This is DayStar (DS) with the Thursday Harvey Report
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News and Commentary
Andy Hoffman: There's a whole category of potential events that - while not necessarily "anticipated" - have relatively high probabilities of occurring in the coming months and years; and, frankly, in some cases, sooner. I deem such outcomes "Grey Swans" - as for example, it would be difficult to consider it "unexpected" if we awaken to a Greek or Spanish bank bail-in; a Suez Canal oil blockage related to the Egyptian Revolution; a U.S. and/or Israeli-led invasion of Iran; a derivatives blow-up at a major Western bank; bankruptcy of a major municipality (like Detroit); escalating civil unrest in India, Brazil, or Turkey; or implosion of the U.S. Treasury and/or housing markets. The whole point of pondering Black Swans, "Grey Swans," or any type of potential event is considering the odds of them occurring; and subsequently, acting to insure oneself if they do. In today's turbulent world, in which I anticipate a dramatic increase in financially destructive - and inflationary - events to occur, I fail to see how ANYONE can neglect the only assets that have served to PROTECT one's wealth throughout history; i.e, PHYSICAL gold and silver.
Andy Hoffman: As for the ongoing "Indian Implosion," the situation gets more ominous each day. As the government screams like Kevin Bacon in Animal House that "all's well," they are issuing new Capital Controls each day; and today, the rumor is that to obtain dollars to support the collapsing Rupee (down another 1.2% this morning, to yet another ALL-TIME LOW), they'll lease the very 200 tonnes of gold they just bought in 2009 from the IMF! Not only is this the dumbest idea in the history of dumb Central banking ideas - as it could well set off a citizen PANIC - but said "gold" likely never existed anywhere but in an electronic ledger. Jim Sinclair says there is an upcoming tsunami of panicked Indian gold demand.
Eric Pomboy (King World News): The stage is set for a surge in inflation going forward. Zero Maturity Money Supply y/y looks to lurch higher bringing CPI (and precious metals) in tow. As well, the 30-Year rally in bonds looks as if it has come to an end, and the value of US gold reserves will soon begin to catch up to our ever-expanding Monetary Base.
Michael Pento (via King World News): Eric King: “How destabilizing could rising interest rates be to the entire financial system?” Pento: “I think it could be exponentially worse than what we experienced in the collapse of the dot-com bubble and the collapse of the real estate market ... The bond market has already started to taper for the Fed ... Interest rates are set to soar. Interest rates have already started to climb. That’s just the beginning -- I think they go to 4% by the end of the first quarter of 2014, and that is where your watershed moment occurs where the Fed says, ‘Enough! We are now permanently in the business of manipulating the long-end of the Treasury yield market.’ That’s when you had better be exposed to precious metals and mining shares because these investments should then soar in price.”
Grant Williams (via King World News): Right now there is a lot of fear out here, particularly in India. There are some terrible capital controls that have been put in place in India, in an attempt to restrict this flow of gold. There is now discussion that the Indian Reserve Bank may be looking to lease out their 200 tons of gold because they think they can make $23 billion in interest payments on that. But that is a very, very dangerous thing to do given the tightness in the physical supply right now. If India does lease that gold out and it’s not just a book entry, which I would assume they would definitely want it to be, but if they physically lease that gold out and it leaves their vault, I don’t think India will ever get that gold back. It really feels to me like the tightness in the physical market is so acute that if you hold physical gold, you do not want to lend it to anybody else right now, for any price at all. An entity would have to have a really good reason to do that. Generally when central banks do something this extreme it’s because they want to move a currency down, or they want to move the price down, but it’s a very, very dangerous game to play right now.”
Keith Barron (via King World News): The Indian rupee has plunged very recently and it is now at an all-time low vs the U.S. dollar. This is very interesting because in my KWN interview last week I was talking about the moves that the Indian government had been making to kill the demand in the Indian gold market. These attempts by the Indian government to suppress gold purchases have been a total failure. Gold is now the most black-market trafficked item into India. Indians are moving to protect their wealth as the Indian currency continues its plunge, and they are doing this by purchasing physical gold and silver. readers need to keep in mind that the plunging rupee is not only highly inflationary in India, it also means gold and silver are soaring in terms of the Indian rupee. I think this talk of selling Indian gold is just more jawboning in an attempt to temporarily halt the advance in gold, and possibly to try to have the gold price back and fill a bit here. You have to remember the Western central planners never want to see the price of gold advance because it is an important alternative to holding U.S. dollars. But I think the West is going to great lengths to try to conceal the fact that everyone in Asia is dumping dollars right now. We can see this in the recently released sales of U.S. Treasuries by Asian countries. So they are dumping dollars as quickly as possible without trying to crash the price of the U.S. currency, and at the same time they are desperately buying as much physical gold as they can get their hands on. The bottom line here is this is rather tragic to witness the West near the edge of a cliff, as central planners recklessly endanger the entire global financial system and ensure that the West will eventually collapse.
