I received an update recently from Barbara Lips, daughter of the late Ferdinand Lips to whom this blog is dedicated, that the book, “Gold Wars” has now been translated and published in Spanish under the title: “Las Guerras del Oro”.
Ferdinand Lips’s classic book was originally published in 2001 just at the time gold had begun its spectacular bull run from the spot price of around $270.00 to a whopping $1650.00 today. This book is perfect for anyone curious about monetary systems and how honest, free market money has always been a safe haven throughout the ages and the lack of honest money has been the cause of many past and current wars and atrocities; hence the book title.
Please join me in spreading the word that this vital reading is now available to Spanish speaking students of Austrian Economics globally. You can read more about it at the Lips Institute website.
All my best,
Kirsty Hogg
Founder of Why Buy Gold? (and Silver!).
I was interviewed by Mark Cullivan of Resource Stock Digest at the Vancouver Investors Conference, January 22, 2012. Mark asked me how I got into spreading the word on sound money as well as why it is a good idea to buy physical gold and silver. I'll be contributing more about this topic at Resource Stock Digest in the near future.
Disclaimer: I am not a financial advisor in this jurisdiction or any other.These are my personal opinions only and should not be interpreted as financial advice.
I had the pleasure of having a meeting with Kerry Lutz of the Financial Survival Radio Network on Sunday Jan. 22nd, 2012 at the 2012 Cambridge House Investors Conference. Kerry has been putting out a tonne of fabulous interviews with gold and silver experts from all around the world.You can find all his shows at Kerrylutz.com.
Kerry and I chatted briefly about the great opportunities at the show for investing in the junior mining stock sector. We reminded everyone to proceed with caution and do their own due diligence as this kind of investing is pure speculation and very risky. Thankfully, there are some expert newsletter writers in the industry who can help the lay investor navigate their own way in this 1700 + company sector successfully.An example of this kind of newsletter writer is Mickey Fulp, The Mercenary Geologist. Mickey publishes a variety of musings targeted at the lay-investor (be sure to go back into his archives to access all of his previous articles and videos). These musings specifially offer tips and tutorials that empower people to do their own effective research and potentially make some money along side the experts who have been doing this for 30 years.
If you want to learn more, I enourage you to go to Mercenarygeologist.com – Simply provide a name and email address to get full access. Mickey was also listed as the top source of investment advice in mining by Mining.com on Jan. 2nd, 2012. Everything is totally free to his subscribers.
No one knows what is in store for us in 2012, but we certainly have a very good idea after reading and viewing all of the amazing resources posted and provided by you in the past two years in Why Buy Gold? (and Silver!). Armed with this knowledge, we have the power to take action and prepare for an economic tsunami of which so many are not yet aware. The reason why this group is successful is because enlightened and knowledgeable members continue with the desire to spread the word on reasons people need to buy gold and silver and other “stuff” that will aide us in the future if the SHTF. I express my heartfelt thanks for your support and input to the group over the last year and wish you and yours a very Merry Christmas and a special holiday season.
My goal is to grow the membership of this group at least another 1000 people in 2012. Growing this group is always a challenge, so if anyone has an idea on how to help, please add your comments below.
We will continue to spread the word on the importance of physical reserves and how we protect our savings by storing a portion of our wealth in precious metals.
As we look ahead to the coming year, we should always remain optimistic in our outlook and not cave under the weight of dreary doom and gloom opinion day after day. To paraphrase Chris Martenson, we know there is a definite outcome to this 40 year fiat money experiment, and it will be the same as has occurred throughout human history. It is simply how we deal with this outcome that matters most.
On November 4th, the CME put out short and obscure margin advisory stating it is raising rates to ensure adequate collateral coverage, apparently to back futures trades to ease the bulk transfer of accounts held by MF Global Holdings customers.
I wanted to discuss the panic that ensued after Zerohedge sounded the alarm Friday, Nov. 4th, about the imminent margin calls predicted for Monday morning and its overall effect on the silver market. Here's an excerpt from the ZH article in reference to the implications of the fallout of the announcement: “Which means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call. Naturally, since it is very unlikely that this incremental amount of liquidity can be easily procured in one business day, we anticipate the issuance of hundreds of thousands of margin calls Monday, followed by forced liquidations of margin accounts across America… and the world.”
This message is spreading like wildfire on the social networking sites prompting youtubers to make videos appealing to people to dump their silver contracts first thing Monday morning. Check out this one I stumbled across on Youtube. It is a very compelling message.... It makes me want to get out of paper...Oh yeah, I already did that early 2008!
