Floyd Norris writes for the New York Times that it’s 1980 all over again.

Discussion of gold has gone from nonexistent a decade ago to the question of whether its price is in bubble territory, and now a policy question in the Republican primary. Ron Paul has been stumping for a return to the gold standard for decades, and the populace has finally caught up.

The issue resonates with young people who worry about a dire future with a dollar crash and nationwide poverty. The gold issue is hot enough that Newt Gingrich has promised to appoint a gold commission, with The Case for Gold coauthor Lewis Lehrman and Jim Grant as cochairman.

When Ronald Reagan went through the gold commission charade in 1981 to satisfy a campaign promise of studying the gold standard question, Lehrman cast one of two dissenting votes on the commission that voted in favor of maintaining the fiat money status quo. The other “no” vote came from Ron Paul himself. As Murray Rothbard explained,

The gold standard was the easiest pledge to dispose of. President Reagan appointed an allegedly impartial gold commission to study the problem — a commission overwhelmingly packed with lifelong opponents of gold. The commission presented its predictable report, and gold was quickly interred.

In similar fashion, Norris and the NYT look to explore the worthiness of a gold standard by citing aUniversity of Chicago survey of 37 economists asking if they agreed that “price-stability and employment outcomes would be better for the average American” if the dollar’s value were tied to gold.

Norris makes a point that among the 37 were advisers to both Democratic and Republican presidents. As if this insured some sort of impartiality. Like Captain Renault in Casablanca, you will be shocked — shocked! — to know that all 37 of the esteemed economists polled think a gold standard is a terrible idea.

The first statement the 37 economists responded to was

If the US replaced its discretionary monetary policy regime with a gold standard, defining a “dollar” as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

CONTINUED at The Ludwig von Mises Institute. Written by Doug French.

As Chinese take up a big position on gold, COMEX commodity speculator positions begin to surge.

The spot market price of buying Gold climbed to $1728 an ounce Monday morning London time – a slight drop from last week’s close – while stock markets, commodities and the Euro all fell and government bond prices rose as European leaders met for their latest summit in Brussels.

The cost of buying Silver fell to $33.08 at one point – a 2.6% drop from where it ended last week.

Gold fell as low as $1718 per ounce Monday morning, dropping steadily during Asian trading, though this represented a loss of only 1% on Friday’s closing price.

CHINA

“Everybody seemed to be expecting profit taking out of Shanghai after the two Chinese bourses came back online,” said one Hong Kong dealer.

“As far as we can see, there wasn’t much of that.”

During last week’s Lunar New Year holiday, China saw a “gold rush”, with consumers spending more on buying gold than during the 2011 festival, according to a China Daily report.

“People seem crazy about gold, snatching it up more like a cheap cabbage than such a precious metal,” it quotes Beijing resident Miao Miao.

The value of sales at two of Beijing’s top gold retailers, Caibai and Guohua, reportedly hit 600 million Yuan ($95.28 million) – a 49.7% rise on last year’s sales, almost 50% increase in purchases! The gold price in Dollars meantime rose around 25% over the same period.

The Yuan also appreciated against the Dollar over that time, gaining around 3.6%, which implies a rise in Chinese domestic gold prices of around 20%.

CONTINUED at Commodity Online.

A combination of several factors, including a declining dollar and the Federal Reserve’s announcement that it would keep interest rates at virtually zero until late 2014, helped to send gold and silver prices soaring to multi-week highs. Analysts expect the upward trend to continue as paper currencies founder and gloomy news continues to dominate the economic headlines.

The spot price for gold was around $1,725 by 2 p.m. Eastern time after jumping more than $60 since the day before, up almost 30 percent from a year ago and more than 7.5 percent over the last 30 days. It smashed through $1,700 on Wednesday for the first in six weeks.

“At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar,” Commerzbank analyst Daniel Briesemann told Reuters.

Analysts said the single most important factor behind gold’s strong rally was the Federal Reserve. On Wednesday, the privately owned central bank promised to keep short-term interest rates at rock bottom until late 2014, extending the date from its previous pledge to keep rates down until mid-2013.

