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XMFSinchiruna (26.55)

The Trickle-Down Effect



May 18, 2012 – Comments (11) | RELATED TICKERS: IAG , AUQ.DL , AG

I don't know about you, but I was in need of a good laugh. This image did the trick:

I trust that my readers continue to make JSMineset part of their daily reading, but for any that do not, I would direct them to this post:



We can never make good discussions when we are out of balance. If I can be of any assistance it is to bring you back to balance as you review your situation. The market manipulators depend on being able to unbalance you and the greatest tool they have is to supply credit to the margin junkies who live on the edge of greed. This helps them flash to fear faster than the weather changes on Mt. Washington.

The continued strokes in the fiat money markets, regardless of where, is bullish for gold. The problems of OTC derivative just brought into the headlines by Morgan is alive and well, guaranteeing QE to infinity. It is possible that due to the genus quant’s, many of these weapons of mass financial destruction have taken on lives out of the control of their manufacturers. How long the Fed wants to stare down the markets is limited in time in a election year. QE is non-economic buying of US treasuries. They are bought to create a rate by government.

Austerity has exploded in the face of politics in the EU. That always results in changing politicians such as in France and Greece. The recovery in US economic statistics is running thin. That will cause more demand for liquidity especially in this election year as it is liquidity that floats all boats, especially the wishes of the want-to-again-be president.

The Fed has never failed a sitting administration in its history. The Fed is not going to fail the sitting administration in this election year. The assumed strength in the US dollar is a product only of the mirror image of weaker euro. The US dollar is not going to purchase more of anything US when currency induced cost push inflation is alive and well. The USDX is an antiquated index in its weights and measures.

Sales of gold or gold shares should only occur when there is a clear and present need to pay bills with no other alternative. Your sales should not be made in the unbalanced fear of the bear raids fundamentally certain to fail in both gold shares as well as gold itself.


11 Comments – Post Your Own

#1) On May 18, 2012 at 10:55 AM, XMFSinchiruna (26.55) wrote:

Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994.

By the way, the mining indexes are not to the lows of 2008, but relative to the price of gold, we are back at the lows of 2008. You have to remember gold was a lot lower back in 2008. This decline in the gold equities has really been a painful, painful experience. In my long career, it feels like the gold shares have never been this cheap relative to the gold price.

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#2) On May 18, 2012 at 5:18 PM, valuemoney (< 20) wrote:

This decline in the gold equities has really been a painful, painful experience. In my long career, it feels like the gold shares have never been this cheap relative to the gold price.

Hopefully the gap is not corrected by a huge decline in the gold price instead of the gold equities going up. Then the pain could get worse. WAY WORSE!

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#3) On May 18, 2012 at 10:54 PM, skypilot2005 (< 20) wrote:

Some interesting "reads":

Economic insight and analysis from The Wall Street Journal.


·     MMay 18, 2012, 12:17 PM


Economists React: What if Greece Exits the Euro Zone?



By Katie Martin

As the prospect of Greece leaving the euro becomes more real by the day, economists are trying to figure out what would happen next, to the economy and to the markets.

Nothing is certain here; Greece may or may not leave, and there’s a huge range of potential policy responses. So, making allowances for some guesswork, here’s a rundown of some of their views.

JP MORGAN: There’s now a 50% chance of Greece leaving, up from 20% before the country’s politicians failed to produce a coalition government. It says a Greek exit would depress the country’s gross domestic product by five to 10 percentage points more than if it were to stay in. “That would put the peak-to-trough decline in Greek GDP at 25-30%, broadly matching the U.S. experience in the early 1930s.” In turn, that would take away around two percentage points of growth from the region. “This would put the current downturn in line with previous deep recessions, such as the mid-1970s and the early 1990s, but milder than the exceptionally deep recession of 2008/09, when area-wide GDP fell 5.5% from peak to trough,” the bank adds, warning that regional unemployment could be higher than “anything seen in the past half-century.”

CITIGROUP: “There are many scenarios for a Greek exit; almost all of them are likely to be euro negative for an extended period,” says the bank that coined the now-ubiquitous term “Grexit”. If the process is managed, which the U.S. bank deems unlikely, expect a short, sharp selloff in the euro, with a subsequent rally up to $1.45 or higher. If Greece just dumps the austerity program and walks, the risk of contagion rises, and “the euro could begin to rally, but so much damage will have been done by then that it would begin its rally from a much lower level and probably not be anywhere close to the current level at the end of the year.” If the stronger countries were to break away, some see euro gains ahead, but Citi reckons that “this can take a very long time and is probably well beyond an investible horizon.” All in all, the outlook for the common currency is “not very promising…unless policy makers surprise with decisiveness.”

