August 30, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was down (at press time) $14.50 (-0.9%) for the week to $1,657.60, and silver was down $0.08 (-0.3%) to $30.48. According to GoldCore, “Gold is mostly unchanged as investors gear up for the US Fed chairman Ben Bernanke’s speech tomorrow. Bernanke may again obfuscate… However, the smart money, such as PIMCO’s Bill Gross, Jim Rogers, John Paulson and others, believes that further QE and money printing remain inevitable. We would concur and advise investors to fade out the short-term noise.”

Plus ça change, plus c’est la même chose. If a Best of Auguries column were run here this week, could anyone tell the difference? From August 25, 2011: “One is tempted to compare the Ben Bernanke’s power and influence to that of a Roman emperor or a medieval pope, but one doesn’t want to underestimate the man. As Catherine Hollander of the National Journal declares, ‘All eyes will be on [him] when he takes the podium on Friday morning at the central bank’s annual confab in Jackson Hole, Wyoming.’”

Now, as then, the pre-speech verdict is the same. Bernancus Magnus is expected “to keep his options open for future action.” One thing is different, though. Last year, fear of no immediate further quantitative easing send gold plummeting from $1,900. This year, gold barely budged in anticipation of his Wyoming Address.

Jackson Hole: Scenic, isn't it.

We heard last week from the enthusiasts: the bug-eyed goldbugs. But as CommodityHQ points out August 29, “It is not just casual investors betting on an uptrend in gold, as a number of significant investors and institutions have been increasing their gold stakes as of late.”

George Soros, the Angel of Death, has increased his holding in the SPDR Gold Trust (GLD) from $52 million to $137.3 million. John Paulson “increased his GLD stake by 26% to hold 21.8 million shares… That means that Paulson has approximately 44% of his company’s assets in this singular fund.” Russia has bought 80 tons and has “more than $47 billion invested in physical bullion.” Turkey has bought “nearly 50 tons this year alone [because of] new legislation that puts gold in reserve requirements for banks, meaning this purchasing will likely continue for some time.” And Mexico bought 110 tons between 4Q 2010 and 1Q 2012.

Gold is no longer infra dig. And the “conspiracy theories” entertained by goldbugs are now getting a respectful hearing, if Peter Hodson’s op-ed in the August 24 Financial Post is any indication.

Hodson examines three such theories. First, “Does the GLD, the world’s largest ETF, actually own the physical gold that it claims it does?” His verdict: “With multiple ‘physical’ gold ETFs out there, why even take the slightest chance that ‘your’ gold is not metal, but a form of paper? We did a lot of work on the GLD over our career, and certain clauses were worrisome. For example, under ‘emergency’ conditions, the GLD in theory could suspend redemptions. To us, an ‘emergency’ is exactly when you might want to have some real, hard, gold.”

Second, “The price of silver is being manipulated downward in order to protect JPMorgan and other big banks. It is well known that US money-centre banks have a giant short position against silver. The short position, it is said, is absolutely huge compared to the amount of physical silver that exists in the world.” Hodson’s verdict: “Maybe. There are certainly enough global players who need the big US money-centre banks to survive, so maybe they ‘help out’ once in a while.”

Third, “The US government is actively involved in financial markets. This theory states that, whenever stock markets plunge, there is active US government intervention to start buying futures and equities in order to turn things around so there is not a panic.” Hodson’s verdict: “If the governments actively support stock markets, where the heck were they during those dark, dark days of 2008-2009?”

Where the heck were they? Ask Warren Buffett. In November 2010, he looked back to the “the darkest of days” when “Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch.” By making sure none of the big boys, AIG, Goldman Sachs, et al, lost a penny. First things first, but those bailout trillions trickled down to the stock markets soon enough.

Hodson concludes, “The world is not out to get you—really.” As you say, but it has been proved time and again that the powerful do not have your best interests at heart and are prepared to lie to get what they want. Nine years ago, the governments of the United States, the United Kingdom and others invaded Iraq based on their certain knowledge that Saddam Hussein possessed “weapons of mass destruction.” No such weapons were found. To this day, Western governments and elites insist that massive Third World immigration will result in significant economic benefits. All empirical evidence demonstrates the opposite.

The more things change, the more they say the same. Our leaders continue to resemble Kevin Bacon in Animal House: “Remain calm! All is well!” Gold took off from $800 an ounce in 2008, and to this day it refuses to roll over and play dead. There’s a lesson here.

Stock Tips and Joke of the Week

Next Page 1 | 2

July 26, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was up (at press time) $38.90 (+2.5%) for the week to $1,619.80, and silver was up $0.32 (+1.2%) to $27.45. GoldCore attributed gold’s increase to “investor hopes for additional stimulus packages to be released by central banks [which] increased the yellow metal’s appeal as an inflation hedge. [This] was on the wave of Ewald Nowotny‘s comments and hopes that the US would employ further action after [the Fed's] policy meeting next week.”

Nowotny proposed giving the European Stability Mechanism a banking licence, an idea that should be a non-starter because it’s, well, illegal. But one suspects we’re about to witness a sea change in European law real soon now.

Perhaps it will be started by European Central Bank supremo Mario Draghi, who declared Thursday, “Within our mandate, the ECB is ready to do whatever it takes to preserve the Euro. And believe me, it will be enough.” Did you feel the frisson? He’s Batman!

Sirius, the Dog Star: Let the sacrifices begin.

Meanwhile, the 17 “wise men” (ie, economists) of the Institute for New Economic Thinking (ie, old economic thinking), which is bankrolled by the sinister George Soros, have issued their own cri de coeur: “We believe that…Europe is sleepwalking toward a disaster of incalculable proportions… The sense of a never-ending crisis, with one domino falling after another, must be reversed.” Their solution? Further fiscal integration, more borrowing from Paulo to pay Pedro.

As we head into the dog days of summer, these epic pronouncements become ever more unreal. According to Wikipedia, the ancient Romans believed the dog days “to be an evil time [when] ‘the Sea boiled, the Wine turned sour, Dogs grew mad, and all other creatures became languid; causing to man, among other diseases, burning fevers, hysterics, and phrensies.’” Their solution? “The Romans sacrificed a brown dog at the beginning of the Dog Days to appease the rage of Sirius, believing that the star was the cause of the hot, sultry weather.”

One suspects that modern Roman Mario Draghi must needs sacrifice more than one brown dog to appease the malign star that persecutes his continent. Greece, Spain, Italy…? The kennel is anxious, and the night air is rent with the hideous sounds of canine shrieks, howls and whimpers.

Continuing our ancient theme, the Daily Mail‘s Mitch Feierstein reminds us of the fate of Cassandra. She “was the daughter of King Priam of Troy. After Helen, she was considered the most beautiful woman on earth… Because of her beauty, the god Apollo fell in love with her and gave her the gift of prophecy. When she did not return his love…he cursed her, ensuring no one would ever believe her prophecies. But Cassandra saw it all coming: the Trojan War, the Trojan Horse, the fall of the city and the slaughter of its citizens…. And no one believed her.

