Negative GDP? Who cares? Nothing to see here.... Move along....

AS GDP GOES NEGATIVE ANALYSTS DEBATE THE OBVIOUS TO DEATH:

“I’m not going to say growth is particularly strong (if you don't believe negative growth to be strong growth), but this is not a recessionary signal by any means, (if you don't define a recession as a contracting economy)” said Paul Edelstein, director of financial economics at IHS Global

“statistical noise in the defense and inventory components” means it’s best to look at the average pace of growth over the second half of the year to get a better understanding, economists David Greenlaw and Ted Wieseman at Morgan Stanley in New York, said in a note.
 
The .1 Percent US Negative GDP matches the Negative GDP in the Eurozone and the 1 percent negative GDP in Japan.

Meanwhile, there's a raging debate amongst analysts as to why gold is languishing at 1680.  "Answers" include: an improving economy, overwhelming deflation,  mistrust of the ETF's, good crisis management by the central banks blah blah blah etc etc etc.

There's also a raging debate amongst analysts as to why the Dow is nearing all time highs as the economy shrinks.  For answers, see above.

There's also a raging debate as to the sustainability of zero percent interest rates.

There's also a raging debate as to why the Emperor is running around naked.  Answers include: he's wearing clothes, we just can't see them, he's wearing clothes and we see them but we don't realize we see them; He's wearing a suit made of skin...

The fact is gold, the Dow, Gold, Rates are all MANIPULATED BY THE CENTRAL BANKS AND THE GLOBAL BANKING CARTEL, so that we won't notice the economy has stalled out.

No one can see this, because it's so painfully clear.  Nobody can believe this because it's so patently obvious.  And no one can admit this because then all their analysis is so much worthless blather.

One more thing: The Central Banks can not control consumer willingness to spend money they don't have.  There's nothing they can do but keep rates at zero, keep stock prices high, and hold gold down.  But in the end: Demographics are Destiny.  And all that won't help a drowning, starving middle class buy more VCRs and Cell Phones.

Yes, it's still working somewhat now.  I know.  I have a cell phone too.  But don't bet the house trying to outmaneuver  the inevitable.

Past is Prologue

1. The War of Spanish Succession left the finances of the Louis XIV in shambles.  Louis XV inherited a badly depleted Kingdom.  He hired John Law, a Scottish math wizard and professional gambler with sophisticated theories on how to use paper currency to inflate the wealth of the sovereign by "Stimulating the Economy."  In 1716 Law established the Banque General in France, a private bank, but three-quarters of the capital consisted of government bills and government-accepted notes, effectively making it the first Central Bank of the nation.  Law proceeded to issue Paper Money backed by Theoretical Land owned by the Mississippi Company, while simultaneously issuing and controlling the shares in the Mississippi Company. For a period of three years this did indeed create a fantastic bubble that "Stimulated" the French economy.  THEN:
   
   In Dec. 1719 the share price of the Mississippi Company, which had risen in a bubble from 150 to 10,000 Livres descended to 7,500.
   
2. Law declared a dividend for shareholders of Livres 200 per share and the price recovered to 9,000.
   
3. Future markets developed at 15,000 Livres, but Law refused credit to finance futures, whereupon the price fell. He then revoked his credit ban and the price recovered.
   
4. Company sales offices were opened in Paris to try and curb “unregulated” sales and control the market.
   
5. ”Primes”, equivalent to today’s options, were launched with leverage of 10 to 1.
   
6. Investors sold shares in order to buy Primes, crashing the share price from 10,000 to 7,000 Livres.
   
7. Physical silver and gold were draining from the bank’s coffers as investors, anticipating an end to the bubble, sold shares and cashed out into physical.
   
8. By the end of 1720, some 500 million Livres in silver and gold had been taken out of the country to London and elsewhere.
   
9. Inflation in France escalated and the price of land rose 400% in some areas. The price of staples rose with bread up 500% from 1 to 5 sous within a year.
   
10. Law, although a "free marketeer" by philosophy, (sounding familiar?) decided the time had come for swift and devastating intervention.

