Hard Asset News

Commodity supercycle is ‘alive and well’: McKinsey & Co.

September 26, 2013, 12:16 PM

Recent declines in commodity prices have raised the idea that the so-called commodity supercycle is over, but not everyone believes that.
Month to date futures prices, based on the most-active contracts, for gold  GCZ3 0.92% have lost around 5%, silver’s  SIZ3 0.02% down over 7%. Oil CLX3 -0.21% and natural-gas futures  NGX13 0.56% have lost around 4%.
But “despite recent falls, commodity prices are still near their levels of early to mid-2008, just before the global financial crisis hit,” said analysts at McKinsey & Company, in a recent research note.
“At a time when the world economy remains below full power, this phenomenon is striking and a sign that the supercycle is alive and well,” they said, noting that the supercycle refers to the period of sharp price rises and heightened volatility since the turn of the century.

Pink Diamond Expected to Fetch Over $60 Million

By Associated Press Sept. 25, 2013Add a Comment

Keystone,Martial Trezzini / AP

A Sotheby's employee shows The Pink Star diamond weighing 59.6 carat, during a preview at Sotheby's, in Geneva, Switzerland, Wednesday, Sept. 25, 2013.

(GENEVA) — Sotheby’s is showing off a pink diamond that is expected to fetch more than $60 million at auction.
The auction house was giving previews of what it calls the world’s most valuable diamond ever to be offered at auction.
Sotheby’s said in a statement Wednesday that The Pink Star, a 59.60-carat oval cut pink diamond, would go up for auction on Nov. 13 in the historic five-star Beau-Rivage Hotel along Lake Geneva.
David Bennett, chairman of Sotheby’s Switzerland, says the vivid pink diamond is “of immense importance” because of its extraordinary size and exceptionally rich color that surpass all others known to exist in government, royal or private collections.
He says it is “simply off any scale, and passes, I believe, into the ranks of the earth’s greatest natural treasures.”

Wine Buyers Pay Record Prices at South Africa’s Biggest Auction

By Renee Bonorchis - Sep 10, 2013 6:11 AM ET

South Africa’s biggest wine sale at the Nederburg estate outside Cape Town saw prices almost double to a record this month as volumes on offer fell.
Held on Sept. 6 and 7 at the estate in Paarl, northeast of Cape Town, the auction offered 132 wines, including 72 red, 36 white and eight dessert varieties, the auctioneer said in a statement on its website today. The average price per liter climbed 92 percent to 354.64 rand ($35) from a year earlier.

Ferrari NART Spyder Sets $27.5 Million Auction Record

By Scott Reyburn - Aug 19, 2013 12:48 PM ET

Concept Cars of Future Meet Pricey Past at Pebble

A 1960s Ferrari convertible sold for a record $27.5 million in California, where classic-car sales were dominated by rarities from the Italian maker.

 

A 1967 Ferrari 275 GTB/4*S NART Spyder. One of only 10 made, was estimated at $14 million to $17 million in a two-day sale held by RM Auctions in Monterey, California, on Aug. 16-17. The car sold for $27.5 million with fees, the most paid at auction for the Italian carmaker anywhere in the world and the most for any car bought at a U.S. public sale. Photographer: Darin Schnabel/RM Auctions via Bloomberg

Stack’s Bowers Galleries Breaks Multiple Auction Records To Realize More Than $46 Million In Chicago As Official ANA Auctioneer!

IRVINE, Calif. – Stack’s Bowers Galleries conducted the Official Auction of the August 2013 ANA World’s Fair of Money from August 11-16 at the Donald E. Stephens Convention Center in Rosemont, Illinois. Fourteen live auction sessions and two Internet-only sessions brought the total sales to a staggering $46,483,309. Some of the most famous names in numismatics were represented in this sale, with pieces from the John J. Ford, Jr. Collection, the Thos. H. Law Collection, the Richard Jewell Collection, the Bentley Shores Collection, the Dr. Edward and Joanne Dauer Collection of Silver Certificates, the Demarete Collection, and others, all offered throughout this amazing event.
Significant highlights abounded in all numismatic areas, and the sections of U.S. coins featured a number of important lots, including several record-breakers. Lot 4043 showcased an incredible 1792 half disme graded MS-66 by PCGS. Pedigreed back to the Judd and Hayes collections, as well as back to David Rittenhouse, the first director of the United States Mint, this amazing piece of history fetched a whopping $793,125 when it crossed the block during our Rarities Night event on Thursday evening.
Morgan dollars featured a number of notable pieces, including an amazing 1889-CC graded MS-68 by PCGS, making it the finest certified example of the date by three points. In addition to impeccable condition, this coin also boasts a fabulous pedigree, which includes the collections of John G. Mills, John H. Clapp, Louis E. Eliasberg, Sr., and Jack Lee. This coin was hotly contested and eventually sold for an impressive $881,250 after active bidding.
U.S. gold coins were highlighted by the wonderful Bentley Shores Collection of Indian Eagles, a complete and definitive collection of superb pieces. The collection contained not one but two examples of the famous 1907 Rolled Rim, Periods! The first was graded MS-67 (PCGS) and sold for an incredible $470,000, and the second example in PCGS MS-66+ brought $329,000.
“This was our third consecutive Official ANA World’s Fair of Money Auction and our most successful ANA auction to date in terms of prices realized,” said Brian Kendrella, president of Stack’s Bowers Galleries. “It is always an honor and privilege to work with the American Numismatic Association and to be part of this tremendous annual show, and we are proud to be able to present such a vast and diverse catalog of historic numismatic items to our bidders at the auction and around the world.”
U.S. coin highlights of the Stack’s Bowers Galleries 2013 Official Auction of the ANA World’s Fair of Money include:

