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Digging For Small Cap Gold? Follow Agnico-Eagle’s Lead
By Iain Butler - May 31, 2013
Gold stocks have taken a beating thus far in 2013. This is no secret, but just to drive it home, the TSX Gold sub-index has declined by 32% year-to-date.
Some investors might approach this decline with great trepidation and stay away. Others, like yours truly, see such drops as a potential opportunity.
Should gold regain its shine at some point, this sector will have huge returns throughout. Today’s pain could turn into tomorrow’s gain.
Picking potential winners
One of the problems that most investors have with the gold space, and resources in general, is that there are a pile of companies all doing the same thing and telling mostly the same story. How can we possibly differentiate?
Well, one way is to follow the lead of a respected industry player. A person or company that knows the business and has a demonstrated track record of success.
Enter Agnico-Eagle (TSX:AEM,NYSE:AEM).
Agnico has not been spared by the carnage that has occurred as its stock has declined 38% year-to-date. However, Agnico entered the current downturn with a competitive advantage – a reasonably strong balance sheet. With a debt/equity ratio of just 0.23 and $295 million of cash at the end of the last reported quarter, Agnico was in a position to bolster its business. Where many are in a defensive mode, Agnico is playing offense.
Since March the company has been on a shopping spree of sorts, extending its reach into the industry’s junior ranks. A total of 5 deals have been made, resulting in a partial ownership stake in 4 entities and the complete buyout of another. Several details pertaining to each of the 4 companies that Agnico partially bought into are tabled below.
Company Name Market Cap Agnico’s Stake Project Location
Sulliden Gold (TSX:SUE) $281.5M 15.8% South America
Atac Resources (TSXV:ATC) $112.9M 8.5% Yukon
Probe Mines (TSXV:PRB) $107.6M 9.9% Ontario
Kootenay Silver (TSXV:KTN) $54.6M 10.0% Mexico
Foolish Takeaway
For any of these names, Agnico’s presence only promises that there is a deep pocketed big brother standing by should financing become a stumbling block, which it tends to be. Each company still has to go through the rather arduous process of getting a mine up and running, a big task with plenty of risk to say the least. However, if you’re prone to poking through the rubble that is Canada’s junior mining space, why not start your search by taking a ride on the shoulders of one of the industry’s most respected participants.
http://www.fool.ca/2013/05/31/digging-for-small-cap-gold-follow-agnico-eagles-lead/
Expert Comments on Probe Mines Ltd:
Kwong-Mun Achong Low, Jennings Capital (5/29/13) "Probe Mines Ltd. announced the closing of its bought deal private placement for net proceeds of $14.4M of flow-through units. Agnico-Eagle Mines Ltd. was the back-end investor of the charitable flow-through and now owns 9.97% of the non-diluted shares of the company. Interest in Probe's Borden gold project comes as no surprise to us, given its safe jurisdiction, exploration blue-sky potential and out-forecasted sizeable production potential; we estimate Probe to have an enviable treasury of $42M at the end of May, assuming a burn rate of $1.2M per month. Borden remains a robust project."
Tyron Breytenbach, Cormark Securities (5/29/13) "We view Probe Mines Ltd.'s Borden as one of the more buildable projects still owned by a junior in a secure Canadian jurisdiction; based on its current burn rate, Probe is financed to complete exploration and engineering to beyond 2015. . .we continue to believe that the company is one of the more compelling juniors. The well-located, grade-flexible open-pit deposit backstops our valuation, while the deep discovery offers continued exploration upside and a potential grade uptick. Probe is well insulated from the current turbulent junior equity market and is well positioned for a rebound in investor sentiment."
Ali Khan, Stonecap Securities (5/29/13) "With the financing successfully completed in difficult markets, Probe Mines Limited continues to outshine peers in terms of asset quality in the form of the Borden gold project. The company is well financed to continue further derisking the project and gets a vote of confidence by an intermediate producer (Agnico-Eagle Mines Ltd.) in the form of a strategic investment; we reiterate our Outperform rating and $3.50 price target."
The Gold Report Interview with Ryan Walker (5/3/13) "I like to look for projects that can get big and that have legs, scalability, development options and by-product credits, if possible. A good example and the one I am most excited about right now is Probe Mines Limited. The company's Borden Gold deposit in Ontario has had success pretty quickly. It was discovered in late 2010 and it is already up to 4–6 Moz gold, depending on the cutoff grade you apply. Some say these big, low-grade deposits are out of favor right now—that's quite true—but Probe has a couple of characteristics that help it stand out. The deposit has a higher-grade core that runs right down the middle. The bulk of the deposit is running at around 1 g/t gold. The higher-grade core is up around 1.6 g/t. That gives Probe a bit of flexibility to go after the higher-grade core first and then stockpile the lower-grade material for processing toward the end of the mine life.
The really exciting thing is that late last year, drilling to extend the deposit toward the southeast returned the type of hole I can't say I've seen in some time—51m of 10.3 g/t. And, that was NOT influenced by, say, a 1m section of 800 g/t—it wasn't a case of grade smearing. Probe more recently did some follow-up drilling and the first two holes—and mind you this is a 500m stepout from that initial hole—boom! Drill results came back just shy of 13m at 7.4 g/t and another at 10.2m of 12.5 g/t. Those are fantastic results! . .the deposit has 4–6 Moz, so you know it's a big plumbing system to be able to pile up that much gold. The bulk-tonnage target and high-grade core have shown good continuity. We're waiting on results from additional ice-based holes sunk this winter further southeast and they could be the game changers. It looks as if Probe has tapped into a high-grade feeder system toward the southeast. That changes the complexion of the story from bulk-tonnage and low-grade to high-grade, and, importantly, so far over some nice wide intervals. All that, and the company still has a large little-explored land package. Probe is worth a look. With $30M on the balance sheet, the company should at least be funded through the end of this year. No jeopardy of running dry on funds." More >
Kwong-Mun Achong Low, Jennings Capital (4/26/13) "Probe Mines Limited announced updated metallurgical results and a recovery curve for its Borden gold project in Ontario. . .recoveries appear to slightly exceed our expectations. We assume an average recovery of 85% for an average head grade of ~1 g/t, whereas the recovery curve outlined by the company infers approximately 87% at the same head grade. . .at higher gold grades, the recovery response approaches 90%. . .we believe other areas of this largely continuous orebody should see similar results. . .we reiterate our Buy rating and 12-month target of $4/share."
http://www.theaureport.com/pub/co/3961
Nouriel Roubini Seriously Misguided on Gold, on Equities, on Economic Growth, on Money
By: Mike Shedlock | Thu, Jun 6, 2013
(special thanks to the cork)
I just finished reading Nouriel Roubini's seven point analysis on the Bursting of the Gold Bubble in which Roubini's asks and answer the question "Gold skyrocketed to over $1,900 per ounce in the fall of 2011 from $800 in early 2009, but has since collapsed by around 27%. Why?"
I offer a point-by-point rebuttal.
Roubini: First, tail risks are lower. Gold tends to spike when the global economy faces severe economic, financial and geopolitical threats; but, thanks to a variety of policy actions, the tail-risks argument for holding gold is less compelling today than at any time since the start of the financial crisis in 2007.
Mish: Japan is flirting with a Yen crisis thanks to Abenomics. Nothing has been fixed in regards to structural problems in the eurozone. A US recession is at hand. A China slowdown is baked in the cake. Trade wars loom between China and Europe. A full scale housing bust is underway in Australia. The UK threatens to leave the EU. The eurozone is unlikely to survive in its current state. Tail risks are enormous (and growing). I would have thought tail risks were so obvious that any serious economist would notice them. I was mistaken.
Roubini: Second, inflation is low and falling. Gold does best when there is a risk of high inflation, as it is a traditional store of value against inflation. But, despite the very aggressive monetary and quantitative easing from many central banks, global inflation is actually low and still falling as growth in most of the global economy remains below trend.
Mish: Gold actually does well in periods of deflation, in periods of credit risk, in periods of stagflation, and in periods of hyperinflation (the latter is obvious). Price inflation fell from 2000 to 2013 and gold rose from $250 to $1900. When was there risk of high inflation in that time-frame?
To be fair, one also needs to look at the disinflationary period between 1980 and 2000 when the price of gold collapsed from $850 to $250. Yet, in disinflationary periods in the last decade, gold soared. The difference? Credit risk and global distrust of fiat currencies. It's easy to cherry pick a timeframe and say gold does this or that, when other timeframes and other factors disprove the thesis.
Roubini: Third, other assets provide better returns. Now that the global economy is recovering, other assets, such as equities or even real estate, are performing much better than gold.
Mish: Lovely! The same sort of argument regarding housing could have been presented in 2002, in 2003, in 2004, and in 2005. Yes, other assets are performing better, for now. But for how long? Is the current trend supposed to last forever? Has Roubini suddenly become a momentum trader in what is performing best?
Roubini: Fourth, exit from ZIRP will be bearish for gold. Real interest rates and gold prices are highly inversely correlated. Although real rates are still negative, the more positive outlook for the U.S. and global economy implies that the Fed and other central banks will gradually exit from QE and ZIRP. Real rates will rise over time rather than fall.
Mish: Precisely when is the Fed supposed to end ZIRP? Tomorrow? Next Month? Next year? A decade? If "real rates rise" won't that be a sign of increasing inflation? Is increasing inflation good for gold or not? Roubini attempts to make a case that rising inflation and falling inflation are both bad for gold and both are about to happen simultaneously. Let me also point out that Roubini thinks 'QE' won't end for another two years! He can't have it both ways.
Roubini: Fifth, highly indebted countries are planning to sell their gold. Some argued that a world full of highly indebted sovereigns would push investors into gold as government bonds would become more risky. Instead, these countries are likely to dump their gold reserves to reduce their debts, or at least are considering doing so.
Mish: Roubini's thesis has gone from circular silliness to the point of complete absurdity. Other than Cyprus (and Cyprus was forced at gunpoint) what central banks are dumping gold? And what central banks are buying gold? ZeroHedge reports Russia, Greece, Turkey, Other Central Banks Buy Gold
Russia, Greece, Turkey, Kazakhstan and Azerbaijan expanded their gold reserves for a seventh straight month in April, buying bullion to diversify foreign exchange reserves due to concerns about the dollar and the euro.
Russia's steady increase in its gold reserves saw its holdings, the seventh-largest by country, climb another 8.4 metric tons to 990 tons, taking gains this year to 3.4% after expanding by 8.5% in 2012, International Monetary Fund data show.
Kazakhstan's reserves grew 2.6 tons to 125.5 tons, taking the increase to 8.9% this year after a 41% expansion in 2012, data on the website showed.
Turkey's holdings rose 18.2 tons to 427.1 tons in April, increasing for a 10th month as it accepted gold in its reserve requirements from commercial banks.
Belarus's holdings expanded for a seventh month as did Azerbaijan's.
Interestingly, Greece's gold holdings climbed for a fourth month, according to the IMF data. Cyrus has about 14 tons of gold. If Cyprus sold all of it, the addition by Turkey alone would cover all of it.
Roubini: Sixth, U.S. dollar appreciation is bearish for gold. There is usually an inverse relationship between the value of the U.S. dollar and the dollar price of commodities, including precious metals like gold. Looking ahead, the relative strength of the U.S. economy and of U.S. asset prices compared with those of other DMs suggests that the dollar may appreciate--as it has done recently--against a basket of DM currencies.
Mish: The biggest gold rally of all time (1979) occurred while the dollar was going sideways with a slight upward bias. The dollar and gold both rose in 2005 as well. If the dollar were all-important for gold, it would never rise in terms of foreign currencies, but it definitely does do that.
Roubini: Seventh, gold has been hyped for irrational political reasons. Some extreme politically conservative gold bugs think that all government is evil, that there is a government conspiracy to expropriate most private wealth and that gold is the only hedge against this risk. This group also believes that we will return to the gold standard as central banks "debase" paper money and as hyperinflation ensues. However, inflation is falling globally and gold is not in any way a currency.
Mish: Yes gold has been hyped by many hyperinflationists. The same was true two years ago, five years ago, and 10 or more years ago.
That makes Roubini's own hype all the more laughable. Roubini ends his hype with this statement: "The price of gold may temporarily go higher in the next few years, but it will be very volatile and trend lower over time as the global economy slowly mends itself. RGE expects gold to go to $1,300 by end-2013 and $1,000 by 2015. For the most part, it is time to offload and underweight Keynes's barbarous relic."
People ask me all the time where the price of gold is headed. I do not pretend to know, especially in the short-term.
However, I understand the fundamentals and Roubini clearly doesn't.
Nor does Roubini have a clue about money or what causes economic growth. His statement "It is time to offload and underweight Keynes's barbarous relic" is quite telling.
Can Printing Money Create Wealth?
Clearly Roubini believes that printing money creates wealth. The average 7th-grader (not yet influenced by Keynesian and Monetarist clown teachers) can easily figure out the fallacies of such ridiculous economic theories.
Who benefits from printing? The answer is those with first access to money (the banks, the already wealthy, and the government). Printing money does nothing but exacerbate the trend of income inequality. This is so obvious that Roubini cannot see it.
Buying gold is a perfectly rational reaction to the crazy central bank and governmental policies that Roubini advocates.
Precious Metal Fundamentals
Those interested in a primer on precious metal fundamentals can find it in Precious Metals - An Update by Pater Tenebrarum on the Acting Man Blog.
Those who think Fed asset levitation can and will last forever need to consider John Hussman's June 3, 2013 article Following the Fed to 50% Flops.
Finally, those who wish to see a brilliant takedown of Roubini's recent bullishness might enjoy "Dr. Doom" Becomes "Dr. Boom" - 1,000 SPX Points Too Late, also on the Acting Man Blog.
Things Roubini is Wrong About
Gold
Tail Risk
Benefits of monetary printing
Benefits of fiscal stimulus
On what causes economic growth
Inflation
Stock market risk
That is one heck of a lot of things to be wrong about!
http://www.safehaven.com/article/30068/nouriel-roubini-seriously-misguided-on-gold-on-equities-on-economic-growth-on-money#.UbGb8R9iaRU.twitter
CFTC Gold and Silver Bank Participation Report - Ted Butler's Comments
Posted by Jesse
at 3:00 PM 08 June 2013
(special thanks to basserdan)
The US Banks have gotten net long of gold in this last report.
The charts below are from Sharelynx.com.
Here is what Ted Butler had to say about this report today:
"Since the BPR of February 5, the US bank category position (in effect, almost exclusively JPMorgan) has swung by a net 100,000 contracts, from net short 70,000 contracts to net long 30,000 contracts (all rounded). There has never been a move of such magnitude before. Over that same time, the total net commercial short position (in the COT) declined by 113,000 contracts, meaning that JPMorgan accounted for almost 90% of the entire commercial decline. It is not possible for that extreme degree of concentration and market share not to be manipulation, pure and simple.
And here’s the manipulative icing on the cake – JPMorgan was able to flip a net short position in COMEX gold of 50,000 contracts in February to a net long position of 50,000 contracts on a gold price decline of as much as $350. I would submit that the singular purchase of 10 million ounces of gold (worth the equivalent of $15 billion) within four months on a greater than 20% price decline could only be accomplished if the price was manipulated lower by the purchaser. No other explanation would be possible...
JPMorgan’s emergence as the big COMEX gold long changes the dynamic of the gold market. In addition to conclusively proving that this is the most crooked and evil financial institution ever to exist, it confirms the extremely bullish set up for the gold price...
Of course, if JPMorgan can continue to accumulate inventory on lower prices, we will get lower prices temporarily. But having JPMorgan confirmed as being on the long side of gold is a game changer. That’s why I continue to throw money out the window on silver call options."
I read Ted twice a week for color commentary on the metals markets. Its a subscription service. I tend to take some confidence from what he says about the bullish set up because several other things that I watch carefully are inclining to show the same setup for a serious short squeeze on the funds.
He also had quite a bit to say about silver, which is area of special interest, but you will have to subscribe to read that.
I took my first silver position in a while on Friday and expanded my gold position on that weakness.
Posted by Jesse at 3:00 PM
http://jessescrossroadscafe.blogspot.com/2013/06/cftc-gold-and-silver-bank-participation.html
BLOCKBUSTER: Former Plunge Protection Team Member on Government Manipulation of the Gold Price and Much More
June 9, 2013
Economic Policy Journal
A new King World News interview is out. It is destined to become a classic. It is the most important insider interview I have ever heard. The interview is with Pippa Malmgren.
I have written about Malmgren before:
Philippa "Pippa" Malmgren is an insider's insider. She was Special Assistant to the President for Economic Policy on the National Economic Council. She was also a member of the President's Working Group on Financial Markets, aka, the Plunge Protection Team. Her client list includes every elite corporate firm in the world (Take a minute to look at the list, it is mind boggling, the list is here.). You don't get much more insider than this.
During her interview with KWN she states that "governments hate when gold goes through the roof." And if you read between the lines of her comments, it is clear that she is saying that, yes, the government does try to manipulate the price of gold. I remind you, this is a former member of the United States government's Plunge Protection Team saying this.
Most interesting, she says that a lot of private wealth is moving into diamonds and she states that it is going into diamonds because a lot can be moved very easily and that unlike gold it can't be detected by a metal detector. Get this, she then reminds the interviewer that she headed the anti-laundering division of a USG agency.
Most shocking, she stated openly that your "cash is increasingly at the risk of ending up in the hands of government." She says money will be expropriated in many different ways, but that it will be taken.
She also makes clear that there is no way that the US government will be able to pay off its debt and that it is only a matter of how the government defaults. She lists money printing inflation as a very strong possibility.
She ends the interview with some bullish comments on gold, saying that you just have to hold gold through its volatility.
I repeat, this is a remarkable interview, you should listen to it more than once. Malmgren lays it all out, right here.
(ht Tom Garrett)
http://www.economicpolicyjournal.com/2013/06/blockbuster-former-plunge-protection.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+economicpolicyjournal%2FYZSb+%28EconomicPolicyJournal.com%29
Gold Wars: U.S. Undermining Iranian Currency By Blocking Gold Imports
May 17, 2013 - 04:41 PM GMT
By: GoldCore
Nothing has changed regarding the positive fundamentals of the physical gold market.
All that has changed is that the price of gold is again lower due to the machinations of technical traders and speculators. Paper gold sales are again trumping massive physical demand however this cannot go on for much longer and the patient will again be handsomely rewarded.
U.S. markets are again having a wild party and all speculators are invited. Stocks are at an all-time high, the country is basking in its new found energy ‘independence,’ there is a perception that the housing market is showing green shoots of recovery and the great bellwether, the employment numbers, showed better than expected gains in April.
Tragically, it appears, the U.S. and other investors are again borrowing to buy stocks, confident that prices can only go in only one direction. All of this euphoria can be traced to the monetary expansion policies of the U.S. Fed and across the sea to Europe to the Bank of England and the ECB, and over to Japan and the ‘la la land’ of ‘Abenomics’.
Does history repeat itself? Can we learn from money printing throughout history?
Of course we can.
Global currency debasement on a scale never before seen in history will not end well - for savers and most investors.
Currency wars are set to continue and deepen which will support gold.
The United States government is to rigorously enforce a ban on gold sales to Iran from July 1.
They are planning to block sales of gold to Iranians in order to undermine the Iranian currency, the rial, and to step up pressure on Tehran over its nuclear program, U.S. officials said yesterday according to Reuters and Bloomberg.
The Iranian rial is the official currency of the Islamic Republic of Iran. The conventional market quotation is the number of rials per U.S. dollar. The rial is a fiat currency which like most paper currencies today is a managed, floating currency. The Central Bank of Iran has abolished the multi-tier exchange rate regime and established a single rate in its place.
U.S. Dollar and Iranian Rial (USDIRR) Spot Exchange Rate - Price of 1 USD in IRR– 5 Years (chart)
The U.S. will now ban sales of gold by anyone to either the Iranian government or to Iranian citizens, a senior U.S. Treasury official said yesterday.
Washington has warned Iran's neighbours Turkey and the United Arab Emirates, key regional centers of the gold trade, to stop gold sales to Iran, said David Cohen, treasury under-secretary for terrorism and financial intelligence.
"We have been very clear with the governments of Turkey and the UAE and elsewhere, as well as the private sector that is involved in the gold trade, that as of July 1 all must stop, not just trade to the government," he said.
Cohen told the Senate Foreign Relations Committee that the U.S. government continues to find new ways to isolate Iran from the international financial system.
"In particular, we are looking carefully at actions that could increase pressure on the value of the rial," he said.
"One thing that we have seen in the course of the last year is when the rial depreciates and depreciates rapidly, that begins to create a dynamic in Iran that has an effect.”
The rial has lost 34% against the dollar since 2008 having fallen from 9135 rial per $1.00 to 12258 per $1.00 today.
The dollar has fallen by 52% against gold in the same period having fallen from $920/oz to $1,380/oz.
XAU/USD Spot Exchange Rate - Price of 1 XAU in USD – 5 Years (chart)
Iranian people are suffering from the currency devaluation with the very significant increase in the cost of living.
"It has an effect on the elites and their perception of how the country is behaving."
The move to block gold sales is part of the effort to further weaken the rial, he explained.
"There's a tremendous demand for gold among private Iranian citizens, which in some respects is an indication of the success of our sanctions."
"They are dumping their rials to buy gold as a way to try to preserve their wealth. That is I think an indication that they recognise that the value of their currency is declining."
Cohen and another senior official, U.S. State Department Under Secretary for Political Affairs Wendy Sherman, told the committee that sanctions were having a deep impact on Tehran.
He said a ban on oil exports was costing Tehran between USD 3 and 5 billion a month and caused the economy to contract by as much as eight percent last year.
Sherman said 14 out of 20 importers of Iranian oil have ended their purchases, and the other six -- China, India, Turkey, South Korea, Japan and Taiwan -- have significantly reduced their imports.
"We are continuing, of course, to press them for further significant reductions as is required under the law," she told the committee.
