Get Gold For The Next 20 years.

Baltic Dry Index. 903  +28

LIR Gold Target by 2019: $30,000.  Revised due to QE programs.

"All previous attempts to base money solely on intangibles such as credit or government edict or fiat have ended in inflationary panic and disaster."

Donald Hoppe

More on gold after this. Say goodbye to EMU Greece. You know that the end is near when Greece’s biggest company bottles out. When the going gets tough, Coca-Cola gets going to London and Switzerland. By now, even the dumbest Greek politician can see that Greece needs to default, leave the EMU, devalue and start to reform.

Greece's biggest company Coca-Cola Hellenic moves abroad

Greece's largest company is to move its headquarters to Switzerland and list its shares in London, in a further blow to the struggling eurozone country.

2:28PM BST 11 Oct 2012

Drinks bottler Coca-Cola Hellenic (CCH), which already has secondary stock listings in the UK and New York, said in a statement that leaving Greece is the right move at this time.

"A primary listing on Europe's biggest and most liquid stock exchange reflects better the international character of Coca Cola Hellenic's business activities and shareholder base," the company said.

It added that the move would improve access to equity and debt capital markets and increase its flexibility in raising new funds.

Shareholders, most of whom are abroad, will exchange their stock for shares in Coca Cola HBC AG, based in Switzerland. Most investors have already accepted the plan after long complaining about Greek taxes, according to Reuters.

The company, in which The Coca-Cola Co of the US has a 23pc stake, bottles drinks in 28 countries from Russia to Nigeria. Despite saying that Greece comprises just 5pc of its business and that its plants in the country will operate as normal, chief executive Dimitris Lois said the move "makes clear business sense".

Analysts agreed, adding that it was yet another setback for a Greek economy mired in its fifth year of recession and grappling with an unemployment rate of 25.1pc.

"The Greek bourse is losing a very good company and the London Stock Exchange is gaining a very important group," Manos Hatzidakis, of Beta Securities in Athens, told Reuters.

"It's very bad news for the Greek economy and bourse."

More

http://www.telegraph.co.uk/finance/financialcrisis/9601942/Greeces-biggest-company-Coca-Cola-Hellenic-moves-abroad.html

Now back to the case for owning some gold. Pimco, the world’s largest bond fund and now part of Germany’s giant Allianze  group, makes the case more persuasively than most. I would just add that holding in addition some of gold’s poor cousin silver, is equally valid. Once a real self-sustainable recovery gets underway, even if aperhaps still a few years off, all the QE new money parked at the central banks will miraculously decamp from the central banks and flow into hedge funds and their ilk, setting off  a stampede into wild speculation and tangible asset accumulation. The age of the great inflation will then unleash itself on the world.  

"There can be no other criterion, no other standard than gold. Yes, gold which never changes, which can be shaped into ingots, bars, coins, which has no nationality and which is eternally and universally accepted as the unalterable fiduciary value par excellence."

Charles De Gaulle

GOLD – The Simple Facts

Nicholas J. Johnson, Mihir P. Worah  October 2012

When it comes to investing in gold, investors often see the world in black and white. Some people have a deep, almost religious conviction that gold is a useless, barbarous relic with no yield; it’s an asset no rational investor would ever want. Others love it, seeing it as the only asset that can offer protection from the coming financial catastrophe, which is always just around the corner.

Our views are more nuanced and, we believe, provide a balanced framework for assessing value. Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies.

We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio. The supply of gold is constrained, and we see demand increasing consistent with global economic growth on a per capita basis. Regarding inflation in particular, we feel that the Federal Reserve’s decision to begin a third round of quantitative easing makes gold even more attractive.

We see the Fed’s actions in the wake of the financial crisis as a paradigm shift whereby the Fed is attempting to ease financial conditions and encourage risk-taking by increasing inflation expectations. Its policies will likely result in continuous negative real interest rates because nominal rates will be fixed at close to 0% for the foreseeable future.

To be sure, gold isn’t the only asset with the potential to hold its value in inflationary times. For U.S. investors, at least, Treasury Inflation-Protected Securities (TIPS) offer an explicit inflation hedge. What’s more, TIPS tend to be less volatile than gold and, if held to maturity, are guaranteed to receive their principal back – barring a U.S. government default (which we see as incredibly improbable). Still, history shows that gold is highly correlated to inflation and has unique supply and demand characteristics that potentially lead to attractive valuations. 

A unique store of value
 

For more than a millennium, gold has served as a store of value and a medium of exchange. It has broadly managed to maintain its real value, even as various currency regimes have come and gone. The reason is that the supply of gold is not at the whim of any governmental power; it is fundamentally supply constrained. Total outstanding above-ground gold stocks – the amount that has been extracted over the past few millennia – are roughly 155,000 metric tons. Each year mines supply roughly 2,600 additional metric tons, or 1.7% of the outstanding total. This is why gold can be thought of as the currency without a printing press.

