Weekly Infinium Strategic Plan 11/20/2011 Chuck Whitman Trading Plan Current environment: Sideways/Normal Most markets continue

to stay in sideways ranges. We

saw last week some markets that flirted with breaking to the upside (WTI, ES) fail and break hard during the week. This just affirmed the environment. I think we will see volumes continue to decline and ranges continue to contract. There are runaway markets down in NG, Cocoa, Soybeans, and Soybean Meal. Cocoa looks like a solid short. NG is searching for an exhaust bottom and is near many long term price targets. Soybeans and Soybean Meal have some major divergences and last week s lows might have been the low for the move.

Summary: European yields continue to remain high. France rates continued to climb last week and if
they continue to do so will really spook markets. Having said that though, once again the markets are reinforcing the sideways environment, because they can t break in the presence of very bad news. After all the issues with rising rates in Europe and now the failure of the SuperCommittee here in the US, the markets are still hanging in. I think it will take a major downside shock for the markets to break their recent lows. This week will be Thanksgiving week and trade will likely be done by Tuesday close or Wednesday morning. I think many hedge funds are going to be packing up for the year. I don t think anyone thinks they can make their year in the next 6 weeks. I think they will be very conservative and try and get through until Jan 2012. We need to be mindful that we might have a really slow 6 weeks. How are we going to make money over the next 6 weeks?? Get your risk down as much as possible and focus on grinding it out and benefitting from strategies that do well in sideways/contracting vol environments.

Top Trading Markets for Week of 11/14-11/18: Longs: Shorts:  NG  CC ___________________________________________

Top Trading Ideas for Week of 11/7-11/11: Longs:  Weekly/Daily  Qtrly/Monthly Shorts:  Weekly/Daily o ES in Weekly B2 (1242-1274) o SM in Weekly B3 (299-304.70) o CC in Weekly B2 (2464-2523)  Qtrly/Monthly Spreads  +ARA/-BRN  +BO/-SM  +S/-SM  +PL/-PA Open Positions:  -NGZ stop @ 3.461

We covered our +CL/-BRN spread on a tight stop when it went through -9.00. We covered our SM on a tight stop after the divergent retest down. We were stopped out on NEM after we bought it on the BO up. We were stopped out on in ARA after a breakout up. We will be focusing on spreads in some of these markets that both are sideways.

Plan Commentary
Liquidity Cycle: Long term cycles, liquidity cycles, Presidential and other cyclical behavior is all being swamped beneath the risk on/off noise tied to the ongoing failure of courage in the political arenas of Europe and the United States. The current consensus is the Euro zone is mortally wounded unless and until the Germans agree to monetary debasement and the abandonment of any monetary integrity. I beg to disagree. I believe the frog is already in the pan and the German s only choice is how fast to boil the water. This chart indicates the potential contraction in the Eurozone economy that bond spreads are forecasting. Those levels are below the lows in the 2008 crisis.

Meanwhile back in Washington the feather their own nest crowd of lobbyists and congressmen continue to fiddle while solvency burns. The corruption has never been highlighted as well as today when I saw articles describing that Ex-Frontpoint manager Skowron gets five years in prison for insider trading ( Bloomberg) and dozens of articles on routine insider trading by elected officials for which they cannot be punished. They cannot be punished because they have written laws that allow them cheat. Uncertainty surrounding the very survival of the Euro zone and the deadline of the Super committee recommendations this Wednesday will dominate the week and overwhelm cyclical behavior . There have been some positive economic reports recently that will strengthen rallies in equity markets in the US and Asia if the news flow allows a risk on phase to get started. But Thanksgiving typically sees the start of declining holiday volume and reduced positioning by hedge funds creating thin and treacherous conditions even in normal years.