Also bullish for gold — and bearish for the U.S. dollar, of course — was Fed boss Ben “helicopter” Bernanke’s veiled threat to unleash more so-called “Quantitative Easing,” known in simpler terms as creating new “money” out of thin air and pumping it into the economy by purchasing bonds. The dollar immediately took a hit against other major currencies.

“The framework makes very clear that we need to be thinking about ways to provide further stimulus if we don’t get improvement in the pace of recovery and a normalization of inflation,” Bernanke said during a quarterly news conference after the Fed’s report was released. Analysts and central bank critics, already concerned about massive monetary “easing” in recent years, lambasted the idea that more money would solve the economic problems plaguing America.

“If the Federal Reserve thought the economy was improving, it wouldn’t need this artificial prop to keep sustaining it,” said Euro Pacific Capital head Peter Schiff, noting that wild money printing was helping to drive the nation and its economy off a cliff. “The President and the Federal Reserve are now conspiring to create a much bigger crisis.”

The Fed claimed it would be targeting a 2-percent rate of annual inflation for 2012. However, few analysts take the government’s “Consumer Price Index” (CPI) measure of inflation seriously — especially as Core CPI, one of the most frequently cited figures, omits price increases in key sectors like food and energy.

According to Schiff, the government’s claim based on CPI that inflation for 2011 was 3 percent is completely bogus. It was actually much higher, he said, noting that officials were using phony measures like the CPI to mask the true rate of inflation. And it is likely to be even higher in 2012 before eventually morphing into a full-blown currency and debt crisis in the coming years.

“The reason they have to keep [interest rates] so low is to artificially support a phony economy,” Schiff explained. “This economy is a disaster waiting to happen — the only thing standing between us and economic Armageddon is zero-percent interest rates.”

But it can’t go on forever, and the longer rates are kept so low, the worse the looming crisis will be. For now, Schiff, whose business trades gold and silver, said investors should protect their assets by purchasing precious metals “before the price goes any higher.”

An analysis by Bloomberg published on Wednesday showed that gold — which has increased every year for more than a decade — provided the best return on investment over the last five years when adjusted for volatility. And heavy-hitting financial firms cited in the report including Goldman Sachs and Morgan Stanley are forecasting that gold prices will keep rising to around $2,000 in 2012 or 2013.

“People are still very under-invested in gold, and so there is a huge scope of that increasing,” explained UniCredit analyst Jochen Hitzfeld, the most accurate precious-metals forecaster tracked by Bloomberg over the past two years. Other experts noted that gold is widely and accurately perceived as a safe-haven in times of economic turmoil.

While gold prices have been extraordinarily volatile — spot prices hit $1,923 in September before crashing to $1,523 by the end of 2011 — the longer-term rally has so far been relatively consistent over the past decade. Just 10 years ago, gold was worth less than $300 per ounce.

Silver, which has also seen drastic price fluctuations, was less than $5 per ounce 10 years ago. In 2011, it surged to an all-time high of around $50 before dropping back down to about $33.35 today. The U.S. dollar, meanwhile, has not been doing so well — even when measured against other depreciating paper currencies.

Even billionaire investor George Soros, whose well-publicized sale of some 99 percent of his gold holdings during the first quarter of 2011 spooked precious-metals investors, has jumped back into the market. According to Securities and Exchange Commission (SEC) filings cited by Bloomberg, the hedge-fund manager had increased his stake in SPDR Gold Trust, an exchange-traded fund tracking gold prices, to almost 50,000 shares as of September 30.

Central banks around the world were also buying up multi-ton quantities of gold bullion, according to data cited in news reports. And the trend shows no signs of slowing down.

In other bullish news for the precious metal, unconfirmed reports indicate India has started purchasing oil from Iran using gold rather than U.S. dollars. China could follow, too, according to news reports.

