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It Could be Time for China to Back Down

By Rocky Vega

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03/15/10 Stockholm, Sweden – Throughout the media, mainstream and otherwise, and especially since the financial crisis, are discussions of China’s growing importance… be it in new billionaires or in strengthening political allies. However, Ambrose Evans-Pritchard takes a different tack. When it comes to the current issue of Chinese yuan appreciation in particular, he questions whether China’s aggressive ire may have risen a little too far too fast.

From The Telegraph:

“China’s premier Wen Jiabao is defiant.

“‘I don’t think the yuan is undervalued. We oppose countries pointing fingers at each other and even forcing a country to appreciate its currency,’ he said yesterday. Once again he demanded that the US takes ‘concrete steps to reassure investors’ over the safety of US assets…

“…Days earlier the State Council accused America of serial villainy. ‘In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers’ rights are seriously violated,’ it said.

“‘The US, with its strong military power, has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights,’ it

…Read more…

Inflation Explosions in a Financial Action Film

By The Mogambo Guru

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03/15/10 Tampa, Florida – There was an interesting item in The 5- Minute Forecast which read, “Within 12 years, the largest item in the federal budget will be interest payments on the national debt,” which is pretty scary for guys like you and me, especially if you are, like me, a paranoid, frightened and angry little man who sees nothing but complete catastrophe looming up, rising up out of the mists like a fearful Gorgon to turn you to stone, because the federal government is borrowing and spending too, too, too much money, all of which is supplied by the Federal Reserve which is creating too, too, too much money and credit, which is horrifying because such massive inflation in the money supply will, by necessity, destroy everything with ruinous inflation in prices because, unfortunately, that’s the way it works.

This simple fact has given me the idea to make some Award-Winning films (“Worthless trash!” says The Chicago Sun) using the plots (but without paying for them) of some scenes from Sylvester Stallone movies, such as John Rambo bursting up out of the water with that snarl on his lips and an AK-47 in each hand, who immediately starts blasting away, the whole scene shot in slow-motion, Rambo blowing the hell out of everything in a cacophonous hail of fiery gunfire and spent cartridge shells, things catching on fire, things exploding, bodies flying through the air, people screaming, and it is all one (pause for breath) one hell of a mess.

That’s inflation for you! Okay, maybe except for the part about real bullets, and things catching on fire, and things…Read more…

Economists to Miss the Next Financial Crisis

By Bill Bonner

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03/15/10 Mumbai, India – Beware the Ides of March…and the rest of the year too!

This is the day Caesar was assassinated. What’s it to us?

Well, it just reminds us that things go wrong. Even when you’re on top of the world. There are always countercurrents…undercurrents, beneath the surface, where you don’t see them…plots…conspiracies…and just bad luck.

On the surface, the US economy is recovering. Well, not even. It is stabilizing.

The Dow has been creeping up. It rose 12 points on Friday. Gold fell $6. Oil held at $81.

The most recent figures show the consumer becoming a little freer with his money. But look beneath the surface and you find government statisticians juking and jiving with the numbers. They seasonally adjusted downward the figures for January…which boosted the figures for February. Had they not done so, the figures for February would have been negative!

Still, consumers are not as lifeless as they have been…and on the surface, this is good news.

And who can blame consumers for being a little more ready to spend money? The newspapers tell us that the Great Recession is over…and that we’re in a recovery. The lumpen consumer probably thinks he’s going to find a job soon…and that his house is going up in price.

But beneath the surface, there are powerful downtrends still underway. These trends began in 2007. They were misinterpreted, naturally, by leading economists and policymakers as a “liquidity crisis.” In fact, they were signs of a debt crisis. The private sector had far too much debt.

Economists who never expected…Read more…

Northgate Minerals Corp (AMEX:NXG) – Soon Building a “Great Source of Wealth Creation”

By Rocky Vega

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03/15/10 Stockholm, Sweden – Northgate Minerals Corp (AMEX:NXG), the Vancouver-based gold and copper producer with operations in Canada and Australia, has been reporting mixed news of late… posting a fourth quarter net loss on charges, but also recently producing its two millionth gold ounce.

Chris Mayer, editor of Agora Financial’s research newsletter Mayer’s Special Situations, has been able to cut through the noise to make several determinations today:

“We got earnings out of gold miner, Northgate Minerals (AMEX:NXG). Northgate produced a record amount of gold last year and $187 million in operating cash flows. The market values Northgate at only $880 million. That means NXG trades for less than 5 times cash flow. It also finished the year with $253 million in cash and no long-term debt.

“The big cloud that hangs over Northgate is that its Kemess mine is in its final days. Mine life has been extended to the first quarter of 2011, but after that, Northgate will lose a lot of cash flow. Its remaining two mines, Fosterville and Stawell, are high cost. They produce gold at cash costs of $655 and $633 an ounce, respectively. So the market worries about that.

“The big positive is the Young-Davidson deposit, on which construction will start

…Read more…