Some very good points in this thread- I am interested in the economy - and all I can witness to is how so many good paying jobs have left Calif-how many long time residents are going out of state. Our town was 90% white. Now we are a huge minority. Just sayin-not predjudice. Kids are coming out of college,some with a masters and have huge student loans to pay off. What the heck has happened? Thanks for the good reading here at the RX- keep it up-I am battling the DOJ as we speak.
Most of the "job creation" since the 2007 plundge is in the part time/temp/low income/crappy or no benefits arena quality of jobs is absolutely terrible... Got like 30% of americans on food stamps ... Economic structure now is unstable/non-sustainable long term .... Big companies not hiring hardly just making existing personel do more as they throw their cash hoards into stock buybacks and dividends ... Small guys who historically have been the job growth engine were cleaned out and not coming back and have a hard time competing today as the big guys in bed with politicians and write the rules ... Revenue and true organic growth for big guys anemic ....
Hard to say what's gonna happen to Wall Street due to it being fluffed by a variety of factors but the economic picture for the average joe on Main Street will continue to be quite bad long term.. Long term path we on is Mexico north where u got a small percent of population filthy rich living off pseduo monopolies while the bulk of the population lives like shit
i doubt it gets to even 1000 ... High 1000s/1100 a more rational target the fundamentals for gold are very strong long term regardless of the near term noise and it was long overdue for a big time shakeout phase... Maybe I'm wrong and everything is just fine economically long term ?
also technically good hasn't been this oversold near term since 2000 when the bull started
China Is Now More Capitalist Than The US: Main Communist Mouthpiece Says Bailouts Are Bad
Submitted by Tyler Durden on 06/25/2013 - 10:42
Given the earlier rumors of PBOC bailing out the funding markets (followed rapidly by their actual denial/explanation of what is going on which is much less supportive than an exuberantly bouncing market implies), it is perhaps ironic that the nation's government mouthpiece - The People's Daily - explains that help is not coming:
A bailout of the stock market is not beneficial to the development of a sound capital market, although some analysts are suggesting the China Securities Regulatory Commission and the People's Bank of China should intervene
Indeed; it seems the Communist party did learn something about the failures of the US' version of Capitalism and the snowballing impacts of bailout-based unintended consequences.
Submitted by Tyler Durden on 06/25/2013 - 10:42
Given the earlier rumors of PBOC bailing out the funding markets (followed rapidly by their actual denial/explanation of what is going on which is much less supportive than an exuberantly bouncing market implies), it is perhaps ironic that the nation's government mouthpiece - The People's Daily - explains that help is not coming:
A bailout of the stock market is not beneficial to the development of a sound capital market, although some analysts are suggesting the China Securities Regulatory Commission and the People's Bank of China should intervene
Indeed; it seems the Communist party did learn something about the failures of the US' version of Capitalism and the snowballing impacts of bailout-based unintended consequences.
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Financialization is the disease eating away the heart of the economy and what's left of democracy.
There are a number of factors behind the widening canyon of economic inequality, but the primary driver is financialization. Financialization has given those with capital and access to financier expertise ways to skim great wealth from the system without creating any value whatsoever.
Those with a home that is owned free and clear and $500,000+ in a 401K or retirement account have more capital than the vast majority of Americans, but members of the upper-middle class have no access to the leverage and tools of financialization.
In other words, financialization isn't a consequence of having capital: it's the consequence of having access to unlimited credit, leverage and low-risk, low-tax skimming operations (for example, tax codes enable hedge funds to declare income as low-tax long-term capital gains).
From the financier point of view, the upper-middle class tax donkeys who keep all their investment capital in mutual funds are the marks who supply liquidity to the system. The wealthy who park money in hedge funds are marks of a higher order, as their cash enables fund managers to gamble with other people's money and then return a thin slice of the gains (if any, after fees) back to the investors.
A carry trade is a classic skimming operation. The term is based on the difference between the costs of holding (carrying) one position and the gains earned by investing the proceeds elsewhere.
A typical example has been borrowing money for near-zero interest in Japan (yen) and using the proceeds to buy higher yielding Treasury bonds in the U.S. Here is Dan Norcini's description:
To define this term, "carry trade", for those who are a bit newer to the markets, it consists of borrowing large amounts of Yen for extremely low costs due to the miniscule short term interest rate in that nation, and taking those proceeds, exchanging it into different currencies and then using that money to make investments elsewhere where higher yields may be obtained. If that is not risky enough, most of these hedge funds then leverage their speculative bets in the hopes of compounding their gains.