“It shows the exodus from the dollar is gaining speed,” noted precious-metals and currency trader Simit Patel on the investment analysis site Seeking Alpha. “With the major economies of the world facing $7.6 trillion in bond payments due this year, I think the tipping point for a shift out of dollars and into a new monetary system backed by gold is not as far off as it may seem.”

With the steep drop in prices during the last few months of 2011, some analysts and traders were reluctant to get back in the precious-metals market before the appearance of a solid bottom had solidified. But the big banks and respected analysts are forecasting that as long as the fundamentals — out-of-control money printing, sovereign-debt crises, wild government spending, and more — remain the same, gold and silver prices could see massive gains in 2012.

Source: New American.

Stocks Are Cheaper Than They’ve Been in Two Decades … U.S. stocks are trading at their cheapest levels since at least 1990, according to such commonly used valuations as price-to-earnings and price-to-book ratios as well as dividend yield, Bespoke Investment Group says. This realization will lift the S&P 500 Index by 11 percent to 1,400 this year or maybe more, according to the research firm’s 2012 outlook report. “The S&P 500 is currently trading below its historical average P/E and P/B ratios, and these ratios are also at their lowest levels in the careers of a large percentage of money managers,” wrote strategists Paul Hickey and Justin Waters. – Fast Money/CNBC

Dominant Social Theme: Now is a golden buying opportunity!

Free-Market Analysis: OK, stocks are cheaper than they’ve been in 20 years. But cheaper than what?

This is actually a kind of power elite dominant social theme, in our view. We used to believe in the myth of the ever-abundant stock market but not anymore. Nonetheless, equity drummers keep pounding away. Stocks are just like any other widget. Sometimes they’re expensive according to historical indicators and sometimes they’re cheap. When they’re cheap you buy. When they’re expensive you … hold.

In the wonderful world of brokerage, the wisest customers never sell. In about five years from now – if the current system survives, and we doubt it will – there’ll be a virtual flood of articles about the few brave souls who managed to hold onto their equity positions for the past 15 years without flinching.

Now, we’ll be told, they’ll reap the rewards. Their stocks are up! Their patience has been rewarded. What we won’t read is the information about the lost opportunities, the funds tied up in failing stocks for a decade-and-a-half, the lack of capital to participate in gold and silver as both metals rose tremendously in value.

The rhetoric never changes. We remember the euphorias of the late 1990s and mid-2000s. Stocks, we were told, were like heirlooms. If you owned Kodak (oops) you never sold it. Or GM (oops), etc. You were supposed to pass these certificates down from generation to generation, like silverware. Here’s some more from the article:

The S&P 500 is already on track to reach or exceed this forecast, up more than four percent in 2012. Better-than-expected economic data and an emerging bailout solution in Europe are behind the gains.

To start 2012, the benchmark had an earnings multiple of 13, the lowest since 1990 and below the 80-year average of 15, according to Bespoke. It would take a move back to 1,484 to get the benchmark back to this long-term mean P/E.

The price-to-book ratio is 2.05, below the average since the late 1970s of 2.43. To get back to that average P/B, the benchmark would need to increase to 1,491.

So trading multiples are low and so is price-to-book. Sounds exciting but even the most trustworthy and historical numbers can lie. In this case, we’d point out, the analysts are looking at statistics instead of the larger business cycle.

It’s the Austrians who helped invented business cycle analysis, FA Hayek and Ludwig von Mises, and everyone who’s anyone on Wall Street is well aware of it. Central banks print money and generate stock-market bubbles. Then the markets and the bubbles collapse and the cycle starts all over.

But really, that’s not the whole truth because there are cycles within cycles. From at least 1980 to 2008, for almost 30 years, the US Federal Reserve in particular inflated the economy at the first sign of a slowdown.

Alan Greenspan did much of this by raising and lowering short-term interest rates gradually. But the result was a steady inflation of the US (and the world’s) economy. Of course, that can’t go on forever. What such endless amounts of monetary inflation do to an economy is entirely poisonous. They destroy it.