“I’ve said for ages that the Euro will fail, that the countries of the Mediterranean are bankrupt, that Germany doesn’t have the resources to fill the void and that the Western world is entering not a recession but a depression: a huge, 10-year, economic slump. And here we are. If you look outside the city gates right now, I think you’ll find a giant wooden horse with a trapdoor in its belly. Because I’m a Cassandra, you won’t believe me, of course.”

And yet this could be Cassandra’s time. According to Bloomberg, “The secret to success for Julie Dickson, the most-powerful woman in Canadian banking and watchdog for the world’s soundest lenders, is to assume Nouriel Roubini is always right.” Dickson, head of Canada’s Office of the Superintendent of Financial Institutions, says, “In my business, I don’t pay attention to all the people who are upbeat; we focus more on what could go wrong. What’s the right word for people like Nouriel Roubini?” Isn’t it “doommonger”?

At Seeking Alpha, David Alton Clark reads the entrails: “With the latest announcement by the ECB’s Draghi and the strong possibility of the Fed implementing another round of QE, I am extremely bullish. I believe gold and silver at their current levels provide an excellent buying opportunity.”

Stock Tips and Joke of the Week

Next Page 1 | 2

July 12, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was down (at press time) $33.10 (-2.1%) for the week to $1,571.20, and silver was down $0.54 (-2%) to $27.13. Kitco attributed gold’s decline to “Wednesday afternoon’s FOMC minutes from the Federal Reserve [meeting June 19 to 20] that confirmed a sluggish US economy but provided no fresh clues on any upcoming Fed monetary-policy-easing moves.”

Last week, this space noted Jim Sinclair’s “total intellectual and spiritual certainty” that “The battle to stop gold has been lost.” This remains to be seen. And yet Stein’s Law informs us that “If something cannot go on forever, it will stop.”

Thomas Pascoe, writing in the Telegraph, informs us why goldrigging cannot go on forever. “The price of gold is traditionally a proxy for the value of money. A soaring bullion price is indicative of a lack of faith in fiat currency. Our financial system is predicated on the notion that money stands as a proxy for the factors of production—capital, labour, land and enterprise. In short, the abundance of money in the economy should be related to the abundance of those factors.”

Up in flames: "Paper money has been stripped of meaning."

Instead, “Twentieth- and 21st-century economics appears to have done away with this. Money is now created ex nihilo to feed both the top and bottom ends of society. Money printing or quantitative easing is mainly of benefit to two parties.” First, governments, which borrow more, more cheaply “to finance both existing debt and an expansive welfare state.” And second, bankers, “who are able to sell their government bonds at a profit. In theory, they may use this to even up their balance sheet. In reality, they frequently use it as stake money at riskier tables.” As a result, “Paper money has been stripped of meaning.”

The traditional corrective to this debasement has been commodities, particularly gold, which “holds its value when paper money loses value, because it is beyond the gift of the government to simply will gold into being and give it to friends in high places or voters in low ones.”

However, “If gold has been manipulated downwards, and if that process continues, then all recourse to a store of value (other than land and property) has been taken from the individual. The value of our money is falling thanks to quantitative easing. Fixing in the gold market takes away one of the key hedges for those with cash assets but no property.”

Pascoe concludes, “It would appear that the Libor scandal at Barclays has acted to draw out more market figures willing to claim openly that organized price-fixing has occurred in gold.”

This is indeed good news. And yet one hardly expects our rulers to admit that they are engaged in a massive fraud to facilitate mass impoverishment in order to sustain a failed system (and ensure that the superrich grow ever richer).

Pat Buchanan asks, “How many more such blows to their credibility can the financial elites sustain before people turn on the capitalist system itself?” He concludes, “Where vast wealth accrues to people whose actions seem unrelated to any contribution to society or country, and to have come simply from rigging the system for their own benefit, that system will not endure. Our casino capitalists are playing with fire.”

As Buchanan reminds us, Franklin Roosevelt responded to an earlier crisis of capitalism by railing against “moneychangers in the temple of our civilization,” with the result he became “the century’s most successful politician.” But as James Burnham informs us, political change is wrought not by ideas but by a change in elites. Today, unlike 1932, there is no alternative elite in sight. The politics of 2012 are ironclad proof of “the iron law of oligarchy.”

Consider Spain. In 2007, “Madrid ran a primary surplus of 3% of GDP, [and] public debt fell to 42% (Germany was 65% at the time).” A model economy, in other words. Spain’s reward was to be flooded by Euros stripped of their meaning, blowing up its real-estate market and its banks. The bankers aren’t about to be punished for their greed, and so the Spanish people are to be crucified instead. After all, “There is no alternative.”

Stock Tips and Joke of the Week

Next Page 1 | 2

June 14, 2012

By Kevin Michael Grace

Next Page 1 | 2

Gold was up (at press time) $28.30 (+1.8%) for the week to $1,619.60, and silver was down $0.13 (-0.3%) to $28.41. According to Goldcore, “Gold appears to be consolidating after hitting its fourth session of gains, when weak US economic data, in the form of poor retail sales, led to renewed QE chatter. [It] is likely also being supported by real concern about the outcome of Greece’s elections on Sunday.”

Ah, quantitative easing, the Walter White-grade intoxicant demanded by globalists worldwide. Reuters reports June 13, “Many more years of money printing from the world’s big four central banks now looks destined to add to the $6 trillion already created since 2008… As rich economies sink deeper into a slough of debt after yet another wave of Euro financial and banking stress and U.S. hiring hesitancy, everyone is looking back to the US Federal Reserve, European Central Bank, Bank of England and Bank of Japan to stabilize the situation once more.”

“Stabilize,” heh heh. “After four years in which, according to HSBC, the balance sheets of the Big Four have collectively more than tripled to $9 trillion and still not generated self-sustaining recoveries, the question is how long this can keep going on without creating bigger problems for the future.”

The future is now, and stability has left the continent. Just five days after being offered a €100-billion “rescue package,” Ambrose Evans-Pritchard reports that “Spain’s borrowing costs have surged to record highs and are perilously close to the point of no return, threatening a full-blown sovereign crisis unless the European Central Bank comes to the rescue.”

According to Jens Sondergaard of the Japanese bank Nomura, “It is very worrying. Markets are behaving as if the Eurozone is heading for breakup.” Wherever would they have got that idea? Thank goodness Sondergaard has a solution. No prize for guessing what that might be. “He said the ECB should slash interest rates by half a point to 0.5% and ‘pre-commit’ to half a trillion Euros of QE over coming months, blanketing the Spanish and Italian bond markets.”