The liquidity cycle indicator continues to be confirmed by the ECRI Index of weekly leading indicators but short term risk on risk off behavior is more dominant. I expect strong equity rallies on good news but I don t expect good news. The chart to the right is a comparison of the US liquidity cycle indicator with a global version of the same kind. Since spring the US has very modestly out performed I expect tha to continue as Asian markets adjust to lower growth in Europe which looks to lag well behind other regions. The chart on the following page is of the US Treasury 10 year yields. I highlighted the period just before the date of the debt ceiling vote. Consensus views were that the arguing would come down to the last few days and then pass that gave every congressional gas bag some tv airtime. I agreed with that scenario and it was not to be. The markets were taken by surprise and panicked. Price action this last week reminded me of that period, but advanced a few days. All indications are nothing has been accomplished and if anything does happen by Wednesday the 23rd it will require accounting sleight of hand and empty rhetoric. The debt ceiling event hints at the potential for volatility.

Here is a list of 10 yr yields in the Eurozone and the spread versus the US. Several changes over the last year are notable

German spreads to the US have moved above the yearly average and only Ireland is still below its yearly average. Austria France Belgium and the EFSF have all moved sharply away from the safe zone spread levels they held early this year. Market rates make the AAA rating of French securities appear absurd compared to the downgraded US rating. The rating agencies will be compelled to re-rate France very soon. Only political pressure has prevented this from occurring already. The spreading contagion in Europe is obvious in the recent price action of yields in in formerly safe France and the renewed worries in Spain. Yields across Europe are flaring up except Germany, so far.

Elsewhere trends are the opposite as the fight against inflation had pushed yields higher last year. Now reduced food inflation fears combined with lower demand for basic materials, has allowed interest rates in the Asia Pacific region to soften. Australia and S Korea are examples. CRB Index also dropped.

China became very concerned with food inflation and initiated tighter conditions to cool down the bubbling growth in real estate and retard the extraordinary pace of economic growth. The chart of slowing the M2y/y% rate of change illustrates the sustained monetary tightening.

The markets are looking for signs the Chinese authorities have achieved most of the desired slowdown and now risk a hard landing if policies are not eased soon. A few published comments and news items so appear to hint that such a policy change is being reluctantly implemented. Much of the focus on China right now is searching for confirmation of policy turns toward easier monetary conditions. Equity markets will respond favorably to confirming evidence.

Items of Interest and Commentary

David Fuller asks a German Economist and friend to comment on the attitude of the German man on the street about the Euro sovereign crises. I found his answer quite surprising.

"With so many momentous decisions to be taken within the EU, I wondered how you and your fellow citizens view the situation as it is unfolding. Do you see the end game, in terms of how all of this will play out? I sent the email above to a Bavarian friend, Erwin Grandinger, yesterday evening. I did so because I do not always trust American or British views on the eurozone, including my own. Brits in particular have issues with the euro, which I understand and often share, but they can impede our objectivity in the current crisis.
Veteran subscribers will know of Erwin Grandinger as his views have appeared in Fullermoney over the years, he is an independent political economist and consultant at EPM Group Berlin. He has also been a guest columnist with the German daily DIE WELT for over 12 years. Dr Grandinger's acclaimed book: "Beyond Repair: Germany in the Midst of Systemic Change", published in March 2010, discusses problems in the welfare state.

