morning at $764 only to have gotten smacked again by the dark forces with paper selling at the COMEX led by the strong arm of the Treasury and Hank Paulson via JP Morgan.

The following is a youtube presentation by Mr. Max Keiser doing what he does best, calling a spade a spade.

http://www.youtube.com/watch?v=PRe0lIbSeaE
 By bluejay

11/18/2008  11:12PM

Last on gold is $739.10.

The following is a clear message from China to the US: get your house in order. This perceived indirect message is especially serious as it follows last weekends G20 meeting of finance ministers and central bank governors.

Adding insult to injury President Hu Jintao of China who attended the G20 gathering visited Fidel Castro directly following the meetings. China is continuing to pump money into Cuba's economy in providing the funds for renovating and rebuilding aging hospitals and ports. China is also providing money to Costa Rica for the building of a refinery.


China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report
Wed, Nov 19 2008, 01:51 GMT

China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report

BEIJING (Dow Jones)--China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn't elaborate on the plan.

China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.
 By bluejay

11/13/2008  11:25AM

Gold $714.00 up $4.50
Silver $9.03 down $0.22
Gold/XAU Ratio 9.71
Gold/Silver Ratio 79.09
DJ Industrials 8079.24 off 203.42
Crude Oil 55.53 0ff $0.63
US Dollar Index 87.98 plus 0.33

For the fist time the Treasury's agent JP Morgan is having difficulty keeping gold in a locked step with the declining DJ Industrial Averages.

It seems that from the action of gold today from a low of $698.50 to its last sale of $714.00, while the Dow remains in minus 200 red ink, a battle of the titans at COMEX may be in play.

Rumors have been circulating that there will be a big push in contract delivery requests for physical gold and silver for the month of December. Rumors have also been circulating that these requests may bust COMEX and force it to close as their suspected inventories do not match the amount of December contracts outstanding. Time will tell.

Its seems that such an event could settle the great disparity of prices that currently exists between paper prices at COMEX versus the physical market.

If for what any reason COMEX is unable to deliver any precious metals requested that particular metal would easily advance to new highs.
 By bluejay

11/12/2008  10:57PM

Last on gold is $713.90.
Last on crude oil is 55.38

It wouldn't be surprising to find out that JP Morgan is forcing down oil prices with the blessings of the Treasury. Not only has JP Morgan become a major influence on gold and silver exchanges but it has entered the oil and natural gas markets within the past year or so, also, as a major player. In case most people aren't aware of this, JP Morgan is now classified as a bank.

It seems odd these days that the banking industry is being allowed to effect prices in the commodities markets. JP Morgan and Goldman Sachs have close connections to the Treasury as they have been their main bullion banks to go to when they want gold lower. Since these guys are agents of the Treasury they basically have a blank check to accomplish the Treasury's orders at exchanges with no questions ever asked relating to their substance.

As with the precious metals markets along with the oil and natural gas markets, JP Morgan has most probably been on the short side. It's hard to imagine that the oil producing countries aren't aware of Morgan's exploits in oil and gas. It seems that we are sacrificing international relations just so the Treasury can bolster the economy somewhat as banks and other companies continue to suffer from capital loss.

Just as a reminder of why our economy is in so much trouble, some excerpts from Antal Fekete's October 20, 2008 article entitled "The Mechanisim of Capital Destruction" are provided:

Liquidation Value of Bonded Debt

Falling interest rates destroy capital in a way that is more subtle than destruction through rising rates. The liquidation-value of debt, contracted earlier at higher rates, rises. "Liquidation value" is the lump sum it takes to liquidate debt, should it be necessary to retire it before maturity -- for example, in the case of takeovers, mergers, shotgun marriages, bankruptcies, or the nationalization of the banking system. The point is that as the rate of interest falls, the liquidation value of debt rises. Why? Well, the stream of interest payments now has to be discounted at a lower rate. Therefore at maturity it falls short of liquidating the debt.