• Lot 1008, "1781" (1782) Libertas Americana Medal. Bronze. Betts-615. MS-65 BN (PCGS). CAC. Secure Holder. Realized $58,750
• Lot 1035, 1801 Thomas Jefferson Indian Peace Medal. Small Size. Silver Shells. Julian IP-4. Choice About Uncirculated. From the Charles W. Wharton Collection. Realized $117,500
• Lot 1080, 1801 Thomas Jefferson Indian Peace Medal. First Size. Silver Shells. Julian IP-2. Choice Very Fine. Ex: F.C.C. Boyd Estate. Realized $246,750
• Lot 1340, 1787 Fugio Copper. Club Rays. Newman 5-F. Rarity-7. Concave Ends, UNITED STATES. VF Details (PCGS). From the Robert Ayers Collection. Realized $35,250
• Lot 2258, 1921-S Walking Liberty Half Dollar. MS-65 (PCGS). CAC. From the George Edward Collection. Realized $108,688
• Lot 4019, 1793 Wreath Cent. S-9. Vine and Bars Edge. MS-69 BN (PCGS). Realized $481,750
• Lot 4043, 1792 Half Disme. MS-66 (PCGS). Ex: Rittenhouse-Judd-Hayes. Realized $793,125
• Lot 4245, 1878-S Liberty Seated Half Dollar. MS-63 (PCGS). CAC. From the Richard Jewell Collection. Realized $164,500
• Lot 4305, 1794 Flowing Hair Silver Dollar. B-1. VF-35 (PCGS). Secure Holder. Realized $211,500
• Lot 4357, 1850-O Liberty Seated Silver Dollar. MS-64 (PCGS). Realized $105,750 – World Record Price at Auction
• Lot 4374, 1889-CC Morgan Silver Dollar. MS-68 (PCGS). Realized $881,250 – World Record Price at Auction
• Lot 4382, 1893-CC Morgan Silver Dollar. Proof-66 Cameo (NGC). Realized $323,125 – World Record Price at Auction
• Lot 4411, 1944 Lincoln Cent--Struck on a Steel Planchet--MS-64 (PCGS). CAC. Secure Holder. Realized $158,625 – World Record Price at Auction
• Lot 4430, Harris, Marchand & Co. Gold Ingot. No. 6468. 51.00 Ounces. 880 Fine. Realized $305,500
• Lot 4472, 1797 Capped Bust Right Half Eagle. Small Eagle. BD-3. Rarity-6. 16 Stars. MS-61 (PCGS). Realized $411,250 – World Record Price at Auction
• Lot 4494, 1908 Indian Half Eagle. Proof-67+ (PCGS). CAC. Realized $152,750 – World Record Price at Auction
• Lot 4512, 1865 Liberty Eagle. Proof-66+ Deep Cameo (PCGS). CAC. Secure Holder. Realized $528,750 – World Record Price at Auction
• Lot 4523, 1907 Indian Eagle. Wire Rim, Periods. MS-67 (PCGS). Secure Holder. From the Bentley Shores Collection. Realized $211,500
• Lot 4524, 1907 Indian Eagle. Rolled Rim, Periods. MS-67 (PCGS). Secure Holder. From the Bentley Shores Collection. Realized $470,000 – World Record Price at Auction
• Lot 4525, 1907 Indian Eagle. Rolled Rim, Periods. MS-66+ (PCGS). Secure Holder. From the Bentley Shores Collection. Realized $329,000
• Lot 4526, 1907 Indian Eagle. No Periods. MS-68 (PCGS). CAC. Secure Holder. From the Bentley Shores Collection. Realized $176,250 – World Record Price at Auction
• Lot 4528, 1908 Indian Eagle. No Motto. MS-67+ (PCGS). CAC. Secure Holder. From the Bentley Shores Collection. Realized $105,750 – World Record Price at Auction
• Lot 4537, 1908-S Indian Eagle. MS-69 (NGC). From the Bentley Shores Collection. Realized $182,125 – World Record Price at Auction
• Lot 4538, 1909 Indian Eagle. Proof-67 (NGC). From the Bentley Shores Collection. Realized $141,000 – World Record Price at Auction
• Lot 4571, 1933 Indian Eagle. MS-64 (PCGS). Secure Holder. From the Bentley Shores Collection. Realized $367,188
• Lot 4585, 1861 Liberty Double Eagle. MS-67 (PCGS). CAC. Realized $352,500 – World Record Price at Auction

Antiquities and documentation: it will only get more difficult

Antiquities, With a Proven Record, Drive Auction Market

By SOUREN MELIKIAN

Paris — The market for antiquities from the ancient world is undergoing an upheaval that sends some works of art skyrocketing to unimaginable heights while scores of others are effectively becoming unsalable.

