Gold prices fall sharply on profit-taking and a stronger U.S. dollar. U.S. stocks end higher on upbeat earnings reports. Gold last traded at $1,300 an ounce. Silver at $19.49 an ounce.

As millions of Americans rush to meet tonight’s deadline for filing their federal income taxes; gold has entered a correction, tensions continue to escalate in Ukraine and economic reports raise concerns about the health of the US economy.

The price of gold is off about 2% on technical-driven profit taking today after five days of consecutive gains. Despite the sell-off, there is evidence higher prices are in store.

Richard Ross, global technical strategist at Auerbach Grayson, says today’s correction is providing a good buying opportunity, as the charts are doing something they haven’t done in a while: flash a buy sign.

“There are some signs that make gold very attractive at these levels,” said Ross. “I’m not a gold bug per se but I do like a nice chart and I think that’s what we can see here with gold. It has a lot of things in its favor.”

Pulling out his fundamentals hat, Ross also sees a weaker dollar, lower interest rates and volatility in the equity markets as tailwinds for bullion.

One of the recent bullish indicators for gold has been rising Chinese demand, making China the world’s number one consumer of gold. According to the World Gold Council, that trend will continue over the next few years, with Chinese gold demand rising by another 20% by 2017.

Another factor that could potentially drive global investors to gold as a safe haven is the continuing tension in Ukraine. This tension ramped up yet again today as Russian Prime Minister Dmitry Medvedev said Ukraine was on the verge of civil war as the country launched a military operation against pro-Russian militants in the separatist East.

The government in Kiev is taking the battle to the restive East of the country after armed pro-Russian activists occupied administrative buildings in cities including Donetsk, a regional center of more than 900,000 about 62 miles from the Russian border. An attempt to head off the mounting insurgency may escalate tensions with Russia, which has 40,000 troops massed on Ukraine’s border after its annexation of Crimea last month.

In addition, a Russian fighter jet buzzed a US Navy destroyer in the Black Sea yesterday, making as many as 12 low-level passes over the ship in a clear effort at intimidation.

In more mundane economic news, new economic reports were released today which all show reasons to be concerned about the US economy:

• The Consumer Price Index (CPI) rose 0.2% in March, slightly higher than 0.1% economists had forecast. The Bureau of Labor Statistics said increases in the shelter and food costs accounted for most of the rise. Consumers are especially feeling the hike at the grocer where beef is at a record high and milk, and some vegetables, are also climbing in price.

In fact, beef prices are at their highest levels in 27 years and the drought in California is expected to drive fruit and vegetable prices up across the board anywhere from 14% for corn to 34% for lettuce in coming months.

• Confidence among home builders in the market for new, single-family homes remained in a holding pattern in April, ticking up just one point.

The National Association of Home Builders/Wells Fargo Housing Market Index rose to 47 from a downwardly revised reading of 46 the month before. The reading disappointed analysts who had expected it to rise to 49. A reading of more than 50 indicates more builders view market conditions as favorable than poor. In other words, more builders view market conditions as unfavorable or poor today than favorable.

• U.S. business inventories rose a bit less than expected as sales rebounded, suggesting a slow pace of restocking could weigh on economic growth. The Commerce Department reported that inventories increased 0.4 percent in February after rising by the same margin in January. Economists had forecast inventories increasing 0.5 percent in February.

Businesses accumulated too much stock in the second half of last year and are placing fewer orders with manufacturers while they work through the pile of unsold goods.

Add to these concerns; severe weather, the expiration of long-term unemployment benefits and food stamps cuts … all of which add up to a gloomy forecast for growth.

Gold prices closed slightly lower, but gained for the week as investors worry about the sharp losses on Wall Street. U.S. stocks suffer big weekly loss, Nasdaq now below 4,000. Gold last traded at $1,319 an ounce. Silver at $19.95 an ounce.

Merill Lynch used to be bullish. Not anymore. Bank of America/Merill Lynch is now calling for a “10% to 15% correction” in the US stock market later this year.

They may be a little tardy in their call. All major stock markets around the world are sharply lower today. In fact the Nikkei index in Tokyo saw its largest weekly fall in three years this week. Shanghai and Hong Kong were also down. The news was the same in Europe. And today, all three major US stock indices are down, egged on by a disappointing earnings report from financial services giant JPMorgan.

One famous market expert believes conditions in the stock market will get far worse before they get better. Marc Faber told CNBC yesterday that he expects a crash in the stock market worse than the one experienced in 1987, when the down fell 20%+ in one day. Faber points out that underlying earnings have not supported stock market performance for some time and will eventually precipitate a major sell-off.

