Bigworld, Another aspect to this Middle East situation is that it can potentially affect the upcoming election dynamics in a big way. If the 'US bombs Iran' scenario is in fact an absolute necessity for halting Iran's nuclear weapons program, and that program is now very close to its goal, then there could be a strong existential incentive within Netanyahu's extreme coalition to see the Rep Party return to power in the US. But since the main globalist factions want nothing to do with Trump again, this potentially sets up some hair raising internecine scenarios right out of 'The Day of the Jackal'. Let's hope not, but logic says there could be even more election related intrigue than usual.

Btw, speaking of that 'Day of the Jackal' novel / movie --> back in college (1973-75) in the dorm I met a student from France whose father was in a French prison for his supposed role in that military plot against de Gaulle. His dad was a French military officer (major or colonel I think), and ended up in the slammer. Anyway, people in the US tend to dismiss 'conspiracies', but in Europe they have been part of the fabric for centuries.



---

Bigworld, Thanks. The McAlvany commentary makes a good case for not having too much in financial assets (stocks, bonds, cash), and for increasing the hard asset side (real estate, land, gold, silver, commodities, etc).

Upping the hard assets definitely seems like a good idea. Along those lines, it could make sense to start counting one's home / real estate as an 'investment class', and include it in the allocation mix. So maybe a 50-50% mix between financial and hard assets, and then as the debt bomb approaches, the hard asset side can be increased. Bonds seem like the most vulnerable class over the long haul. Since the debt bomb timeline may be longer than we think, I figure it makes sense to have all bases covered, but the hard asset side will become more important for long term wealth preservation.

In addition to the rapidly growing debt bomb (34 tril and rising fast), another factor in the demise of the dollar reserve system is BRICS expansion and their planned gold-linked BRICS currency. However it appears the timelines have been slipping, since Saudi Arabia and Argentina have backed out of joining BRICS (for now). It also appears the gold-linked BRICS currency has encountered headwinds from India, since they see it as favoring China too much.

Anyway, I figure we have a period of years before things unravel in earnest, but shifting more into hard assets seems like the logical path.




---

https://www.zerohedge.com/markets/omens-nasdaq-technical-signal-proliferates

gfp: Insiders are privy to more information than the average investor. And if they are selling 50:1 over buying there must be a lot of Insiders who see real trouble on the horizon. At one point Wall Street was predicting 6 interest rate cuts. Then it was 3 cuts. Now it looks doubtful that there will be any cuts. And I've read article suggesting the Fed will be forced into a Japan style Yield Curve Control to keep what the Treasury has to pay in interest on our unpayable debt from eating up 50% or more of the budget. Interest is already the largest line item in the Budget, and with the Treasury having to roll over Trillions at higher rates the interest expense will approach %1.6 Trillion by the end of the year. That's 1/3 of tax receipts. And that's only the carrying cost of all our debt.

gfp: Listen to this weeks McAlvany Weekly Commentary. Insider selling is 50:1 over Insider buying. That's not a good sign for equities going forward.:

https://mcalvany.com/executive-insiders-unloading-their-own-stocks/

Rickards - >>> AI, Gold and Nuclear War


BY JAMES RICKARDS

APRIL 16, 2024


https://dailyreckoning.com/ai-gold-and-nuclear-war/


AI, Gold and Nuclear War

So-called artificial intelligence (AI) is taking the world by storm. Meanwhile, gold has shot up like a rocket over the past couple of months.

In mid-February, gold was trading at $1,990. Two months later, gold is trading above $2,400 — a $410 gain in just two months.

So here’s a question:

Is there a connection between AI and gold? It seems like an odd question. But as it turns out, the answer is yes. And surprisingly, there has been for decades. It involves the Cold War between the U.S. and the Soviet Union.

In the early 1980s, the KGB was deeply concerned about the possibility of a nuclear first strike by the United States. At the time, Yuri Andropov was head of the KGB.

Andropov’s fear of a nuclear first strike by the U.S. was based in part on the 1980 election of Ronald Reagan and Reagan’s plan to install Pershing II intermediate-range missiles in Europe.

Those missiles could be armed with nuclear warheads and could strike the Soviet Union within minutes of being launched. This put Soviet nuclear forces on a hair-trigger alert. They adopted a “launch on warning” posture.

This means that as soon as credible evidence of a planned first strike was discovered, the Soviet Union would launch its own first strike to avoid destruction of its forces.

The irony was that the U.S. had no actual plans to launch a first strike, but the Soviet Union didn’t know that. Reagan’s speeches about the “evil empire” did nothing to calm Soviet concerns.

AI and Nuclear Readiness

In response, the Soviets developed a primitive (by today’s standards) AI system called VRYAN. That’s a Russian acronym for: sudden nuclear missile attack.

VRYAN took about 40,000 military, economic and political inputs and computed the relative strength of the Soviet Union compared with the United States expressed as a percentage output. The model used a value of 100% for equivalence of the USSR to the U.S.

The Soviet leadership was comfortable that the U.S. would not launch a nuclear first strike if the USSR could maintain a value of 60%, although they viewed 70% as providing a more comfortable margin.

A VRYAN output of 40% was considered the critical threshold at which the U.S. might feel it could launch a first strike with acceptable risk that the Soviets would not be able to mount a successful second strike.

VRYAN output values were in steady decline in the dangerous period from 1981–1984 (in 1984, the VRYAN output had declined to 45%).

The VRYAN AI system relied on by the KGB and the Soviet Politburo was an important factor in the Soviet decision in 1981 to vastly increase intelligence collections aimed at detecting U.S. preparations for a first strike.

Close Call

This intelligence collection effort was complicated to the point of extreme danger by the fact that the U.S. and NATO were conducting a war game in late 1983, code-named Able Archer 83. This war game was to practice a nuclear strike on the Soviet Union.

It turned out that the U.S. was rehearsing a nuclear first strike at the same exact time that the KGB was looking for evidence of a nuclear first strike. Able Archer 83 provided the KGB with more than enough reason to suspect the U.S. was indeed preparing for a first strike under cover of a war game.

VRYAN’s AI output on relative U.S. strength was compounded by massive U.S. intelligence failures regarding Soviet intentions. U.S. intelligence analysts assumed that the future would resemble the past, and that Soviet alerts were really propaganda designed to halt the U.S. deployment of Pershing II intermediate-range nuclear missiles in Europe.

U.S. intelligence analysts were also guilty of what’s called mirror imaging: the belief that because you know your own intentions, your opponents must share your view. In this case, the U.S. assumed that because they had no intention to launch a first strike, the Soviets must have understood that intention and would therefore have no cause for concern.

In fact, the Soviets had the opposite view based in part on VRYAN AI output.

The world came extremely close to World War III and a nuclear holocaust as a result of this sequence of events and misperception of intentions. It was only when one U.S. general decided not to escalate in the face of Soviet first strike preparations that both sides deescalated, and the crisis eventually receded.

The information above wasn’t fully understood by either side at the time of the escalation. On the U.S. side, it wasn’t until the 1990 publication of a study entitled The Soviet War Scare by the President’s Foreign Intelligence Advisory Board (PFIAB) that something like the full story was revealed.

Nuclear War Threats: Good For Gold

This study was originally classified above TOP SECRET. (Most citizens assume that TOP SECRET is the highest level of classification. But there are secret access codes that limit circulation of certain documents even among those cleared with TOP SECRET access.

In the case of The Soviet War Scare, those restrictions had the code names UMBRA, GAMMA, ININTEL, NOFORN, NOCONTRACT, ORCON. I can’t discuss my own TOP SECRET clearances, but I can inform you that very few intelligence operatives would have been able to view the PFIAB report based on those restrictions.

So what does all this have to do with gold?

Buried inside The Soviet War Scare was this passage about the U.S. assessment of KGB collection requirements related to a potential nuclear war:

VRYAN Collection Requirements – Throughout the early 1980s, VRYAN requirements were the No. 1 (and urgent) collection priority for Soviet intelligence… They were tasked to collect:… monitoring of the flow of money and gold on Wall Street as well as the movement of high-grade jewelry, collections of rare paintings and similar items. (This was regarded as useful geostrategic information.) (Emphasis added)

And there it is! The U.S. assessed that the KGB tracked the movement of gold as a leading indicator of nuclear attack.

I didn’t find this completely surprising. From 2004–2010, I was co-director of a CIA effort called Project Prophesy that looked at capital markets activity as an early warning of an enemy attack.

Gold was one of the valuable assets that was on our list of items to track. The idea was that if a general or political leader had advance information about an attack, they’d convert their wealth to gold in safekeeping in order to financially survive the fallout.

The bottom line is that this intelligence reporting and AI system are not ancient history. Today, the world is closer to nuclear war than at any time since the Able Archer scare in 1983. Gold is once again on the move, having risen from $1,830 per ounce on Oct. 5, 2023, to over $2,400 today. That’s a 31% gain in six months.

Is this a coincidence? Hardly. A close correlation of huge gains in gold with serious threats of nuclear war is exactly what one should expect.

Unfortunately, those threats of nuclear war are not going away soon. One need only look at the Iranian attack on Israel this past weekend and the possibilities of further escalation.

There are also situations in Ukraine, Russia, NATO, Gaza, the Red Sea and the Suez Canal revealing that the world is a more dangerous place than it has been for decades.

That’s bad news for the world but good news for gold investors. The rally we’ve seen in the past six months is just getting started.

<<<



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Bigworld, In addition to RSI for the main stock indices, another indicator I'm using is the $VIX, since when its RSI approaches or reaches overbought (RSI of 70), this has consistently identified stock market bottoms (see below). The $VIX had an RSI reading over 70 yesterday, and is currently ~ 68, so this suggests that a near term bottom could be near.

