July 19, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was up (at press time) $9.70 (+0.6%) for the week to $1,580.90, and silver was up $0.08 (+0.3%) to $27.13. GoldCore reported July 19, “Gold has gained this morning after two straight days of Bernanke-testimony-related slight losses, and gold is testing resistance at the 50-day moving average at $1,586 per ounce.”

Bernancus Magnus admitted that the Fed has revised downward its already droopy growth projections, and “Given that growth is projected to be not much above the rate needed to absorb new entrants to the labour force, the reduction in the unemployment rate seems likely to be frustratingly slow.” For the time being, however, the Great One’s motto remains, “We will unleash no quantitative easing before its time.”

Four days before the Fed Chairman spoke in Washington, Barack Obama gave an extraordinary speech in Roanoke, Virginia, where he declared, “If you’ve got a business—you didn’t build that.” The Obama campaign has already accused Mitt Romney of taking this statement “out of context.” The full context, taken from WhiteHouse.gov, follows.

Chicken: "The hard part is knowing when to flinch."

“Look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something—there are a whole bunch of hardworking people out there.

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business—you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet. The point is, is that when we succeed, we succeed because of our individual initiative but also because we do things together.”

If nothing else, this speech should put paid to the notion that Obama is a great mind or even “so smart.” Yes, no man is an island. But that doesn’t make all men equal. And yes, there are a whole bunch of hardworking people out there, but few are capable of analytical insights, let alone those that can be transmuted into commerce.

Sometimes one wonders whether Obama is entirely ignorant of the history of his country or the history of anything. Henry Ford and Thomas Edison were almost entirely self-taught. Bill Gates and Steve Jobs were college dropouts. Jobs and Steve Wozniak transformed the personal computer from a toy to a tool. Gates and Paul Allen created the personal computer software industry ex nihilo. And Obama doesn’t know the difference between the Internet and the World Wide Web, devised by Tim Berners-Lee. These five men—if you seek their monument, look around you.

A mere generation after the collapse of Soviet communism, Obama has pronounced the death of capitalism and announced the triumph of collectivism. It is painful to admit that he is correct. If we understand “capitalism” to mean people lending their money at interest to banks, which then loan these funds at a higher interest rate to those seeking to establish or expand companies, that system collapsed after the dotcom bust, when Alan Greenspan determined that, business cycle be damned, there wasn’t going to be a recession on his watch. And so began the forced march to perpetual ZIRP.

Whatever checks and balances that existed in Capitalism Classic have been removed, and as a result, the world economy is now effectively a multitrillion-dollar game of chicken played by governments and bankers, with the rest of us reduced to rubberneckers.

Paul Craig Roberts invites us to imagine Congress demanding that Fed answer for the market-rigging and outright fraud that characterizes New Capitalism. “The Federal Reserve will reply: “So, you want us to let interest rates go up? Are you prepared to come up with the money to bail out the FDIC-insured depositors of JPMorganChase, Bank of America, Citibank, Wells Fargo, etc? Are you prepared for US Treasury prices to collapse, wiping out bond funds and the remaining wealth in the US and driving up interest rates, making the interest rate on new federal debt necessary to finance the huge budget deficits impossible to pay and finishing off what is left of the real estate market? Are you prepared to take responsibility, you who deregulated the financial system, for this economic Armageddon?’”

The answer, no surprise, would be: not on our watch. “But the question remains: How long can the regime of negative interest rates continue while debt explodes upward?” Roberts foresees a worldwide rebellion against the US dollar as reserve currency (it has already began with the BRICS), which means an end to it as “safe haven.”

Next Page 1 | 2

June 22, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was down (at press time) $54.10 (-3.3%) for the week to $1,564.50, and silver was down $1.47 (-5.2%) to $26.94. Reuters reported, “Gold fell 2.5% Thursday, nearly wiping out this year’s gains as renewed fears of a global economic slowdown and disappointment over a lack of aggressive US Federal Reserve stimulus dampened bullion’s inflation-hedge appeal.”