Here is a familiar example, the liquidation value of bonded debt. When the rate of interest falls, the market immediately bids up the price of bonds. The higher bond price represents the higher liquidation value of the underlying debt. The fall in the rate of interest, far from alleviating the burden of debt, aggravates it.

Bank capital has been eaten away by the fall of interest rates. The impairment has been ignored and, after 28 years of negligence the global banking system stands denuded of capital. Those shareholders who can read balance sheets see through the fancy values banks are putting on their assets. They dump the stock before bank capital goes all the way to zero.

This is not a real estate crisis, nor is it a sub-prime crisis. This is a crisis caused by the destruction (of) bank capital across the board, through the wrecker's ball of swinging interest rates. In the final analysis, it has been caused by exiling gold from the banking system.

Dissipating Capital Under False Pretenses

People tend to have a religious faith in the Fed's miraculous power to create something out of nothing. They think that the Fed is above capital requirements and accounting rules. They think that the Fed is above the law. They dismiss the idea that the Fed, too, can suffer from capital inadequacy, or that it may not be able to escape the ill effects of falling interest rates.

The Federal Reserve Act(as amended) explicitly forbids the Treasury from participating in the earnings of the Fed. The purpose of this provision is to retain the undivided surplus in the Federal Reserve System to meet emergencies precisely like the present crisis. The conspiracy of the Treasury and the Fed ignores this provision of the law. Year in and out the Fed remits about 90 percent of its earnings to the Treasury under false pretences, calling it the "franchise tax on Federal Reserve Notes." No sooner had the Treasury received the remittance than it spent the proceeds, and more, on consumption. As a result, the Fed is left with no undivided surpluses and no cushion to fall back on in hard times. And the Treasury has debt far greater than it has resources to retire. This high-handed disregard for the law is motivated by the desire to foster a public image of the Fed as an institution with supernatural powers. The Fed has the magic wand and can wave it to solve any problem by throwing money at it. In this view the Fed is not a bank, but the embodiment of divine power.
 By bluejay

11/12/2008  10:50AM

Gold $717.80 off $13.60
Silver $9.39 off $ 0.39
Gold/XAU Ratio 9.10
Gold/Silver Ratio 76.44
US Dollar 87.26 up 0.07
DJ Industrials 8395.52 off 298.44

The selling by the suspected banks and the Treasury(aka PPT) continues to have its effect on the price of gold. No fundamental or technical positives seem to effect the large amounts of paper that are being thrown at gold on the COMEX Exchange in NY. The whole scenario from the Exchange, to the CFTC to the Treasury represents a rigged game which is a far cry from free markets.

Things just got a little worse with the recent naming of Larry Summers as the new Secretary of the Treasury. According to sinbob at agoracom.com Larry runs with "Geithner, Corzine, Volcker, Fisher, Phil Gramm, Bernanke, Hank Paulson, not to mention Alan Greenspan, al al are buddies; they play golf together; they have links to the Council on Foreign Relations and the Bilderbergs; they act concurrently in accordance with interests of Wall Street; they meet behind closed doors; they are on the same wave length; they are Democrats and Republicans."

Going on sinbob states, "While they may disagree on some issues, they are firmly committed to the Washington-Wall Street Consensus. They are utterly ruthless in their management of economic and financial processes. Their actions are profit driven. Outside of their narrow interest in the "efficiency of markets," they have little concern for "living human beings." How are people's lives affected by the deadly gamut of macro-economic and financial reforms, which is spearheading entire sectors of economic activity into bankruptcy.(?)

The complete article with some specific history concerning Summers in available by using the following link:

http://www.agoracom.com/ir/ECU/messages/999759.

In 1991 Larry was the Chief Economist at the World Bank and made some disturbing commments on why dumping our waste in third world countries made perfect economic sense.

Sinbob has done some excellent research into Larry Summers involvement in the 1997 Asian Crises and in the 1999 Financial Services Modernization Act that permitted OTC derivatives to blossom into the world's current financial meltdown.

Sinbob titled his presentation as, "Putting the Fox in Charge of the Chicken Coop."