	Law passed an edict banning the export of silver and gold coins and bullion.
	The public turned to buying diamonds, gems and jewels, in order to escape paper (Livres and shares).
	The purchase and wearing of diamonds, pearls, and other jewels was then prohibited.
	The investors turned to buying silver and gold dishes, plates, and other similar objects.
	A ban was imposed on the production and sale of all silver and gold items except religious ones.
john law with a share from the Mississippi company: as good a gold...	The prices of crosses and chalices soared, until their use was also banned.
	Law announced the Royal Bank was being taken over by the Mississippi Company at 9,000 Livres per share and closed down the company sales offices.
	The share price collapsed from 9,500 to 7,800 Livres.

• On Feb 27th measures for 'hoarders.'
  
• Informers were rewarded for any hoarding information, which included the right for the government’s agents to search any private property for silver and gold.
  
• Some 2 weeks later Law reversed his decision, re-opened the company sales offices and supported the sales price at 9,000 Livres. There was a rush to sell shares for paper Livres.
  
• Law decided to fade out silver and gold coin by reducing their value to zero over several months - turning to a total paper monetary system.
  
• Law had gone one step too far and his political support started to collapse.
  
• A huge crime wave developed simultaneously as losses led to penury, hardship and hunger.
  
• By May 1720 some 2.6 billion Livres banknotes had been printed.
  
• Law decided to reduce the price of the shares from 9,000 to 5,000 Livres.
  
• The value of Livre banknotes would also be reduced by 50%.
  
• After 3 days of riots, Law resigned, and Orleans restored the value of the shares and banknotes to their previous levels.
  
• A few days later the limits of owning gold and silver were lifted, but nobody had any left.
  
• Only 2% of the money still circulating was in silver and gold.
  
• Coins were rationed and vast public bonfires of paper shares and Livres bank notes were organized by the government to try and restore faith in paper, by demonstrating to the public that they were reducing the quantity in circulation, which needless to say did not work.
  
• On the foreign exchange market a pound sterling rose from 39 Livres to 92 Livres in 6 months.
  
• Finally vast quantities of copper coins were minted to replace the lack of coins in circulation.
  
• Banks however opened only sporadically and to huge queues of people trying to exchange paper for gold and silver.
  

Structurally unsustainable.

Income inequality has been growing steadily since the mid-1980s. As of 2011, the top 5% of households brought home over 22% of all income generated in the country, whereas the middle 20% of households (quite literally the middle class) got less than 15%. Coupled with the unemployment picture wherein U6 (as a measure including discouraged and part time workers) is steady at 14-15%  it is clear a majority of the U.S. population has been losing ground to the most wealthy.

This is not just a moral issue.  It lies at the heart of economic malaise.  In a society that relies on consumption for 70% of its economic activity, this certainly does not bode well for the future, since the wealthiest traditionally do not consume much of their income.

To top it off, the recent “fiscal cliff deal” just reduced disposable income further by increasing payroll taxes by 2% for all those working, putting additional strain on the working class and their discretionary spending dollars.the share of total U.S. income earned by the middle class and the top 5% of households.

At the same time it is true that the US takes in about 2.5 trillion in tax dollars and pays out about 2.5 trillion in transfer payments.  This leaves nothing for everything else.  But how can that ever change given that 1 in 5 Americans are unemployed, and less than 15 percent of Americans have more that $10,000 of liquid assets.  More Americans are becoming dependent on transfer payments every day.  Not less.  More.

But we're doing fine, right?  The stock market is at an all time high, rates are at an all time low, and the vix is at any all time low.  The housing market is rebounding.  The recovery is picking up steam.

How do we reconcile these two realities?

Two words: Money Printing.   

One question: How long can money printing paper over the structurally unsustainable?

In fact money printing adds to the instability because most of the printed money goes to the banks who gamble it in the risk markets - keeping stocks high and rates low and they keep the rest in the form of salaries and bonuses for bank executives.  Meanwhile necessities become ever more expensive adding to the malaise of the middle class.

Be careful. It doesn't take a genius to see where this is headed.

Why Indian and Chinese gold coins are so hot:

INDIA: The Federation of Indian Exporters Organisations has said India exported gold jewellery to the tune of $12.12 billion in the first nine months of this fiscal, which was just 30.68% of the value of imported gold. 