Here is the opening from Erwin Grandinger's detailed and illuminating reply to my email above: "There is a clear disconnect between what fund managers think / believe, and what is happening on German streets. "The virtual world (financial markets) believe they experience a crisis and are partially in panic (how do you explain the German-Austrian 10 yr. yield spread explosion?). The real world (German voters) has, in general, not the slightest concern when it comes down to the "Euro". Nice theme on TV, but does not existent in your daily life. "Take the city state of Berlin. The city has more debt than Argentina (over EUR 60bn). But the new SPD-CDU Berlin coalition government has just agreed to employ another 11.000 civil servants, and has come up with all sorts of welfare state goodies for voters... No sign of "austerity"... There are only 12 companies in Berlin that employ more than 500 employees... Unlike Argentina, Berlin has no underlying business model, except tourism (exactly like Greece)... "A tiny portion of Germans try to copycat the "occupy"-movement, but these guys are organized by the usual left-wing suspects (Greenpeace, Green Party, attack movement, etc.) which do know how to exploit anti-market, anti-capitalistic sentiment in Germany (certainly prevailing for a long period of time). "Lehman" 2008 simply re-confirmed their views. "However, one aspect of the drama has become very apparent: the politicians have successfully managed to blame the "banks" in total for all the ongoing trouble. "Bad governance" by German / European governments regarding fiscal policies is not discussed. The "banks" have caused all of these problems... No one discusses the excessive, debt-driven welfare states (organized by generations of politicians) in Europe that have reached the limits of refinancing while their respective demographics are deteriorating. "So, while a huge part of the Germans may not like the "Euro" (see many polls), the same huge part is not at all concerned about the stability of the currency and/or places like Italy. As you David have mentioned before, debt de-leveraging can take many years. Therefore the name of the game in Europe / the Eurozone is and can only be "muddling through", given the number of countries and political decision-makers involved. There is no quick fix and everybody understands this. "Also, all lip-service apart, when push comes to shove German politicians expect the ECB to jump in and buy sovereign bonds directly. That is what I hear all the time here in Berlin. The "options" are: temporarily higher inflation (good to reduce government debt and to expropriate savers) or a defunct financial system. Politicians, Bundesbank and the ECB will of course go for the former. Buying sovereign bonds directly, truly, will only happen in the very last "second", i.e. when the "virtual" crisis has become a "real" crisis (from a German perspective, since the country is booming economically & mentally). The ECB and the Bundesbank (playing good guy, bad guy) need to keep the pressure up (Italy, Spain, etc.) as long as possible to enforce domestic political reforms (Italy, Greece)... When all options are exhausted, and only when, then the ECB will act more forcefully in my view. "As an independent advisor and analyst here in Berlin I have also experienced a gradual, but very slow learning curve by Berlin politicians when we talk about the "Euro" crisis. In May 2010 (first Greek bailout package) politicians claimed that "we" can pay

Greece out of our (German) pocket money. They had never heard before about CDSs, CDOs, yield-spreads, etc... They fully and comprehensively underestimated the problem. Now, 24 months later (after in Oct 2009 the Giorgos Papandreou government revealed that the Greek budget deficit figures are in fact much higher), they are still behind the curve to some extent, but they no longer underestimate the importance of the subject. In fact, they spent 90 percent of their professional time to deal with the issue. "Italy (definitely unlike Greece) has an array of options: support from the ECB, IMF, EFSF (once it works properly), China/Asia, bilateral agreements (when experiencing repayment troubles in the 1970s Italy did borrow a few billion DM from Chancellor Helmut Schmidt and repaid everything including interest subsequently). Italy has a high savings rate, primary surplus and a huge and effective energy sector (ENA, business interests in Northern Africa). And a new (Mario Monti) government. Italy's Debt Office works highly professionally. The next major bond repayment is not before Feb12. With the new government in place Italy has gained some time. BTPs have printed an ending signal, as you also pointed out, last week. The pressure is off for the time being. So, we (the bond market vigilantes) have gone all the way from Greece, over Ireland to Italy. What's next? France? Germany? US? All of this is too predictable. "The Germans will never let the Euro go. Market participants think along the lines of MBA school P&L. Politicians don't think so. For them the "Euro" was born out of the Holocaust. It is not negotiable. Simple as that. German politicians feel that we are in a transition period: from nation states to a more unified Europe. Time will tell whether we will end up with real EU Finance Ministry and German-inspired fiscal discipline rules... We may get there in the next 10-20 years. Not now. Now we are in muddling through territory. It is too early for all participants. That also means Germany will never leave the Eurozone on its own (as Anatole Kaletsky suspected a while ago). That is pure nonsense. Germany may accept that the Eurozone may have to shrink, before it can expand again. "German Chancellor Angela Merkel has pointed out a number of times: the "Euro" is Europe. Many people disagree with that concept, but for the overwhelming number of politicians and for the most part of the German intellectual elite this is exactly the point. In less than 12 years the Euro has become the raison d'tre for Europe in their view. In that respect, financial markets are behind the curve. They have failed to understand that philosophical concept in the context of what has happened in Europe since 1933."
Pasted from <http://www.fullermoney.com/x/default.html> __________________________________________________________________________