Here's Kid Dynamite's take on the announcement. He writes “... the initial margin is almost always larger than the maintenance margin (initial margin is how much collateral you have to post when you buy the contract. Maintenance margin is lower because otherwise you’d have to replenish your margin every time the contract falls in value – instead you only have to do it when you reach certain “maintenance” thresholds).
So the initial/maintenance ratios were previously greater than 1.0. They are being LOWERED to 1.0. There are two ways for this to happen, obviously: 1) Raise maintenance margin requirements or 2) lower initial margin requirements. If the CME was hiking maintenance margins across the board, it seems that they could have more accurately used the term: “maintenance/initial” ratio to describe the change.”
In response to the on-line reaction, Saturday, Nov 5th, there was a press release from CME to apologize and clarify the previous advisory. "Nov. 5, 2011 -- /PRNewswire/ -- CME Group today is clarifying its notice to clearing firms regarding margins. In light of the issues customers transferring out of MF Global are facing, while still maintaining appropriate risk management protections for the market, CME Clearing is setting the "initial" margin upcharge to zero. This upcharge is normally applied to customer accounts when they are receiving a margin call. The intention and effect of these changes are to decrease the size of any margin calls resulting from the bulk transfer of MF Global customers to new clearing members not to increase them.
This is a short term accommodation to maintain market integrity and provide temporary relief to customers whose accounts have been disrupted by this event. We apologize for any confusion our initial advisory may have created."
The lack of clarity and professionalism in the initial announcement has the CME’s reputation in question. And in this instance, many people are accusing the CME Group of changing the rules to service their own position.
This is what whistle blower Andrew McGuire had to say about this subject to King World News today “Now it’s obvious that a self regulated organization like the CME has its own clients’ interests at heart and not the interests of the public. So I’m absolutely incensed that any dispersions have been put upon Gensler for any failure to discover the MF Global problem when they (the CME) were actively blocking his request for extra staff. The CFTC has been facing an incredible headwind from the CME and their members to stop any form of progress on the Dodd Frank Act. This is yet another example of the power of the banking cartel and their constant abuse of power.”
Here is another less benign view from an editorial by Bix Weir (Bix is rather radical but I tend to agree with his overall message): "You know what that will most likely mean for silver…ANOTHER MASSIVE SILVER SLAM! The ONLY institutions that can make these kinds of margin deposits without selling off assets are the big banks. VOILA…massive long silver liquidations. On a brighter note, it is likely the LAST silver slam we will have to ride out…EVER! This is the END GAME of 40 years of computer price manipulation. Expect it to get a little crazy”.
I got out of paper early 2008, thanks to the warnings by the likes of Philip Judge, Franklin Sanders, and Peter Schiff et al. I sleep much better now that my involvement in market is to preserve my wealth in inflation proof assets and serendipitously capitalizing on the initial and massive break out they will both make in the coming months/years. For the people who remain long in physical gold and silver, these are very interesting and exciting times and I smell another potential buying opportunity beginning next week.
I am extremely curious to find out what happens in the market on Monday (Nov. 7th, 2011). Will there be massive liquidation? Or will the market only have small sells offs and basically remain unchanged? I guess I will put an addendum to this entry as it unfolds.
Best to you. As you know I am not a financial advisor in this jurisdiction or any other. As well, I am not a speculative investor and remain a proponent of physical bullion ownership only; no paper.
EDIT (Nov. 8, 2011):
What an anti-climax! It looks like CME back-pedaled after the amount of complaints received from their initial advisory last Thursday and therefore it was business as usual on Monday. A couple of things of interest from today: 1) Now that the dust has settled, some may be overjoyed to find out that “CME Is Legally Liable For MF Global Customer Losses”, says Avery Goodman at Seeking Alpha. 2) A Market Nugget from Debbie Carlson of Kitco. Market Nuggets: CME Group: Verifying All MF Global Account Transfers Are Accurate, Complete; Collateral In Trustee's Control 08 November 2011, 1:50 p.m. By Kitco News (Kitco News) - The CME Group says in a letter to members dated Tuesday that it is working to verify that all account transfers are accurate and complete regarding MF Global’s customer accounts. "When the verification process is completed and we confirm that all monies and positions have been transferred correctly, customers will be given access to cash in their accounts," says the exchange, which had frozen the access to that cash. However, the exchange says all property is subject to the control of the trustee, which is SIPC. "In the ordinary course, he will reduce all assets, including securities, letters of credit, warehouse receipts and other delivery certificates to cash, and make a pro-rata distribution among the commodity customers based on their relative account balances," the exchange says. Customers of MF Global have complained that regulators are treating them as similar to unsecured creditors, rather than clients whose funds were to be segregated from the firm’s money. Their concern is that they will receive just a portion of the cash they had in their accounts. Debbie Carlson of Kitco News; dcarlson@kitco.com
Kerry Lutz interviews Kirsty Hogg on September 8th, 2011 about the Pan Asian Gold Exchange. (Article below video).