NOMURA: “Without pretending to be precise about the effects involved, we think it is fair to say that a large swing in the current-account balance would be forced by a lack of capital inflows and inevitable capital flight,” Nomura says, stressing repeatedly that bank holidays may be needed to stem the flight of deposits.

HSBC: “On contagion, one would have to decide how impacted the market elsewhere in Europe would be by a Greek exit, and also how swift and aggressive the associated policy response from the European Central Bank would be. The latter could include a reopening of the ECB’s bond-buying program, additional long-term refinancing operations, or something more ground-breaking.” The bank has devised a scale for how damaging a Greek exit would be to the common currency as a whole. Broadly speaking, it reckons that the “best” outcome for the euro would involve the experience for Greece being as tough as possible. If it’s too easy, the temptation for others to leave would be greater, and the currency would be seen to be easily divisible.

BANK OF AMERICA-MERRILL LYNCH: “The risk of a Greek euro exit is rising, but so too are the incentives to keep Greece in.” If it does happen, expect a short, sharp shock to the euro’s exchange rate. “However, in the short run if the ECB responds decisively we believe risky assets, especially bank stocks and periphery bonds, may be prone to a short squeeze. In the longer run, exporters would have scope to outperform domestically geared stocks for a lengthy period.” In a separate note, the bank adds that “if Greece exits the euro, Greek oil demand drops one third… and in a disorderly euro break-up, demand could contract sharply, with profound implications for oil prices.” Brent oil prices could drop as low as $60 per barrel, from the $106 area now.

RBS: “There is already likely to be some form of Plan-B… [but] if contagion really kicks off then a thinly veiled form of monetary financing of debts may be on the table.” The bank reckons a Greek euro exit risks a total of EUR400 billion from bailouts, the ECB and Bank of Greece lending. The risk of capital flight is key. “We are most worried about deposit risk for the periphery, and we see plenty that can be done to alleviate these risks–crucially if there is the political willingness. For instance, allowing banks to access the EFSF/ESM [the European Financial Stability Facility and European Stability Mechanism, the euro zone's temporary and permanent rescue funds, respectively] directly. We have not thought that this was politically feasible but clearly there is a pain threshold that makes politicians take risks.” Alternatively, a euro-wide deposit insurance program would be a good idea, RBS says. For trade ideas, the bank says “we think the theme of market deterioration leading to a policy action translates into buying bonds at distressed levels, which looks closer now.”






Wall Street Journal

Updated May 18, 2012, 7:26 p.m. ET

Europe Weighs Exit Scenario

Officials Prepare for a Possible Euro Split, but Stress They Want Athens to Stay

FRANKFURT—Europe has begun to prepare for Greece's possible exit from the euro zone ahead of a crucial round of elections in the country next month, which are fast becoming a referendum on its membership in the common currency.

Euro-zone officials have started emergency planning to contain the fallout from a Greek exit from the currency bloc, officials said Friday. That includes the preparation of emergency scenarios by staff at the European Commission, the European Central Bank and in national finance ministries, the officials said.

The euro zone's financial "firewall" may need to be boosted to reassure markets that neither Spain nor Italy would be allowed to default on their debt during any market panic that might follow an eventual Greek exit, they said. The bloc's bailout fund has unused lending capacity of €500 billion ($635 billion), only enough to finance Spain and Italy, widely seen as the next two dominoes that could fall in the euro-zone crisis, for a few months.

European Union Trade Commissioner Karel De Gucht caused a stir Friday when he told a Belgian newspaper that the commission and ECB were "working on emergency scenarios if Greece does not make it."

It was the first admission by a senior commission official that the EU has contingency plans in place. Germany's finance ministry further stoked speculation of such preparations. Asked whether the ministry was drafting emergency measures, a spokeswoman cited comments by Finance Minister Wolfgang Schäuble, saying: "Our citizens expect us to be prepared for every eventuality."