Translation: Bernancus Magnus descended from his Olympian redoubt Wednesday and delivered a gloomier assessment than previously. Zero Hedge comments, “In April, the Fed saw 2012 GDP between 2.4%-2.9% and unemployment of 7.8%-8%. The just released updated forecasts table has these two critical for the election campaign data points at 1.9%-2.4%, or a major drop since April, for GDP and unemployment declining to 8%-8.2%. One thing is certain: whatever GDP and unemployment are at the end of 2012, they will not be whatever the perpetually inaccurate Fed forecasts.”

In the event, the Fed did not unleash the Kraken, ie, the much anticipated and feared QE III. Instead, it “extended its Operation Twist program and will swap $267 billion in short-term securities with longer-term debt through the end of 2012.”

At Seeking Alpha, Gary Tanashian called Thursday’s selloff “a disgusting display indeed with the gold sector doing exactly what yesterday’s policy release…said it should do.” He explains, “What does Operation Twist do? It seeks to negate the natural forces (and thus the signals we derive) of the [Treasury] bond market in favor of painting a handy picture. As for gold, the monetary barometer to systemic and inflationary pressure, it has—since the acute phase of the credit bubble implosion began in 2007—tended to follow the spread between 30-year bonds and 2-year bonds.”

And thus the Great One has delivered “A nice, quaint and sanitized way of going about interest-rate manipulation that seeks to bail out and fund the areas of the economy (housing, mortgages, etc.) that experienced the most egregious abuses while pretending that all bonds are equal and selling short-term (excluding ‘Fed funds,’ of course, the inflationary ZIRP) notes to sanitize the process.”

Three days earlier, Tanashian asked, “Really, how long can they keep it up?” That remains to be seen. How long will they try? Until the day after the end of the world or the day after the world economy collapses, whichever comes first. ZIRP is essential to the “stimulus” that has done so much in aid of the “recovery,” but there is another reason why it must remain perpetual. That would be the $200 trillion [sic!] in derivatives held by US banks.

Ellen Brown writes, “When Jamie Dimon, CEO of JPMorgan Chase Bank, appeared before the Senate Banking Committee on June 13, he was wearing cufflinks bearing the presidential seal. ‘Was Dimon trying to send any particular message by wearing the presidential cufflinks?’ asked CNBC editor John Carney. ‘Was he…subtly hinting that he’s really the guy in charge?’”

It was asserted by many that the Senators were obsequious to Dimon because JPMorgan has them in its pocket. Brown reports, “Financial analysts Jim Willie and Rob Kirby think it may be something far larger, deeper, and more ominous. They contend that the $3 billion-plus losses in London hedging transactions that were the subject of the hearing can be traced, not to European sovereign debt (as alleged) but to the record-low interest rates maintained on US government bonds.

“The national debt is growing at $1.5 trillion per year. Ultra-low interest rates MUST be maintained to prevent the debt from overwhelming the government budget. Near-zero rates also need to be maintained because even a moderate rise would cause multitrillion-dollar derivative losses for the banks and would remove the banks’ chief income stream, the arbitrage afforded by borrowing at 0% and investing at higher rates….

“Interest rate swaps are now over 80% of the massive derivatives market, and JPMorgan holds about $57.5 trillion of them. Without the protective JPMorgan swaps, interest rates on U.S. debt could follow those of Greece and climb to 30%. CEO Dimon could, then, indeed be ‘the guy in charge’: he could be controlling the lever propping up the whole US financial system.”

How long can they keep it up? Brown believes the jig may already be up and that JPMorgan may already be bankrupt, not that hoi polloi would be allowed to know this until too late. We say that the banks are TBTF, Too Big To Fail, but it would be more accurate to say that their failure would be TBTC, Too Big To Contemplate.

