Oldtent Archives 2010

There is really no doubt about it in my mind whatsoever

Margaret….I am not kidding …I think you go green by end of day/////

Aussie Goldies…………The least said the better.

I read this a cheered up…the public is gonna wake up this year and start piling in by the end of it…

www.zerohedge.com/article/prechter-gold-buy-signal-has-been-triggered

You are a madman.  Keep up the good work.

Here are the lyrics…

Le Metropole Members, 

Paulson feared run on dollar and collapse of Goldman Sachs  

Submitted by cpowell on 05:39PM ET Sunday, January 31, 2010. Section: Daily Dispatches
'Everything that Could Go Bad, Did Not'

By Krishna Guha
Financial Times, London
Sunday, January 31, 2010

http://www.ft.com/cms/s/0/772748d6-0e94-11df-bd79-00144feabdc0.html?ncli…

Hank Paulson feared there would be a run on the dollar during the early phase of the financial crisis when global concerns were focused on the US, the former Treasury secretary has told the Financial Times.

“It was a real concern,” Mr Paulson said in an interview ahead of the release on Monday of his memoir, “On the Brink.” A dollar collapse “would have been catastrophic,” he said. “Everything that could go bad did not go bad. We never had the big dislocation of the dollar.”

When the crisis escalated and went global with the failure of Lehman Brothers in September 2008, the dollar rallied — but Mr Paulson had to grapple with a firestorm of financial failures.

He feared that Goldman Sachs and Morgan Stanley would go down along with Washington Mutual and Wachovia.

Lloyd Blankfein, Goldman Sachs chairman, told him that Goldman would be “next” if speculators succeeded in bringing down Morgan Stanley, the former Treasury secretary said. 

“If they go, we’re next,” Mr Blankfein told Mr Paulson, a former Goldman chairman who had recused himself from decisions relating to his former company.

US officials explored the possibility of mergers between JPMorgan and Morgan Stanley, Goldman and Citigroup, or Goldman and Wachovia, before settling on turning Morgan Stanley and Goldman into banks with access to central bank loans.

Even then Morgan Stanley was not safe until the US Treasury helped seal an investment by Japan’s Mitsubishi UFJ, Mr Paulson writes.

The frenzied manoeuvring came in the three-week period between the failure of Lehman on September 15, 2008, and Columbus Day weekend in early October, when the global financial system was on the verge of meltdown.

“Banks were going down like flies,” Mr Paulson told the FT. As his book details, he was scrambling to secure Tarp bailout funds from Congress. “The timing could not have been worse since we were months or weeks from the election, so you had the collision of markets and politics.â?

Although a Republican, Mr Paulson found it harder to deal with John McCain than Barack Obama — raising the interesting (and unanswered) question of which candidate Mr Paulson voted for.

Mr Paulson said that the turning point in the crisis came when — armed at last with Tarp equity — the US joined other Group of Seven nations to announce comprehensive interventions to guarantee bank funding and access to capital on October 10.

Three days later Mr Paulson pressured nine top US financial institutions into accepting $125 billion in Tarp capital. “I do think it was the defining act,” Mr Paulson said.

Mr Paulson said the US authorities lacked essential tools to deal with a crisis — above all a controlled bankruptcy regime for non-bank financial companies.

He hopes his book conveys “the pace at which things were moving and the number of decisions that had to be made in very short time frames.”

He said he was surprised by the vehemence of the public reaction against bailouts. He told the FT there was “a disconnect” between the way policymakers saw their actions and the way the public perceived them.

“We knew — I knew — that when the markets froze there was going to be a painful impact on the economy a number of weeks out.”

Mr Paulson is frustrated that people do not pay more attention to disasters averted by timely actions — including the move to seize control of Fannie Mae and Freddie Mac.

Instead, most debate centers on the failure to stop Lehman from collapsing, and the decision to rescue insurance giant AIG. 

Critics say the Treasury should have deployed its sole pre-Tarp source of capital, the Exchange Stabilisation Fund, to backstop a rescue. However, Mr Paulson said Treasury lawyers had been through this during the Bear Stearns crisis six months earlier and concluded that it would not be lawful.

Others fault top US officials for not doing a better job of preparing for a Lehman collapse.

Mr Paulson said the US was taken by surprise by the UK bankruptcy administrator’s decision to seize hedge fund assets held by Lehman — a move he said was “devastating.”

He also admitted: “I did not see the money markets moving as quickly as they did” after the Lehman collapse. But he said there were limits to what could have been done in general to mitigate a Lehman failure without precipitating its immediate collapse.

On AIG, Mr Paulson said he had nothing to do with the controversial decision to pay counterparties at par — and found out about it only in December when AIG made a public disclosure.

