Wednesday, November 30, 2005

Houses Sell for Gold

In addition to the sale of a house in Vietnam requiring gold, the same applies to substantial business transactions. Gold always has been, is and always will be actual real money, nobody's liability, despite the Keynesian Barbarous Relic Crowd propaganda.

The same applies to silver.

From Tuoi Tre, Ho Chi Minh City, Vietnam
Saturday, November 26, 2005

Over the last two weeks real estate agents have had few customers. Doan Khac Thuat, director of Saigon real estate trading, explained that the dramatic gold price increase has caused trading activities to come to a halt.

Currently payment in real estate is undertaken by gold, not cash, and with such a dramatic price increase, clients will have to pay tens of millions of Vietnamese dong more for a house valued at 1,000 taels of gold.

Mr Thuat related how a deal failed last week due to a last-minute decision, with the buyer refusing to buy a house when he heard that the price exceeded the threshold of VND 900,000. There is a tendency among buyers to wait for gold prices to cool.

Truong Anh Tuan, director of Hoang Quan Real Estate, also said that numerous deals fell through last week. He said that houses valued at 2,000-3,000 taels of gold cannot sell these days, and other brokers revealed that no successful deals have been made recently.

The price rise has brought loss to those who borrow gold to buy land and houses. Ngo Xuan Quy from Tan Phu district, Ho Chi Minh City, one such individual said that the gold price was VND 890,000 per tael when he borrowed gold but it has now risen to VND 940,000 per tael, equating to a loss of VND50mil over half of month.

According to Nguyen Ngoc Duong, deputy director general of Van Phat Hung, the continuous price increase will prompt investors to buy gold instead of houses and land as the profit made by real estate investment cannot offset the increase of gold prices. If the gold price keeps increasing, the real estate market will remain frozen.

According to Lam Van Chuc, director of Phuc Duc, the current real estate market has been narrowed compared to the same period last year. On Tran Nao and Luong Dinh Cua streets, where 110 real estate centers used to practice, there are now only 10 companies operating.

Mr Chuc went on to say that real estate businesses are facing big difficulties due to stagnant activities, while some have to pay large sums of interest to banks. "If the situation continues, 30 percent of real estate businesses will go bankrupt," he said.


Monday, November 28, 2005

Gold and Silver Are About To Get Tail Winds

The US Dollar is up to a resistance level established during the first quarter of 2004:
which you can see on this 2 year chart
in addition to having stopped going up along the top of the upward sloping channel that it is in:
which you can see on this 6 month chart
in addition to having formed a 2-b end of upward trend signal last Thursday.
Things are looking terrible for the US Dollar. Three strikes and you're out?

Since the Dow Jones Industrial Average is back up to its resistance level of early this year:
which can be seen on this 3 year chart
it would be a good time for non Americans to sell their US equities and convert their proceeds of US Dollars into their home fiat tokens (currencies or even money as some people call them) while the US Dollar is strong against their home fiat tokens. It is a good time for non Americans to lock in both their equity gains and foreign exchange gains. On top of that, The Dow was up 6 days in a row, an end of upward trend signal, as of last Friday. An extra reason for selling their equities, and then selling their US Dollar proceeds for their home tokens.

"A general dissolution of principles and manners will more surely overthrow the liberties of America than the whole force of the common enemy. While the people are virtuous they cannot be subdued; but when once they lose their virtue then will be ready to surrender their liberties to the first external or internal invader." -- Samuel Adams

Tuesday, November 15, 2005

Oops! There is that word **systemic** again

Risk Measurement and Systemic Risk - November 8, 2005

Speech by André Icard, Deputy General Manager of the Bank for International Settlements, at the Fourth Joint Central Bank Research Conference on Risk Measurement and Systemic Risk, European Central Bank, Frankfurt, 8 November 2005


In addition, the number of counterparties big enough to accommodate our business needs is very limited, especially in the domain of OTC derivatives. As this limits the number of eligible investments and counterparties, the BIS runs significant credit risk and business volume concentrations. In fact, the resulting triangularity between credit quality, liquidity and concentration is exacerbated not only by the growth of our own business volume, but also by the continuing merger activity among issuers and counterparties. As most of you will agree, a situation like this requires careful monitoring and management of the resulting risks; and models alone, though helpful, do not guarantee that we get such a trade-off right. Furthermore, the use of collateral can help mitigate the counterparty risk posed by positions in OTC derivatives, but leaves open a significant part of the risk involved.

The last point is of some importance, as a relatively small number of institutions has become key to the integrity and smooth functioning of quite a number of markets. As these players combine various forms of intermediation activities, on and off balance sheet, it is conceivable that problems in one of these activity areas could affect the activity of other parts of the firm, and thus spread across various markets. Idiosyncratic shocks to key bank or non-bank institutions, particularly when coinciding with systematic factors, could thus become systemic. Indeed, the concentration phenomenon that I identified in the first part of my talk as a feature of the BIS’s risk exposure reappears here as a potential concern about the system’s "plumbing".

While big, Refco was probably not big enough to matter in any systemic sense, and its crucial futures brokerage continued to be operational. But the events surrounding its demise offer a taste of how the proverbial "flap of a butterfly’s wing" could cause repercussions throughout the financial system by affecting parts of the market infrastructure. What if a bigger broker with more of a presence in OTC instruments had been hit by the same event? At the risk of overemphasising the point, I find it relatively easy to imagine that cases involving bigger institutions with more complex net positions would have much broader implications.


US Fed to Discontinue Publishing M3 Numbers

Discontinuance of M3

Release Date: November 10, 2005
Release dates | Historical data | About
Discontinuance of M3

On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate. The Board will also cease publishing the following components: large-denomination time deposits, repurchase agreements (RPs), and Eurodollars. The Board will continue to publish institutional money market mutual funds as a memorandum item in this release.

