Gold dives 4 percent on fund liquidation, technicals

[CrackSmokeRepublican]

Not a good sign if large Hedge Funds need to liquidate some of the "run-up"... with crunch issues and belief in a slow-down,  you'll want to wait until it finds a bottom for at least a week before buying...with MF global busted some funds  may be trying to get "cash" right now to use it to short Bonds/markets or even Gold itself... Hedge fund blow ups mean "liquidation"...  --CSR

----------
Gold dives 4 percent on fund liquidation, technicals

By Frank Tang

NEW YORK | Wed Dec 14, 2011 6:04pm EST

(Reuters) - Gold dropped 4 percent on Wednesday as a technical sell-off, year-end fund liquidation and plunging commodities fueled bullion's second-biggest decline since the 2008 economic crisis.

Bullion fell below $1,600 an ounce for the first time since early October. Losses snowballed after it broke below its 200-day moving average -- a technical support it had held for nearly three years. Gold option volatility also exploded as futures investors sought to hedge against downside risk.

The magnitude of gold's decline dwarfed equities' losses and some traders said the selling appeared to lead the rout across commodities. Oil and copper also fell 5 percent on the day.

Bullion was already pressured by the previous session's news the U.S. Federal Reserve did not offer new economic stimulus.

That momentum increased on Wednesday as the euro dropped below $1.30 and a shortage of dollar funding prompted investors to sell aggressively.

Banks' dollar borrowing from the European Central Bank tripled on Wednesday compared to the prior week as the euro zone debt crisis has caused money markets to seize up.

Rampant market talk that possible liquidation by a big hedge fund to meet redemption demand ahead of the year end also weighed heavily on bullion market sentiment.

"It appears that there is significant amount of forced selling. The way gold is falling it looks like a big fund is blowing up, prompting forced-redemption selling," said James Dailey, portfolio manager of the TEAM Financial Asset Management with $200 million in fund assets.

Spot gold fell 3.9 percent to $1,568 an ounce by 3:26 p.m. EST. It hit a session low of $1,563.99, its lowest since late September.

Silver tumbled 6.5 percent to $28.76 an ounce.

Bullion notched its biggest three-day slide since late September.

HSBC said that gold was hit by a push among investors to get more cash onto their balance sheet ahead of the year end.

"Some macro hedge funds are liquidating gold holdings and taking profits in a difficult year. As trading volume typically drops toward year-end, we expect increasingly volatile price swings," said James Steel, chief technical analyst at HSBC.

Gold has slid 18 percent since hitting $1,920 an ounce in September, a drop that takes it closer to bear market territory and might signal a peak in bullion's decade-long rally.

In September, gold prices tumbled sharply from a record partly on speculation of hedge fund sales.

At that time, there was talk hedge fund manager and long-time gold bull John Paulson might have liquidated his holdings to meet end-of-year client redemptions.

Paulson & Co. revealed in a U.S. regulatory filing two months later that it had cut its holding in the SPDR Gold Trust GLD by a third in the third quarter, a sale which was equivalent to 1.1 million ounces of gold.

U.S. gold futures for February delivery settled down $76.20 at $1,586.90 an ounce.

Trading volume was 50 percent above its 30-day moving average to be one of the busiest sessions in the last three months, bucking a recent trend of weaker turnover.

A commodity market maelstrom also prompted investors to sell gold to cover losses elsewhere, as U.S. crude oil futures sank about 6 percent and copper dived 5 percent. However, the S&P 500 U.S. stock index fell only about 1 percent.

Also weighing on gold is a physical market glut created by the excess supply of gold lending by European banks in return for U.S. dollars. Gold leases rates are at their lowest levels in more than 10 years, analysts said.

TECHNICAL BREAKDOWN BELOW 200 DMA

Spot gold broke below its 200-day moving average for the first time since January 2009 as some analysts said that a break below that defining parameter could spell the end of gold's three-year bull trend.

(Additional reporting by Amanda Cooper in London; editing by Andrea Evans, Bob Burgdorfer, Sofina Mirza-Reid, Josephine Mason and David Gregorio)

http://www.reuters.com/article/2011/12/ ... M520111214

[Timothy_Fitzpatrick]

CSR, are you a day trader?

[LordLindsey]

Gold and silver are down because the jews have to destroy those foolish-enough to believe that this system is legitimate.

They allowed the price to go-up...then WHEN THEY DECIDED TO CRASH IT...they did.

Don't worry, though, because soon-enough gold and silver will shoot-up, and THIS TIME IT AIN'T COMING DOWN.

The sooner this planet finally admits that these creatures have destroyed our world the sooner humanity can begin to get things to some semblance of normalcy.