“The decision to rescue AIG was a Fed authority, a Fed decision, and the Fed was responsible for administering that loan,” he told the FT.

His book hints that the Treasury was less than enthusiastic about supporting the original Federal Reserve loan with later Tarp equity — but Mr Paulson refused to discuss AIG further.

Looking back, Mr Paulson is confident that — notwithstanding criticism — the big calls were the right ones. 

“This Monday morning quarter-backing misses the point — that, guess what, we did take the important actions that it took to stop the system from collapsing.”

* * *

all you need to watch is where the hot money is moving in or out. I agree with you because I have read enough examples of where this is the case. Of course, my problem - and I assume it is also the problem for many other Goldtenters - is how to get the inside track on where the big sums of money are moving day to day on the world markets. I do listen to rumors on what George Soros or Warren Buffett are doing with their money when there is news that they may have a shifting focus. But I also assume that even these rich folks are bit players when it come to the HUGE influential amounts of currency-related or bond-related money movement that unfolds day to day. In my lifetime I never expect to get any insights about where “the hot money” is moving because the big moves happen long before small eggs like me ever hear about it. I think your 19:36 perception is correct, but unfortunately not available as an investment criterion for we small folks in this game. Cheers. Equiz.

Perhaps the rumors about the US creating the earthquake are not so far fetched. US troops arrived very quickly after the quake. Sure they provided water and food but it could have been a great cover for other troops to do recon on their project. There is no other reason to be there now except recon.  That could be why they are only at the airport. What a world we live in.

http://www.rallymonkey.com/video/kenindex.swf

newsjunkiepost.com/2010/01/30/us-military-no-where-to-be-found-in-port-au-prince/

Reporting from Haiti

You have to be in Haiti to see for yourself that no where in Port-au-Prince are troops present or actively helping survivors.

No Aid In Port-au-Prince

I have been driving all week around Port-au-Prince taking photos of the destroyed homes and buildings and as I’ve gone from one end of this city to the other, the US is military is only found at the airport — nice and secured behind those gates.

…

bwaaahahahahahahaaaaa

You just knew they wouldn’t play by the rules, right?

Investment bankers in the U.S. have begun using equity derivatives to convert restricted shares paid as bonuses into cash, side-stepping new guidelines on remuneration which were designed to prevent bankers cashing out for at least three years, according to a headhunter.

The bankers are using over-the-counter equity derivatives strategies such as call options, put options and collars to monetise their shares now, albeit at a discount to what they would receive if they waited for the restrictions to lift.

The purpose of these rules was to insure that the banksters were actually promoting sustainable operation of the business instead of looting people, which could detonate the company’s share price before they could cash out.

So instead they’re taking a sizable haircut.

What does this tell you about the “sustainability” of their practices?

And why over-the-counter derivatives?  They’re bilateral and thus there is no exchange record of what they’ve done.

Time to break up these banks right damn now folks.  Break ‘em all up, shut ‘em down, stop this crap right now.

Oh, and if you’re in the markets?  That’s the clearest indication I’ve ever seen that the very people inside know that it’s all going to blow up.

Again.

Before they could otherwise cash their bonuses out.

Ignore the actions of those on the inside at your peril.

http://market-ticker.org/

Your alive …..yeah …music is good but no words eh.. I had a hard time fitting in “How dry I am ” in the tune…..

This is a soundtrack I’m finishing up and it occurs to me that it could easily be a Goldbug Theme…perhaps a Gold Tent Theme.  Anyway I’ve gotten good feedback so far from other musicians so I wanted to share it with you all: alas, not everything is made of silver!

The City of Gold

www.myspace.com/relpomiraculous

They are in good company.

Cheers, TQ

You’re happy every day. That’s what we like about you. Don’t change.

Ahhh it’s ok ….but thanks ….sometimes I do need a kick in the head Haaa…but nonetheless I think we will be happy tomorrow…