Senator Robert Menendez, chairman of the Foreign Relations Committee and sponsor of several Iran sanctions laws questioned whether the administration is doing enough to enforce its own prohibitions on Iran’s gold trade issued last summer.
He cited estimates in a report by the Foundation for Defense of Democracies and Roubini Global Economics that Iran has imported more than $6 billion in gold, mainly from Turkey and the United Arab Emirates, since the administration’s ban on gold trade with Iran’s government took effect last summer.
That’s equivalent to about 10% of Iran’s 2012 oil exports of $60 billion, Menendez said.
“We are actively enforcing” the gold ban, Cohen said. “We have been very clear with countries that are exporting gold to Iran, principally Turkey and the UAE, on precisely what the law permits and what it forbids, and we are following the information very carefully.”
Cohen reminded lawmakers that this July 1, the ban will extend to private sales.
To date, though, the administration hasn’t penalized any entity in Turkey or the UAE for trading in gold with the Iranian government.
This is another manifestation of the war on gold. Central banks and their minion banks have won the recent battles but the finite money par excellence gold and owners of physical gold will again win the war as they have throughout history.
GoldNomics' can be viewed by clicking on the image above or on our YouTube channel:
www.youtube.com/goldcorelimited
This update can be found on the GoldCore blog here.
Yours sincerely,
Mark O'Byrne
Exective Director
http://www.marketoracle.co.uk/Article40498.html
New for Traders: Shareholders approve ICE acquistion of NYSE
BY MICHAEL MCFARLIN
JUNE 7, 2013 •
Futures Magazine
Stockholders from both IntercontinentalExchange (ICE) and NYSE Euronext approved the proposed acquisition of NYSE by ICE.
Financials
* ERIS Exchange modified its contract size to a $100,000 notional size contract from the previous $1,000,000 notional size, in response to significant end user demand for increased granularity in trade allocations in advance of the June 10 Category 2 swap clearing mandate.
* ICE Clear Europe will start clearing NYSE Liffe’s London-based derivatives market from July 1, 2013, pending regulatory approval. The transition process for open positions, if approved, will occur over the weekend of June 29 to June 30.
* Cleartrade Exchange launched its third party reporting service through an electronic connection to the DTCC-owned Swap Data Repository. According to the report, derivatives contracts traded through CLTX can now be automatically reported to the DTCC in real-time, allowing the exchange members to meet CFTC trade-reporting requirements.
Options
* CME will introduce three wheat options contract on its Kansas City Board of Trade (KCBT) hard red winter wheat futures, starting from July 1, pending regulatory approval. The contracts include an option on KCBT hard red winter wheat versus CBOT soft red winter wheat, another option on KBCT wheat versus Minneapolis Grain Exchange hard red spring wheat, as well as weekly KCBT options.
* LSE will launch trading in single-stock options in June, with the offering to include 19 contracts on energy and mining companies listed in the UK. LSE’s Turquoise unit will also offer trade options on companies from BP to Rio Tinto from June 10, with the products to be cleared through LCH.Clearnet.
Commodities
* CME will introduce three wheat options contract on its Kansas City Board of Trade (KCBT) hard red winter wheat futures, starting from July 1, pending regulatory approval. The contracts include an option on KCBT hard red winter wheat versus CBOT soft red winter wheat, another option on KBCT wheat versus Minneapolis Grain Exchange hard red spring wheat, as well as weekly KCBT options.
* CME Group is exploring the sale of the NYMEX Building, the headquarters to the New York Mercantile Exchange (NYMEX). The 16-story, LEED-certified building is located at One North End Avenue overlooking the Hudson River immediately west of Brookfield Place (formerly the World Financial Center) and Goldman Sachs Tower.
* CME Group announced it has expanded its centrally cleared, over-the-counter agricultural swap offering through the introduction of a new U.S. dollar-denominated palm oil swap.
Technology
* Object Trading and Dubai Gold and Commodities Exchange announced
Object Trading’s flagship direct market access suite FrontRunner is now live with clients connected to DGCX, and is available to provide direct market data and risk-managed trade execution.
* Markit announced that it has launched Markit ETP Analytics, a comprehensive and independent analytics solution for the global Exchange Traded Products (ETP) market.
* Barchart.com, Inc. announced that it has introduced a series of free market data widgets. Anyone can now visit Barchart’s market data solutions website and create customized displays using a widget builder, and then integrate the widget into their website.
* The London Metal Exchange this week opened its Asian Helpdesk, which will provide full technology support for users throughout the Asian trading day. The new Systems Operations desk is located at the Hong Kong Exchanges and Clearing New Generation Data Centre in Tseung Kwan O.
Forex
* SGX launched depository services for yuan-denominated bonds this week, in an effort to support Singapore’s development as an offshore hub for issuers and investors of yuan-denominated bonds.
* SGX will launch futures in the INR, SGX, AUD and the AUD/JPY cross in 3Q13, Reuters reported. According to SGX head of derivatives Michael Syn, “it’s playing to our natural geographical advantage that most of the key trading heads, the key price-makers and many of the key policymakers are based where we are matching and where we are trading.”
http://www.futuresmag.com/2013/06/07/new-for-traders-shareholders-approve-ice-acquistio
New for Traders: Shareholders approve ICE acquistion of NYSE
BY MICHAEL MCFARLIN
JUNE 7, 2013 •
Futures Magazine
Stockholders from both IntercontinentalExchange (ICE) and NYSE Euronext approved the proposed acquisition of NYSE by ICE.
Financials
* ERIS Exchange modified its contract size to a $100,000 notional size contract from the previous $1,000,000 notional size, in response to significant end user demand for increased granularity in trade allocations in advance of the June 10 Category 2 swap clearing mandate.
* ICE Clear Europe will start clearing NYSE Liffe’s London-based derivatives market from July 1, 2013, pending regulatory approval. The transition process for open positions, if approved, will occur over the weekend of June 29 to June 30.
* Cleartrade Exchange launched its third party reporting service through an electronic connection to the DTCC-owned Swap Data Repository. According to the report, derivatives contracts traded through CLTX can now be automatically reported to the DTCC in real-time, allowing the exchange members to meet CFTC trade-reporting requirements.
Options
* CME will introduce three wheat options contract on its Kansas City Board of Trade (KCBT) hard red winter wheat futures, starting from July 1, pending regulatory approval. The contracts include an option on KCBT hard red winter wheat versus CBOT soft red winter wheat, another option on KBCT wheat versus Minneapolis Grain Exchange hard red spring wheat, as well as weekly KCBT options.
* LSE will launch trading in single-stock options in June, with the offering to include 19 contracts on energy and mining companies listed in the UK. LSE’s Turquoise unit will also offer trade options on companies from BP to Rio Tinto from June 10, with the products to be cleared through LCH.Clearnet.
Commodities
* CME will introduce three wheat options contract on its Kansas City Board of Trade (KCBT) hard red winter wheat futures, starting from July 1, pending regulatory approval. The contracts include an option on KCBT hard red winter wheat versus CBOT soft red winter wheat, another option on KBCT wheat versus Minneapolis Grain Exchange hard red spring wheat, as well as weekly KCBT options.
* CME Group is exploring the sale of the NYMEX Building, the headquarters to the New York Mercantile Exchange (NYMEX). The 16-story, LEED-certified building is located at One North End Avenue overlooking the Hudson River immediately west of Brookfield Place (formerly the World Financial Center) and Goldman Sachs Tower.
* CME Group announced it has expanded its centrally cleared, over-the-counter agricultural swap offering through the introduction of a new U.S. dollar-denominated palm oil swap.
Technology
* Object Trading and Dubai Gold and Commodities Exchange announced
Object Trading’s flagship direct market access suite FrontRunner is now live with clients connected to DGCX, and is available to provide direct market data and risk-managed trade execution.
* Markit announced that it has launched Markit ETP Analytics, a comprehensive and independent analytics solution for the global Exchange Traded Products (ETP) market.
* Barchart.com, Inc. announced that it has introduced a series of free market data widgets. Anyone can now visit Barchart’s market data solutions website and create customized displays using a widget builder, and then integrate the widget into their website.
* The London Metal Exchange this week opened its Asian Helpdesk, which will provide full technology support for users throughout the Asian trading day. The new Systems Operations desk is located at the Hong Kong Exchanges and Clearing New Generation Data Centre in Tseung Kwan O.
Forex
* SGX launched depository services for yuan-denominated bonds this week, in an effort to support Singapore’s development as an offshore hub for issuers and investors of yuan-denominated bonds.
* SGX will launch futures in the INR, SGX, AUD and the AUD/JPY cross in 3Q13, Reuters reported. According to SGX head of derivatives Michael Syn, “it’s playing to our natural geographical advantage that most of the key trading heads, the key price-makers and many of the key policymakers are based where we are matching and where we are trading.”
http://www.futuresmag.com/2013/06/07/new-for-traders-shareholders-approve-ice-acquistio
France prohibits sending currency, coins and precious metals by mail
BY MARK O'BYRNE
(Mark O'Byrne is executive director of Ireland-based GoldCore.)
June 7, 2013 •
In new legislation which was enacted May 23rd, the French government decreed that it is forbidden to send all forms of currency - coins and cash and all forms of precious metals – coins, bars and jewellery by mail.
The legislation was published on Legifrance, the French government entity responsible for publishing legal texts online and can be seen here.
It was not announced by the government and not covered in the media. There were no communications and nobody in the government justified or explained this decision.
The legislation says that “the insertion of banknotes, coins and precious metals is prohibited in mailings, including the insured items, registered items and items subject to formalities certifying deposition and distribution. "
Some have suggested that the decree is to limit what is known in France as “the anonymous market”, the market in which no taxes are paid and people are free to trade without the supervision of banks and government.
However, euro coins and notes and gold bullion coins and bars attract no tax in France and therefore this is more likely to be an attempt to discourage the ownership of gold bullion and cash outside of the banking system and is a form of capital control.
It may also be an attempt to restrict the growing private market in France of people buying bullion online through Ebay which is increasingly popular.
The freedom of people to trade amongst themselves is a form of civil liberty as is the right to privacy.
The selling and the buying of precious metals in France are already subject to strict regulations.
Until September 2011, citizens could easily buy and sell gold coins and bars with cash but this was forbidden then when French citizens were forbidden to buy with cash in person and had to buy precious metals by trade mail, crossed cheque and by wire transfer or be “punished by a fine of fifth grade” which is a fine of some €1,500/oz.
The government decree does not specify that other independent companies cannot send gold and or silver coins or bars by mail. Indeed, it is only the French public company or national post company, La Poste that is forbidden in the decree.
Gold in Euros, 5 Year – (Bloomberg)
However, 3 months ago in March, Fedex began stopping French people from taking delivery of precious metals.
At the start of the year, UPS began stopping French people from taking delivery of precious metals.
Perhaps not coincidentally, in recent days Fedex have stopped allowing companies and individuals to send or receive gold and other precious metal bullion coins and bars by insured mail in Germany and the UK.
This is an important story that bears watching as it appears that governments internationally, from India to France are attempting to control, restrict and make it difficult for their citizens to own bullion.
http://www.resourceinvestor.com/2013/06/07/france-prohibits-sending-currency-coins-and-precio?eNL=51b21042fc746f0c720000a0&utm_source=DailyENL&utm_medium=eNL&utm_campaign=RI_eNL&_LID=484115&t=precious-metals&page=3
Silver Nugget: CEO of Fortuna Silver Mines, Jorge Ganoza - GoldSeek.com Radio
Jorge Ganoza, President & CEO Fortuna Silver Mines
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INTERVIEW TRANSCRIPT BELOW
Fortuna Silver Mines is positioned for sustainable growth with two, 100%-owned operating silver mines and extensive property holdings in Peru and Mexico. Formed in 2005, the company has established a reputation as an efficient mine builder and operator. Today, Fortuna is one of Latin America's fastest-growing silver producers with production forecast to grow from 4.0 million ounces of silver and 20,700 ounces of gold, plus base metals, in 2012 to approximately 5 million oz of silver and 26,000 oz of gold, plus base metals by 2014.
Fortuna's land package of 95,600 hectares offers attractive opportunities for driving organic growth. A 51,000-meter drill program is underway to examine multiple silver and gold targets at the San Jose and Caylloma mines. More on Fortuna Silver Mines...
Detailed Quote
Chris Waltzek: Well we’re so glad you’ve chosen GoldSeek.com as a trusted investment and business information source. Today’s special guest, Mr. Jorge Ganoza from his offices in the other hemisphere in Lima, Peru.
Well it’s a pleasure to welcome back to GoldSeek.com radio my special guest, Mr. Jorge Ganoza, President, CEO and Director of Fortuna Silver Mines. Welcome back, Mr. Ganoza.
Jorge Ganoza: Good morning to you and your audience.
Chris Waltzek: Let’s begin the discussion, sir, with an overview of the Fortuna Silver Mines which operates two 100 percent owned underground mines in Latin America, the San Jose property in Mexico and the Callyoma Mine in Peru. Last year silver and gold production increased for the sixth consecutive year. Silver production increased 59 percent over 2011, gold increased 195 percent. I’d like for you to fill in the blanks regarding your mines.
Jorge Ganoza: Fortuna has been growing steadily since 2007 which was the first year of production basically by expanding our two core assets; the San Jose mine in Mexico and the Callyoma mine in Peru.
What’s exciting at the moment is the recent discovery we have made at our San Jose mine in Mexico. In February we announced the first discovery holds. We had a second release in – news release in April and on May 22 we announced a third release with additional holds which have confirmed the emergence of a new area which we called Trinidad North with grades and sicknesses of silver that are comparable with some of the best silver deposits in the world.
No, I can’t point out to drill hole 288 where we have a true thickness of 19 meters with almost a kilo of silver per ton, petro, silver, gold deposits and veins, hole 283 with seven meters and almost two kilos and a half of silver on hole 295 for example with hole – with six meters in a kilo and a half.
So basically we have outlined through these discovery holes a large and coherent sum that remains open in at least two directions and it’s in the immediate vicinity of existing research and resources, so we plan to incorporate this new area into our production within 18 months.
Chris Waltzek: Well I understand that the San Jose property, you actually had an interesting announcement and exciting development where you located high grade silver gold deposits and veins on the property and as you mentioned you did compare this in the announcement with some of the best silver deposits worldwide.
Jorge Ganoza: San Jose, our mine has been in production since September 2011. We currently have roughly 20 million ounces of silver in reserve, some 170,000 ounces of gold in reserves. The last 25 million ounces of silver and 215,000 ounces of gold in incurred resources, the mine currently operates at 1,000 tons per day and we’re ramping up production in August of this month to 1,500 and 1,800 tons per day.
This discovery is in the immediate vicinity to the north of existing reserves and resources where we’re doing the mining. We made the first discovery holes in – late in – late last year in the month of December. We had our first release as I mentioned in the month of February. In the first half of 2013 we’ve been drilling aggressively.
We have outlined a coherent zone of broad widths and high grades where grades in the magnitude of 700 grams per ton to two and a half kilos is the norm, so we are excited about the potential to have a core zone of very high grades and brought with – that can have a material in the production.
It is a factual statement when I say that the kinds of grades and sicknesses that we find in this Trinidad zone, in the central part of Trinidad zone which right now extends longitudinally for roughly 150 meters and vertically for another 150 meters. It’s consistent, what you see – what we’re seeing there is – from the dual intersects is consistent with what you find in some of the best silver deposits in the world and the zone remains open in at least two directions and, in fact, the best drill intercepts too late as the ones that outline the open zone to the north onto it.
Holes 295 which is the northernmost hole intercepted the six meters two thickness with a kilo and a half of silver that’s a silver-gold equivalent and the deepest hole in the zone right now is zone 283 which intersected seven meters with 2.3 kilos of silver per ton.
Chris Waltzek: Another important Fortuna Silver Mines property that we begin to discuss today, the Caylloma property, this is located in one of the most important metal productive provinces in the Andes. I understand you also made an important announcement regarding a high-grade silver gold find last month as well on this property.
Jorge Ganoza: Yes, over the course of the last two years our exploration teams have been working hard. You know the nature of exploration, we’ve been working for two years with little to report on the programs, seeing the fruit of the work carried over the last two years coming forward with the discovery of the zone we just spoke about it, San Jose Trinidad North, and the discovery of a grain code, Ramal Pisa Carolina, a long name for a vein, where we intersected a high gold rate.
Cayllma is a prolific silver vein system. Callyma, it’s – the mine itself, that vein system has been in production for over 500 years. It’s truly one of the historic silver deposits in Peru. It’s been at work since pre-colonial times. It’s been known for silver content but little known for gold.
So it’s been an exciting discovery because this new zone, this new vein carried grades, gold grades, the highest, 21 grams per ton, as we reported in the news release where the norm in the district and in the vein system that we control in our land package is usually around no higher than a gram – no between half a gram to a gram.
So we’re excited about this. It’s enhancing our knowledge of our robust and well-developed, and well-endowed vein system, and we’re pursuing this new discovery of high-grade gold in the system.
Chris Waltzek: I’d also like to discuss the Fortuna silver mines’ rock solid financial condition. Your company’s debt to equity ratio is excellent. You have less than roughly half a million dollars in total debt. That means that most of your financing is through equity plus your profit margin is exceptional, approaching 17 percent.
You know this classifies your shares for what I’d call a Warren Buffet portfolio candidate, a very solid company with excellent prospects. Care to share any other aspects of your financial condition?
Jorge Ganoza: Yes, something that characterizes Fortuna, as since its inception we’ve been good stewards of capital. We are very conscious of shareholder dilution and we have raised since inception back in 2005 $130 million.
With that money, with that capital we raised through equity we have built two mines. We are projecting sales this year of roughly $180 million. Our EBIDTA margin is around 42 percent and we have a treasury with $68 million in cash plus a credit facility that – a revolving credit facility for another $40 million which we have not touched, so yes, we are debt free. So we are in a very sound financial position and that one, a position that gives us flexibility in this context of declining prices, at least in the short term and also the observability to act when we see opportunity because we have the financial resources to do it.
And when I say act, act on the exploration front for to found organic growth, expanding our minds, reallocating capital to aggressive exploration programs and also in the case of Guda in many opportunities we can also move quickly.
Chris Waltzek: Another big plus for your shares is the discount in cash flow situation. According to my figures here Fortuna Silver Mines could be trading at least 50 percent below its intrinsic value. I think this is another big plus for investors. Any comments?
Jorge Ganoza: Yes, the entire sector has been hit lately on the valuation side but you know I think the shares have done relatively well and we’re recovering some of the ground.
When you look at our production profile, our growing production profile over the next few years at least on a three, four year outlook you see organic growth, a good eye for organic growth and even though it’s early and we still cannot factor into that growth the discovery of the Trinidad North area in the concept production model we expect we’ll be able to do that in the second half of next year as we have reserved conversion.
So right now we have a very exciting discovery in San Jose and we need to convert and do work there so we can convert the discovery into reserves that we can fit into our production models. I will be – there will be a better realization of the impact of that discovery as we get closer to that and we achieve the reserve conversion but we are already saying some analysts, we have good analyst coverage from Canadian institutions and North American institutions already adjusting their multiples and factoring in the impact of this new discovery in evaluation and in their target prices.
Chris Waltzek: Are there any other important challenges or hurdles ahead for Fortuna Silver Mines on the horizon?
Jorge Ganoza: We are a growth company. We’ve been sourcing organic growth over the course of the last seven years and with the discoveries we are making at both mines we continue to see good potential for continued organic growth which is the most creative best growth we can deliver on a per share basis and to the benefit of our shareholders. So I am glad to – we are all excited to see that there is nothing that gets you more passionate and excited than – than a discovery on your ground. That’s what we made.
Now the work ahead of us is to advance with the exploration, define these zones and have them see their production models or mine plants and production models. So but that is execution and I think we’ve proven the market and we are recognized for that for our ability to deliver on not just the exploration from but also on the execution.
We built our nines on time, on budget so we need to remain focused that we have always been on the execution of our plans and also looking for new opportunities for a group that could be growth. I believe that a good environment allows us to see opportunity out there and we’re out there actively looking also outside of the farm, so the organic growth is taking care of these discoveries. We just have to focus on execution.
We’re looking, scouting the market pursuing opportunities for quick growth outside the farm, so that’s something where we are also being very active.
Chris Waltzek: Have we covered everything or is there anything else you’d like to discuss?
Jorge Ganoza: No, I think we covered everything and again I can just only stress that we are all here very excited about this discovery and I’d like to thank you for your work.
Chris Waltzek: Thank you, sir, and we’ll look forward to having you back on GoldSeek.com Radio.
Jorge Ganoza: All the best.
http://www.silverseek.com/radio/silver-nugget-ceo-fortuna-silver-mines-jorge-ganoza-goldseekcom-radio-12176
U.S. Culling Verizon Phone Data Defended as Terror Shield
Bloomberg
By Margaret Talev, Chris Strohm & Mike Dorning
Jun 6, 2013 7:07 PM ET
The Obama administration and Senate Intelligence Committee leaders of both parties defended the secret collection of telephone records of millions of U.S. residents as critical to combating terrorism, with one lawmaker saying such surveillance thwarted a “significant” plot.
As some members of Congress condemned the program as an intrusion in the lives of innocent Americans, the White House said Congress was regularly updated and all rules were followed. Lawmakers confirmed they knew of the classified court order compelling Verizon Communications Inc. (VZ) to provide data on its customers’ calls, continuing a George W. Bush administration policy that sparked a national controversy.
The publication of the secret court order by the U.K.-based Guardian newspaper renewed a political debate that has repeatedly flared since the Sept. 11, 2001, attacks about the proper balance between traditional American civil liberties and protection against terrorist threats. It came as President Barack Obama is being challenged over his regard for individual privacy and constitutionally guaranteed freedom of the press.
The Justice Department, as part of its inquiries into leaks of national-security information, has also obtained secret search warrants for telephone records of journalists from the Associated Press and Fox News, prompting protests from U.S. lawmakers and media-advocacy groups.