Emergency planning for a Greek euro-zone exit was discussed at the weekly meeting of the 27 European commissioners, said a senior EU official. The flight of deposits from the Greek banking system threatens to accelerate the timetable on which the country could be thrust from the euro zone, said one official involved in the talks. "If it reaches large dimensions then it's not solvable," the official said. "At the current moment, it's manageable."

European leaders and ECB officials have in recent days publicly raised the possibility of Greece's exit from the euro if elections next month result in a government that rejects 

European officials insist they want Greece to stay in the euro, making it hard to muse publicly about its possible exit.

Yet denying any "Plan B" in case Greece defaults could erode confidence in financial markets, if investors doubt the ability of European officials to deal with any fallout of a worst-case scenario.

In a sign of how sensitive the topic is, European Commission officials scrambled Friday to clarify that the EU is neither expecting a Greek exit from the 17-nation euro zone nor working to push the country out of the common currency area.

"I'd like to reaffirm very clearly that we want Greece to stay in the euro area," European Commission president José Manuel Barroso told reporters before the Group of Eight summit that he is attending in Camp David, Maryland.

"We will do whatever it takes to guarantee the financial stability of the euro zone," added Herman Van Rompuy, who as president of the European Council chairs EU summits.

Both leaders declined to say whether their institutions were studying contingency plans for a possible Greek exit. "We never comment on Plan 'B'," Mr. Barroso said. "We are working on Plan A," which is for Greece to remain in the euro zone, he said, adding that he believed the magnitude of Europe's efforts so far had been underestimated.

Friday also brought confirmations of a report that De La Rue PLC—a U.K.-based company that is one of a handful that prints bank notes of different currencies—is making preparations to print an alternative Greek currency in the event that the country quits the euro zone.

A person familiar with the industry confirmed a report in the Times of London that the company is discreetly preparing for a revival of the drachma. The initiative is the company's own, this person stressed, and isn't spurred by any Greek request. The Bank of Greece, which has repeatedly declined to respond to questions as to whether it is preparing a contingency on bank notes, declined to comment Friday.

Any initiative to create new Greek bank notes with modern security measures could take months of preparation, testing and vetting. It's unclear how long De La Rue has been working on the plan and if others are doing so.

Markets were spooked Friday by reports that German Chancellor Angela Merkel told Greek President Karolos Papoulias that Greece should include a referendum on its euro membership with next month's elections. Greece's main political parties denounced what they saw as foreign interference in their affairs. Berlin denied Ms. Merkel made such a proposal.

The ECB said it doesn't "engage in any speculations about any emergency plans or possible scenarios and therefore do not comment [on] Commissioner De Gucht's statement." The "immutable preference" is for Greece to stay in the currency bloc, the ECB said, referring to comments Wednesday from ECB President Mario Draghi.

Mr. Draghi has also said Greece's future in the euro zone isn't a matter for the ECB to decide. Still, the ECB has a lot at stake. It owns around €45 billion in Greek government bonds it started purchasing when the crisis first flared two years ago. It has about €80 billion in outstanding loans to Greek banks and billions more through emergency lending.

Though messy, the ECB could probably withstand the immediate hit to its balance sheet if Greece repudiates its debts and exits the euro. The central bank has vast gold and foreign-exchange reserves. It earns billions of euros in fees from printing euro notes. Any losses on bondholdings and from central bank claims on Greece—known as Target2—would be spread throughout the 17 national central banks that comprise the euro, meaning Germany would take the largest hit.

The bigger issue for the ECB would be how to deal with any contagion to other vulnerable euro-area countries such as Spain. The ECB could make more unlimited loans available to banks to ease fears of a credit crunch. It could also restart its dormant bond-purchase program to provide immediate relief to Spanish and Italian government-bond markets.

—Matthew Dalton, Jessica Hodgson and William Boston contributed to this article.



·         Updated May 18, 2012, 7:19 p.m. ET

·         The Wall Street Journal


Cost of Losing Athens Can't Be Calculated



“As Greece girds for elections next month that could lead to its exit from the euro zone, economists are acknowledging an unsettling reality: No one knows what the bill will be.

A wide range of potential price tags has been reported, anywhere from €150 billion to €1 trillion euros ($1.27 trillion). But none of these are comprehensive, nor are they meant to be—they don't, for instance, weigh the cost of an exit against the cost of avoiding one. By comparison, the 2008 Troubled Asset Relief Program, known as TARP, was a $700 billion program initiated in response to the U.S. financial crisis.

