Wall Street Journal

In one of the most coherent take-downs of the government's data gatherers, economists, reporters, and the general investing public that soak up the propaganda spewed forth by the former, TrimTab's CEO Charles Biderman destroys today's 'Advance' retail sales, and crushes the Census Bureau's process. Needing little additional comment, we can only hope that the 'ignorance is bliss' approach of the mainstream media and self-serving talking heads is at least questioned by the broad investing public when they hear the sense that Biderman speaks with regard to the antiquated methodologies used to gather data and the factual destruction of Wall Street Journal "I am the law" headlines straight off the government's press releases. The simple fact is that while anyone suggesting the government's data may not be accurate is dismissed as a tin-foil-hat-wearing conspiracy theorist (Goldman Sachs client 'muppetry', high-frequency-trading liquidity destruction, rehypothecation and shadow-banking deleveraging, LTRO-Stigma, and real European sovereign balance sheet aside for example), when faced with the facts - the unadulterated numbers - it is hard to argue with tough reality; leaving only the shrug, 'money-on-the-sidelines', 'trend-is-your-friend', 'retail not participating yet', self-fulfilling mutual masturbation that is now become our virtuous circle of reporting, government data, and sell-side economists.

"In the last three plus years, central banks have had little choice but to do the unsustainable in order to sustain the unsustainable until others do the sustainable to restore sustainability!" is how PIMCO's El-Erian introduces the game-theoretic catastrophe that is potentially occurring around us. In a lecture to the St.Louis Fed, the moustachioed maestro of monetary munificence states "let me say right here that the analysis will suggest that central banks can no longer – indeed, should no longer – carry the bulk of the policy burden" and "it is a recognition of the declining effectiveness of central banks’ tools in countering deleveraging forces amid impediments to growth that dominate the outlook. It is also about the growing risk of collateral damage and unintended circumstances." It appears that we have reached the legitimate point of – and the need for – much greater debate on whether the benefits of such unusual central bank activism sufficiently justify the costs and risks. This is not an issue of central banks’ desire to do good in a world facing an “unusually uncertain” outlook. Rather, it relates to questions about diminishing returns and the eroding potency of the current policy stances. The question is will investors remain "numb and sedated…. by the money sloshing around the system?" or will "the welfare of millions in the United States, if not billions of people around the world, will have suffered greatly if central banks end up in the unpleasant position of having to clean up after a parade of advanced nations that headed straight into a global recession and a disorderly debt deflation." Of course, it is a rhetorical question.

Butler on Blythe

And the government is trying to catch up.

A lot.

It’s important to put yourself in the minds of OECD policy makers. They are largely managing a retirement class that is moving out of the workforce and looking to draw upon its savings -- savings that are (mostly) in real estate, bonds, and equities. Given this demographic reality, growth in nominal terms is undoubtedly the new policy of the West. While a 'nominal GDP targeting' approach has been officially rejected (so far), don't believe it. Reflationary policy aimed at sustaining asset prices at high levels will continue to be the policy going forward.  While it’s unclear how long a post-credit bubble world can sustain such period of forced growth, what is perfectly clear is that oil is no longer available to fund such growth. For the seventh year since 2005, global oil production in 2011 failed to surpass 74 mbpd (million barrels per day) on an annual basis. But while the West is set to dote upon its retirement class for many years to come, the five billion people in the developing world are ready to undertake the next leg of their industrial growth. They are already using oil at the margin as their populations urbanize. But as the developing world comes on board as new users of petroleum, they still need growing resources of other energy to fund the new growth which now lies ahead of them. This unchangeable fact sets the world on an inexorable path: a competitive race for BTU.

Dr. Constantin Gurdgiev, a non Executive member of the GoldCore Investment Committee, has again analysed the data of US Mint coin sales in  Q1 2012 and has looked at the data in their important historical context going back to 1987.  He finds that the data regarding gold coin sales in Q1 2012 confirms that there is “no hysteria and no bubble here”.  Dr Gurdgiev finds that while volume of sales in Q1 2012 fell from the quite high levels seen Q1 2009, 2010 and 2011, demand was much stronger than “in the pre-crisis average for 2000-2007.” Also of note is the fact that despite the worst financial and economic crisis the modern world has ever seen being experienced since 2008 demand has remained below the record levels seen in the aftermath of the Asian debt crisis and unfounded Y2K concerns.  Interestingly, Dr Gurdgiev finds that the historic data (since 1987) shows that the "gold price has virtually nothing to do with demand for US Mint coins - in terms of volume of gold sold via coins." He finds that the demand for gold coins has little to do with the price in general and that “something other than price movements drives demand for coins”.

The price of gold is being actively managed by central planners and their proxies. The main culprit here appears to be the US authorities, as the manipulation is most apparent in the US open gold market. For the most part, this 'management' has resulted in letting the price of gold rise, but not too much, or too quickly.  The price of gold has always been an object of interest for governments and central bankers. The reason is simple enough to understand: Gold is an objective measure of the degree to which fiat money is being managed well or managed poorly. As such, whenever paper money is being governed poorly, the price of gold becomes an important barometer. And this is why the actual price of gold is a strong candidate to be 'managed.' Or 'influenced'. Or 'manipulated'. Whichever word you prefer, they all convey the same intent. Some who are reading this are likely having an eye-rolling moment because they hold a belief that there is no conspiracy to manage the price of gold. This is an interesting belief to hold because it runs heavily against the odds. We could spend a lot of time discussing how a belief such as 'gold is not being manipulated' gets promoted and inserted into the popular consciousness, but we won't. Instead, we'll simply note that the people who hold this belief -- and you may be among them -- react to the concept at a visceral level, often with strong emotions such as anger or contempt, and even anxiety. When a strong emotional response surfaces during a conversation of ideas, it usually means that beliefs are in play -- neither facts nor logic. Experience has taught me that when someone becomes dismissive or angry or hostile when the idea of price manipulation is discussed, it's best to simply drop the conversation and move on. No combination of logic or facts is effective against a deeply-held belief. It's better to wait until some new evidence calls that belief into question, opening the door for revisiting the topic. But for those with an open mind, there is a very interesting trail of dots to connect.