Between April to December 2012, gold imports jumped 40.23% over $28.16 billion imported during the corresponding period of April to December 2011.

Indians save roughly 30% of their income, as opposed Americans, who save 5%. Plus, Indians are getting richer all the time. Once a very poor country, the rich and middle classes now outnumber the poor in this nation of 1.2 billion. The country has the sixth-largest economy in the world. 

CHINA: The net gold flow from Hong Kong to mainland China in November hit its second-highest level in 2012 after April. Hong Kong exported 90.763 tonnes of gold to mainland China in November, an increase of 91 percent on the month. Its gold imports from China rose 23 percent to 27.681 tonnes. The total net gold flow in the first eleven months of the year, at 462.75 tonnes, already exceeded last year’s total of 379.573 tonnes, Reuters calculations showed.  

 China and India as the biggest (gold) markets experienced the same percentage increase in nominal GDP, wages and their currencies’ gold price. Locally, the gold prices did not change when expressed in terms of purchasing power, which is fundamentally different to the West. China has been the trendsetter in their reaction to financial repression (started in 2000). The Chinese population has chosen consciously and hugely for physical gold investments as a way to escape from financial repression.

IN CHINA AND INDIA GDP IS RISING IN LINE WITH THE RISE IN THE GOLD PRICE SINCE 1980.  IN THE US THE OPPOSITE HAS BEEN TRUE.  THUS GOLD IS STILL RELATIVELY CHEAP IN ASIA

Your tax dollars at work dept

Saturday, January 19, 2013

Fed's balance sheet grows above $3 trillion, finally impacting the monetary base.  Fed's balance sheet stood at 869 billion on August 8, 2007.

Total assets of Fed's balance sheet broke through $3 trillion last week, hitting a new high, as securities purchases are stepped up (including treasuries).


The Fed's holdings of Treasuries totaled $1.666 trillion. 

The Fed's ownership of mortgage bonds guaranteed by Fannie Mae (FNMA.OB), Freddie Mac (FMCC.OB) and the Government National Mortgage Association (Ginnie Mae) totaled $926.69 billion.

The Fed's holdings of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Bank totaled $76.78 billion.

The Fed's overnight direct loans to credit-worthy banks via its discount window averaged $28 million a day.

Wow, I'd love to borrow 28 million dollars a day interest free to gamble in the risk markets.  What fun.

 Of course, that doesn't count the 29 Trillion Dollars (According to the Fed) that they just printed up and gave away to the world banks:

By the way, 87 Billion dollars of which went directly to AIG who is now suing America as a way of saying "thanks."

Cumulative facility totals, in billions
Source: Federal Reserve

Facility	Total	Percent of total
Term Auction Facility	$3,818.41	12.89%
Central Bank Liquidity Swaps	10,057.4(1.96)	33.96
Single Tranche Open Market Operation	855	2.89
Terms Securities Lending Facility and Term Options Program	2,005.7	6.77
Bear Stearns Bridge Loan	12.9	0.04
Maiden Lane I	28.82(12.98)	0.10
Primary Dealer Credit Facility	8,950.99	30.22
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility	217.45	0.73
Commercial Paper Funding Facility	737.07	2.49
Term Asset-Backed Securities Loan Facility	71.09(.794)	0.24
Agency Mortgage-Backed Security Purchase Program	1,850.14(849.26)	6.25
AIG Revolving Credit Facility	140.316	0.47
AIG Securities Borrowing Facility	802.316	2.71
Maiden Lane II	19.5(9.33)	0.07
Maiden Lane III	24.3(18.15)	0.08
AIA/ ALICO	25	0.08
Totals	$29,616.4	100.0%

Fed's balance sheet as of 1/16/13 (source: FRB)

And for the first time since this program was launched it is starting to have a material impact on bank reserves (the dynamic component of the monetary base), which spiked last week.

Indian Jeweler Becomes Billionaire as Gold Price Surges

By Netty Ismail, Zohair Siraj & Swansy Afonso - Jan 21, 2013 7:40 PM ET

T.S. Kalyanaraman is beloved by his customers and detested by his rivals for bringing transparency to jewelry sales in India, where haggling is the norm.