I figure a lot will depend upon Israel's response to the Iranian bombing. Since the US has told Netanyahu pretty bluntly that the US will not support his retaliatory efforts, it seems doubtful that he'll do anything really big. Who knows, but I figure that after a few more days the financial markets will go back to concentrating more on corporate earnings. Anyway, I re-upped my stock allocation to 20%, so will go with that for now. I figure a conservative approach might be 12.5% as Core (LT buy/hold), and 7.5% as Flex, but still a 'work in progress'.


2022 - late Sept / early Oct

2023 - March

2023 - August

2023 - late Sept thru Oct

2024 - mid Feb

2024 - April



---

Chart-wise, the main stock indices are nearing oversold, based on the RSI (under 30 is oversold) -

DJIA ------ 31
S+P 500 - 39
Nasdaq -- 42
Russell --- 37


Wall Street is waiting to see Israel's response to the Iranian bombing, but if nothing happens soon then the near term bottom in stocks might be in (?)




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Bigworld, Concerning that repo market news (previous post), the Fed will soon be easing back on the current QT policy, with the monthly QT being reduced from $60 bil to 30 bil (see below). So even if there are no % cuts until later in the year, the reduction of QT provides some added liquidity to the system.

But since the longer term Treasury auctions have not been going well, they are reportedly "shifting to financing America’s deficit mostly with short-term debt". Not being able to sell longer term bonds does sound ominous. With my own Treasury bond allocation, I only went out 2.5 years (to Dec 2026), in part because the US debt monster is growing so fast, and might conceivably reach 40 trillion by late 2026. Fwiw, I figure that is the debt level (40 trillion) where the growing debt bomb could really become a problem, so my tentative strategy is to have the bond allocation much reduced by 2027. I figure the major problems start as the US debt moves from 40 ---> 50 trillion. But what to use instead of bonds? Hard assets, real estate, commodities would be the logical place, as you have already done.



>>> “We’ve been losing liquidity as people and companies pull out money to pay taxes,” said Thomas Tzitzouris, head of fixed-income research at Strategas. “We’re in a bit of an air pocket that’s letting the bond market float more freely and yields rise.”

One line of support is likely to come from the Fed. Minutes from the Fed’s March meeting, released last week, showed that policymakers are looking to slow the pace of running down the central bank’s large holdings of bonds accumulated to prop up the economy. They would likely reduce the rate at which they let Treasurys mature to $30 billion a month, half of the current $60 billion pace.

Balance-sheet runoff, known as quantitative tightening, is meant to drain the banking system of reserves and increase the market’s share of the sovereign-debt pile. With the Fed paring back that program, and prepping to stop it sometime in the future, investors will have to absorb a smaller net share of Treasury securities. That could support bond prices and remove some upward pressure on yields. <<<

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174235707




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>>> Fed's reverse repo facility plummets to lowest level in nearly three years

Reuters

Apr 15, 2024

By Michael S. Derby


https://finance.yahoo.com/news/feds-reverse-repo-facility-shrinks-174128320.html


NEW YORK (Reuters) - A key Federal Reserve facility that takes in cash from money market funds and others saw inflows drop sharply on Monday.

The U.S. central bank's reverse repo facility took in $327.1 billion, down $80.2 billion from Friday, marking the lowest level of inflows since the facility took in $293 billion on May 19, 2021.

The Fed's reverse repo facility exists to put a floor underneath short-term rates, taking in cash from eligible firms in loans collateralized with Treasuries held by the central bank. Inflows have been contracting for some time as the Fed withdraws liquidity from the financial system by allowing its holdings of bonds to shrink.

Monday is the deadline for most U.S. tax returns and a key settlement date for Treasury debt auctions, which can influence activity at the reverse repo facility. Scott Skyrm, executive vice president at money market trading firm Curvature Securities, says money is coming out of reverse repos to deal with financing the Treasury's debt issuance.

<<<



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ABC News - >>> US to Israel: If you strike back at Iran, you'll do it alone <<<

https://www.yahoo.com/news/us-israel-strike-back-iran-162024611.html


Finally some sanity prevails. Next, Biden & Co need to ditch their ultra risky Ukraine strategy. Unlike Iran, Russia has 6000 nuclear weapons, including hypersonic missiles, and everything is on a hair trigger. A week ago the lunatic Zelensky bombed the Zaporizhzhia nuclear powerplant (!) Enough of the madness -- > return to Kissinger's détente strategy before we bumble into WW 3 -


>>> Russia test-launches an intercontinental ballistic missile <<<

https://abcnews.go.com/International/wireStory/russia-test-launches-intercontinental-ballistic-missile-109172270


>>> Attacks on Zaporizhzhia nuclear plant significantly increase accident risk, IAEA head says <<<

https://apnews.com/article/russia-ukraine-war-zaporizhzhia-nuclear-drone-a28710a691f3259b5dd6586787838b60




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Bigworld, Yes, the debt bomb is entering the later innings, but I figure the finance magicians can likely hold things together for a number of years. I figure the US debt hitting 40 trillion could be a key turning point, and then sometime prior to it reaching 50 trillion the debt / dollar crisis will arrive. But just a guess.

Fwiw, I used this morning's bounce to reduce the stock allocation a little more, down to 12.5%. So that should do it (hopefully). I sold off the liquid S+P 500 index portion, and kept the individual stocks and sector ETFs. 200 plus individual stocks are too cumbersome to sell, so the idea is to keep them (12.5%) as long term buy / hold. Anyway, that was the original plan, so I'll try to stick to it. I figure the cash proceeds will earn ~5% with no risk, and can be re-deployed later. Buying a 1X short ETF (SH) to hedge the remaining stock exposure is an option at some point, but I figure that earning 5% in cash is good enough. The permanent 12.5% in stocks will benefit as the stock market eventually recovers. Anyway, I figure it's best to have all bases covered, and never go to zero in any asset class.

Anyway, still a work in progress, but it turned out that 28% in stocks was clearly too high for an aging nervous nellie like me. Buffett and Bogle both said that the key is finding the right allocation you can live with (without insomnia or daily Tagamet). I thought the old rule of subtracting your age from 100 might work, but 31% in stocks is clearly too high on the 'Tagamet scale'.



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gfp: The underlying fundamentals of the economy are horrific. The only thing holding up the whole house of cards is that the Federal government is still able to pull future revenues into present era spending. The Federal government will spend about $3 Trillion this fiscal year ABOVE what they take in in taxes. Lots of those Dollars find their way to Wall Street one way or another. Hence we have a speculative bubble in almost all asset classes. At some point....next week, next month, next year....the debt bomb is going to explode and take our way of life down with it.

Ed Dowd is one of the elite number crunchers in the world. His analysis of the mortality and morbidity caused by the Codid vaccines is unparalleled:

https://www.zerohedge.com/political/lies-are-just-unreal-ed-dowd-rages-govts-media-continue-pretending-massive-health-crisis

Ombow, Looks like LWLG is teetering again at key support (descending triangle formation). It fell through 4, but chart-wise the actual support level is ~ 3.90, and this is the fifth time it has tested this key support in the last six months (plus an additional four times earlier in 2023). So it could soon be 'bombs away' time, but we'll see if it can hold again, or if some news flow might arrive to give it a saving bounce. The descending triangle is a classic bearish chart formation -










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Bigworld, Amazingly the stock market futures are currently up, so go figure. Possibly Fed / PPT activity, as happened around Oct 7. But the market had already sold off considerably, so perhaps there's a relief rally before the market weakens again (?)

I figure 28% was too much to have in stocks anyway, so will roll with 15% for now. There are plenty of reasons to be wary -

1) Geopolitical / war risks

2) Fed delaying % rates cuts due to persistent inflation

3) Growing election angst

4) Stock market has already runup big since Oct, so no sense watching those gains evaporate

5) Black swan events



---

gfp; This should be an interesting week in the markets.

gfp: Just keep good positions in Energy and Precious metals for your stock allocation. Maybe a few good dividend payers. And short term Treasuries. I'm holding tight to my metals, my miners, and my energy plays. I want real stuff. The days of fiat are numbered.

gfp: Rinear thinks the big rise and abrupt fall on Friday were due to short term traders worried about the geopolitical events, especially between Iran and Israel. I expect a slow and steady climb from here, with back filling. If gold and silver are rallying with the DXY strong and the 10 year above 4.5% then the paradigm has changed. Inflation and geopolitical worries are driving the PM markets now. Central bank stockpiling puts a floor under the metals. At some point Comex will not be able to provide delivery for futures buyers who want deliver of the metal and not a roll over to more contracts. When that happens the incredible level of leverage in the metals will become apparent. It could get ugly for the money center banks that hold big naked short positions (probably at the behest of The Fed.)

Debt bomb - >>> America’s bonds are getting harder to sell


The Wall Street Journal

by Eric Wallerstein

Apr 14, 2024


https://finance.yahoo.com/news/america-bonds-getting-harder-sell-093000703.html


A series of weak auctions for U.S. Treasurys are stoking investors’ concerns that markets will struggle to absorb an incoming rush of government debt.

A selloff sparked by a hotter-than-expected inflation report intensified this past week after lackluster demand for a $39 billion sale of 10-year Treasurys. Investors also showed tepid interest in auctions for three-year and 30-year Treasurys.

Behind their caution lies a growing conviction that inflation isn’t fully tamed and that the Federal Reserve will leave interest rates at multidecade highs for months, if not years, to come. The 10-year yield—the benchmark for borrowing rates on everything from mortgages to corporate loans—finished the week around 4.5%, near its highest levels since touching 5% in October.

At the same time, the government is poised to sell another $386 billion or so of bonds in May—an onslaught that Wall Street expects to continue no matter who wins November’s presidential election. While few fear a failed auction—an unlikely scenario that analysts said could potentially trigger prolonged turmoil—some worry that a glut of Treasurys will rattle other parts of the markets, raise the cost of government borrowing and hurt the economy.

“There’s been a big shift in the market narrative. The CPI [consumer-price index] report changed everybody’s view of where Fed policy is headed,” said James St. Aubin, chief investment officer at Sierra Mutual Funds.