Nothing could be closer to the truth.
 By bluejay

11/10/2008  10:28AM

Gold $742.20
Silver $ 10.19
Gols/XAU Ratio 8.39
Gold/Silver Ratio 72.84
US Dollar Index 85.81

Gold is higher today by $8.30 but is down $25 from its early morning high at about $767. One wonders, when all this watering down of the metal's price will end on practically every show of strength?

Once the current administration leaves office we will have a new captain in the control seat at the Plunge Protection Team and possibly less pressure on gold.

In the paper this morning is more bad news coming from the Treasury Department and its banking industry buddy, Hank Paulson. It is absolutely amazing how much money Paulson is costing the taxpayers and no one is slapping his hands.

Now it is being reported by Amit R. Paley from the Washington Post that the Treasury is circumventing Section 382 of the tax code and thus costing us an additional $140 billion.

According to George Yin, the former chief of staff of the Joint Committee on Taxation, the nonpartian congressional authority on taxes said, "They (the Treasury) basically repealed a 22 year old law that Congress passed as a backdoor way of providing (more) aid to banks."

Basically, the Treasury is saying it is all right for banks to buy shell companies with losses and apply those losses against their earnings(thus avoiding income taxes).

This was sneaked by while all eyes were on formulating the relief plan funding. This is the same as taking advantage of a diversionary event to steal. How many times have we watched movies where the bank robbers create diversions for police to respond to while these same people empty the vaults of a financial institution in another part of town?

In this case, the bankers representative at the Treasury, Paulson, just handed them over $100 billion in saved tax expenses by ignoring #382. Paulson should be brought up on charges and the tax code inforced by the IRS against these bankers.

Write your Congressional representatives and Senators and complain, I did.
 By bluejay

11/06/2008  4:26PM

Last on gold is $726.90.

John Embry on paper gold versus physical gold:

http://envast.blogspot.com/2008/10/john-embry-golds-game-changing-moment.html
 By bluejay

11/04/2008  9:28AM

Last on gold is $758.40.

Rumor Flash

It has been reported from Lichtenstein, Germany that our 1933 gold coin melt bars are showing up in world markets.

The following was reported to the Agoracom.com's ECU forum page by member ESL:

"My colleague in Lichtenstein confirmed the proliferation of these bars on the European market and I just received information that dealers in Dubai are seeing them all over the place."

If this is true, all responsible should be put in jail. Putting Paulson, the great gold liquidator of the 90's, in charge of the Treasury was like putting the fox in charge of the hen-house.

How much money have all the ex-Goldman Sachs employees stolen from taxpayers since they became employess of the U.S. government at the Department of the Treasury?

Is there any wonder when Paulson first pushed his way into Nancy Pelosi's office looking for billions that he also requested immunity from prosecution?
 By bluejay

11/04/2008  8:44AM

Gold $762.40 up $40.40
Silver $10.51 up $ 0.71
Gold/XAU Ratio 8.49
Gold/Silver Ratio 72.61
Dollar Index 85.01 off 1.39

Gold is higher today following a weak dollar. Strong long term overhead resistance on the dollar chart is located at the 90 to 91.50 area. The dollar's high on its recent three month surge has been about 88.30. It is suspected that the dollar has already topped from its recent fast moving bear market rally.

It appears that too many dollar holders are falling over themselves as they become more aggressive in exiting their positions in the 87 to 88 area. Time will tell for them if they should have begun to liquidate their holdings sooner and at lower levels.

It's a great time to be considering selling the U.S. dollar and buying the Canadian dollar at .8621, the Australian dollar at .6996 and the Swiss Franc at .8661. The Canadian dollar is already up smartly from its recent lows in the .78 area.

As the U.S. dollar regains its terminal slide gold will benefit. We just have witnessed over the past months one of the most vicious bull market shakeouts in precious metals, base metals and their shares in recent history.

Historical charts clearly show that new intermediate bull markets, within major bull markets, spawn from the ashes of these types of breakdowns.

