November 14, 2013
- Hated bank opens up on Twitter, hilarity ensues
- The most important thing Janet Yellen won’t say today
- Silver Eagle milestone… “extreme undervaluation” of gold stocks
- Yes, you can become a federal target for reading the “wrong” book
- A horse-out-of-the-barn Obamacare solution… last word on Aussie vs. Kiwi… in search of free stock picks… and more!
Perception management, commercial bank edition: We have a feeling some public-relations flunky at JPMorgan Chase is being shown the door today.
The flunky thought it’d be a swell idea to hold an #AskJPM session on Twitter today, featuring the bank’s vice chairman, Jimmy Lee.
The announcement went out yesterday. The response was swift and relentless…
“#Badidea! Back to the drawing board,” the bank posted less than six hours later.
Perception management, central bank edition: “We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession.”
The Asian markets took off last night as soon as traders got a peek at Janet Yellen’s prepared testimony before the Senate Banking Committee, now underway as we write.
Traders are on tenterhooks right now, awaiting the unscripted portion of her testimony, eager for cues and clues about what she might do as the next Federal Reserve chair. In other words, will she mainline even more of “that good s***” into the markets?
In the meantime, the Dow rests four points below its latest record-high close. Gold is holding on to its late-day gains from yesterday, at $1,285.
Here’s something you’re not likely to hear Yellen say today: If you’re a saver, you’re selfish and must be punished.
Erik Townsend is a retired software entrepreneur turned commodities trader who has a weekly spot on Jim Puplava’s Financial Sense podcast. He attended a talk by Yellen in San Francisco some time back.
“She was talking in her lecture,” he recalls, “about how if there was anything she could do to figure out a way to make interest rates negative, she would do that, because she feels that that’s what we need to do to make credit as easy as possible for the people. And I asked the obvious question that none of the San Francisco liberals were asking, which is, what about savers and investors? Doesn’t that punish them?
“And what she said didn’t surprise me that much. She said, well, we’re coming to the point where we have to consider the role of people who have significant savings and their responsibility in society, that it really is selfish to be hoarding it and that we need to create incentives through government for people to spend their savings, because that’s exactly what we need in order to rejuvenate the economy.”
There you have it: Little old ladies who are upset because they can no longer collect 5% on CDs? They’re “selfish.” Banks that borrow from the Fed at less than 1% and plow the proceeds into 10-year Treasuries paying 2.75%, pocketing the massive spread? They’re “systemically important” financial institutions, dontcha know?
The part about “sucks to be you” was merely implied.
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Global demand for physical gold totaled 868.5 metric tons during the third quarter, according to the World Gold Council. That’s a 21% drop from the third quarter of 2012.
Blame the fall in part on India’s steep import duties on gold. Elsewhere, the numbers show continued consumer growth in China and strong jewelry consumption worldwide.
We pass along the WGC numbers with the caveat that Sprott Asset Management chief Eric Sprott finds them suspect. “Demand statistics reported by the World Gold Council (WGC) consistently misrepresent reality,” he wrote last month, “mostly with regard to demand from Asia.”
At that time, the WGC’s estimate for global gold demand during the first half of 2013 was 1,848 metric tons. Mr. Sprott’s research based on import data leads him to believe a more accurate figure is 2,890. “This lack of quality information has certainly been one of the driving factors behind the lack of investors’ confidence toward gold as an investment.”
Silver Eagle sales have set an annual sales record. The year-to-date total on the U.S. Mint’s website is 40,175,000 — topping the previous record of 39,868,500 in 2011.
“Demand for the 1-ounce silver bullion coins has been intense throughout the entire year,” Coin Update reminds us. Indeed, sales were suspended for an 11-day stretch in January when the 2013 issue went on sale. Supply has been rationed to the Mint’s dealer network ever since. “As such, sales figures are not a reflection of full market demand for the coins, but rather a reflection of the U.S. Mint’s production capacity.”
The last of the 2013 mintage will be available to the Mint’s “authorized purchasers” on Dec. 9. Orders for the 2014 issue will be accepted starting Jan. 13, 2014.
“Gold stocks are at an extreme low we haven’t seen in over 30 years,” writes Jeff Clark at Casey Research.
“An effective way to measure the true value of gold stocks is to compare them with the gold price. Other thing being equal, a gold producer selling for $20 per share at a $1,500 gold price is a heck of a lot cheaper than when gold’s at $1,000.”
Consider the XAU-gold ratio. “The XAU (Philadelphia Gold and Silver Index) consists of 30 gold and silver stocks and began trading in December 1983. Here are the first 23 years of the index’s ratio to gold.”
