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Instead of a "botched" event, the Facebook IPO is actually a total success by Wall Street standard, since concerted effort appeared to have been made  to ensure an "acceptable" return for the insiders.

With so many countries vying for the dubious honor of “Sick man of Europe,” ConvergEx's Nic Colas looks at some of the academic literature related to how doctors make sound diagnostic decisions.  The medical profession suffers from many of the challenges we all face in making sound judgments, fighting off inherent biases and shortcuts to make consistent decisions based on the facts.  The one difference is that medical professionals must often make their decisions “On the fly,” with life or death often in the balance.  In contrast, European policymakers have, thus far, had the luxury of time in addressing the region’s challenges.  But if the pace of crisis picks up in the coming months, the ECB/IMF as well as other monetary and fiscal policy bodies will have to move more like an army field surgeon than careful diagnostician. The ongoing challenges in Greece, Spain, Italy and other European countries could be considered either economic malpractice or misdiagnosis. Will they see “Austerity” as the cure for every ailment, or will they remain flexible?  Will they remain overconfident and (potentially) overplay their hand? It is tempting to say that policymakers should follow the Hippocratic Oath and “First, do no harm.”  Sadly, the situation in Europe is beyond that simple recommendation. 

A push by the ECB for the euro zone to stand behind banks suffering from bank runs is slowly gaining traction but the bloc has yet to build backstops to prevent, or cope with, a sudden collapse of confidence in banks and mass deposit withdrawals. Last week, European leaders discussed pan European means of supporting banks, measures the ECB hopes will include a bank resolution fund to deal with the fallout from the wind up or restructuring of a failing bank. But a wave of withdrawals by depositors - either for fear that their government is too weak to stand behind its banks or that their country will exit the euro and forcibly convert their savings into a vastly devalued national currency - would represent a crisis of completely new proportions. Greece’s exit and reversion to their national currency, the drachma, could precipitate electronic bank runs in other periphery nations. The risk is that even savers who may trust their bank as being safe, come to the conclusion that there is a risk that their euro deposits may, in the event of a sovereign crisis, be forcibly converted to drachmas, pesetas, liras, punts and escudos.

While the Spanish government feverishly attempts to wrap up the country’s euphemistic financial system reform, the ever-expanding black holes, multiple balance-sheets restructuring with infinite amounts of public funds and reiterated calls for the need to further consolidate financial institutions seem to be setting up the stage for a self-fulfilling prophecy of Mayan proportions.  Hopefully, this time around, we can learn from the not-so-ancient Mesoamericans’ hard-learnt lessons of the dangers implied in the state breaking the rules of free market capitalism when bailing out institutions and interest groups at the taxpayers’ expense. If we don’t, at least the endgame should not take anyone by surprise.

A reminder of the sharp increase in demand for gold and silver, particularly store of wealth demand, in recent years was seen in the figures released by the China Nonferrous Metals Industry Association in Shanghai today. China’s gold consumption rose 33% to 761 tons in 2011 and China’s silver consumption rose 6.8% to 6,088 tons last year. China’s gold consumption rose 190 metric tons last year to 761 tons, Wang Shengbin, China Gold Association Vice Chairman, said in a speech in Shanghai as reported by Bloomberg. China’s jewelry consumption jumped 28 % to 456.7 tons last year, gold bar consumption surged 51% to 213.9 tons and gold coin consumption gained 25% to 20.8 tons, Wang said. China’s silver consumption, including industrial use, jewelry and coins, rose 6.8% to 6,088 metric tons last year, the vice chairman said. The amount shows a surplus given China’s output of 12,348 tons last year, which gained 6.3%, Wang said.

Today, the deputy chairman of Russia's central bank, Sergey Shvetsov, said that the Bank of Russia plans to keep buying gold on the domestic market in order to diversify their foreign exchange reserves.   "Last year we bought about 100 tonnes. This year it will be less but still a considerable figure," Shvetsov told Reuters on the sidelines of a financial conference in Milan. Russia's gold and foreign exchange reserves fell to $514.3 billion in the week ending May 18, from $518.8 billion a week earlier. However, they have risen from the $498.6 billion seen at the end of 2011. Yesterday, Shvetsov said that Greece has plans for a parallel currency and that it is a “necessity” for Greece to leave the euro.