The downside of gold is that it generates no interest. One ounce of gold today will still be only one ounce next year and the year after that. Because of this, gold is sometimes referred to as a non-productive financial asset, but we feel this characterization is misleading. Rather, we believe gold should not be thought of as a substitute for equities or corporate bonds. These have equity or default risk and therefore convey risk premiums.

Instead, gold should be thought of as a currency, one which pays no interest. Dollars, euro, yen and other currencies can be deposited to receive interest, and this rate of interest is meant to compensate for the decline in the value of paper currencies via inflation. Gold, in contrast, maintains its real value over time so no interest is necessary.

Today, the forward-looking return on holding U.S. dollars, and most other major currencies, has been artificially lowered by the Fed’s commitment to keep interest rates pegged at near zero for the next few years; real yields on U.S. government bonds are negative out to 20 years. In such a world, we believe the desire and willingness of investors to hold gold relative to other currencies increases dramatically, creating the potential for continued price appreciation.

----The price of gold in real or inflation-adjusted terms is less affected by the rate of inflation and more impacted by the level of real interest rates because as discussed previously, it is the real interest rate that drives the relative attractiveness of holding gold relative to other currencies. With real interest rates negative on average for the next 20 years, it is of little surprise that gold is trading near its all-time inflation-adjusted high.

Even the inflation-adjusted value of gold doesn’t tell the whole story, however. Thanks to productivity gains and economic growth, per capita GDP is significantly higher today than 30 years ago. Thus, the average person today has more wealth and, all else being equal, can afford to pay relatively more for gold.

To Chinese, gold has never seemed less expensive

Figure 2 shows the ratio of gold prices to per capita GDP in the U.S. and China. In dollar terms, gold is still 34% below its 1980 peak, as U.S. per capita GDP is higher today. Furthermore, this is a relatively U.S. centric view, and considering that China represents the largest source of global gold demand, we believe investors take an overly myopic view at their peril. Chinese per capita GDP has grown at an 18% annualized rate for the past 10 years, compared with just 3% per year in the U.S. Thus, while gold might seem quite expensive to those of us in developed economies, its price seems much less expensive to those in faster-growing emerging economies like China.

More

http://www.pimco.com/EN/Insights/Pages/GOLD-The-Simple-Facts.aspx

We end for the week with Asia, where Japan finally seems to be awakening to the hopeless hole it has dug itself into. In the latest version of claiming a divine right to China or Taiwan’s islands, Japan seems to be falling back on “America gave them the islands” in 1972. As interesting as that wrong is, and at the time coming as it did in the aftermath of communist China’s murderous “Cultural Revolution,” followed by the disastrous “rule of the Gang of Four,” it seemed like a good idea at the time not to give the islands immediately back to China or Taiwan. But the islands weren’t America’s to dispose of at will. They had been disposed of in the settlement of World War Two. The USA only held possession and custodianship. Japan cannot gain rightful title by the malfeasance of the custodian. Sooner or later, and I’d bet on sooner, China/Taiwan will win.

Noda Calls for China Talks as Island Spat Threatens Growth

By Matthew Winkler, Isabel Reynolds and Takashi Hirokawa - Oct 11, 2012 9:28 AM GMT

apanese Prime Minister Yoshihiko Noda called for talks to contain economic damage from a diplomatic dispute with China as Japan’s largest trading partner downgraded its delegation to an annual gathering in Tokyo.

“These are the second and third largest economies in the world and our interdependence is deepening,” Noda, 55, said yesterday in an interview at his office in Tokyo. “If our ties cool, particularly economic ones, then it isn’t a question of one or the other country suffering. Both countries lose out.”

Noda’s call reflects rising concern that tensions over Japan’s nationalization last month of islands claimed by both nations will hurt trade. The International Monetary Fund, holding its annual meetings in Tokyo this week, said an escalation in strains may affect world growth. China’s central bank governor and finance minister are skipping the gathering.

China’s backlash against the move saw Toyota Motor Corp. (7203) and Nissan Motor Co. suffer their biggest month drop in Chinese car sales since at least 2008 in September. JPMorgan Chase & Co. sees a 0.8 percentage-point hit to Japan’s gross domestic product from the China dispute this quarter.

----Asked about Noda’s comments, a Chinese official today said Japan was “fully responsible” for causing “an unprecedented grave situation” in ties.

Japan should “correct its wrongdoing of violating China’s sovereignty and return to the track of solving the issue through dialogue and negotiation,” Foreign Ministry spokesman Hong Lei told reporters in Beijing.

----Japan’s prime minister said his government won’t compromise on its ownership claim, reiterating comments he made last month in New York. China denounced the position as “outrageous,” and has increased the dispatching of patrol boats into the waters claimed by Japan.

“There is no doubt that the Senkaku islands are Japan’s inherent territory in terms of history and international law,” Noda said. “There is no problem of sovereignty.”