If Someone In Europe Owes You Money, You Must Find A Copy Of This Report Read more: http://www.businessinsider.com/redemonination-risk-in-europe-2011-11#ixzz1eCOj3OCs

Eurozone debt web: Who owes what to whom?

The circle below shows the gross external, or foreign, debt of some of the main players in the eurozone as well as other big world economies. The arrows show how much money is owed by each country to banks in other nations. The arrows point from the debtor to the creditor and are proportional to the money owed as of the end of June 2011. The colours attributed to countries are a rough guide to how much trouble each economy is in. Follow link below to interactive map.
Pasted from <http://www.bbc.co.uk/news/business-15748696

Obama's Indefensible Pipeline Punt

Pasted from <http://www.american.com/archive/2011/november/obamas-indefensible-pipeline-punt>

Obamas delaying consideration of the Keystone XL pipeline is what is called a spherically perfect decision, because no matter from which angle you look at it, it looks perfectly the same: wrong. President Obama made yet another bold decision by refusing to consider the fate of the Keystone XL pipeline until after the 2012 election. Here is a brief primer for those who know nothing about Canada, for those who have only a hazy notion of Americas energy supply, and for those who do not know what the months of protests in front of the White Housewith the placards about the Earth in peril and with pipeline-like black plastic tubeshave been all about. Canadanot Saudi Arabia or Iraqis the single-largest provider of Americas imported crude oil and refined oil products. In 2010, it supplied nearly 27 percent of net U.S. petroleum imports and 21.4 percent of all U.S. crude oil purchases abroad, more than the entire Persian Gulf region (18.4 percent), and far more than second place Mexico (12.5 percent) and third place Venezuela (9.9 percent). (By the way, remember those claims that the United States invaded Iraq for its oil? Well, in 2010 Iraq accounted for a mere 4.5 percent of U.S. crude oil imports and only about a quarter of its crude exports went to the United States, less than went to China!) In 2010, the United States imported about 46 percent of its total crude oil consumption (and 49 percent of all petroleum products) and hence Canada supplied about 8 percent of Americas crude oil, almost every twelfth barrel. Construction of the pipeline has been opposed on a variety of environmental grounds. The planned XL route was to cross assorted sensitive areas; a catastrophic rupture would contaminate Ogallala, the countrys largest aquifer; and, most notably, the pipeline would move dirty crude derived from Albertas oil sands, whose extraction and upgrading uses considerably more energy, and hence emits more carbon dioxide than, the production of conventional liquid oil. As a result, protests against the XL pipeline have been portrayed as protecting a planet in peril and helping to avert catastrophic climate change.

Source: Canadian Association of Petroleum Producers. Here are a few facts to consider. With a total length of close to 3,000 kilometers, the new pipeline would add just over 1 percent to the already existing network of crude oil and refined products lines that crisscross the United States and parts of Canada. Why, if pipeline safety is a key concern, have we not seen waves of civil disobedience focused on more than a quarter million kilometers of existing pipelines? Long-term statistics show convincingly that there is no safer way to transport large masses of liquids over long distances than a pipeline. Moving the same amount by trucks or rail would be much more risky, in addition to being vastly more expensive. __________________________________________________________________________