This year, at the end of June, a new gold exchange opened in Kunming City, Yunman Province China. The Pan Asian Gold Exchange (PAGE) is part of China’s12th five year plan that was released in March 2011. In communist China, they have a series of five year economic plans dating back to 1953 that are carefully planned and methodically executed. PAGE is part of a long-term strategy to resurrect Kunming City’s role as a trade interface with India and Southeast Asia. Yunman Province has trading history of about 2400 years and PAGE is part of an initiative to attract investors and restore Kunming as a gateway to Southeast Asia.
There has been a remarkable lack of mainstream media coverage on PAGE. It's been suggested that it is because it is a Chinese initiative as opposed to an American or European effort, as well, there’s not a lot of information available about it on the internet. Even PAGE's official website is quite cryptic. Furthermore, other Asian exchanges have opened in the past with no dramatic effect on the market. E.G. Hong Kong and Beijing, CN This could be why media outlets perceive it as a non-event. As well, mainstream media does not possess the mindset or responsible journalism to find out how PAGE will be unlike any other gold exchange to-date.
Currently, PAGE is running a 10 ounce mini physical gold contract for the domestic retail market. This contract allows the average retail investor to buy physical gold or set up an account with a brokerage firm and trade futures. This enables all of the customers of the Agricultural Bank of China who are approx 320 million retail customers and 2.7 million corporate customers, to buy and sell these contracts straight from their bank account in Renminbi (RMB is the Chinese currency of mainland China). This could impose a big draw down on the physical market. In fact, Andrew Maguire said “To give a further idea of scale, if just 1% of their customers bought a single 10 ounce contract, that would equate to 1,000 tons of physical gold being drawn down....”
Another important point to make is that International investors will now have access to the Renminbi through these gold contracts.
The most severe impact will be with the international facing spot contract. The spot market is where the real weight of money is in the gold market, and this October, people will be able to buy into a 90 day rolling spot gold contract in Renminbi. Each contract will be backed 1:1 with allocated gold. The investor will have the choice to either take delivery of their gold or be paid in Chinese Renminbi.
Six major Chinese banks will fix the gold price every morning at 8am their time.
Until now, the mechanism has been that the futures market in London drives the spot price of gold. The LBMA and COMEX are supposed to have 90% unallocated versus 10% allocated contracts, so for every 100 OZ's of paper gold, there is only 10% allocated backing them. Some gold and silver market experts like Adrian Douglas of GATA suggest there’s even less than that.
James Turk of GoldMoney recently put up a video featuring Ned Naylor-Leyland of Cheviot Management where they discuss the paper market and how it currently drives the physical market but in actuality, it should be the other way around. It is the physical market that the paper market should price itself off of. Even though the physical market is much larger, and it is more logical that the price discovery would be based on physical, the public has become quite complacent in accepting that the futures market controls the spot price. This is now all going to change with inception of PAGE, and per CFTC hearing whistle blower and bullion trader, Andrew Maguire, “we now have an additional factor to be vended into the supply demand equation. This factor will ultimately destroy the remaining short positions in both gold and silver.”
From an investor stand-point, the advantages PAGE provides are invaluable because it offers a fully backed 1:1 allocated gold contract, and gives people looking to diversify their fiat currencies access to RMB. What international investor would want to continue to invest in 10% backed paper contracts vs. the 100% physically backed spot contract PAGE is launching? This aspect of the new exchange is of tremendous significance in the international gold market and could put an end to paper gold as well as change the price discovery mechanism for gold. It will be interesting to watch what happens in October when the 90 day spot contracts are available and then measure what impact it has by the end of the year on the markets.
Addendum: I have been updated by one of the people closely involved with PAGE that the exchange may take a couple of months more to be fully operational than expected.
I was interviewed by Kerry Lutz on the Financial Survival Radio Network, August 8th, 2011 about mid $1700 gold, the US credit rating downgrade, the decline of the West and whose fault is it? You can listen to the interview below:
I received an update recently from Barbara Lips, daughter of the late Ferdinand Lips to whom this blog is dedicated, that the book, “Gold Wars” has now been translated and published in Spanish under the title: “Las Guerras del Oro”.