Meanwhile, Reuters reports June 11, “European finance officials have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing Eurozone capital controls as a worst-case scenario should Athens decide to leave the Euro.” This is the European Common Market, right?

Almost 40 years ago, back when your columnist was a young man, he heard Malcolm Muggeridge say, with considerable amusement, that, according to the socialists, the solution to the failures of socialism was always more socialism. This would appear to be a general principle that applies to all failed systems.

Fifty years ago, Thomas Kuhn, in his groundbreaking The Structure of Scientific Revolutions, posited that (Wikipedia), “The evolution of scientific theory does not emerge from the straightforward accumulation of facts but rather from a set of changing intellectual circumstances and possibilities.” Crude paraphrase: scientific orthodoxy changes only after the doyens of orthodoxy die. This would appear to be a general principle as well, one that applies to all intellectual change.

For a hilarious but sad example of both general principles, readers are directed to Terence Corcoran’s interview of Robert Mundell, 1999 Nobel laureate in economics. He is known as “the godfather of the Euro,” and it speaks to his bravery that he continues to embrace this sobriquet. As the EU stands on the brink of dissolution, Mundell proclaims, “The Euro is a world currency par excellence. It is second only to the dollar. Indeed, it is challenging the dollar as a stable global unit of account and could have a great future as an international reserve asset. The Euro has passed its youth with flying colours.” He is defiant: “The Euro—barring a political revolution in Europe—is here to stay.” It’s funny how all the Euro’s men have gone all Samson in the temple.

Mundell insists that Europe doesn’t have a “Euro problem.” “If the Government of Canada or Newfoundland or Ontario ran up their public debts, and had big current deficits to boot, would that be a debt-deficit problem or a loonie problem? If California is on the verge of insolvency would that be a US dollar problem or a debt-default problem for California?” If you or I were to assert an equivalency between the politico-economic systems of Canada and the United States and the European Union, we’d be ridiculed, but we haven’t been feted in Stockholm, have we?

Not that Mundell doesn’t admit the EU has a problem. Thank goodness he has a solution. No prize for guessing what that might be. “Ultimately, the European Commission should become the executive power, and the Council should be turned into an Upper House of Parliament, with national representations that take some account of population size.” Yes, of course, the solution to the failures of centralization is always more centralization.

Stock Tips and the Joke of the Week

Next Page 1 | 2

February 16, 2012

By Kevin Michael Grace

Gold was down (at press time) $1.20 (-0.1%) for the week to $1,730.10, and silver was down $0.40 (-1.2%) to $33.52. According to our favourite wire service, gold remains dependent on the Euro, which isn’t looking too good “after European officials postponed a decision on a bailout package for Greece, which fuelled fears the heavily indebted nation could face a chaotic default.”

This space remains highly sceptical regarding this magical power attributed to the Euro. In any event, we should see a clarification shortly, as the Greek bailout is a busted flush. At best. At worst, it is Germany dealing from the bottom of the deck. According to a website called The Slog, “A written document giving firm dates and detailed actions for a planned Greek default has been in the possession of two top Wall Street bank currency trading bosses since the second week in January… The plan gives a firm date of March 23 for default to be announced after the close of business.”

Karl Denninger comments, “As I have repeatedly said, the problem is not, in the main, Greece. It is that Italy, Portugal, Ireland and perhaps others will demand the same thing when Greece defaults, especially if they ‘get away with it,’ and it is nearly certain (absent armed intervention) that they will. Be ready.”

If these countries default, Club Euro will be smaller and much more exclusive shortly. But the Euro isn’t the big news in gold this week. Warren Buffett is. The soi-disant Oracle of Omaha this week delivered to his shareholders (and Fortune) an encyclical on the subject. Buffett doesn’t like gold, for the same reason the Vicar of Rome doesn’t like contraception: it’s not “procreative.” To wit: “If you own one ounce of gold for an eternity, you will still own one ounce at its end.”

One could respond that that’s precisely the point. As the great Peter Blegvad sings,

Gold would be useless if it didn’t require such
Heartbreak to seek it, to find it and mine it
Things remain precious as long they’re rare
If gold could be found lying round everywhere
It’d be the lowliest of metals, too soft for serious use
Pretty, of course, and warm to the touch
But no longer alluring, when you’ve handled so much

Buffett believes goldbugs are scaredy-cats, and, “What motivates most gold purchasers is their belief that the ranks of the fearful will grow. During the past decade that belief has proved correct. Beyond that, the rising price has on its own generated additional buying enthusiasm, attracting purchasers who see the rise as validating an investment thesis. As ‘bandwagon’ investors join any party, they create their own truth—for a while… But bubbles blown large enough inevitably pop.”

Perhaps so, but “inevitably” can mean a long time. Gold traded at $37 an ounce in 1970, while the Dow Jones was at 839. Based on today’s closing prices, the Dow is worth 15.4 times as much, but gold is worth 46.8 times as much.

A rather nice rate of return, but what would Buffett have us invest in instead? His prefers “productive assets, whether businesses, farms or real estate.” Real estate? Is he having us on? In procreative terms, houses are more barren than gold, which doesn’t need constant and expensive maintenance to prevent it from literally falling apart. As for businesses, some are productive, and some are not. It would be hard to argue that the Bank of America (as currently constituted) is a productive asset, but, as Auguries readers will remember, that didn’t stop Buffett from a making a substantial investment (read: sweetheart deal) in that institution last year.

Few will remember that Buffet delivered a pretty much identical encyclical last year (when gold was at $1,440) and was treated with the same fawning reverence. Why, he’s so sagacious and just-plain-folks, sort of a Mayor Tommy Shanks of the financial world. Practically a saint, really—who just happens to be the richest man in the world. And to paraphrase The Simpsons, “No one who invests $5 billion in Goldman Sachs in 2008 could be an evil man.”

Buffett, like all good men, is a stalwart supporter of President Obama and has raised a great deal of money toward his re-election. And of course this had nothing do with Obama’s rejection of the Keystone Pipeline. That Buffett, through his ownership of Burlington Northern, stands to benefit greatly by this is the purest coincidence, a happy accident, if you will.

Buffett is, above all, a patriot, as proved by his November 16, 2010, letter to Uncle Sam (reprinted in the New York Times), wherein he remembers 2008, “the darkest of days,” when “Ben Bernanke, Hank Paulson, Tim Geithner and Sheila Bair grasped the gravity of the situation and acted with courage and dispatch.” Buffett confesses, “And though I never voted for George W Bush, I give him great credit for leading, even as Congress postured and squabbled.” How admirably bipartisan of him and unexpected, too, especially as President Obama’s policy of bailouts for the 1% is exactly the same as President Bush’s.

Ultimately, Buffett is the standard bearer for the mutant capitalism whose hegemony over the world economy is coming to an end, first in Europe, then everywhere else. He says gold is a bad investment, but he would say that, wouldn’t he?