Oil vs. Natural Gas Prices; On An Energy-Equivalent Basis Gas is 79% Cheaper vs. Oil

http://mjperry.blogspot.com/2011/11/charts-of-day-oil-vs-natural-gas-prices.html

Kyle Bass Thinks The Idea Of A 'Solution' To Eurozone Problems Is Ridiculous

See video at link below

"The only way to quote resolve any problems in Europe is to have massive debt restructuring... One of the things we've said in our office recently is you know how screwed up Europe is when you have a German pope and an Italian central banker. We have a scenario today in which debt has grown globally in the last nine years from $80 trillion to $210 trillion. Global credit market debt has grown at 12% a year for the last nine years, while global GDP has grown at 4. We're in a scenario where the PIIGS have sailed into a zone of insolvency. When you sail into the zone of insolvency there is no quote solution for you. The bill is due and you have to pay the bill. What has to happen is it is of our opinion that these debts have to be written down, it's that simple. Basically you're saying if Germany goes joint and severally liable with the profligate idiots of southern Europe will that quote solve the scenario? Think about this. Let's assume Germany goes to doing a eurobond and Germany takes on these... first of all German constitutional court has already ruled that that's illegal in Germany, but let's assume that they get over that and they go ahead and issue this bond. What would that do for the profligate members including Greece when Greece says, "OK we're all in, we're good, you're lending us more money, we have a big debt problem and you're lending us some more and now we can borrow a little cheaper," and then Greece keeps spending, and they go back to Germany and say, "OK Germany I need some more money." Germany says, "No, we're going to impose this real austerity on you now." Greece says, "Fine, we'll default." Every single time from now on Germany is in the exact situation it's in today. We call it in Texas a Mexican Standoff, meaning there's no winner. The profligate members will always have Germany by the short hairs every time this scenario comes up. So I disagree. I don't think that Germany will end up going all in. It would not be to the benefit of

Germany to do so in the long run. Let me ask you this question: How many of your relatives would you go joint and severally liable with? Really a hilarious interview. The question about Germany comes at 10:28 (via Credit Writedowns). Bass also thinks Japan is at the end of its rope:

Read more: http://www.businessinsider.com/kyle-bass-profligate-idiots-in-southern-europe2011-11#ixzz1eISfGS2a Video at link above SP Sectors performance last week was poor as hopes faded that the super committee might actually do their job.

Currency 1 week performance versus the dollar was rather one side too.

Futures Markets for the past week.

This report has a particularly gloomy tone thus far so here I will inject some more positive news. First weekly claims data came in at a slightly better level giving us hope that some job growth is occurring though at a painfully slow rate. Also leading indicators maintain a positive slope.

I have maintained since January 2 2009 that one s equity holdings should favor strong balance sheets, solid dividends and be diversified among large global companies and based in countries with desirable currencies. Nothing particularly unique about that opinion but the following chart from Credit Suisse makes it clear that the high dividend strategy is always a good one.

Country yield tilts

Higher-yielding stocks have outperformed lower yielders, so perhaps higher-yielding markets have also outperformed lower-yielders. We investigate this by examining the 19 Yearbook countries over111 years. At each New Year, countries are ranked by their dividend yield at the old year-end. We assign countries to quintiles, each comprising four countries, except the middle quintile which contains three. Each quintile portfolio has an equal amount invested in each country, and all income is reinvested. Portfolios are held for one year. We then re-rank the countries and rebalance the portfolios, repeating the process annually. The leftmost set of bars in Figure 10 shows the annualized returns from the quintiles over the full 111-year period. There is a perfect ranking by prior yield and the differences between quintiles are large. An investment of one dollar in the lowest-yielding countries at the start of 1900 would have grown to USD 370 by the end of 2010, an annualized return of 5.5%. But the same