Beware Counterfeiters

By: Kevin Bambrough & David Franklin

Long time readers know that we have written about gold many times over the last ten years, starting with an October 2001 article entitled “All that Glitters is Gold”. We first invested in the precious metal based on the belief that central bank sales were filling a fundamental supply deficit that existed in the gold market. We also wrote that if you believed in gold as a financial instrument you might envision a gold price appreciation of 45% to US$400 per ounce, or even higher, as investors sought to protect their wealth in the ‘bear market’ that followed the 2000 stock meltdown. What a difference nine years have made. In 2010, Central Banks are now close to becoming net buyers of gold while mine output continues to decline. With major indices returning nothing to investors over the last ten years it has been a lost decade for stocks but an excellent decade for gold.Gold’s recent appreciation in US dollars has led some market commentators to question its fair value. This is nothing new for gold – it has been criticized and downplayed as an asset ever since it came off its previous peak in 1980 of US$850 per ounce. In our view, however, it is not gold’s value that is in question; it is the value of paper money. Let us consider the supply and demand fundamentals of paper money. Clearly, the supply of paper money is technically infinite. This has, of course, not always been the case. For millennia, money was commodity based - its value was linked to goods produced from land and labour. It was impossible to counterfeit wheat, nickel, copper or other commodities and therefore impossible to counterfeit money. Money was viewed as a link to, or representative of, productive capacity. If you had money, you had the right to trade it in for something real, and therefore possessed real wealth.Historically, gold, principally because of its preciousness, has been the commodity into which paper money has been convertible. Each paper note represented tangible, stored gold and included a promise to convert that piece of paper into a specific quantity of gold on demand. That “promise” provided an inherent protection to the holder and ensured that governments couldn’t print money indiscriminately. The link between paper money and gold has been lost for many decades. With respect to the US dollar, the world’s reserve currency, it was severed during the last century during two stressful economic periods. The first official break took place during the Great Depression. The second break took place during the Nixon-era in the 70s. These events are instructive and warrant brief consideration. While there are several contributing factors to the Great Depression, it was the money supply growth in the preceding years under the supervision of the Federal Reserve that was, in our opinion, the greatest contributor. The Federal Reserve System was created in 1913 on a promise of stabilizing the banking system. What followed instead was an unprecedented growth in fractional reserve banking, as well as the money supply, which helped fuel the roaring 20’s. The aggressive money printing created inflated values in bonds and stocks, which peaked in 1929. When the market began its precipitous slide, and the public began to realize that stock and bond values were artificially high, the populace began to convert its cash holdings into gold. The government lacked the ability to satisfy that demand and was thus forced to renege on the currency’s founding promise of gold convertibility. It’s important to point out that without this original promise of convertibility for citizens, the currency may never have been adopted. In 1933, The Gold Reserve Act was passed by Congress and formalized into law the breaking of the gold standard. This law provided for a controlled-currency issue through the Federal Reserve System which was non-redeemable in gold. Although the link to anything tangible had been broken, the citizens had little choice but to continue using these non-redeemable dollars as a medium of exchange. The currency had already been broadly accepted, proven convenient and a perception of safety had already become entrenched.After forty years of continued dollar printing, in August, 1971, President Nixon effectively declared the US dollar to be a completely “fiat” currency by refusing to allow foreign governments to convert their US dollar holdings into gold. The right of conversion which had been granted under the post World War II, Bretton Woods agreement could not be honoured because of decades of money supply expansion. The original ‘promise’, which had vaulted US dollar to its status as a global reserve currency and a stable store of value, was now completely broken. These historical events resulted in a world in which all currencies are fiat; they are not backed by gold or any other tangible asset. The supply is infinite. In fact, the production of today’s newly created paper money in relation to historical commodity-based money is akin to counterfeiting. A US dollar printed today has no ties to anything tangible and as a result carries only four cents of the equivalent purchasing power of a gold-backed dollar of 1913. It is ironic that in a poor choice of wording on Wikipedia, the definition of counterfeiting states that “it is usually pursued aggressively by all governments.” It is only because the evolution of money has occurred slowly over generations that the obvious flaw with fiat currency is not widely understood.The demand for paper money in its various forms has remained, in our view, surprisingly high. The public has, for the most part, been content to trust paper money and hold it in various forms (cash, money-market funds and bonds), even without any yield. Presumably, this is because it is perceived as being “safe”. Bonds continue to be viewed and treated as highly conservative and ultimately “safe” monetary instruments. We are of the view that long-dated government bonds are one of the most speculative asset classes commonly held today. In order to truly value a long-dated government bond one must speculate what its future proceeds will be able to purchase in real goods and services. A prospective purchaser must try to determine the expected “real return”. In the current environment of excessive government deficits and increased debt issuance, we feel certain that long-term bond holders will be disappointed. Quantitative Easing, a radical form of monetary policy which allows for the direct printing of money by central banks in order to purchase government debt (or other undesirable bonds of even lower quality) will ensure all varieties of paper money will not enjoy nearly as much purchasing power in ten or twenty years as they do today. We believe the yields being offered today on such instruments, when compounded over their duration, will prove to be immaterial considering the total loss of purchasing power suffered by their holders. We are gold investors because we have made a specific and calculated bet against paper money. Simply put, we are betting against paper money as a store of value. We believe its supply will continue to increase. We do not believe that the world’s major governments have any stake left in protecting it. Government debt loads have grown so massive that printing them away has become obligatory - there is no longer any other feasible option left. In our view, the savers of the world should already be outraged by the dilution they have been forced to suffer at the hands of the Central Banks. Are we to infer that the limited reaction of savers to the combination of zero interest rates and debasement of currency is a result of “learned helplessness”?For those that don’t accept savings dilution as the ordinary course of business, how do investors protect themselves from this loss of purchasing power? We feel a conservative approach would be to ignore nominal prices entirely and focus on building real wealth with a strong weighting towards tangible investments. As currencies are debased it is ‘relative values’ that investors should use to make investment decisions, since nominal prices can be distorted. In the case of gold, it is pointless to debate its value in US dollars. There is no longer any tie between the two and it’s clearly the value of paper money that should now be on trial, not gold. In future editions of Markets at a Glance we will continue to explore the investment themes and businesses that we feel that meet this strong relative valuation criteria.