LINDSEY

[abduLMaria]

so far the most insightful of the webcasts i've heard in the last month about precious metal markets was that of Jim Willie.

he takes a stab at filling in the blanks on MF Global.  admittedly what Jim says is conspiracy theory - but if we wait to get the "memo from headquarters" we'll be waiting a long time.

many MF Global clients used their accounts to build up funds prior to taking delivery of Precious Metals.  (OK, that part is fact).

Willie's idea is that MF Global was a patsy - set up to divert funds out of the market for physical metals, at the time that it was found to be necessary.  which, apparently, was late October/ early November.


silver dipped this morning to $28.40 ... $28 if you were up late - when the Hong Kong markets were open.

some vendors have silver with a spread of 49 cents or 69 cents.  that combination of availability, low spread, and low price makes it a good time to buy, now/ today.

similar in the gold  market today - it moved below it's 200 day moving average.


one of the other PM webcasts i listened to yesterday was Jeff "the PM markets are not manipulated" Christian.  they talk 2011, and what is striking is that all the reasons that Christian lists for the run-up in gold to $1900 (e.g. the endless debt ceiling palavering/ mental masturbation exercise in which our Congress engaged in late July early August) are still going on.  the US is more bankrupt now than on August 1 - it's just that it's not being talked about.  (and if anything the circle jerk in the Senate is getting even more intense.  e.g. the latest $650 billion 'defense' bill, containing the language which gives the US gov. the 'right' to detain US citizens without due process.)


when the PM markets down-ticked in 2008 and 2009, many forms of silver & gold were not available.  you could buy 1000 ounce bars of silver - but not 1, 10, or 100 ounce bars/ rounds.  similar in the gold market - one coin dealer i know had all the gold you could want - if you wanted 50 peso Mexican coins.

that's the thing about waiting for lower prices - when they come, the "sold out" sign tends to go up on lots of products.

[CrackSmokeRepublican]

I'm not one to argue with Jim Willie.  I just think the big "D"(eflation) is a lot stronger than is expected right about now. We may be seeing a lot of  banks and hedge funds go down here in the US, GB, France,Italy, etc.  There's really no mystery about it. I just think that if any of these "Institutions" needs to raise cash pretty quickly for any reason, Gold/Silver are a lot more liquid price wise than other Commodities and can be just  
"dumped"

I'm not a trader but I do know that K-Wave will hit Gold/Silver big as the Global Liquidation ensues, afterwards, these may be a great investment.  I just see down action from here though until the 200 DMA is resettled.  JewTard Rip-off Insanity has run "Talmudically" wild here lately... shameless ripoff and thieving by Jews unabated and unstopped...bonds-banks everywhere are set up for massive shorting--CSR

JP Morgan Crashed MF Global to Avert COMEX Failure, European Derivatives Implosion

Jim Willie

Jamie Dimon and Lloyd Blankfein are "doing God's work."  

We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!

JP Morgan averted both a COMEX default and a European sovereign debt implosion, and notice that JP Morgan increased the amount of silver in their registered vaults by precisely the amount that was supposed to be delivered!

This is just another financial 9/11, and THERE WILL BE MORE

If JP Morgan can steal 140,000 futures accounts, what's to stop 250,000 MUTUAL FUND ACCOUNTS FROM BEING STOLEN!?!

The Fed was staring at 20 Lehmans in Europe!! 20 Lehmans almost happened, and the fed rushed in, lowered interest rates for banks. If there is another big implosion and there is another string of contagion and big banks are dead in the morning, don't expect there to be any money in the accounts in the morning.

I think we're going to see SEVERAL MILLION PRIVATE ACCOUNTS VANISH!

Pension funds, mutual funds- they're all at risk, and people I talk to HAVE NO CLUE. Put your money in GOLD AND SILVER!

We are at the verge of a very widespread, colossal theft of private accounts. It's getting really, really dangerous.

Quantitative Easing never ended

It just increased in deception. It increased while the deception got worse. TAKE A LOOK AT THE DATA! IT NEVER STOPPED! Hyper-monetary inflation is the new normal.

We have big European banks selling boatloads of sovereign bonds. The foreign creditors of the US are big sellers of Treasury Bonds. Operation Twist is QE3! Quantitative Easing is now the policy, its gone global! What they're trying to do is not talk about it, because talking about it hurts the dollar. They're just not talking about it! There's been a huge spurt in the past few months of derivatives- $9 Trillion in the past quarter alone from Morgan Stanley! Can you say $9 Trillion in interest rate swaps in order to create the impression that money is flowing into treasury bonds!?! This is getting incredibly dangerous! This just continues to make it worse!