initial investment allocated to the highest-yielding countries would have grown to an end-2010 value of more than USD 1,000,000 some 2,700 times as much, and equivalent to an annual return of 13.4% per year. These figures are before tax and transaction costs, but the performance gap is too big to be attributable to tax. The returns shown in Figure 10 are measured in US dollars from the perspective of a US-based global investor. However, the pattern would look the same from the perspective of a global investor from any other country. The returns would just need to be multiplied by the appropriate common currency scale factor (published in the Sourcebook). The remaining five sets of bars in Figure 10 show the returns over the four quarter-century periods making up the 20th century as well as the returns over the 21st century to date. Over all of these sub-periods, the high-yielding countries outperformed the low-yielding countries by an appreciable margin. The results are not therefore periodspecific. Nor are they attributable to risk. The returns from investing in the lowest-yielding countries were slightly more volatile than investing in the highest-yielders; the betas against the 19country world index were approximately the same; and the Sharpe ratio was 0.72 for the portfolio of highest-yielding countries versus just 0.35 for the lowest yielders. Clearly, this multi-country trading rule based on prior yield would have generated significant profits at no higher risk.

Credit Suisse published this large long term study on global investment that included this chart and a wealth of educational information. I recommend it to those interested in long term data.

And Now For Something Completely Different (not so optimistic)

China s economy has a reputation for being strong and prosperous, but according to a wellknown Chinese television personality the country s Gross Domestic Product is going in reverse. Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn t think was being recorded that the Chinese regime is in a serious economic crisis on the brink of bankruptcy. In his memorable formulation: every province in China is Greece. The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not to post his speech online, or everyone will look bad, in the audio that is now on Youtube. In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. What I m about to say is all true. But under this system, we are not allowed to speak the truth, he said. Despite Lang s polished appearance on his high-profile TV shows, he said: Don t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it. He said that the regime doesn t listen to experts, and that Party officials are insufferably arrogant. If you don t agree with him, he thinks you are against him, he said. Lang s assessment that the regime is bankrupt was based on five conjectures. Firstly, that the regime s debt sits at about 36 trillion yuan (US$5.68 trillion). This calculation is arrived at by adding up Chinese local government debt (between 16 trillion and 19.5 trillion yuan, or US$2.5 trillion and US$3 trillion), and the debt owed by state-owned enterprises (another 16 trillion, he said). But with interest of two trillion per year, he thinks things will unravel quickly. Secondly, that the regime s officially published inflation rate of 6.2 percent is fabricated. The real inflation rate is 16 percent, according to Lang. Thirdly, that there is serious excess capacity in the economy, and that private consumption is only 30 percent of economic activity. Lang said that beginning this July, the Purchasing Managers Index, a measure of the manufacturing industry, plunged to a new low of 50.7. This is an indication, in his view, that China s economy is in recession.

Fourthly, that the regime s officially published GDP of 9 percent is also fabricated. According to Lang s data, China s GDP has decreased 10 percent. He said that the bloated figures come from the dramatic increase in real estate development each year (accounting for up to 70 percent of GDP in 2010). Fifthly, that taxes are too high. Last year, the taxes on Chinese businesses (including direct and indirect taxes) were at 70 percent of earnings. The individual tax rate sits at 81.6 percent, Lang said. Once the economic tsunami starts, the regime will lose credibility and China will become the poorest country in the world, Lang said. Several commentators have expressed broad agreement with Lang s analysis.
(Source: Things That Make You Go HMMM via http://english.ntdtv.com/ntdtv_en/news_china/201111-14/chinese-tv-host-says-regime-nearly-bankrupt-.html )

Gold Activity among central banks continued to fulfil our expectations of further purchases in Q3. In fact, net buying accelerated notably during the quarter totalling 148.4 tonnes as the issues surrounding the creditworthiness of western governments debt seeped into the official sector. A number of banks continued their well-publicised programmes of buying, while a slew of new entrants emerged wishing to bolster their gold holdings in order to diversify their reserves. We see this trend continuing into 2012. (Thanks Tom D) Source : WGC GOLD REPORT via Things That Make You Go HMMM

Central bank gold buying at 40-year high

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/c002550010ef-11e1-a95c-00144feabdc0.html#ixzz1eImjNyaw Central banks made their largest purchases of gold in decades in the third quarter as a sharp drop in prices in September spurred buying to diversify reserves.