Jeff Nielson: With many (most?) of those paper-holders simply swapping their paper for real metal, and with lower prices igniting gold demand in China and India; the Great Paper Liquidation quickly morphed into the Great Physical Accumulation. With the phony, paper market being (literally) a hundred times larger than the real gold market; naturally massive, net-selling of this paper would (and did) take down prices. Then there is the silver market. There was no Great Paper Liquidation with respect to paper-called-silver. In reaction to the (premeditated) Cyprus Steal, the “smart money” dumped their paper-called-gold for real metal. But apparently there is no smart money in the paper-silver market. Put another way, unlike the gold market there has been no reason at all for the decline in silver prices. The massive drop in the price of silver (which has exceeded the decline in the gold market) has simply been the result of more, naked manipulation. The price of silver fell not because it “should have” fallen (like gold); but simply because the banking cabal could manipulate prices lower. We have seen (in unequivocal terms) that lower gold prices do spark an immediate demand-response. In the recent frenzy to accumulate physical bullion; we saw markets all over the world explode with higher demand. Indeed, gold demand in India has soared to such extremes that the Indian government (and the bankers) have taken every step imaginable to attempt to suppress Indian gold imports. But those same actors have seen no need at all to intervene in India’s silver market. The same Indian bullion-buyers rabidly buying gold because it’s so cheap are (apparently) shunning silver because it is too cheap. What could alleviate such a conundrum? The banksters’ own market-rigging algorithms. At some point that the scorched-Earth attacks on bullion markets will cause demand for gold to ignite to such an extreme that the price of gold will simply catapult itself through any further attempts at price-suppression. When the gold market explodes; it will drag the silver market higher with it, because of those same trading algorithms. And once a rising price of silver causes sentiment to swing from positive to negative; that’s when the fun begins. The key (and obvious example) here is India.
Ron Rosen (via King World News): This market decline has just begun in the Dow, and this will be second only to the major collapse in the Dow between 1929 and 1932. That was an 89% collapse that we saw in the early 1930s. This will be at least a 66% decline, and as I said, second only to the collapse that led to the Great Depression. During this decline I expect gold and silver to skyrocket. With respect to silver, it hasn’t even taken out its high of $50 from 1980. Silver needs to rise nearly $30 from current levels just to take out that 1980 high. But silver will outperform gold in every conceivable way in the future. I expect for silver to hit roughly $150 in the next 18 months, and that’s not even half way to where I expect the ultimate price of silver will rise.
SilverDoctors.com: Ever since the big take-down in the price of the precious metals in April of this year, an interesting trend has taken place in the Gold & Silver Eagle market. While demand for both coins remained strong in the first four months of the year, investors are now overwhelmingly purchasing more Silver Eagles — banking on much higher gains in silver than gold. The gold to silver sales ratio was 19.5/1 in April, fell to 80/1 in July and so far in August it is a staggering 489/1! Over the last month, investors are overwhelming purchasing nearly 500 times as many Silver Eagles as Gold Eagles from the US Mint! Silver Eagle sales will hit a new all-time record this year by beating the past record set back in 2011 of nearly 40 million oz. if we look at the current trend in Gold & Silver Eagle sales, we can see that investors are purchasing silver as a premium investment over gold. Hedge Funds and investors are banking on much better future returns in silver than gold.
German Economic News [Google translation from German]: Several German counties and municipalities for years have already been close to bankruptcy. Now we see the threat of outright collapse in many regions. About ten million people live in cities that are almost incapable of action. The taxpayer will be asked to pay. The financial situation is so tense that the municipalities are almost paralyzed with shock. Around 50 to 60 of the municipalities with around ten million inhabitants are so deeply in debt that they "are scarcely able to act," says René Geissler, municipal expert at the Bertelsmann Foundation. The total debt has increased from 2007 to 2011 from 111 to 130 billion euros.
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Harvey's comments on Thursday's price action (basis 1:30 PM EST)
In the access market today at 5:15 pm tonight here are the final prices:
Gold: $1375.50
Silver: $23.19
Wednesday, August 21st Gold and Silver Action (basis 1:30 PM EST)
http://harveyorgan.blogspot.com/2013/08/august20Comex-dealer-and-total-gold.html
Select Commodity Prices:
The Bloomberg Baltic Dry Index (BDI) was 1158.0 up 0.17%. WTI August crude was 105.20 up 1.59. Brent closed at 109.90 up 0.30. The spread between Brent and WTI was 4.70, down 1.29. The 30 year US Treasury bond was up 0.0030 at 3.8850. The 10 year T-Note was up strongly by 0.0460 at 2.9010. This is the one that is the dollar killer. I am now worried about the financial meeting at the White House. GOFO is negative for the 34th day in a row. It still looks like they are running out of bullion. The dollar was up 0.17 at 81.52. The PPT/Dow was 14,963.74 up 66.19, BELOW the very key round number of 15,000. Facebook was 38.55 up 0.23 (0.60%). Silver closed up (0.30), at 23.19. It looks like they are keeping it range bound. September wheat was down 8.20 at 630.40. December corn was down 18.60 at 464.40. October lean hogs were 84.40 down 1.425. Hogs are also in backwardation as far out as June 2014. Seems the market is very concerned about the pork supply. September feeder cattle were down 0.775 at 158.100. September copper was 3.3300 up 0.0235. September natural gas was up 0.085 at 3.545. September coal is up 0.30 at 53.60.
Thank you for reading the Harvey Report. There is much more on Harvey's blog.
http://harveyorgan.blogspot.com
Goooood day!
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Thanks for the kind words, guys. I left a note on the front page this morning about the missing hat tips. I haven't seen anything. I will follow up if I don't hear soon.
Thanks,
DayStar
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https://www.tfmetalsreport.com/forum/4132/harvey-organ-should-be-interesting-read-today