Stock Tips and the Joke of the Week

Next Page 1 | 2

March 8, 2012

By Kevin Michael Grace

Gold was down (at press time) $21.80 (-1.3%) for the week to $1,701.20, and silver was down $1.71 (-4.8%) to $33.91. Gold rebounded Thursday but only after earlier in the week falling below its 200-day moving average, a decline Reuters attributed to “dimmer near-term prospects for another round of quantitative easing from the US Federal Reserve.” This explanation was rubbish when it was first advanced last week and remains so this week, but it is the narrative (dread word) of the moment.

At MarketWatch, Peter Brimelow says of the Leap Day Massacre: “This abrupt and decisive shock did more than raise eyebrows.” He notes that GATA “has been much derided for its view that the gold market is manipulated. Now it was able to report a whole procession of significant observers making unprecedented sympathetic noises.”

Not least, “one long-time vociferous skeptic, The Gartman Letter,” which wrote, “The market’s plunge may not have been solely the result of pure market forces but may have been the result of a very real effort to ‘manipulate’ the market lower…perhaps on orders of a central bank hoping to break the market in order to buy gold more cheaply after the surge of selling or perhaps on the order of a government wishing to drive gold down for the ‘optics’ of weaker gold prices.”

A rather significant optic is exactly what is meant by “gold.” John Embry, Chief Investment Strategist at Sprott Asset Management, comments, “It’s all just paper. I can assure you that there is very little physical gold being sold at distressed levels here. Any transaction in physical is probably being motivated by the buyer who is taking advantage of these low prices.”

Similarly, the “London Trader,” interviewed by King World News, reported, “[March 8] when we dropped through $1,700, you would not believe the amount of physical tonnage orders that filled. US-centric traders tend to concentrate on the COMEX, but the real market is made in London.”

Another optic much influencing the paper price of gold lately has been Europe, the sick man of continents. Reuters reports Thursday that Greece’s bailout deal survived its first test, “an overwhelming acceptance of a bond swap offer to private creditors…beat[ing] its own most optimistic forecasts.”

Optimistic being the operative word here. For Greece not to collapse and bring the rest of the PIGS down with it would require a concatenation of implausibles too much even for Alfred Hitchcock. Or as Egon von Greyerz, managing partner of Matterhorn Asset Management, puts it, “This is the bankrupt leading the bankrupt. It’s absolutely ridiculous.”

What’s the most plausible future for the Canadian mining industry? According to the Globe and Mail, “Miners hopeful of emerging from a late 2011 funk.” Yay! According to the Financial Post, “Even amid a commodity bull market, gloom hangs over mining industry.” Boo!

Peter Koven reports in the Post that the industry is much exercised by “resource nationalism,” foreign countries claiming an ever-bigger slice of mining profits. This is worrying, to be sure, but perhaps a greater concern should be what might be called “resource irredentism,” Indian bands claiming veto power (sorry, “consultation”) over Canadian mining projects.

Drew Hasselback explains in the Post, “If you want to develop a mine any place that affects a First Nations community or its land rights, the Crown has a duty to consult with that native community before the project gets a green light. Now the hard part: trying to figure out what consultation means. How much consultation is needed before the legal duty is satisfied? And since it’s the Crown that holds the duty to consult with the native band, why is it that it’s the company that winds up having to do all the work?”

Why, indeed? Hasselback concludes, “We do have rule of law in Canada, and those with full legal rights do have access to the courts to enforce them. The rule of law either means something or it doesn’t. But good business people should know how to pick and choose their battles. Clinging to a purely legal strategy may be short sighted, and it may be a strange business strategy. There are too many projects chasing too few investment dollars for a stubborn legalistic approach to make any sense.”

Yes, the rule of law either means something or it doesn’t. And advising companies that a “stubbornly legalistic approach” is probably best avoided suggests strongly that the rule of law in Canada plus five bucks will buy you a grande caramel macchiato and nothing more.