The government funds its operations by selling the world’s safest bonds to investors and dealers at regular auctions. And issuance of Treasurys has exploded since the pandemic began. In the first three months of 2024, the U.S. sold $7.2 trillion of debt, the largest quarterly total on record. That surpasses the second quarter of 2020, when the government was financing a wave of Covid-19 stimulus. It also builds on a record $23 trillion of Treasurys issued last year, which raised $2.4 trillion of cash, after accounting for maturing bonds.

The size of the sales has expanded along with the market for U.S. debt. After poor demand at a series of auctions late last year jarred investors, the Treasury Department eased concerns by shifting to financing America’s deficit mostly with short-term debt. That helped, in part, because the Fed simultaneously signaled a pivot to easier monetary policy: Hopes that interest-rate cuts would come soon helped reassure investors about the Treasury’s strategy.

Now, those hopes are dwindling, and the Treasury is expected to announce its third-quarter borrowing plans at the end of April. The nonpartisan Congressional Budget Office forecasts that the deficit will increase from 5.6% of U.S. gross domestic product to 6.1% in the next decade. Debt held by the public is set to expand from $28 trillion to $48 trillion in that time, up from $13 trillion 10 years ago.

Wall Street doesn’t expect the Treasury to raise auction sizes of longer-term notes and bonds until next year. But the government must also contend with refinancing a chunk of its bonds. A record $8.9 trillion of Treasurys, roughly a third of outstanding U.S. debt, is set to mature just in 2024, according to Apollo Global Management’s chief economist, Torsten Slok.

Investors are also watching how revenues from tax season boost America’s coffers in the coming weeks.

“We’ve been losing liquidity as people and companies pull out money to pay taxes,” said Thomas Tzitzouris, head of fixed-income research at Strategas. “We’re in a bit of an air pocket that’s letting the bond market float more freely and yields rise.”

One line of support is likely to come from the Fed. Minutes from the Fed’s March meeting, released last week, showed that policymakers are looking to slow the pace of running down the central bank’s large holdings of bonds accumulated to prop up the economy. They would likely reduce the rate at which they let Treasurys mature to $30 billion a month, half of the current $60 billion pace.

Balance-sheet runoff, known as quantitative tightening, is meant to drain the banking system of reserves and increase the market’s share of the sovereign-debt pile. With the Fed paring back that program, and prepping to stop it sometime in the future, investors will have to absorb a smaller net share of Treasury securities. That could support bond prices and remove some upward pressure on yields.

Another factor supporting Treasuries: Global investors have a lot of savings and few viable options to place them. The eurozone and Japan both run current-account surpluses, meaning they take in more money from trade than they spend on imports. Treasurys provide them a safe place to stash their cash and pick up more than 4% of yield. They also offer an easy way to invest dollar-denominated income from trading with America.

The euro and yen are both sinking relative to the dollar, in part because the Bank of Japan is still holding rates low and investors expect the European Central Bank to slash them soon. That could increase demand for U.S. debt, with Treasury yields remaining elevated relative to global alternatives.

That leaves many investors hopeful that as long as inflation continues to trend toward the Fed’s 2% target, Treasury yields will remain under 5%. But some worry the influx of new Treasurys will exacerbate already-volatile markets, particularly if inflation stays sticky. After the CPI report and weak auction Wednesday, the 10-year yield posted its biggest one-day rise since 2022, jumping nearly 0.20 percentage point.

“If we continue to see hot inflation prints, it’s going to keep a lot of people on the sidelines,” said Sierra’s St. Aubin.

<<<



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Bigworld, On the financial front, we'll see what happens next week. The stock market should tank to some extent, but we'll see if the PPT / Plunge Protection Team comes to the rescue. When the Middle East blew up last October, the Fed quickly did a dovish pivot to support the financial markets, and that could be repeated. But the war risks are broader now than in Oct, and the current market is higher and more vulnerable.

I figure the US dollar surge from last week could continue into next week, so that night mute further upside for gold / silver (?), but just a guess. The market has a way of doing what we don't expect, but at minimum I figure a pullback to 5000 for the S+P 500 seems likely. The market was in need of a pullback / consolidation anyway.

As I see it, the big question now is to what extent Netanyahu continues trying to gin up the 'US bombs Iran' scenario. The main goal is to disable the underground nuclear enrichment sites at Natanz (which are deep under a mountain), which will presumably require tactical nuclear bunker buster bombs, so that means the US will have to do it, unless Israel has acquired some of these for their arsenal. They've had hundreds of nuclear tipped ballistic missiles for decades, but probably only have conventional bunker busters. Netanyahu could decide to go it alone if the alternative is a nuclear armed Iran by this time next year. For him it's a huge existential problem, which makes the alternative of waiting impossible.



---

So the plot thickens. Still early, but some possible scenarios that could force the US into direct action against Iran would include -

1) Netanyahu continues to deliberately escalate the tit-for-tat with Iran, hoping that some US assets are hit.

2) A false flag is staged against US assets in the region. But since current US leadership is so wary and reluctant, a false flag probably wouldn't work anyway.

3) Netanyahu waits until next year and hopes for a Rep administration full of neocons. The problem here is multi-fold --> a) by next year Netanyahu will likely be out of power, b) by next year Iran likely has a nuclear weapon, c) Biden may be re-elected


The biggest problem is - b) the inevitability of Iran getting nuclear weapons. We already have North Korea with nukes, so next will be Iran. With our extreme vulnerability to an orbital EMP attack (knocking out the power grid and microelectronics), the future looks precarious to say the least -


Nuclear EMP - https://en.wikipedia.org/wiki/Nuclear_electromagnetic_pulse

>>> Biden tells Netanyahu US will not participate in counter-strike against Iran


4-14-24

by MJ Lee and Kevin Liptak

CNN


https://www.msn.com/en-us/news/world/biden-tells-netanyahu-us-will-not-participate-in-counter-strike-against-iran/ar-BB1lB3l0?ocid=BingHp01&cvid=3cf388f67cf54cc896fb3bb8d6bd3e14&ei=11


President Joe Biden and senior members of his national security team, seeking to contain the risk of a wider regional war following a barrage of Iranian missiles and drones directed toward Israel, have told their counterparts the US will not participate in any offensive action against Iran, according to US officials familiar with the matter.

In a conversation with Prime Minister Benjamin Netanyahu late Saturday, Biden sought to frame Israel’s successful interception of the Iranian onslaught as a major victory — with the suggestion that further Israeli response was unnecessary.

Biden told the Israeli prime minister in his phone call that he should consider Saturday a win because Iran’s attacks had been largely unsuccessful and demonstrated Israel’s superior military capability, a senior administration official said.

John Kirby, the White House national security spokesman, said Sunday the ability to prevent widespread damage was a demonstration of Israel’s “military superiority” and proof that Iran was not the “military power that they claim to be.”

“This was an incredible success, really proving Israel’s military superiority and just as critically, their diplomatic superiority, that they have friends in the region, that they have around the world that are willing to help them,” Kirby told CNN’s Jake Tapper on “State of the Union.”

Defense Secretary Lloyd Austin asked his Israeli counterpart, Minister Yoav Gallant, to notify the US ahead of any potential response to the Iranian attack, according to another US official.

Even as American officials stressed to their counterparts that the final decision on how to respond to Iran is up to Israel, Biden has sought to prevent a wider escalation of the conflict.

On Sunday, he planned to convene a meeting of fellow Group of Seven leaders to discuss a “united diplomatic response” — with the emphasis on non-military actions that would limit the prospects of a wider war.

“I told him that Israel demonstrated a remarkable capacity to defend against and defeat even unprecedented attacks — sending a clear message to its foes that they cannot effectively threaten the security of Israel,” Biden said in a statement following his conversation with Netanyahu.

Whether Netanyahu takes Biden’s advice remains an open question. The Iranian reprisals came at a moment of deep tension between the men over the war in Gaza. Throughout that conflict, the limits of American influence on Israeli decision-making have been laid bare.

Iran’s decision to fire weapons from its own territory toward Israel significantly ratchets up the long-simmering enmity between the two countries. There will likely be political pressure from inside Israel for some type of response.

Kirby said the attack — the first launched from Iranian soil against Israel — did not necessarily have to constitute the start of a broader regional war.

“We don’t believe it is nor do we believe it has to be,” he told Tapper, noting that the US and Israel both had a good sense of what Iran was planning to do ahead of time.

Gallant warned Sunday that the confrontation with Iran is “not over yet.” The country’s response options are expected to be discussed in detail during a meeting of Israel’s war cabinet meeting.

The Commander of Iran’s Islamic Revolutionary Guard Corps, Hossein Salami, warned that Tehran would respond directly if Israel retaliates, saying a “new equation” had been created.

<<<



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Well, it looks like Iran has sent drones toward Israel, so the next question is what they are targeting. Last week, the US military already started moving more ships into the region, so this could be the start of the big punch up with Iran -


>>> Iran launches dozens of drones at Israel as Mideast tensions soar: Live updates <<<


https://www.usatoday.com/story/news/world/israel-hamas/2024/04/13/israel-war-updates-iran-ship/73311944007/



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Bigworld, With the Middle East situation, we'll see if this cargo ship seizure is the extent of the Iranian 'reply' to Israel's recent bombing of their consulate in Syria. It seems like a measured response, and the Iranians obviously realize they are being set up. Apparently the Iranian leader is in his early 80s, and has been adept at avoiding direct war, and instead uses proxies. However, the Netanyahu gang may just keep raising the stakes until the US is forced into fighting Iran directly. Biden seems very reluctant, but Israel has a nuclear arsenal of its own, and the threat of that being used could force him into action.

Who knows, but as an investor I figure there's no sense having one's neck out too far these days, so I lowered the stock allocation again on Friday afternoon, down to 15% (from 28%). I'll try to hang with that, and can always add a 1X inverse hedge ETF (SH) if the market really starts to unravel. The stock market did great over the last 6 months, but the rest of the year looks murky at best.




