Golden Minerals Company

Two weeks ago when we reported that there had been a record consecutive week dump of US Treasury paper in the Fed's custodial account, as reported by the weekly H.4.1, we made the assumption that this was China preemptively selling US paper. Well, that may or may not have been the case, but it was only part of the full story. We have now learned that Europe, and especially Germany has been just an active seller of sovereign bonds, most certainly including US paper, in recent weeks.

I would suspect that this would be the main reason why U.S. bond yields are rising across the curve. This zerohedge.com story was sent to me by reader Roy Stephens...and the link is here.

Very quickly, there has been much loose talk about EU fiscal union. What was agreed at 4AM this morning is nothing of the sort.

As the statement says, EMU’s leaders have learned the lesson of a decade of self-delusion. "Today no government can afford to underestimate the possible impact of public debts or housing bubbles in another eurozone country on its own economy."

But none of this is fiscal union. There is no joint bond issuance, no move to an EU treasury, no joint budgets with shared taxation and spending, no debt pooling, and no system of permanent fiscal transfers. Nor can there be without breaching a specific prohibition by Germany's top court, a prohibition that could be overcome only by changing the Grundgesetz and holding a referendum.

EMU break-up is Verboten, fiscal union is Verboten, full mobilization of the ECB – either to lift the South off the reefs through reflation, or to back-stop the system as a lender-of-last resort – is Verboten. Germany will have none of it.

Please tell me what exactly has been solved.

The Telegraph's Ambrose Evans-Pritchard is up on his high horse in this blog. It's well worth the read...and is another Roy Stephens offering. The link is here.

Economist Professor Yanis Varoufakis, from Athens University, says Europe's recovery plan does not resemble reality...but the markets are happy because the politicians have created such low expectations any action is cheered.

This 11:30 minute video interview [plus transcript] was conducted by Tony Jones from the Australian Broadcasting Corporation early yesterday...and the good professor picked the EU carcass clean.

"The numbers that I saw were flimsy. They were not founded on anything that resembles the reality on the ground in the social economy of the eurozone, of Greece, of Germany, of any of the countries, or the banks for that matter.

"At around four o'clock in the morning they hadn't reached any serious agreement, so they decided to give George Orwell his latest triumph by describing their failure to agree, their impasse, as a success, as a triumph of convergence. And they're hoping, I think, that in the next few weeks, probably months, something of a rational plan will emerge magically out of that mess that they found themselves in overnight.

Not too many shades of grey in his comments. I thank Australian reader Wesley Legrand for sharing this abc.net.au interview with us. It's well worth watching...or reading...and the link is here.

Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon washed over by fast-moving events.

Data released by the European Central Bank show that real M1 deposits in Portugal have fallen at an annualised rate of 21pc over the past six months, buckling violently in September.

"Portugal appears to have entered a Grecian vortex and monetary trends have deteriorated sharply in Spain, with a decline of 8.4pc," said Simon Ward, from Henderson Global Investors. Mr. Ward said the ECB must cut interest rates "immediately" and launch a full-scale blitz of quantitative easing of up to 10pc of eurozone GDP.

The M1 data - cash and current accounts - is watched by experts as a leading indicator for the economy six months to a year ahead. It has been an accurate warning signal for each stage of the crisis since 2007.

Ambrose was a busy boy yesterday. This was his second column on Thursday. This one was posted over at The Telegraph late last night. Once again I thank Roy Stephens for bringing this must read story to our attention...and the link is here.

The thing to understand about the highest-level diplomatic negotiations is this.

Basically, there is the bloke in the bar anywhere in the world, railing against the iniquity of what foreigners get up to: “Can you believe what those Germans/Frenchies/Americans/Arabs/Brits/Jews are doing now?! They’re trying to cheat us! Do they think we’re thick, or wot? Innit!” Then above him (sorry, ladies, it’s usually a him) is a vast, unpleasant fog created by supercilious on-the-one-hand-on-the-other-hand people like me. Officials, technocrats, state-funded busybodies and experts droning on in high acronymic about Targets, Priorities, Road-maps, Objectives, Strategies, Policies and the rest of it.

When you break through that impenetrable, noxious layer of process, you suddenly get to clear blue sky where meetings of world leaders take place. And the impressive thing is that these leaders resemble the bloke in the pub. The language is (usually) not quite as blunt. But the thoughts and messages are.