 

Aishwarya Rai, Bollywood actress and Kalyan Jewellers' national brand ambassador, poses for a promotional material. Source: Kalyan Jewellers via Bloomberg

 

T.S.Kalyanaraman, chairman and managing director of Kalyan Jewellers, poses for a photograph in his office in Thrissur, Kerala, India 

He opened a shop in the southern Indian state of Kerala in 1993 and taught customers how to test the purity of their gold to expose cheating craftsmen. He was also the first jeweler in town to attach price tags to his gold and gem collection, angering competitors who accused him of ruining the trade.

Two decades later, the 65-year-old has become a billionaire as a 12-year rally in gold prices fails to damp demand in India, the world’s largest consumer of the precious metal. He owns 44 stores in India and plans to open 36 more by March 2014, including five in the Middle East.

“Less profit, more turnover; that is what we believe in,” Kalyanaraman, chairman of Kalyan Jewellers, said in a phone interview from Kerala. “Be as transparent as you can in your trade. The big thing in life is trust.”

2013-2014 Certainties

Certainties (as opposed to predictions) for 2013-2014

a) The Government will continue to borrow 40 cents of every dollar they spend.

b) The Official Federal Debt will continue to expand by over a trillion dollars a year

c) The GAAP Accounting Federal Debt will continue to expand by over 4 trillion dollars a year.

d) Obama and the Democrats will expand government spending by protecting all transfer payments - social security - medicaire - medicaid - etc etc.  All of which expands naturally as the population expands.

e) Republicans will expand government spending by protecting Military Spending which is steadily 25 percent of an expanding government spending.  Republicans will also expand government spending by protecting corporate welfare which drastically decreases the tax base so that Government spending must be funded through borrowing.

Meanwhile Republicans and Democrats will engage in endless battles over things have no bearing whatsoever on the Federal Budget or the economy (like the debt ceiling.)

f) The Federal Reserve Bank of the United States will continue to print Several Trillion dollars a year (29 Trillion over the last 5 years) and give this money to the world's largest banks. 

g) the ECB and the Bank of Japan will continue to follow the Fed's lead in printing money to funnel into the global banks.

H) They will all continue Zero Interest Rate Policies that benefit the Global Banks and punish tax paying savers.

I) They will all jawbone endlessly about Recovery and Exit Strategies that will never materialize

j) the World's largest Banks, recipient of trillions of dollars of tax payer money will continue to use this money to gamble in the risk markets, and award themselves enormous salaries and bonuses.

K)They will all jawbone endlessly about Recovery and Exit Strategies that will never materialize

L) The average taxpayer will see his wealth erode as the value of the paper money in which it is denominated erodes.  Meanwhile, on an absolute basis the cost of living will increase as Medical Costs, Insurance costs, Education Costs, Heat, Gas, Food, Rent, (Things everybody needs) all increase.

M) the Global Banking cabal will insist that the cost of living is decreasing under Disinflation, as they will point to the lower cost of  discretionary expenditures (crap nobody needs).

Banks post great earnings (not counting losses) as the recovery builds steam

Banks posted great earnings again - as long as you don't count billions of dollars of "One time charges."  The recovery gains steam as long as you don't count all the factors holding the economy back.

Bank of America  Chief Executive Brian Moynihan said the bank would take $2.7 billion in one kind of mortgage-related charge and another $2.5 billion tied to a separate charge.

Citigroup  posted a 25% increase in quarterly profit. But please don't count the $1.3 billion surprise in the form of legal costs, another $305 million charge, more losses at Citi Holdings, and a charge for an increase in the value of its own debt

JPMorgan earned $1.35 a share excluding one-time items such as accounting adjustments and costs from a mortgage settlement. 
JPMorgan set aside $656 million in provisions against future mortgage loan losses, compared with an average estimate by analysts of about $1.5 billion.
“The earnings beat was primarily driven by a low provision charge,” Richard Staite, an analyst at Atlantic Equities LLP in London, said in a telephone interviewThe bank also booked a $567 million pretax loss from a so-called debt-valuation adjustmen.  And JPMorgan took a one-time pretax charge of $700 million in the fourth quarter to cover the costs associated with a $2 billion settlement of mortgage abuse allegations by the Fed in a deal announced Jan. 7.  The bank faces regulatory sanctions and investigations by U.S. and international authorities stemming from the loss over a wrong-way bet on credit derivatives.