Will gold equities remain bad investments? In the Financial Post, Peter Koven writes, “Half-a-dozen large-cap gold miners are set to announce record profits for 2011, but investors are far from excited about their prospects. Despite gold prices above $1,700 an ounce, miners are struggling with soaring costs, execution problems and country risks. As a result, their stock prices have underperformed gold bullion despite the massive cash flows they are generating.”

Further to this, the Globe and Mail‘s Simon Avery reports that, despite a record-breaking 4Q, “Investors continue to value Barrick TSX:ABX at a price-to-earnings multiple far less than telecom companies and only a hair above most major US banks.” Which suggests that the market is simply prejudiced.

And now to cases. At Seeking Alpha, Vatalyst presents “five silver stocks, all with stories for generally positive outlooks, which could be profitable in 2012 [and] present a great entry point for investors looking to get into the silver market”: First Majestic TSX:FR, Silvercorp TSX:SVM, Silver Standard TSX:SSO, Coeur d’Alene TSX:CDM and Endeavour TSX:EDR.

From the same source, Simit Patel is quite keen on gold miners Nevsun TSX:NSU (especially after its recent fall in price) and Sunridge TSX:SGC. Yes, they are both in Eritrea, but Patel considers this a benefit, not a cost: “The country has been sanctioned by the UN, and so there is fear that it is economically cut off from the world at large. But I believe these fears are unfounded; China is a major supporter of Eritrea, and so I think from a geopolitical perspective, Eritrea is part of the value network that China runs. As I’ve noted numerous times…I believe China is the smart money of the global economy at large and particularly the resource sector.”

And at the Gold Report, newsletter publisher Sascha Opel touts European gold miners Carpathian TSX:CPN, Colt TSXV:GTP, Orex TSXV:REX and Astur TSXV:AST. He suggests “two potential takeovers in 2012″: Mansfield TSXV:MDR and Rye Patch TSXV:RPM.

Finally, controversy rages in New Jersey, where Governor Chris Christie will honour the late Whitney Houston by lowering state flags to half mast Saturday. In defence of his decision, Christie admitted that Houston was “not a role model” but noted that she was “a daughter of New Jersey” and claimed her as a “cultural icon in the history of this state.” This is good news for Garden Staters Deena, JWoww, the Situation, Pauly D and Snooki, cast members of the culturally iconic Jersey Shore, who will doubtless all succumb to tragic vodka and Valtrex overdoses sometime during the Christie administration.

January 26, 2012

By Kevin Michael Grace

Gold was up (at press time) $67.50 (+4.1%) for the week to $1,724.80, and silver was up $2.86 (+9.3%) to $33.45. Reuters attributed gold’s rise to “The Federal Reserve’s pledge this week to keep US interest rates at rock-bottom levels for a number of years and its hints of fresh monetary easing.” Goldbugs ♥ the Ben Bernanke!

At the Globe and Mail, Simon Avery ventures a different explanation, derived from the work of Amit Bhartia and Matt Seto of GMO LLC—higher “prices have been driven not by monetary officials debasing their currencies or central banks hoarding gold bars but by consumers in emerging markets. Between 1999 and 2010, emerging Asia increased its share of global gold demand to 57% from 39%, they say, quoting data from the World Gold Council.”

In any event, neither the Fed nor Asia expects the recovery (that mythical beast) to lumber out of its cave any time soon. And the clever clogs assembled at the World Economic Forum in Davos are anxious. Not least its founder and chairman, Klaus Schwab, who declares, “Capitalism, in its current form, no longer fits the world around us… We have failed to learn the lessons from the financial crisis of 2009.”

His solution: “A global transformation is urgently needed and it must start with reinstating a global sense of social responsibility.” Ah, the eternal refrain of “Davos Man“: think globally, act globally.

Schwab’s assertion is pretty rich, given that it is Schwab and his legion that are responsible for the mutant capitalism that engendered the crisis. As for “social responsibility,” who, whom? In a famous 2004 essay, the late Samuel Huntington, who popularized the term, demonstrated that Davos Man is no friend to Average Man. Huntington wrote as an American for an American audience, but his argument applies to all Western leaders, for they are all Davos Men (and Women).

The views of the general public on issues of national identity differ significantly from those of many elites. The public, overall, is concerned with physical security but also with societal security, which involves the sustainability—within acceptable conditions for evolution—of existing patterns of language, culture, association, religion and national identity. For many elites, these concerns are secondary to participating in the global economy, supporting international trade and migration, strengthening international institutions, promoting American values abroad and encouraging minority identities and cultures at home. The central distinction between the public and elites is not isolationism versus internationalism, but nationalism versus cosmopolitanism.

Specifically,

In 1998, 87% of leaders and 54% of the public thought economic globalization was mostly good for America, with 12% of the leaders and 35% of the public thinking otherwise. Four-fifths of the public but less than half of foreign policy leaders think protecting American jobs should be a “very important goal” of the U.S. government. Fifty percent or more of the public but never more than a third of leaders have supported reducing economic aid to other countries. In various polls, 60% or more of the public have backed tariffs; comparable proportions of leaders have favored reducing or eliminating them. Similar differences exist with respect to immigration. In two 1990s polls, 74% and 57% of the public and 31% and 18% of foreign policy elites thought large numbers of immigrants were a “critical threat” to the United States.

Few would disagree that the gulf between leaders and led has only widened as the financial crisis has worsened. This is reflected in the Call to Action that emanated from the World Economic Forum last week. Davos Man demands “an open trading system,” “resilient cross-border finance,” “recapitalizing banks quickly, where necessary,” “ensuring [that] bank deleveraging does not impair trade and project finance” “support[ing] open markets for trade and investment” and “green growth.”

Furthermore, “global cooperation must be renewed”; “the European Central Bank’s measures to secure bank funding and liquidity” must be continued; “the European Financial Stability Facility and European Stability Mechanism to ensure governments can fund at sustainable rates” must be enhanced; “country-level fiscal packages to stabilize debt dynamics” must be implemented; and “Countries must reaffirm that none will resort to growth-destroying protectionism and demonstrate that trade restrictions introduced in response to the economic crisis will be rolled back.”

Prime Minister Harper is certainly on board. In his keynote speech, he boasted that his government has refused to “reduce immigration or give in to protectionism.” Meet the new capitalism, same as the old capitalism. If the World Economic Forum gets its way, the globalist policies that have engendered the crisis will be intensified. Goldbugs ♥ Davos Man!

And now to cases. Reuters reports that, according to CIBC World Markets analyst Barry Cooper, “Rising costs coupled with delays at key growth projects have driven down Kinross Gold’s TSX:K market value, leaving one of Canada’s top miners ripe for a takeover.” Cooper has “slashed his price target for the miner’s US-listed shares to $15 from $20″ (currently $11.48).

Reuters also reports that Canaccord Genuity has raised its price target on MAG Silver from $14 to $16 (currently $8.20).