No policy is working towards a solution. We don't have any insolvent banks being liquidated. We don't have any policy towards bringing back jobs from China. The deception and bad economic policy is hiding perpetual RUIN!

The two pillars of US economic policy are:

    1. Give money to the banks in the hopes they increase lending (but they only give more bonuses)

    2. Panhandle consumers.

I think we need to give jobs to people so they can earn the money- increase industry!

Unless the housing market recovers, the banks face systemic failure!

I believe we saw two major failures with MF Global

    I think it will end up being up to $5-$10 Billion dollars in stolen client accounts

I have one contact who they confiscated his entire account- I think he had over $100,000- it's missing. He made a complaint a few days ago that the receipts that prove his account- they were just seized by the receivership committee! They confiscated the evidence of his account! We have JP Morgan trying to sit on the board making decisions on stolen money, when they did the stealing!

We had a COMEX system failure in November. COMEX was ready to default on gold and silver in November. Rather than honor delivery demands in gold and silver- JP Morgan simply stole the money in the accounts that were going to stand for delivery. They had their pockets picked while they were standing in line at the delivery window. Notices of delivery were replaced at stolen accounts!

JP Morgan underwrites a lot of credit default swaps. JP Morgan makes a lot of money in this unregulated insurance. How are the sovereign bonds doing? They're doing lousy. In order to stay neutral, its always a good idea to buy the underlying asset. I think MF Global was set up to fail a long time ago to go down in flames- to steal clients' accounts when the inevitable finally happens. We were on the verge of the sovereign debt in Europe imploding. We saw a near event of an implosion in some of these sovereign bonds markets.

JP Morgan covered their butts by letting MF Global fail, and in the process stealing 140,000 accounts.

Its not just MF Global accounts, its stealing many accounts that used MF Global for their clearing!

The FBI is investigating this, but they havent talked to Corzine yet. WHY!?! Because this is a cover-up, JUST LIKE MADOFF!

JP Morgan averted both a COMEX default and a European sovereign debt implosion, and notice that JP Morgan increased the amount of silver in their registered vaults by precisely the amount that was supposed to be delivered.

This is just another financial 9/11, and THERE WILL BE MORE

If JP Morgan can steal 140,000 futures accounts, what's to stop 250,000 MUTUAL FUND ACCOUNTS FROM BEING STOLEN!?!

The Fed was staring at 20 Lehmans in Europe!! 20 Lehmans almost happened, and the fed rushed in, lowered interest rates. If there is another big implosion and there is another string of contagion and big banks are dead in the morning, don't expect there to be any money in the accounts in the morning.

    I think we're going to see SEVERAL MILLION PRIVATE ACCOUNTS VANISH!

Pension funds, mutual funds- they're all at risk, and people I talk to HAVE NO CLUE.

Put your money in GOLD AND SILVER!

[CrackSmokeRepublican]

BTW, pretty damn ugly chart... maybe buy when it reverses... after all the Hedge Funds liquidate:

http://1.bp.blogspot.com/-CublOjioRE0/T ... aily27.PNG

[abduLMaria]

I'm not one to argue with Jim Willie.  I just think the big "D"(eflation) is a lot stronger than is expected right about now. We may be seeing a lot of  banks and hedge funds go down here in the US, GB, France,Italy, etc.  There's really no mystery about it. I just think that if any of these "Institutions" needs to raise cash pretty quickly for any reason, Gold/Silver are a lot more liquid price wise than other Commodities and can just be  
"dumped"

I'm not a trader but I do know that K-Wave will hit Gold/Silver big as the Global Liquidation ensues, afterwards, these may be a great investment.  I just see down action from here though until the 200 DMA is resettled.  JewTard Rip-off Insanity has run "Talmudically" wild here lately... shameless ripoff and thieving by Jews unabated and unstopped...bonds-banks everywhere are set up for massive shorting--CSR

i was going to say, "i respectfully disagree" - with your original suggestion about waiting a week to buy the exact lows that will come during forced liquidations, margin calls, etc.

when it comes to investing in PM's, i'm not sure if there is a 'short' answer.

of course it helps to watch the market for 6 months to a year before spending any money because then you get an idea of the market behavior, which with precious metals is highly volatile.


consider 3 prospective investors -

relative #1 - who turns to you for help protecting their assets against the tidal wave, who lives close enough that you can help them do the transactions and make sure they don't get screwed / MFGlobal'ed/ Morgan Stanley'd (the last one referring to Morgan Stanley's $4.4 million settlement in 2007 - that's what they  paid to precious metal investors for charging storage fees for non-existent metals.  they settled in cash for the PM's, but had also charged the investors for vault space for metals that were never bought - the $4.4M settled that.)