We also wanted to prepare our readers and clients for the next leg of the gold bull market as it will prove to be extremely volatile. Gold bull markets are unique in that buying becomes driven by both fear and greed. Gold is quickly moving into the hands of those who are unwilling to gamble on fiat currencies or bonds as a store a value. The new owners of gold are unconcerned with its lack of yield but instead are focused on its historic ability to preserve wealth and its unquestionable value. Given the difficulty we have valuing paper money, it becomes extremely difficult to come up with a reasoned price target for gold. Today’s gold market is significantly different from the gold market of the 1970s for two reasons: 1) Central Banks are more likely to be buyers of gold today and 2) They clearly have little ability to dramatically raise interest rates with the massive increases in government issued debt. Thus, it is easy to envision a similar twenty-five fold increase in the gold price that was seen between 1970 and 1980, which would result in a gold price today above $6,000 per ounce. We expect the often quoted “1980 inflation adjusted high” of approximately $2,200 to be achieved in short order. These targets may well prove to be irrelevant, however, as the quality of our lives will be more greatly impacted by the continued evolution of our money and how the general public chooses to value it, or not.

“We go down tomorrow. And down for awhile yet. This carnage is far from over, and any bumps up on the way down are simply to sucker in more…well, gold suckers.”

You sound rather sure of yourself.  Have you suddenly become omniscient?  I don’t know if we are going up or down tomorrow, seems more like a coin flip to me, but there is no reason for you to berate our friend Irish for his views.

You are sounding like a guy that has sold all his PM shares and is hoping to buy back at a lower price.  This may not be the case but it sure sounds like it.

Cheers, ipso

my Senator demanding the transparency of government that we are entitled to as citizens. Why oh why did I waste my time? Shoot the bastards dead, they deserve it. Here’s the response, italics are mine for emphasis.

Dear Robert,

Thank you for writing to me with your thoughts on the legislative process. I appreciate your taking the time to get in touch.

I strongly believe in transparency and in holding Congress accountable not only for its legislative work but also for all Congressional activities and responsibilities. Particularly when legislation as monumental as health insurance reform is being considered, I feel it is important to give the public full access to the proposals we consider on the floor of the Senate. You may be pleased to know that Congressional leadership has pledged to make health insurance reform legislation available on the Internet at least 72 hours prior to potential votes.

The legislative process should always be fair and accessible to the American people, and I will continue working with my colleagues to ensure proper transparency for the work we do as your Congressional representatives.

I will continue to listen closely to what you and other Coloradans have to say about matters before Congress, the concerns of our communities, and the issues facing Colorado and the nation. My job is not about merely supporting or opposing legislation; it is also about bridging the divide that has paralyzed our nation’s politics. For more information about my positions and to learn how my office can assist you, please visit my website at www.markudall.senate.gov.

Warm regards,

Mark Udall

All I can say is if I ran into my buddy Mark on the street I would punch him in the nose, and take the fine, or imprisonment happily.

I am beginning to think that it makes no difference what you KNOW about and have been involved with for most of your life - it only matters if you can figure out where the HOT money is moving in or moving out.  Very little seems to work the way it should in markets anymore or maybe I just don’t know anything! 

How many times are you going to post that “we’re gonna have runnup into tomorrow”. Then when gold and silver finally do turn back up, you’ll say, “see, I told you so, I felt it in my bones.”

The only time gold is going back up is when the charred bodies of gold-bug-wannabees are stacked up in the streets.

We go down tomorrow. And down for awhile yet. This carnage is far from over, and any bumps up on the way down are simply to sucker in more…well, gold suckers.

Thanks for the Trader Dan comments…..I liked his take on the wheat market. Makes me think I should have been sellin’ wheat instead of buyin’ nat gas. Only invest in a market ya know something about. ha!

All the best.——-aggie.

Sorry Ororeef - I feel sure that must have been my mother-in-law !

I have the feeling we will just keep going right up the ladder tonight ..and have a good up day tomorrow …

In its budget proposal to be released on Monday, the White House predicts a record $1.6 trillion budget deficit for the fiscal year that ends September 30, the Capitol Hill source said.