Christie’s

‘‘Cupid and Psyche embracing’’ sold for $483,750  at Christie’s New York this month, well above estimates because of its proven history.  

Enlarge This Image

Drouot

An Egyptian portrait dating from  54  to 68 A.D. sold for 1.46 million euros at an  auction in Paris in  May.

The reason for this discrepancy lies in the Unesco convention adopted in 1970 to safeguard the buried heritage of mankind and shield standing monuments from looting. While many countries, including the United States, did not sign up, the convention is effectively being implemented by international institutions and, increasingly, by prudent collectors and dealers, fearful that the legitimate ownership of their acquisitions may be challenged in the future.

As a result, important works of art that can be proved to have reached the market before 1970 shoot to vertiginous levels, while those that cannot fail to sell with increasing frequency.

The divergent trends reached new extremes at auction in the past two weeks, from New York to Paris.

At Sotheby’s New York on June 5, a sculpture from Egypt recorded in noted private collections a very long time ago surpassed the experts’ most optimistic expectations.

A bronze figure of Somtous-Harpocrates from Hellenized Egypt of the fourth century B.C. sold for two and a half times the high estimate, at $137,000. The impact of Greek influence, which spread in the wake of Alexander’s conquest of Egypt, is noticeable both in the rendition of a male deity as a seated man in the nude and in the expressive face clearly inspired by a man of flesh and blood. The sculpture, owned in the early 20th century by an Egyptian family that took it to northern Europe, is unlikely to be the object of future litigation.

The headless body of a satyr, badly damaged, could have suffered from its poor condition.

Fortunately, it once stood in the residence of the Viennese collector Oskar Bondy. Seized by the Nazis on the eve of World War II and dispatched to the Kunsthistorisches Museum in Vienna, it was restituted to Bondy’s widow, Elizabeth, in 1948. The torso more than tripled the high estimate at $329,000.

At a Christie’s New York sale on June 6, early documentation had an even more dramatic impact. “Cupid and Psyche embracing,” carved around the first century in Italy, passed through the hands of Sir William Hamilton in the 18th century before being acquired at his 1801 sale by the Neo-Classical artist Thomas Hope. It was lot 1011 in the 1941 William Randolph Hearst sale. Despite extensive 18th-century restorations to the bodies, the group was estimated to be worth $100,000 to $150,000 plus charges. Instead it went up to $483,750.

There are nuances in the quality of the documentation that establishes the presence of antiquities in the market prior to 1970.

Take the most dazzling Roman period sculpture sold at Christie’s, a life-size marble Venus now missing its head and arms. The masterpiece made $447,750, only slightly more than the high estimate. The catalog indicated that the statue was “with N. Koutoulakis, Paris and Geneva, 1965 or earlier.” (Koutoulakis was a world-renowned dealer in antiquities.) It was exhibited from 2005 until this year at Stanford University, in the Iris and B. Gerald Cantor Center for Visual Arts. That is not nearly as good as an early publication complete with a photograph solidly establishing the presence of the sculpture in the market prior to 1970.

The contrast with the dead silence that greeted scores of bronzes, some very fine, from ancient Afghanistan, Iran, Iraq, Yemen and other areas was striking. None were documented and the majority remained unwanted at low prices ranging from €1,000 to €5,000 euros. In five to 10 years, these hot potatoes may not even make it to the auction rooms.

Naturally, a total lack of documentation before 1970 proves increasingly damaging, even to rarities. 

Early in the Christie’s auction, a glass beaker described as “early Roman, 4th century” was estimated to be worth $10,000 to $15,000 plus the sale charges. Probably of Celtic make, the vessel is intact, making it doubly rare. But it remained unsold — the lack of documentation would stop most museums from touching it.

Permanent Easing: By Ben Hunt, Ph.D.:

What Bernanke signaled this week is that QE is no longer an emergency government measure, but is now a permanent government program.

In exactly the same way that retirement and poverty insurance became permanent government programs in the aftermath of the Great Depression, so now is deflation and growth insurance well on its way to becoming a permanent government program in the aftermath of the Great Recession. The rate of asset purchases may wax and wane in the years to come, and might even be negative for short periods of time, but the program itself will never be unwound.

