** Wednesday's most read story was "The Gold Bubble", by Rick Bookstabber, in which he explored the open secret of the hedge fund investment in gold. Next up was "A Constitutional Dollar", from the Ludwig von Mises Institute. We have another piece today by Mises himself. See below for "The Gold Standard". Finally, we had "China's Bad Bet Against America", by Joseph S. Nye Jr., professor at Harvard's Kennedy School of Government and author of 'The Powers to Lead." Also, see the Regulatory section in today's newsletter to see responses to CFTC Chairman Gary Gensler's address this morning at FIA in Boca Raton.
CFTC Chair Gensler's Plan to Take Over the World
Seeking Alpha
Commentary by Craig Pirrong
Gary "Jeremiah" Gensler continued his assault against CDS, this time from deep in enemy territory, at Markit's Outlook for OTC Derivatives Markets Conference. If it were up to Gensler, the OTC Outlook would be terminal. In the speech, Gensler repeats several of his constant themes, and also adds some more, drafting off the cynical European outrage over sovereign CDS.
http://jlne.ws/dvXxzx
** Having spoken with him several times, Dr. Pirrong is one of my favorite interview subjects. In this short, sharp deconstruction of Gensler's speech this morning in Boca, he responds to Gensler point by point. Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston.
Four reasons gold will remain firm and strengthen
Mineweb
Blanchard Chairman, Donald Doyle sees numerous reasons that point to gold's nine-year bull run continuing in both the near and long term. In a release put out by Blanchard yesterday, Chairman and CEO, Donald Doyle, points out four signs that the gold price is going to improve.
http://jlne.ws/cLnuan
** Doyle lists out gold fundamentals, focusing on currency risks. Solid, but not revelatory.
Why Nobody Likes Obama's Economic Policies
The Atlantic
Commentary by Daniel Indiviglio]
No one seems to be too thrilled with what President Obama has done for the economy since his term began last year. Conservatives blame him for everything from wasteful stimulus spending to killing the dollar. Liberals say he's catering to Wall Street and has failed to attack unemployment with enough vigor. Mike Dorning at Bloomberg doesn't think this is fair. But no one ever said the intersection of economics and politics was fair.
http://jlne.ws/8ZXZkD
** Indiviglio makes the point that the markets are rallying not because they love Obama's initiatives, but because they are, at this point, completely unrealized. He also looks at several Obama constituencies and how the President is alienating them. Sad but true.
Sovereign debt and the euro: All for one
The Economist
NOW that Greece has given in to pressure from its peers for a more austere budget, the euro zone's policy brass suddenly seems more sympathetic towards its most troubled member. On reflection, perhaps the fault with Greece's parlous public finances lay not just with its budgetary profligacy but also elsewhere: in the absence of a central euro-zone authority for helping out cash-strapped countries; or with the credit-rating agencies that had unhelpfully downgraded Greek government bonds; or with the amoral speculators who had bet against those bonds and helped drive up borrowing costs.
http://jlne.ws/ahWXHs
Jim Rogers: 'Let Greece Fail, It Would Be Good for the Euro'
Seeking Alpha
Commentary by Adam Sharp
I love this guy. In the clip below, he dishes out his patently-straightforward analysis of the Greek debt problem. He demands accountability from the Greeks (and anybody else asking for a bailout), and dismisses concerns that sovereign CDS traders are the problem - "Were they the ones who increased deficits to 12% of GDP?"
http://jlne.ws/c4MaNF
** Includes video of Jim Rogers on Bloomberg TV.
The Gold Standard
Ludwig von Mises - Mises Institute
Men have chosen the precious metals gold and silver for the money service on account of their mineralogical, physical, and chemical features. The use of money in a market economy is a praxeologically necessary fact. That gold -- and not something else -- is used as money is merely a historical fact and as such cannot be conceived by catallactics.
http://jlne.ws/bIk4lS
** A history lesson on European gold and silver standards and the geopolitical implications for those that adopted, and failed to maintain, those standards. Ludwig von Mises was the leader of the Austrian School of economics and a prolific author.