There is a risk to currency carry trades: if the currency you borrow appreciates, then the trade blows up as the exchange rate loss exceeds your interest rate gain. The yen carry trade expanded to an estimated $1 trillion because the dollar/yen exchange rates were relatively stable.
The sweetest carry trades occur when two currencies are officially pegged but there is a big difference in interest rates between the two currencies. The lack of volatility in the exchange rate lowers the risk of this trade to near-zero--until the peg blows up.
You Don’t Really Understand the Carry Trade, Do You? (Yahoo Finance)
Would you like to leverage a carry trade 10 to 1? Hmm, who will loan you $1,000,000 based on $100,000 collateral? That's a key feature of financialization: the real power--leverage and access to global markets--is not available to you. The skimming operations are only open to the financier class.
Leveraging phantom collateral is another feature of financialization. Commoners were allowed a taste of this when subprime lenders were offering no-document, no-down payment mortgages back in 2004-2007. Phantom income was posted as collateral for the nothing-but-leverage loan.
The same sort of trade appears to be occurring in China, where a warehouse of copper is pledged as collateral for a legitimate bank loan at a rate of 4.5%. The proceeds are then loaned out at 10% (or higher) in the shadow banking sector of informal, unregulated credit.
What's to keep several people from pledging the same warehouse of copper? Nothing.
The carry trade blows up when the shadow-banking borrower defaults. Globally, the shadow banking system has ballooned to almost unimaginable proportions as financiers have sought out skimming operations:
Leverage and high-finance skim operations do not require much capital. It takes essentially no capital to originate a derivative; just craft the thing to protect your interests and sell it to some money manager as a valuable hedge.
If you have the right position and tools, it doesn't even require collateral to access gargantuan trading lines of credit.
The point is financialization is about leverage and skimming the existing system for immense profits. It's not about hedging legitimate industries' risks or investing in productive enterprises; it's all about skimming wealth while providing no value to the real economy or society.
The hidden toxin in financialization is the resulting concentration of wealth can buy concentrations of political power. Financialization is thus self-perpetuating: once the skimming operations generate billions of dollars in profit, it only takes a relatively small piece of these profits to buy/influence the political class. Once the politicos are in your pocket, the regulators and judiciary fall into line or are marginalized by new statutes or gutted budgets.
When Congress dared to question hedge funds' primary tax break (declaring income as long-term capital gains), the industry went apoplectic and declared capitalism, Mom and apple pie were all at grave risk if their skimming operations were taxed at the same rate you and I pay on our income.
Financialization is the disease eating away the heart of the economy and what's left of democracy.
Financialization is the disease eating away the heart of the economy and what's left of democracy.
There are a number of factors behind the widening canyon of economic inequality, but the primary driver is financialization. Financialization has given those with capital and access to financier expertise ways to skim great wealth from the system without creating any value whatsoever.
Those with a home that is owned free and clear and $500,000+ in a 401K or retirement account have more capital than the vast majority of Americans, but members of the upper-middle class have no access to the leverage and tools of financialization.
In other words, financialization isn't a consequence of having capital: it's the consequence of having access to unlimited credit, leverage and low-risk, low-tax skimming operations (for example, tax codes enable hedge funds to declare income as low-tax long-term capital gains).
From the financier point of view, the upper-middle class tax donkeys who keep all their investment capital in mutual funds are the marks who supply liquidity to the system. The wealthy who park money in hedge funds are marks of a higher order, as their cash enables fund managers to gamble with other people's money and then return a thin slice of the gains (if any, after fees) back to the investors.
A carry trade is a classic skimming operation. The term is based on the difference between the costs of holding (carrying) one position and the gains earned by investing the proceeds elsewhere.
A typical example has been borrowing money for near-zero interest in Japan (yen) and using the proceeds to buy higher yielding Treasury bonds in the U.S. Here is Dan Norcini's description:
To define this term, "carry trade", for those who are a bit newer to the markets, it consists of borrowing large amounts of Yen for extremely low costs due to the miniscule short term interest rate in that nation, and taking those proceeds, exchanging it into different currencies and then using that money to make investments elsewhere where higher yields may be obtained. If that is not risky enough, most of these hedge funds then leverage their speculative bets in the hopes of compounding their gains.
There is a risk to currency carry trades: if the currency you borrow appreciates, then the trade blows up as the exchange rate loss exceeds your interest rate gain. The yen carry trade expanded to an estimated $1 trillion because the dollar/yen exchange rates were relatively stable.
The sweetest carry trades occur when two currencies are officially pegged but there is a big difference in interest rates between the two currencies. The lack of volatility in the exchange rate lowers the risk of this trade to near-zero--until the peg blows up.