At the Globe and Mail, the top mining pick of Peter Brieger, CEO of GlobeInvest Capital Management, is Scorpio Gold TSX:SGN, “an emerging gold exploration and production company based in Nevada. It is in production with a 2012 target of 60,000 ounces and a three-year target of 100,000 ounces. It has an aggressive exploration program on the current property.”

At the Financial Post, Zara McAlister reports that Steuart McIntyre of RBC Capital Markets is sweet on African explorer PMI Gold TSXV:PMV: “In our view, the company is characterized by its large, above average grade resource base, experienced team and compelling relative value.” McIntyre has a A$1.80 target for the company (currently $1.09 on the TSXV) “with an 80% implied return” and suggests possible takeover attempts from Endeavour Silver TSX:EDR, Golden Star TSX:GSC and Perseus TSX:PRU.

At Seeking Alpha, Hawkinvest names six “gold stocks that are poised to benefit from the long-term uptrend in gold”: Goldcorp TSX:G, Golden Star TSX:GSC, Great Basin TSX:GBG, Newmont TSX:NMC, Taseko TSX:TKO and Yamana TSX:YRI.

From the same source, Simit Patel likes Nevsun Resource TSX:NSU and its Bisha gold-silver-copper-zinc mine in Eritrea. He notes that the mine is 30% owned by Eritrean National Mining Company, which “significantly decreases political risk” and that “in 3Q 2011 the company reported cost per ounce of $264,” which means that, “given that the bull market in gold is far from over, the prospects for this mine are outstanding.”

Finally, your attention is drawn to this clip from the Onion News Network. K’Ronikka does not exist, and so the report is satirical, but its satire resides not in its depiction of a slutty, talent-bereft female electropop artist, as the Onion’s fantasy is scarcely to be distinguished from reality. The video is funny because K’Ronikka’s interviewers dare to criticize her and everything she stands for. Her response is typical of her generation: “I got nuthin’ to say to all the h8ters.” Contrast this to the reactions of the fictional band in the satire This Is Spinal Tap (1984) to the critical reviews of its albums and note the degeneration of pop culture in the last 28 years. Spinal Tap were embarrassed by the accusation they were “treading water in a sea of retarded sexuality and bad poetry.” To Fergie, Ke$ha, Katy Perry, Rihanna, Nicki Minaj, et al, this is no accusation; this is their aspiration.

January 19, 2012

By Kevin Michael Grace

Gold was up (at press time) $8.00 (+0.5%) for the week to $1,657.30, and silver was up $0.37 (+1.2%) to $30.59. Reuters attributed gold’s gain to the “Euro hit[ting] a two-week high versus the dollar, benefiting from solid Spanish and French debt auctions.”

Why is it only equities and commodities whose daily rise and fall are followed by such readings of the entrails? This practice should be extended to other measurables, for instance, Nielsen ratings. Then we could have this: Keeping Up With The Kardashians fell 17% this week, as Americans rediscovered the virtues of intelligence, dignity and self-sufficiency. Or, alternately, this: Keeping Up With The Kardashians rose 19% this week, as America decided to park itself on the couch with a gross of Snackwells and a three-litre bottle of Diet Mountain Dew and just give up.

Until that happy day, this space will continue to list the various explanations for the up hill and the down dale of precious metals and related subjects. That is, unless the Stop Online Privacy Act passes into law. The purpose of the Act, HR 3261, is “To promote prosperity, creativity, entrepreneurship, and innovation by combating the theft of US property.” That’s the official position. Alternately, one could describe its purpose thus: To crush fair use once and for all and to further extend the hegemony of the entertainment industry over every aspect of our lives by terrorizing Internet service providers.

Auguries is based on quotations from other sources, which are usually found on the Internet. Should one of those sources claim this column is “committing or facilitating the commission of” copyright infringement, ResourceClips.com (which is hosted on a US server) would be subject to seizure by the US government. Due process? Think again. It wouldn’t even be necessary to claim we had infringed copyright directly, even a link to another site that has allegedly infringed copyright would be sufficient. But suppose ResourceClips.com switched to a non-US server? Adrian Hon of the Telegraph explains:

It gets worse. If the targeted site is not based in the US and thus cannot be seized, then the following actions must occur:

It’s not just this column that’s imperilled. Mike Shedlock explains that if SOPA passes, “My site, ZeroHedge, Calculated Risk can all be shut down if a newspaper or other site thinks we went beyond fair use in quoting an article.”

Proponents of SOPA are apt to respond that everybody knows what stealing means and that the principle of fair use is widely understood. Neither of these propositions is true. Fair use is a legal minefield, and Hollywood is continually expanding the length and scope of its copyright claims.

Did you ever wonder why you almost never hear “Happy Birthday,” a song at least 100 years old, in TV shows or movies? Because the producers would have to pay a royalty. (It brings in $2 million a year.) If you happen to sing “Happy Birthday” at a party at your local Chili’s or Chuck E Cheese, and someone from Warner Music Group happens to find out about it, you’ll be on the hook for several hundred dollars.

Did you ever wonder why It’s A Wonderful Life used to be broadcast almost non-stop on hundreds of stations during the Christmas season but is now shown only twice annually, on NBC? Because the successor company to Republic Pictures—which let its copyright lapse—managed to persuade a court to ignore that little detail.

Did you ever wonder why imported LPs and CDs would always work on your equipment but imported DVDs and Blu-rays usually don’t? (Warner Bros and Universal are two honourable exceptions to this rule.) Because the entertainment industry established a worldwide region-code cartel to prevent people from buying foreign DVDs, even those unavailable in your country. The Digital Millennium Copyright Act actually makes it a crime to circumvent the region-code system or disseminate information on how to do so.

Did you know that Hollywood has taken the position that if you watch a TV show but don’t watch the ads, you’re guilty of theft?

Information is, as they say, power. One cannot make informed decisions without data, and if SOPA passes, the data used by investors in the mining industry (or any other industry) is at risk. Let there be no mistake, it is Hollywood and its minions in the US Congress that are primarily responsible for stifling “prosperity, creativity, entrepreneurship and innovation” by means of their ceaseless efforts to put all information under lock and key.

American lawmakers were frightened by the public reaction to the blackouts by Wikipedia and other websites this week, and passage of SOPA is no longer a sure thing. But the threat remains. American readers of this column should contact their federal representatives and urge them to vote against SOPA, and Canadian readers should contact the Hon Christian Paradis, Minister of Industry, to urge him to protect Canadian websites, should SOPA become law.

And now to cases. At the Globe and Mail, Darcy Keith and Jody White report that Michael Fowler of Loewen, Ondaatje, McCutcheon believes that Northern Freegold’s TSX:NFR first resource estimate of its Yukon gold-silver-copper project “is very positive for the company as it is on the upper end of its guidance.” Fowler rates Freegold a “speculative buy” with a $1.44 target. (Currently $0.26.)