| JLN Metals Scorecard | 3/10/2010 |
| NYSE LIFFE US Total Volume | 30,570 |
| 100 oz. Gold Futures Volumes | |
| NYSE LIFFE US | 4,388 |
| CME/NYMEX (Globex + PNT) | 208,759 |
| CME/NYMEX Open Auction | 16,771 |
| NYSE LIFFE market share | 2.06% |
| NYSE LIFFE US Electronic market share | 2.06% |
| 100 oz. Gold Futures Open Interest | |
| CME/NYMEX | 491,264 |
| NYSE LIFFE US | 2,850 |
| NYSE LIFFE US market share | 0.58% |
| Mini Gold Volume | |
| NYSE LIFFE US | 19,410 |
| CME/NYMEX miNY | 328 |
| CME/NYMEX E-mini | 70 |
| NYSE Liffe market share | 97.99% |
| 5,000 oz. Silver Futures Volume | |
| NYSE LIFFE US | 451 |
| CME/NYMEX | 46,678 |
| NYSE LIFFE US market share | 0.96% |
| Mini Silver Volume | |
| NYSE LIFFE US | 5,029 |
| CME/NYMEX miNY | 53 |
| CME/NYMEX E-mini | 0 |
| NYSE LIFFE US market share | 98.96% |
| Additional Metal Futures Volume statistics | |
| EUREX Gold Futures | 0 |
| TOCOM Gold Futures* | 43,676 |
| TOCOM Mini Gold Futures* | 8,262 |
| TOCOM Silver Futures* | 1,038 |
| MCX India | 63,831 |
| Dubai Gold & Commodities Exchange | 1,611 |
| * Today's date |
| Metal ETFs | Symbol | Volume |
| ProShares Ultra Silver | AGQ | 768,061 |
| Powershares DB Base Metals Fund | DBB | 201,687 |
| Market Vectors Gold Miners | GDX | 16,058,709 |
| MARKET VECTORS JUNIOR | GDXJ | 1,429,197 |
| SPDR Gold Trust | GLD | 21,990,951 |
| ProShares UltraShort Gold | GLL | 605,927 |
| iShares COMEX Gold Trust | IAU | 123,768 |
| ETFS PHYSICAL PLATINUM SHARES | PPLT | 182,845 |
| ETFS PHSYICAL PALLADIUM SHARES | PALL | 167,959 |
| ETFS GOLD TRUST | SGOL | 53,813 |
| ETFS SILVER TRUST | SIVR | 161,871 |
| iShares Silver Trust | SLV | 17,111,855 |
| Market Vectors Steel | SLX | 324,193 |
| ProShares Ultra Gold | UGL | 257,359 |
| ProShares UltraShort Silver | ZSL | 2,540,572 |
| INTENTS FOR DELIVERY | Issues | Stops |
| NYSE LIFFE US | NONE | NONE |
| MARCH 2010 COMEX 100 GOLD FUTURES | ||
| PRUDENTIAL | 8 | |
| NOVA SCOTIA | 10 | |
| JP MORGAN | 1 | |
| RJ OBRIEN | 3 | |
| TOTAL | 11 | 11 |
| MARCH 2010 COMEX 5000 SILVER FUTURES | ||
| PRUDENTIAL | 9 | |
| DEUTSCHE BANK | 1 | |
| NOVA SCOTIA | 82 | |
| JP MORGAN | 25 | |
| JP MORGAN | 136 | |
| TRILAND USA | 34 | |
| FORTIS | 14 | 1 |
| UBS | 2 | |
| TOTAL | 152 | 152 |
Lead Stories
Special report: Are the days of 'big gold' over?
Mineweb
As cash pressures mount, gold majors move to mine the markets, which are proving more lucrative than the mining of gold. Two of the world's biggest three gold miners, Barrick and AngloGold Ashanti, have started moves - no matter how tentative - towards possible constructive disintegration, as pressures continue to mount on gold miners world wide, despite eight successive years of rising dollar gold bullion prices.
http://jlne.ws/a86GAn
** Everything that rises must converge; examines the proposed strategic breakup of large gold mining operations.
Rising inflation likely to spark monetary tightening
Sidney Morning Herald
CHINA'S inflation reached a 16- month high in February, industrial output climbed and new loans exceeded forecasts, adding weight to the case for the government to pare back stimulus measures. Consumer prices rose 2.7 per cent from a year earlier, the National Bureau of Statistics said yesterday. Economists had predicted 2.5 per cent.
http://jlne.ws/bEn3tI
** Even so, inflation is below the 3% target.
China Official: See 2010 Inflation Moderate, Controllable
Dow Jones
Inflation this year will be moderate and controllable, with consumer price index growth to slow in March as seasonal factors fade, National Bureau of Statistics spokesman Sheng Laiyun said Thursday.
http://jlne.ws/bEqIrG
Gold Has Less Luster in China
China Real Time Report - WSJ
The International Monetary Fund last year announced it would sell 403.3 metric tons of gold to raise money for poor countries. This immediately sparked speculation that China would be a major purchaser-and the rumor spread through the market like wild fire. But comments out of China Tuesday seemed to dampen this theory even more than news from the IMF last month. The IMF said in February it would begin selling the remaining 191.3 tons on the market because it couldn't find another central bank buyer.
http://jlne.ws/aiXP2o
** We will continue to follow these non events as they fail to develop.
Futures & ETF News
Singapore bourse to start trading gold contract on March 30
Reuters
Singapore Commodity Exchange, a unit of Singapore Exchange, said it will commence trading of its new gold deferred settlement contract on March 30.
http://jlne.ws/dAZqlY
Copper May Advance to Record on China, Sucden Says
Bloomberg
Copper may rise to a record this year, possibly surpassing $9,000 a metric ton, driven by larger- than-expected imports by China and a revival of demand in Europe and the U.S., according to Sucden Financial Ltd.
http://jlne.ws/bpy7p3
Copper Drops on Investor Concern China May Raise Interest Rates
Bloomberg.com
Copper declined as inflation in China gained at the fastest pace in 16 months, fueling concern that the government and central bank may take further steps to cool the economy, potentially curbing demand for the metal. The June-delivery contract on the Shanghai Futures Exchange fell 2.2 percent to close at 59,310 yuan ($8,689) a metric ton. Copper for three-month delivery on the London Metal Exchange dropped 1 percent to $7,363 at 3:59 p.m. Shanghai time.
http://jlne.ws/avIHme
Behind The Palladium Rally
Hard Assets Investor - Podcasts
Lara Crigger explains the reasons behind the metal's recent rise--and why recent numbers from the Big Three Carmakers could send it even higher.
http://jlne.ws/91NO3I
Play the Chinese Yuan's Fortunes with These ETFs
ETF Trends
The Chinese yuan has been pegged to the fortunes of the U.S. dollar, but that may no longer last. There are two ways to play the yuan with exchange traded funds (ETFs), as interest-rate differentials widen and China adopts a more traditional model of growth.
http://jlne.ws/8XrfBQ