The 20,000 dollar coin

The restrike British Indian Two Mohur of William IV is now selling for $20,000 in high grade (as we saw in the past Bowers auction).  About 2000 pieces were minted of the original strike coin.  There are an estimated 5000-6000 restrikes floating around.  The restrike was a coin minted on demand for collectors and never intended for circulation.   As such it is more of a medal than a coin, but since it looks substantially like the original strike it is considered a coin.  Semantics?  Sure, but without the semantic distinction, this "coin" would surely sell for much less.

The reason it has suddenly caught fire, is that the Indian Economy is maturing.  There is now a very wealthy upper middle class in India: a millionaire class, which is growing daily.  There are now about 200,000 millionaires in India (compared to a million in China) but the Indian growth rate should be at 7 percent by next year - roughly equal to China's.  And, like the Chinese millionaire class, they are very interested in acquiring treasures of their national heritage.

And unlike China, since India was a British Colony there is a numismatic tradition of coins and medals with well cataloged mintage records.  Accordingly, no less than three major collections of British Indian coins will hit the market in the next year.  Spink will present a collection of North India and Tibet, Baldwin's will present the David Fore Collection of British India, and Heritage will also present a collection of British Indian patterns and proofs.

In China, the numismatic surge began with modern Chinese gold coins from the Chinese Central Mint - precisely because there are known mintages.  Some of these low mintage 1 ounce coins soared to 15,000 dollars - before reversing course and dropping back to the 6-7000 dollar range, as interest spread to early republican coinage and earlier sycees and medals.  Still, the Chinese market is very healthy as China's economic development surges ever forwards.  But for numismatists China will always be a relatively thin market as coinage - in the western sense - is extremely limited before the Republican period.

As India's economic  power develops its comparatively rich numismatic history will provide collectors with opportunities in most every historical era.  Starting with the Parthians then the Sassanians and moving to the Kushans and the Guptas through the various Islamic Dynasties, the Mughal Empire, the various Princely States all the way through to the British Colonial period there is a tremendously rich numismatic history.

And though the coins of British India are now by far and away the hottest area, British Inidan Medals are sure to follow (as they are equally well cataloged) - and then the coins and medals of eras past, as the Indians themselves are sure to eventually mine each and every era of their rich history.

But, as always, Caveat Emptor - don't go running out to buy up coins of some under-appreciated eras without understanding the cultural history, the language, and the history of the coinage itself, otherwise you're certain to wind up with a collection of useless junk sold to you by some sharp Indian dealers who have already culled and separated the cream of the crop for themselves.

Gold: a little perspective

3000- 1500 BCE Mesopotamia.  Gold is money.  Silver is money.  Cunieform records record transactions of gold and silver as payment for all forms of goods and services.  Units of measurement (according to translations into various languages) include talents, shekels, minas.

3000- 500 BCE Egypt.  Gold is money.  Silver is money.  Heiroglyphs record transactions of gold and silver as payment for all forms of good and services.  Units of measurement:  Deben

600-200 BCE.  Lydia, Persia, Greece:  Gold is money.  Silver is Money.  Coinage is invented by the Lydians and spreads quickly thoughout Persia, the Black Sea Area, Macedonia, Greece and Italy.  Unit of measurement: Shekels, Drachms, Staters, Litrae.  Nomos.

200 BCE- 400 AD Rome.  Gold is money.  Silver is money.  Unit of measurement:  Aureus, Dinarius. 

400 -1300 AD Byzantine Empire.  Gold is money.  Silver is money.  Unit of measurement; Solidus, Siliquae, Nomisma

(1200 - Venetian banker introduce the Letter Of Credit which is used in payment to represent gold that is theoretically being held at the Venetian Banks. At various times these letters are abused leading to various bankruptcies.)

1100 - 1700  AD Venice, Florence.  England.  France. Holy Roman Empire. Gold is money.  Silver is Money.  Units of measurement: Ducats, Florins, Francs, Pounds, Thalers.