Of course exogenous events could touch off such a sell-off in stocks. One possible factor that has been largely forgotten but could re-emerge is the economic crisis in Europe, which has never been truly resolved. A panel of European university economists warned yesterday that the Eurozone debt crisis persists and could re-erupt on a larger scale.

National debt for several European nations remain precarious. Italy’s debt is 130% of its annual GDP. Greece’s is 170%. These conditions are a recipe for disaster if there is an economic downturn. Economists also worry that European politicians act as if the crisis is history and they say that is far from the case. A crisis over the Ukraine, a crisis involving Iran or the impact of a slowdown in the Chinese economy could all create the conditions in which Europe could be dealt an economic catastrophe.

Meanwhile, here in the US, the second sign of rising inflation in the past week appeared. The Producer Price Index was up 0.5% during March, the fastest rate in nine months, owed largely to higher costs experienced by clothing retailers, grocers and wholesalers of chemical goods–a broad base of inflationary pressures.

What’s more, some inflationary pressure could be building in the pipeline. The price of unprocessed goods such as animal feed or sheet metal has risen by 5.8% in the past 12 months, the biggest increase since last summer. If those costs keep rising, they could eventually push up the price of wholesale goods and filter into consumer products.

This could introduce a whole new economic factor into the investment calculus.

Expectations of higher inflation could further buoy gold prices; along with a softening dollar. Banking giant HSBC’s take on the recently released Federal Reserve Open Market Committee meeting minutes was that policies over the near-term would weigh on the dollar and support higher gold prices.

Finally, Harvard University released a study this week indicating that each American worker’s personal share of our government’s national debt is a whopping $106,000. In other words, every employed American would have top pay $106,000 to pay off the national debt. If the debt was spread across every person living in the US, that figure would “only” be $52,000.

Gold prices up over 1% on dovish Fed minutes. U.S. stocks lower on downbeat trade data from China and better-than-expected jobless claims. Gold last traded at $1,320 an ounce. Silver at $20.09 an ounce.

The sell-off in stocks was renewed in earnest today in the wake of minutes from the last Federal Reserve Open Market Committee meeting.

All the major stock indices, particularly the tech-heavy NASDAQ, are sharply lower thus far and the price of gold is up more than $13.

The minutes suggested officials will be cautious on increasing interest rates going forward.

Ordinarily this would buoy stocks, but not right now. The stock market action is being dominated by continuing worries about high-tech stocks and a flurry of disappointing earnings reports.

The Federal Reserve’s flip-flopping statements on monetary policy bode well for gold.

Today the markets were also greeted with the news that claims for unemployment had plunged to their lowest levels since 2007. But, the devil is in the details and the details suggest this number does not represent a trend.

The issue at hand has to deal with seasonality. The drop in jobless claims may be more the result of statistical quirkiness than a dramatic improvement in the job market. The problem is these numbers are notoriously volatile around March and April. Unemployment claims for this time of year are historically impacted by holidays, such as spring break, Easter and Passover. It remains to be seen whether this is the start of a trend.

Meanwhile, China’s economy lost momentum in the first quarter and growth in 2014 could fall short of the government’s official target . This could jeopardize global growth as many world economies are dependent on China for both the supply and demand side of the equation. It is no wonder millions of Chinese are turning to gold.

Gold prices ended slightly lower, but climbed higher after release of Fed minutes. U.S.stocks rally after Fed minutes revealed a more dovish stance than investors expected. Gold last traded at $1,305 an ounce. Silver at $19.77 an ounce.

The stock market has rebounded somewhat over the past two days but there are indications that the sell-off could resume.

Technical analyst Louise Yamada says the stock slide isn’t over just yet.

“I don’t think the pullback is already over,” Yamada, of Louise Yamada Technical Research Advisors, said on Tuesday. “I think that it’s an interim pullback, and we’ve certainly seen what we’ve expected, in the Internet and biotechs coming off. And I think that although they may bounce, there’s probably still a little bit more to go on the downside.”

The selling could spread to other sectors, such as aerospace and consumer discretionary stocks. Yamada says the weakness in stocks lines up well with broader bearish indicators, such as the fact that 2014 started with a weak January, and is a midterm election year.

Another sector that has been in the spotlight recently has been banking. US banking regulators on Tuesday ordered the eight largest “too big to fail” banks to raise capital levels in a bid to address weaknesses seen in the 2008 financial crisis.

Federal Reserve Chair Janet Yellen said the robust capital standards — the banks will need to raise a reported $68 billion in additional capital — were “essential to reduce systemic risk and mitigate the distortions imposed by institutions deemed too big to fail.”