You Don’t Really Understand the Carry Trade, Do You? (Yahoo Finance)
Would you like to leverage a carry trade 10 to 1? Hmm, who will loan you $1,000,000 based on $100,000 collateral? That's a key feature of financialization: the real power--leverage and access to global markets--is not available to you. The skimming operations are only open to the financier class.
Leveraging phantom collateral is another feature of financialization. Commoners were allowed a taste of this when subprime lenders were offering no-document, no-down payment mortgages back in 2004-2007. Phantom income was posted as collateral for the nothing-but-leverage loan.
The same sort of trade appears to be occurring in China, where a warehouse of copper is pledged as collateral for a legitimate bank loan at a rate of 4.5%. The proceeds are then loaned out at 10% (or higher) in the shadow banking sector of informal, unregulated credit.
What's to keep several people from pledging the same warehouse of copper? Nothing.
The carry trade blows up when the shadow-banking borrower defaults. Globally, the shadow banking system has ballooned to almost unimaginable proportions as financiers have sought out skimming operations:
Leverage and high-finance skim operations do not require much capital. It takes essentially no capital to originate a derivative; just craft the thing to protect your interests and sell it to some money manager as a valuable hedge.
If you have the right position and tools, it doesn't even require collateral to access gargantuan trading lines of credit.
The point is financialization is about leverage and skimming the existing system for immense profits. It's not about hedging legitimate industries' risks or investing in productive enterprises; it's all about skimming wealth while providing no value to the real economy or society.
The hidden toxin in financialization is the resulting concentration of wealth can buy concentrations of political power. Financialization is thus self-perpetuating: once the skimming operations generate billions of dollars in profit, it only takes a relatively small piece of these profits to buy/influence the political class. Once the politicos are in your pocket, the regulators and judiciary fall into line or are marginalized by new statutes or gutted budgets.
When Congress dared to question hedge funds' primary tax break (declaring income as long-term capital gains), the industry went apoplectic and declared capitalism, Mom and apple pie were all at grave risk if their skimming operations were taxed at the same rate you and I pay on our income.
Financialization is the disease eating away the heart of the economy and what's left of democracy.
great call on gold tiz, im getting buried here on the physical side...i did buy 100 shares of IAG today, this price is just comical....just gonna sit and hold it company is structured to withstand the storm with its production cost under $800 oz from a few of its mines. was a good pr from seeking alpha today on it so i decided to buy.
Also you need to keep in mind cost of production nowadays most gold miners need 1000+ gold to be profitable ... So if we do get a sub 1k dip it will likely be very short lived as many miners would cease production and supply would dry up ..... unlikely u see gold sub 1000 for any extended period of time ever again ...
Also the general sense I get is the chines liquidity crunch is the main driver for this gold selloff being this deep .... As china are big gold hoarder and there is a scramble for cash currently ... Once that clears out I'm guessing gold will stabilize ... lately u tend to see a big drop near Asia opening .... Bouncing today about 35 bucks off the lows ... Maybe dead cat bounce before lower who knows .... But seeing a headline at yahoo finance with a guy saying gold is a bubble is always a good sign 
New rules pressure gold miners to come clean on costs
By Clara Ferreira-Marques and Julie Gordon
LONDON/TORONTO, JUNE 27 | Thu Jun 27, 2013 12:13pm EDT
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By Clara Ferreira-Marques and Julie Gordon
LONDON/TORONTO, June 27 (Reuters) - The gold industry has released new guidelines for bullion miners under pressure to disclose the real economics of producing an ounce of metal, feeding a debate over the sustainability of many gold mines in a sector battered by falling prices.
Miners have seen gold prices soar since the turn of the millennium. At their height in 2011, prices were more than six times the level a decade earlier.
But costs like wages, taxes and electricity have all climbed, sometimes faster than the gold price.
The effect has been that a price drop since April - the sharpest in a generation - has pushed many mines into the red and miners to the verge of reserve writedowns.
The World Gold Council said its new guidelines would help clarify the real cost, beyond cash costs which account for only a portion of what goes into producing an ounce.
"The signal (the new cost reporting will send) is that the gold industry is probably not sustainable at its current level of output," Nick Holland, chief executive of Gold Fields, said.
"We are going to see more projects deferred, possibly marginal mines being put on care and maintenance or just shut altogether prematurely. And that's going to change the whole supply and demand fundamentals for the gold industry."
Gold equities have been battered as prices fall, with the Thomson Reuters Global Gold Index down almost 50 percent so far this year - in part, investors say, due to opaque costs.
"Investors cannot understand the cost structure, so they move out of the sector, rather than take a risk," said fund manager Angelos Damaskos of Junior Gold.