China maintains that it’s owned the East China Sea islands for centuries. Japan argues it took control of them in 1895, lost authority after World War II, and had them returned by the U.S. in 1972.

More
http://www.bloomberg.com/news/2012-10-10/noda-calls-for-china-talks-as-island-dispute-threatens-growth.html

Japan and China Agree to Hold Talks on Rift After Noda Call

By Isabel Reynolds and Takashi Hirokawa - Oct 12, 2012 6:00 AM GMT

Japan and China agreed to talks aimed at reducing tensions over a territorial dispute a day after Japanese Prime Minister Yoshihiko Noda warned that Asia’s two biggest economies would suffer without negotiations.
Officials from both countries agreed to hold vice- ministerial level discussions at an unspecified date, Japan’s Foreign Ministry said last night. The dispute “will have a number of mostly negative economic effects over the medium term,” Moody’s Analytics said in a report today.

“It is important for Japan and China to take a broad view and start by communicating with the aim of improving relations, including at the planned vice-ministerial meeting, where I expect a frank exchange of views,” Japanese Chief Cabinet Secretary Osamu Fujimura told reporters today in Tokyo.

----China, which has sent more patrol boats into waters claimed by Japan since the purchase, maintains that it has owned the islands for centuries. Japan argues it took control of them in 1895, lost authority after World War II and had them returned by the U.S. in 1972.

Asked about Noda’s comments, a Chinese official yesterday said Japan was “fully responsible” for causing “an unprecedented grave situation” in ties.

More

http://www.bloomberg.com/news/2012-10-12/japan-and-china-agree-to-hold-talks-on-dispute-after-noda-call.html

"Never have the world's moneys been so long cut off from their metallic roots."

Murray M. Rothbard

At the Comex silver depositories Thursday final figures were: Registered 41.62 Moz, Eligible 102.84 Moz, Total 144.46 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over. 

Today, Germany’s austerity regime for others seems to have misfired. Trapped in a dysfunctional monetary union, in addition to having to bankroll all the deadbeats of Euroland, Germany now seems to be heading towards its own recession. While British euro sceptics are no  doubt delighted by the irony, if Europe’s top economy does enter recession, the UK and all the other European economies in the daisy chain, will enter a new recession right behind Germany. The madness of a one size fits all euro gets plainer by the passing week.

"Buy gold and sit on it. That is the key to success."

Dr. Franz Pick

Germany in 'great danger' of falling into recession

Germany is in "great danger" of plunging into recession, four respected think tanks have warned, as they slashed the country's 2013 growth forecasts in half.

3:20PM BST 11 Oct 2012

The four institutes - Ifo in Munich, IfW in Kiel, IW in Halle and RWI in Essen - also lashed out at the European Central Bank, saying its latest anti-crisis measures risked fuelling inflation in the 17 countries that share the euro.

"The euro crisis is negatively impacting economic activity in Germany," the institutes wrote in their joint twice-yearly forecasts, published on Thursday.

"Should the situation in the eurozone continue to deteriorate, this will also impact the German economy. Over the forecasting period as a whole the downside risks prevail and there is a great danger that Germany will fall into a recession," they warned.

While Germany clocked up growth of 0.5pc in the first quarter and 0.3pc in the second quarter, "there are currently a large number of signs that overall economic expansion will weaken towards the end of the year," they wrote.

As a result, gross domestic product (GDP) was projected to grow by 0.8pc overall this year and by 1pc next year.

That marked a downgrade from the institutes' previous spring forecasts when they had been pencilling in growth of 0.9pc for this year and 2pc for next year.

Furthermore, the latest projections were based on the assumption that the situation in the euro area, currently grappling with its worst-ever crisis, would stabilise.

If it did not then Germany, which has held up much better to the long-running crisis than its eurozone partners, could find its economy going backwards, they said.

More

http://www.telegraph.co.uk/finance/financialcrisis/9602179/Germany-in-great-danger-of-falling-into-recession.html

Another autumnal weekend, and Europe’s never ending crisis staggers on. The German Chancellor and the German Finance Minister have now adopted the roles of good cop, bad cop in the tragedy of the Club Med pantomime. Germany’s top politicians along with the Brussels Euro’rats are in deep denial. They still tell themselves that the euro can be saved, wilfully unable to see that it’s Borodino and Stalingrad all over again. Stay long physical precious metals for the familiar ending. Have a great weekend everyone.

"The gold standard, in one form or another, will prevail long after the present rash of national fiats is forgotten or remembered only in currency museums."

Hans F. Sennholz

The monthly Coppock Indicators finished September:

DJIA: +66 Up. NASDAQ: +88 DOWN. SP500: +85 Up. All three indicators had reversed from down to up, but now the NASDAQ has reversed again to down. While not unprecedented, it is a warning sign a that the July reversal from up to down is about to fail.