FBI Request
The telephone surveillance, sought by the Federal Bureau of Investigation and approved by the court on April 25, requires Verizon to provide the National Security Agency with information about calls inside the U.S. and between the U.S. and other countries on a daily and “ongoing” basis. The NSA runs computer centers for analyzing huge databases.
The Washington Post reported this evening that the NSA and FBI also are tapping directly into the central servers of nine leading U.S. Internet companies, capturing audio, video, photographs, e-mails, documents and connection logs. The Post said the operation, which began in 2007, has grown exponentially and become the most prolific contributor to the president’s daily intelligence briefing, providing raw material for almost 1 in 7 intelligence reports.
Microsoft Corp. (MSFT), Yahoo! Inc. (YHOO), Google Inc. (GOOG), Facebook Inc (FB)., PalTalk, AOL Inc. (AOL), Skype Technologies SA, Google’s YouTube, and Apple Inc. (AAPL) participate in the program, the Post reported. The White House did not immediately return telephone and e-mail requests for comment.
Disrupting Plots
White House deputy press secretary Josh Earnest, commenting earlier today on the telephone surveillance program to reporters traveling with Obama on Air Force One, said any such monitoring is carried out “with the knowledge and oversight of Congress.” It doesn’t include listening to telephone calls, and he said the president’s paramount goal is to “disrupt plots that may exist.”
Earnest said the data collected relates to call details, such as the telephone numbers of the caller and recipient and the length of their conversation. Neither he nor lawmakers would say whether the government monitors calls through other telephone companies, though outside analysts said that was probably the case.
Senate Intelligence Committee Chairman Dianne Feinstein, a California Democrat, and Senator Saxby Chambliss of Georgia, the panel’s top-ranking Republican, told reporters that the surveillance is legal and that they have been kept informed under the law. The court order lasts three months and was a regular renewal of the legal authority, which has been going on for seven years, Chambliss said.
Attacks Thwarted
“Terrorists will come after us if they can, and the only thing we have to protect us is good intelligence,” Feinstein said.
House Intelligence Committee Chairman Mike Rogers, a Michigan Republican, said telephone records collected under the surveillance program were used to thwart a “significant” terrorist plot within the “the last few years.” He declined to provide any details on the incident.
Some lawmakers blasted the breadth of the domestic surveillance. Senator Charles Schumer, a New York Democrat, demanded an explanation for a program he called “invasive.”
“One thing I have not heard is what the explanation is for needing to do this,” Schumer told reporters.
Senator Rand Paul, a Kentucky Republican, called the program “an astounding assault” on the U.S. Constitution.
‘New Low’
“After revelations that the Internal Revenue Service targeted political dissidents and the Department of Justice seized reporters’ phone records, it would appear that this administration has now sunk to a new low,” Paul said in a statement posted on his congressional website.
The order from the Foreign Intelligence Surveillance Court covers telephone numbers as well as the location and duration of calls, according to the order published by the Guardian and posted on its website.
Feinstein and Chambliss, briefing reporters, said the information collected is dumped into a government-maintained database and then used to respond to specific threats.
The surveillance program creates “a telephone book” of data and cannot be accessed without “reasonable, articulable suspicion that the records are relevant and related to terrorist activity,” Feinstein said.
Senate Majority Leader Harry Reid, a Nevada Democrat, joined them in defending the monitoring, saying it wasn’t new.
“Everybody should just calm down,” Reid said.
Obama ‘Responsibility’
His counterpart in the House, Republican Speaker John Boehner of Ohio, said Obama should explain to the American people what he’s doing that requires the intrusion. Obama has the “responsibility to outline what these tools are and how they are being used,” Boehner told reporters in Washington.
Representative James Costa, a California Democrat, told a Bloomberg Government breakfast this morning that the monitoring of telephone data “tests the faith and credibility of Americans about our government.”
Former vice president and Democratic presidential candidate Al Gore criticized the monitoring in a message to Twitter followers: “In digital era, privacy must be a priority. Is it just me, or is secret blanket surveillance obscenely outrageous?”
The disclosure may put further pressure on U.S. Attorney General Eric Holder, who is under fire for targeting reporters in the crackdown on leaks. It also may weigh on the nomination of Obama’s choice as the next FBI director, James B. Comey.
Disclosure Sought
Privacy-rights advocates issued swift protests upon learning of the Guardian report, calling the data collection an intrusion on millions of Americans. The American Civil Liberties Union called for the Obama administration to halt the program and disclose its scope and asked Congress to investigate.
Paul Bresson, an FBI spokesman, and Verizon spokesman Ed McFadden declined to comment.
The Verizon data-collection order was signed 10 days after the Boston Marathon bombing killed three people and injured more than 260 in the highest-profile terrorist incident on U.S. soil since 2001. U.S. agencies vastly expanded surveillance efforts during the past 12 years in a bid to avoid a repeat of the attacks on New York and the Pentagon.
The Bush administration started the so-called Terrorist Surveillance Program in the aftermath of the Sept. 11 attacks, when agencies began secretly conducting electronic surveillance on U.S. phone calls and e-mails without court warrants.
2008 Law
Congress passed a law in 2008 codifying parts of the program and authorizing intelligence agencies to get broad electronic surveillance orders from the Foreign Intelligence Surveillance Court.
That law, updating the more than three-decade-old Foreign Intelligence Surveillance Act, lets intelligence agencies monitor the e-mail, Internet activity and phone calls of non-U.S. citizens reasonably believed to be located outside the U.S. and involved in terrorist activities or other crimes. Congress voted last year to extend it until the end of 2017.
“We’ve been saying for over a decade that the law is incredibly broad and could be interpreted to allow something like this, but people didn’t believe it,” said Michelle Richardson, legislative counsel of the ACLU. “Now that there is hard proof, hopefully this will force Congress to take a look at it.”
Law Challenged
The Supreme Court has never ruled on the constitutionality of such a sweeping surveillance program. In February, the court voted 5-4 to bar a challenge by lawyers and civil rights activists to a federal law that allows government wiretapping of international phone calls and e-mails.
The majority didn’t rule on the surveillance program itself, instead saying the opponents lacked “standing” to sue because they hadn’t shown they were being harmed.
In 2012, there were 212 such FISA orders, known as “business records requests,” according to a letter from the Justice Department to Reid. The letter doesn’t specify the targets or scope of the requests.
The Guardian report marks the first time since broad surveillance was authorized in 2008 that an unredacted order has come to light.
“It confirms the worst fears that these tools are not being used in a targeted manner just against suspected terrorists and spies,” Richardson said.
Senators led by Paul and Oregon Democrat Ron Wyden tried and failed to amend last year’s legislation extending FISA so it would have included what they said were needed provisions to protect the constitutional rights of U.S. citizens.
“This sort of widescale surveillance should concern all of us and is the kind of government overreach I’ve said Americans would find shocking,” Senator Mark Udall, a Colorado Democrat, said in an e-mailed statement.
To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Chris Strohm in Washington at cstrohm1@bloomberg.net; Mike Dorning in Washington at mdorning@bloomberg.net
To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net
http://www.bloomberg.com/news/2013-06-06/nsa-said-to-collect-millions-of-verizon-phone-records.html
The Comex Warehouse Stock Report Fraud Clarified
Dave from Denver…
Thursday, June 6, 2013
(special thanks to basserdan)
I realized after assessing some comments posted on my Tuesday blog post about the fraud going on at the Comex that I did not articulate a key point about the credibility of bank financial reporting. It seems that there is still a contingency of people who are willing to believe that if a bank issues an accounting report, it must be valid.
Let me preface this clarification post by saying that given the long laundry list of charged and prosecuted high profile fraud cases against all of the big banks, I just assumed that everyone understood that banks can not be trusted at all. Here's my Golden Rule: banks can not be trusted at all. Fool me once, shame on you; fool me twice, shame on me; fool me three times, I'm a moron. Got it?
With that in mind let me clarify how the Comex warehouse gold and silver stock reports are produced. Each bank that operates a Comex vault is responsible for keeping and maintaining all accounting records in connection with operating their vault. This means that all of the reports and data that the CME uses to produce its warehouse stock reports come from the banks themselves. They are paper accounting records the bank produces and sends to the bean counters at the CME. There is no actual independent auidt of the reports OR of the bars themselves that are reported to be held in each bank vault. Everything the CME publishes is based on what is reported from the banks. Do you still trust these reports? If you do, re-read my Golden Rule.
Please DO NOT CONFUSE the reliability of paper records and the reliability of any bank not acting fraudulently with regard to those paper claims with actual physical gold that is sitting in an allocated account and bars for which the rightful owner has legal entitlement. Paper is NOT to be trusted - in any form.
A large portion of the gold that is being reported by the Comex vault operators is likely not really there to be reported. Now, "not being there" could well mean that there is a lease-claim attached to it or some other form of hypothecation. Just because bars are sitting physically in "registered" or "eligible" accounts does not mean that the intended owner of that bar has a legal entitlement to that bar.
Review the laws connected with short-selling and hypothecation. When an asset is sold short or hypothecated, the original holder of that asset unknowingly loses legal title to it. The fact that the legal department at the CME now requires a disclaimer about the bank reports that are used to produce the Comex warehouse gold and silver stock should tell us all we need to know about the nature of those bank reports, especially when considered in the context of all of the other fraud that banks have been involved in over the last couple decades.
Now, I also believe - per the recent 35% drain of gold inventory from the Comex - that a lot of the bars have been physically removed upon demand by entitled owners. By "entitled," I mean the party who possess the legal title to the bars. The disclaimer was added to the inventory report as an attempt to exonerate the CME from the legal liability of fraudulent reporting by the vault operators, who are responsible for the record-keeping and accounting and reporting of the bar inventory that is supposed to be in their vaults. Moreover, a high percentage of the gold that remains in the Comex vaults has likely been leased out or hypothecated. In other words, the financial reports from the banks do not legally present the actual amount of gold or silver in Comex vaults that can be immediately removed upon demand by the original intended owner. Think this is far-fetched? Explain why the Bundesbank demanded some of Germany's gold to be shipped back to Germany it requires and it requires 7 years to ship back just 300 tonnes of Germany's 1800 tonnes supposedly sitting in the Fed's NY vault? (Please note that Venezuela was able to have 200 tonnes of its gold shipped back to Venezuela within about 4 months).
This is the same kind of situation with GLD. Same wine, different bottle.
Now as far as Comex bar quality standards, not only am I well aware of the criterion and rules, but we have taken delivery of both gold and silver bars FROM the Comex. I am experienced in the entire process from start to finish.
This is also why I DO NOT trust the Comex reports. Back in April 2010, we took delivery and were given notice by HSBC for several silver bars. BY THE RULES, HSBC was required to deliver the bars to our possession by April 30, the last delivery day. They are given 3 days of leeway. Not only did we NOT receive the bars within the legal time frame, it took 7 full weeks for HSBC to make good on the delivery. If our fund was a lot bigger and we could have reasonably afforded the litigation, we would have gone after HSBC for breach and damages.
Moreover, during 2010, HSBC changed its delivery policy for off-Comex deliveries, making it more cumbersome and more expensive to get bars delivered to your possession from their vault.
Need I remind you that HSBC has recently been charged in several fraudulent banking activities AND convicted on a couple. They are connected to the recent HKMex gold scandal in Honk Kong, as well.
This clarification is to explain exactly why bank-produced paper reports at the Comex is more than likely riddled with fraud and it clarifies the difference between owning physical gold in your own possession vs. owning a paper claim on gold sitting somewhere else and a claim which can be hypothecated such that you actually lose legal entitlement to that underlying asset. The Comex is just as fraudulent as Enron, Refco, Amaranth, AIG, etc. Capito?
Posted by Dave in Denver at 9:16 AM
http://truthingold.blogspot.com/2013/06/the-comex-warehouse-report-fraud.html
Exposing the Secret to Wiping Out Student Loan Debt in
Jun 06, 2013 - 11:45 AM GMT
By: Money_Morning
Tara Clarke writes: Accepted wisdom says that there are only two (rather sobering) ways to relieve the burden of student debt: either pay it off, or depart from this earthly world.
Until now.
On May 22 the Ninth Circuit Court of Appeals wiped out $58,000 in student loan debt for a former law student in bankruptcy proceedings, sending shockwaves through the formerly impervious facade of student loan debt performance.
This is the case of Michael Hedlund.
His tale seems unexceptional in today's economic hard times.
Hedlund went to the University of Oregon and earned a bachelor's degree in business administration. He then attended Willamette Law School where he earned his J.D.
Hedlund financed his education with Stafford loans, a commonplace higher education loan backed by the U.S. government.
After graduating, Hedlund took the Oregon bar exam and worked as an intern for the Klamath County District Attorney.
That's when things began to fall apart.
Hedlund failed the bar. He tried and failed again. The DA fired him for he was not able to practice law.
In an effort to turn things around, Hedlund got a full time job as a counselor with the Klamath County Juvenile Department. He signed up to take a third stab at the bar exam.
The day of the exam, he accidentally locked his keys in his car and missed the test.
At this point, Hedlund gave up on trying to practice law. He married in 2000, and became a father in 2001.
But just because Hedlund gave up on his legal training didn't mean the lenders who paid for it were going to let him off the hook.
Hedlund owed PHEAA (Pennsylvania Higher Education Assistance Agency) more than $85,000, which came out to monthly payments around $800. He didn't make nearly enough money in his counselor position to pay that amount, so he began searching for relief.
After exhausting all forbearance opportunities, Hedlund applied to consolidate his student loans in an attempt to lower his monthly payment.
The lender lost his application causing Michael to default on his loans. Once he defaulted, he was no longer eligible for consolidation or any other program relief. He tried different avenues to consolidate his loans but was rejected at every turn. He made every attempt to continue paying for his loans.
But the lenders filed action against Hedlund for defaulting. They began garnishing his wages in small increments, which he did not contest.
Then, one of the lenders garnished a larger chunk, way too much for Hedlund to handle, as he frantically tried to keep his family afloat.
In a final act of desperation, Hedlund filed for bankruptcy.
Until Hedlund's case, bankruptcy was thought to be a safety net only available to failed businesses and unlucky or mismanaged personal finances.
Debt wrought from educating yourself is considered a non-dischargeable offense, unless you can show "undue hardship" - up until now a nearly insurmountable standard to prove in court.
Proving undue hardship is a costly and highly intrusive prospect. The burden is on the debtor to prove it's impossible for him or her to pay the student loan. The process involves a public, intimate, and downright embarrassing examination of your finances.
On top of that, different courts use different indicators to determine undue hardship, making the likelihood of success extremely difficult to predict.
But here we have Michael Hedlund, a shining example of a man who acted in good faith to repay his debt.
The Ninth Circuit looked upon Hedlund with an appraising eye.
Here is a debtor who made every effort to obtain employment, to maximize his income, and to minimize his expenses. He tried everything he could think of to reduce the monthly payments to a manageable amount, including negotiating with lenders. He even endured wage garnishments without protest until an overwhelming amount was taken.
Hedlund was judged to have done his absolute best to pay his debts and so the court discharged all but $32,080 of his remaining debt.
It decided that paying the full amount would be too onerous on Hedlund and his family.
This ruling opens the flood gates to student debtors across the nation.
By defining guidelines for undue hardship in a detailed, published opinion, the Ninth Circuit has given courts more freedom to say, "You've done enough to try to repay. We'll discharge your student debts."
Borrowers who have truly made every effort to repay their loans now have an avenue for relief.
Derek Foran, whose firm represented Hedlund, commented, "The Ninth Circuit's decision is important for other student debtors, because it clarifies the correct standard of review governing undue hardship determinations under the bankruptcy code. It will mean significant relief for student debtors - who often are unrepresented - seeking relief in bankruptcy court."
Now, imagine what would happen if an abundance of student debtors across the nation have circumstances as compelling as Hedlund's?
The implications are vast, given the student loan bubble.
Klamath Community College President Dr. Roberto Gutierrez commented to his local NBC affiliate: "An extreme measure would be that the bubble will burst as far as loans - and a lot of students will refuse to pay the loans anymore. Then we've got a problem, because then we may have lenders that do not want to loan anymore."
If the student loan bubble bursts, we are talking earth-shaking stuff here - as major as the subprime mortgage crisis in 2008.
And, just like subprime, Hedlund's case reiterates the idea that lenders have a responsibility to issue loans they know can actually be repaid.
Hedlund's case is a game changer for student debtors, and if enough borrowers like him are out there, it's a game changer for us all.
Source :http://moneymorning.com/2013/06/05/law-student-expose...
http://www.marketoracle.co.uk/Article40785.html
Goldman Sachs Too Big To Prosecute Skates Again
Jun 06, 2013 - 10:28 AM GMT
By: Money_Morning
Shah Gilani writes: These investment bankers almost ruin our economy and they're still acting like it's 2007. Have they no shame?
If you missed the latest news that former Goldman Sachs (NYSE: GS) Vice President Neil M. M. Morrison was fined a record $100,000 by the SEC and barred from the securities business for five years for breaking municipal securities rules, don't feel bad.
The news didn't make it into many newspapers.
And sadly, that's because there's nothing newsworthy about greed and corruption on Wall Street.
Here's what Morrison did wrong, besides getting caught. And what his former firm Goldman Sachs said about him after they threw him under the bus, then fired him because he got caught doing what he did.
It's kind of like the intro to "Mission Impossible" episodes and movies when the agent receives the assignment, and the message ends saying, "Of course, if you are caught, we will disavow having any knowledge of you or your mission," then self-destructs.
Neil Morrison, 38 years old, started as a vice president of Goldman Sachs in July 2008. As a municipal finance executive in Goldman's Boston office, Morrison's job was to bring in municipal underwriting business, including the Massachusetts Treasurer's office.
Goldman "trained" Morrison on the ins and outs of gathering municipal underwriting business, the rules, regulations and laws governing municipal financing and underwriting standards, as well as Goldman's own internal policies.
And then....
Killing the Interview, Goldman-style
Fortunately for Morrison, he had friends in high places. This is pure speculation on my part, albeit educated speculation, but Goldman likely knew, perhaps from the interviewing process for which Goldman is so famous, that Morrison was well-connected.
From November 2008 until October 2010 Morrison, by a stroke of good fortune, worked for then-Massachusetts Treasurer Timothy P. Cahill on his gubernatorial campaign.
Morrison's portfolio on behalf of the aspiring governor included fundraising, fundraising solicitation, writing position papers, speechwriting, prepping the candidate for press conferences, interviewing consultants and rendering legal advice.
Morrison didn't get paid by Cahill, and he didn't contribute money to the candidate's campaign efforts.
But there's little doubt that Morrison and his employer expected his "in-kind" contributions to be remunerated by the then-treasurer and possibly future governor, by throwing a little municipal underwriting business his way.
It turns out that the 364-plus e-mails from Morrison's Goldman Sachs office computer and all his other campaign efforts for the treasurer, many of which were orchestrated from the Goldman office, were to no avail.
But that didn't mean Morrison's efforts were in vain. During the time Morrison was contributing his energies to Cahill's campaign, Cahill steered more than $9 billion of underwriting business to Goldman Sachs. The firm profited by some $7.5 million in fees.
Cost of Doing Business
Well, it turns out that there's a law against that kind of back scratching. It's called "pay-to-play" and it's illegal.
Morrison didn't think he was doing anything wrong, but Goldman was surprised, to say the least.
Once it was found out that Morrison and Goldman were being investigated, Goldman fired Morrison. Goldman said, "Neil Morrison violated applicable regulatory rules as well as Goldman Sachs' internal policies. We detected his activities, promptly alerted regulators, terminated his employment, and fully cooperated with investigations."
Of course, it never occurred to Goldman that Morrison was doing his job in a way that they expected him to and he simply got caught. Then, with their own hands soiled, Goldman promptly sought a settlement of the matter without admitting or denying guilt and paid a piddling $14.4 million fine.
As far as Morrison, he bore the brunt of the punishment, not by the "record" $100,000 fine (tip money for a Goldman banker), but by being barred from the securities milk run business for five years.
But then again, it was only ever a civil matter. These crimes are never criminal matters, when big money and big politics are involved.
Maybe the word criminal, as in one who commits a crime (things there are laws against), should be changed to "civilinal" so as to not offend hardworking white-collar criminals.
Source :http://moneymorning.com/2013/06/06/too-big-to-prosecute-goldman-skates-again/
Money Morning/The Money Map Report
Goldman Sachs Too Big To Prosecute Skates Again
Jun 06, 2013 - 10:28 AM GMT
By: Money_Morning
Shah Gilani writes: These investment bankers almost ruin our economy and they're still acting like it's 2007. Have they no shame?
If you missed the latest news that former Goldman Sachs (NYSE: GS) Vice President Neil M. M. Morrison was fined a record $100,000 by the SEC and barred from the securities business for five years for breaking municipal securities rules, don't feel bad.
The news didn't make it into many newspapers.
And sadly, that's because there's nothing newsworthy about greed and corruption on Wall Street.
Here's what Morrison did wrong, besides getting caught. And what his former firm Goldman Sachs said about him after they threw him under the bus, then fired him because he got caught doing what he did.
It's kind of like the intro to "Mission Impossible" episodes and movies when the agent receives the assignment, and the message ends saying, "Of course, if you are caught, we will disavow having any knowledge of you or your mission," then self-destructs.
Neil Morrison, 38 years old, started as a vice president of Goldman Sachs in July 2008. As a municipal finance executive in Goldman's Boston office, Morrison's job was to bring in municipal underwriting business, including the Massachusetts Treasurer's office.
Goldman "trained" Morrison on the ins and outs of gathering municipal underwriting business, the rules, regulations and laws governing municipal financing and underwriting standards, as well as Goldman's own internal policies.
And then....
Killing the Interview, Goldman-style
Fortunately for Morrison, he had friends in high places. This is pure speculation on my part, albeit educated speculation, but Goldman likely knew, perhaps from the interviewing process for which Goldman is so famous, that Morrison was well-connected.
From November 2008 until October 2010 Morrison, by a stroke of good fortune, worked for then-Massachusetts Treasurer Timothy P. Cahill on his gubernatorial campaign.