There is very little difference from a policy efficacy perspective between announcing a small taper of, say, a $10 billion reduction in monthly bond purchases and announcing no taper at all. But there is a HUGE difference from a policy signaling perspective between the two. Doing nothing, particularly when everyone expects you to do something, is a signal, pure and simple. It is an intentional insertion of uncertainty into forward expectations, a clear communication that the self-imposed standards for winding down QE as established in June are no longer operative, that the market should assume nothing in terms of winding down QE.

Choosing nothing over a small taper is only useful insofar as it signals that the Fed prefers to maintain a QE program regardless of the economic data.

Interesting hard asset:

Cheers! Eight-century-old ale jug found in attic is predicted to fetch £50,000 at auction

• The horseshoe was the crest of the Ferrers who lived in Duffield castle
• The jug may have carried cider or ale for workers during harvest time
• It recently spent 150 years in an attic before being put on sale

By Chris Pleasance
PUBLISHED: 12:59 EST, 20 September 2013 | UPDATED: 14:54 EST, 20 September 2013

It started life 800 years ago as a humble ale jug, used to carry a refreshing pint or two into the countryside during the medieval harvest.
Left behind, perhaps by a farm hand who had drunk one too many, the jug lay undiscovered in the grounds of Kedleston Estate until it was rediscovered in 1862.
Now, after another 150 years spent gathering dust in an attic, the jug is going to auction and is expected to fetch between £30,000 and £50,000.

Ancient history: the Magna Carta was signed by King John just five years before this jug was made

The large glazed jug, described 'as one of the most important and early Medieval relics of the potters art ever discovered', was originally made for use at Duffield Castle in Derbyshire between 1220 and 1250.

Found: the glazed pottery was rediscovered in 1862 by a worker draining a field

Auctioneers speculate that it could have been used to carry cider or ale into the countryside to quench the thirst of workers who were gathering in the harvest.
After being lost it was rediscovered in 1862 by a worker draining a field.
At the time the vessel was kindly lent by the Right Honourable Lord Scarsdale for exhibition in Derby and eventually inherited by a  gentleman in Derbyshire
The exterior decoration shows horseshoe and buckle mouldings, the distinctive crests of the Ferrers family who used to live at the castle.
It will go on sale at Hansons Auctioneers in Derbyshire on Saturday 28 September.
Mr Hanson, manager of the auction house, said: 'The early English Medieval jug is from the late Norman period and would date to circa 1220. It really is a magical item.'
'When I initially assessed the jug I was informed the pet dog had on a couple of occasions come close to wagging its tail a little too close and knocking it over.'
'The family said it had then been stored in an attic before being discovered and put up for auction.'
'We hope collectors and museums will celebrate such a wonderful item. I really hope it is purchased by a museum and the public can enjoy it like we have at our auction centre.'

Rickards on the near future:

Jim Rickards, author of the best-seller Currency Wars, sees the world's central banks embroiled in a "race to debase" their currencies in order to restore – at any cost – growth to their weakened economies.

In the midst of the fight, the U.S. Federal Reserve wields oversized power due to the dollar's unique position as the global reserve currency. As a result, actions by the Fed create huge percussive ripples across the battlefield, often influencing events in ways little understood by the players – and especially by the Fed itself.

In Rickards' words, the policymakers at the Fed "think they are dialing a thermostat up and down, but they're actually playing with a nuclear reactor – and they could melt the whole thing down": It will play out in all markets. When I say collapse, it is a loss of confidence in paper money.

Take the Fed, for example. The Fed has printed almost $3 trillion since 2007. Now, that is without a liquidity crisis. I mean, we did have a liquidity crisis in 2008. And the first round – I would say QE1 was a legitimate central-bank response to liquidity crisis. But QE2 and QE3: we will look back over them and we will see them as enormous blunders in one of the greatest failed experiments in economic history.

But the problem is, the Fed printed trillions of dollars without a liquidity crisis. What is going to happen when we do have a liquidity crisis, which I expect in the next couple years, where there is a 2008 panic starting again? What are they going to do? Print $6 trillion? $9 trillion? There is a limit on what they can do. And so at some point, it is going to get handed over to the IMF, and they are going to have to print SDRs (special drawing rights). That is the IMF world money. Because none of the central banks have clean balance sheets at this point; they look like hedge funds.
And so it really is a loss of confidence. Confidence is the key word – a loss of confidence in paper money

HOW WELL FUNDED ARE YOUR STATE PENSION PLANS?

HERE"S THE GRAPH USING THE STATE'S GROWTH PROJECTIONS.  NOT BAD EH?  ONLY A FEW STATES IN REAL TROUBLE.  AS LONG AS THEY GROW ACCORDING TO THEIR FANTASY MODELS THAT PROJECT 8 PERCENT RETURNS IN AN ECONOMY GROWING AT A 3.5 PERCENT RATE:




HERE'S THE GRAPH USING THE STATES ACTUAL FUNDING AS OF TODAY.  