Even after escaping from the regulatory miasma, many gold stocks that should be doing better aren’t. At Seeking Alpha, Stanley Barton offers three theories why. 1. “Investors would rather hold physical, refined gold than gold stocks, despite the gold reserves that those stocks represent.” 2. “Gold stock investors have been burned by the volatility of the yellow metal in the past and…are reluctant about diving back into those investments as gold is peaking.” And 3. “There is not much interest in gold stocks…because their managements are reluctant to distribute the profits to the investors.”

And now to cases. Barton cites AuRico TSX:AUQ as a good example of a stock as “motionless as a deer in headlights,” despite “upgrading their operations, increasing production, expanding their resources and adding a plum of an acquisition. Oh yes, there was also the 50% spike in the price of their product.” He offers two goldminers he believes well placed to break out of the pack: Banro TSX:BAA and Sandstorm TSXV:SSL.

From the same source, Marco G notes “4 Small Cap Silver Stocks That Have Soared 40% In 2012″: Avino TSXV:ASM, Aurcana TSXV:AUN, Impact TSXV:IPT and Mag TSX:MAG. He describes these companies as “smaller silver miners working on increasing production and thereby providing a growth outlook for the company. The market respects this production growth and being coupled with the gains in the prices of their main commodity…gives these particular stocks good leverage over the silver prices.” They might, he ventures, hit the “sweet spot…along the road to full production” managed by First Majestic TSX:FR last year.

And at the Gold Report, Bo Chew, manager of the Magna Opportunity Fund, likes Barkerville Gold TSXV:BGM, Scorpio Gold TSXV:SGN, Mag Silver TSX:MAG, Pretium TSX:PVG, South American Silver TSX:SAC, Metanor TSXV:MTO, Avino Silver & Gold TSXV:ASM, Gran Colombia Gold TSXV:GCM, Gryphon Gold TSX:GGN, Geologix TSX:GIX, Xtierra TSXV:XAG and Minco Gold TSX:MSV.

Finally, Sherree DeCovny of CFA Magazine reports, “Studies conducted by Canadian forensic psychologist Robert Hare indicate that about 1% of the general population can be categorized as psychopathic, but the prevalence rate in the financial services industry is 10%. And [Wall Street psychologist] Christopher Bayer believes, based on his experience, that the rate is higher.” In related news, the business schools at Harvard, Yale and the University of Pennsylvania have all added The Killer Inside Me by Jim Thompson to their required reading lists.

February 2, 2012

By Kevin Michael Grace

Gold was up (at press time) $37.20 (+2.2%) for the week to $1,762, and silver was up $0.85 (+2.5%) to $34.30. At the Globe and Mail, David Rosenberg comments, “Gold has begun behaving less as a commodity and more like a currency. Its attractions are obvious: No central bank can print gold, and it is no country’s liability. In contrast, holding paper money is looking less and less attractive.”

Reuters, on the other hand, remains committed to the position that gold is lashed to the mast of the SS Euro. It matters not whether this explanation makes any sense; its continued assertion will cause gold prices to fall with the Euro, at least in the short term. With that in mind, let’s have a look at the latest financial news from the Continent.

Oh là là! French consumption fell 0.5% in 2011, the biggest decline since 1997. President Sarkozy intends to turn this around by raising the VAT(!) Fitch has downgraded the credit ratings of five countries: Belgium from AA+ to AA, Slovenia and Spain from AA- to A, Italy from A+ to A- and Cyprus from BBB to BBB-.

Euro Area unemployment has risen from 10.2% to 10.4%, with Italy at 8.9%, France 9.9%, Slovakia 13.4%, Portugal 13.6%, Ireland 14.5% and Spain 22.9%. Portuguese 10-year bond yields reached 17.38% Monday. And Euro Area banks “cut lending sharply at the end of 2011…raising concern that Europe was on the verge of a credit crisis that could lead to a deeper recession than expected.”