Few men have a resume quite like Jon Corzine.  Not only has Corzine served in the U.S. Senate and been governor of New Jersey, he has also been the CEO of Goldman Sachs and the recently imploded brokerage firm MF Global.   The insider blood filtrated through cronyism and the endless squandering of the public dime flows heavily through his veins. When MF Global went belly up back in the fall, Corzine was finally revealed for the inept, overly connected bureaucrat he really is.  Corruption seemingly follows the former Senator, Governor, and banker like shadows on a sunny day.  Earlier this week, New Jersey was declared the least corruptible state in the union much to the surprise of, well, everyone.  But as the great Jonathan Weil pointed out, the methodology in the study conducted by the Center for Public Integrity was horribly flawed.

All you need to read and some more.

BarCap said it expects precious metals to be one of the commodity price leaders in the second quarter, citing the "resumption of the kind of currency debasement/inflation concerns that have been the big driver of gold and silver prices over the past 12 months". It recommended that investors take a long position in December 2012 palladium, saying lower Russian exports should push the market into a supply deficit and bring prices "significantly above current levels" by later this year. BarCap put a second-quarter price of $745 per ounce for palladium futures on the London Metal Exchange, versus the past four weeks' average of $701. Spot palladium on the LME hit a session bottom below $645 on Thursday.

Jewelers in India are protesting the tax hike on gold imports and plan to keep their shops closed for two more days. This is India’s first nationwide strike in seven years and shows how important the gold industry is in India. The excise duty hike is expected to lead to less demand however Indian demand may again prove to be robust despite tax increases. PDR Gold Trust, the world's largest gold-backed ETF, said its gold holdings remained unchanged at 1,293.268 metric tonnes for the 5th straight session on Monday, despite the drop in prices last week. Gold will have a “sharp” rally as the U.S. boosts monetary stimulus because of a faltering economy in the coming months, Societe Generale said in a report that was picked up by Bloomberg. Data on U.S. gross domestic product in the first and second quarters will “surprise dramatically to the downside,” the bank said today in a report. Meanwhile, ANZ has said that central bank gold buying may lead to a nominal gold record price in 2012 and prices to average $1,744/oz from $1,571/oz in 2011.

Gold traded lower on Friday, moving towards a third straight week of losses on the backdrop of a recovering US economy, which prompted investors to put their money in other vehicles, while India’s plan to double the import duty on gold bullion erased some early gains. On news that Finance Minister Pranab Mukherjee proposed to double the 4% customs duty on gold from April 2012, physical dealers saw some panic buying from India, the world’s largest gold consumer. In January, India raised the gold import duty 90% and doubled the tax on silver as the government is struggling with a growing fiscal deficit and looked to increase revenues. Growing subsidies for fuel and food have left the government struggling to meet its budget target.  Indian investors, who are the largest consumer group of gold in the world, rushed to buy gold in advance of the government’s plan to increase the 4% customs tax in April 2012. The resulting gains where then eroded by stronger then expected US economic growth numbers.  

• Tapping oil from the SPR may be trickier than ever (Reuters)
• Why Quantitative Easing Is The Only Game in Town: Martin Wolf (FT)
• Lacker Says Fed May Need to Raise Target Interest Rate in 2013 (Bloomberg)
• Japan Debt-Financing Concern Clouds BOJ’s Bond Buying (Bloomberg) No worries - US will just buy Japan's bonds
• IMF Approves €28bn Loan to Greece (FT)
• Banks Want Fed to Iron Out 'Maiden' (WSJ)
• China 'Wealth Exodus' Underestimated (China Daily)
• Geithner Calls For Reforms to Boost Growth (FT)
• China Adds Treasuries For First Time Since July on Europe Woes (Bloomberg)
• Osborne Weighs 50p Tax Rate Cut To 45p (FT)

Yet another whistleblower has stepped up, this time one already known to the general public, and one that Zero Hedge covered just over a month ago: we refer to the case of former CBO worker, Lan T. Pham, who, as the WSJ described in early February, "alleges she was terminated [by the CBO] after 2½ months for sharing pessimistic outlooks for the banking and housing sectors in 2010" and who "alleges supervisors stifled opinions that contradicted economic fixes endorsed by some on Wall Street, including research from a Morgan Stanley economist who served as a CBO adviser." As we observed in February, "what is most troubling is if indeed the CBO is nothing but merely another front for Wall Street to work its propaganda magic on the administration. Because at the core of every policy are numbers, usually with dollar signs in front of them, numbers which have to make sense and have to be projected into the future, no matter how grossly laughable the resultant hockeystick." As it turns out, somewhat expectedly, the WSJ version of events was incomplete. There is much more to this very important story, one which has major implications over "impartial" policy decisionmaking, and as a result, Ms. Pham has approached Zero Hedge to share her full story with the public.