Here we see each state's FUNDED RATIO: This represents a plan's assets as a percentage of liabilities, or the amount of money actually owed in benefits compared to the amount they actually currently have.  

WOW,  WHAT A DIFFERENT STORY WE GET WHEN WE USE REAL NUMBERS VERSUS FANTASY MODEL PROJECTIONS:  YELLOW, ORANGE, AND RED STATES IN SERIOUS TROUBLE:

 

The funded ratio is one of the primary measurements of a pension plan's overall funding health. It provides an additional layer of context that unfunded liabilities alone cannot. For example, California has a larger unfunded liability than Kansas does, but based on what these states currently know they will owe to retirees versus the amount of money they actually have, the funded ratio tells us that Kansas is in worse shape than California, with Kansas' plans being 29% funded and those of the Golden State being 42% funded.
 
By this measure, the seven most poorly funded states are Illinois (24%), Connecticut (25%), Kentucky (27%), and Kansas (29%), along with Mississippi, New Hampshire, and Alaska, which are tied at 30% funded.

At the other end of the spectrum, using a realistic assumption of future returns suggested by both Moody's and GASB, Wisconsin, the most well-funded state in the country, has just a 57% funded ratio, followed by North Carolina (54%), South Dakota (52%), Tennessee (50%), and Washington (49%).

In other words the very strongest states are still about 50 percent UNFUNDED.

Now let's just suppose the economy turns down, instead of strongly up, as the states' models suggest.  Many states are using 8 Percent as expected returns against an economy that should grow 3.5 percent.  Let's say that's a tad optimistic.  How long before the states actually go broke?

Gee whilikers.   I don't know.  Depends how bad the downturn might be.  But don't worry the last real crisis was FIVE long years ago.  Ancient History.  Who can even remember back that far, except a bunch of cranky old Freedom Haters, and Class Warriors?

Nothing to worry about here.  Especially because the BANKS are on the job, filling the States coffers with Interest Rate Swaps and other Exotic Debt Instruments that nobody but the bankers understand.  It worked well for Greece.  I'm sure it will turn out just as well for our pensions here.

delusions of freedom

In Ancient Greece, Luo meant both to Free, and to Destroy.  This was because to the Greeks, very much like the Eastern Hindus from whom the Greeks borrowed their entire Dyonisiac tradition, Freedom is not possible while one is bound by the chains of desire.  To the Greeks, one was free when one destroyed the chains of desire.  Thus the Greek ideal of the Golden Mean.  Moderation in everything.  The moderate man is Free.  His chains are destroyed. 

They had no concept of "Capital."  The concept of amassing for the sake of amassing simply did not exist. 

This is not to say there weren't greedy Greeks.  Of course there were.  But they were not lionized, idealized as paragons to be emulated.

In modern America, Freedom means the ability to indulge in whatever one wants, whenever one wants, to whatever extent one wants - regardless of how this indulgence affects one's neighbors.  So we have a population of obese, cell-phone addicted, prescription-drug addled, morons.  And anyone who takes issue with this "Hates Freedom."

Noone is served better by this Delusion of Freedom than the Big Banks.  The United States Bankers and Shadow Bankers (insurance companies, investment banks, hedge funds) exist to suck potentially productive capital out of the system into their own pockets. 

There is no functional oversight.  Everyone in the government is bought and paid for.  And the Myth of Freedom dictates that anyone who even notices this extraordinarily corrupt Banking abomination must Hate Freedom.  Or is waging "Class Warfare."

The myth dictates these bankers are sucking all the capital out of the system because they are "Smarter."  And they are the "Job Creators."  We must idolize them, not criticize them.  If we notice their extraordinary greed and corruption, we're Jealous, and we Hate Freedom.

Fine.

But realize this.  The faster the Banks suck capital from the system, the more debased the system's CURRENCY becomes.  There's no way around it.  Because the entire  Banking Scheme is founded on a mountain of DEBT.  They suck capital through leveraged gambling.  Leverage means Debt.  And the Central Banks fund the entire scheme with ever more printed money.  Which means ever more debt.  Because printed money is simply an instrument of debt.

And as the debt mounts, the currency debases.

Which means that over time Hard Assets will be the only reliable store of wealth.

Fall Auctions: estimates are meaningless...

For those new to the Ancients Auctions there are three iron clad rules to bear in mind.

1) Estimates are meaningless.  There are a host of reasons why a coin might be estimated at a certain level.  Certain houses may just look at the last auction price.  They may be protecting a coin.  They may be encouraging bidding.  They may be boxed in by consigners.  They may, as policy, estimate everything at less than half the expected price.  Etc.