Germany’s unemployment rate has fallen to 5.5%, the lowest since reunification, even as Chancellor Merkel has been fitted with a black hat by the IMF, and the doling out of bailout dosh to the rest of the EU threatens a constitutional crisis and has resulted in the possibility that “If any of the crisis countries exits the euro or if there is an EMU break-up, the Bundesbank bears extreme risks.”

Greece is supposedly close to a bailout deal, but this will not “avert the risk of a Greek default in March.” And there is no guarantee the Greeks will agree to “further austerity cuts equal to 1% of GDP,” “a cut in the minimum wage” and “an EU ‘debt commissar’ to take direct charge of Greece’s budget.”

At the American Interest, Walter Russell Mead comments, “The austerity policies the Germans favour are hopelessly biased in favor of German banking interests and are aimed more at the preservation of the reputations of German politicians than at helping Greece.”

Meanwhile, Europe has a message for its youth—no future for you! The unemployment rate for those aged 16 to 24 has reached 30.7% in Portugal, 46.6% in Greece and 51.4% in Spain. ZeroHedge comments, “If there is no hope for tomorrow, what is the opportunity cost of doing something stupid and quite irrational today?”

Johnny Rotten put it somewhat differently:

When there is no future
How can there be sin?
We’re the flowers in the dustbin
We’re the poison in your human machine
We’re the future, your future

Globalism makes no provision for bulkheads, so if the Euro goes down and the PIGS drown, the big banks are going to get awfully wet. Combined exposure of Citigroup, JPMorgan Chase, Bank of America, Morgan Stanley and Goldman Sachs to the debt of Portugal, Italy, Ireland, Greece and Spain: $80.4 billion. The Future Tense concludes, “The last man holding paper currency loses when the music stops.”

Will the precious-metals juniors ever cash in? According to Jordan Roy-Byrne at Seeking Alpha, it’s happening already: “ZJG.to [BMO Junior Gold Index] is a Canadian junior ETF which is comprised of entirely gold companies while three of the top 10 companies in GDXJ are silver companies. ZJG is nearing resistance at 20-21 while GDXJ is nearing resistance at 31-33. More importantly, both markets have broken out of their downtrends against Gold.”

And now to cases. At the Globe, the “legendary” Frank Mersch, co-founder of Front Street Capital, avers that if he had $100,000 to “invest right now,” he would put “40% in gold stocks like Barrick Gold TSX:ABX and Continental Gold TSX:CNL, an exploration play.”

From the same source, Tim Kiladze notes that Detour Gold TSX:DGC “came to market last week and easily raised $241 million” in a bought-deal private placement. The bought-deal private placement by NovaGold TSX:NG Kiladze mentioned has now been increased from US$250.8 million to US$332.5 million.

At the Financial Post, Jonathan Ratner reports that Agnico-Eagle TSX:AEM is down “more than 30% since [it] announced the closure of its Goldex Mine on October 19, 2011,” and notes that Dundee Securities has changed it recommendation from neutral to buy. Analyst Paul Burchell has “cut his price target on the stock to $44 from $56.” (Currently $37.42.)

From the same source, Peter Koven reports that “emerging West African gold miner SEMAFO TSX:SMF disappointed investors on Monday when it reported weaker-than-expected production and cost guidance for 2012.” Steven Green of TD Securities has cut his price target to $9, while Brian Christie of Desjardins Securities has cut his to $12.25, and Dan Rollins of UBS Securities has cut his to $10.50. (Currently $6.87.)