Morrison's portfolio on behalf of the aspiring governor included fundraising, fundraising solicitation, writing position papers, speechwriting, prepping the candidate for press conferences, interviewing consultants and rendering legal advice.
Morrison didn't get paid by Cahill, and he didn't contribute money to the candidate's campaign efforts.
But there's little doubt that Morrison and his employer expected his "in-kind" contributions to be remunerated by the then-treasurer and possibly future governor, by throwing a little municipal underwriting business his way.
It turns out that the 364-plus e-mails from Morrison's Goldman Sachs office computer and all his other campaign efforts for the treasurer, many of which were orchestrated from the Goldman office, were to no avail.
But that didn't mean Morrison's efforts were in vain. During the time Morrison was contributing his energies to Cahill's campaign, Cahill steered more than $9 billion of underwriting business to Goldman Sachs. The firm profited by some $7.5 million in fees.
Cost of Doing Business
Well, it turns out that there's a law against that kind of back scratching. It's called "pay-to-play" and it's illegal.
Morrison didn't think he was doing anything wrong, but Goldman was surprised, to say the least.
Once it was found out that Morrison and Goldman were being investigated, Goldman fired Morrison. Goldman said, "Neil Morrison violated applicable regulatory rules as well as Goldman Sachs' internal policies. We detected his activities, promptly alerted regulators, terminated his employment, and fully cooperated with investigations."
Of course, it never occurred to Goldman that Morrison was doing his job in a way that they expected him to and he simply got caught. Then, with their own hands soiled, Goldman promptly sought a settlement of the matter without admitting or denying guilt and paid a piddling $14.4 million fine.
As far as Morrison, he bore the brunt of the punishment, not by the "record" $100,000 fine (tip money for a Goldman banker), but by being barred from the securities milk run business for five years.
But then again, it was only ever a civil matter. These crimes are never criminal matters, when big money and big politics are involved.
Maybe the word criminal, as in one who commits a crime (things there are laws against), should be changed to "civilinal" so as to not offend hardworking white-collar criminals.
Source :http://moneymorning.com/2013/06/06/too-big-to-prosecute-goldman-skates-again/
Money Morning/The Money Map Report
COMEX - Year to Date Delivery Notices
http://www.cmegroup.com/delivery_reports/MetalsIssuesAndStopsYTDReport.pdf
Connecticut becomes first state to pass legislation requiring genetically modified (GM) food labeling
By Agence France-Presse
Tuesday, June 4, 2013
The small US state of Connecticut became the first to pass legislation requiring food products with genetically modified ingredients to be labeled as such.
But the law, passed on Monday, will not go into effect until a number of other states in the northeastern region where Connecticut is located follow suit with similar legislation.
The legislation was strongly supported in a 134-3 vote in the state House of Representatives, making Connecticut the first of some two dozen states mulling GM foods labeling to pass a measure.
The bill had been passed by the Senate on Saturday.
The state’s governor, Dannel Malloy, endorsed the legislation ahead of the vote, saying it “strikes an important balance by ensuring the consumers’ right to know what is in their food while shielding our small businesses from liability that could leave them at a competitive disadvantage.”
With just 3.6 million people in the state, it was necessary to tie enactment of the law with other states doing the same.
The bill said that the labeling rules will only take effect when at least four other states, including at least one of them an immediate neighbor of Connecticut such as New York, enact similar legislation, and also only when states in the northeastern region of the country with a combined population of 20 million or more do the same.
“Connecticut is a fairly small state and we wanted to make sure that it wouldn’t be the only state in the region to pass such a law, which could have been a disadvantage for our small businesses,” said Todd Murphy, a spokesman for the House of Representatives.
Officials had stressed that it was only an issue of informing consumers and that no restrictions were placed on GM ingredients under the new law.
The Center for Food Safety, which campaigns against GM foods — also known as genetically engineered (GE) foods — applauded the vote.
“Numerous other states in the Northeast and around the country are actively considering pending GE food labeling bills,” said the center’s Rebecca Spector in a statement.
“Connecticut’s leadership provides momentum and an incentive for these other states to move forward.”
http://www.rawstory.com/rs/2013/06/04/connecticut-becomes-first-state-to-pass-legislation-requiring-genetically-modified-gm-food-labeling/
Skip Davos, Go to Tel Aviv
Posted: 06/05/2013
Janet Tavakoli, President Tavakoli Structured Finance
Huffingtonpost
The Wall Street Journal's Matina Stevis has a breaking story about a "strictly confidential" internal IMF (International Monetary Fund) document that reveals how thoroughly the IMF deceived the public (and investors) when it said Greece's debt levels were "sustainable." The document will be released on Thursday.
I wasn't at Davos, but in all of the accounts and subsequent verbal reports to me by participants, the IMF's false narrative was touted there. The IMF now admits that its response to the Greek crisis (pushing more debt on Greece) bought time so that the rest of the 17-nation Eurozone could do damage control.
In other words, the IMF threw Greece under the bus. In particular, it ludicrously downplayed the damage its recommended austerity measures would do to the Greek economy, which is in the grips of a prolonged and deep recession.
Gang of Three
The IMF wasn't alone. It is part of the Eurozone's so-called troika comprised of the IMF, the European Commission, and the European Central Bank.
The troika's biggest fear may have been that Greece would repudiate its debt, as Iceland did. Iceland is now recovering, while Greece is sinking even further. By joining forces, the troika engaged in a sophisticated form of bullying.
As the troika arranged multiple bailouts that sank Greece further in debt, the IMF first forecast a 5.5 percent decline in Greek economic output for 2009 to 2012. But Greece lost 17 percent in real gross domestic output. The forecast also called for only 15 percent unemployment in 2012; the reality was 25 percent. These weren't forecasts; they were numbers fabricated to build consensus to strong-arm Greece into complying with the bailouts.
The troika is also managing the bailouts of Ireland, Portugal, and Cyprus, and it will likely have a hand in others when needed. Yet, citizens of these countries would be foolish to believe the troika has their interests in mind.
Eurozone Banks Are Bloated with Bad Debt
The IMF's own document reveals that the wider Eurozone benefited from the Greek bailouts, not Greece. In other words, banks and investors didn't have to recognize losses on Greek debt that cannot be repaid. Instead, the troika has a policy of foisting more debt on failing countries -- to support the Eurozone's failing banks -- to pretend that the banking system in the Eurozone isn't bloated with bad debt.
The reason for this is simple. The Eurozone banks cannot mark down the "assets," i.e., the debt they own, to realistic levels. If they did, the losses would be so great, even the troika couldn't save them. Many banks should be allowed to fail, even if that means wiping out shareholders and having debt holders take a hit. There would be a lot of short-term pain, but it would be over faster.
The troika will never recommend this, because some of the biggest losers are among their fellow attendees at Davos. Many people in prestigious positions would lose their status. Little do they know that they have already lost that status in the eyes of thinking financiers and business leaders.
Lies in Davos, Truth in Tel Aviv
In December, I spoke at the Israel Business Conference in Tel Aviv. My topic was the Eurozone, and I aired my views on Greece, views that are very different than the troika's. Speakers and attendees included Shimon Peres, European business leaders, leaders from the defense industry, and corporate leaders from around Europe. The Tel Aviv conference was one of the most illuminating events I've attended in a decade
European business leaders were baffled by the misinformation pushed by the troika about the situation in Greece and in weaker Eurozone countries. They recognized the troika's story for the deception it was. European business leaders and (honest) banking officials called Greece's deep recession a depression, since that's exactly how it appears to them.
How much has the IMF damaged its credibility? Here's a snippet from Matina Stevis's WSJ report:
The IMF said that it bent its own rules to make Greece's burgeoning debt seem sustainable and that, in retrospect, the country failed on three of the four IMF criteria to qualify for assistance.
Over the last three years, a number of senior IMF figures, including the current managing director Christine Lagarde, have repeatedly said that the country's debt level was "sustainable" -- likely to be repaid in full and on time.
Meanwhile, the IMF knew there were serious doubts about the sustainability of Greek debt. All the while banks and investors were taking this debt onto their balance sheets. In many cases the banks knew this was troubled debt even as they sold it to investors and stuffed it on their own balance sheets. Convenient lies from the IMF gave their risk committees air cover.
At Davos Lagarde was lionized and gave a speech entitled "Resilient Dynamism." If dishonest spin is what you want to hear, Davos is the place for you. If you prefer hard-to-hear useful truth, go to Tel Aviv.
See also: "Euro Endgame," TSF, June 1, 2011 (pdf) or
Euro Endgame - Huffington Post - by Janet Tavakoli - June 1, 2011
Endnote: In September, 2009, I gave a presentation to members of the International Monetary Fund (IMF) explaining the corrosive atmosphere that allowed the largest Ponzi scheme in the history of the capital markets to flourish: "Wall Street's Fraud and Solutions for Systemic Peril." You can read more about it by clicking here..
The IMF was still in denial (this preceded SEC fraud suits). It also has a history of sending the wrong message. Failure to recognize fraud led to statements like the one that opened Chapter 2 of the IMF's April 2006 Global Financial Stability Report:
There is growing recognition that the dispersion of credit risk by banks to a broader and more diverse group of investors, rather than warehousing such risk on their balance sheets, has helped to make the banking and overall financial system more resilient.
That was all the more extraordinary given that in April 2005, I had given a presentation to the IMF about problems with credit derivatives and misrated collateralized debt obligations. The IMF acted as a public relations division for the global banking system. IMF insiders said they are often censored and not allowed to oppose the party line.
http://www.huffingtonpost.com/janet-tavakoli/skip-davos-go-to-tel-aviv_b_3391421.html
Institutional Ownership In Silver Producers
Jun 4 2013, 07:16
by Itinerant
Disclosure: I am long AG, EXK, SVLC, HL, ASM. (More...)
Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.
Mutual funds, pension funds or other institutional investors are the major players in the share market. Decisions to buy or sell by these institutions can drive share price development and typically have a strong effect on other owners. Institutions tend to buy in large quantities and also tend to perform extensive due diligence before joining a share registry with resources and expertise at their disposal that retail investors can only dream of. Institutions also have a tendency to support stocks they own by stepping up their buying in times of share price weakness, which in turn might attract retail investors back to the stock. This mechanism often provides stability to the stock price.
While institutions typically take their time to build a position in a particular stock, they are not always as patient when it comes to selling. If one or more large owners rush to the exit then this can create undeserved downward pressure. We therefore like multiple institutions to be present with balanced holdings to minimize the impact of one of these institutions selling.
Small companies usually have relatively few shares outstanding, and their total worth is modest. Institutions don't tend to buy into micro- and small-cap stocks, but will do so once the stock grows and they have convinced themselves on the potential. Once a buy decision by an institution has been made, the position will be built continuously over time and in the process will drive the share price higher. This typically represents a great opportunity for speculators who had the foresight to buy a stock before institutions became interested, or investors who happen to observe the interest and buy early on during institutional buying.
For all these reasons it often pays to observe the moves of institutions when pondering buying into, or selling out of a particular stock or sector as a retail investor.
Using data published on Nasdaq.com we collated a data base detailing institutional holdings of silver mining equities. In this article we would like to share our data and offer some interpretations. The data we are presenting in the following was last updated at the end of the first quarter 2013. As such, these holding reports date back to a time before the recent severe drop in precious metal prices. We will update our data once it becomes available for the second quarter and we will be very curious as to what changes we will be able to observe. For the time being, here is the situation as of March 31 2013.
In alphabetical order, these are the 16 companies we have included in our research: Aurcana (AUNFD.PK), Avino Silver (ASM), Coeur Mining (CDE), Endeavour Silver (EXK), Excellon Resources (EXLLF.PK), First Majestic Silver (AG), Fortuna Silver (FSM), Great Panther Silver (GPL), Hecla Minin (HL), Impact Silver (ISVLF.PK), PanAmerican Silver (PAAS), Revett Minerals (RVM), Scorpio Mining (SMNPF.PK), Silver Standard (SSRI), Silvercorp (SVM) and SilverCrest (SVLC).
For each of the listed companies we collated values for total institutional holdings (labeled inst. total), the holding of the largest single owner (labeled top 1) and accumulated holdings of the top five institutional owners (labeled top 5) and top ten institutional owners (labeled top 10). The results are shown in the diagram below. Three companies out of our list had no records of noteworthy institutional holdings and were therefore not included in this diagram. These companies are Aurcana, Excellon Resources and Impact Silver.
The second diagram illustrates changes in institutional holdings during the first quarter 2013 for the same companies.
(click to enlarge)
(click to enlarge)
Observations
Correlation between market capitalization and institutional holding is high at 0.74.In other words: higher market captilization attracts higher institutional holdings. For silver mining companies with large portions of the share registry taken up by institutions the distribution is usually balanced between several institutions.
We noted that Van Eck Associates are the major shareholder in just about every single one of the larger silver mining companies in our list, with the notable exceptions being Fortuna Silver Mines, Silver Standards and SilverCrest. Van Eck is the largest provider of mutual funds in the precious metal mining space (among others) and their holdings deserve special attention. Silver miners are included in Van Eck's Market Vectors Gold Miners ETF (GDX), Market Vectors Junior Gold Miners ETF (GDXJ) among others. Changes in the weightings of these funds tend to move the share price of the affected companies.
In the case of Silver Standard the top holder is Royce Associates who have been selling heavily and Van Eck is recorded in close second place. Our data provides no indication of Van Eck buying more stock of this particular company.
SilverCrest and Fortuna Silver on the other hand have displayed strong growth and we would identify these two companies as possible candidates to pique Van Eck's interest in the not too distant future. Both these companies have strong fundamentals and have shown up on our radar (for example, see here, here or here).
Of the 4 companies with more than $1B market capitalization we noted First Majestic Silver with disproportionate low institutional holdings. First Majestic has been showing very strong growth and continues to outperform its peers. We would suggest that there is a strong possibility that institutional holdings for First Majestic Silver will catch up with peers which would provide upward momentum for the share price. On the other hand, institutional holdings of Coeur Mining are significantly higher compared to its peers, giving rise to the possibility of trimmings which could put some pressure on the share price.
Not unexpectedly, smaller companies tend to have single top holders with disproportionate weight. Scorpio is the most significant example here with Tocqueville Asset Fund holding 17% of the company and no other institutional owners present. Avino Silver is another junior miner with Sprott Asset Management as their single dominant institutional holder. Should other institutions decide to follow the lead of these funds then that could provide a perfect storm for the share price of these two companies.
Discounting shifts of less than 1% institutional holdings have been increasing in the first quarter for four companies: Coeur Mining, Great Panther Silver, Silver Standard and SilverCrest. On the downside we noted decreases in institutional holdings for Endeavour Silver, Silvercorp and Hecla Mining. Endeavour Silver is the standout in this context with almost 6% of the stock sold by institutions.
http://seekingalpha.com/article/1478991-institutional-ownership-in-silver-producers?source=email_portfolio&ifp=0
great post!
Major Insider: Time to Buy Gold; The Chinese Want to Make the Yuan Gold Backed
Robert Wenzel
Tuesday, June 4, 2013
(special thanks to basserdan)
I have mentioned Philippa Malmgren before ( http://tinyurl.com/m8zs8by )
Philippa Malmgren is an insider's insider. She was Special Assistant to the President for Economic Policy on the National Economic Council. She was also a member of the President's Working Group on Financial Markets, aka, the Plunge Protection Team. Her client list includes every elite corporate firm in the world (Take a minute to look at the list, its mind boggling, the list is here: http://tinyurl.com/kk2l4o5 ). You don't get much more insider than this.
She is out with a new comment on gold ( http://tinyurl.com/nx3asn9 ). In it she seems to hint that there might have been a conspiracy to push gold down (Remember this is coming from a major insider, who travels in the circles she is talking about):
"Why Won't Gold Go Up? After all, gold should be rising given that every major central bank is expanding the monetary base by historic magnitudes. Japan is doubling the monetary base. The UK is about to print until they reach what the new Governor calls "escape velocity" which is as yet undefined. The US has open-ended Quantitative Easing that will last at least until nearly full employment is reached at 6.5% to 5.5%. The ECB has not even started to monetize the debt but hopes to as soon as the Germans give in. So, why did the gold crash of 2013 happen on April 12th? Gold lost an almost unprecedented 84 USD an ounce that day.
Conspiracy theories abound. It seems the Japanese bond market and gold are highly correlated. As the JGB market sells off, due to their effort to create inflation, every bank starts hitting it's VAR driven risk limits and has to raise cash.
Maybe the Fed did it? Like all central bankers who are pursuing QE, Chairman Bernanke, is bound to hate it if the market puts more trust and faith in gold than in government. Some observers are now going crazy with the possibility that the Federal Reserve and other central banks might somehow have encouraged the sudden sell pressure. Central banks are either selling or exchanging gold for credit. Cyprus sold 75% of it's gold, though that does not begin to provide enough cash for them. The IMF is selling too. Euro zone banks are all pledging their gold as collateral against the generous and probably repayable loans the ECB is extending to them.
Is it materially important that JP Morgan and other investment banks are net beneficiaries of money printing but also maintain massive short positions? Why did several banks all issue "sell gold" notes just before or in the months before the record price drop? Were they prescient or forcing a desired outcome?"
Note her comment on who has been buying gold during the recent selloff and what it means (my bold):
"The most interesting piece of the puzzle is that the Chinese have emerged as the biggest buyer of gold, mainly in large off market. They want the Yuan to emerge as a hard, gold-backed currency in a world where everyone else has chosen to inflate and devalue. The recent bilateral currency deals with Australia, France Russia and Singapore, and many others, reflect this desire to displace the USD as the world's reserve currency. It may be an interesting and long race between the Chinese reaching for convertibility and the Western central banks straining credibility."
So what is her advice to investors?:
"Gold bulls have a rare chance to double up now. Gold bears will have a hard time doubling down from a record profit. Meanwhile, apparently the Indians and everybody else in the emerging markets recognizes a good deal when they see it. As inflation pain continues to make headlines from high tomato prices in Brazil to the same for onions in India, no emerging market investors have any illusions. Inflation for them is here for the duration. A gold backed Yuan is increasingly sounding like a sensible idea."
http://www.economicpolicyjournal.com/2013/06/major-insider-time-to-buy-gold-chinese.html
How Elite Economic Hucksters Drive America’s Biggest Fraud Epidemics
AlterNet [1] / By William K. Black [2] May 29, 2013 |
(special thanks to wall rus)
Editor's note: This article is part of an ongoing AlterNet series, "The Age of Fraud."
http://www.alternet.org/print/economy/how-elite-economic-hucksters-drive-americas-biggest-fraud-epidemics
What do you get when you throw together economic fraudsters, plutocrats and opportunistic criminals? A financial crisis, that’s what. If you look back over the massive frauds that have swept the country in recent decades, from the savings and loan crisis of the 1980s to the 2007-'08 financial crash, this deadly combination always appears.
A dangerous cycle begins when prominent economists pander to plutocrats and bought politicians, who reward them with top posts, where they promote the perverse economic policies that cause fraud epidemics. Crises develop, and millions of people are ripped off. Those who fight for truth are ignored or ruined. The criminals get wealthier, bolder and more politically powerful, and go on to hatch even more devastating cons.
The three most recent financial crises in U.S. history were driven by a special type of fraud called “control fraud” -- cases where the officers who control what look like legitimate entities use them as “weapons” to commit crimes. Each time, Alan Greenspan, former chairman of the Federal Reserve, played a catastrophic role. First, his policies created the fraud-friendly (criminogenic) environment that produces epidemics of control fraud, then he failed to identify those epidemics and incipient crises, and finally, he failed to counter them.
At the heart of Greenspan’s failure lies an ethical void in the brand of economics that has dominated American universities and policy circles for the last several decades, a brand known as “free market fundamentalism” or the “neoclassical school.” (I call it “theoclassical economics” for its quasi-religious belief system.) Mainstream economists who follow this school assert a deeply flawed and controversial concept known as the “efficient market hypothesis,” which holds that financial markets magically regulate themselves (they automatically “self-correct”) and are thus immune to fraud. When an economist starts believing in that kind of fallacy, he is bound to become blind to reality. Let’s take a look at what blinded Greenspan:
Greenspan knew that markets were “efficient” because the efficient market hypothesis is the foundational pillar underlying modern finance theory.
Markets can’t be efficient if there is control fraud, so there must not be any.
Wait, there are control frauds! Tens of thousands of them.
Then control fraud must not really be harmful, or markets would not be efficient.
Control fraud, therefore, must not be immoral. As crime boss Emilio Barzini put it in The Godfather, “It’s just business.”
As delusional and immoral as this “logic” chain is, many elite economists believe it. This warped perspective has spawned policies so perverse that they turn the world of finance into the optimal environment for criminals. The upshot is that most of our elite financial leaders and professionals have thrown integrity out the window, and we end up with recurrent, intensifying financial crises, de factoimmunity for our most elite criminals, and the rise of crony capitalism. Let’s do a little time travel to see exactly how this plays out.
How to stoke a savings and loan fiasco
The Lincoln Savings and Loan Association of Irvine, California was at the center of the famous crisis that rocked the financial world in the 1980s. A once prudently run company morphed into a casino when S&L associations became deregulated and started doing risky business with depositors’ money. Businessman, GOP darling, and anti-pornography crusader Charles Keating, ironically nicknamed “Mr. Clean,” took over Lincoln in 1984 and got the casino rolling. (It was a special kind of casino where the games were rigged – and not in favor of newlywed brides who were the subject of sexual extortion in Casablanca.) In a classic case of control fraud, Keating devoted himself to turning the company into a weapon of mass financial destruction and a source of wealth for his family. Keating’s “weapon of choice” for his frauds was accounting.
Keating went on a spree buying land, taking equity positions in real estate projects, and purchasing junk bonds. In 1985, the Federal Home Loan Bank Board (FHLBB), where I was the staffer leading the regulation efforts, grew alarmed at the new activities of savings associations like Lincoln. So we made a rule: S&Ls could not put more than 10 percent of company assets in "direct investments” – an activity that led to very large losses.