The scale of the purchases at 148.4 tonnes on a net basis was far bigger than previously disclosed and puts central banks on track to buy more gold than at any time since the collapse of the Bretton Woods system 40 years ago, the last time the value of the dollar was linked to gold. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/c002550010ef-11e1-a95c-00144feabdc0.html#ixzz1eImu6StC Analysts said the buying, led by emerging market central banks intent on diversifying their growing foreign exchange reserves, helped explain golds rebound from a low of $1,534 a troy in September as large hedge funds such as Paulson & Co were forced to sell some gold to cover losses elsewhere. Central bank buying tends to follow a different heartbeat than pure investment purchases of gold, said Marcus Grubb, head of investment at the World Gold Council, a lobby group for the gold industry. Its often based on targets set earlier in the year on gold as a proportion of foreign exchange reserves. On Thursday, gold dropped 2.5 per cent to $1,718 a troy ounce, following other commodities such as oil and copper lower. The WGC, which published the purchase data, declined to identify the central banks behind the majority of the buying, saying only that a slew of new entrants emerged wishing to bolster gold holdings. The countries that have publicly disclosed their purchases include Thailand, Russia and Bolivia. Central banks are one of the most important drivers of the gold market but disclose few details about the changes in their bullion reserves. As a group, they became net buyers of gold last year after two decades of heavy selling a reversal that has helped propel the price of bullion to a high of $1,920.30 a troy ounce, up 600 per cent in a decade. The purchase of 148.4 tonnes in July-September is the largest since GFMS, the consultancy which produces the data underlying the WGC reports, began compiling quarterly numbers in 2002. Before then, the last time central banks were net buyers of gold was in 1988 when they bought 180 tonnes. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/c002550010ef-11e1-a95c-00144feabdc0.html#ixzz1eIn5pVWa Mr Grubb said the majority of buying took place in September after prices fell sharply from record highs to a low for the month of $1,534. It coincided with growing international tensions over the dollar after a dispute in Washington about raising the US debt ceiling.

Mr Grubb predicted that central bank gold buying for the full year could reach 450 tonnes, implying a purchases of a further 90 tonnes in the fourth quarter. GFMS last month said central bank purchases were likely to be in excess of 400 tonnes and could reach 500 tonnes, an upward revision from its September forecast of 336 tonnes. Elsewhere, the WGC reported that China overtook India to become the largest consumer of gold jewellery in the third quarter. Gold for Chinese jewellery consumption rose 13 per cent from a year earlier to 138.6 tonnes, while buying from India traditionally the worlds top consumer fell 26 per cent.
Source: The Financial Times http://www.ft.com/intl/cms/s/0/c0025500-10ef-11e1-a95c00144feabdc0.html#axzz1eImKHBc0 Closing Remark: Europe must resort to money printing and will do so but under cover of a blanket of new agencies and rules and obscurantism of the first order. But make no mistake that is the only way to salvage any form of Euro. That will be bullish real productive assets globally eventually if not immediately. Bullish in nominal terms that is. The expectation of the super committee this week is for failure to produce. Surprise would be if something was actually done. I feel the odds of a positive result from these bloviating gasbags is roughly the same as a wheat field and a pig spontaneously producing a ham sandwich, but we can hope. However, should the committee beat all odds and produce a positive surprise the equity markets will erupt out of the current pile of negative sentiment. I still like Gold, dividends, low leverage, geographic and currency diversification. Not much new there but I can report I am increasingly worried about the politics of envy and hate being practiced by Obama. I am attaching to this email a letter written by Howad Marks of Oaktree Capital dealing with the Tyranny of the Majority . I urge you to read what Mr. Marks has written.

Happy Thanksgiving BBL