This is an incredible new item...and when you see who the author is, you'll understand why. Throw this on your absolute must read list as well, as it's an eye-opener. This is Roy's last offering of the day...and I thank him once again for sharing it with us. It was posted over at The Telegraph yesterday...and the link is here.

A federal judge next month will sentence the man who authorities say took advantage of the booming gold market, by scamming more than 1,400 people out of tens of millions of dollars.

But before he goes to prison, the mastermind of the scheme, Jamie Campany, sat down with ABC News' Chief Investigative Correspondent Brian Ross to reveal how he tricked his hundreds of victims out of nearly $30 million.

The most promising victims of the gold scam, Campany said, were spotted through Google earth satellite images. Campany and his team matched phone leads to addresses to find victims with the biggest homes, and therefore the most money to invest in gold and silver.

But in reality, there was no gold despite the legitimate-looking transaction papers from the Global Bullion Exchange -- a company that Campany said was "completely bogus."

There's some text...along with a 3:04 video clip...and it's well worth your time. I thank reader Craig Eubanks for sending me this story that was posted over at gma.yahoo.com website...and the link is here.

If gold moves from $1600 to $800 investors would lose 5% of their current net worth [if they had invested 10% of their portfolio in gold], but that will mean that something wonderful has happened in the world. Under such a scenario it is likely conservative to believe that the 90% of one's wealth not invested in gold would probably appreciate by at least 25% from today's levels. Using that potential framework, the net portfolio will have appreciated in value by 20% despite gold's theoretical 50% haircut.

The linear thinking in this very short [but very excellent] article is impossible to refute. As the title says it's "Risk Management 101" at its finest. I thank Paoli, Pennsylvania reader D.M. for sending this along...and the link is here.

Here's another very short piece that deserves your undivided attention. There's an excellent quote, followed by an even more excellent graph...and a James Grant video interview entitled "Inflation Will Hit Suddenly".

I thank reader Eleanor Coats for sharing this blog which is posted over at the bmgbullion.com website...and the link is here.

In gold what looks healthy is the fact that you didn’t even reach the 38% retracement level on the downside move. The decline, while large in dollar terms, did not even take you back to the first of the Fibonacci levels relative to the bull move dating back to 2009. To me that is a sign of inherent strength.

Also the fact that gold held some of these critical moving averages, from a technical perspective this is fairly resilient action. Momentum is pretty strong and there is a lot of dry gun powder on the sidelines, so we will most likely see continued upside action.

Eric King sent me this KWN blog yesterday...and the link is here.

On Wednesday - just two days after our modern-day Evita got re-elected president of Argentina - Christina Fernandez Kirchner's government announced a change in rules for mineral exporters; they will be required to repatriate all sales revenue to Argentina. Apparently certain unpatriotic exporters didn't want to bring cash from abroad back home and convert them to rapidly inflating Argentinean pesos - how strange.

Prominent Argentina plays promptly sold off. Many investors evidently concluded that Canadian mining companies operating in Argentina would not be able to get any cash out of the country to the benefit of shareholders. According to our legal contacts in Argentina, however, this view is incorrect.

This must read piece by International Speculator editor, Louis James, was posted in yesterday's edition of Casey's Daily Dispatch...and the link is here.

In a widely criticised move by Venezuela's President Hugo Chavez to repatriate all of its $11 billion worth of gold held abroad, the country's central bank currently awaits the arrival of some 17,000 gold bars from banks in the West.

This Reuters piece was filed from Caracas yesterday...and is posted over at the mineweb.com website. It's certainly well worth the read...and I thank reader Steven Green for sending it along. The link is here.

Twenty-four-year-old Xin Wenting stays up until one o'clock on most days, looking after her gold investment during the ebb and flow of global trade.

Many small investors in China have turned to gold as high inflation threatens to erode wealth in the world's second-largest economy, leading to small gold exchanges springing up all over the country.

The influx of retail investors promises to not only boost Chinese gold demand, but also increase its volatility.

This Reuters item was filed from Singapore on Wednesday...and I thank Hong Kong reader Peter Wynn Williams for sending it my way. The link is here.

Eric Sprott, CEO of Sprott Asset Management in Toronto, did an interview on October 19th with Jim Puplava that's posted over at the financialsense.com website. The interview runs about 30 minutes...and the link to this absolute must listen interview is here.