Alan Greenspan, chairman of an economic consulting firm at the time, urged us to permit Lincoln Savings to go full steam ahead. His memo supporting Lincoln’s application to make hundreds of millions of dollars in direct investments praised the company’s management (Keating) and claimed that Lincoln Savings “posed no foreseeable risk of loss.”
The FHLBB rejected Lincoln’s request to exceed the rule’s threshold because direct investments were a superb vehicle for accounting fraud – they made it easy to hide losses and to create fictional income. Nevertheless, Lincoln continued to violate the rule and created fictional (backdated) board consents with hundreds of forged signatures to make it appear that the investments were “grandfathered” under the rule. The hundreds of millions of dollars in unlawful direct investments were used for fraudulent purposes by Lincoln Savings’ controlling officers and caused enormous losses – many of them to elderly citizens who were conned into buying the junk bonds of Lincoln Savings’ holding company. The massive losses on Lincoln’s illegal direct investments were a major reason those bonds were worthless.
Hoping to use his political clout to continue the fraud, Keating hired Greenspan to lobby the senators who eventually became the known as the “Keating Five.” I remember well when these senators intervened at Keating’s request to try to prevent me and my colleagues from taking an enforcement action (or conservatorship) that would have saved over a billion dollars. (I took the notes of that meeting, which led to the Senate ethics investigation of the Keating Five.) The cronyism was so thick in Washington that William Weld, then a top Department of Justice official and later the Republican governor of Massachusetts, actually tried to gin up a criminal investigation of the regulators rather than Keating at the request of Lincoln’s lawyers who had just left the DOJ! Eventually, Keating and many of the senior managers of Lincoln Savings were convicted of felonies and Lincoln Savings became the most expensive failure of the S&L debacle.
When you look back on this expensive fiasco, you see that the work of respected professional economists was frequently called upon to support the fraudulent activities. One of the ways Greenspan tried to advance Keating’s effort to have the courts strike down the direct investment rule was to use a study conducted by a less famous economist, George Benston, who showed that S&Ls that violated the direct investment rule earned higher profits than those who didn’t. So he recommended the rule be dropped. Small problem: In less than two years all 33 of the companies Benston studied had failed. Most were accounting control frauds in which executives cooked the books to show fictional profits.
Keating had a talent for obtaining endorsements from prominent economists. He got Daniel Fischel to conduct a study that purported to show that Lincoln Savings was the best S&L in America. Fischel invoked the efficient market hypothesis to opine that our examiners provided no useful information because the markets had already perfectly taken into account any information to which we had access. In reality, of course, this was nonsense, and Lincoln Savings was the worst S&L in the country.
Economists who pander to plutocrats have a great advantage over scholars in other fields: There is no reputational penalty among your peers for being dead wrong. Benston got an endowed chair at Emory, Fischel was made dean of the Univerisity of Chicago’s Law School, and Greenspan was made Chairman of the Fed. Those who got control fraud right and fought the elite scams and their powerful political patrons – people like Edwin Gray, head of the FHLBB, and Joe Selby, head of supervision in Texas – saw their careers ended.
Consider what that perverse pattern indicates about how badly ethics have fallen in the both economics and government.
How to create a regulatory black hole
Alan Greenspan was Ayn Rand’s protégé, but he moved radically to the wacky side of Rand on the issue of financial fraud. And that, friends, is pretty wacky. Greenspan pushed the idea that preventing fraud was not a legitimate basis for regulation, and said so in a famous encounter [3] with Commodities Futures Trading Commission (CFTC) Chair Brooksley Born. “I don’t think there is any need for a law against fraud,” Born recalls Greenspan telling her. Greenspan actually believed the market would sort itself out if any fraud occurred. Born knew she had a powerful foe on any regulation.
She was right. Greenspan, with the rabid support of the Rubin wing of the Clinton administration, along with Republican Chairman of the Senate Banking Committee Phil Gramm, crushed Born’s effort to regulate credit default swaps (CDS). The plutocrats and their political allies deliberately created what’s known as a regulatory black hole – a place where elite criminals could commit their crimes under the cover of perpetual night.
Greenspan chose another Fed economist, Patrick Parkinson, to testify on behalf of the bill to create the regulatory black hole for these dangerous financial instruments. Parkinson offered the old line that efficient markets easily excluded fraud -- otherwise, they wouldn’t be efficient markets! (Parkinson would later tell the Financial Crisis Inquiry Commission in 2011 that the “whole concept” of a related financial instrument known as an “ABS CDO” had been an “abomination”). Greenspan’s successor richly rewarded Parkinson for being stunningly wrong in his belief: Ben Bernanke appointed Parkinson -- who had no experience as a supervisor or examiner -- as the Fed’s head of supervision.
Lynn Turner, former chief accountant of the SEC, told me of Greenspan’s infamous question to his group of senior officials who met at the Fed in late 1998 or early 1999 (roughly the same time as Greenspan’s conversation with Born): "Why does it matter if the banks are allowed to fudge their numbers a little bit?" What’s wrong with a “little bit” of fraud?
Conservatives often support the “broken windows” theory of criminal activity, which asserts that you stop serious blue-collar crime by cracking down on minor offenses. Yet mysteriously, they never apply the concept to white-collar financial crimes by elites. The little-bit-of fraud-is-ok concept got made into law in the Commodities Futures Modernization Act of 2000, which created the regulatory black hole for credit default swaps. That black hole was compounded by the Commodity Futures Trading Commission under the leadership of Wendy Gramm, spouse of Senator Phil Gramm.
Enron’s fraudulent leaders were delighted to exploit that black hole, because they were engaged in a massive control fraud. They appointed Wendy Gramm to their board of directors and proceeded to use derivatives to manipulate prices and aid their cartel in driving electricity prices far higher on the Pacific Coast. In a bizarre irony, the massive increase in prices led to the defeat of California Governor Gray Davis (the leading opponent of the cartel) and his replacement by Governor Schwarzenegger – a man who was part of the group that met secretly with Enron’s leadership to try to defeat Davis’s efforts to get the federal regulators to kill the cartel.
How damaging was Greenspan’s dogmatic and delusional defense of elite financial frauds in the case of Enron? If you look closely, you can see that Enron brought together all the critical elements of a financial crisis: big-time accounting control fraud, derivatives, cartels, and the use of off-balance sheet scams to inflate income and hide real losses and leverage. On top of all that, many of the world’s largest banks aided Enron and its extremely creative CFO Andrew Fastow to create frauds. The Fed could have responded by adopting and enforcing mandates to end the criminal practices that were driving the epidemic, but it didn’t. Instead, Greenspan and other Fed economists championed Enron’s leadership and cited the company as proof that regulation was unnecessary to prevent control fraud. They were so extreme that they attacked their own senior supervisors for daring to criticize the banks’ role in aiding and abetting Enron’s activities.
Later, when risky derivatives activities and control frauds at large financial institutions were pushing us toward the catastrophic crash of 2007-2008, the Fed took no meaningful action based on the lessons learned from Enron. Greenspan and the senior leadership of the Fed had learned absolutely nothing, which shows how disabling economic dogma is to regulators – making them worse than simply useless. They become harmful, again attacking their supervisors for criticizing the banks’ fraudulent “liar’s” loans. When Bernanke placed Patrick Parkinson (an economist blind to fraud by elite banksters) in a supervisory role at the Fed, he sealed the fate of millions of Americans whose financial well-being would be sucked right into that regulatory black hole – and removed the ability of the accursed supervisors to criticize the largest banks.
How to protect predatory lenders
Finally, we come to the mortgage meltdown of 2008, when the entire housing industry went into freefall. Central to this crisis is the story of the liar's loan -- mortgage-industry slang for a mortgage that a lender gives without checking tax returns, employment history, or anything else that might reliably indicate that the borrower can make the payments.
The Fed, and only the Fed, had authority under the Home Ownership and Equity Protection Act (HOEPA) to ban liar’s loans by all lenders. At a series of hearings mandated by Congress, dozens of witnesses representing home mortgage borrowers and state and local criminal investigators urged the Fed to do this. The testimony included a study that found a 90 percent incidence of fraud in liar’s loans.
What did Greenspan and Bernanke do? Exactly nothing. They consistently refused to act.
Greenspan went so far as to refuse pleas to send Fed examiners into bank holding company affiliates to find the facts and collect data on liar’s loans. Simultaneously, the Fed’s economists dismissed the warnings from progressives about fraudulent liar’s loans as “merely anecdotal.” In 2005, the desperate Fed regulators, blocked by Greenspan from sending in the examiners to get data from the banks, resorted to simply sending a letter to the largest banks requesting information. The Fed supervisor who received the banks’ response to that letter termed the data “very alarming.”
If you suspect that the banks would typically respond to such requests by understating their problem assets significantly, then you have the right instincts to be a financial regulator.
By 2003, loan quality was so bad that it could only be explained as the inevitable product of endemic accounting control fraud and it continued to collapse through 2007 until the bubble burst. By 2006, over two million fraudulent liar’s loans were originated annually. We know that it was overwhelmingly lenders and their agents who put the lies in liar’s loans. Liar’s loans make the perfect “natural experiment” because no governmental entity ever required a lender or a purchaser (and that includes Fannie and Freddie) to make or purchase a liar’s loan. Banks made, and purchased, trillions of dollars in liar’s loans because doing so lined the pockets of their controlling officers.
The Fed’s leadership, dominated by economists devoted to false theory, was enraged when the Fed’s supervisors presented evidence of endemic control fraud by the most elite lenders, particularly in the making of fraudulent liar’s loans. How dare the supervisors criticize our most reputable bank CEOs by showing that they were making hundreds of thousands through scams?
Bernanke finally acted under Congressional pressure on July 14, 2008 to ban liar’s loans. He cited evidence of endemic fraud available since early 2006 – evidence which would have been available way back in 2001 had Greenspan moved to require examiners to study liar’s loans. Even in the face of overwhelming evicence, Bernanke delayed the ban for 18 months -- one would not wish to inconvenience a fraudulent lender, after all.
We did not have to suffer this crisis. Economists who were not blinded by neoclassical theory, like George Akerlof (who won the Nobel Prize in 2001) and Christina Romer (adviser to President Obama from 2008-2010), had warned their colleagues about accounting control fraud and liar’s loans, as did criminologists and regulators like me. But Greenspan (and Timothy Geithner) refused to see the obvious truth.
Alan Greenspan had no excuse for assuming fraud out of existence, and his exceptionally immoral position on fraud and regulation proved catastrophic to America and much of the world. We cannot afford the price, measured in many trillions of dollars, over 10 million jobs, and endless suffering, of unethical economists.
Nice find basserdan. From the article;
Then in the USA, it has leaked out that Monsanto directly worked with its apparent current favorite US Senator, Roy Blunt, a Republican from Monsanto’s home state of Missouri and one of the major recipients of Monsanto campaign finance, to draft for Blunt an obscure paragraph Blunt got into a spending bill, a bombshell that exempts Monsanto from being sued for any damage its crops or chemicals cause.[6]
Called by opponents the Monsanto Protection Act, many members of Congress were apparently unaware that the Monsanto Protection Act was a part of the spending bill that they were voting on. The Monsanto bill, signed into law by President Obama despite hundreds of thousands of protest petitions not to, essentially gives Monsanto and other GMO purveyors legal immunity, even if future research shows that GMO seeds cause significant health problems, cancer, anything. The federal courts no longer have any power to stop their spread, use, or sales. [7] The only other corporations in the US enjoying such outrageous legal immunity are the pharmaceutical vaccine makers.
Biotechnology and Biological Sciences Research Council Has Links to GMOs
June 04, 2013
http://articles.mercola.com/sites/articles/archive/2013/06/04/biotechnology-gmo-research.aspx?e_cid=20130604_DNL_art_2&utm_source=dnl&utm_medium=email&utm_content=art2&utm_campaign=20130604
The Greatest Fundamental Reason to own Precious Metals
Filed in Precious Metals
by SRSrocco
on May 31, 2013 SRSroco Report
Gold and Silver will become two of the best assets to own in the future, however most investors are still clueless to why this is true. Currently, the Main Stream Media Bandwagon has hoodwinked the majority of investors into buying and holding some of the most overpriced, dead-end, and increasing worthless investments in the market. These investments include most stocks, bonds, retirement accounts, pension plans, commercial and residential real estate.
Over the past few years I have listened to many interviews and read many articles on how hedge funds have bragged about picking up large chunks of real estate for their portfolios. While the investment strategy of picking up real estate for a bargain has worked in the past… the future will be a much different story. I will explain more about this later.
If we look at the chart below, we can see where the majority of the world invests their hard-earned money:
According to TheCityUK Fund Management Report dated Nov. 2012, global conventional assets under management are estimated to be $85.2 trillion in 2012 up from $79.7 trillion in 2011. Furthermore, a recent report from TheCityUK states that global pension funds increased from $31.3 trillion in 2011 to $33.9 trillion in 2012 — a fourth successive year of recovery… or so they say.
The majority of the Global Pension Funds are dominated by the United States which accounts for 56% of the total market based on the latest 2011 figures (TheCityUK March 2013 Pension Markets). Thus, in 2011 the U.S. held $17.6 trillion out of the total $31.3 trillion.
The table below shows the asset allocation of selected countries pension funds:
If you look at the column next to the U.S., you will notice that nearly 75% of its pension fund asset allocations are in equities, bonds and bills. Furthermore, almost half were invested in equities alone. With the majority of the United States pension funds invested into these assets, it’s no wonder why the Fed is buying up Treasuries while member banks are propping up the broader stock markets. It’s one big happy family.
The remaining portion of the U.S. Pension funds are invested into the “other category”, which includes real estate, loans, mutual funds and private investments. Normally, when they list these “other” categories they do so in rank of highest to lowest in percentile. With real estate being the highest percentage of this category, we can see another motivation for the Fed and US Govt to keep real estate prices from falling — hence, the purchase of $40 billion a month of Mortgaged Back Securities included in the QE 3 announcement of Sept. 2012.
Of course the housing market is good for the economy but as we can plainly see, all of these so-called assets are all interwoven into one giant propped up bubble. This also includes the global insurance funds.
According to Deutsche Bank Group’s Insurance Investment First Half 2013 Report, the $24.4 trillion of insurance fund assets were allocated in the following sectors:
The table above shows that the majority of global insurance funds are invested into sovereign and corporate bonds. We must remember bonds of all types are nothing more than debt instruments. So, with the world’s insurance funds heavily invested into corporate and foreign government debt as well as equities, mortgages and real estate, it’s no surprise that the central banks are working frantically together to keep the greatest Ponzi Scheme in history alive.
Even though the grand masters of finance have kept this system from collapsing by printing, pumping and propping up the world’s economies, they are about to hit a brick wall… and that brick wall is energy.
ENERGY DRIVES THE WORLD’S MARKETS… NOT FINANCE
There seems to be an illusion that finance runs the world’s markets, it doesn’t — energy is the driver of the global economy. The chart below shows the relationship between the world oil supply growth and world GDP growth. If we subtract inflation from the global GDP figures we have the following:
(graph by Gail Tverberg)
In the article, Evidence that Oil Limits are Leading to Declining Economic Growth, Tverberg states that the real down-trend of global GDP growth may indeed be understated. This is due to countries understating true inflation rates as well as adding increasing amounts of debt.
So, in a nutshell there is no way to tell what is the true global GDP growth rate. Moreover, I believe the manufacturing of derivatives, the printing of money and repurchasing of Treasuries and Bonds by central banks have destroyed the ability for the market to correctly value goods, services and commodities.
As the world’s global oil supply peaks and starts to decline, global GDP growth will turn negative putting more pressure on all the trillions of dollars of global conventional assets under management described in the beginning of the article.
The majority of analysts fail to understand that the $85.2 trillion in global conventional assets are actually not assets but rather debts and liabilities that need to be repaid in the future. I call these supposed assets ENERGY IOU’s.
GOLD & SILVER ARE STORES OF TRADE-ABLE ENERGY VALUE
The reason why gold and silver have been excellent stores of value in the past several thousand years is due to their nature of being stores of TRADE-ABLE ENERGY VALUE. This holds true even today… actually more so.
The difference between the global conventional assets and physical gold and silver, is that one is an ENERGY DEBT, whereas the latter is an ENERGY ASSET VALUE. Now, I am not saying there is energy contained in an ounce of gold or silver, rather it is in a form trade-able energy value.
Each ounce of gold and silver are paid in full energy value that can be traded for energy values contained in goods and services. When supply and demand forces are in equilibrium, the overwhelming value of a good or service is determined by all the forms of energy in all stages. This is complex concept that will be explained in future posts and articles.
However, if we think about all the complex stages in bringing a good to market, the majority of its value is derived from the different forms of energy whether that be oil, coal, electricity, human or animal labor.
I realize this Energy Theory of Value will stir up a lot of debate, but I believe as more individuals understand the whole complex energy system of providing goods and services to market, the theory will gain favor. If we think about it, competition between the large corporations today have done a pretty good job in balancing the forces of supply and demand. I am not saying in all cases, but in the majority.
As these large corporations compete in the market place and the result is a balancing of the supply and demand forces, what is left over is their margins of profit or loss. If we were to take the time to add up all the costs in energy in all forms and in all stages that were consumed into providing a good or service, we would find the overwhelming value came from energy.
THE BEST FUNDAMENTAL REASON TO OWN GOLD & SILVER IS DUE TO THEIR STORE OF ENERGY VALUE
Most gold and silver bugs believe in the precious metals because they have no counter-party risk. Once an investor purchases an ounce of gold or silver, they own the asset outright which behaves like a store of value.
However, I believe most of the precious metal investors fail to grasp that it is the energy value component in gold and silver that make them such an excellent store of value. As I mentioned above, the $85.2 trillion in global conventional assets are not assets but rather ENERGY IOU’s that need to be repaid in the future.
In addition, a great deal of the supposed wealth wrapped up in commercial and residential real estate will evaporate as future energy constraints destroy the ability for mortgages to be repaid. This will cause a negative feedback loop that will make real estate values decline for years to come.
As the world oil supply peaks and then declines, there will be less available energy to repay those holding pension plans, insurance funds and mutual funds. Thus, managers of these funds will be forced to switch to holding physical assets such as gold and silver that guarantee a store of value rather than holding increasingly worthless financial products that no longer provide a rate of interest or behave like a store of value.
I believe this transition will likely occur much sooner than most realize.
Comments (22)
http://srsroccoreport.com/the-greatest-fundamental-reason-to-own-precious-metals/the-greatest-fundamental-reason-to-own-precious-metals/
The Greatest Fundamental Reason to own Precious Metals
Filed in Precious Metals
by SRSrocco
on May 31, 2013 SRSroco Report
Gold and Silver will become two of the best assets to own in the future, however most investors are still clueless to why this is true. Currently, the Main Stream Media Bandwagon has hoodwinked the majority of investors into buying and holding some of the most overpriced, dead-end, and increasing worthless investments in the market. These investments include most stocks, bonds, retirement accounts, pension plans, commercial and residential real estate.
Over the past few years I have listened to many interviews and read many articles on how hedge funds have bragged about picking up large chunks of real estate for their portfolios. While the investment strategy of picking up real estate for a bargain has worked in the past… the future will be a much different story. I will explain more about this later.
If we look at the chart below, we can see where the majority of the world invests their hard-earned money:
According to TheCityUK Fund Management Report dated Nov. 2012, global conventional assets under management are estimated to be $85.2 trillion in 2012 up from $79.7 trillion in 2011. Furthermore, a recent report from TheCityUK states that global pension funds increased from $31.3 trillion in 2011 to $33.9 trillion in 2012 — a fourth successive year of recovery… or so they say.
The majority of the Global Pension Funds are dominated by the United States which accounts for 56% of the total market based on the latest 2011 figures (TheCityUK March 2013 Pension Markets). Thus, in 2011 the U.S. held $17.6 trillion out of the total $31.3 trillion.
The table below shows the asset allocation of selected countries pension funds:
If you look at the column next to the U.S., you will notice that nearly 75% of its pension fund asset allocations are in equities, bonds and bills. Furthermore, almost half were invested in equities alone. With the majority of the United States pension funds invested into these assets, it’s no wonder why the Fed is buying up Treasuries while member banks are propping up the broader stock markets. It’s one big happy family.
The remaining portion of the U.S. Pension funds are invested into the “other category”, which includes real estate, loans, mutual funds and private investments. Normally, when they list these “other” categories they do so in rank of highest to lowest in percentile. With real estate being the highest percentage of this category, we can see another motivation for the Fed and US Govt to keep real estate prices from falling — hence, the purchase of $40 billion a month of Mortgaged Back Securities included in the QE 3 announcement of Sept. 2012.
Of course the housing market is good for the economy but as we can plainly see, all of these so-called assets are all interwoven into one giant propped up bubble. This also includes the global insurance funds.
According to Deutsche Bank Group’s Insurance Investment First Half 2013 Report, the $24.4 trillion of insurance fund assets were allocated in the following sectors:
The table above shows that the majority of global insurance funds are invested into sovereign and corporate bonds. We must remember bonds of all types are nothing more than debt instruments. So, with the world’s insurance funds heavily invested into corporate and foreign government debt as well as equities, mortgages and real estate, it’s no surprise that the central banks are working frantically together to keep the greatest Ponzi Scheme in history alive.
Even though the grand masters of finance have kept this system from collapsing by printing, pumping and propping up the world’s economies, they are about to hit a brick wall… and that brick wall is energy.
ENERGY DRIVES THE WORLD’S MARKETS… NOT FINANCE
There seems to be an illusion that finance runs the world’s markets, it doesn’t — energy is the driver of the global economy. The chart below shows the relationship between the world oil supply growth and world GDP growth. If we subtract inflation from the global GDP figures we have the following:
(graph by Gail Tverberg)
In the article, Evidence that Oil Limits are Leading to Declining Economic Growth, Tverberg states that the real down-trend of global GDP growth may indeed be understated. This is due to countries understating true inflation rates as well as adding increasing amounts of debt.