Gold’s London AM fix this morning was USD 1,558.50, EUR 1,239.27, and GBP 993.62 per ounce. Yesterday's AM fix this morning was USD 1,555.00, EUR 1,229.44, and GBP 989.56 per ounce.
Gold fell $5.60 or 0.36% in New York yesterday and closed at $1,561.20/oz. Gold has been trading sideways in Asia and was slightly lower in Europe prior to buying which saw gold rise to about the close in New York yesterday. 

Now that talk of NEW QE is once again all the rage, and with the FOMC's June meeting in less than a month, and since there is nothing that anyone can do, short of a revolution to prevent this (with half the country obese, and the other half hypnotized by the Kardashians or on disability, that ain't happening), it only makes sense to join them since we can't beat them. Which is why we are officially launching the "POMO For The Rest Of Us" initiative. Beginning today, we will collate readers' ideas based on twitter posts with the #POMOList hashtag, which we naturally suggest be addressed to the @FederalReserve twitter account as we wouldn't want the good central planners at the Fed to be unaware of what the general population demands be monetized in the next imminent iteration of an utterly idiotic activity which does absolutely the same as every year before, while hoping for a different result.

It just never gets old...

Gold’s London AM fix this morning was USD 1,555.00, EUR 1,229.44, and GBP 989.56 per ounce. Yesterday's AM fix this morning was USD 1,575.75, EUR 1,233.95, and GBP 998.76 per ounce.

Gold fell $26.20 or 1.64% in New York yesterday and closed at $1,566.80/oz. Gold fell in Asia and those falls continued in Europe where gold has been trading in a $16 range.

A panel of the Swiss parliament is discussing the introduction of the parallel ‘Gold franc’ currency. Bloomberg has picked up on the news which was reported by Neue Luzerner Zeitung. The Swiss parliament panel will discuss a proposal aimed at introducing a new currency, or a so-called gold franc. Under the proposal, which will be debated in the lower house’s economic panel in Bern today, one coin in gold would be worth about 5 Swiss francs ($5.30), the Swiss newspaper reported. The Swiss franc would remain the official currency, the paper said. The proposal may lead to a wider debate about the Swiss franc and the role gold might again play to protect the Swiss franc from currency debasement. The initiative is part of the “Healthy Currency” campaign which is being promoted by the country’s biggest party – the conservative Swiss People’s Party (SVP).

Because Banning Propaganda “Ties the Hands of America’s Diplomatic Officials, Military, and Others by Inhibiting Our Ability to Effectively Communicate In a Credible Way”

Gold Has Fallen Due To:

• Gold’s recent weakness is in large part due to a period of recent dollar strength. While gold in dollar terms has fallen by 25% ($1,920 to $1,540), gold in euro terms is only down by 14% (from €1,374/oz to €1,210/oz). 
• Oil weakness – since the end of February, oil has fallen from $111 a barrel to below $95 a barrel (NYMEX) today. Gold and oil are often correlated and many buy gold to hedge inflation that comes from higher oil prices.
• Gold’s weakness may also have been due to wholesale liquidation in all risk markets due another bout of "risk off" which has seen global equities and commodities all come under pressure.
• Physical demand from retail investors in the western world has slowed down as did demand from India in recent weeks due to the increase in taxes on bullion (since removed).
• Much of the selling has been technical in nature – whereby more speculative elements on the COMEX who trade gold on a proprietary basis have been selling gold due to the recent price weakness and the short term trend clearly being down. This has led to speculative longs now having their smallest positions since December 2008.

Gold rose for its 2nd day on concerns that Europe’s debt crisis is growing and the yellow metal is once again seeing increased demand as a safe haven asset. Fitch's downgrade of Greece's credit rating sent the euro to a 4 month low against the dollar and investors wonder if Greece will be able to continue in the EU fiscal union.  The gold price jumped over $30 yesterday its most since January, and news from a US report on manufacturing in Philadelphia showed contraction for the first time in over 2 quarters. Moody's Investor Service downgraded 16 Spanish banks yesterday, including Banco Santander, the euro zone's largest bank.  All the banks' long-term debt ratings were decreased by at least one grade and some suffered three-grade cuts.  This is just days after Moody's downgrade of 26 Italian banks on Monday. Spain's banks like those in other EU countries (PIIGS) have been left with a sea of bad loans after the real estate bubble burst and investors see a state bailout as extremely difficult in light of the country’s limited public finances.

 A recent IMF working paper predicts a permanent doubling of real oil prices over the coming decade.  However, the "peak oil labor" could be just enough to tip the scale for the doubling in oil price scenario a lot sooner than year 2022.