The banks affected are Bank of America, The Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo.

The move is designed to help ensure banks can remain on their feet when the funding market for banks suddenly dries up in a crisis, as happened in 2008, when governments were forced to step in and prop up financial institutions.

This is just the latest sign that there are serious concerns about the health of the banking sector and its ability to withstand an economic and financial crisis.

Let’s face it: you don’t keep ordering banks to prepare for crisis if you don’t have a concern that a crisis is on the way.

The Federal Reserve may be imposing policies on the private sector but the private sector has its own opinion of Federal Reserve policies. Wall Street in particular has been the beneficiary of the Fed’s loose money policies. Now that the Fed is tapering Quantitative Easing and making noises about eventually raising interest rates, Wall Street is protesting.

The latest Fixed Income Forum Survey from global rating agency Fitch Ratings showed that money managers desire the Federal Reserve to maintain their loose monetary policy. According to the data, 70% of the respondents said the Fed’s monetary support is either important or critical.

Rising interest rates are negative for the bond market as they depress the prices of existing bonds.

The money managers also see one major risk to the economy: the labor market. Most believe the employment situation is worse than reported in official statistics–something we’ve been pointing out for months.

There is another long-forgotten factor that may be creeping back into the economy: inflation, in the form of rising prices. Extreme weather has thinned the nation’s cattle herds, roiling the beef supply chain from rancher to restaurant. As a result, beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon.

The retail value of “all-fresh” USDA choice-grade beef jumped to a record $5.28 a pound in February, up from $4.91 the same time a year ago. The same grade of beef cost $3.97 as recently as 2008.

Soaring beef prices are being blamed on years of drought throughout the western and southern U.S. The dry weather has driven up the price of feed such as corn and hay to record highs, forcing many ranchers to sell off their cattle. That briefly created a glut of beef cows for slaughter that has now run dry.

The nation’s cattle population has fallen to 87.7 million, the lowest since 1951, when there were 82.1 million on hand, according to the USDA.

Finally, as we have reported repeatedly over the past several months, there is a long-term trend to supplant or even replace the US dollar as the world’s reserve currency. One candidate to step up into the dollar’s place is the Chinese yuan.

Numerous reports have shown nations declaring interest in or directly discussing diversifying away from the US dollar. Standard Chartered bank notes that at least 40 central banks have invested in the yuan and several more are preparing to do so. The trend is occurring across both emerging markets and developed nation central banks. Perhaps most ominously, for the dollar, is a former-IMF manager’s warning that “The Yuan may become a de facto reserve currency before it is fully convertible.”

Where Can Investors Turn If U.S. Stocks and Banks are Rigged?

4.7.14 – TWO shocking financial news stories hit the wires last week; First, evidence indicates the U.S. stock market may be rigged – front-run by high-speed traders who push stock prices up in a millisecond to skim profits. Second, the world’s 12 largest banks are being sued for rigging the foreign exchange markets over the last decade.

These revelations came as no surprise to those who’ve read, The Great Withdrawal by Craig R. Smith and Lowell Ponte, which details how and why financial market and interest rate manipulation have accelerated because of politicians and central bankers.

However, for nearly one-half of Americans, news of stock market “rigging” is irrelevant because they’ve bailed out of stock investing all together over the past five years.

Regarding banking risks, “Once upon a time – in Norman Rockwell’s ‘hand-shake-confidence’ America – it made good sense to put your money in a rewarding, low interest, near-zero risk bank account,” says Lowell Ponte, a former think-tank futurist.

“But today it no longer makes sense to keep all of your savings in a near-zero reward, high-risk bank account,” say authors Smith, a monetary expert frequently interviewed by Fox’s Neil Cavuto and other major business journalists, and Ponte in their just-released 32-page White Paper titled Don’t Bank On It!

Smith and Ponte clearly identify 19 major bank account risks on the rise today. For example: Did you know that your money deposited in most U.S. banks could be subject to withdrawal restrictions and even confiscation by existing Executive Orders and International Law? And those are just bank risks #1 and #2.

One-third of Americans ignore these risks because they have less than $1,000 in savings. Another one-third of our fellow citizens have less than $25,000 saved, with many assuming that our spendaholic politicians will bail them out.

Smith and Ponte see Progressive economic policies as the key reason most Americans today are living paycheck-to-paycheck, doing all they can just to survive in a world of stagnant wages and rising food, transportation, shelter, clothing and healthcare costs.