At Seeking Alpha, Marco G argues that Pan American’s TSX:PAA proposed $1.5-billion takeover of Minefinders TSX:MFL establishes a new benchmark value of $5 per ounce of silver in the ground. He presents a chart of 12 other silver equities, which asserts their relative value, as measured by multiplying their reported silver ounces by $5 and comparing these totals to their market caps. By this metric (and with the caveat, “In real life, there is a world of difference between proven reserves and inferred resources”), Impact TSX:IPT was given a rating of -55%, meaning overvalued by 55%: $110-million market cap versus $50-million silver resource. Fortuna TSX:FVI was at -42%, Excellon TSX:EXN -39% and Aurcana TSX:AUN -15%. MAG TSX:MAG was given a rating of +13%, meaning undervalued by 13%: $500-million silver resource versus $443-million market cap. US Silver TSX:USA was at +51%, Avino TSX:ASM +113%, Cream TSX:CMA +486%, Soltoro TSX:SOL +628%, Silvermex TSX:SLX +722%, Revett TSX:RVM +855% and Defiance TSX:DEF +1,186%.

And at the Gold Report, Matthew Zylstra has this to say about the following gold juniors—Armistice TSX:AZ is “interesting”; Niogold TSX:NOX is “fairly attractive”; and Orvana TSX:ORV is “compelling.” He has this to say of the following silver juniors—Oremex TSX:OAG is “very interesting”; and Cream TSX:CMA “has the potential to more than double the current resource.”

Finally, Mayor Dave Bing’s plan to avert the takeover of bankrupt Detroit by the Michigan state government is threatened by the recalcitrance of its police, who have refused a 10% pay cut and threatened strike action. At a news conference today, Mayor Bing said he was fully prepared to meet that contingency with a daring technological advance in law enforcement. “We’re predicting the end of crime in Old Detroit within 40 days,” he said. “There’s a new guy in town. His name is RoboCop.” Experts in chaos theory decried the introduction of this cyborg constable, warning that it might somehow become sentient, go rogue and demand to be called “Murphy.” VP Bob Morton of Omni Consumer Products, which created the man-machine, rejected this concern, pointing out that RoboCop’s actions are strictly controlled by rigorous and civilian-friendly “Prime Directives.” Morton said, “Let me make something clear to you. He doesn’t have a name. He has a program. He’s product.”

January 27th

By Kevin Michael Grace

Jimmy Carter suffered the death of a thousand cuts as US President. One of the deepest was self-inflicted April 17, 1977: a speech (“fireside chat,” he called it) on energy policy. Clenching his fist in determination (but wearing a sweater), Carter called energy conservation “the greatest challenge our country will face during our lifetime,” and, borrowing a phrase from philosopher William James, invoked the “moral equivalent of war.” It took about five seconds for wags to turn Carter’s call to action into the acronym MEOW. He was never really taken seriously again.

Carter talked up solar power 34 years ago, as did President Obama in his State of the Union address January 25. It seems that solar remains the ever-receding wave of the future. In keeping with the retro vibe, Obama summoned up the distant memory of the challenge of Sputnik, as part of his call for America to “win the future.” He used this phrase six times, obviously unaware of its acronym: WTF.

We haven’t heard the last of this, but, nevertheless, Obama’s speech got generally good notices, reflecting his rising approval rating after the Arizona shootings and a popular belief that economic recovery is imminent. In related news, gold took a beating this week, flirting with $1,310 an ounce, fully $100 off its recent high. Silver fell to under $27, fully $4 off its recent high.

One man who can be counted on to always see imminent economic recovery is Financial Post editor Terence Corcoran. Writing January 24, he suggests, “The world may be on the brink of a major outbreak of growth and wealth creation.” This “Super-Cycle” (a phrase coined by Standard Chartered chief economist Gerald Lyons) “will last a couple of decades and will leave no economy behind, blowing prosperity throughout the four corners of the globe—even to the gloom-infested United States.” According to Lyons, the world has enjoyed two previous Super-Cycles, “from 1870 to 1913 and after the Second World War.” Corcoran doesn’t mention this, but Super-Cycling America suffered no fewer than 11 recessions between 1945 and 2007.

Corcoran avers that the post-war boom can be ascribed to free trade, globalization and, most important, “the triumphant rise of a commercial class that spread innovation around the world.” But if Corcoran is right about the necessity of these factors to foment growth, it seems unlikely that another Super-Cycle will arrive anytime soon, given the current belief that it was precisely these factors (especially the triumphalism of the commercial class) that engendered the present crisis.