The amounts could vary sharply depending on how Greece walks away, with each scenario introducing its own set of uncertainties. There is no real precedent for economists to analyze, as prior defaults or devaluations are very different. And any signals from investors are ambiguous: It's impossible to isolate Greece's contribution to stock-market gyrations this week from other factors”



“Economists might also turn to the stock market as a proxy. Perhaps the loss of market capitalization in the European markets this week—the Stoxx Europe 600 index fell 5.2% this week—is an indicator of how much a Greek exit might cost. But any signal from stocks is hazy, researchers say—and not just because other factors could be tugging on prices.

"Stock markets are notoriously unreliable in estimating anything of that order of magnitude," says Thomas Risse, director of the Center for Transnational Relations in Berlin. "These and other financial markets are currently driven by what one calls the 'herd effect.' "

And the herd is as confused as everyone else, Mr. Jenkins says. "This is such an extraordinarily difficult event to analyze and to quantify that in many ways I can understand stock markets to some degree not reacting to it totally. What possible value could you put on things if you think there's a chance the entire system could melt down?"





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#4) On May 22, 2012 at 10:36 PM, skypilot2005 (< 20) wrote:

Yukon Nevada update:


April 23, 2012

Focus on Resource Conversion Proves Successful at Jerritt Canyon, Nevada


“Yukon-Nevada Gold Corp. (TSX: YNG) (Frankfurt Xetra Exchange: NG6) announces that proven and probable reserves at its 100% owned Jerritt Canyon operating gold mine in Elko County, Nevada, estimated at year-end 2011, have increased to 1,060,800 ounces of gold at a grade of 0.175 ounces of gold per ton (opt) or 6.00 grams of gold per tonne (gpt). These reserves are within a newly estimated measured and indicated resource of 2,319,200 ounces of gold at a grade of 0.189 opt (6.48 gpt). The inferred resource at Jerritt Canyon is an additional 748,400 ounces of Au at a grade of 0.182 opt (6.24 gpt). The attached tables summarize the newly calculated reserves and resources by area.”


Yukon-Nevada Gold Corp. Announces First Quarter Results for 2012


March  2012  


Major Shareholders



Sprott Asset Management


Deutsche Bank



Proud to be long YNGFF 






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#5) On May 22, 2012 at 10:48 PM, skypilot2005 (< 20) wrote: May 18 2012

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#6) On May 23, 2012 at 10:53 PM, skypilot2005 (< 20) wrote:

Will 'Peak Gold' Exploration Continue to Grow?: USGS' Micheal George

Source: Alec Gimurtu of The Gold Report   (5/23/12)




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#7) On May 24, 2012 at 10:14 PM, skypilot2005 (< 20) wrote:


Alexandria Drills 12.48 g/t Gold over 8.20 m at Akasaba, Deepening High Grade Zone 100 m Below Current Resource

Toronto, Ontario, May 24, 2012 

Eric Owens, President and CEO of the Company, said, "The results at Akasaba continue to get even better. Within the context of our geological model, vein merging offers the potential that more ounces exceeding our underground resource grade may be found. Akasaba remains our drilling priority and I emphasize that the deposit remains open at depth and along strike."


Official Web Link Assistant to Sinchi

Long AZX 

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#8) On May 25, 2012 at 6:19 AM, skypilot2005 (< 20) wrote:

Alexandria Drills 12.48 g/t Gold over 8.20 m at Akasaba, Deepening High Grade Zone 100 m Below Current Resource

Toronto, Ontario, May 24, 2012

Alexandria Files Akasaba National Instrument 43-101 Resource Study on SEDAR

TORONTO , May 16, 2012




Official Web Link Assistant to Sinchi

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#9) On May 27, 2012 at 5:17 PM, skypilot2005 (< 20) wrote:

Tyhee Gold Investor Presentation

Yellowknife Greenstone Belt

Interinvest Group, Sprott and other institutions

May 2012

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#10) On May 30, 2012 at 9:47 PM, skypilot2005 (< 20) wrote:

Yukon-Nevada Gold  F.Y.I:


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#11) On May 31, 2012 at 6:27 PM, Horiemon (< 20) wrote:

thank you sky for pumping the optimistic news! 

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