relative #2 - they are concerned but don't live closeby.

relative #3 - an experienced trader who is already diversified.


in the case of relative #1, i would move today - i wouldn't wait.  i would also put them more into gold than into silver, because silver tends to be more volatile and i wouldn't want them blaming me if it falls 30% some day, though i would review historical charts with them before buying.






relative #2 - with them i would direct them to known trustworthy local & online precious metal dealers and have them buy a small amount just to get a feeling for "how it works".

then i would have them buy more next week.  i would suggest that they do the transaction during the 45 minutes when markets are closed, 5:15 to 6 PM Eastern or on a Saturday morning, because it's less stressful to do a transaction when prices are constant.

then more the next week.  in the course of this buying, they would transact some deals at prices near market lows.


relative #3 - an experienced trader wouldn't really need my advice regarding the timing of purchases.  they could wait patiently and at least buy on the days of the market lows, like Thursday 12.14.11 or back a month or 2 ago when silver dipped to $26 & gold to $1550.


in the example, 2 out of the 3 relatives buy at or near the lows, one by accident, the other by waiting and, as some traders put, "trying to catch a falling knife".  Jim Puplava & Eric King say not to do this.  I disagree with them.  I think it's worth trying to catch the low price of the day, and the low price of the cycle.

a lot of the advice can be summed up as - when buying, never buy when the price is above the 200 day moving average.

when selling, sell when the price is 20% or more above the 200 day moving average.


i would also present silver as a way to buy gold.  the most conservative # i've heard for the long term gold-silver ratio (GSR) is 30 - that's my ratio.  the implication being that at some point in the future, you will be able to trade approx. 3 ounces of silver for 1/10 ounce of gold.  in other words, yesterday December 14 you could buy something - 30 ounces of silver - for $900, which in the future can be traded for 1 ounce of gold.

most market watchers (Jim Sinclair, Jim Rickards, etc.) all put the Gold Silver ratio lower - 20:1, 15:1.  having witnessed a 30:1 GSR earlier this year, i'll stick with that.


one other note about Kitco, Rickards, Harvey Organ - and a lot of the other market watchers & players in precious metals - they are Israel-supporters.      i was kicked off of the Kitco website for talking about Israel's attack on the USS Liberty, or something like that.

[CrackSmokeRepublican]

Not surprised M.A. about Rickards and Kitco-- they definitely want to shape "opinion" on the PMs and Israel.... kind of like "hey I'm your buddy giving you good financial advice on the PMs... subscribe to my newsletter, and Israel is Justified in fighting her enemies..etc..ad nauseam..".  I think they like a "wild and crazy" Israel, Peak Oil and "Terrorism" just  because in general... all the news... gooses their long and short trades in commodities (oil, PMs).
  Looks like gold probably touched support and held.  I think a lot of Hedge Fund Jews are in this game pretty deep.
 

Gold Daily Chart - Gold Rally and Decline Tracks Chart Formation From First Half of Year


This formation, if activated and valid, would target gold to a much higher level than the previous high.

Let's see how this develops. I will be tracking both this and my normal scenario obviously. Both are bullish but this alternative view promises a wilder ride.

The similarity between the big accumulation-liquidation cycle and the previous cycle from March to July is remarkable in many details.

That does not necessarily mean that the next move will be of the same magnitude. But if that pattern holds we get a target of between $2,800 and $3,000 for the next leg up.

I would wait for this to unfold therefore and strongly advise that you not try to get ahead of it.   Any successful trader would gladly give up the first ten percent of the next bull move to wait for confirmation to make sure, as Bernard Baruch used to say among others.     The first level of key resistance is $1620.

Once the current decline is over and the positions have been liquidated, market participants will be sitting on their piles of paper in fear and trembling of what comes next. And 'what comes next' is the key variable.  Will it be a continuation of this pattern, or a repetition of a series of formations in complete recycle?

That is hard to see now, and what might provoke it. Will it be a major quantitative easing in the dollar and euro, or a further liquidation and collapse in the banks and stock markets?

I would prefer a measured bull market move higher, but we must carefully observe and accommodate the changes in the structure of world currencies and the evolution of what we call 'money.'

This is a major engagement in what we have come to call The Currency Wars.

http://jessescrossroadscafe.blogspot.co ... -view.html

[CrackSmokeRepublican]

Looks like the Floor may be in for a rally.

---------
Gold - This is the Week!

Technical observations of mailto:RossClark@shaw.ca">RossClark@shaw.ca

Bob Hoye
Institutional Advisors
Posted Dec 18, 2011
Written Dec 14, 2011

Gold is into the window for an appropriate low leading to up to a yearend rally. The first higher close or close above the average price (Open+High+Low+Close)/4 should trigger a rally back to the 21-day Bollinger Band (currently $1793).  