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>>> Iranian commandos seize an Israeli-linked container ship near Strait of Hormuz


April 13, 2024

The Associated Press


https://www.npr.org/2024/04/13/1244583830/iran-seizes-container-ship-strait-of-hormuz-israel


DUBAI, United Arab Emirates — Commandos from Iran's paramilitary Revolutionary Guard rappelled down from a helicopter onto an Israeli-affiliated container ship near the Strait of Hormuz and seized the vessel Saturday, the latest in a series of attacks between the two countries.

The Middle East had braced for potential Iranian retaliation over a suspected Israeli strike earlier this month on an Iranian consular building in Syria that killed 12 people, including a senior Guard general who once commanded its expeditionary Quds Force there.

The Israeli war on Hamas in the Gaza Strip meanwhile is now 6 months old and is inflaming decades-old tensions across the whole region. With Iranian-backed forces like Hezbollah in Lebanon and Yemen's Houthi rebels also involved in the fighting, any new attack in the Mideast threatens to escalate that conflict into a wider regional war.

Iran's state-run IRNA said a special forces unit of the Guard's navy carried out the attack on the vessel, the Portuguese-flagged MSC Aries, a container ship associated with London-based Zodiac Maritime.

Biden returns to D.C. a day early to consult national security team on Iran-Israel row

Biden says Iran could soon attack Israel, and warns, 'Don't'

Zodiac Maritime is part of Israeli billionaire Eyal Ofer's Zodiac Group. Zodiac declined to comment and referred questions to MSC. Geneva-based MSC later acknowledged the seizure and said 25 crew had been aboard the vessel.

"We are working closely with the relevant authorities to ensure their wellbeing, and safe return of the vessel," MSC said.

An Indian government official, speaking on condition of anonymity as he was not authorized to brief to journalists, said 17 of the crew were Indians.

IRNA said the Guard would take the vessel into Iranian territorial waters.

Earlier, a Middle East defense official, who spoke on condition of anonymity to discuss intelligence matters, shared a video of the attack with The Associated Press. In it, the Iranian commandos are seen rappelling down onto a stack of containers sitting on the deck of the vessel.

A crew member on the ship can be heard saying: "Don't come out." He then tells his colleagues to go to the ship's bridge as more commandos come down on the deck. One commando can be seen kneeling above the others to provide them potential cover fire.

The video corresponded with known details of the MSC Aries. The helicopter used also appeared to be a Soviet-era Mil Mi-17 helicopter, which both the Guard and the Iranian-backed Houthis of Yemen have used in the past to conduct commando raids on ships.

The British military's United Kingdom Maritime Trade Operations described the vessel as being "seized by regional authorities" in the Gulf of Oman off the Emirati port city of Fujairah, without elaborating.

How Iran and Israel became archenemies

Israeli Foreign Minister Israel Katz called on nations to list the Guard as a terrorist organization.

Iran "is a criminal regime that supports Hamas' crimes and is now conducting a pirate operation in violation of international law," Katz said.

Iran since 2019 has engaged a series of ship seizures and attacks on vessels have been attributed to it amid ongoing tensions with the West over its rapidly advancing nuclear program.

Since November, Iran had dialed back its ship attacks as the Houthis targeted ships in the Gulf of Aden and the Red Sea. Houthi attacks have slowed in recent weeks as the Muslim holy fasting month of Ramadan ended and the rebels have faced months of U.S.-led airstrikes targeting them.

In previous seizures, Iran has offered initial explanations about its operations to make it seem like the attacks had nothing to do with the wider geopolitical tensions — though later acknowledging as much. In Saturday's attack, however, Iran tellingly offered no explanation for the seizure other than to say the MSC Aries had links to Israel.

Iran has been threatening to act after Israeli strike in Syria

For days, Iranian officials up to and including Supreme Leader Ayatollah Ali Khamenei have been threatening to "slap" Israel for the Syria strike. Western governments have issued warnings to their citizens in the region to be prepared for attacks.

However, Iran in the past largely has avoided directly attacking Israel, despite it carrying out the targeted killing of nuclear scientists and multiple sabotage campaigns against Iran's atomic sites. Iran has, however, targeted Israeli or Jewish-linked sites through proxy forces over the decades.

Earlier this week, Guard Gen. Ali Reza Tangsiri, who oversees Iran's naval forces, criticized the presence of Israelis in the region and in the United Arab Emirates. The UAE reached a diplomatic recognition deal with Israel in 2020, something that long has enraged Tehran.

"We know that bringing Zionists in this point is not merely for economic work," Tangsiri reportedly said. "Now, they are carrying out security and military jobs, indeed. This is a threat, and this should not happen."

The U.S., Israel's main backer, has stood by the country despite growing concerns over Israel's war on Gaza killing more than 33,600 Palestinians and wounding over 76,200 more. Israel's war began after Hamas' Oct. 7 attack on Israel that killed 1,200 people and saw some 250 others taken hostage.

On Friday, President Joe Biden warned Iran not to attack Israel and said he felt an Iranian attack on Israel likely would happen "sooner than later."

"We will help defend Israel, and Iran will not succeed," Biden added.

The Gulf of Oman is near the Strait of Hormuz, the narrow mouth of the Persian Gulf through which a fifth of all globally traded oil passes. Fujairah, on the United Arab Emirates' eastern coast, is a main port in the region for ships to take on new oil cargo, pick up supplies or trade out crew.

Since 2019, the waters off Fujairah have seen a series of explosions and hijackings. The U.S. Navy blamed Iran for limpet mine attacks on vessels that damaged tankers. The UAE meanwhile has sought to mend ties with Iran and issued a statement condemning the suspected Israeli attack in Syria.

Meanwhile, Lufthansa Group said on Saturday it had extended the suspension of its flights between Frankfurt and Tehran though Thursday and said that all of its planes would avoid Iranian airspace in that period. The German carrier also said that, until at least Tuesday, flights to and from Amman will be operated as "day flights" so crews can return to Frankfurt without spending a night in the Jordanian capital.

Dutch airline KLM said in a statement Saturday that it will no longer fly over Iran or Israel, but will continue flights to and from Tel Aviv, a destination not currently deemed risky. "Safety has the highest priority," KLM said.

<<<



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>>> Iranian attack on Israel expected ‘sooner rather than later’, says Joe Biden

President said US are ‘devoted to the defence of Israel’ as he urged Tehran to show restraint


The Guardian

by Peter Beaumont, Julian Borger and Patrick Wintour

Apr 12, 2024


https://www.theguardian.com/world/2024/apr/12/france-diplomats-families-iran-israel-travel-warnings


Joe Biden has said he expects an Iranian attack on Israel “sooner rather than later” and issued a last-ditch message to Tehran: “Don’t.”

“We are devoted to the defence of Israel. We will support Israel. We will help defend Israel and Iran will not succeed,” Biden told reporters on Friday.

Earlier the White House national security spokesperson John Kirby warned that the threat of a significant Iranian attack on Israel remains “viable” despite Washington-led efforts, including calls to Tehran from the UK and Germany, to deter a serious escalation in the conflict in the Middle East.

The White House comments came as several countries, including India, France, Poland and Russia, warned their citizens against travel to the region and Israel’s defence minister, Yoav Gallant, said his country was “prepared to defend [itself] on the ground and in the air, in close cooperation with our partners”.

Later CBS, quoting two unnamed US officials, reported that a substantial missile and drone attack could be launched as early as Friday evening, as a number of countries urgently warned their nationals of the risk of escalating violence in the region, and Israel’s prime minister, Benjamin Netanyahu, convened a security assessment.

Appearing to underline that report, Javad Karimi-Ghodousi, a member of the Iranian parliament’s national security and foreign policy commission, said: “After punishing the Zionist regime in the coming hours, this villain will understand that henceforth, wherever in the world it attempts to assassinate figures of the resistance front, it will again be punished with Iranian missiles.”

German airline Lufthansa said on Friday its planes would no longer use Iranian airspace and extended its suspension of flights to and from Tehran until Thursday.

Qantas has paused its non-stop flights from Perth to London because the 17-and-a-half-hour flight is possible only by using Iranian airspace.

Iran has threatened reprisals against Israel for a strike on the Iranian consulate in Syria on 1 April, in which seven members of the Revolutionary Guards including two generals were killed, sparking fears that an already volatile climate in the Middle East could quickly spiral further.

Tehran’s foreign minister, Hossein Amir-Abdollahian, said on Thursday that Iran felt it had no choice but to respond to the deadly attack on its diplomatic mission after the UN security council failed to take action.

Speaking to reporters, Kirby said the prospect of an Iranian attack on Israel was “still a viable threat” despite concerted efforts by Israel and the US in recent days to deter it.

“We are in constant communication with our Israeli counterparts about making sure that they can defend themselves against those kinds of attacks,” Kirby said. He confirmed that the head of US Central Command, Gen Erik Kurilla, was in Israel talking with defence officials about how Israel could be best prepared.

Israel has said it is strengthening air defences and has paused leave for combat units.

On Friday, France ordered the evacuation of diplomats’ families and warned nationals in several other countries, including Israel and Lebanon, and alerts were issued by Canada and Australia. The US also restricted travel within Israel for US diplomats and their families.

In its strong warning on Friday, the French foreign ministry advised citizens against travelling to Iran, Lebanon, Israel and the Palestinian territories and said French civil servants were banned from conducting any missions there.

The advisories followed a number of media reports that Israel was preparing for the prospect of an attack from Iran, possibly as soon as this weekend.

A US official told the Wall Street Journal that American intelligence reports indicated an Iranian retaliatory strike “possibly on Israeli soil” as opposed to against Israeli interests elsewhere, adding that the strike could come within 24 to 48 hours.

The same report, however, also reported an individual briefed by the Iranian leadership as saying no final decision had been taken by Tehran.