A crisis that President Obama believes America has seen the back of: “Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.” These things are true, but on the other side of the ledger America’s latest deficit estimate has risen to $1.5 trillion (up $300 billion), Social Security is now in a current-account deficit, and the dreaded “double dip” has hit the already-reeling housing market, with new home sales falling to their lowest level in 47 years.

Is it too early to speak of a crisis in precious metals? According to the January 28 Financial Daily, “Investor appetite for the metal [has] waned … on growing expectations for rising interest rates that would ultimately make bullion a less attractive investment.” According to Richcomm Global Services analyst Pradeep Unni, “Though the Fed’s firm commitment to buy $600 billion of bonds is a bullish factor for bullion, preferences for riskier assets like stocks and high interest rate currencies has also increased on the back of this.”

Alix Steel, on The Street January 27, attributes recent losses to “lackluster physical buying as gold’s appeal as a safe haven deteriorated.” The story also references “good old-fashioned profit-taking” and concludes, “Cooling in China is another wild card for gold prices. The International Monetary Fund said it expects China to grow 9.6% in 2011 and 9.5% in 2012. If that is too hot for China, then more rate hikes are in the cards which would pressure gold. But until the country tames inflation, gold still makes a good alternative to the yuan.”

Others believe gold’s 2011 decline is the result of malevolent manipulation. In the January 28 Investor’s Digest of Canada, John Embry, Sprott Asset Management chief investment strategist, claims, “The anti-gold cartel unleashed a vicious paper-driven attack on both gold and silver as the New Year opened.” Paradoxically, Embry sees this as good news: “I believe strongly that the lows resulting from this manufactured correction will be the lowest prices we will see in 2011, and thus it is essential that investors take advantage of this opportunity.”

Over at the Daily Reckoning January 26, Richard Daughty is rather more insistent. After describing “The Troubling Doubling of Money Supply” and its implications, he concludes, “I … will tell you right to your face that if you are not buying gold and silver, especially since their prices have seen a little dip lately, then you are, indeed, an idiot.”

The dictum that “mining equities have not yet adjusted to $1,300-an-ounce gold” remains possibly true, as gold still remains over $1,300. Darcy Keith, in the January 25 Globe and Mail, reminds us that even with a 2010 average gold price of $1,225mining equities had a great year: “The S&P/TSX diversified metals & mining index rose a healthy 45 per cent and stock gains of more than 300 per cent in certain well-performing junior miner names were not uncommon.”

But what of 2011, “especially given the pullback seen in recent weeks in base and precious metals markets”? Canaccord Genuity thinks investors can remain bullish, “as long as you’re choosy about who you pick.” Its precious metals picks (with price targets) are Batero Gold ($6.25), Canaco Resources ($6.50), Carpathian Gold ($1.10), Claude Resources ($2.70), North Country Gold ($2.30), Sandstorm Resources ($1.25), SilverCrest Mines ($3.30) and Yellowhead Mining ($2.45).

Martin Mittelstaedt, in the January 24 Globe, enumerates some general principles for picking winners, picked up from BC newsletter writer Ian Gordon of the Longwave Group. They are: looking for companies operating where the big finds were in the past or next to where they are now, “seeking out juniors with minority stakes held by senior producers,” and taking notice when “top performing gold fund managers take a liking to a company.” Companies that meet Gordon’s criteria are Trelawney Mining, Evolving Gold and PC Gold.

Here are some silver picks from Hyperinflation at Seeking Alpha: Alexco, Aurcana, First Majestic, Bear Creek and Great Panther.

Finally, for all the cattiness directed at Jimmy Carter, he was, one must admit, far ahead of the curve on energy. And yet he remains, in the immortal words of The Simpsons, “History’s greatest monster.” Perhaps it was the sweater.