[CrackSmokeRepublican]

Gold looks like it is in a "pop" zone... either up big or down big at this point:

[Timothy_Fitzpatrick]

Gold & Reversals



Gold elected the Major Weekly Bearish Reversal at 1605 but held the Minor at 1599 be closing at 1600.1. In order to get immediate follow-through on a reversal, you normally have to execute it within just a few ticks. If you elect a Reversal substantially below or above, the market will do one of two things. It will normally move back to the Reversal and test it before resuming the trend. The second option is it will test typically the high of the move for that week.

In the case of Gold, closing about $5 below the Major yet holding the Minor at 1599, set the stage for a retest first of at least the 1605 level or in this case more likely the high of the where the break began, which took place of the 14th at 1646.30. The reaction rally unfolded into the 21st reaching intraday 1646.0. Immediate follow-through would be indicated ONLY by just electing the Reversal such as 1598.9-1598.0. Our first Monthly Bearish Reversal lies at 1465.70 and the next Weekly Bearish is at 1522.70. The major support begins at 1225 and our year-end number is 1434. I may be the only long-term bullish analyst who is bearish on gold near-term. It is often hard to explain to people all the nonsense surrounding gold is just that – nonsense. Everything from fiat to the predictions we will head into hyperinflation are just so wrong, yet to say that guarantees 100 emails of pure hate. Let me explain one more time why there is no inflation NOW despite the fact the Fed created almost $3 trillion of elastic money. When you have almost $60 trillion in debt, forget the derivatives and the unfunded liabilities, that contraction is far greater than the $3 trillion the Fed created. At the very least, there is a bare minimum of $15 trillion that evaporated in the deleveraging in debt on top of all the extreme numbers on derivatives. The efforts of QE1 and QE2 failed to stimulate and they failed to create inflation. We are suffering from DEFLATION at this time that is not yet over. At the most extreme, gold could even collapse back to retest the 1980 high of $875 if we were to see a Quarterly closing BELOW 1113. That would shift the real rally most likely into the 2015-2020 time slot. For those that were at the Conference, we are reaching that point of maximum entropy where everyone who thought of buying has bought, and in the correction is likely to shake the tree.

When will gold rally. When we see new bond offerings go unsold in the USA. The critical place to watch is Europe and Japan. The details will be provided in the upcoming special reports after we get the closings for 2011.

Source: http://www.martinarmstrong.org/files/Go ... /index.htm

[CrackSmokeRepublican]

2012:Year of the Bank Failures

Bob Moriarty
Archives
Jan 11, 2012

It's the turn of the year and New Year Predictions are sprouting like wild flowers after a spring rain. Usually I avoid the temptation to make predictions, I often go back and reread what others have projected and you could do as well tossing a quarter. But this time it's different. This is an easy call and my readers need to know what is coming down the hill like a runaway train.

In 1931 an Austrian bank based in Vienna named the Credit-Anstalt failed. The bank was consider "too big to fail" but turned out in the end to be "too big to bail."

Founded by the Rothschilds in 1855, the Credit-Anstalt ventured past the boring business of simply making business loans into the far more adventurous areas of investing in new ventures from sugar making to automobiles. Due to the size of the bank, smaller and more nimble local bankers snapped up the best loans leaving the giant Credit-Anstalt holding the paper no one else wanted.

For readers who never took a course on banking, it's important for them to know that all banks are subject to a bank run and failure at any time no matter how healthy the bank or economic conditions due to the nature of their business.

When you walk into a bank and deposit money into your checking account, you are loaning money to the bank. They in turn loan out that money: hopefully to credit worthy borrowers who will pay the money back with interest. It's vital for readers to understand the basic business of banks is to borrow short and lend long. When you deposit money you may want it back tomorrow. But when someone borrows money on a house, they may want 30 years to pay it back.

So if for any reason there is a run on a bank, the bank should go under. There are government programs in theory that protect the investor such as the FDIC but in reality, they are to protect the banks by preventing a run on the bank in serious times. Such as today.

It's also important for readers to understand that banks make loans to each other and to governments. Again, lending long and borrowing short. But the key there is that if you walk into a bank and deposit $1 million, your Bank A may loan $1 million to Bank B who in turn loans $1 million to Bank C. If the same money has been loaned out 10 times, the balance sheet of the entire transactions would show $10 million in assets and $9 million in liabilities reflecting the original $1 million in real money.