While analysts had initially speculated that Iran may not rush into a response, concern has grown in the last two days over the potential for direct conflict between Iran and Israel after years of proxy conflict between the two enemies.

More recently experts have suggested that Iran now feels it is required to act militarily to restore its balance of deterrence with Israel.

On Wednesday, Joe Biden said Iran was threatening a “significant attack” against Israel and that Washington would do all it could to protect Israel’s security.

The US president’s comments in turn followed a televised speech by Iran’s leader saying the attack in Damascus was equivalent to an attack on Iran itself. “When they attacked our consulate area, it was like they attacked our territory,” Ayatollah Ali Khamenei said. “The evil regime must be punished, and it will be punished.”

The Israeli military said it was fully prepared for any strike. Israel was “on alert and highly prepared for various scenarios, and we are constantly assessing the situation,” the Israel Defense Forces spokesperson, R Adm Daniel Hagari, said at a press conference. “We are ready for attack and defence using a variety of capabilities that the IDF has, and also ready with our strategic partners.”

According to reports in the Israeli media, the IDF believes that Iran or one of its proxies are most likely to attempt to strike a military target rather than civilian centres, although some sites such as the Kirya, Israel’s defence headquarters in Tel Aviv, are located in city centres next to shopping malls, offices and restaurants.

Concern over a significant escalation in the Middle East conflict, which has already drawn in Hezbollah in Lebanon, pro-Iranian groups in Iraq and Yemen’s Houthis, came as Israeli forces continued to fight Palestinian militants in the north and centre of the Gaza Strip.

Residents of al-Nusseirat refugee camp in central Gaza said dozens were dead or wounded after Israeli bombardment from air, land and sea that had followed a surprise ground assault on Thursday, and that houses and two mosques had been destroyed.

<<<



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Bigworld, Looks like gold finally hit some profit taking today, after reaching ~ 2450 intraday. Meanwhile the US dollar has also been surging over the last 3 days, so an unusual combination with both gold and the dollar climbing together. I figure some of the dollar strength is from the Fed delaying % rate cuts, plus dollar demand coming from people leaving the stock market.

Fwiw, I lowered my stock allocation from 28% to 20% today, but might still be on the high side. 15% could make more sense, but I'd first like to see if the S+P 500 holds at its 50 MA support. The DJIA and Russell both fell through their 50 MAs this week, but the Nasdaq is still above its 50 MA, and the S+P 500 is testing its today.

What worries me the most are the geopolitical landmines. It appears the various globalist factions may now be in agreement on an even more aggressive 'war brinksmanship' approach for dealing with Russia, Iran, etc. It's a lot safer to have these US/West foreign policy people at loggerheads with each other. Better to have relative gridlock to provide a check / balance on the lunacies of both sides, since these idiots could bumble us right into WW 3.



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https://kunstler.com/clusterfuck-nation/the-beauty-parlors-full-of-sailors-and-the-circus-is-in-town/

gfp: Things appear slightly different this time. Gold and silver are rising even with interest rates climbing and the Dollar being relatively "strong". Some analysts attribute it to continued stockpiling by countries and Central Banks. All fiat currencies eventually fall to their intrinsic value....zero. Gold retains purchasing power over time. I know that there will be a monkey hammer take down of gold and silver at some point. But I think that will only create another buying opportunity. We are in a "Fourth Turning". Anything can happen. A crisis is brewing. Probably several different crises all at once. It's good to have gold and silver. And dividend paying energy plays. If wars break out energy prices will skyrocket.

Bye the way Rinear thinks the move in gold and silver is due to underlying problems below the surface in the bond markets. Well we are already in a Minsky Moment. Interest on the debt balloons to over $1.5 Trillion a year by year's end, becoming the highest line item in the Federal budget. And that's at current interest rates. If rates rise all bets are off. And yet we add about $3 Trillion a year to the debt making things worse.

gfp: When countries are as financially mismanaged as badly as the USA and Western Europe they leaders ill always look to widespread world wars to get into so as to focus the blame for their ineptitude and corruption elsewhere...on the "enemy". I just don't think they will be able to pull it off for two reasons. The collective "west" is broke. Insolvent. Any war would have to be financed with printed money. That's inflationary. The people are already suffering from inflation. If it doubles, triples or goes to hyperinflation then revolutions happen. Secondly there are not going to be enough willing participants to become cannon fodder for the bankers and political elites. A conscription Draft in the USA or Western Europe would fail miserably. The Deep State would have to nuke a city in America on the east coast to drum up enough hatred to get people invested in another useless war.

https://www.zerohedge.com/markets/central-banks-are-buying-gold-top

Bigworld, Gold futures - 2404, and silver - 28.85.

Wow, this has been some move. At the end of Feb, gold was ~ 2060, and on March 1st it took off, and so far is up 17%. The way it's moving, 2500 could come next week, and that would put it up over 20%. Over the same time period, silver has gone from 22.91 to 28.85, so up over 25%. Usually it would take a falling US dollar to get gold moving strongly upward, but the dollar is actually up modestly since Mar 1, so go figure.

With such a sudden runup in gold, one possible explanation is that some key players have become aware of a coming crisis, so they are piling into gold. With the Middle East teetering on disaster for months, that would be the obvious possibility. It appears the Netanyahu gang have pivoted away from the Gaza operation, and are moving into the next phase against Syria, Lebanon --> Iran. So the broader 'US bombs Iran' scenario might be starting to unfold in the period ahead, with the first step being to initiate military strikes within Iran itself, and growing from there.

Just a guess, but I'm thinking that it might be time to start reducing the stock allocation. In addition to the geopolitical landmines, it looks like the Fed's % cut plans are being pushed back, and the election uncertainty will be growing as a negative factor for the markets.




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Bigworld, Looks like a setup designed to drag the US into attacking Iran -


>>> U.S. Warns of Imminent Attack on Israeli Assets by Iran or Proxies


Wall Street Journal

by Warren P. Strobel


https://www.msn.com/en-us/news/world/u-s-warns-of-imminent-attack-on-israeli-assets-by-iran-or-proxies/ar-BB1lpTb8?OCID=ansmsnnews11


WASHINGTON—U.S. intelligence reports show that an attack on Israeli assets by Iran or its proxies could be imminent, U.S. officials said Wednesday, as the top American military commander for the Middle East headed to Israel to coordinate a response.

Iran has publicly threatened to retaliate for a strike in Syria on an Iranian diplomatic building in Damascus last week, presumed to be the work of Israel, that killed top Iranian military officials, including a senior member of the Islamic Revolutionary Guard Corps’ elite Quds Force.

Syria and Iran accused Israel of carrying out the attack, which killed Gen. Mohammad Reza Zahedi, who managed Iranian paramilitary operations in Syria and Lebanon, according to Iranian state media and U.S. officials. Zahedi was the highest-ranking Iranian military official to be killed since the January 2020 U.S. assassination of Gen. Qassem Soleimani in Baghdad.

The U.S. has said it wasn’t involved in the strike in Syria and received no previous warning from Israel that it planned to conduct the attack.

It is unclear whether Iran is planning to conduct a direct strike on Israeli targets or use one of its Middle East proxies. In the past, Tehran has appeared eager to avoid a direct confrontation with Israel or the U.S. and worked via proxies such as Hezbollah in Lebanon, the Houthis in Yemen and Iran-backed groups in Iraq.

But U.S. defense officials warned that Iran could use its own military forces this time to demonstrate a forceful response to Zahedi’s death.

President Biden said on Wednesday that Iran is “threatening to launch a significant attack on Israel.”

“As I told [Israeli] Prime Minister [Benjamin] Netanyahu, our commitment to Israel’s security against these threats from Iran and its proxies is ironclad,” Biden told reporters. “Let me say it again: ironclad. We’re going to do all we can to protect Israel’s security.”

The Biden administration has passed messages to Iran saying that it wasn’t involved in the Israeli strike in Damascus and would hold Iran accountable if it attacked U.S. forces or assets, U.S. officials say. Iran has sent its own messages to the U.S., Iranian officials have said.

Mohammad Jamshidi, the deputy chief of staff to Iran’s president, said in a tweet on April 5 that Tehran had warned the U.S. “not to get dragged in Netanyahu’s trap.”

The U.S. reached out Wednesday to countries in the region to ask them to encourage Iran to avoid escalation, a U.S. official said.

Israeli officials have vowed to strike back if the country is attacked by Iran. The rhetoric on both sides has raised concerns about a wider Middle East war six months after Hamas attacked Israel, leaving more than 1,200 people dead, according to Israel, and prompting an Israeli invasion of the Gaza Strip. That offensive has resulted in the death of more than 33,000 Palestinians, most of them women and children, according to Palestinian health officials, whose figures don’t distinguish between combatants and civilians.

Gen. Michael Erik Kurilla, the commander of U.S. Central Command, which is responsible for U.S. military operations in the Middle East, had planned to travel to Israel before the strike in Damascus, U.S. defense officials said, primarily to iron out logistics for a U.S. temporary pier set to be placed in northern Gaza to expand humanitarian aid deliveries.

He now is expected to leave for Israel this week to also discuss a possible Iranian attack and how the U.S. could respond, the officials said. Kurilla is expected to meet with Israeli Defense Minister Yoav Gallant.

While the Pentagon doesn’t discuss whether it is currently adjusting forces in response to potential threats, U.S. military forces in the region had already been in a heightened state since Hamas’s Oct. 7 attacks on Israel.

Iran’s Supreme Leader Ayatollah Ali Khamenei said Wednesday on X that the strikes in Syria constituted an attack on Iranian soil and that Israel “should be punished, and it will be punished.” Israeli Foreign Minister Israel Katz responded that if Iran attacks Israel from Iranian soil, Israel would retaliate inside Iran.

<<<




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>>> Why Are Gold Bar Sales Surging at Costco?