So, in a nutshell there is no way to tell what is the true global GDP growth rate. Moreover, I believe the manufacturing of derivatives, the printing of money and repurchasing of Treasuries and Bonds by central banks have destroyed the ability for the market to correctly value goods, services and commodities.
As the world’s global oil supply peaks and starts to decline, global GDP growth will turn negative putting more pressure on all the trillions of dollars of global conventional assets under management described in the beginning of the article.
The majority of analysts fail to understand that the $85.2 trillion in global conventional assets are actually not assets but rather debts and liabilities that need to be repaid in the future. I call these supposed assets ENERGY IOU’s.
GOLD & SILVER ARE STORES OF TRADE-ABLE ENERGY VALUE
The reason why gold and silver have been excellent stores of value in the past several thousand years is due to their nature of being stores of TRADE-ABLE ENERGY VALUE. This holds true even today… actually more so.
The difference between the global conventional assets and physical gold and silver, is that one is an ENERGY DEBT, whereas the latter is an ENERGY ASSET VALUE. Now, I am not saying there is energy contained in an ounce of gold or silver, rather it is in a form trade-able energy value.
Each ounce of gold and silver are paid in full energy value that can be traded for energy values contained in goods and services. When supply and demand forces are in equilibrium, the overwhelming value of a good or service is determined by all the forms of energy in all stages. This is complex concept that will be explained in future posts and articles.
However, if we think about all the complex stages in bringing a good to market, the majority of its value is derived from the different forms of energy whether that be oil, coal, electricity, human or animal labor.
I realize this Energy Theory of Value will stir up a lot of debate, but I believe as more individuals understand the whole complex energy system of providing goods and services to market, the theory will gain favor. If we think about it, competition between the large corporations today have done a pretty good job in balancing the forces of supply and demand. I am not saying in all cases, but in the majority.
As these large corporations compete in the market place and the result is a balancing of the supply and demand forces, what is left over is their margins of profit or loss. If we were to take the time to add up all the costs in energy in all forms and in all stages that were consumed into providing a good or service, we would find the overwhelming value came from energy.
THE BEST FUNDAMENTAL REASON TO OWN GOLD & SILVER IS DUE TO THEIR STORE OF ENERGY VALUE
Most gold and silver bugs believe in the precious metals because they have no counter-party risk. Once an investor purchases an ounce of gold or silver, they own the asset outright which behaves like a store of value.
However, I believe most of the precious metal investors fail to grasp that it is the energy value component in gold and silver that make them such an excellent store of value. As I mentioned above, the $85.2 trillion in global conventional assets are not assets but rather ENERGY IOU’s that need to be repaid in the future.
In addition, a great deal of the supposed wealth wrapped up in commercial and residential real estate will evaporate as future energy constraints destroy the ability for mortgages to be repaid. This will cause a negative feedback loop that will make real estate values decline for years to come.
As the world oil supply peaks and then declines, there will be less available energy to repay those holding pension plans, insurance funds and mutual funds. Thus, managers of these funds will be forced to switch to holding physical assets such as gold and silver that guarantee a store of value rather than holding increasingly worthless financial products that no longer provide a rate of interest or behave like a store of value.
I believe this transition will likely occur much sooner than most realize.
Comments (22)
http://srsroccoreport.com/the-greatest-fundamental-reason-to-own-precious-metals/the-greatest-fundamental-reason-to-own-precious-metals/
In Europe, Monsanto Backing Away From GMO Crops
Reuters | Posted: 05/31/2013
Huffington Post
May 31 (Reuters) - Monsanto Co is not pushing for expansion of genetically modified crops in most of Europe as opposition to its biotech seeds in many countries remains high, company officials said on Friday.
European officials for the St. Louis, Missouri-based Monsanto told the German daily "Taz" that they were no longer doing any lobby work for cultivation in Europe and not seeking any new approvals for genetically modified plants.
"We've come to the conclusion that this has no broad acceptance at the moment," Monsanto Germany spokeswoman, Ursula Lüttmer-Ouazane, told Taz.
Monsanto corporate spokesman Thomas Helscher said on Friday that the company is making it clear that it will only pursue market penetration of biotech crops in areas that provide broad support.
"We're going to sell the GM seeds only where they enjoy broad farmer support, broad political support and a functioning regulatory system," Helscher told Reuters. "As far as we're convinced this only applies to a few countries in Europe today, primarily Spain and Portugal."
The company has been focusing lately on gaining market share in the conventional corn market in Ukraine, and Monsanto Vice President Jesus Madrazo, who oversees international corporate affairs, said Eastern Europe and South America are key growth areas for the company now.
Unlike Europe, South America has largely been welcoming of Monsanto's crop biotechnology, but the company is also facing hurdles there as it is awaiting approvals by China, which is a large buyer of soybeans from Brazil.
Monsanto's wants to launch its new bioengineered, worm-resistant soybean seed called Intacta RR2 Pro for planting in Brazil next season, but a successful launch depends on approval from China, according to Monsanto officials.
Monsanto is under fire this week after an experimental biotech wheat that the company said it shelved several years ago was found growing in an Oregon farm field. The discovery, announced by the U.S. Department of Agriculture on Wednesday, has roiled exports markets for U.S. wheat as Asian buyers have backed away from U.S. wheat purchases.
(slide show)
http://www.huffingtonpost.com/2013/05/31/europe-monsanto-gmo-crops_n_3367284.html
So Much for Position Limits on COMEX Gold
May 15, 2013
Gene Arensberg
GotGold Blog
HOUSTON -- We are using this space to put something in the public domain out of convenience more than anything.
Where were the regulators on gold futures position limits April 12 and April 16?
Flash back to Friday, April 12, when the paper gold futures market was slammed with an enormous sell order in the early going of New York trading, following a “tenderizing” of the market right at the New York open.
We have read and heard various descriptions of the initial sell order being as little as 124 tonnes and as much as 400 tonnes of gold equivalent – sold by a single source or by a group all at once – with the express intent to break the gold market. (More...)
Friday, April 12 5-minute tick chart courtesy of Ross Norman, Sharps-Pixley, UK.
We want to voice a concern of ours which we thought of that very day and have thought about off and on since then, but have yet to act on it. (Other than to share it with several colleagues.)
Our simple question: Where are the regulators (in this case the CFTC and CME Group) with regard to size and accountability limits?
First, though, a caveat: We do not have the actual trade data which would include the actual orders and the sellers of those orders. Without that, this is pure speculation and subject to receiving that actual data. (More...)
That said, what we do know is that the volume spiked to an unprecedented level April 12 and Monday, April 15 and that initial sale triggered an avalanche of trading and trailing stops. The net effect was that the initial order was indeed large enough and sold into the market fast enough that it literally overwhelmed the gold futures market. Whoever it was used a bazooka at a knife fight. The selling panic that ensued will be talked about for generations.
Whether the initial sale into the gold market was 124 tonnes or 400 tonnes is not really material to our question. Either size would be so much higher than any one trader should have been able to sell into the gold market at one time that it begs the question: How many traders would have had to be involved in order to “legally” sell that many gold futures contracts into the market?
Let’s assume for this discussion that the initial sale was 124 tonnes. That’s about 4 million ounces or the equivalent of 40,000 COMEX contracts.
From earlier work we know that the CME Group has position limits for gold futures of 3,000 contracts in the front month and 6,000 contracts in all months.
We know from the open interest that the initial sale on April 12 was concentrated in the front month, so no one trader should have been able to sell more than 3,000 contracts at one time, and that’s assuming that trader had a zero open position when the sale occurred. The 3,000 number is supposed to be the limit of all contracts and options, both long and short at any time, even intra-day.
Assuming all the traders involved had no open contracts before opening four million ounces worth, how many traders would have had to be involved? Simple math says (40,000 contracts / 3,000 lots limit) = 13.3 traders. Call it 14 traders.
So, in order for the initial 124 tonne sale to have occurred “legally” it would have had to have been 14 traders, all with zero orders open, all acting simultaneously, all acting independently, in their own self-interest, without colluding with each other to “sell-for-effect” or conspiring to foment a price smash.
In actuality, the chances that there were 14 traders who held zero open orders all acting independently, all throwing their full allowable 3,000 contracts into the gold market within a few minutes of each other are infinitesimally small.
Much more likely is that the initial sale which triggered the sell stop putsch in gold was done by a single trader, acting so far outside the position limit regime as to be brazen about it.
How about a few facts:
At the time of the large sale on April 12, the gold price was breaking through $1,520.
4 million ounces at $1,520 is roughly $6 billion in notional value.
40,000 contracts would have required about (40,000 X $5,940) = $237.6 million in initial performance bond requirements, if the traders were Spec members. (CME Group subsequently raised Spec initial margin to $7,040 for the close on April 16.) If the big seller was a commercial hedge member, then it would have required (40,000 X $5,400) = $216 million in initial bond requirement. (CME Group subsequently raised Hedger initial margin to $6,400 for the close on April 16.)
At the time of the large sale the COMEX open interest was a little over 416,000 contracts. So the initial sale was about 10% of the entire open interest of the COMEX. There was little change in the number of contracts open as of Tuesday, April 16, by the way (413,083).
A few questions:
Who was the large trader who decided to hammer the gold market with 40,000 contracts all at once?
How did that trader manage to do so without running afoul of the CME Group position limits or the CFTC regulators?
Was the initial trade by one, two or many traders? If by one or two, then there is no way in hell the trade was “legal” under the position limits.
If by many traders all acting at once, then how is that possible without their conspiring in advance to do so? (We are talking about the initial smash trade here, not the ensuing stops triggered.)
We invite well-informed commentary on this subject and would be grateful to any N.Y. traders who know the facts to comment either here on the blog or privately.
We suppose it is possible that the initial sale was actually much smaller than 124 tonnes, but that it triggered a series of sell stops that collectively amounted to that much, but we are doubtful that the sale which triggered this sell down was “legit” when we look at the facts.
Our sense is that no one would sell that many gold contracts so fast unless it was with the express intent to drive the market lower and by doing so, trigger sell stops of many other traders - which is, of course, trading for effect, which is patently illegal. (And yes, we know it happens all the time, but there you go.)
Our sense is that we won’t be bothered with any commentary or enforcement action by the CME Group or the CFTC on this issue. The history of the paper gold and silver futures markets suggests that rules and position limits are just so much sausage – to be ground up by a few elite traders from time to time.
Not that we are complaining, mind you. We are merely trying to understand if there really are position limits and whether they should have come into play on April 12, 2013.
Edit to add: A trader buddy, responding to our inquiry reminds: “The hedge members can use their bona fide hedger exemptions to sell more than the limit, but not without filing paperwork with the exchange.”
If true, and we do believe it is true, then whoever blew out the gold market on April 12 is already known to the CFTC (and what documentation they used to back up their trade). But don't hold your breath waiting to hear about if from the CFTC under Goldman Sachs-ex Gary Gensler.
Mr. Gensler is a Goldman sausage grinder from way back...
Gene Arensberg for Got Gold Report
Posted by Gene Arensberg at 02:24:45 PM in Got Gold Blog, Vulture In Review
http://www.gotgoldreport.com/2013/05/so-much-for-position-limits-on-comex-gold.html
Brien Lundin: The April attack on gold was market manipulation
Submitted by cpowell on Fri, 2013-05-31 03:09. Section: Daily Dispatches
By Brien Lundin, Thursday, May 30, 2013
https://jeffersoncompanies.com/
(special thanks to the cork)
The short attack on gold of April 12 and April 15 was almost assuredly a violation. The only question that remains is whether it was a violation of the exchange's position limits -- or a violation of the law.
To explain what I mean, allow me to step back a bit.
My good friend Gene Arensberg follows gold trading on the Comex better than anyone else in the market. Following up on some comments I made in a recent Gold Newsletter Alert, Gene really got on a roll and ended up sharing some amazing analysis with me and a couple of other of our well known gold-market friends.
As soon as I read what Gene had come up with, I urged him to publish it on the blog at his Got Gold Report. He did so --
http://www.gotgoldreport.com/2013/05/so-much-for-position-limits-on-come...
-- and I urge you to read the whole thing as soon as you can.
What Gene did was analyze what happened on those two days in mid-April, based on the initial reports that a 124-tonne initial order, and perhaps as much as 400 tonnes, were sold in an obvious attempt to take the gold market down.
Gene goes through the numbers in detail, and the bottom line is this:
"... In order for the initial 124-tonne sale to have occurred 'legally' it would have had to have been 14 traders, all with zero orders open, all acting simultaneously, all acting independently, in their own self-interest, without colluding with each other to 'sell for effect' or conspiring to foment a price smash.
"In actuality, the chances that there were 14 traders who held zero open orders all acting independently, all throwing their full allowable 3,000 contracts into the gold market within a few minutes of each other are infinitesimally small.
"Much more likely is that the initial sale that triggered the sell-stop putsch in gold was done by a single trader, acting so far outside the position limit regime as to be brazen about it."
So there you have it. Gene goes on in some detail, and again, I urge you to read the whole piece, and his ongoing commentaries, which are outstanding.
As you know, I don't believe that there's day-to-day manipulation of the gold market. But I do believe that certain powers-that-be intervene at key strategic points. The April manipulation may have been motivated by profit rather than politics, or perhaps both. But manipulation it was.
Excerpted from today's GATA Bill Murphy's Saturday 'Special Editon' @ LeMetropole Cafe which featured yezzer's
"Speechless Turd" blogpost by Turd Ferguson: #msg-88528309
(special thanks to basserdan)
"TF's effort and analysis is well worth highlighting for a number of reasons…
*First the backdrop. The last QE announcement by the Fed in mid-September of last year was an impetus for stock and precious metals markets to move higher. The DOW did just that, dinking up day after day after day. But what has happened to gold and silver is a completely different story.
The prices of gold and silver did bump up very briefly, into the first week into October. But since the precious metals live in a Black is White and White is Black world, that was to be it. The Gold Cartel’s stepped-up war on gold and silver was about to begin … with the price of gold around $1793 and silver at $35 and change.
An effort to suppress the prices of each would commence in earnest on a daily basis like I had never seen before. Rarely has a day done gone by in all this time that The Gold Cartel could not be spotted implementing at least one of their repetitive selling tactics.
An entire diatribe could be written on why it was done, but simplistically put, the Fed/US is in a NO SOLUTIONS environment for the financial/economic predicament it has evolved into. The only way out, as they saw it, was to print money, etc. The best way to defuse the longer term ramifications of this action was to SHOOT THE MESSENGER, to disfunctionalize the barometer of US/world financial market health, that being the price of gold. Sister market silver was included because of its relationship to gold … a price dichotomy between the two could not be tolerated.
The escalated war on gold and silver was underway. But this time, The Gold Cartel included other countries, other bullion banks, various hedge funds, etc. It led to the unprecedented attacks on them on April 12 and April 15, as you know all too well. Since then, gold has made some effort to get into recovery mode, while silver has languished, flopping its way into the bottom end of its trading range following the historic raid on gold.
*What Turd’s work shows is that The Gold Cartel’s constant selling has had the effect of spec longs exiting, replacing them by the commercial crowd. The entire dynamic most of the way up of spec longs taking on the commercials has been in a process of reversing, especially since the financial market terrorist attacks of mid-April.
TF on the latest COT numbers which speak for themselves:
"The Bullion Banks have now reduced their net liability in gold by over 75% and, in silver, by over 83%...all since the game-changing announcement of QE8 last September."
This is an extraordinary development over a period of time and is setting up historic moves higher in the prices of gold and silver, which never should have been down at these artificially low levels in the first place. However, there are some caveats which need to be dealt with in the very short term…
-As noted in Friday’s commentary, the Gold Cartel was as visible on Friday as they were 8 months ago. The price plunges on Friday were NOT due to increased speculative selling, at least IMO. We know this because of the way gold and silver played out, in a similar manner as they have done for these debilitating 8 months. Gold failed miserably after breaking out of a 9 time top. Silver, after acting horribly on Thursday, then goes into new low closing territory for the entire move. If this were specs, we wouldn’t see the same trading patterns as we have witnessed all the way down.
-The numbers presented by the CFTC can’t be totally off, but something does not seem right to me. The bottom line is my take is that The Gold Cartel is using offshore, numbered accounts to make them look like spec accounts … in order to disguise what they are still doing and to create a much more bullish picture technically than is really the case ... to suck in even more unsuspectings that a bottom is in.
We know JP Morgan uses offshore accounts. Silver is trading so terribly, it tells me they are using them to further their agenda to bury the price so much that the stubborn longs finally capitulate. As demonstrated, while the gold open interest has collapsed in stunning fashion, the silver open interest is not far from multi-year highs. This is more than highly unusual and suggests something is not right with the visible gold/silver open interest pictures, as portrayed by the COT report.
Nothing that has happened to gold and silver the past many months has been normal. They have been caught up in a scorched earth Gold Cartel devastation policy. It is for ALL THE MARBLES, which is why The Gold Cartel recruited so many allies to assist them in their mission. No ruthless price suppression tactic would be left in the lurch. That gold gave up all of its breakout gains of Thursday above $1400, and then some, is a perfect example what the sordid cartel forces are prepared to do. They made this known to their allies in advance by crushing silver below key $23 the day before.
Their efforts are as well thought out as they are sinister. We are all aware of the hundreds of tonnes of outflows from the ETFs on the way down. Tonnage accumulated all the way up is being disgorged, facilitating other supply used by The Gold Cartel to meet stellar demand for physical. Much of the accumulation in the ETFs were by big league money managers in search of profit and performance for their investors. All was hunky dory with the price of gold going up every year … with gold yielding returns far higher than fixed income investments.
But suddenly all that changed with the gold/silver price collapses, accompanied by the daily relentless move higher of the US stock market. The Gold Cartel knew that money managers would be compelled to dump gold/silver ETF holdings because of their affect on relative performance. IMO, it was one of their reasons for the financial market terrorist attacks. Those money managers who were holding on just wouldn’t be able to take it anymore … and many have not. This all goes back to how comprehensive this vast and devious market manipulation scheme really is.
*So, back to what this may be all about, and it is just a maybe. A colleague of mine and I have gone back and forth for months about what The Gold Cartel’s end game plan is. Much of that has been covered numerous times in this commentary. But, there could be one more thing, which would be the blockbuster of blockbusters if the case.
There is a great deal of talk, as per Turd’s efforts, among others, about the commercials getting longer and longer relative to their normal short positions. There is also talk of The Gold Cartel actually getting long, or at least exiting their positions, before the historic move up in the precious metals begins in earnest. This is what the COT numbers have appeared to tell us over the past many weeks.
But, as already covered, the gold/silver price action doesn’t correlate to the supposed makeup of the open interest numbers. The Gold Cartel appears to be as aggressive as ever. Gold and silver would not be trading in a similar manner as they have since the beginning of October if their modus operandi had changed yet. There is one possibility of what could be going on which would shake the financial world. A thought…
Many in the GATA camp have long talked about an overnight revaluation of the price of gold. Pick a number: $3,000, $5,000+, etc. The reasons for such are for another commentary, but it is a constant theme in our camp. One day we will wake up on a Monday morning to find out the US and other western countries have reset the price.
We know the central banks have nowhere near the central gold they say they have, much of it being leased out. Over the last decade GATA has claimed, based on the input we have received over the years, they have less than half the gold they say they say, and that would be the best case. This is one reason central banks are so secretive about their real gold dealings … the US being a perfect example.
We know how the bullion banks/Gold Cartel have been so short over the years. If a decision was made to revalue the price of gold to that degree, a plan would first need to be implemented so they could cover as many shorts as possible on the Comex and in other venues. It would have to be one like never seen before … both vicious and long-lasting. It would also involve disgorging physical gold and silver positions from the ETFs, badly needed to cover physical precious metals short positions.
Perhaps one of the most misunderstood notions among uninformed precious metals reporters, and the likes of a clueless Doug Casey, is their claim The Gold Cartel has done a lousy job of suppressing the price of gold all these years as per the 12 year price advances. When I explain to reporters how much money they have made by fleecing spec longs over the years with raids like the last one, they go blank. Think how much money JP Morgan has made with their raids on silver in 2008 and in the past year alone, much less mini spank jobs in between and all the way up.
There is only ONE way the price of gold can be revalued without the bullion banks/Gold Cartel getting destroyed, and that is to do it with the price devastated and many of the bullion bank’s shorts covered on the way down, replaced by unsuspecting spec shorts. As it is now, the specs will cover their shorts and go long, as they always do, once the technicals turn positive, moving averages turn, etc. Those longs will need to have corresponding shorts in the futures market. This means the same drill on the way up again as The Gold Cartel does what they do and slows price advances down. To stop a price explosion down the road they will be forced to go back as short as they ever were.
And that will be the case, UNLESS, there is an overnight price reevaluation. In that case, instead of shorting gold all the way up, they would suddenly only need to sell gold at those $3,000 to $5,000 numbers, or not at all. It would be the perfect exit plan to end their nefarious activities over the last number of decades. Mission accomplished.
It would also accomplish something else. An overnight price of that magnitude would bring owners of gold (silver too, as who knows what that price would soar to) out of the woodwork, including me. Gold and silver would flood the marketplace at those dramatically higher prices. This would allow the physical gold and silver shorts to replenish/reconcile the positions on their books. Yes, those losses from selling low and buying high would be considerable, but only a drop in the bucket compared to money made/saved in other financial market arenas … even compared to the costs of saving the western financial market system as a whole.
Their physical market lease losses could also be minimized by buying way out of the money calls on the Comex or on the Over the Counter Market. They could be purchased with very little impact on the futures price because of their distance … i.e., there would be very little delta hedge buying of futures by the writers of the calls.
Should this occur, the effect on the Comex would be devastating. The number of unsecured deficits would blow the exchange out of the water. How ironic it would be that such a dramatic move would cause a never expected Force Majeure … the failure of spec shorts to send sudden losses to the Comex to meet their unsecured, massive overnight money losses. It is doubtful the Comex could survive such an event. Maybe that would be just fine with The Gold Cartel, as they move on.