From the same source, Wayne Atwell, managing director of Rodman & Renshaw, likes gold-miner Richmont Mines TSX:RIC. His target price is “almost $15.” (Currently $11.05.)

At the Financial Post, Peter Koven reports that Pan American Silver TSX:PAA is at a turning point. If the law against open-pit mining in Argentina’s Chubut province is revoked and PAA’s Navidad mine approved, Andrew Kaip of BMO Capital Markets sees a “30% upside” in its share price. “Kaip has an outperform rating on Pan American stock and a price target of $32.50.” (Currently $24.87.)

And at Seeking Alpha, David Alton Clark suggest five TSX-listed “out of favour” silver stocks which “are undervalued, primed to rebound and have significant upside potential as the price of silver rises”: Endeavour TSX:EDR, First Majestic TSX:FR, Pan American TSX:PAA, Silver Wheaton TSX:SLW and Silvercorp TSX:SVM.

Finally, the aforementioned Internet suffered a minor stroke last week after Lana Del Rey performed on Saturday Night Live. How bad was the backlash? You know you’re in trouble when even the perennially genial Brian Williams takes offence. Things got worse after it became widely know that Del Rey (née Elizabeth Grant) is, as Wikipedia informs us, “the daughter of domain investor and millionaire Rob Grant,” that “Grant’s management chose her stage name” and that her father “helped with the marketing” of her first (now withdrawn) album. OK, one-percenters, here’s the deal—you can rob us blind, turn the free market into a joke and bring the world economy to its knees, but dare to corrupt our “edgy,” “alternative rock,” and this means war.

December 29, 2011

By Kevin Michael Grace

Gold was down (at press time) $66.90 (-4.2%) for the week to $1,540.80, and silver was down $1.74 (-6%) to $27.36. Nicolas Johnson of the Globe and Mail attributed these declines to “a report from the European Central Bank [which] rekindled concern that the region’s debt crisis is deepening.”

The Guardian reports today, “The Euro sank to a 15-month low against the dollar on Thursday as the European Central Bank (ECB) reportedly stepped in to prop up Italian bonds following an auction that revived fears Italy may be unable to refinance its huge €1.9 trillion [US$2.46 trillion] borrowings.”

In other words, Europe is falling back into recession, and the money cannot be found (or created) to bail out the PIGS. At The Daily Reckoning, Bill Bonner explains why this is bad for gold: “The US may be going broke, but perversely, people want dollars…and US Treasury debt. It’s the only thing they can count on. If the feds ever run out, they know they can depend on Ben Bernanke and his central banker friends to give them more.”

Bonner argues that “insatiable demand” for Treasuries has created a bubble, “But bubbles do not necessarily blow up right away. It can take time for the pin to approach…And Mr Market is a pretty cunning old fellow. Our guess is that he will want to draw more of the world’s wealth into the US bond market…before blowing it up.” Logically enough, he advises, “And so what if gold falls to 1,400? Or 1,200? You know what we call that. A buying opportunity!”

Over at Mish’s Global, Mike Shedlock gives us 10 predictions for 2012. Readers are advised to fortify themselves with a couple of stiff ones before clicking on the link, which may otherwise induce uncontrollable wailing whilst running in circles and tearing out one’s hair. The bad news: “Severe European Recession as the sovereign debt crisis escalates: Austerity measures in Italy, Greece, Spain, and Portugal plunges all of Europe into a major recession. Spain and Portugal will follow Greece into an outright depression.” The “good” news: “The US will not avoid a recession in 2012. Retail spending ran its course with the tail-off into Christmas of 2011… [Although] certainly the US recession will be far less severe than the recession in Europe and Australia.”

The problem with these apocalyptic pronouncements is that with each week that goes by without Europe devolving into chaos and destitution, people and politicians are likely to conclude that the crisis will simply fade away. This was the situation that obtained in Europe during the so-called Phoney War of September 1939 to May 1940. With each week that passed without a German invasion of France, expectations rose that the seizure of Czechoslovakia, Austria and half of Poland had sated Hitler’s appetite. In any event, France was protected by the impregnable Maginot Line.

Just as today we have our impregnable central banks to protect us. As Alexander Boot explains in the Daily Mail, it is a fatal conceit to conclude that the present crisis is merely a technical problem. Boot observes that he is surprised to find himself in agreement about anything with Rowan Williams, the Archbishop of Canterbury. That said, he cannot help applauding Dr Williams’ portrait of amoral Britain: “Whether it is an urban rioter mindlessly burning down a small shop…or a speculator turning his back on the question of who bears the ultimate cost…in the virtual reality of today’s financial world, the picture is of atoms spinning apart in the dark.”

Boot is by no means a Marxist; he is in fact a retired (and successful) businessman who fled the Soviet Union in 1974. But he is a moralist: “In no sense can an economy in which the government spends nearly 50% of GDP (closer to 75% in the outer areas of the UK) be termed capitalist. But whatever the economy is, when it’s ripped off its ethical underpinnings, it’ll be cast adrift into the sea of virtuality… When the unifying reality of our civilization falls by the wayside, we indeed sink into a virtual world—in which we live on virtual money.”

The present crisis is also an opportunity—to reinvest capitalism with moral principles and to consider the questions how much government we can afford and how much government is good for us. Early indications are that this opportunity is being squandered.

At Seeking Alpha, Kate Stalter interviews Jason Burack of Wall St for Main St, who believes precious-metals equities are more than ever a significant investment opportunity. He says, “I still think gold and silver are going to outperform all the other commodities as a whole in the next three to five years.”

And now to cases. Burack likes AuRico TSX:AUQ, Brigus Gold TSX:BRD and Jaguar Mining TSX:JAG.

At the Globe, Jody White reports that CIBC World Markets analyst Cosmos Chiu rates Banro TSX:BAA as a “sector outperform[er] with a $7 price target (currently $3.75). He also notes that CIBC analyst Jeff Killeen has “reaffirmed his price target of $8″ for Queenston Mining TSX:QMI.

Dividend Kings suggests five silver stocks “chosen because of their opportunities for profit-margin expansion and earnings-ratio multiple expansion through growth”: First Majestic TSX:FR, Silver Standard TSX:SSO, Silvercorp TSX:SVM, Coeur d’Alene TSX:CDM and Endeavour TSX:EDR.

And at Happy Capitalism, Lou Schizas urges, “Do not fight the tape! If a stock is going down you don’t need to understand why. You need to make a decision to get off the ride and preserve capital.” Specifically, Gran Columbia Gold TSX:GCM “seems to have a tiger by the tail with their Maramoto gold project in Columbia. Their forecast is that production will go from 90,000 ounces in 2011 to 510,000 ounces in 2016. However, until the stock breaks this downtrend, it’s a speculation not an investment.”