NO CONSISTENCY
Methods used by gold companies to report the cost of production often lack consistency.
Most use "cash costs", based on a standard developed by the now defunct Gold Institute, but with significant variations - like whether or not to include credits for by-products, certain taxes, capital costs and other items.
Top producer Barrick Gold Corp, for example, has historically reported total cash costs and net cash costs, while the world's second largest producer, Newmont Mining Corp , reported costs applicable to sales.
The metrics can include a credit for some by-products, but not others.
In its guidelines, the World Gold Council listed elements to be included in two measures - "all-in sustaining costs", or the effective day-to-day cost, and "all-in costs", which adds in extra costs to reflect variations over the lifecycle of a mine.
Companies are not obliged to use the metrics - which exist on top of normal accounting standards - but many producers have already adopted very similar measures and more are likely to follow suit, driven by pressure from investors like BlackRock who say miners need to report more accurately.
"What we want to do with this methodology is lay out an approach that we hope will provide greater consistency," said Terry Heymann, director for responsible gold at the WGC.
"All-in sustaining" costs including everything from mining costs to royalties, permitting and exploration to sustain production. "All-in" costs add in elements like broader community and permitting costs.
COST RISES
Part of the issue for gold producers in recent years has been the disconnect between a record prices and lacklustre share prices.
While costs rose across the wider mining industry, gold miners were hit harder, in part as average grades fell.
Average grades in 2002 of 2.8 grammes per tonne had tumbled to 1.2 g/t in 2011, meaning that for every tonne of rock moved, the amount of gold contained within has more than halved.
With most rich projects in traditional mining districts gone, miners were also pushed to expand capacity into lower-grade deposits and tougher geographies just to keep production flat, which was fine so long as gold prices kept rising.
But as gold prices tapered off, many new projects started to look very marginal.
That has left major gold miners in a bind, with their true cost of production hovering around $1,100 to $1,200 an ounce and sometimes higher - uncomfortably close to the spot price, which plunged to a 3-year low at $1,221 on Wednesday.
"With a rising gold price, you can cover up a lot of sins," said Graham Shuttleworth, chief financial officer of FTSE 100 miner Randgold, which has outperformed rivals.
Shuttleworth, like many peers, said measuring return on investment was paramount in his own decision-making - not costs alone - but recognised investor demand for more.
"From an investor point of view I can see this is better than nothing. I am just cautioning that on its own it is not a magic solution...I would caution that to try and simplify it down to one measure and think this will solve the industry's problems is a little naïve."
The World Gold Council hopes the measures will help, for example, with negotiations with governments which have assumed modest cash costs and a high prices mean huge profits.
But, as Shuttleworth and others have said, even better cost measures are not a panacea. Companies can bring down headline costs by cutting exploration, for example - with consequences.
"That's not really lowering costs, that's just spending less," said analyst Elizabeth Collins at Morningstar. "It just means future production will ultimately suffer."
By Clara Ferreira-Marques and Julie Gordon
LONDON/TORONTO, JUNE 27 | Thu Jun 27, 2013 12:13pm EDT
SHARE THIS ARTICLE
By Clara Ferreira-Marques and Julie Gordon
LONDON/TORONTO, June 27 (Reuters) - The gold industry has released new guidelines for bullion miners under pressure to disclose the real economics of producing an ounce of metal, feeding a debate over the sustainability of many gold mines in a sector battered by falling prices.
Miners have seen gold prices soar since the turn of the millennium. At their height in 2011, prices were more than six times the level a decade earlier.
But costs like wages, taxes and electricity have all climbed, sometimes faster than the gold price.
The effect has been that a price drop since April - the sharpest in a generation - has pushed many mines into the red and miners to the verge of reserve writedowns.
The World Gold Council said its new guidelines would help clarify the real cost, beyond cash costs which account for only a portion of what goes into producing an ounce.
"The signal (the new cost reporting will send) is that the gold industry is probably not sustainable at its current level of output," Nick Holland, chief executive of Gold Fields, said.
"We are going to see more projects deferred, possibly marginal mines being put on care and maintenance or just shut altogether prematurely. And that's going to change the whole supply and demand fundamentals for the gold industry."
Gold equities have been battered as prices fall, with the Thomson Reuters Global Gold Index down almost 50 percent so far this year - in part, investors say, due to opaque costs.
"Investors cannot understand the cost structure, so they move out of the sector, rather than take a risk," said fund manager Angelos Damaskos of Junior Gold.
NO CONSISTENCY
Methods used by gold companies to report the cost of production often lack consistency.