But any bank in the chain can default and all of a sudden you have $9 million in very real liabilities and nothing in real assets. When we talk about a bank having say $500 billion in assets, we don't mean they own $500 billion in gold or silver or houses or shares of stock; they have $500 billion owed to them and in bad times, that "asset" may be utterly worthless.

The cracks in the dyke during the Great Depression started with the stock market crash in October of 1929. The cracks in the dyke in our current GFC (Global Financial Crisis) became obvious in late June of 2007 when two Hedge Funds run by Bear Sterns collapsed.

By May of 1931, the collapse of the Credit-Anstalt began the far more serious series of banking failures that led to a Bank Holiday in the United States in March of 1933 just after President Roosevelt wasinaugurated.

A similar event occurred in October of 2011 with the sudden and shocking failure of the Dexia Bank in Belgium. Need I remind my readers that we live in perilous times? With the BIS reporting $708 trillion dollars in derivatives at the end of June 2011, it's pretty obvious that when derivatives are 12 times the size of the world economy, there are a lot more liabilities around than assets. Many of those "assets" may have multiple claims on them just as did the billions of dollars of customer's money on deposit with MF Global when it went teats up.

The global banking system has been underwater since the failure of Lehman Brothers in September of 2008. I was doing a lot of radio interviews at the time and I said the entire banking system was on the very edge of total failure. Evidently President Barack Obama and VP Joe Biden agreed with me. There was a discussion within the team of the President Elect as to if they needed to call a bank holiday when they assumed office.

When Biden admitted it in a speech early in 2009 that should have been front-page news. It wasn't and that tells you everything you need to know about the Cheerleaders pretending to be News Reporters today.

The US, and probably the world banking system, was in a state of total and complete failure in September of 2008. Everything governments have done since then has not only been the wrong thing, it's been exactly the opposite of the right thing. If an individual or a company or a bank or a government or a country has for years spent far more than they can afford, the only logical and right solution is to declare bankruptcy, learn from your mistakes and start over. The US government has pasted so many Band-Aids on the sinking ship that the ship is now entirely made of Band-Aids.

For years I have said that the primary reason to own gold and silver is as an insurance policy against financial collapse. We know the collapse is near, that's why I'm calling 2012 the Year of Cascading Bank Failures. Extend and Pretend has passed its sell-by date and we need to clean up the books. That will only happen after a sudden and complete failure of the banking system. It's going to happen very soon. Own some gold, keep some cash and extra food/water. One day soon your bank will close and your checks/credit cards will be worthless.

But when you get beyond the need for an insurance policy against financial collapse, you have investment funds left hopefully. I'll be as blunt as I am ever, gold was cheap at $252, silver was cheap at $4 and I said so. Those who listened to me did well indeed. If on the other hand, you want to pay Eric Sprott a 34% premium for his paper silver or you want to wait until silver is $50 before you conclude it's going to go up 1000% and you should throw every cent you have at it, good luck with that. At $50 silver has already made a moon shot and is up 1100% from the low.

Silver and gold are not cheap now. We may well have hyperinflation and we may well have deflation. I can't see how $708 trillion in derivatives can evaporate as we know they will without there being a world of deleveraging and deflation. You need to consider other financial investments.

I like the juniors of gold and silver and I've spent 50% of my time for the last 10 years visiting projects and reporting on them. Reporting on a project is not a blanket recommendation to buy and I don't give sell signals. There is only one reason to buy a stock and that's because you think it's going higher. There are 100 reasons to sell.

I just got back from a lightening fast 48-hour trip to Nicaragua where I saw one of the most interesting and best run gold projects I have ever visited.

The company is named Corazon Gold (CGW-V) and is run by Patrick Brauckmann as President and CEO. It was formed in March of 2010 to advance a gold project in Nicaragua surrounded by B2 Gold's property. They did an $8 million dollar bought deal in April of 2011 and raised an additional $4.5 million in January of 2011.

The primary project of Corazon is the Santa Domingo project some 200 km east of Managua, the capitol of Nicaragua. Santa Domingo was the first gold project located by the Spanish in the country some 200 years ago. It's been mined on a small scale by artisanal miners ever since and had no modern exploration.

B2 Gold grew out of the management team from Bema Gold in 2007. They own two operating gold mines in Nicaragua including the La Libertad only 10 km away from Santa Domingo. La Libertad produces some 80,000 to 90,000 ounces of gold a year.

CIMG1024

The Santa Domingo deposit grew out of a concession granted to a local mining cooperative in 1980. The local miners continue to mine from shallow (but dangerous) holes in the ground where they go down a rope to hand mine high-grade gold veins. I was knocked out when I visited their processing facility where they were still using ancient design arastras and even a four stamp mill.