The New York Times

by Rebecca Carballo

April 11, 2024


https://www.yahoo.com/news/why-gold-bar-sales-surging-175059774.html


Alongside its $1.50 hot dog and soda combo, gallon tubs of mayonnaise and value packs of socks, Costco, the warehouse retailer, has been selling gold bars since October.

Now, Costco is selling up to $200 million worth of gold and silver each month, according to an analysis from Wells Fargo.

Online forums and Reddit threads have cropped up where customers give one another advice on how to purchase the bars before they sell out.

“I’ve gotten a couple of calls that people have seen online that we’ve been selling one-ounce gold bars, yes, but when we load them on the site, they’re typically gone within a few hours,” Richard Galanti, Costco’s executive vice president and chief financial officer, said in an earnings call in September.

Costco started selling gold bars in October.

Costco is now selling one-ounce, 24-karat gold bars, according to its online store. The bars can be purchased only by members, and the price varies based on market rates. As of Thursday, the bars were sold out for members online, but The Wall Street Journal reported that shoppers purchased them for around $2,000 in December.

Costco has also been selling silver coins, advertised as 99.9% pure silver, since January, according to an analyst report from Wells Fargo.

People buy gold in times of turmoil.

The precious metal has set a series of records as it surged to $2,350 per troy ounce, up roughly $300 since the start of March.

Buying gold becomes more common in times of economic turmoil. Although the U.S. economic outlook has improved and inflation has slowed, it remains higher than the targets from the Federal Reserve, said Sadiq S. Adatia, the chief investment officer for BMO Global Asset Management. And on Wednesday, a key inflation rate was revealed to be stronger than expected.

Investors have said they were puzzled about the rally.

Geopolitical concerns could also be a factor in an increasing interest in gold, Adatia said. There has been more interest in gold since Ukraine’s currency collapsed after Russia’s invasion, he said.

For those looking to purchase gold for the first time, Costco provides familiarity and ease, Adatia said.

“They make it convenient,” he said. “People can physically go in and pick it up and that’s it, versus opening up an account and buying gold shares.”

How much is Costco profiting from this?

Probably not too much.

Given its pricing and shipping costs, it’s likely a “very low profit business at best,” analysts with Wells Fargo wrote in a note to clients on Tuesday.

Costco sold more than $100 million of gold during its first quarter, or the three-month period ending on Sept. 30 last year, Galanti said on a December earnings call. However, those sales have likely grown since then and may now be running at $100 million to $200 million per month, which could increase its sales figures by 1%.

“The reason that we looked at this is that it’s becoming a larger contributor to sales for them,” said Edward Kelly, managing director of equity research at Wells Fargo. “It’s not that $100 or $200 million a month is a lot for Costco, but it’s new business and they didn’t have that business last year.”

In the three-month period ending on Dec. 31, Costco’s e-commerce sales grew 18% compared with the same period a year earlier, driven in part by demand for the precious metals, Galanti told investors on an earnings call in March.

Investing in metals can be volatile.

The Commodity Futures Trading Commission has urged caution when buying gold because precious metals can be highly volatile.

“Like other commodities, precious metal prices rise as demand goes up, so when economic anxiety or instability is high, the people who typically profit from precious metals are the sellers,” the agency said in a statement.

The commission likely puts that warning out to signal that it is not a guaranteed investment, said Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report. He recommends the average person invest 3% to 5% of their assets in gold.

<<<



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Bigworld, It's great to hear the culture was negative, and that things can move ahead. While having surgery again will be an ordeal, regaining your mobility will be great, and you can resume a regular life :o)

Thanks for the stock ideas. Nuclear and Copper do seem like the logical winners in the 'electric everything' paradigm. I have some URA, but wonder how they can pay a 5.8% yield when the stocks it holds don't seem to pay much in dividends (?) Same with URNM, which yields 3.5%, so I must be missing something.

With copper COPX seems like a good way to go, and SCCO is another vehicle. I've been waiting for a pullback, but so far these keep plowing higher, so I guess some patience will be required. For dividends, RIO and PICK seem like solid vehicles. PICK also has some steel stocks (STLD, NUE), which have been doing great in recent years.

Nice to see gold and silver finally moving. Looks like silver is homing in on 30, then probably some consolidation.



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gfp: I see the morning numbers on gold and silver. I'm cautiously optimistic. The 10 interest rate is dropping a little. We have inflation numbers tomorrow. I'm encouraged. But so far the miners are moving up but much slower than what they have done in the past when the spot prices of the metals are rising fairly rapidly. I'd like to see a bigger upward move on the miners. I'd like to diversify a bit more with an eye toward dividend yields now that I'm planning to mostly retire at the end of the year.

My knee aspiration culture came back negative. I'm cleared to return to work. I plan to work until mid June. My surgery date is set at Wednesday June 19th. I'm taking another 2 month leave to recover from that. Revisions to a total knee are more difficult to recover from. They have to cut away more bone and use larger hardware that is set in deeper into my long bones. I had an easy time recovering from the first TKA. This time around it's going to be a lot tougher.

gfp: I have a small position in UEC. I wish I had bought more. It's done really well. My biggest individual uranium stock is Cameco (CCJ). I have my eye on Denison Mines (DNN) but don't own any yet. And I have some URA. I'm getting influenced by BAR. I like good dividend plays now, especially in IRAs. You can't beat URA yield while you wait for capital gains. I view it as a core hold investment. I also own RIO for it's copper exposure primarily. The yield isn't bad either. I bought it in late 2021, saw it surge higher, then plummet below my buy in. But I held on. I'm currently green on the stock but I view it as a long term hold due to my hard asset focus. Electronics need copper. I have some COPX also for easy diversity in the copper space.

gfp: Like most of the apparatchiks of the Biden/Obama regime Blinken is pretty much an idiot.

Ukraine attacks nuclear power plant -

(mad bomber Zelensky strikes again)


>>> What are the risks at Zaporizhzhia nuclear power plant after drone attack?


Reuters

By Guy Faulconbridge and Francois Murphy

April 8, 2024


https://www.reuters.com/world/europe/nuclear-power-plant-eye-ukraine-war-2024-04-08/


MOSCOW/VIENNA, April 8 (Reuters) - Russia said Ukraine struck the Zaporizhzhia nuclear power station controlled by Russian forces three times on Sunday and demanded the West respond, though Kyiv said it had nothing to do with the attacks.

The International Atomic Energy Agency (IAEA) has long warned of the risks of a disaster at Zaporizhzhia, Europe's largest nuclear plant, and urged an end to fighting in the area. The plant is just 500 km (300 miles) from the site of the world's worst nuclear accident, the 1986 Chornobyl disaster.

What nuclear material is at the Zaporizhzhia plant, what are the risks and why are Russia and Ukraine fighting over it?

WHAT IS IT AND WHAT WAS ITS CAPACITY?

The Zaporizhzhia nuclear power plant has six Soviet-designed VVER-1000 V-320 water-cooled and water-moderated reactors containing Uranium 235. They were all built in the 1980s, though the sixth only came online in the mid-1990s after the collapse of the Soviet Union. All but one of the reactors are in cold shutdown. Reactor unit 4 is in "hot shutdown", mainly for heating purposes. IAEA Director General Rafael Grossi says that fighting a war around a nuclear plant has put nuclear safety and security in "constant jeopardy".

WHAT HAPPENED ON APRIL 7?

Russia's state nuclear corporation, Rosatom, said Ukraine attacked the plant three times on Sunday with drones, first injuring three near a canteen, then attacking a cargo area and then the dome above reactor No. 6.

IAEA experts at the site went to the three locations of the attacks and confirmed there had been an attack. "Russian troops engaged what appeared to be an approaching drone," the IAEA said. "This was followed by an explosion near the reactor building."

"While the team so far has not observed any structural damage to systems, structures, and components important to nuclear safety or security of the plant, they reported observing minor superficial scorching to the top of the reactor dome roof of Unit 6 and scoring of a concrete slab supporting the primary make-up water storage tanks," the IAEA said.

The IAEA did not say directly who was to blame for the attacks. A Ukrainian intelligence official said Kyiv had nothing to do with any strikes on the station and suggested they were the work of Russians themselves. (lol)

WHAT ARE THE RISKS?

Russian forces took control of the plant in early March 2022, weeks after invading Ukraine. Special Russian military units guard the facility and a unit of Russia's state nuclear company, Rosatom, runs the plant. Nuclear reactors' containment structures like Zaporizhzhia's are made of steel-lined reinforced concrete designed to withstand the impact of a small plane crash so there is little immediate risk from a minor attack on those structures. A 1989 study by the U.S. Department of Energy found that the model of containment structure used in Zaporizhzia "exhibits vulnerabilities to the effects of an aircraft crash" and a fighter jet crashing downwards into the dome, where the structure is thinner, could penetrate it, causing concrete chunks and aircraft engine parts to fall inside.

External power lines essential to cooling nuclear fuel in the reactors are a softer potential target. Cooling fuel even in reactors in cold shutdown is necessary to prevent a nuclear meltdown. Since the war began the plant has lost all external power eight times, most recently in December last year, forcing it to rely on emergency diesel generators for power. Water is also needed to cool fuel. Pressurised water is used to transfer heat away from the reactors even when they are shut down, and pumped water is also used to cool down removed spent nuclear fuel from the reactors. Without enough water, or power to pump the water, the fuel could melt down and the zirconium cladding could release hydrogen, which can explode.

WHAT ABOUT THE SPENT FUEL?

Besides the reactors, there is also a dry spent fuel storage facility at the site for used nuclear fuel assemblies, and spent fuel pools at each reactor site that are used to cool down the used nuclear fuel. Without water supply to the pools, the water evaporates and the temperatures increase, risking a fire that could release a number of radioactive isotopes. An emission of hydrogen from a spent fuel pool caused an explosion at reactor 4 in Japan's Fukushima nuclear disaster in 2011.

WHAT HAPPENS IN A MELTDOWN?