1715-1720 France.  The first Western experiment with paper money established by John Law under Louis XV.  Crippled by debt from the War of Spanish Succession Louis XV commissioned John Law to to stimulate industry by replacing gold with paper credit and then increasing the supply of credit, and to reduce the national debt by replacing it with shares in the Mississippi Company.  The entire venture ended disastrously, bankrupting France.

1721 - 1920.  Europe, South America, North America.  Gold is money.  Silver is money.   

(Brief interludes of paper money occured as emergency issue during periods of war when precious metal was unavailable (US Revolution and Civil War periods)  This money quickly became worthless and was replaced with gold and silver.)

1921 Post World War 1, The London Ultimatum of 1921 demanded Germany pay reparations in gold  of 132 billion goldmarks which was far more than the total German gold and foreign exchange.  Germany began to print money and issue coins of worthless base metal with nominal values.  Hyperinflation led to a total collapse of the German economy.

1921-1933  World Wide.  Gold is money.  Silver is money. Paper money is convertible on demand into gold and silver.

1933 -45.  US at the depth of the Great Depression the US iniated a Gold Confiscation.  Private citizens were forced to turn their gold in to the Government, in the hopes of using paper to expand the monetary base and pay off national debt.  The Depression persisted nevertheless through to World War II.

1945 -1971 World wide.  Gold and Silver are theoretically still money though through the Bretton Woods agreement all currencies are convertible into the US dollar which is then convertible into gold.

1971.  Nixon closes the gold window.  Paper is money.  Gold and silver become secondary currencies.  Each economic shock during this period has been met with ever greater sums of paper money.  Worldwide debt explodes from about 50 Million Dollars in 1970 to the billions to the trillions and is now measured in hundreds of Trillions.  At the same time 90 percent of global wealth has become concentrated in the hands of 1 percent of the world citizens.

FIVE THOUSAND YEARS OF WORLD HISTORY.  GOLD AND SILVER HAVE BEEN EXCLUSIVE MONEY THROUGHOUT FOUR THOUSAND NINE HUNDRED AND FORTY OF THOSE YEARS.  EVERY EXPERIMENT IN PAPER HAS ENDED IN A CYCLE OF DEBT - INFLATION - DEFLATION - DEPRESSION.

WILL THIS TIME BE DIFFERENT?

NY Numismatic convention

Like the NY Auctions, the NY Numismatic Convention was noticeably lacking in quality material.   The lack of material certainly feeds the high end of the market, as wealthy collectors battle over top offerings that do appear.  The Goldberg auction at the end of the month certainly has far more impressive material than anything that turned up in New York.  I have no doubt high prices will be realized there.

It is also interesting to note that at the FUN show in Florida, going on at the same time, there was an auction of Betts Medals of European Origin representing US related themes - amongst them a gold "new world colonies" medal of Charles 11 and a gold "Vigo Bay" of Anne, (the former in atrocious condition).  Both medals realized close to $40,000 an astounding price for medals that last sold a few years ago at 1/4 the amount.  Other medals in the auction brought similarly fantastic prices, including a Lord Baltimore Indian Peace Medal that garnered close to $200,000.   It shows the voracious appetite for top material extends across coins and medals - when presented properly in well-conceived and attended auctions.

But just below the high end that there is a curious paralysis to the market that seems to parallel other hard asset markets - most markedly real estate - where top properties are always in demand but at the high end of the middle class sellers are loathe to drop their prices while buyers are content to wait them out.

I heard many dealers with cabinets of middling material trying to put a good face on the show while betraying the same anxiety one hears expressed throughout all facets of the current economy.

NEW YORK WINTER AUCTION UPDATE

The New York Winter Auctions were an enormous disappointment.  Except for a nice run of Roman Republican silver in CNG the quality of coins was largely missing.  The beautiful and very rare Judaea Capta Aureus of Vespasian (pictured above) should have brought a hammer of $130,000, - and last year it surely would have.  Yet this year it brought in a mere $65,000.

Why?

Well, for one thing it was surrounded by very unimpressive coins.  The auction room was half full, whereas last year latecomers might have had to stand and bid in the doorway.  The lack of impressive material was noticeable throughout the auctions. The same was certainly true at the Freeman and Sear Auction - as well as the Baldwin's auction. 