The artisanal miners will form teams of about 5 men. One team can mine about 1 ton of ore a day. Their recovery is probably 35-40% and they need 10-gram material at least to be profitable. It also costs them to process the ore through the stamp mill or one of the tiny arastras so at the end of the day, they might make $20 for a day's work. That makes them among the highest paid workers in the country.

Corazon realized the Santa Domingo concession is entirely surrounded by the ground of B2 gold. Back in 1980, the local miners selected what they considered the best ground for their concession. Both Corazon and the mining cooperative realized the way to make the most money and produce the most gold was for the miners to sell the rights of the project to Corazon. Corazon approached them, a deal was cut and Corazon agreed to pay them $5.5 million for Santa Domingo.

Groundwork completed to date shows some 15 km of total vein length among a series of high-grade gold veins. There isn't any question, there is gold there. There is high grade gold there. It is being mined and obviously is mineable.

There are questions to be answered that can only be answered through drilling such as depth of the deposit and type of ore at lower levels but I think Corazon did a brilliant move for both them and for the local community. I don't think they have 5 million ounces of gold but 1 million wouldn't surprise me and B2 Gold is a natural partner/operator.

Corazon began a Phase one 34 hole 5600-meter drill program in September that finished in November of 2011. They began a Phase two drill program in November with a plan to drill somewhere between 5000 and 10,000 meters. They are using one drill now and will add a drill should they need to.

The final payment of $2.5 million on the project is due on April 15, 2012. Corazon has the money in the bank and can pay it any time they wish. The exploration budget is $3.4 million for 2010/2012. I'm quite happy to see them hit the ground running and to keep two drill rigs churning. This is a funny sort of exploration company. They know the gold is there; it's been being mined for 200 years. They just need to count up ounces until someone wants to build a gold mine in Nicaragua.

Obviously there is a world of opportunity in Nicaragua and gold prices of above $1600 make exploration attractive. Corazon is looking for other projects in the country.

I was a fighter pilot when I was 20 and obviously tactics are something I've thought about for 45 years. CEO Brauckmann has pulled off an incredible coup. He owns a gold mine. All he has to do is count ounces. He bought 100% of it for $5.5 million. If he finds 500,000 mineable ounces, his cost per ounce is $11. If he finds 1 million ounces, his cost drops to $5.50 an ounce. Drilling costs $160 a meter but he's drilling structures with a known history.

The locals will be allowed to continue mining. Now they have some money in their pockets they are happy. I spent two days with his man on the ground in Nicaragua, Alejo Bermudez and he is a find. Born in the country, he's spent 30 years working in the US so he's totally comfortable with both cultures. We dropped in on the Minister of Mines for Nicaragua on Friday last. They couldn't do enough for Alejo. I was quite impressed with the Ministry; they made it obvious they wanted to work with outside investors. I was impressed with the entire team at Corazon, everyone was friendly and helpful and the attitude of everyone I met was wonderful.

Nicaragua has been off the radar screens of investors. The management team at B2 Gold discovered the opportunity first and half a dozen juniors are following in their footsteps. Patrick Brauckmann has snapped up one of the nicest projects I have ever visited on great terms for the company but has made sure they will be welcomed with open arms. He has surrounded himself with a brilliant team in the country with a depth of local knowledge unmatched by any company I've visited lately. I think the chances of their success are very high.

I met Patrick at the San Francisco gold show in November. I was impressed enough with the company to go out and buy some shares on the open market. At $.20 they were selling for about the amount of cash they had on hand. The shares are in tight and friendly hands; the company is not carrying any baggage. I expect more drill results soon and I think investors will like them.

Obviously there is a good chance the company will find more deposits but if all they had was Santa Domingo, it has company making potential. The company is well cashed up to support both the property payment due in April and all exploration plans for 2012.

Corazon is an advertiser. I am biased. I have bought shares on the open market. I think they are cheap and I really like them. As always, do your own due diligence.
CIMG1026

CIMG1028

CIMG1041

CIMG1043

CIMG1044

CIMG1048

CIMG1052

Corazon Gold Corp.
CGW-V $.28 (Jan 10, 2012)
RMZFF-OTCBB
60.5 million shares
Corazon Gold website

###

Bob Moriarty
President: 321gold
Archives

http://www.321gold.com/editorials/moria ... 11112.html

[CrackSmokeRepublican]

Some up before the trap is sprung...?

Silver's epic reversal against the Nasdaq:
http://profitimes.com/free-articles/sil ... -reversal/

[Anonymous]

I have been following GOLD since 2004, nearly every year or two, GOLD has suffered a 30% or greater but always sprung back. That correction was just another of the same, likely gold will start to push back at the 1900 level, flirt around there awhile and then move above it, just like it has done every other time.