A meltdown of the fuel could trigger a fire or explosion that could release a plume of radionuclides into the air which could then spread over a large area. The Chornobyl accident spread Iodine-131, Caesium-134, Strontium-90 and Caesium-137 across parts of northern Ukraine, Belarus, Russia, northern and central Europe. Nearly 8.4 million people in Belarus, Russia and Ukraine were exposed to radiation, according to the United Nations. Around 50 deaths are directly attributed to the disaster itself.

But 600,000 "liquidators", involved in fire-fighting and clean-up operations, were exposed to high doses of radiation. Hundreds of thousands were resettled. There is mounting evidence that the health impact of the Chornobyl disaster was much more serious than initially presented at the time and in the years following the accident. Incidence of thyroid cancer in children across swathes of Belarus, Russia and Ukraine increased after the accident. There was a much higher incidence of endocrine disorders, anaemia and respiratory diseases among children in contaminated areas.

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Bigworld, Silver futures over 28, and gold up also (2371), so nice to see the metals finally getting some long overdue upside :o) Looking at the silver chart, it looks like a run to 30 is underway.(2020-21 highs) :o)

For gold it's tougher to pick an upside target since it's in uncharted territory, but an old rule of thumb with a Cup + Handle breakout is that the upside move will match the size (depth) of the Cup, so that would suggest an eventual upside target of around 3000.

These TA / chart rules may sound fanciful, but they are very useful since everyone on Wall Street uses these same rules, so they become self fulfilling. Chart patterns also accurately reflect the human 'herd behavior' aspects (greed, fear) that are repeated over and over, even in computerized trading since the algorithms that determine buy / sell points are designed by humans.



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Bigworld. Speaking of nuclear energy, there's been some wild activity among some US utility stocks with nuclear exposure. Check out the charts for CEG, VST, and TLNE --> straight up for months, mostly based on the idea that the rapid growth of AI / data centers will require the steadiness of nuclear power (article excerpt below).

Btw, just curious which stocks / ETFs you are using for nuclear exposure? Thanks. I have URA and NLR, and also got a small amount BWXT on Friday. BWXT has both US Navy exposure as well as the commercial side. It's had a big run, but has consolidated somewhat over the last month, although still not anything close to cheap.

CCJ seems like an obvious choice, though the broad ETF (URA) has over 20% in CCJ, so I figure that's one way to go, and URNM is another ETF. Both URA and URNM have high expense ratios though (0.69%, 0.75% respectively), but also pay a nice dividend (5.8% and 3.5%). Likewise with NLR, and it has some exposure to the nuclear utilities.

Fwiw, I had all these last Fall but then decided to exit, so missed out on much of the move. Now back in with small amounts (URA, NLR, BWXT). On the regular mining side I have RIO and PICK. Thanks for any additional ideas :o)


https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174146014



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Bigworld, Here are Blinken's statements on Ukraine, from the State Dept website (below). It doesn't sound nearly as imminent as Kunstler said (NATO membership 'ASAP'), but more ambiguous -- to 'build a bridge to that membership, create a clear pathway'.

Fwiw, I think the idea has been to isolate and wear down Russia with an extended war, similar to the US strategy back in the 1980s with the 10 year Russia / Afghanistan war, which was originally cooked up by Zbigniew Brzezinski, and culminated in the collapse of the Soviet Union. The US/West presumably believe a similar approach could work again, using Ukraine as the battleground for the proxy war. An extremely dangerous strategy, to say the least -


>>> Secretary Antony J. Blinken and Ukrainian Foreign Minister Dmytro Kuleba Before Their Meeting


https://www.state.gov/secretary-antony-j-blinken-and-ukrainian-foreign-minister-dmytro-kuleba-before-their-meeting-10/


REMARKS

ANTONY J. BLINKEN, SECRETARY OF STATE

NATO HEADQUARTERS

BRUSSELS, BELGIUM

APRIL 4, 2024

SECRETARY BLINKEN: It’s very good to be with my friend and colleague Dmytro Kuleba, the foreign minister of Ukraine. We just came from a session with all NATO Allies and Foreign Minister Kuleba, and I think it’s safe to say that the support for Ukraine, the determination of every country represented here at NATO remains rock solid. We will do everything we can; Allies will do everything that they can to ensure that Ukraine has what it needs to continue to deal with Russia’s ongoing aggression against Ukraine, an aggression that gets worse with every passing day. And we’ve seen that just in the month of March with thousands of missiles, rockets, projectiles launched at Ukrainians and Ukraine’s cities and towns, its electricity grid – and that continues.

We’re also here at NATO to talk about the summit that’s upcoming in the summer in Washington, celebrating the 75th anniversary of the Alliance. Ukraine will become a member of NATO. Our purpose of the summit is to help build a bridge to that membership and to create a clear pathway for Ukraine moving forward. We’ve done a lot of work on that over the last couple of days here in Brussels, a lot more work to be done between now and the summit, but we will see, I think, at the summit very strong support for Ukraine going forward and its relationship with NATO.

But we’re equally focused, as I said, on the immediate and on Ukraine’s needs today, tomorrow, the day after to help it withstand this ongoing aggression from Russia. We’ll talk about all of that and the work that our two countries continue to do together.

The final point is this: The fight that Ukraine has on its hands is not only Ukraine’s fight; it’s everyone’s fight. Because the aggression being committed by Russia is not only an aggression against Ukraine and its people, it’s an aggression against the very principles that lie at the heart of the international system. If Russia were somehow to succeed in Ukraine, if we did not continue to stand with Ukraine, the message to would-be aggressors everywhere is it’s open season; you can get away with it too.

And so it’s imperative that Congress move forward with a supplemental budget request that President Biden made for additional assistance to Ukraine. It’s not only in Ukraine’s interest; it’s profoundly in our own. And we have dozens of allies as well who feel the same way, who are more than picking up their share of the burden. And the supplemental will help ensure that we can continue to deliver for Ukraine because Ukraine is delivering for us, fighting the fight every day to uphold these principles that Russia’s aggressing and that matter to the United States and matter to every country in NATO.

FOREIGN MINISTER KULEBA: Thank you for the kind and strong words that you said just now, but also in the meeting behind the closed doors. I didn’t want to spoil the birthday party for NATO, but I felt compelled to deliver a very sobering message on behalf of Ukrainians about the state of Russian air attacks on my country, destroying our energy system, our economy, killing civilians. And I urged Allies today to provide Ukraine with new additional air defense systems, the best of which is Patriot. This is the only system that effectively intercepts ballistic missiles. In March only, Ukraine suffered from 94 ballistic missiles – 94 ballistic missiles were shot at Ukraine.

As a result of the discussions that we had and these strong encouraging messages from Secretary Blinken, Allies will undertake an exercise of allocating, of finding this – identifying this additional air defense systems in order to bring them to Ukraine, to provide them to Ukraine, and help defend our skies.

Of course, I also listened carefully to the discussion, to the comments related to the upcoming Washington Summit. It is up for – up to Allies themselves to decide on the form and the content of the next step towards Ukraine’s membership in NATO. I understand the decision has been taken today to task the military – military part of the Alliance with designing what that step could be. And we will be looking forward to the outcome, but, of course, we believe that Ukraine deserves to be a member of NATO and that this should happen sooner – rather sooner – sooner rather than later. So we will be looking forward to the outcome of these deliberations.

Finally, I would like to thank the people of the United States, the Biden administration, and those forces in Congress who work tirelessly on finding a solution to a very – to a problem that seems to be very simple; just put something to the vote, put the law to the vote. No one has doubts that the law will be voted by overwhelming majority, but overcoming this last obstacle is crucial. It has to happen as soon as possible. We heard the latest messages coming from Washington, and we hope that this will be delivered. Thank you.

SECRETARY BLINKEN: Thanks.

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https://kunstler.com/clusterfuck-nation/vectoring-dangerously/

gfp: Unless the world's scientists can perfect fusion energy creation and are able to commercialize it at scale then uranium will be our only viable source for long term electricity generation. Solar panels as best left to rooftop installations and windmills are a total folly from a resource perspective, and they cause wildlife problems to boot. So I have to think that uranium is going to be our best alternative for the next 50 years at least. Instead of fighting unnecessary wars we should be building nukes all over the world. Energy drives GDP which accounts for our collective standard of living. Without adequate energy we can't run the world as it exists. Without energy our standard of living drops by centuries and billions of people on the planet will die.

https://www.zerohedge.com/commodities/container-ship-reportedly-lost-power-nyc-harbor-right-verrazzano-narrows-bridge

>>> All eyes on inflation print as Q1 earnings season kicks off: What to know this week


Yahoo Finance

by Josh Schafer

April 7, 2024


https://finance.yahoo.com/news/all-eyes-on-inflation-print-as-q1-earnings-season-kicks-off-what-to-know-this-week-115748545.html


A robust jobs report couldn't save stocks from weekly losses as a spike in oil prices amid tensions in the Middle East and worries over the Federal Reserve's rate cut path put a damper on the market's hot start to the year.

For the week, the Dow Jones Industrial Average (^DJI) led the losses, falling nearly 2.3%, or more than 900 points. This marked the Dow's worst weekly performance in more than a year. Meanwhile, the S&P 500 (^GSPC) fell nearly 1% and the tech-heavy Nasdaq Composite (^IXIC) slipped 0.8%.

In the week ahead, a fresh reading on inflation and the start of first quarter earnings season will greet investors.

On the corporate front, JPMorgan (JPM), Wells Fargo (WFC), BlackRock (BLK), and Citi (C) are set to report earnings along with Delta Air Lines (DAL).

Elsewhere in economic news, minutes from the Federal Reserve's March meeting and an update on consumer sentiment are on the schedule.

The rate debate

While the Fed maintained its forecast for lowering interest rates three times this year at its last meeting, there's growing discussion about whether the central bank will make fewer cuts — or even hold off on them altogether.

