In portuguese CARA means Face.

Have a nice weekend

Bill,

India's Central Bank had done the same thing - raised CRR by 0.5% - 2-3 weeks ago. While looking for that news, I found the following link:

http://www.cattlenetwork.com/content.asp?contentid=105597

Once again, Bill, you explain market action with logic. As no one else does (can).
Bless you, my friend, I sleep so much better these days.

Bill, Nice story but the gold price was looking toppy and correction was expected.

I need to study the charts and see where the bottom might be.

Bill,

Thanks to you my wife and I will have a better retirement than if I hadn't found your site. Stop the hurting, and keep on doing what you do best.

mrmockbird

Hi Bill,

The following are important dates concerning central banks and policies.

March 6, Reserve Bank of Austrailia
March 7, Bank of England
March 8, Bank of England
March 8, Reserve Bank of New Zealand
March 8, ECB meets

ALOHA !!

Interesting that the PBOC news release does not mention if the CCR rates were an increase on transaction deposits(M1) or time deposits(M2). Same for the article on India's Reserve Bank posted by Rick. Transaction deposits are for accounts that are "checkable", meaning you can write a check for payments. Time deposits are CD accounts where there is a time limit on withdrawls which also includes savings accounts. Here in the USA the CCR for transaction deposits is 10% and the CCR for time deposits is ZERO!!! Thats right "zero" funds in reserve. What is the CCR on time deposits(M1) in China and India?Imagine what would happen if there was suddenly a run on US banks like in 1929? Luckily since Americans have a negative savings rate(-1.5)the Fed would not have to print up too much!

Then there is the repo(repurchase agreement) which operates in the open market, where central banks can get around the CCR by simply increasing money supply (liquidity)temporarily via electronic means. Repos are mostly used to purchase government bonds, foreign currency, securities or gold. Rarely if ever does the reserve bank issue a reverse repo which in effect means those same securities are then sold and money supply is destroyed(at least in the US). This is how the FED pumps the DOW here in the USA.

Therein lies the descrepency. I believe the little guy in China decided to sell his "stocks" rather than his "gold". The Chinese are inherently more interested in preserving wealth so that would mean holding gold not selling it. The typical American only knows gold on fingers and on teeth not as "money"!! Once again "reserve currency" status is to blame there ... add in FED and Wall Street media spin!

Of course the real driver for increased liquidity cannot be the little guy but the BIG central government who is now engaged in a huge military buid-up in China as well as rebuilding Beijing for a two week circus called the "Olympics" ... It goes to show you BIG governments are the same all over the World. The little guys creates the wealth and the BIG government destroys it via huge "spending" projects! Ever wonder what the US dollar and economy would look like without military bases in 134 countries and two ongoing wars? To get a glimpse look at Switzerland ... no huge standing army there, only militias. Perhaps that is why the Swiss Franc has a high value.

Oh and "cara" in Spanish also means face ...

ALOHA !!

I can see only one main culprit for the gold take down! The US Federal Reserve via their agents JP Morgan and Goldman Suchs. You cannot have gold as a safe harbor while the Shanghai Index and the DOW tanks. When the trigger in China started all the World stock markets tanked so that was a perfect cover to take gold down since everyone has been brainwashed into thinking gold is a commodity like copper or pork bellies. The FED starts the sell off but the speculators intensify the sell off especially margined speculators.

The average investor in the US only seems to believe there are only four places to invest. They are ... stocks, bonds, real estate and CDs. While real estate is a hard asset it is secured by a "soft asset" ... a mortgage. What is a mortgage? Simple put a paper loan, a debt instrument secured by yet another debt instrument known as the US dollar! Think you own real estate ... a hard asset? You own nothing if you own a mortgage! Even if you paid off your home you still do not own it unless you have an "alloidial title" ... In other words without "alloidial title" your property can be seized and sold even if you paid off your mortgage to settle a property tax lien. If you do not pay your property tax you lose your home paid for or not! Only an "alloidial title" exempts you from property taxes, but does not exempt anyone from eminent domain. Long live the "King"!! An FYI ... most states in the USA either exempt or reduce property tax rates for agricultural properties like farms. That is why I live on a farm here in Hawaii. For five acres zoned A1(oceanview), a house and a business my annual property taxes are only $398USD. I am a legitimate farmer with an orchid, tropical flower and foliage nursery where we sell on the internet shipping to the USA and Canada. We also sell wholesale for weddings and businesses, companies like the Mirage Hotel in Las Vegas, The Fairmont in SF and Disney Studios, Denver Broncos, Geoffrey Beene NYC, Gallerie Elektra Sausalito,CA(shameless plug). Some here in Hawaii are not legitimate trying to take advantage of lower property tax rates.

This is why I consider gold and silver important to own ... In the simplest terms monetary metals are a hedge against fiat ... a hedge against government spending! The entire US financial system is essentially a house of cards based on paper assets backed by DEBT(US Dollar)!!! BATTA BING!! In a collapse there is NO safe asset except "gold" or "gold stock certificates".

It may interest you that during the hyperinflationary period of the Weimar Republic(Germany in the 1920s) stock certificates were traded like money and were considered more valuable than marks because you had "title" to a hard asset. When you hold a fiat dollar you have title to government "debt" an IOU.

"CHINESE CREDIT

When stocks go down hard, bonds rally, the USDollar drops hard, but gold & silver are also hit, the cause is usually not hard to discern. Massive liquidity drains hit suddenly, taking money out of all long positions except bonds. Safe haven is sought in bonds. Rarely is the initial cause what is reported. This time it was the hard 9% hit endured in Chinese stocks after pressures mounted to curb certain credit abuse among investors. Even condo dwellers in China were borrowing against their equity in order to invest in stocks! One would think such stupidity is the sole province of witless steroid driven Americans. Not so. The most obvious and immediate story to point to as the cause was China. Therefore dismiss it as the actual principal cause. We are approaching the June 2008 Summer Olympic games though, but that date is still far off. Their expansion continues. The showcase is not yet ready for prime time. One must wonder if Goldman Sachs and the US Dept of Treasury won some compromise from Beijing leaders in the vacuous empty Strategic Dialog last late November. Perhaps GSax convinced the Chinese leaders to be more careful with credit abuse in financial markets. Perhaps GSax won a favor from the ICBC stock launch, and they called in a favor in the form of scaring the bejesus out of financial markets, just to keep them in check. It is difficult to properly gauge the sequence of guided events, what with trade protection ratcheting forward, big bank IPO launches occurring, banking reform urged, currency controls pressed to be released slowly, and a brand spanking new $200 billion official "kitty" for investing the gigantic mammoth gargantuan $1 trillion Chinese FOREX reserve account. Perhaps Chinese leaders want to go on a buying spree with that $200 billion only after prices come down on speculative investments. China is a maelstrom of events. My gut says the Chinese keep the game going, since the only constant, it seems, is an uneasy labor force eager to exit rurals and enter urbans in order to improve their lifestyles. Few Americans fully appreciate this powerful political factor."