Finally, Belinda Stronach, writing in the Globe, presents a plan for the democratic renewal of the House of Commons: term limits for MPs. It does not seem to have occurred to Stronach that her plan is impossible because parliaments cannot have fixed terms. One wonders why anyone would seek Stronach’s counsel on this issue, but that would be to forget her own historic contribution to democratic renewal, when in 2005 she switched parties, thereby snatching from the Canadian people a constitutionally mandated election and preserving in power a cynical, corrupt and exhausted government.

A Happy and Prosperous New Year to all Resource Clips readers!

December 8, 2011

By Kevin Michael Grace

Gold was down (at press time) $35.90 (-2.1%) for the week to $1,712.40, and silver was down $0.66 (-2.1%) to $31.64. Gold’s declines was attributed by the Wall Street Journal to “investors seeking safety in the US dollar after the European Central Bank’s latest efforts to shore up the Eurozone financial system fell short of market hopes.”

To speak of “market hopes” would seem to be begging the question, as it has become obvious since 2008 that there are two markets. There is the market patronized by people that read this website, and then there is the market controlled by our betters—the bankers and their patrons, the politicians.

A prominent example of the latter class, Jon Corzine, testified before Congress today about the billion or so dollars that went missing during when he was at the head of MF Global. According to the Washington Post, “Though anything he said could be used against him, Corzine hedged his testimony by saying he had too little time to prepare for the hearing and only limited access to records ‘essential to my being able to testify accurately.’” And only a cynic would conclude that his hedging had anything to do with possible considerations of perjury.

Such a lot of cynicism these days about our betters. John Crudele writes in the New York Post, “So, now do you believe me? The stock market was rigged.” In 2009, the Post got hold of Hank Paulson‘s telephone records. On September 18, 2008, Treasury Secretary Paulson spoke six times with Lloyd Blankfein, CEO of Goldman Sachs. The man Blankfein succeeded as Goldman CEO is called Hank Paulson. Crudele reports, “That was a day of great market turmoil and—while there is no way of knowing what the two men spoke about—the calls did coincide with a major turnaround in stock prices.”

Crudele then draws our attention to July 21, 2008, “a time when both Fannie Mae and Freddie Mac, government-sponsored organizations that buy most of the nation’s residential mortgages, were in serious trouble.” According to a story in Bloomberg Market, Paulson told the New York Times that Fannie and Freddie looked fine—and then he told a bunch of hedge-fund traders that they were at risk of governmental seizure wiping out the value of their stocks.

Crudele writes, “By giving confidential information to a roomful of traders, Paulson had to understand he’d influence the price of Fannie and Freddie stock and, by extension, the whole market. He’d also be giving the people receiving that information a chance to cheat—to rob public investors who weren’t lucky enough to be invited to such meetings.”

Finally, Crudele notes a curious coincidence, the November 28 secret approval by the Federal Reserve (announced publicly two days later) of bailout funds for Europe and the strong market rally that day.

Over at Mish’s Global, Mike Shedlock describes how the Federal Reserve refuted the allegations made by Bloomberg Market that banks made $13 billion profit on $7.7 trillion of secret loans and pledges. Two small problems with this refutation: it doesn’t address any of Bloomberg’s specific charges, and it doesn’t even deign to mention the article in question.

On the other hand, Canadian Defence Minister Peter MacKay has deigned to notice the allegations that he lied about his use of an Armed Forces helicopter. He’s threatening to sue various MPs for libel. This is the same government that when caught out lying about Liberal MP Irwin Cotler, responded that the Conservatives were merely engaging in “free speech.”

According to the Victoria Times Colonist, “One can split hairs about whether MacKay lied. But emails released under freedom of information requests show he didn’t tell the truth.” Clearly, the Times Colonist is unaware of the Costanza Defence. As viewers of Seinfeld will know, Jerry’s best friend George possesses “one of the most deceitful, duplicitous, deceptive minds of our time.” Of course, lying is as natural to the human condition as smiling, and when Jerry wants to trick a polygraph in order to preserve the fiction that he is not a fan of Melrose Place he goes to George for advice. Which is: “Just remember, it’s not a lie if you believe it.”

The theological term for the Costanza Defence is antinomianism. Faith alone is sufficient for salvation, so the great have no need for what lesser mortals call “truth.” The Times Colonist declares, “Dishonesty is corrosive. When it becomes the norm, when morality is abandoned, we are entering dark and dangerous times.” No argument there, but more corrosive still is the dishonesty of those convinced their righteousness renders considerations of morality nugatory.

Would you place yourself at the mercy of financial instruments created and maintained by such men? This is the choice we face. At Equedia, Ivan Lo writes, “Money will be printed endlessly. It’s inevitable. Even as the US economy is struggling to deal with a housing crisis, inflation will eventually happen. It will take time and we may deflate before it happens, but it will happen. When it does it won’t be a slow and gradual rise—it will be explosive.” He declares that those who invest in “gold and gold-related investments” now will “look at our current situation as the opportunity of a lifetime five years from now.”

To educate investors in evaluating gold equities, Lo has prepared the second in his series of technical tutorials, “Cut-off Grade Theory and Practice.”

And now to cases. At the Gold Report, Bob Moriarity of 321Gold says, “Nobody quite knows where the price of gold and silver will go, but anybody in production now is literally minting money… You couldn’t possibly not be profitable.” He mentions in this regard Endeavour Silver TSX:EDR, First Majestic Silver TSX:FR, Fortuna Silver Mines TSX:FVI, Great Panther Silver TSX:GPR, Rio Alto Mining TSX:RIO and Timmins Gold TSX:TMM.

With regard to explorers, Moriarity is sweet on Colombia, calling it a “phenomenal play.” He mentions in this regard B2Gold TSX:BTO, Bellhaven Copper and Gold TSX:BHV, Columbia Crest Gold TSX:CLB, Continental Gold TSX:CNL, Red Eagle Mining TSX:RD and Solvista Gold TSX:SVV.

At Seeking Alpha, Simit Patel is sour on Argentina, arguing that the political risk there is now “too great for investors in non-diversified mining firms.” The only personal exception he has made is Minera Andes TSX:MAI. Another exception could be Extorre Gold Mines TSX:XG; even then, however, he wouldn’t buy until it drops below $6 (currently $9.18).

And at Happy Capitalism, Lou Schizas scrutinizes West African gold miner Semafo TSX:SMF, which went from $2.16 in May 2009 to $12.45 in November 2010 (currently $7.25). Schizas concludes, “The momentum indicators are not suggesting a shift towards the upside,” and so, “It will most likely retest $7.”

Finally, the US Transportation Security Administration Agency is again under fire after it was claimed that three feeble old women were strip-searched at JFK Airport last week. Don’t these critics know there’s a war on? As the great Thomas Jefferson said, the price of liberty is eternal viciousness.