On Thursday, Minneapolis Fed president Neel Kashkari suggested the Fed may not cut interest rates at all this year if inflation progress stalls. And after the March jobs report showed the labor market remains remarkably resilient, Apollo Global Management chief economist Torsten Sløk said the report is in line with his previous call for no cuts this year. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

"We are sticking to our view that the Fed will not cut interest rates this year," Sløk wrote in a note to clients.

Others believe Friday's data showed some positive developments on the supply side of the labor market, helping bolster the case that a strong labor market and wage growth won't necessarily fuel inflation.

"We see the report as supporting Chair Powell's view that the Fed can start a cautious and gradual easing cycle later this year — as long as the incoming data on inflation show improvement," Bank of America US economist Michael Gapen wrote in a research note on Friday.

Price check

The week ahead will provide another update on the inflation story with the release of the March Consumer Price Index on Wednesday. After some have noted seasonal effects could have caused sticky inflation readings to start the year, economists will be closely watching to see if inflation returned to its downward trend in March.

Wall Street expects an annual gain of 3.5% for headline CPI, which includes the price of food and energy, a noted increase from the 3.2% headline number in February. Prices are set to rise 0.4% on a month-over-month basis, in line with February's rise.

On a "core" basis, which strips out the food and energy prices, inflation is expected to have risen 3.7% year over year, a slowdown from the 3.8% increase seen in February. Monthly core price increases are expected to clock in at 0.3%, slower than the 0.4% increases seen in January and February.

"The March CPI report will be a key indication of whether the pickup in inflation at the start of 2024 was a function of early-year noise or if inflation's journey back to the Fed's target has been drawn out materially," Wells Fargo senior economist Sarah House wrote in a note to clients. "We believe it will show hints of both dynamics at play."

A new earnings season kicks off

Delta is set to report earnings on Wednesday before the bell, an appetizer for investors before a slew of the nation's largest financial institutions, including JPMorgan, officially usher in the first quarter reporting season on Friday.

Broadly, Wall Street expects the first quarter to set the tone for a robust year of earnings growth among S&P 500 companies. Consensus expects first quarter growth for S&P 500 companies of 3.2% compared to the year prior. For the full year, Wall Street sees S&P 500 earnings growing 10.9%.

From a broad perspective, two key themes to watch will be which sectors are seeing earnings growth and, as always, how company executives think the current economic environment will impact the rest of their year.

Within the sector action, Wall Street strategists will be closely following whether earnings pick up in areas outside of technology, as they've recently helped lead a broadening of the stock market rally.

Part of that rally has been backed by an expectation that earnings will begin to grow among the 493 S&P companies that weren't a part of the Magnificent Seven-led rally in 2023. Deutsche Bank chief equity strategist Binky Chadha believes signs of that earnings rotation will begin this quarter with megacap growth and tech seeing slower year-over-year earnings growth than the prior quarter.

"We can always talk about price action and whether, you know, the rally is widening but at the end it's about earnings and fundamentals," Chadha told Yahoo Finance. "We think outside megacap tech, you'll see a pickup in earnings growth, whereas for megacap tech you'll see the beginning of a slowdown basically in earnings growth."

While Chadha isn't predicting a moment where the floor falls out during tech earnings this quarter, slower sequential growth in that sector met with a pickup in earnings in other sectors should "encourage" further rotation in the market, he said.

Weekly calendar

Monday
Economic data: New York Fed one-year inflation expectations, March (3.04% previously)

Earnings: No notable earnings.

Tuesday
Economic data: NFIB Small Business Optimism, March (90.0 expected, 89.4 previously)

Earnings: WD-40 (WDFC), Tilray (TLRY)

Wednesday

Economic data: Consumer Price Index, month-over-month, March (+0.4% expected, +0.4% previously); Core CPI, month-over-month, March (+0.3% expected, +0.4% previously); CPI, year-over-year, March (+3.5% expected, +3.2% previously); Core CPI, year-over-year, March (+3.7% expected, +3.8% previously); Real average hourly earnings, year-over-year, March (+1.1% previously) MBA M

Mortgage Applications, week ending April 5 (-0.6%); FOMC meeting minutes

Earnings: Delta Air Lines (DAL), Rent the Runway (RENT)

Thursday
Economic data: Initial jobless claims, week ending April 6 (221,000 previously); Producer Price Index, month-over-month, March (+0.3% expected, +0.6% previously); PPI, year-over-year, March (+1.6% previously)

Earnings: CarMax (KMX), Constellation Brands (STZ)

Friday
Economic data: Import prices, month-over-month, March (+0.4% expected, +0.3% previously); Export prices, month-over-month, March (+0.1% expected, +0.8 previously); University of Michigan consumer sentiment, April preliminary (80.0 expected, 79.4 previously);

Earnings: BlackRock (BLK), Citigroup (C), JPMorgan (JPM), Progressive (PGR), State Street (STT), Wells Fargo (WFC)

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Schumer and Pelosi are finally right about something -


>>> Chuck Schumer calls for new elections in Israel, breaking with Benjamin Netanyahu <<<


https://investorshub.advfn.com/boards/read_msg.aspx?message_id=174079952



>>> Pelosi joins call for Biden to stop transfer of US weapons to Israel <<<


https://www.msn.com/en-us/news/world/pelosi-joins-call-for-biden-to-stop-transfer-of-us-weapons-to-israel/ar-BB1l9tVZ?OCID=ansmsnnews11




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>>> Why a near-miss cyberattack put US officials and the tech industry on edge


Reuters

by Raphael Satter

April 5, 2024


https://finance.yahoo.com/news/why-near-miss-cyberattack-put-110219091.html


WASHINGTON (Reuters) -German software developer Andres Freund was running some detailed performance tests last month when he noticed odd behavior in a little known program. What he found when he investigated has sent shudders across the software world and drawn attention from tech executives and government officials.

Freund, who works for Microsoft out of San Francisco, discovered that the latest version of the open source software program XZ Utils had been deliberately sabotaged by one of its developers, a move that could have carved out a secret door to millions of servers across the internet.

Security experts say it’s only because Freund spotted the change before the latest version of XZ had been widely deployed that the world was spared a digital security crisis.

“We really dodged a bullet,” said Satnam Narang, a security researcher with Tenable who has been tracking the fallout from the find. “It is one of those moments where we have to wipe our brow and say, ‘We were really lucky with this one.’”

The near-miss has refocused attention on the safety of open source software – free, often volunteer-maintained programs whose transparency and flexibility mean they serve as the foundation for the internet economy.

Many such projects depend on a tiny circle of unpaid volunteers fighting to get out from under a pile of demands for fixes and upgrades.

XZ, a suite of file compression tools packaged into distributions of the Linux operating system, was long maintained by a single author, Lasse Collin.

In recent years, he appeared to be under strain.

In a message posted to a public mailing list in June 2022, Collin said he was dealing with "longterm mental health issues" and hinted that he working privately with a new developer named Jia Tan and that “perhaps he will have a bigger role in the future.”

Update logs available through the open source software site Github show that Tan’s role quickly expanded. By 2023 the logs show Tan was merging his code into XZ, a sign that he had won a trusted role in the project.

But cybersecurity experts who’ve scoured the logs say that Tan was masquerading as a helpful volunteer. Over the next few months, they say, Tan introduced a nearly invisible backdoor into XZ.

Collin didn’t return messages seeking comment and said on his website that he would not respond to reporters until he understood the situation well enough to do so.

Tan did not return messages sent to his Gmail account. Reuters has been unable to ascertain who Tan is, where he is, or who he was working for, but many of those who've examined his updates believe Tan is a pseudonym for an expert hacker or group of hackers -- likely one working on behalf of a powerful intelligence service.

“This is not kindergarten stuff,” said Omkhar Arasaratnam, the general manager of the Open Source Security Foundation, which works to defend projects like XZ. “This is incredibly sophisticated.”

‘WE LUCKED OUT’

Tan could easily have gotten away with it had it not been for Freund, the Microsoft developer, whose curiosity was piqued when he noticed the latest version of XZ intermittently using an unexpected amount of processing power on the system he was testing.

Microsoft declined to make Freund available for an interview, but in a publicly-available email and posts to social media, Freund said a series of easy-to-miss clues prompted him to discover the backdoor.

The find “really required a lot of coincidences,” Freund said on the social network Mastodon.

Microsoft CEO Satya Nadella congratulated Freund over the weekend, saying in a post to the social network X that he loved seeing how the developer, “with his curiosity and craftsmanship, was able to help us all.”

In the open source community, the discovery has been sobering. The volunteers who maintain the software that underpins the internet aren't strangers to the idea of little pay or recognition, but the realization that they were now being hunted by well-resourced spies pretending to be Good Samaritans was “incredibly intimidating,” said Arasaratnam, of the Open Source Security Foundation.

Government officials are also weighing the implications of the near-miss, which has underlined concerns about how to protect open source software. Assistant National Cyber Director Anjana Rajan told Politico that “there’s a lot of conversations that we need to have about what we do next” to protect open source code."

The Cybersecurity and Infrastructure Security Agency (CISA) says it has been leaning on U.S. companies that use open source software to plow resources back into the communities that build and maintain it. CISA adviser Jack Cable told Reuters the burden was on tech companies not just to vet open software but to “contribute back and help build the sustainable open source ecosystem that we get so much value from.”

It’s not clear that software companies are properly incentivized to do so. Online open source mailing lists are teeming with complaints about tech giants demanding that volunteers troubleshoot issues with open source software those companies use to make billions of dollars.

Whatever the solution, almost everyone agrees the XZ episode shows something has to change.

“We got unreasonably lucky here,” said Freund in another Mastodon post. “We can't just bank on that going forward.”

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Ombow, Just curious if you felt that earthquake today? It was apparently centered in N Jersey, but felt at least up to Connecticut. Here in the Phila suburbs it was fairly strong, with the condo building shaking for around 5 seconds. I know some people from California, and they get them routinely. It's unnerving, but luckily no apparent structural damage -