Last on gold is $756.80.
 By bluejay

11/03/2008  10:21AM

Last on gold is $727.70.

The following is an excerpt from a news release issued today from Emgold concerning the publishing by the city of Grass Valley of its environmental draft report:

The Idaho-Maryland mine was historically California's second largest underground gold mine producing 2.4 million ounces of gold from 1862 to 1956 at an average grade of 0.43 ounce per ton grade. It is adjacent to the historic Empire mine, which was Newmont Mining Corp.'s first operating mine. The Empire mine produced 5.8 million ounces of gold from 1850 to 1956. Newmont retains the mineral rights to this property. The Grass Valley mining district produced over 17 million ounces of gold and is historically one of the richest gold districts in North America.
 By bluejay

11/02/2008  10:32PM

Just a taste of what is coming.

The News Today
Posted: Nov 02 2008 By: Jim Sinclair Post Edited: November 3, 2008 at 1:24 am

Filed under: In The News

Jim Sinclair’s Commentary

Between 400,000 and 1,000,000 STILL cannot get access to their savings.

Don’t follow the spin, and let your guard down. This is the beginning, not the end. This could have been you!

The primary target that should be faced has not been even been aimed at. That target is called over the counter derivatives.

Part of the rescue is the use of an OTC derivative by the Federal Reserve - a swap.

Reserve Funds investors still waiting for their money
30 Oct 2008 11:53 am


This isn’t good:


At least 400,000 people, and perhaps as many as a million, can’t get access to their savings, a problem that has quietly persisted in spite of widely publicized federal efforts to restore confidence in money-fund investments.


Some of these customers — who, like most Americans, assumed their money funds were as safe and accessible as bank accounts — are getting desperate.


“Longer term, I just don’t know how we’ll deal with it,” said John Oakes, a retired engineer in Austin, Tex., who can’t tap $20,000 in a Reserve account to pay his mother’s nursing home bill. “They say we may get some money this week, but we don’t know if we’ll get 100 percent, 90 percent or 30 percent.”


Sandra and Lawton Dews, a retired couple in North Myrtle Beach, S.C., had more than $250,000 — 35 percent of their retirement assets –invested in the Reserve US Government Fund.


“They even bragged that you could sleep at night if you invested in their funds,” Mrs. Dews said. “In the past month and a half, we don’t sleep at all.”


Her insomnia began soon after Sept. 15, when the Reserve Fund was hit by a wave of redemptions, apparently because its largest fund had a stake in notes backed by the newly bankrupt Lehman Brothers.
 By bluejay

11/02/2008  11:14AM

Last on gold is $723.70.

The following article clearly reports the the debt abyss that is consuming the nation.

National Debt Soars $500B In Under A Month
Financial Bailout Plan The Primary Culprit In Record-Setting Debt Accumulation
Nov. 1, 2008

(CBS) This story was written by CBS News White House correspondent Mark Knoller

It’s the surge you won’t hear anyone boast about.

Never before in U.S. history has the national debt increased as much and as rapidly as it has over the past month.

Since September 30, the day the national debt hit the $10-trillion mark for the first time, the government has run up over $500 billion in new debt.

That’s more than the federal deficit for the entire 2008 fiscal year, which ended September 30. And it’s the most rapid increase in the national debt ever: over half a trillion dollars in less than a month - 23 days to be exact.

The government’s latest calculation of the national debt stands at $10,530,893,033,778.21 - that’s $10.5-trillion for short. It took less than four months for it to rocket to that level from $9.5 trillion on July 21.

Less than four months! To put it in perspective, consider this: it took the U.S. government over four decades, from 1940 to 1982, to run up its first trillion dollars of debt.

The second and third trillions were racked up much more quickly - each in just four years. And it only took from 1990 to 1992 for the national debt to hit $4 trillion.

On the day President Bush was sworn in, the debt stood at $5.7 trillion. Less than eight years later, the it’s within days of having swelled $5 trillion dollars on his watch - an embarrassing milestone for a president who considers himself a conservative and an advocate of fiscal discipline.