2) Pictures lie.  This one is tough.  It doesn't mean that pictures purposefully mislead.  Sometimes a coin in hand can look much better than the picture.  Sometimes much worse.  It's the nature of photography.  Coins are often small with very high relief, so shadows are cast, different elements are highlited, tiny unnoticeable flaws are exaggerated, and metal quality enhanced or diminished.  This is just the nature of photography.

3) Grading is subjective.  Most coins at auction are raw: not NGC graded.  The grade assigned by the auction house is the opinion of the expert in that house who will have his own idiomatic system and will be under his own set of political constraints. 

And finally: many houses will run coins they know have been altered.  These coins are ungradeable.  Altered coins can slip through at any auction.  But try to avoid houses that run altered coins as a matter of policy.  I can't print that list here.  But if you contact me directly, I'll give you my OPINION on this.

The new liquidity Trap, part 2

Price realized: 2'300'000 CHF
Decadrachm, unsigned work of My(ron) and Poly(ainos) circa 409-406, AR 42.42 g. AKRAGAS   Of the highest rarity, less than ten specimens known. Undoubtedly one of the most  prestigious, important and fascinating Greek coins. A masterpiece of the  finest Classical style, work of two skilled master-engravers.


Since the "recovery" began five years ago, disposable income for the top 1 percent has increased by 40 percent.  For the rest, it is flat.  Factor in inflation, and 99 percent of the population is in worse condition than at the stock market low 5 years ago.

There is no official inflation.  Yet everyone in the 99 percent knows their dollars are worth much less than five years ago.  Rents have soared.  Education has soared.  Health Care costs have soared.  Eating out has soared.  Eating healthy food has soared.  Fuel has soared.

In other words, the world's most liquid market, the market for US dollars has somehow been manipulated downward, so that the notes in your wallet are losing value quickly.

This is the new liquidity trap.  The more liquid the market, the easier it is for the top one percent at the Big Banks, to manipulate it.

Stocks are at all time highs.  Because only the top one percent is participating in stocks.  They're waiting to suck everyone back in before they get out and let it collapse.  It won't collapse until the last widow and orphan gives up and gets in.

Gold is under huge pressure.  Because the top one percent is running it down, until every last little gold bug gives up their gold.  Once everyone is out, they'll buy bit all up and let it rise as stocks drop.

This is all done because Price Discovery which is the hallmark of Liquid Markets is terribly easy to manipulate when you are able to overwhelm liquidity with tremendous Volume.  This volume, enabled and backstopped by the Central Banks who literally create trillions out of thin air and give it to the traders at the Big Banks, turns Free Markets on the head.  The "Freer" in other words, the "More liquid" the easier to manipulate.

There are many who still don't believe all the liquid markets are manipulated suckers traps.  None of these true believers in the Free Market work at Wall Street Big Banks.  On Wall Street, they understand and revel in the rigged casinos we call markets.  You only need to have worked there a short while to understand this.

All those Patriotic True Believers in Free Markets make the Wall Street/Big Bank rigged casinos work.  As they happily lose all their worldly belongings, they look for scapegoats everywhere - immigrants, Jews, blacks, socialists, liberals - everyone but the Big Banks who are sucking them dry.

But the new Liquidity Trap has a flip side.  And it lies in the safety of illiquid markets for items with intrinsic value: coins, medals, antiquities, historical documents, art, gemstones, diamonds etc.

Ironically, it is very hard to systematically manipulate the price for items for which there is no price discovery.  You can pay a trillion dollars for an original  copy of the declaration if independence - if you can find one.  But there may not be a greater fool to pass it on to.  And that purchase tells you nothing about the price at which that document will next change hands.  All you've done is acquire the document.   The same is true to varying degrees for all unique items of intrinsic value.

So, if there is no price discovery, how are these items stores of value?

Because those who work at understanding these markets, those who know how many of each item might exist, how similar items are valued, where these items change hands, how these items change hands and how they are valued in comparison to other items of intrinsic value - can get  a pretty good idea of the reasonable range of value for any given item.

In other words Price Discovery is extraordinarily Knowledge Intensive, rather than Volume Intensive.  Therefor there is no advantage for the  Big Banks.  Yet there is a large Global Market for these items.

Take the Dekadrachm pictured above.  It sold recently for two and half million dollars?  Was this a fair price?  Will it hold its value?  I'd say yes.  What would you say?

Protect yourself.  Learn about these markets.

The New liquidity trap

The classical Liquidity Trap occurs when no matter how much money is printed by the Central Banks and given to the member banks, still nobody wants to borrow and spend.

Right now there is a small class of people with so much paper money all they do is spend.  They can spend 24 hours a day, seven day a week and not make a dent in their paper horde.  So they do.

Then there is the 99 percent who are trying to cut back and make ends meet.

In that classic bar where 99 of these poor middle class shmucks are drowning their sorrows in dollar beers, Bill Gates walks in, and suddenly the average drunk in that bar is a multi-millionaire, statistically speaking.  This situation approximates the statistical nominal growth in our economy.