Sooner or later, larger economic forces reject the extra money sloshing around in the economy. Too much has been built, too much created, too much excess capital has been misplaced and mis-allocated. The economy collapses and central bankers rush to inject yet MORE money.

It’s the reason the banking sector (central banks’ distribution arm) is probably the largest or at least most important industry in the world right now. No matter what happens, banks aren’t allowed to fail.

The same cannot be said for the stock market. No matter how the powers-that-be try to prop up the stock market, the larger equity marts reflect the larger economy. When that slumps, so do stocks in aggregate. And it’s a fact that large economic slumps are an inevitable result of central banking monetary “crack.”

Today, and really for the past decade, the world has been in the grip of a fiat-paper bear market. It was most seriously affected during 2008 when the dollar reserve system basically collapsed. The chances are in our view that the fiat-money bear market may last several more years – even as many as four or five more.

Of course, we’re on record as wondering if this market cycle will go that far. We have a feeling that as gold approaches its higher-highs, the powers-that-be will have had enough. The dollar reserve system (which is basically no more, in our view) will be replaced by something else. Some sort of gold standard, we figure.

Of course, we likely won’t be in a favor of it. A potential new monetary standard, whatever it’s supposed to be, will no doubt be suggested and perhaps implemented by the same group that has saddled the world with 100 or more central banks.

This Anglosphere power elite will NEVER let the market have its way. They are determined to impose their will on human events at the expense of whatever human suffering is necessary. We can see them lining up the options already – a state-mandated metals money or perhaps the IMF‘s SDRs, supported by a larger basket of currencies.

Of course, whatever happens over the next few years will be reflected in the stock market. If the world does end up with a new monetary system, we can’t imagine that will be bullish in the short-term for equities. The market is no fan of uncertainty.

And for this reason, we return to our initial question – stocks are cheap, historically, but cheaper than what? Different “investments” are valued differently at different times during the artificial central-banking business cycle that we must function under.

In this case, we would argue, stocks are more likely reflecting potential chaos to come than a buying opportunity. Sure, there may be rallies during this fiat bear market but they should be considered within the context of the larger trends.

What bothers us most about these kinds of analyses is that if you mention the reality of the business cycle to many people on Wall Street, they’ll grant its existence and influence. But then they’ll go right back to banging the drum for equities as if the market can be evaluated solely on its own. (True, if pressed, they’ll suggest a government or corporate bond during a downturn.)

Likewise, regulations have been created without taking business cycle economics into account. Most SECregulations tend to narrow the strategic richness of the opportunities that people have to invest just when they are needed most. What regulations do, therefore, is to create an even more artificial and brittle marketplace where everyone is investing the same way – or trying to leave through the same door.

The regulators and the brokers are really two sides of the same coin. Stubbornly, neither will recognize the REAL business cycle or the culpability of the larger central banking system in its too-often ruinous behavior. With all the emphasis on risk, disclosure and asset diversification, this refusal to recognize the obvious is a little bit like ignoring the elephant in the room.

Of course, more and more investors are “getting it” these days, thanks to all the information available on the Internet. It is the Internet Reformation – as we call it – that is increasingly driving people’s investment behavior, and driving them away from mainstream equities as well.

As understanding about the real factors affecting the market continues to rise, we expect continued skepticism about mainstream stock markets and about the financial industry in general. Soon, we would not be surprised if the buying public begins to understand more about business cycle investing then the investment pros are willing to discuss. That will certainly make their jobs more difficult and lead to increasing confusion all around.

Conclusion: On the bright side, however, the talk about treating stocks like heirlooms may subside once and for all.

Source: The Daily Bell.

The recent bankruptcy of financial stalwart and Wall Street casino failureMF Global in the US, has claimed a new and unlikely victim. Following the company’s glorious collapse, Trends Research founder Gerald Celente had his own six figure gold investment account completely looted by chapter 11 trustees, and he is fighting to get it back.

*Taken from Gold Core via Zero Hedge.