December 1, 2011

By Kevin Michael Grace

Gold was up (at press time) $52.50 (+3.1%) for the week to $1,748.30, and silver was up $0.87 (+2.7%) to $32.80. These rises were attributed to the collective decision of the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve and Swiss National Bank to lower the pricing on the existing temporary US dollar liquidity swap arrangements by 50 basis points.

Bloomberg translates the above as, “European banks have been parched for liquidity and need access to dollars. The ECB can’t supply them dollars unless it borrows them from the Fed. Essentially today’s action makes it easier for the ECB and thus European banks to borrow dollars.”

Peter Schiff sees it somewhat differently. “[This] unprecedented announcement by the world’s most powerful central banks was a loud and clear bell ringing to buy precious metals. The move, disguised as an attempt to help the fragile state of the global economy, is in reality a move to prop up failing banks in Europe and the US. By reducing interest rates paid for dollar swaps, central bankers are in effect increasing the quantity of global dollars in circulation. The result? The dollar will weaken, inflation will rise, and gold will soar.”

Zero Hedge adds, “Whether [the banks] succeed in overturning the deflationary tsunami is unknown. What is certain is that they will bring fiat currencies to the verge of viability (and beyond) in trying.”

At the Globe and Mail today, Michael Babad observes, “By the Eurozone’s own calculations, eight days remain in which to save the crippled monetary union. But after the euphoria of yesterday’s coordinated move by the world’s major central banks, the outlook is still bleak.” Bleak for whom, one wonders. This supposedly beloved transnational currency, the Euro, is not yet 13 years old and must be considered one of history’s great planning disasters. So the fervid and increasingly desperate efforts to save it must have another explanation. The late financier Sir James Goldsmith identified it as the elevation of an economic doctrine, globalism, to a religious belief. He spent the last decade of his life campaigning against worship of the Golden Calf, and for this he was derided as a bitter, clapped-out and half-mad billionaire.

Goldsmith was an arrogant and even monstrous man, but he knew the world, and he knew business, unlike the think-tank titans for whom “the market” is never wrong but whose knowledge of it is entirely theoretical. He was the son of a German Jewish father and a French Catholic mother. As the Telegraph obituary informs us, “The Goldsmiths were descended from Moses von Schaffhausen, a goldsmith from Nuremberg who was driven out of that city by official persecution of Jews in 1499. The family settled in Frankfurt, took the name Goldschmidt, and prospered as bankers.” Eventually, Sir James held the citizenship of five countries, Britain, France, the United States, Israel and Mexico.

After having built a major food conglomerate in Britain and coming out much the worse after an ill-advised attempt to destroy Private Eye—which mocked him as “Jaws,” “Goldenballs” and “Sir Jammy Fishpaste”—Goldsmith decamped to America, where he became one of its leading corporate raiders and asset strippers (and the inspiration for Sir Larry Wildman in Oliver Stone’s Wall Street). At one time he was the largest timber owner in the country, and he owned 49.9% of Newmont Mining.

Adam Curtis argued in his documentary The Mayfair Set that, “The very thing that made [Goldsmith] rich”—the rise of banking power—”was now a threat to global stability.” Who could deny that now? In a 1994 interview with Charlie Rose (full video here), he declared, “The economy is there to serve the fundamental needs of society: prosperity, stability and contentment.” Seventeen years later, the economy is now regarded by experts as a vengeful god, capricious, terrifying and beyond the influence of any human agency. “Instead of the economy being there to serve us, we are there, adoring [and] serving economic indices.”

This worship sustained us so long as these indices were rising, but now that they are not and give little indication of recovery, more than fiat currencies are about to be brought to the verge of viability.

Gold equities continue their own peculiar struggle with viability. Thomas Biesheuvel reports, “Gold mining stocks are trading at their cheapest level in at least nine years, even as the industry’s profits are estimated to almost double this year and bullion trades close to its historic high.” Eldorado Gold TSX:ELD President Norm Pitcher is optimistic this situation will change. “Gold equities will come back,” he says. “The one thing you don’t have when you are buying an ETF is any upside to exploration, and I think the companies that have good exploration assets are the ones that will probably be valued a little higher.”

And now to cases. At the Financial Post, John Shmuel reports that Dundee Capital remains bullish on gold. With regard to equities, it “advise[s] cautious investors to remain in reputable names including the likes of Barrick TSX:ABX and Yamana TSX:YRI.” For investors, who don’t mind pushing the boat out, “With respect to junior producers, we continue to like names such as Aurizon Mines TSX:ARZ and Perseus Mining TSX:PRU.” For the truly ambitious, “Our favoured names include Torex TSX:TXG, Continental Gold TSX:CNL, Lydian TSX:LYD and Sabina TSX:SBB, and for the more risk-tolerant investor, we also like Colossus Minerals TSX:CSI.”

From the same source, David Pett reports on the fallout of Agnico-Eagle’s decision to suspend production at its Quebec Goldex gold mine. According to Steven Butler of Canaccord Genuity, “Operating results will struggle to improve for at least two to three quarters,” and the company faces “the potential overhang of class-action lawsuits on Goldex.” Butler has changed his recommendation to hold from buy and lowered his target to $53 from $98 (currently $44.93).

At Seeking Alpha, Plan B Economics writes, “If and when investors believe markets will rally on rising liquidity and a falling dollar, they may benefit from holding the…most sensitive silver producers.” The five listed on the TSX are First Majestic TSX:FR, Coeur d’Alene Mines TSX:FR, Endeavour TSX:EDR, Pan American TSX:PAA and Silver Wheaton TSX:SLW.

From the same source, Michael Cassano notes that Banro Corp TSX:BAA, which operates in the Democratic Republic of Congo, “has delineated 11.2 million oz. of gold resources (including inferred),” which makes it “an attractive M&A target.” He concludes that the company “is a very compelling investment opportunity and should be considered by investors looking to gain exposure to an emerging gold miner with significant capital appreciation upside.”

And Bloomberg reports that Guyana Goldfields TSX:GUY, whose Aurora gold-mine project is fully permitted, “has signed confidentiality agreements with six parties interested in buying the company.” A $100 million to $150 million financing is likely imminent, and Trevor Turnbull of Scotia Capital says “Guyana ‘would probably be at the top of a short list’ of potential acquisition targets.”

Finally, back in the day one could count on CoverGirl ads to present the ideal of American beauty: Jennifer O’Neill, Cybill Shepherd, Cheryl Tiegs, et al. Nowadays, beauty is considered hateful and undemocratic, and so we are forced to contend with the unedifying spectacle of, ahem, celebrity spokesmodel Ellen DeGeneres “voguing” or some such for the camera. In one of her spots, Ellen remarks that women don’t want makeup that leaves them resembling an apricot or a prune. True enough, but why ever would Procter & Gamble imagine that women would prefer to resemble a vampire raccoon?