Whether this sort of clandestine operation is in play or not, we are in the process of moving to one of three monumental money making opportunities of all time. They are all WIN WIN…
We are close to the time of a short covering squeeze, and the end of the unending Gold Cartel bombings initiated in early October.
As is my thinking, we have more to endure before the price moves of gold and silver really kick in.
This blatant, never-ending assault on gold and silver actually is leading to an overnight night reevaluation in the months ahead.
They are the three in play, IMO. All of them dictate staying with physical market gold and silver positions … and building gold/silver share positions in your firms of choice.
Yes, investing in them, in many cases, has been a disaster for years now. But, what goes around, comes around. In all of the above cases the odds, at this point, of them taking off as per what occurred in the internet mania at the end of the 1990’s, is on the increase, with the risk/reward situation way more than favorable.
To conclude, watching how the gold/silver shares trade in the weeks and months ahead is likely to take on increasing importance. They led the way down and are likely to give us an indication of the major turn in the gold and silver markets. In any of the above scenarios, we need more action in the PM Shares like we saw on Friday, in which they held up very well considering what the US stock market and gold/silver markets did … and that is after a couple of solid up days.
In all of these scenarios The Gold Cartel, and allies, will want to cover their shorts in the share market ahead of any of the above retreat scenarios. Can you imagine what the shares would do on an overnight basis on a revaluation? Sweet dreams on that thought!"
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(Painless 2 week free trial available)
Front Groups Exposed—50 Industry Groups Form a New Alliance to Manipulate Public Opinion About Junk Food, GMOs, and Harmful Additives
May 29, 2013
By Dr. Mercola
If you think it’s tough sorting truth from industry propaganda and lies, get ready for even tougher times ahead. More than 50 front groups, working on behalf of food and biotechnology trade groups?Monsanto being the most prominent?have formed a new coalition called Alliance to Feed the Future.
The alliance, which is being coordinated by the International Food Information Council (IFIC), was created to "balance the public dialogue” on modern agriculture and large-scale food production and technology, i.e. this group will aim to become the go-to source for “real” information about the junk being sold as “food.”
The groups comprising this new alliance represent multi-national food companies, biotech industry, and chemical companies that generate hundreds of billions of dollars worth of revenue from food related sales every year.
On the upside, this alliance and many other industry-sponsored front groups masquerading as non-profits and consumer protection organizations are becoming increasingly exposed for what they really are, and I will point out several of them in this article.
Michele Simon, JD, MPH, policy consultant with Center for Food Safety recently published a report titled: Best Public Relations Money Can Buy: A Guide to Food Industry Front Groups1 also reveals how the food and agricultural industry hide behind friendly-sounding organizations aimed at fooling the public, policymakers and media alike.
Many Industry Front Groups Are Created to Dominate Codex Discussions
The Codex Alimentarius Commission, conceived by the United Nations in 1962, was birthed through a series of relationships between the World Health Organization (WHO), the Food and Agriculture Organization (FAO), the World Trade Organization (WTO) as well as the American FDA and USDA.
The Codex Alimentarius itself is a compilation of food standards, codes of practice and guidelines that specify all requirements related to foods, whether processed, semi-processed, genetically engineered, or raw.
Its purported purpose is to “protect consumers’ health, ensure fair business practices within the food trade, and eliminate international food trade barriers by standardizing food quality.”
There are a number of different working groups that meet regularly to establish food standards of every imaginable kind. For example, the Physical Working Group on Food Additives recently held meetings in Beijing, China. The 45th session of the Codex Committee on Food Additives (CCFA) ended on March 22.
On the agenda were discussions about aluminum-containing food additives. Are they safe or should they be eliminated from the worldwide Codex standards? The National Health Federation (NHF), the only health-freedom group allowed to speak at the meeting, dished out harsh criticism on the additives, calling for their removal. In a Facebook update, the NHF wrote:2
“The usual Codex suspects (the delegations of Australia, the United States and Canada) plus the trade organizations of the International Food Additives Council (IFAC) and the International Council of Grocery Manufacturers Associations (ICGMA) were the industry apologists for keeping aluminum in food additives.
In dishing out scorching criticism of aluminum's proponents, NHF came under return fire from Australia, IFAC, and the Chairman.
IFAC - which does not seem to disclose any of its members... along with its sidekick ICGMA, cried out constantly that the 'Industry' just could not make it without aluminum food additives. Their members spraying equipment 'might overheat and catch fire,' IFAC lamented.
When NHF suggested that this was a not a genuine issue; that the industry could easily innovate its way out of this 'problem' and create non-overheating equipment, NHF was criticized by the Chairman for suggesting that IFAC might not be telling the truth.
By the end of the day, the success of the EU and NHF could be tallied by numerous uses of aluminum food additives that the Working Group will suggest be discontinued to the full Committee meeting... although there were also many food-additive uses that stayed in place (albeit usually at reduced levels), no thanks to the interventions of Australia, the U.S., Canada, IFAC, and ICGMA.”
Who’s Behind the International Food Additives Council (IFAC)?
The International Food Additives Council (IFAC) is “an international association representing companies that produce high quality substances used worldwide as food ingredients in traditional and organic products.” The group is very active in Codex. But how do you know who they are, and who they represent, when it’s almost impossible to find out who their members are?
As the NHF noted above, it’s virtually impossible to locate a list of its members (which naturally would indicate sources of funding, and potentially reveal behind-the-scenes agendas).
But here, I’m making public IFAC’s list of officers and board members as of 2011. It wasn’t easy to find this list, primarily because IFAC isn’t a regular 501(c)(3). In fact, it isn’t a 501(c)(3) at all. Actually, it’s a 501(c)(6)?an IRS classification for nonprofit “commercially oriented” organizations such as football leagues, chambers of commerce and, apparently, groups like IFAC. Once you know its non-profit classification, you can find its 990 forms?which all non-profits must file, complete with lists of officers and directors. I obtained IFAC’s 990s for the years 2004-2011. And there I learned the truth.
Except for two, who I couldn’t find any information at all on, all of IFAC’s officers and directors are linked to processed foods and additives in some way, with at least six of them having direct or business links to Monsanto and/or DuPont. That’s right. Six of IFAC’s governing board members are linked to the largest GMO producers in the world.
If you look up these board members’ contact information, you’ll find that all contacts for IFAC3 go to a corporation called The Kellen Company. Kellen “provides the essential services to advance associations to the next level of their evolution.” Such services include management, administration, accounting, meeting planning, membership marketing and strategic advice. According to the company’s website:
“Kellen takes the mission and message of each association client and brings it to audiences large and small, internal and external, domestic and international. Utilizing communications tools that are customized for each association, Kellen identifies the audiences, develops the strategies, defines the tactics and executes a planned and carefully reasoned communications plan.”
“Our consulting expertise enables us to reorganize association governance and assets, optimize association resources, extend reach for U.S. associations into Europe and Asia... Kellen’s team is expert in all strategic and tactical elements of associations and can provide insightful analysis and guidance on industry alignment... establishing new legal entities and building consensus. “ [Emphasis mine]
Additionally, if you look up IFAC’s origins in Internet business profiles, you’ll find that it was formed in 1980 by Patrick M. Farrey, who just so happens to be The Kellen Company’s group vice president. In short, The Kellen Company not only is linked to the formation of IFAC, but also serves as the managing entity behind IFAC. And its members, although a proper members list has not been obtained, are bound to be like their governing body? manufacturers of food additives, including but certainly not limited to manufacturers of artificial sweeteners and glutamate (i.e. MSG).
This association is clearly spelled out in the Council’s name. But what’s troublesome about it is that IFAC represents companies that create food ingredients in organic products as well, although there’s not a shred of evidence that any person, company or organization dedicated to organics is actually represented by IFAC. If that is the case, this means IFAC probably does NOT have any incentive at all to ensure such ingredients are appropriate for organic products, and most likely, they will just do what needs to be done to ensure its members’ ingredients are allowed to be used in organics no matter what.
You need look no further than its board members?and their links to Monsanto and DuPont, and their managing entity, Kellen?to see what I’m talking about, because Kellen tells you plainly on its website where the organization it represents stand when it comes to organics. Boasting that Kellen and its members joined the “Say No to Proposition 37” movement in California, Kellen explains right on its website how they defeated the bill that would have mandated that all GMO products be labeled as such:
“Almost all of Kellen Company’s food clients would have been negatively affected by Prop. 37, but no single association was in a position to lead opposition efforts to GMO labeling. A coalition was a perfect solution; our team decided to join the 'No on 37 Coalition,' a multi-stakeholder group that led opposition efforts and helped to educate Californian voters about the shortcoming of Prop. 37. And that story has a happy ending – the proposition was not passed and food companies in California are not required to include potentially misleading labeling.”
The site goes further, detailing the steps to “success” of this campaign, advising site visitors: “With proposed ballot initiatives beginning to be certified and many states opening their 2013 legislative sessions this month, now is the time to think about your association’s plans should state legislation or a ballot initiative affecting your industry be introduced in 2013.”
Finally, if you have any doubt about what IFAC’s goals are, you need look no further than a PowerPoint presentation4 that the group is currently giving at symposia and conventions around the world. One of the slides on this presentation states that IFAC promotes “independently determined” studies of safety in its members’ products. By “independent,” they explain that this means: “experts chosen and employed by the manufacturer.” This is the same procedure that gets Monsanto’s products to market: Monsanto gets to do its own safety studies and submit them to the FDA as “proof” that their products won’t harm you.
Front Groups Working to Keep Harmful Food Additives Hidden and on the Market
The Kellen Company has ties with other major industry players. According to a 2011 press release,5 one of the Kellen Company executives was honored as president of the Calorie Control Council, a non-profit association that represents manufacturers and suppliers of low-calorie, sugar-free and reduced sugar foods and beverages. It’s also closely tied to the International Council of Grocery Manufacturers Associations (ICGMA), which, along with IFAC, urged the Codex working group to keep aluminum in food additives, despite the many known health risks associated with aluminum.
According to Truthinlabeling.org,6 there are a number of front groups for the glutamate and artificial sweetener industry in the US. In an article titled: Meet the people who get the job done so effectively, they write:
“In the United States, the glutamate industry has two arms. Both work to keep MSG hidden in food. One is the International Hydrolyzed Protein Council... The second and more active arm is spearheaded by Ajinomoto’s International Glutamate Technical Committee (IGTC) and its American subsidiary, The Glutamate Association (TGA), with representative organizations throughout the world.”
Now here’s where it gets interesting, as it again shows the intricate ties of the glutamate industry with the Kellen Company:
“In 1977, the IGTC spun off The Glutamate Association, with both organizations accommodated under the umbrella of The Robert H. Kellen Company... a trade organization and association management firm, specializing in the food, pharmaceutical, and health care industries. [Editor’s note: although not covered in this article, this is a clue that there are many front groups operating in the drug and health care industry as well, under the careful management of the Kellen Company. Such front groups ensure you will NOT get the truth about drugs and health care issues where corporate profits are at stake.]
The Encyclopedia of Associations (The Glutamate Association, 1990) listed Robert H. Kellen as president of The Glutamate Association. Richard Cristol, executive director of The Glutamate Association, was also Vice President of The Kellen Company. Cristol assumed management of the Washington, DC operations of The Kellen Company and its subsidiary, HQ Services, in 1993...
In 1992, and still in 1998, Andrew G. Ebert, Ph.D., Chairman of the International Glutamate Technical Committee (IGTC), was also Senior Vice President of The Kellen Company. Membership in The Glutamate Association is secret. However, a source from within the glutamate industry, who asked to remain anonymous, told us that besides Ajinomoto, Archer Daniels Midland, Campbell, Corn Products Corporation, McCormick & Company, Pet Foods, Pfizer Laboratories, and Takeda were among its members; and Nestle was a former member.”
The fact that membership is a secret is telling in and of itself, and it’s quite ironic, considering the Glutamate Association is ardently working to keep the presence of glutamate in foods and other products, such as fertilizers and growth promoters, hidden from the consumer... But there’s more. I’ve often discussed the revolving door between the US Food and Drug Administration, and here we see the door swinging yet again. According to another article by TruthInLabeling.org:7
“Influence of the International Glutamate Technical Committee (IGTC) can be felt at every level. [Andrew G.] Ebert has served the Grocery Manufacturers of America; the National Food Processors Association; the Institute of Food Technology; the National Research Council of the National Academy of Sciences Assembly of Life Sciences; the American Medical Association; the FAO/WHO Codex Alimentarius Food Standards Program as an Industry Observer; and the International Food Additives Council (IFAC) as Executive Director. In 1992, FDA appointed both Andrew G. Ebert, Ph.D., IGTC chairman, and Kristin McNutt, Ph.D., paid spokesperson for the IGTC, to the FDA Food Advisory Committee.” [Emphasis mine]
At this point, it would appear The Kellen Company is instrumental in creating and managing front groups for the processed food and chemical industries. These front groups are specifically created to mislead you about the product in question, protect industry profits, and influence regulatory agencies. This amount of collusion simply is not necessary for a food or product that is truly safe and has great intrinsic value, but it must be done for inferior and/or dangerous products that cannot stand up to closer scrutiny by truly independent sources.
What’s more, it appears all these front groups (there are many others not specifically mentioned in this article) have been created in order to have more seats at the Codex meetings, essentially giving chemical companies and major food manufacturers a much louder voice, in order to control the decisions made.
Front Man Steven Milloy, and Other Non-Profit Front Organizations with Ties to Industry
Steven Milloy, author of Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them, and owner and operator of Junkscience.com8 — a site dedicated to denying environmental and health concerns related to pollutants and chemicals, including those used in agriculture and food production — appears to have been registered as a lobbyist with The EOP Group, a lobbying firm based in Washington, DC. Clients of the firm have included the American Crop Protection Association, the Chlorine Chemistry Council, and Edison Electric Institute.9
Milloy’s clients10 included both Monsanto and the International Food Additives Council (IFAC). Milloy has denied ever being a lobbyist, claiming that he was “a technical consultant" for the lobbying firm.
“However, Milloy shows up in federal lobbyist registration data for 1997 as having lobbying expenditures on his behalf, indicating his firm, the EOP Group, believed him to be an active lobbyist, 'technical' or otherwise,” TRWNews11 states in its expose of the industry front man.
Milloy also headed up the now defunct corporate front group, The Advancement of Sound Science Coalition (TASSC). According to TRWNews,12 TASSC and the Junkscience.com site were one and the same. Integrity in Science,13 which lists non-profit organizations with close ties to industry, reports that TASSC received financial support from hundreds of corporations, including the likes of Procter & Gamble, Exxon, Dow Chemical, and Philip Morris. I’ll leave it up to you to guess what kind of ‘sound science’ was advanced by those sources...
“Its objective is to act as a speakers bureau to deliver the corporate message that environmental public policy is not currently based on 'sound science,' and to counter excessive regulations that are based on what it considers 'junk' science,” Integrity in Science states. [Emphasis mine]
Other non-profit organizations that are in actuality doing the bidding of various industry giants include:
* Air Quality Standards Coalition, “created specifically to battle the clean air proposals, the coalition operates out of the offices of the National Association of Manufacturers, a Washington-based trade group. Its leadership includes top managers of petroleum, automotive and utility companies”
* Alliance for the Prudent Use of Antibiotics, while sounding like it would work for your benefit, actually gets “unrestricted grants” from a long list of pharmaceutical companies
* Alliance to Save Energy, which “supports energy efficiency as a cost-effective energy resource under existing market conditions and advocates energy-efficiency policies that minimize costs to society and individual consumers,” was founded by, among others: BP...
* American Academy of Pediatrics receives $1 million annually from infant formula manufacturers. Other donors include (but is not limited to) the National Cattlemen's Beef Association, Johnson & Johnson Consumer Products, both Wyeth’s and Merck’s vaccine divisions, the Food Marketing Institute, the Sugar Association, and the International Food Information Council (IFIC) — which you will see below, is not only a front group for the glutamate industry; it’s also the coordinating agent for a new alliance of over 50 industry groups aimed at directing the dialogue and altering public opinion about large-scale, genetically engineered and chemical-based food production
* American Council for Fitness and Nutrition. This one takes the cake with a member list that includes the American Bakers Association, the American Meat Institute, the Biscuit & Cracker Manufacturers Association, Chocolate Manufacturers Association, Coca-Cola, Hershey’s, National Confectioners Association and many others that are FAR from suited to devise appropriate “comprehensive, long-term strategies and constructive public policies for improving the health and wellness of all Americans”
IFIC Created 'Crisis Management' Protocol in Case Truth Would Be Exposed
Although their names may differ, many of the functions of these groups overlap, as they’re really serving the same industry. TruthInLabeling explains how front groups such as these serve the distinct interests of the industry, not your or your children’s health, even when their well-chosen name may mislead you to think otherwise.14 Take the International Food Information Council (IFIC) for example:
“In 1990, faced with the threat of a '60 Minutes' segment... that might expose the toxic potential of monosodium glutamate, IFIC became actively involved in representing the interests of the glutamate industry. The IFIC represents itself as an 'independent' organization. It sends attractive brochures to dietitians, nutritionists, hospitals, schools, the media, and politicians, proclaiming the safety of monosodium glutamate. In 1990, an anonymous person sent us a copy of a 'Communication Plan' dated July-December 1991, that detailed methods for scuttling the '60 Minutes' segment on MSG, or, failing that, provided for crisis management.
...Depending on the roles they play, researchers might be considered agents of the glutamate industry. In addition, there are those who promote the products of those they work for, just as public relations firms do, but these organizations highlight the fact that they are nonprofit corporations, while minimizing the fact that they promote the products of those who financially support them. The International Food Information Council (IFIC) and the International Life Sciences Institute (ILSI) are examples of such glutamate-industry agents.”
50+ Industry Front Groups Form New Alliance to 'Balance Public Dialogue' on Food Production
As reported by Sustainable Food News15 on March 17, more than 50 of these front groups, working on behalf of food and biotechnology trade groups, have formed a brand new alliance called Alliance to Feed the Future. Again, the alliance is being coordinated by the glutamate-protecting International Food Information Council (IFIC). The stated aim of the alliance is to "balance the public dialogue on modern agriculture and large-scale food production."
“The Alliance to Feed the Future said "in an effort to meet the world’s increasing food needs responsibly, efficiently and affordably," its members want to 'tell the real story of' and dispel "misperceptions about modern food production and technology,'” the article states.16
The groups comprising the alliance represent multi-national food, biotech, and chemical companies that generate hundreds of billions of dollars-worth of revenue each year. Some of the most notable of these 50 industry groups include the very players already mentioned in this article. For the full list of all 50+ groups that are part of the alliance, please see the original article:17
American Soybean Association
Biotechnology Industry Organization (which represents biotech crop giants Monsanto, DuPont, and Syngenta)
Calorie Control Council (which represents the artificial sweetener industry)
Council for Biotechnology Information
Grocery Manufacturers Association (GMA)
International Food Additives Council (IFAC)
According to the featured article:18
“When asked by Sustainable Food News what misperceptions the group seeks to dispel, Dave Schmidt, CEO at the International Food Information Council, who coordinates the alliance, said the most common misperceptions - perpetuated by what he calls 'a large popular culture' that can be found in recent 'books and movies' - are that 'technology is bad and we need to go back to a time when there was less technology. Or, food processing or large-scale food production is bad.'
...The alliance's aim is to educate who he called 'opinion leaders,' including those in the university sector, professional societies, journalists and government officials. However, another target demographic is the 'informed consumer,' who he expects will find the group's information online.
The Alliance's effort appears to be an attempt to squelch the growing consumer perception that modern food production can have a negative impact on the health of humans and the environment as espoused by the organic and sustainable food movement.” [Emphasis mine]
Meanwhile, close to a dozen of the members of this new industry alliance have resigned from the Leonardo Academy's National Sustainable Agriculture Standards Committee,19 which is currently developing a national standard for sustainable agriculture under the rules of the American National Standards Institute (ANSI). According to Russell Williams of the American Farm Bureau Federation, this exodus occurred because:
“...the committee is dominated by environmental groups, certification consultants, agro-ecology and organic farming proponents. Based on their recent actions, it is apparent that these groups have neither the vision nor desire to speak for mainstream agriculture or the 95 percent of farmers who will be materially affected by any resulting standard.”
Is the Information You’re Given Created by a Front Group Pretending to Be 'Independent'?
As TruthInLabeling points out, the industry has manipulated public knowledge using innocent-sounding front groups for a very long time. As I’ve already shown, the International Food Additives Council (IFAC) is a perfect example of how industry giants can masquerade as a so-called non-profit, independent organization. While their membership still remains secret, the directors and officers on the IFAC board show quite plainly who’s running the show when it comes to food additives?and IFAC is obviously NOT a group of consumer advocates.
Another example can be shown through the distribution of information about MSG, which has been completely directed by the industry itself, through The Glutamate Association:
"Present FDA practice includes distributing unsolicited copies of an FDA Medical Bulletin that assures physicians that MSG is safe; and distributing similar material to food service people. In the January-February, 2003 FDA Consumer magazine, the FDA's Michelle Meadows, in an article titled: MSG: A Common Flavor Enhancer, spewed out paragraphs that look like they came right off The Glutamate Association or the International Glutamate Information Service Web pages. Trying to convince us that MSG is 'safe' while saying nothing."
The same goes for genetically engineered crops, prescription drugs, artificial sweeteners and a whole host of other harmful substances used in food production and medicine. You can bet if there’s a harmful substance out there that makes money, there are at least one or more front groups, posing as independent non-profit organizations, disseminating anything but independent safety reviews and information pertaining to it...