Most use "cash costs", based on a standard developed by the now defunct Gold Institute, but with significant variations - like whether or not to include credits for by-products, certain taxes, capital costs and other items.
Top producer Barrick Gold Corp, for example, has historically reported total cash costs and net cash costs, while the world's second largest producer, Newmont Mining Corp , reported costs applicable to sales.
The metrics can include a credit for some by-products, but not others.
In its guidelines, the World Gold Council listed elements to be included in two measures - "all-in sustaining costs", or the effective day-to-day cost, and "all-in costs", which adds in extra costs to reflect variations over the lifecycle of a mine.
Companies are not obliged to use the metrics - which exist on top of normal accounting standards - but many producers have already adopted very similar measures and more are likely to follow suit, driven by pressure from investors like BlackRock who say miners need to report more accurately.
"What we want to do with this methodology is lay out an approach that we hope will provide greater consistency," said Terry Heymann, director for responsible gold at the WGC.
"All-in sustaining" costs including everything from mining costs to royalties, permitting and exploration to sustain production. "All-in" costs add in elements like broader community and permitting costs.
COST RISES
Part of the issue for gold producers in recent years has been the disconnect between a record prices and lacklustre share prices.
While costs rose across the wider mining industry, gold miners were hit harder, in part as average grades fell.
Average grades in 2002 of 2.8 grammes per tonne had tumbled to 1.2 g/t in 2011, meaning that for every tonne of rock moved, the amount of gold contained within has more than halved.
With most rich projects in traditional mining districts gone, miners were also pushed to expand capacity into lower-grade deposits and tougher geographies just to keep production flat, which was fine so long as gold prices kept rising.
But as gold prices tapered off, many new projects started to look very marginal.
That has left major gold miners in a bind, with their true cost of production hovering around $1,100 to $1,200 an ounce and sometimes higher - uncomfortably close to the spot price, which plunged to a 3-year low at $1,221 on Wednesday.
"With a rising gold price, you can cover up a lot of sins," said Graham Shuttleworth, chief financial officer of FTSE 100 miner Randgold, which has outperformed rivals.
Shuttleworth, like many peers, said measuring return on investment was paramount in his own decision-making - not costs alone - but recognised investor demand for more.
"From an investor point of view I can see this is better than nothing. I am just cautioning that on its own it is not a magic solution...I would caution that to try and simplify it down to one measure and think this will solve the industry's problems is a little naïve."
The World Gold Council hopes the measures will help, for example, with negotiations with governments which have assumed modest cash costs and a high prices mean huge profits.
But, as Shuttleworth and others have said, even better cost measures are not a panacea. Companies can bring down headline costs by cutting exploration, for example - with consequences.
"That's not really lowering costs, that's just spending less," said analyst Elizabeth Collins at Morningstar. "It just means future production will ultimately suffer."
Yet they are still lower than back in 2008
Back then the idustry was ecstatic with with the price but now 1200 is no good. Yea right.
Same with oil. Many now are claiming that 90 bucks per barrel is break even. Yet Chavez wanted to sign a deal with the US for like 60 bucks... back in the day.
And at the depth of the crisis Arabs wanted a long term guarantee of 70 bucks--- they wouldnt have asked for it if they were losing money on it
90 not break even ... But all this hype of America becoming energy independent is nonsense unless prices stay elevated ... Cheap stuff running out ... Arabs still making big bucks but the easy cheap stuff has run out ... Wells by nature spew shit out big time early but as time goes on its gets tougher and tougher to get it out...
canada I believe has more oil/natty gas in the ground then the ME only issue is cost to get it out of ground
Also when u got global governments printing fiat nonstop that's only going to help commodities that actually have an intrinsic value
canada I believe has more oil/natty gas in the ground then the ME only issue is cost to get it out of ground
Also when u got global governments printing fiat nonstop that's only going to help commodities that actually have an intrinsic value
Also as far as the Brent/wtic gap looks like that is closing back up ... Reason wtic was suppressed vs the global price of oil (Brent) was due to pipeline issues with the NA stuff being landlocked with consumption shitty ... Looks like that is slowly being corrected now ... Only a 6 dollar discount to Brent vs the 20ish it was at its peak...
got billions of South Americans, Chinese, Indians etc consuming more oil and resources going forward then thy did in recent past ... And multiplying like crazy
Longgggggg term too many people an too few CHEAP affordable resources is the number 1 issue facing mankind/world economy
got billions of South Americans, Chinese, Indians etc consuming more oil and resources going forward then thy did in recent past ... And multiplying like crazy
Longgggggg term too many people an too few CHEAP affordable resources is the number 1 issue facing mankind/world economy