How did this one percent become so fabulously wealthy?  Well, sure, a few of them invented something.  But most work at the banks where they get given all that money that the Central Banks print up.

They don't lend it out.  Nobody really wants to borrow it anyway.

Rather, they gamble it in the liquid markets.  This creates the New Liquidity Trap.  Any market liquid enough to accommodate large scale gambling is now controlled by the Central Banks and the Member Banks.  This includes Currencies, Debt, Metals, Oil, Stocks, Real Estate, and all sorts of Derivatives.

That means that any market large/liquid enough to create and store wealth for the Banking Class, is also at the complete mercy of the Banking Class.  And they will eventually strip all value out of those markets through massive market bubbles that eventually must collapse.

Therefor, true stores of wealth that are protected from the Banking Class only occur in relatively illiquid markets.  Because the very illiquidity protects these markets from large scale gambling.  Thus they hold no interest for the Banks. 

These markets include Art, Antiquities, Coins, Medals, Historical Documents, etc.  That doesn't mean there isn't fraud, cheating, lying, and manipulation in these markets. These are problems of human nature.  But it does mean that those private citizens investing in these markets as a store of value can do so with some degree of protection from the Banking Class.

Yes, Individual Bankers are entering these markets.  They are buying with their usual vengeance, as another way to diversify out of their paper.  But they can't got out and corner these markets to subsequently manipulate them.  The product doesn't exist it that quantity.  It has to be bought patiently over many years.  It requires time intensive expertise, as no two pieces are alike.  Each purchase is unique.

This is frustrating and confusing for traders used to bullying markets through sheer volume.  

This actually creates advantages over the banking class for private citizens willing to put in the time and effort.

The Barbarous Relic

The Gold Coin pictured above bears an image of Athena with a Griffin on her helmet.  A miserable slave toiled in about 320 BCE in a dank mine somewhere in Mesopotamia, to dig the gold out of the earth.  The gold was turned over to the overseers of the merchant caravan acting under the auspices of the Seleukos 1 Nikator, now Emperor of the Eastern Empire of the deceased Alexander the Great.  In the capital city of Babylon, the shipment reached the Mint in the temple of Athena, where a team of gifted celators carved images into iron which was heated, stamped into a die, which was then recut by another gifted die cutter.  The gold was the heated and rolled into sheets, and stamped into round blanks.  The blanks were again heated then fitted into a metal tong set on an anvil.  The other die face was set in the other tong, pressed over the die and struck with a hammer.

The Mint Master would deliver the result of this massive labor-intensive exercise to the Military Paymaster in charge of paying the troops of Seleukos who was engaged in a relentless series of wars with Alexander the Great's other general who has split up his empire.  Ptolemy had taken Egypt, Seleukos the Eastern Empire, Antigonos had Macedon, Demetrios had Greece.  They all struck substantially similar coins to pay their troops.

Every officer who received one of these coins as a month's wage, was sure that the this payment was constant in terms of weight and purity as guaranteed by the issuing authority of the Babylon Mint under the auspices of Seleukos 1.  Its value would be substantially the same throughout the known world.  Its value would remain constant for centuries throughout the known world.

In fact, its value would remain substantially constant for two thousand years.

The term the Greeks used for this coin was Nomos - which also meant, in verb form, "To Reason."  And, as we know, Reason was the defining characteristic of Greek thought.  The virtue of consistency in the process of reason formed the basis of Greek Philosophy.

This constancy was only interrupted with the advent of the two world wars inf the 20th century, after which a new currency was introduced by the Victors: a currency that was defined by its very lack of constancy.  It had no intrinsic value.  The value would henceforth be assigned at the convenience and to the benefit of the issuing authority and its Banks.  Any constancy of value was thought to limit the ability of the the States and the Banks that controlled them from creating profits.

To call a currency that is defined by its constancy barbaric is amusing for many reasons, not least of which is the fact that constancy is quintessentially Greek, while Barabaric is the term the Greeks used for everything that was Non-Greek.  This is because to the Greeks, those uncivilized tribes who couldn't speak Greek, sounded as if they were saying "Bar bar bar."

Another reason the term Barbaric is amusing when applied to the constancy of gold is because to the Greeks the very concept of Debt - the essence of this new inconstant currency - was Barbaric.  Any form of payment that involved interest was thought belong to the realm of the basest scoundrels, thieves and usurers.  

Of course, times change.  Values change.  Ours are very different from those of Classical Greece.  But applying the term Babaric to the the gold coin pictured above, is certainly a misnomer.

Memo: repeal Glass Steagall so that Banks can gamble with derivatives:

In his August 22^nd article, Greg Palast posted a screenshot of a 1997 memo from Timothy Geithner, then Assistant Secretary of International Affairs under Robert Rubin, to Larry Summers, then Deputy Secretary of the Treasury. Geithner referred in the memo to the “end-game of WTO financial services negotiations” and urged Summers to touch base with the CEOs of Goldman Sachs, Merrill Lynch, Bank of America, Citibank, and Chase Manhattan Bank, for whom private phone numbers were provided.