[CrackSmokeRepublican]

Back at a liquidation event?  

The triangle is narrowing though and if support holds then we could be for an explosive rally, however, if J-Tribe Hedge Funds continue to blow up over their Euro holdings, it could be a general commodities "dump" again to raise cash.... and a fearful one at that.  NY/London Jews (and Shabbos "Goy" style Goyim like Jim Grant or Jim Rogers) are very afraid that Europe will "dump" them and their Talmudic scams first. China is holding more so they get played as suckers for at least this round.

----------

[CrackSmokeRepublican]

Old people in Japan are cashing out their gold apparently.

----------

The Japanese Are Dumping Their Gold
Wolf Richter, Testosterone Pit | May 10, 2012, 9:10 AM | 10,129 | 26


In Japan, people who are old enough to have lived it as adults still reminisce about the bubble that blew up in 1989 when the Nikkei almost hit 40,000 (now at 9,045) and when the sky-high prices of real estate could only go up further.

The slide from the top to reality today has been brutal, and a lot of people lost their shirts. A home changed from being an "investment" to being an "expense." Stocks became toys for traders. And government bonds, because they kept their value though their coupons were practically imperceptible, became the place to go.

And by golly, there suddenly were a lot of them, a veritable tsunami of JGBs that is still building momentum and will reach by the end of this fiscal year one quadrillion yen ($14 trillion), 240% of GDP. But there has been one investment, especially since 1999, that has worked out phenomenally well for the otherwise hapless Japanese investor: gold.

Alas, they're dumping it. And when they're dumping it faster than internal demand can absorb it, the surplus is exported and shows up in the trade statistics of the Ministry of Finance: in fiscal 2006, Japan became a net exporter of gold for the first time since the ministry started tracking it in 1988. Net exports rose every year and built into a crescendo in fiscal 2011, ended March 31, when they surged to 135 tons, an astounding 61% jump from fiscal 2010.

The two largest destinations were Britain and Hong Kong, according to the Ministry of Finance trade data. While Japan has a long history of gold mining, current production is small, ranging from 6.8 tons to 8.9 tons annually over the last decade—hence only a negligible factor in the phenomenon of net exports.

The main sellers were individuals. And one wonders why the love affair with physical gold, one of the few profitable investments the Japanese had access to, is ending despite its truly great run since 1999, when it traded at ¥1,000 per gram, to its peak in August 2011 when it traded at ¥4,745 per gram—the month that bullion house Tanaka Kikinzoku Kogyo K.K. said it bought 15 tons of gold from individuals, five times the normal rate.

There may be reasons that are unique to Japan. Worldwide, the run-up in gold prices might have encouraged individuals to sell their physical gold at an ever quicker pace, but that has not taken place on a massive scale. Rather, a highly plausible reason is that inflation and the fear of inflation have been wrung out of the Japanese psyche over the last 15 years, a period that pundits describe as an infernal descent down the "deflationary spiral":

 

 

As the graph shows, the Japanese were in fact among the few people in the world enjoying actual price stability, with interchanging periods of minor inflation and minor deflation—as opposed to the 27% inflation per decade that the Fed has conjured up and continues to call, moronically, "price stability."

The lack of inflation in Japan has much to do with how expensive everything in Japan used to be during the bubble when Japan was an essentially closed-off market. Over the years, under heavy and consistent pressure from the US, Japan cracked open its borders just a smidgen here and there, allowing cheaper imports to appear, gradually and grudgingly, on the shelves. Read.... The Real Reason for Deflation in Japan.

So, gold has been a great investment, but the Japanese no longer see the need to protect their assets against inflation as its ravages have receded into distant memory. With that fear gone, the motivation to hold on to an asset that has had a phenomenal run turns into the irresistible urge to take profits. But there may be another reason:

"Historically, gold flowed to wealthy countries," said Itsuo Toshima, former Japanese representative at the World Gold Council. And a massive gold outflow, he said, is a sign of Japan's "declining economic power."

In the US, life without Fed-inspired inflation is unimaginable, and investors are struggling with it on a daily basis. "My investing model is ABCD: Anything Bernanke Cannot Destroy: flashlight batteries, canned beans, bottled water, gold, a cabin in the mountains," said David Stockman in an awesome and pungent interview. The director of the Office of Management and Budget under President Reagan said with his usual flair that a "paralyzed" Fed is in its "final days," hostage of Wall Street "robots" that trade in markets that are "artificially medicated." Read the whole interview..... The Emperor is Naked: David Stockman.

Please follow International on Twitter and Facebook.
Follow Wolf Richter on Twitter.

http://www.businessinsider.com/the-japa ... old-2012-5