“Progressive politicians now feel their power slipping away as Americans are withdrawing from a century of hypnotic control. This is why a desperate Left is turning to naked force – ‘financial repression,’ rule by decree, ‘regulution’ [ideological revolution imposed via regulations], crony capitalism, seizures and wealth redistribution, and politicized government agencies including the IRS and NSA to keep their hold on government power,” write Smith and Ponte in The Great Withdrawal: How the Progressives’ 100-Year Debasement of America and the Dollar Ends (11/13 Idea Factory Press).

“These power grabs will fail,” predicts Craig Smith, “because Progressives are obsessed with obsolete centralization and expansion of government power. Progressives are doomed, even if they cling to power, to rule a nation that their policies have put into an economic death spiral towards a new Dark Age.”

In Don’t Bank On It! (distilled from their book by the same title, scheduled for publication early this summer) you’ll discover key factors that put all American bank accounts at risk. Among these are:

1. Computer Hackers, some of whom have foreign government backing.
2. Identity thieves’ access to accounts often surprisingly easy & unblockable.
3. The dawning age of cyber warfare in which banks will be prime targets.
4. The dawning age of cyber terrorism in which banks will be prime targets.
5. Politicians eager to take the wealth of both banks and depositors.
6. Legal changes that make government confiscation of bank accounts easy.
7. Banks that increasingly resist returning money to account holders.
8. The risk of banks suffering “flash crashes” and other such disruptions.
9. The risk of bank runs by depositors because of fractional-reserve banking.
10. “Financial Repression” practiced by the Federal Reserve.
11. Growing government regulation that makes banks afraid to lend, except to the government.
12. Artificially low interest rates benefiting government, but harming savers.
13. Growing government regulation used to redistribute bank assets.
14. Presidential bank regulation now beyond judicial or legislative restraint.
15. Banks rotting in a stagnant swamp of Federal Reserve excess liquidity.
16. Banks being turned into de facto utilities and ATMs for the government.
17. Politicalization of banks through government pressure.
18. The Federal Deposit Insurance Corporation ability to only replace $1 for every $14 it now claims to insure with its “fractional-reserve” insurance.
19. International Monetary Fund considering a global tax on savers.

This important White Paper, available free upon request, suggests safer, more rewarding alternatives to keeping money in a bank account.

“Some aspect of the financial markets has always been rigged,” admitted CNBC analyst Ron Insana on April 4, 2014. In 1792, Insana notes, a former U.S. Treasury official caused a panic by his attempt to manipulate the market.

“What is new and frightening is the magnitude of risk caused by high-speed computer trading, the sheer size and global machinations of banks, and the nearly limitless power new laws and Executive Orders have put in the hands of politicians,” says Ponte, who long ago was part of the salon of Richard Ney, who in bestsellers such as The Wall Street Jungle and The Wall Street Gang warned of similar dangers.

“Today we are suffering a growing deficit of trust in what we used to believe was reliable – banks, fiduciary institutions, government leaders, and the value of the dollar itself,” says Ponte.

“We need to wake up and smell the new reality – that stocks and savings accounts have become high-risk, low-reward investments. We urgently need to move a portion of our life savings to havens that are safer and more rewarding.”

But with the U.S. stock market and U.S. banks now potentially rigged and highly risky for small investors and bank depositors, how can people secure their life savings and other investments? Smith and Ponte have discovered a strategy to make sure your financial future is secure – no matter how rigged the markets and banks may be.

To schedule interviews with Smith or Ponte, contact Bronwin Barilla at 800-950-2428 or email at

Gold prices end above $1,300 on weaker-than-expected jobs data. U.S. financial stocks, dollar fall sharply after jobs data. Gold last traded at $1,303 an ounce. Silver at $19.95 an ounce.

The Labor Department released the latest employment report this morning and the numbers indicate the jobs market in the US economy continues to be lackluster at best.

The economy created 192,000 jobs in March, better than during the depths of winter but still short of the labor market rebound many experts had been hoping to see last month. The unemployment rate remained flat from last month, at 6.7 percent, while economists had been expecting a drop to 6.6%.

The latest numbers suggest the economy is still failing to achieve the kind of escape velocity that experts and policy makers have long sought.

The labor participation rate actually increased last month, but that means the unemployment rate is unlikely to keep falling going forward because people who are again looking for work are counted as unemployed, while those who have given up and dropped out of the labor force are not.

About 10.5 million Americans remain unemployed, and 36% have been without a job for at least six months. Meanwhile, another 7.4 million people are working part-time, even though they would prefer full-time hours.

A number of economists look past the “main” unemployment rate to a different figure the Bureau of Labor Statistics calls “U-6,” which it defines as “total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers.”

In other words, the unemployed, the underemployed and the discouraged — a rate that still remains high.

The U-6 rate rose in March to 12.7 percent.

