Replies to post #307072 on $Stock*Shop*Charts*News*Option$

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(GLD, GDX)Bernanke, Geithner, and Mr. Market All Say Buy Gold Now

Posted on 02/12/10 at 9:57am by Benzinga Staff

The correction in gold prices has clearly unnerved many of the newly-minted gold bugs.

The simple fact gold is not going up $20 a day has sent the “hot money” running for the exits.

Investors willing to wait out the passing storms and keep their eyes on the big prize, however, are going to do exceptionally well.

In fact, this correction is likely creating another great opportunity to reload on your favorite gold stocks.

It’s not just me who’s seeing opportunity in gold stocks now. Secretary Geithner, Chairman Bernanke, and Mr. Market have all recently signaled now is the time to buy gold stocks.

Secretary Geithner: Words that will live in infamy

Over the weekend on ABC’s Sunday political show This Week, the Treasury Secretary took to the airwaves once again with plenty of focus-grouped phrases to attempt to help create the image of how worse the economy would be without the stimulus, bailouts, etc.

It didn’t take long for Geithner to get off script though. Nearly halfway through the interview he started looking ahead into the future and making some bold guarantees.

The following exchange reveals a lot of how the current administration views the massive and growing fiscal deficits and its ability to continue issuing bonds:

Jake Tapper: Is the United States going to lose its triple-A government bond rating? And what happens when the credit markets are no longer willing to buy U.S. debt?

Secretary Geithner: Absolutely not. And that will never happen to this country…

If history is any evidence, when a government representative completely rules out something from happening, it’s pretty much a sure bet it’s only a matter time until it does happen.

That’s why when a reassuring Treasury Secretary says “absolutely not” and “never,” we know the dollar’s fate is pretty much sealed.

Of course, Geithner isn’t alone. The Fed Chairman continues to see the green light to keep to the printing presses running at full speed.

Chairman Bernanke: The only indicator that matters

As we’ve discussed before in Is The Free Money Party Over?, GDP growth, unemployment, and other bits of the financial news media’s “top noise” simply don’t matter too much to the Fed Chairman. The key economic indicator Bernanke is watching is consumer credit.

After all, the economic theory du jour finds deflation as the creation of all economic ills. And simply preventing deflation by any means necessary can prevent a depression and will lead to prosperity and growth.

Despite how many things are wrong with that rationale, we know that means consumer credit growth is what will signal when the Fed starts hiking rates.

Right now, consumer credit is still contracting. Last week the Fed reported consumer credit for the 11th straight month. Consumers cut their debt loads by $1.8 billion in December. That’s a sharp drop from the $21 billion in November, but since it still signals a decline in consumer spending, it’s a green light for the Fed to keep fighting deflation handing out free money.

Mr. Market: Gold stock timing Indicator says “buy”

Bernanke and Geithner are signaling good news for gold is ahead, but it’s Mr. Market who is once again signaling now is the time to get back into gold stocks specifically.

In fact, the market is saying this is the best time to buy gold stocks since the markets were still jumping off their lows last spring.

The chart below shows the how many shares of Market Vectors Gold Miners ETF (NYSE: GDX) an ounce of gold will buy over the past three years:

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per Lobby>FCX $70 Puts

[Stock Lobster]

BL: Multinationals taken aback by Rio Tinto prosecutions

Jane Macartney in Beijing, David Robertson and Alex Spence
February 11, 2010

Chinese authorities have charged four Rio Tinto executives with bribery and violating commercial secrets in a case that is being regarded as a warning to other multinational companies operating in the country.

The so-called Rio Four, as the Australian miner’s executives have become known, are almost certain to stand trial and could face up to seven years in jail. Stern Hu, an Australian citizen and the head of Rio’s iron ore negotiating team in China, and his three Chinese colleagues were arrested last year on espionage and bribery charges.

The Shanghai prosecutor’s office asserted yesterday that the police had gathered sufficient evidence to proceed with charges of bribery and possession of commercial secrets.

Xinhua, the state news agency, said: “The accused four, including Stern Hu, exploited their positions to seek gain for others, and numerous times either sought or illegally accepted massive bribes from a number of Chinese steel firms.”

The move against the Rio executives has sparked fear among foreign businessmen working in China because, they say, the rules on bribery, corruption and espionage are opaque and poorly defined. Companies engaging in what elsewhere might be regarded as normal market intelligence activities could step over an invisible line into corporate espionage.

A leading City lawyer said: “It is extremely worrying. There’s quite a lot of politics and game-playing here.”

Other lawyers and risk consultants operating in China have said that they have been inundated with inquiries from clients about the Rio incident and how it might affect them.

The charges against the Rio Four also show that China is taking anticorruption measures seriously. Jeremy Cole, a partner at Lovells, said: “Just a few years ago only the American regulators were interested in prosecuting corporate executives for bribery. Then the European regulators got in on the act and now the Chinese regulators. These days corporate executives need to watch out wherever they go.”

According to the Shanghai prosecutor’s office, Chinese companies had been the victims of the Rio executives’ activities. Xinhua said: “Many times they used personal inducements and other improper means to obtain commercial secrets from Chinese steel firms, causing serious consequences for the steel firms concerned.”

Wang Hong, lawyer for Zhang Peihong, a Chinese employee of Rio Tinto, said that he was able to see his client frequently and that he was being treated well. The four men were arrested in July on the more serious charges of stealing state secrets, a capital offence in China. However, as the investigation proceeded, the accusations were lowered to industrial espionage, focusing on alleged bribery during high-stakes iron ore contract talks.

Rio Tinto’s China team was responsible for negotiating and managing details of term contracts for iron ore, for which there is a huge demand in the vast Chinese steel industry. They also tracked market information. Rio Tinto maintains that the four have done nothing wrong.

The formal charges come just as China begins annual price talks with Rio Tinto, BHP Billiton and Vale, the big participants in the market.

Last year the China Iron and Steel Association, which took over representing iron ore buyers in the negotiations, failed to reach agreement on iron-ore prices, and top suppliers and mills were left to pay spot prices.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7022665.ece