It's tempting to blame the prices on the economy.  And surely that plays a role.  Only the best material is catching a bid.  But in Europe at the NGSA, the NAC and the Kuenker Auctions last month the prices for top material were stronger than ever.  But then  they were able to put together superior auctions which drew a competitive group of high net worth bidders.

Here in the US the lack of superior material just didn't draw the same crowd.  And without the very high end bidders - who are the only ones left with disposable income these days, there just wasn't the collector class to help the bidding along.

The Bourse floor today was similarly devoid of material.  This is something of a mystery a this point.  But to float a theory, I would say that High End collector/investors in this country are not selling their collections.  They don't want paper money in return.  They're rather looking to convert paper into hard assets, so the dealers here are finding it tough to present much of interest at auction.

Certainly in Europe where collections have been formed over hundreds and  hundreds of years there's a lot more material for top dealers to tap.  But one wonders how long that will last as the world wide paper money devaluation continues.

And the winner is....

Sold for:	$17,625.00 (includes BP ) Bid Source: HA.com/Live bidder
Auction Ended On:	Jan 6, 2013
Item Activity:	1 Internet/mail/phone bidders 169 page views

This staggering price for this mediocre coin proves that for now at least in World Coin Auctions held in the US - the slabbed grade is paramount.  Highest Graded is being regarded as finest known.  That's a lot of power in the hands of a very few people, who rather than being professional numismatists, are professional graders.

While I do believe the grading is fairly consistent with machine made coins - which are made with a uniformity of strike, planchet, and die condition and style; for hammered coins, this is a very risky proposition for the collector, as these coins are likely to have a very different value in their countries of origin - where the largest collector base in located.  But for now, certainly, as in all facets of the US economy, the risky proposition is the most profitable one.  Interesting.

A little perspective, please

AS GOLD crashes amidst talk of the Fed's ending QE, and the healing of the US and European Economies, and the triumph of Free Market Capitalism, and the Taming of the Debt Crisis, and the Success of the Great Deleveraging, you're bound to hear a Chorus of Voices calling for the Death of the Gold Bull - surely led by Fed apologists and momentum traders like Gartman, and the hosts of CNBC, FOX BUSINESS NEWS, and the WALL STREET JOURNAL EDITORIAL STAFF


Believe them if you like.  However, if you've been following gold for the last 10 years you've heard this all before in 2004, 2008, 2011 and you'll hear it again in 2015, 2018..... etc etc.

Real Interest Rates are extremely NEGATIVE.  Yet The Central Banks can not allow interest rates to rise because the Debt Interest Payments will cause a multi year depression.  None of the Western Economies are showing any real growth when you strip out real inflation.  And growth will not come with a Vast Middle Class that is losing net worth year over year, month over month, day over day.  You can't sell rice, wheat, toilet paper, cars, beverages, clothing etc to just the 400 richest people in the world.

Nothing is changing.... not even on the charts below.

If you look at the six month daily chart below... wow does that look scary for gold

If you look at the 15 year daily chart below that... not so much

If you look at the 20 year weekly chart below that.... Gee, what's the fuss about?

Graded Conis: Caveat Emptor

Here below are three Gold Angles - two Henry VII and one Henry VIII coming up for auction in the next few days and weeks.  The first is graded Good VF in the St James and is estimated at about $3000 all in.  The Second is Graded MS 65 in the Heritage and is estimated at about $20,000 all in.  The third is the  Henry VIII graded MS 64 - also St James - pedigreed from the millenium collection and estimated at $11,000 all in.

The first Henry VII coin has a very nicely struck up Angel.  In many respects it is a far superior coin to the second Henry VII.  It is estimated at one seventh the cost.  If it were graded though it looks to be about an AU 50.  Not nearly as impressive to many collectors as an MS 65. 

The Henry VIII also has a nicely struck up angel and like the MS Henry VII it has loads of mint luster.  

It is an interesting question which of the three would be the best buy - at the estimated prices.

Certainly,  five years ago the least valuable of the lot would have been the MS 65 Henry VII.  Had you bought it then, and gotten it graded you now could sell for quite a bit more.  But now, looking at the three I'd guess the MS 64 would appreciate most since the strike is nice and the grade is set in stone.  Then I'd go with the Good VF Henry VII, since it's a beautiful coin with a tremendous strike, despite  some honest even wear.  Lastly and least I'd go with the MS 65 Henry VII.   It's just an ugly ugly coin.  Tough to see how a grade can overcome that handicap. 