What’s to blame for the most recent surge in the debt? Above all else, it’s the federal government's response to the financial crisis.

“It’s the Supplementary Financing Program being run by Treasury to provide cash for the Federal Reserve,” says Corrine Hirsh, spokeswoman for the White House Office of Management and Budget.

By that, she means the billions of dollars disbursed by the Fed to keep the financial markets at home and abroad from collapsing. It includes the $124 billion used to keep insurance industry giant American International Group from going bust.

And this week, the Treasury Department started to spend the $700 billion dollars in the congressionally authorized bailout program, so the national debt can be expected to soar even more rapidly in the coming months.

But on January 20, it becomes another president’s problem. And unless he slashes federal spending or enacts major tax hikes, the ballooning deficit and debt leave no money for any of the big ticket programs he's promised to deliver.

Instead, the 44th president will have to deal with the problem of how to pay the interest on the expanding debt. If past practice holds, it’s a good bet the government will just borrow the money.
 By bluejay

11/01/2008  10:37PM

Last on gold is $723.70.

Extortion 101

Paulson's Swindle Revealed
By William Greider

October 29, 2008
The swindle of American taxpayers is proceeding more or less in broad daylight, as the unwitting voters are preoccupied with the national election. Treasury Secretary Hank Paulson agreed to invest $125 billion in the nine largest banks, including $10 billion for Goldman Sachs, his old firm. But, if you look more closely at Paulson's transaction, the taxpayers were taken for a ride--a very expensive ride. They paid $125 billion for bank stock that a private investor could purchase for $62.5 billion. That means half of the public's money was a straight-out gift to Wall Street, for which taxpayers got nothing in return.

William Greider: United Steelworkers Union prez Leo Gerard cracks open the sweetheart deal that bailed out nine banks--and likely lined the Treasury Secretary's own pockets--with billions of taxpayer dollars. Does anybody care?

These are dynamite facts that demand immediate action to halt the bailout deal and correct its giveaway terms. Stop payment on the Treasury checks before the bankers can cash them. Open an immediate Congressional investigation into how Paulson and his staff determined such a sweetheart deal for leading players in the financial sector and for their own former employer. Paulson's bailout staff is heavily populated with Goldman Sachs veterans and individuals from other Wall Street firms. Yet we do not know whether these financiers have fully divested their own Wall Street holdings. Were they perhaps enriching themselves as they engineered this generous distribution of public wealth to embattled private banks and their shareholders?

Leo W. Gerard, president of the United Steelworkers, raised these explosive questions in a stinging letter sent to Paulson this week. The union did what any private investor would do. Its finance experts vetted the terms of the bailout investment and calculated the real value of what Treasury bought with the public's money. In the case of Goldman Sachs, the analysis could conveniently rely on a comparable sale twenty days earlier. Billionaire Warren Buffett invested $5 billion in Goldman Sachs and bought the same types of securities--preferred stock and warrants to purchase common stock in the future. Only Buffett's preferred shares pay a 10 percent dividend, while the public gets only 5 percent. Dollar for dollar, Buffett "received at least seven and perhaps up to 14 times more warrants than Treasury did and his warrants have more favorable terms," Gerard pointed out.

"I am sure that someone at Treasury saw the terms of Buffett's investment," the union president wrote. "In fact, my suspicion is that you studied it pretty closely and knew exactly what you were doing. The 50-50 deal--50 percent invested and 50 percent as a gift--is quite consistent with the Republican version of spread-the-wealth-around philosophy."

The Steelworkers' close analysis was done by Ron W. Bloom, director of the union's corporate research and a Wall Street veteran himself who worked at Larzard Freres, the investment house. Bloom applied standard valuation techniques to establish the market price Buffett paid per share compared to Treasury's price. "The analysis is based on the assumption that Warren Buffett is an intelligent third party investor who paid no more for his investment than he had to," Bloom's report explained. "It also assumes that Gold Sachs' job is to protect its existing shareholders so that it extracted from Mr. Buffett the most that it could.... Further, it is assumed that Henry Paulson is likewise an intelligent man and that if he paid any more than Mr. Buffett--if he paid $1 for something for which Mr. Buffett would have paid 50 cents--that the difference is a gift from the taxpayers of the United States to the shareholders of Goldman Sachs."