Gold is trading at USD 1,783.10, EUR 1,307.50, GBP 1,116.30, CHF 1,612.20, JPY 138,315 and CNY 11,309 per ounce.

Gold’s London AM fix this morning was USD 1,780.00, GBP 1,112.50, and EUR 1,300.41 per ounce.

Yesterday’s AM fix was USD 1,794.00, GBP 1,114.49, and EUR 1,301.51 per ounce.

Risk off has returned with a vengeance as Italian debt markets have gone into meltdown leading to falls in European equity indices. Gold remains near a seven week high and has risen to above EUR 1,305/oz due to the deepening Eurozone crisis and contagion risk.

CONTINUED..

*Taken from Prison Planet. Written by Paul Joseph Watson.

Is it really any wonder why distrust in corporate media recently reached an all time high? Watch this TV news clip in which the reporter claims that the U.S. dollar is a safer investment because it is backed by “the American government,” whereas gold is backed by nothing at all.

No, you’re not watching a clip from The Daily Show, this is a real “news” anchor telling her audience that gold has no intrinsic value or backing and that the U.S. dollar is a safer investment because it is backed by “the American government.”

And before you ask, CTV’s markets reporter Bridget Brown is not part of Obama’s new economic advisory team, nor is she speaking as a contestant in Miss Teen USA.

There’s so much wrong with this on so many levels.

CONTINUED..

*Taken from Prison Planet. Written by Paul Joseph Watson.

Central banks are presumably so frightened that a growing number of citizens are abandoning rapidly devaluing paper currencies and preserving their wealth through precious metals that governments are now cracking down on the anonymous purchase of gold and silver.

Following the Austrian government’s announcement that it was restricting the sales of precious metals to $20,000 a time, an amount which would purchase just 11 ounces, the French authorities have followed suit with an equally draconian new measure to deter people from buying gold and silver.

A recently amended French law states(translation), “Any transaction on the retail purchase of ferrous and non ferrous (metals) is made by crossed check, bank or postal transfer or by credit card, not the total amount of the transaction may not exceed a ceiling set by decree. Failure to comply with this requirement is punishable by a ticket for the fifth class,” going on to confirm that any amount over €450 euros or $600 US dollars “must be paid by bank transfer”.

CONTINUED..

*Taken from Zero Hedge.

Update: gold is now at a fresh all time nominal high, with a price equivalent to that fateful year in which the world’s biggest and perfectly legitimate criminal cartel was founded on Jekyll Island some years ago.

When it comes to gold, one can now officially skip the foreplay (because apparently there is such a thing s a 2G spot). Unlike two weeks ago when the latest Shanghai margin hike caused gold to temporarily lose its equilibrium and flop, however briefly, somewhere in the lower 1700s, as of tonight it has valiantly processed, and completely ignored, news from the Shanghai Gold Exchange that trading margins for the gold forward contract, Au(T+D), will be raised, temporarily starting Sept 9 to 13 percent from 12 percent, while the daily circuit breaker would be lifted to 10 percent from 9 percent, and has proceeded to rise to within nickels of the all time high, with spot trading over $1910 at last check. Since Europe is about to open shortly, and since the free fall in risk will resume now that virtually every rhetorical gimmick has been used and abused ad inf, it appears that absent the CME doing away with margin altogether, we will see $2G spot within hours.

*Taken from AP.

The price of gold surpassed $1,800 an ounce Wednesday for the first time as investors pulled their money out of stocks and snapped up precious metals contracts.

Gold is fast becoming a favorite port in a storm of uncertainty. Investors are clinging to what they see as a hedge against volatile stock and currency markets.

December gold contracts backed off their highs, and traded around $1,785 an ounce during midday trading after reaching a record $1,801 an ounce earlier in the day on the New York Mercantile Exchange.

Gold prices have shot past a series of milestones over the past two years on an uninterrupted climb. Gold was trading at about $900 in the summer of 2008, before the financial crisis unfolded that year.

Resulting turmoil in currency and stock markets has burnished gold’s luster.