The US economy isn’t the only economy showing weakness. Economists are also worried about China.

Emerging markets, increasingly dependent on China for their own growth, may suffer as the world’s second-largest economy decelerates, the International Monetary Fund reported its latest World Economic Outlook released today.

China’s economic issues may be one factor contributing to the growing demand for gold in that country. In 2013, demand for gold in China reached record levels, propelling China past India as the world’s largest consumer of gold.

That demand is sustaining itself.

Chinese gold demand is broad-based, coming from both the government and from individual and institutional investors. Some observers had expected Chinese gold demand to abate this year, but so far that doesn’t appear to be happening.

Gold prices end slightly lower on a higher U.S. dollar after ECB decision. U.S. stocks lower after four days of gains as U.S. jobless claims rise. Gold last traded at $1,284 an ounce. Silver at $19.86 an ounce.

More disappointing economic reports have been released by the US government today as key Wall Street analysts warn of a reversal in the stock market and the financial world continues to wake up to gold’s positive performance thus far in 2014.

The number of Americans filing new claims for unemployment benefits rose more than expected last week. Initial claims for state unemployment benefits increased 16,000 to a seasonally adjusted 326,000, the Labor Department said this morning. Economists polled by Reuters had forecast first-time applications for jobless benefits rising to 317,000. The claims report also showed the number of people still receiving benefits after an initial week of aid rose 22,000 to 2.84 million.

Statistics published by the New York Times also show an especially bleak job market for the medium- and long-term unemployed.

All of this data seemingly fly in the face of claims by Fed Chair Janet Yellen and other members of the Obama administration that the economy is recovering nicely.

Weakness in the US economy tends to drive investors away from dollar-denominated assets and the US stock market, making gold an excellent alternatives as gold has traditionally served as a hedge against weakness in the dollar and has historically moved independently of stocks.

More negative news for the dollar, America’s trade deficit has widened.

The U.S. trade deficit climbed to the highest level in five months in February as demand for American exports fell while imports increased slightly.

The deficit increased to $42.3 billion, which was 7.7 percent above the January imbalance of $39.3 billion, the Commerce Department reported this morning.

A higher trade deficit acts as a drag on economic growth because it means U.S. companies are making less overseas than their foreign competitors are earning in U.S. sales. A higher trade deficit also puts downward pressure on the value of the US dollar, since sending more dollars overseas increases the supply of dollars relative to foreign currencies.

Given this overall economic uncertainty and the length of time since the stock market experienced a significant correction or bear market, it’s no surprise more expert market observers are issuing warnings about the stock market.

The S&P 500 is a mere 10 points away from a 30% plunge, says Saxo Bank’s chief economist Steen Jakobsen.

He expects equities will peak at around 1,900-1,950 before that big plunge kicks in. Given the S&P 500 is hovering around 1,890, that selloff looks like it’s just around the corner. Instead, it could be a long, slow meltdown.

“We’re not looking at this correction for next month or for the next two quarters, this is for late 2014. If you’re looking at it right now, the market may have an upside of 5%, but then you’re looking at a 30% downside in the final month of 2014,” he says. And if investors only have the potential of around 5% upside from here, Jakobsen says it may be worth backing out of equities starting now.

He predicted the S&P would soon suffer from a decline in real corporate earnings, as well as a “very significant” global slowdown.

Jakobsen says equities, unlike other asset classes, haven’t had a proper correction since the first round of quantitative easing began back in 2008.

Statistically speaking, he says, markets have had a correction of 10% almost every year, and 25% to 30% every five years.

By those numbers, the US stock market is due for a fall.

Jim Paulsen of Wells Capital Management forecasts a similar fall, but perhaps more dramatic.

In 37 trading days, the ongoing bull market would be 1,311 trading days old, says Paulsen.

That is a scary date because it was on the 1,311 trading day after the start of the 1982 bull market that the Standard & Poor’s 500 suffered its biggest one-day crash in history on Oct. 19, 1987. That crash snuffed out what had been a powerful market rally starting in 1982.

Normally these kinds of things are just market oddities. But investors are taking this one seriously since there are such strong similarities with the 1982 bull market and the one the market is currently in. For instance, the current bull run has marked a 175% rally from the low, which is where the 1982 bull was at this point in its run, Paulsen says.

Investors won’t have to wait long to know if the 1987 market is a pattern. The current bull run hit its 1,274th trading day on March 31, 2014. The 1,274th trading day of the 1982 bull market was Aug. 25, 1987, which turned out to be a notable top, Paulsen says.

So, where should investors turn?

Gold would be a good place to turn and it has performed admirably thus far in 2014. Investors are starting to notice.


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