Any time the ratio dipped below 0.20, you could have made a lot of money. Now let’s add the figures since 2007…
“Right now,” concludes Mr. Clark, “gold stocks are like a rubber band that’s being stretched to an extreme. As all rubber bands do, it will snap back. And not just that; based on how extreme the undervaluation has become, they’re bound to be among the most profitable investments of this generation.”
“The Chinese demand has been the big driver in the last two weeks,” says Nick Colas at the New York brokerage ConvergEx Group.
Only he’s not talking about gold. He’s talking about Bitcoin.
The dollar value of the cryptocurrency has more than doubled in the last month, to $434 at last check.
Turns out BTC China has now surpassed Japan-based Mt. Gox as the volume leader in Bitcoin trading. “The demand out of China has been pretty staggering,” says Barry Silbert of SecondMarket, parent company of a U.S.-based Bitcoin fund. “We’re seeing the early signs of money coming into Bitcoin as an asset class.”
Hmmm…
If you ever suspected you’d come under the feds’ nose for merely purchasing the “wrong” kind of book, there’s now confirmation.
“U.S. agencies collected and shared the personal information of thousands of Americans,” reports the McClatchy newspaper chain, “in an attempt to root out untrustworthy federal workers that ended up scrutinizing people who had no direct ties to the U.S. government and simply had purchased certain books.”
The story’s a bit convoluted, but it comes down to this: The feds are on a witch hunt against anyone who thinks polygraphs are bogus — and especially anyone who claims they can train you to beat a polygraph exam, First Amendment be damned. One guy’s already doing time for “obstruction of justice” because he was recorded on a wire telling undercover agents that they shouldn’t reveal to federal officials they’d learned his techniques.
In the course of their investigation, the feds pored over customer records of not only the guy in jail, but another guy who’s not been prosecuted for anything.
“The officials,” reports McClatchy, “then distributed a list of 4,904 people — along with many of their Social Security numbers, addresses and professions — to nearly 30 federal agencies, including the Internal Revenue Service, the CIA, the National Security Agency and the Food and Drug Administration.”
Some of them were applicants for federal jobs requiring a security clearance and a polygraph exam. Others were suspected of infidelity by their spouses. One was a government employee whose job doesn’t require a security clearance; he merely bought a book about how to beat a polygraph.
“Though nowhere near as massive as the NSA [surveillance] programs,” McClatchy adds, “the polygraph inquiry is another example of the federal government’s vast appetite for Americans’ personal information and the sweeping legal authority it wields in the name of national security.”
No lie.
Today is publication day for the Laissez Faire Club’s milestone release — a 166-page manual of “practical liberty,” packed with scads of tips to cover your digital tracks and defy the NSA… avoid the worst excesses of Obamacare… keep your tax bill to the absolute minimum… and much more.
Every bit of it is legal, and every bit of it will take you one step further away from Uncle Sam’s large and heavy thumb. Best of all, you can claim your copy free. Check out how to get it right away.
“As much as I’ve enjoyed,” begins today’s mailbag, “the back-and-forth among readers about the cost of living in the U.S., Australia and New Zealand (‘It is so more expensive in New Zealand!’ ‘It is not!’), Numbeo.com will settle these disputes more definitively than anecdotal bickering.
“It has a metric called the Consumer Price Plus Rent Index (expressed as a percentage of the cost of consumer goods prices plus rent when compared with New York City — the most relevant for expats of several useful metrics Numbeo provides). Here’s how they stack up:
| U.S.: | 56.11% |
| Australia: | 89.53% |
| New Zealand: | 74.15% |
“Numbeo relies on data from users, voluntarily submitted, so it’s not perfect — but it’s far better than anecdotal reports from individual readers. And it lists data from almost 4,000 cities in over 100 countries, and has a built-in currency converter.”
“Maybe,” a reader writes, “you can pass this on to the readers who skulk around here looking for free stock picks. Go to a little search engine called Google, enter ‘free stock picks’ on the search bar and be prepared to experience investor nirvana.”
The 5: Wow, that’s cold. But we like the way you think…
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. From the “Band-Aid on a gaping wound” department, the latest short-term fix for Obamacare.
“With millions of consumers getting cancellation notices for their current health care plans,” reports the Los Angeles Times, “President Obama announced Thursday that he will encourage insurance companies to continue offering their customers the same health plans next year.”
So a one-year reprieve… assuming insurers want to go to the trouble of reinstating policies they’ve already canceled. Makes perfect sense — if you’re in Washington.
If you live in the real world and worry about Obamacare’s impact, here’s something that makes much more sense.