Saturday, 4 December 2010

Weekend Update – December 04 2010

Flight to Tangible Assets.

Baltic Dry Index. 2168 -32
LIR Gold Target by 2019: $30,000. Revised.

"The dollar will be wiped out."

Dr. Franz Pick

Has a flight into tangible assets started? It’s beginning to look like it might have. Hardly surprising with “Helicopter” Ben Bernanke already talking about QE3, if not QE forever, and Germany’s Chancellor Merkel talking about pulling Germany out of the euro. President Nixon’s great blunder of August 15 1971, putting the world on a fiat currency, dollar reserve standard, is coming to its end, this decade, possibly as early as next year. The benefits of fiat currency were all front loaded and long since dissipated by the G-7. Now to keep the whole casino capitalist, derivatives gambling system functioning, we have entered the age of Latin American style monetisation. The last holdout was the ECB, but they now seem to have clamoured aboard the monetisation band wagon. Once on QE it’s impossible to stop, without triggering the very event QE was adopted to prevent. Tangible assets and a new stock market bubble it is. Stay long precious metals.

Our central banksters are so deep into heresy, they all continue swearing black is white, and there’s no need for a bailout until suddenly one day there is. 2011 looks like being a year of serial currency crises.

"The paper standard is self-destructive."

Hans F. Sennholz

Bernanke Won't Rule Out 'QE3'

12/03/10 - 05:30 PM EST

NEW YORK (TheStreet) -- Federal Reserve Chairman Ben Bernanke isn't ruling further quantitative easing measures beyond the Fed's initial plan to purchase $600 billion worth of Treasury securities by the middle of next year.

In an interview taped on Nov. 30 to be aired on CBS' 60 Minutes this coming Sunday, Bernanke "explains why the Fed announced its intention to buy $600 billion in Treasury securities, defending against charges the move will lead to inflation and not ruling out the purchase of more," according to a statement on the network's Web site.

The Fed announced its plans to buy $600 billion worth of longer-term Treasury securities on Nov. 3, saying it would purchase roughly $75 billion each month and look to complete the program by the end of the second quarter.

----Bernanke, who spoke to 60 Minutes correspondent Scott Pelley in Columbus, Ohio, also discusses "deepening unemployment, the prospects of a second recession and taxes" in the interview, which will air at 7 p.m. ET on Sunday.

Angela Merkel warned that Germany could abandon the euro

German chancellor said to have made comments during an EU summit dinner in Brussels at the end of October

Friday 3 December 2010 18.05 GMT

The German chancellor, Angela Merkel, has warned for the first time that her country could abandon the euro if she fails in her contested campaign to establish a new regime for the single currency, the Guardian has learned.

At an EU summit in Brussels at the end of October that was dominated by the euro crisis and wrangling over whether to bail out Ireland, Merkel became embroiled in a row with the Greek prime minister, George Papandreou, according to participants at the event's Thursday dinner.

Merkel's central aim, which she achieved, was to win agreement on re-opening the Lisbon treaty so a permanent system of bailout funding and investor losses could be established to deal with debt crises that have laid Greece and Ireland low and are threatening Portugal and Spain. The Germans also called for bailed-out countries to lose voting rights in EU councils.

At the Brussels dinner on 28 October attended by 27 EU heads of government or state, the presidents of the European commission and council, and the head of the European Central Bank, witnesses said Papandreou accused Merkel of tabling proposals that were "undemocratic".

"If this is the sort of club the euro is becoming, perhaps Germany should leave," Merkel replied, according to non-German government figures at the dinner. It was the first time in the 10 months since the euro was plunged into a fight for its survival that Germany, the EU's economic powerhouse and the lynchpin of the euro's viability, had suggested that quitting the currency is an option, however unlikely.

-----EU finance ministers are to meet again early next week ahead of the summit on 16-17 December. The mood in Brussels is febrile and there have been rumours of another extraordinary summit or session of finance ministers this weekend.

Officials said today there were "no plans" for a weekend session. But it is virtually taken for granted that Portugal will need to be bailed out and the €750bn rescue fund agreed in May may need to be increased as insurance against a Spanish emergency. Two EU ambassadors told the Guardian Portugal would need to be rescued very soon, despite repeated public statements to the contrary.


So no one should be very surprised that fiat currency is increasingly being parked in tangible assets of long term intrinsic value.

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F.A. von Hayek

Mystery trader captures 80pc of London's copper market

A single trader has gobbled up to four-fifths of the copper traded in London, stockpiling it in warehouses.

By Rowena Mason, Energy Correspondent 11:30AM GMT 03 Dec 2010

The unknown buyer has been building up the dominant position since at least last week, putting a squeeze on the market.

According to the rules of the London Metal Exchange, the trader must lend out copper if it holds between 50pc and 80pc of the total to maintain day-to-day liquidity in the market. The trader is currently lending at a 0.5pc premium to the cash price.

The premium for spot price copper over delivery in three months' time reached $89 in the middle of this week - the highest in two years.

Stockpiles in London have fallen by more than a third since their levels at the beginning of the year.

LME copper was steady at $8,720 per tonne this morning, having reached a high of $8,732 earlier. A record price of $8,966 was hit in mid-November.

The large position is not the only reason the copper price is high.

There are fears of a shortfall in supply next year, as mining production is not expected to keep pace with rebounding demand following the recession.

Two US investment banks and one UK company also want to launch exchange-traded funds linked to copper, which is likely to suck demand out of the market further.

Perhaps our mystery buyer is merely positioning ahead of our arriving age of e-mobility. Electric vehicles start arriving in quantity in 2011. Recharging points start arriving too from next year onwards. By 2012 we will have serious feedback on the pluses and minuses of EVs from the early adopters and fleet users. As that feedback gets acted upon by manufacturers, and as EV technology advances, EVs will start to take off 2015 onwards, I believe. But will we have enough copper to support it?

Shanghai powers up EV hub with £2.8bn investment programme

City official reveals plans to produce 100,000 electric vehicles a year by 2012

06 Sep 2010

China's position as one of the world's leading markets for electric vehicles (EVs) was underlined yesterday when government officials in Shanghai announced plans to invest 30bn yuan (£2.86bn) in the sector by 2012

According to reports in the China Daily newspaper, the city will build 25,000 charging stations for battery or hybrid power vehicles over the next two years.

Speaking at the International Forum on Chinese Automobile Industry Development in Tianjin, Wang Zhe, an official with Shanghai's new energy automobile promotion office, said the city was aiming to establish itself as one of the world's largest hubs for EVs.

"With government support in purchasing, R&D and infrastructure, Shanghai will be able to produce 100,000 new energy vehicles every year, including 60,000 passenger vehicles by 2012," he said. "About 20,000 of them will be for private use."

The city is also applying to the National Development and Reform Commission for additional subsidies for private buyers of other alternative energy vehicles.

"The history of paper money is an account of abuse, mismanagement, and financial disaster."

Richard M. Ebeling


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