But the trend right now is with the highest grade.  And as they say, the trend is your friend - until it's not. 

It will still be interesting to see how they all price out.


 British Coins and Medals. Henry VII , angel, type V, mm. cross-crosslet (1504-1505),  Estimate: 1'600 GBP   |   Starting price: 1'280 GBP





Henry VII (1485-1509) gold Angel ND, S-2187, Pheon (arrow) mm, struck 1505-09, MS65 PCGS, a coin of staggering quality,   Estimate: $15,000 - $17,500.


 

Estimate: 5'500 GBP   |   Starting price: 4'400 GBP

GBP

British Coins and Medals. Henry VIII , third coinage (1544-1547), angel, mm. lis, crowned, the archangel Michael slaying the dragon, rev. ship holding shield, cross above (S.2299; N.1830), in plastic holder, graded by NGC as MS64

Meaningless phrases of 2012

10 Meaningless phrases of 2012 that should be abolished in 2013

Main stream media:  A phrase used primarily by media personalities (and their acolytes) who spend 24 hours a day on TV, Radio and Various Internet and mobile Outlets to describe other such media personalities who disagree with them.

If you will... If I may.  Meaningless space fillers that try to make a banal points sound interesting.

I get it... but  A phrase that attempts to discount everything about an opposing argument without bothering to do any rhetorical work.

Dysfunctional Government.  Clearly redundant.

Class Warfare.  A phrase used by the Entitled of all classes to attack those who question their entitlement.

Common Good, Common Ground, The Commons... None of these things exist anymore.  Why pretend?

"I have the utmost respect for my esteemed colleague but..."  Come on, why bother?

"Let's be honest..." If you have to say it, you're clearly way out of practice.  Sort of like calling your news station "Fair and balanced."

Deficit Reduction.  With 16 trillion dollars of Federal debt growing at 3 trillion dollars a year (by GAAP accounting) and an additional 120 Trillion dollars of off balance sheet Federal debt - in a 13 Trillion dollar economy that's growing at less than 1 percent a year when you count in real inflation - really, what could "deficit Reduction" possibly mean?

Freedom Loving the ultimate meaningless Us versus Them slogan.

Keep moving, everything's fine, nothing to see here

Phew, at zero hour the Senate cobbled together a bill that would ensure a continuation of out of control deficits, wild government spending, and a loophole riddled tax code that allows the Finance-Banking class that is raping the country to continue to pay no taxes.

The Banking Finance class that benefits from this status quo awarded us all with a giant rally in the stock market.  They're happy, so we should be happy too.

And the Financial News led by Banking Finance Class cheerleaders like Dennis Gartman hailed the deal as great news for the markets - and the economy, while recommending that public finally dive back into the markets and buy great deals like Real Estate Stocks, while selling their gold.  After all, gold is just for Crisis-Nuts, and there clearly is no crisis here.  Or in Europe - as everyone was quick to point out - the crisis is healing there.  (Except, of course, sourpuss Angela Merkel who had a few choice words of disagreement, but there's always going to be a few stick-in-the-mud types at any celebration.)

Nothing to see here, everything's fine, keep moving....

One Tea Party Nut in the House sourly remarked remarked that the "deal" would only insure that the Federal debt will explode from 16 Trillion in 2012 to 23 Trillion by 2016.  Bah Humbug.  He even suggested the House might not vote for this deal.

So what?  Like the Finance-Banking sector can't afford to pay off enough house members to get this through?

Critics point out that this just kicks the can down the road for a few more months.  Like that's a criticism.  That's the point, stupid.  Kick, Kick, Kick.  Who says we can't kick the can forever?  The debt never had to be repaid.  So what if it gets to 100 trillion - or a quadrillion?  Big Deal.  The Banking class can just print more money - and give it to the Finance Class.  So none of this should affect them much.

It's worked just fine so far.  At least for Banking Finance class.  

And the rest of us should just be happy they can continue to live in the lifestyle to which they've become accustomed.

Happy New Year.