Measures of large-denomination time deposits will continue to be published by the Board in the Flow of Funds Accounts (Z.1 release) on a quarterly basis and in the H.8 release on a weekly basis (for commercial banks).


Unbelievable!!! What does the Fed have to hide in the near future? The Fed produces digital US Dollars. This is like GM (General Motors) announcing that it will no longer report how many vehicles it produces.

The US economy is rolling over slowly here and now since where ever you turn there is too much debt. There are limits to how much can be borrowed just to consume. Well, the US is hitting those limits. Federal income tax revenue is decreasing. There are serious increasing "money" supply problems and increasing price problems in the US. The Fed created the increasing price problems by increasing the "money" supply. Traditionally the Fed increases interest rates to decrease the increasing price problem. If the Fed does that now, it will crash the US economy, and Americans will know that it was the Fed that did it. So politically it looks like the Fed will not be allowed to do that. That it will have to stand aside and let price inflation rip. That it will have to compound the increasing price problem by creating even more digital US dollars out of thin air (essentially what counterfieters do) to give to the US Treasury since its revenues are going to be substantially decreasing, thus compounding even more the price increasing/inflation problem. This part Americans will not understand. Essentially they will not really know who or what to blame for increasing prices that get really wild. No longer publishing M3 numbers is just part of the con.

Saturday, November 12, 2005

Hugo Salinas Price's Message Goes to Sao Paolo

"Mexican Congressmen are going to Sao Paolo, Brazil, for a meeting of the "Latin American Parliament" on Nov. 24 and following days.

Among the Congressmen included in the delegation is a group from the three main political parties in Mexico (who are totally at odds on other matters!) who will make a presentation divided into three parts, regarding silver as a currency which can help unite the economies and politics of the region.

One party member will present the history of silver, why it went out of circulation.

A member of another party will present the way that silver can be reintroduced into circulation permanently - a coin with no nominal face value, whose value will be quoted in a similar fashion (similar seigniorage) by participating Central Banks in each country's local currency, and with the provision that no quote can be reduced, once given out.

Yet another member of another party will present the social, economic and political adantages of placing such a coin into circulation.

After the dismal failure by the US at the recent get-together in Buenos Aires, this new and imaginative proposal may well receive close attention and - who knows? - may spark interest in the Mexican plan, for reintroduction of silver into circulation, in other countries of Latin America, all of which desperately need new and inspiring ideas besides the outworn dollar-dependency song.

So, let's hope these courageous Congressmen are successful in transmitting the message of real money as a "liquid financial 'cushion'" for savers (see Howard Kurlitz's article "Greenspan's Legacy of Debt")

A financial cushion that has a built-in capacity to respond to inflation AND the possibility of rising in value as silver goes up.

So, Mexico's message goes international." - Hugo Salinas Price

Thursday, November 10, 2005

Silver News

Ok, some tidbits from LeMetropole's Cafe:


Something extraordinary IS GOING ON with silver. The open interest rose to a multi-decade high at 143,966 contracts, up another 2833. The OI dichotomy between silver and gold becomes more pronounced on a daily basis. Same MIDAS analysis. Some mega players are loading up on futures positions before they go after the physical silver market. Stand by for some serious upside silver fireworks in the weeks ahead … like a $1 move up in a single trading session."

My local gold & silver dealer, _which is the biggest wholesaler in town_, has just called to beg me to lent him 200 kilos of silver, because Peñoles is way behind in his regular deliveries and the local market here in Guadalajara is undergoing a shortage of silver.
All the best

Wednesday, November 09, 2005

Shanghai Gold Exchange Launches Night Sessions

Gold bourse opens for night trading today

Zhang Liuhao
2005-11-08 Beijing Time
CHINA'S gold investors need no longer worry about prices fluctuating during the night and not being able to anything about it because the Shanghai Gold Exchange is launching night sessions for trading on a trial basis from today, the Oriental Morning Post said.

Shanghai will be the first bourse to open for night trading, according to the Shanghai-based newspaper.

The night sessions will run from 8:55pm to 11:30pm every Monday to Thursday, but close on Fridays, weekends and holidays.

The Shanghai Gold Exchange allows only institutional investors to trade in the metal. Individual investors can trade through commercial banks in their deposit accounts but can't hold real gold, only "paper gold" as it is known in the industry.

The exchange, China's sole bourse for the precious metal, introduced the 50-gram gold bullion for trading last year, which was considered a step toward allowing individual investors to have direct transactions in the precious metal.

Gold trading volume topped 430.58 tons on the Shanghai bourse in the first half of 2005, a year-on-year rise of 49 percent, while trading value rose 58.96 percent to 49.36 billion yuan (US$6.10 billion).

Tuesday, November 08, 2005

The US Dollar Topping Pattern - II

Here is how the dollar looks after Monday, November 8:
A futures chart

The double top to the right hand top failed. The head and shoulders right hand top failed. Then a bullish upside down head and shoulders developed and the dollar went into new highs for this rally. Still, two end of upward trend signals got generated. This is bearish for the dollar even if they failed.

A double top can still be developing. A higher right hand top can be a final strong test/shake out of any weak shorts still left in the market. When there is a bullish double bottom in a market, the ideal bottom is when the right hand bottom goes lower than the left hand bottom which is a final shake out of weak longs. Same goes for the inverse.

The dollar is up 3 days in a row as of Monday. If it closes up a 4th day, that would be bearish for the dollar since that would be an end of upward trend signal.

The dollar is also up near the top of its upward sloping channel. Bearish.

Gold is definately down in over sold territory.

I'm still very bearish on the US dollar.