The implications are staggering. Leo Gerard told Paulson: "If the result of our analysis is applied to the deals that you made at the other eight institutions--which on average most would view as being less well positioned than Goldman and therefore requiring an even greater rate of return--you paid a$125 billion for securities for which a disinterested party would have paid $62.5 billion. That means you gifted the other $62.5 billion to the shareholders of these nine institutions."

If the same rule of thumb is applied to Paulson's grand $700 billion bailout fund, Gerard said this will constitute a gift of $350 billion from the American taxpayers "to reward the institutions that have driven our nation and it now appears the whole world into its most serious economic crisis in 75 years."

Is anyone angry? Will anyone look into these very serious accusations? Congress is off campaigning. The financiers at Treasury probably assume any public outrage will be lost in the election returns. I hope they are mistaken.

About William Greider
National affairs correspondent William Greider has been a political journalist for more than thirty-five years. A former Rolling Stone and Washington Post editor, he is the author of the national bestsellers One World, Ready or Not, Secrets of the Temple, Who Will Tell The People, The
 By bluejay

10/30/2008  11:42PM

Last on gold is $733.50.

For a behind the scenes analysis on what's up and where gold is going, go to http://www.jsmineset.com and read Mr. Jim Sinclair's commentary, "The Beginning Of A Great Economic Drama."

Also, in another commentary Mr. Sinclair states that he is buying gold future contracts and will be taking deliveries of the 100 ounce contracts on a monthly trading cycle basis.
 By bluejay

10/30/2008  11:31AM

Last on gold is $734.40.

In another daily vain attempt at approaching the $775 area gold has failed to hold and has slid back with renewed selling pressure. The move above recent resistance at $748 or abouts is now moot.

An anticipated major low on gold will apparently take its time and on its own terms to establish. At the moment, $680 is its recent down spike low.

Yesterday the Fed reduced its benchmark interest rate lower by one half point from 1.5% to 1.0% to lessen major threats to economic growth and did not rule out more reductions to follow.

Lower interest rates eat up bank capital as it stimulates the redemption of higher interest debt. This occurs when the redemption amount is higher resulting from lower interest rates. When rates go down bonds go up, as an example, thus retiring the original debt becomes more expensive and eats up capital in the process. The bailout package is intended to replenish lost bank capital.

The banker's and the Treasury's greatest fear is that the banks will go belly-up for lack of capital. The derivatives mess only adds to their problems. Reacting to banking troubles, people have been pulling their funds out of these institutions and into U.S. Treasuries and into gold and silver. The threat has been so great that the FDIC has recently announced doubling the insurance levels for funds on deposit at banks.

On an important note, people must know exactly what insurance means. In the worst case scenario, what are the mechanics of returning your insured money?? One possiblity that some folks might not like is how the money is returned to them. Will it be in restricted Treasury instruments? Will it be in another short term irredeemable form of some sorts?

This is the main reason that the western central bankers became part of a major price suppression scheme in July to effect gold and silver prices. It seems that the Asian markets have been buying gold when they are open for business and as trading switches to London and in the U.S. at the infamous COMEX Exchange prices fall on a somewhat, regular basis.

Paul Van Eeden of Canada has generally stated that the approximate area of $650 is a rock-bottom low price for gold based on current monetary expansion. Some months ago Paul correctly forecast lower base metal prices based on his projection of reduced economic activity.

These unanticipated lower prices in gold and silver should continue to be considered a rare purchase opportunity and certainly, not a time to sell.
 By bluejay

10/29/2008  6:10PM

Last on gold is $768.10.

Check out this 80 year view on the sell-offs in the Barron's Gold Stock Index.

http://www.kitco.com/ind/sobolev/oct272008.html

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