The game then in play was the deregulation of banks so that they could gamble in the lucrative new field of derivatives. To pull this off required, first, the repeal of Glass-Steagall, the 1933 Act that imposed a firewall between investment banking and depository banking in order to protect depositors’ funds from bank gambling.

But the plan required more than just deregulating US banks. Banking controls had to be eliminated globally so that money would not flee to nations with safer banking laws. The “endgame” was to achieve this global deregulation through an obscure addendum to the international trade agreements policed by the World Trade Organization, called the Financial Services Agreement.

Palast wrote:
Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas.  The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.

Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders.  The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.
The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.

WTO members were induced to sign the agreement by threatening their access to global markets if they refused; and they all did sign, except Brazil. Brazil was then threatened with an embargo; but its resistance paid off, since it alone among Western nations survived and thrived during the 2007-2009 crisis. As for the others:

The new FSA pulled the lid off the Pandora’s box of worldwide derivatives trade.  Among the notorious transactions legalized: Goldman Sachs (where Treasury Secretary Rubin had been Co-Chairman) worked a secret euro-derivatives swap with Greece which, ultimately, destroyed that nation.  Ecuador, its own banking sector de-regulated and demolished, exploded into riots.  Argentina had to sell off its oil companies (to the Spanish) and water systems (to Enron) while its teachers hunted for food in garbage cans.  Then, Bankers Gone Wild in the Eurozone dove head-first into derivatives pools without knowing how to swim–and the continent is now being sold off in tiny, cheap pieces to Germany.

CENTRAL BANKS AND GOLD. GOLD MOVES WEST TO EAST.

Central banks, mainly those of emerging or the BRIC countries, bought more gold in 2012 than at any time in the past 50 years, a net 536 tonnes. This trend of central banks buying gold instead of selling gold, which started in 2009, is a 180-degree reversal from the original intention of the Washington Agreement whereby central banks gold disposals were coordinated to ensure orderly price forming.

The main buyers in 2012 were the central banks of Russia, China and Turkey.

China continues to hoard gold en masse,  which is starting to have a dramatic impact on the gold price.  Chinese gold consumption is up 50% to 706 metric tons (hereafter tonnes) in the first six months of 2013 -- and is most likely to overtake India as the largest gold consumer in 2013.

The way that China can significantly increase its gold reserves without driving the price of gold sky-high is through buying up its entire domestic production. What is the more remarkable is that China has been able to dramatically increase its gold production, while all the other major gold-producers are reporting flat or declining production.

Russia, world’s largest oil producer, also is one of world’s largest gold buyers. Russia’s central bank has added 570 metric tonnes of the metal in the past decade, now totaling some 1,000 tonnes. During 2012, the Russian central bank increased its holdings by 8.5% or 75 tonnes to 958 tonnes.

One should wonder why these central banks are so eager to purchase “a barbaric relic” which is the opposite of their own creation, paper money. You know why! Because people are finally waking up that physical gold is the only currency with real value that can’t be printed whenever it suits politicians.

While Putin and China are leading the gold rush in emerging markets, developed nations are liquidating

How to buy Ancient coins Part 2: 5 rules

Rule 1) Buy what you like.  Buy coins you think are awesome, beautiful, important, historically meaningful and you'll never be disappointed.  Buying coins to outsmart the market is the ultimate fool's game.



Rule 2)  Always buy the best you can possibly afford.  There's a good reason that the coin with just a small barely noticeable problem is way cheaper.  Only the best appreciates over time.  That doesn't mean the single best coin.  But a coin near the top of its class.  Lesser issues may keep up with inflation for a time, but over time they will depreciate.  That doesn't mean that a coin has to be perfect.  Certain issues are always degraded.  But you can still buy near the best that issue has to offer.  The Electrum Stater of Lampsakos above, is clearly far from perfect.  But for the issue it's magnificent.  Know your issues.

Rule 3) Unless you really know what you're doing, buy graded coins.  Many uncertified coins are smoothed, tooled, repaired, overgraded, photoshopped, or downright fakes.



Rule 4) Beware 1 sided coins.  One excellent side - and one rougher side can be very tough to resell.  The roughness on the seemingly irrelevant reverse on this coin really hurts its value!

Rule 5) If a deal appears too good to be true - it is.  There are no bargains out there at the high end.  And if you're not buying at the high end of what you can afford, you're buying a depreciating asset.  So it might seem like a great deal now.  But in five years it probably won't.  Sure, every now and then something slips through the cracks at auction.  If that happens, great.  But in general, there are only well selected, well considered purchases, and poorly selected - poorly considered purchases.  Well selected, well considered purchases are good deals.  You get something you really want in top condition at a fair price.  You'll never be sorry you bought it.