As for the Codex meetings, and the Group on Food Additives in particular; they’re being shrewdly manipulated by multiple front groups, which ensures that their side comes across as the strongest and most vocal. It also creates the illusion of consensus, when in fact it’s nothing but collusion... It’s high time to pull back the curtain and see who’s really pulling the strings and levers. And whenever you hear the talking points from Alliance to Feed the Future or the International Food Additives Council (IFAC), you now know exactly who is talking, and why. It’s an alliance of multi-national food-, biotech-, and chemical companies that are hell-bent on protecting hundreds of billions of dollars-worth of annual revenue in the face of a burgeoning organic and sustainable food movement. Believe what they tell you at your own risk...
Keep Fighting for Labeling of Genetically Engineered Foods
While California Prop. 37 failed to pass last November, by a very narrow margin, the fight for GMO labeling is far from over. The field-of-play has now moved to the state of Washington, where the people's initiative 522, "The People's Right to Know Genetically Engineered Food Act," will require food sold in retail outlets to be labeled if it contains genetically engineered ingredients. As stated on LabelitWA.org:
"Calorie and nutritional information were not always required on food labels. But since 1990 it has been required and most consumers use this information every day. Country-of-origin labeling wasn't required until 2002. The trans fat content of foods didn't have to be labeled until 2006. Now, all of these labeling requirements are accepted as important for consumers. The Food and Drug Administration (FDA) also says we must know with labeling if our orange juice is from fresh oranges or frozen concentrate.
Doesn't it make sense that genetically engineered foods containing experimental viral, bacterial, insect, plant or animal genes should be labeled, too? Genetically engineered foods do not have to be tested for safety before entering the market. No long-term human feeding studies have been done. The research we have is raising serious questions about the impact to human health and the environment.
I-522 provides the transparency people deserve. I-522 will not raise costs to consumers or food producers. It simply would add more information to food labels, which manufacturers change routinely anyway, all the time. I-522 does not impose any significant cost on our state. It does not require the state to conduct label surveillance, or to initiate or pursue enforcement. The state may choose to do so, as a policy choice, but I-522 was written to avoid raising costs to the state or consumers."
Remember, as with CA Prop. 37, they need support of people like YOU to succeed. Prop. 37 failed with a very narrow margin simply because we didn't have the funds to counter the massive ad campaigns created by the No on 37 camp, led by Monsanto and other major food companies. Let's not allow Monsanto and its allies to confuse and mislead the people of Washington and Vermont as they did in California. So please, I urge you to get involved and help in any way you can, regardless of what state you live in.
* No matter where you live in the United States, please donate money to these labeling efforts through the Organic Consumers Fund.
* If you live in Washington State, please sign the I-522 petition. You can also volunteer to help gather signatures across the state.
* For timely updates on issues relating to these and other labeling initiatives, please join the Organic Consumers Association on Facebook, or follow them on Twitter.
* Talk to organic producers and stores and ask them to actively support the Washington initiative.
http://articles.mercola.com/sites/articles/archive/2013/05/29/codex-front-groups.aspx
Thank you basserdan. The article was an eye opener, Codex was a front group from day one.
'Bazooka at a knife fight' – the April 12 gold takedown –
The chances of the initial gold sale which precipitated the April 12 gold price crash as being 'legal' were infinitesimal. Gene Arensberg does the maths.
Author: Lawrence Williams
Posted: Friday , 31 May 2013
LONDON (MINEWEB) -
There have already been a number of post mortems on the extraordinary trading events which precipitated the huge crash in the gold price of mid-April. Indeed we have already published some ourselves on Mineweb, and perhaps it might be considered over-egging the pudding to look at yet another analysis of these events given they occurred now well over a month ago. However our attention has been drawn to a post by Gene Arensberg on his ‘Got Gold’ site (http://www.gotgoldreport.com/2013/05/so-much-for-position-limits-on-comex-gold.html ) which analyses the events in some detail, and draws the conclusion that the ‘attack’ on gold could not have been accomplished without hugely breaching COMEX position limits, and that the takedown was probably illegal under U.S. financial regulations. Despite this it is presumed highly unlikely that any authorities will take any action as a result given those authorities are largely seen to be in the control of the financial elite, who were in all probability responsible for the extraordinary sales of gold into the markets on that fateful day.
Of course the reasoning behind what definitely appears to be a very deliberate takedown of the markets will probably remain unknown. GATA and its adherents will undoubtedly believe that this was an orchestrated move by the U.S. Fed, and what are seen as its bullion banking allies, to suppress the price of gold and thus protect the perception of U.S. dollar strength at the expense of the beleaguered gold investor, who may be seen to have benefited too much from the yellow metal’s rising price over the previous 12 years.
Others will suggest that it was purely a piece of very costly financial manipulation to protect short position holders given that gold had appeared, up to that time, to be beginning a good recovery back towards its 2012 levels. This theory might well gain traction given that three of the biggest players, Credit Suisse, Societe Generale and Goldman Sachs had all come up with strong sell recommendations for gold immediately prior to April 12. Indeed Goldman Sachs had made an almost unprecedented recommendation to sell gold short only two days beforehand – a point noted strongly by Grant Williams in a recent presentation to a major CFA conference in Singapore (see Little respite for gold – yet).
What Arensberg has done though is go into the maths behind the initial sell orders said to have totalled some 124 tonnes which precipitated the initial price collapse. (Some 400 tonnes was believed to have been sold off later that day). The 124 tonnes appears to have been sold almost instantaneously and Arensberg notes “what we do know is that the volume spiked to an unprecedented level April 12 and Monday, April 15 and that initial sale triggered an avalanche of trading and trailing stops. The net effect was that the initial order was indeed large enough and sold into the market fast enough that it literally overwhelmed the gold futures market. Whoever it was used a bazooka at a knife fight. The selling panic that ensued will be talked about for generations.” with the caveat that at the time of writing that “We do not have the actual trade data which would include the actual orders and the sellers of those orders. Without that, this is pure speculation and subject to receiving that actual data.”
However, in looking at the maths behind the transactions Arensberg notes that the 124 tonnes would have amounted to around 40,000 COMEX contracts, while the position limit at that time of the month would have been 3,000 contracts for an individual trader. So, on Arensberg’s calculations he notes that “in order for the initial 124 tonne sale to have occurred “legally” it would have had to have been 14 traders, all with zero orders open, all acting simultaneously, all acting independently, in their own self-interest, without colluding with each other to “sell-for-effect” or conspiring to foment a price smash.” The chances of this happening are, to say the least, infinitesimal.
Yet the Commodities Futures Trading Commission (CFTC), the regulatory body supposed to oversee such dealings is seen to be making no attempt to investigate.
Arensberg poses the following questions: “Who was the large trader who decided to hammer the gold market with 40,000 contracts all at once? How did that trader manage to do so without running afoul of the CME Group position limits or the CFTC regulators? Was the initial trade by one, two or many traders? If by one or two, then there is no way in hell the trade was “legal” under the position limits. If by many traders all acting at once, then how is that possible without their conspiring in advance to do so? (We are talking about the initial smash trade here, not the ensuing stops triggered.)”
Lots of questions. No real answers.
Arensberg thus notes that “no one would sell that many gold contracts so fast unless it was with the express intent to drive the market lower and by doing so, trigger sell stops of many other traders - which is, of course, trading for effect, which is patently illegal. (And yes, we know it happens all the time, but there you go.)” and goes on to describe COMEX and CME rules and position limits as so much ‘sausage meat’ which can effectively be ignored by the major players with total impunity. (If interested in further details of Gene Arensberg's assessment do click on the link in the first paragraph and read his analysis in full.)
We commented in a previous article how much the scales are weighed against the small investor given the trading latitudes given to the major players with their high frequency trading algorithms and their seeming ability to ignore any supposed controls on their activity. In short the average investor, whether it be in the stock market, or in commodities, is at an enormous disadvantage and in general these markets move at the whim of the big guys. Occasionally they can be overwhelmed by market events – but even then the biggest sharks will probably still come out on top – it’s the middle range ones, and, of course, the small investor, who may lose their shirts unless they guess right.
iPad Version: Picture - Man works on phones at gold futures trading pit at New York Mercantile Exchange: REUTERS/Mike Segar
http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=192631&sn=Detail
Speechless Turd
Turd Ferguson
Friday, May 31, 2013 at 5:28 pm
(special thanks to basserdan)
We knew that this week's CoT was going to be interesting but I didn't expect it to leave me speechless.
Look, I know I've been banging this drum for months and all the metals have done is go down. Got it. I read you loud and clear. But we're talking big picture, positioning stuff here. I am 100% firm in my belief that QE8 caught the bullion banks with their pants down. All of the price action since 9/13/12 has been designed to alleviate the gigantic financial risk and potential liability of being short paper metal. By smashing price, against the fundamentals, from $1800 to $1350 and from $35 to $22, The Cartel Banks have accomplished two things:
* They've been able to transfer the vast majority of their potential liability from themselves to the speculator sector (hedge funds, managed money, small investors).
* And now, instead of being trapped short, they are a in position to profit from the inevitable explosion in price.
Even though it's blatantly criminal, you almost have to give them credit. That they've been able to pull this off in broad daylight is simply astounding. On the level of Oceans 11.
Once again and with meaning: On 9/11/12, two days before the announcement of QE8 and with gold already at $1800, The Gold Cartel was net short 237,091 Comex contracts. That's 23,709,100 paper troy ounces or about 737 metric tonnes of gold. As of last Tuesday, they are now net short just 59,221 contracts or about 184 metric tonnes. A reduction of just over 75%! Oh, and did I mention that, over the same time period, the GLD has been raided for 277 metric tonnes? Just thought I'd throw that in, too. Simply magnificent! The Crime of The Century! Ah, screw that. That's The Crime of The 20th Century, too!! Amazing.
So, here are your numbers. Keep in mind that, for the reporting week, gold was up $1.30 while total open interest fell ahead of June13 expiration by 35,086 contracts. Also keep on mind that for Wednesday and Thursday of this week, total OI fell another 25,110 contracts. One can only imagine how much more long-term bullish these levels are as of this weekend.
GOLD
For the week, the Large Specs dumped 16,836 longs and added 6,544 new shorts (quite a few of which got squeezed yesterday and put back on today). This brings the Large Spec net long total down to just 56,879 contracts. Do you think that's a lot? Hmmm. What if I told you that, back on 9/11/12, the Large Specs were net long 182,016? From a different perspective, back on 9/11/12, the Large Spec net long ratio was 6.62:1. As of last Tuesday, it was down to1.49:1. And here's a little more perspective for you: At the price lows on 12/27/2011, the Large Specs were net long 130,788 with a ratio of 4.57:1 and at the price lows of last August they were net long 114,304 with a ratio of 3.43:1. Again, as of last Tuesday, the Large Specs were net long just 56,879 contracts and had a net long ratio of 1.49:1.
The Small Specs also reduced their net long position by a little over 1500 contracts and they are now net long just 2,342 total contracts. Again, by contrast, back on 9/11/12 the Small Specs were net long 55,075. That's a reduction of nearly 96%!
And The Gold Cartel. What did they accomplish this week? Not much...No, they just reduced their net short exposure by nearly 25,000 contracts! Again and as stated above, The Gold Cartel is now net short just 59,221 contracts or 184 metric tonnes of paper gold. Back on 9/11/12, they were net short 237,091 contracts or 737 metric tonnes of paper gold. The new Cartel net short ratio is just 1.34:1. This means that they are now long 3 contracts for every four that they are short. Incredible!
Once again for perspective, at the most recent price bottoms near $1525 in Dec of 2011 and August of 2012, The Gold Cartel was still net short 163,932 and 143,940, respectively. Their net short ratios on those occasions were 2.01:1 and 1.98:1. Again, as of last Tuesday, the numbers are 59,221 and 1.34:1.
SILVER
While interesting, the silver CoT isn't nearly as wild as gold. It's still crazy, though, as you'll see. For the reporting week, silver was down about 25¢ and its OI fell by about 3,300.
The Silver Large Specs dumped another 1,474 contracts this week while adding another 2,750 longs. That net long reduction leaves them net long just a little over 4,500 contracts and drops their net long ratio down to an almost inconceivable 1.16:1. Again, consider these levels and dates for perspective:
* On 9/11/12, they were net long 31,482 contracts and had a net long ratio of 4.18:1.
* At the 12/27/11 price bottom, they were net long 6,855 with a ratio of 1.40:1
* At the 8/14/12 price bottom, they were net long 15,407 with a ratio of 1.93:1.
The Small Specs in silver had little change and are of little consequence right now.
The silver commercials continue to astound. Though the everybody-but-JPM crowd sold 1,326 longs last week, they're still gross long an amazing 66,428 contracts. All of this commercial and spec selling allowed JPM and The Forces of Darkness to cover 4,918 shorts, leaving them gross short just 74,762. This commercial net short reduction of nearly 3,600 contracts leaves them net short just 8,334 contracts and an incredibly, nearly-impossibly low net short ratio of just 1.13:1. Again, for perspective:
* Caught with their pants down on 9/11/12, The Forces of Evil were net short 47,272 contracts or 236,360,00 troy ounces of paper silver or about 7,350 metric tonnes. They also had a net short ratio of 2.47:1.
* As of last Tuesday, The Evil Ones were net short 8,334 contracts or 41,670,000 ounces. That's 1,297 metric tonnes or a reduction of over 83%!
* At the $26 price low of 12/27/11, they were net short 14,312 contracts with a net short ratio of 1.34:1
* And at the price low of 8/14/12, they were net short 23,402 with a ratio of 1.49:1
* Again, as of last Tuesday, they are net short just 8,334 contracts with a ratio of 1.13:1.
Look, I could probably keep typing for hours about the significance of all of this but I think I'll stop here. All you need to know is this: The Bullion Banks have now reduced their net liability in gold by over 75% and, in silver, by over 83%...all since the game-changing announcement of QE8 last September. Rather than once again trying to cover into rising prices with disastrous results (see April of 2011 in silver and August of 2011 in gold), an evil, insidious and outright criminal plan was made and executed to crush the paper price of both metals. By flawlessly executing this plan, The Bullion Banks have so reduced their potential liability that there can be no doubt that prices will soon be allowed to rise again. When? That's impossible to say, of course. Maybe not until The BBs are net long both gold and silver. Who's to say for certain? But I do know that we are very, very close to a price bottom here when you take this CoT situation and the physical market demand into consideration. Plain and simple.
Finally, we'll have to see how things go once trading resumes Sunday evening. The action today certainly brings my Wednesday post back into play...the one where I speculated that one more washout could come before "a surprisingly disappointing NFP number" on Friday. I guessed that another test of $1350 was possible with a stop-running drop in silver to $21.50 or even a double bottom at $21. Again, given today's action and the $10 or so taken out of gold on the Globex this afternoon, that scenario certainly seems possible, if not likely. Here are two charts that I printed this morning, before this afternoon's decline.
So, anyway, keep the faith. Next week promises to be volatile but fun nonetheless. Enjoy your weekend and try to relax a little. Then come back on Monday with your game face on.
TF
http://www.tfmetalsreport.com/blog/4750/speechless-turd
Front Groups Exposed—50 Industry Groups Form a New Alliance to Manipulate Public Opinion About Junk Food, GMOs, and Harmful Additives
May 29, 2013
By Dr. Mercola
If you think it’s tough sorting truth from industry propaganda and lies, get ready for even tougher times ahead. More than 50 front groups, working on behalf of food and biotechnology trade groups?Monsanto being the most prominent?have formed a new coalition called Alliance to Feed the Future.
The alliance, which is being coordinated by the International Food Information Council (IFIC), was created to "balance the public dialogue” on modern agriculture and large-scale food production and technology, i.e. this group will aim to become the go-to source for “real” information about the junk being sold as “food.”
The groups comprising this new alliance represent multi-national food companies, biotech industry, and chemical companies that generate hundreds of billions of dollars worth of revenue from food related sales every year.
On the upside, this alliance and many other industry-sponsored front groups masquerading as non-profits and consumer protection organizations are becoming increasingly exposed for what they really are, and I will point out several of them in this article.
Michele Simon, JD, MPH, policy consultant with Center for Food Safety recently published a report titled: Best Public Relations Money Can Buy: A Guide to Food Industry Front Groups1 also reveals how the food and agricultural industry hide behind friendly-sounding organizations aimed at fooling the public, policymakers and media alike.
Many Industry Front Groups Are Created to Dominate Codex Discussions
The Codex Alimentarius Commission, conceived by the United Nations in 1962, was birthed through a series of relationships between the World Health Organization (WHO), the Food and Agriculture Organization (FAO), the World Trade Organization (WTO) as well as the American FDA and USDA.
The Codex Alimentarius itself is a compilation of food standards, codes of practice and guidelines that specify all requirements related to foods, whether processed, semi-processed, genetically engineered, or raw.
Its purported purpose is to “protect consumers’ health, ensure fair business practices within the food trade, and eliminate international food trade barriers by standardizing food quality.”
There are a number of different working groups that meet regularly to establish food standards of every imaginable kind. For example, the Physical Working Group on Food Additives recently held meetings in Beijing, China. The 45th session of the Codex Committee on Food Additives (CCFA) ended on March 22.
On the agenda were discussions about aluminum-containing food additives. Are they safe or should they be eliminated from the worldwide Codex standards? The National Health Federation (NHF), the only health-freedom group allowed to speak at the meeting, dished out harsh criticism on the additives, calling for their removal. In a Facebook update, the NHF wrote:2
“The usual Codex suspects (the delegations of Australia, the United States and Canada) plus the trade organizations of the International Food Additives Council (IFAC) and the International Council of Grocery Manufacturers Associations (ICGMA) were the industry apologists for keeping aluminum in food additives.
In dishing out scorching criticism of aluminum's proponents, NHF came under return fire from Australia, IFAC, and the Chairman.
IFAC - which does not seem to disclose any of its members... along with its sidekick ICGMA, cried out constantly that the 'Industry' just could not make it without aluminum food additives. Their members spraying equipment 'might overheat and catch fire,' IFAC lamented.
When NHF suggested that this was a not a genuine issue; that the industry could easily innovate its way out of this 'problem' and create non-overheating equipment, NHF was criticized by the Chairman for suggesting that IFAC might not be telling the truth.
By the end of the day, the success of the EU and NHF could be tallied by numerous uses of aluminum food additives that the Working Group will suggest be discontinued to the full Committee meeting... although there were also many food-additive uses that stayed in place (albeit usually at reduced levels), no thanks to the interventions of Australia, the U.S., Canada, IFAC, and ICGMA.”
Who’s Behind the International Food Additives Council (IFAC)?
The International Food Additives Council (IFAC) is “an international association representing companies that produce high quality substances used worldwide as food ingredients in traditional and organic products.” The group is very active in Codex. But how do you know who they are, and who they represent, when it’s almost impossible to find out who their members are?
As the NHF noted above, it’s virtually impossible to locate a list of its members (which naturally would indicate sources of funding, and potentially reveal behind-the-scenes agendas).
But here, I’m making public IFAC’s list of officers and board members as of 2011. It wasn’t easy to find this list, primarily because IFAC isn’t a regular 501(c)(3). In fact, it isn’t a 501(c)(3) at all. Actually, it’s a 501(c)(6)?an IRS classification for nonprofit “commercially oriented” organizations such as football leagues, chambers of commerce and, apparently, groups like IFAC. Once you know its non-profit classification, you can find its 990 forms?which all non-profits must file, complete with lists of officers and directors. I obtained IFAC’s 990s for the years 2004-2011. And there I learned the truth.
Except for two, who I couldn’t find any information at all on, all of IFAC’s officers and directors are linked to processed foods and additives in some way, with at least six of them having direct or business links to Monsanto and/or DuPont. That’s right. Six of IFAC’s governing board members are linked to the largest GMO producers in the world.
If you look up these board members’ contact information, you’ll find that all contacts for IFAC3 go to a corporation called The Kellen Company. Kellen “provides the essential services to advance associations to the next level of their evolution.” Such services include management, administration, accounting, meeting planning, membership marketing and strategic advice. According to the company’s website:
“Kellen takes the mission and message of each association client and brings it to audiences large and small, internal and external, domestic and international. Utilizing communications tools that are customized for each association, Kellen identifies the audiences, develops the strategies, defines the tactics and executes a planned and carefully reasoned communications plan.”
“Our consulting expertise enables us to reorganize association governance and assets, optimize association resources, extend reach for U.S. associations into Europe and Asia... Kellen’s team is expert in all strategic and tactical elements of associations and can provide insightful analysis and guidance on industry alignment... establishing new legal entities and building consensus. “ [Emphasis mine]
Additionally, if you look up IFAC’s origins in Internet business profiles, you’ll find that it was formed in 1980 by Patrick M. Farrey, who just so happens to be The Kellen Company’s group vice president. In short, The Kellen Company not only is linked to the formation of IFAC, but also serves as the managing entity behind IFAC. And its members, although a proper members list has not been obtained, are bound to be like their governing body? manufacturers of food additives, including but certainly not limited to manufacturers of artificial sweeteners and glutamate (i.e. MSG).
This association is clearly spelled out in the Council’s name. But what’s troublesome about it is that IFAC represents companies that create food ingredients in organic products as well, although there’s not a shred of evidence that any person, company or organization dedicated to organics is actually represented by IFAC. If that is the case, this means IFAC probably does NOT have any incentive at all to ensure such ingredients are appropriate for organic products, and most likely, they will just do what needs to be done to ensure its members’ ingredients are allowed to be used in organics no matter what.
You need look no further than its board members?and their links to Monsanto and DuPont, and their managing entity, Kellen?to see what I’m talking about, because Kellen tells you plainly on its website where the organization it represents stand when it comes to organics. Boasting that Kellen and its members joined the “Say No to Proposition 37” movement in California, Kellen explains right on its website how they defeated the bill that would have mandated that all GMO products be labeled as such:
“Almost all of Kellen Company’s food clients would have been negatively affected by Prop. 37, but no single association was in a position to lead opposition efforts to GMO labeling. A coalition was a perfect solution; our team decided to join the 'No on 37 Coalition,' a multi-stakeholder group that led opposition efforts and helped to educate Californian voters about the shortcoming of Prop. 37. And that story has a happy ending – the proposition was not passed and food companies in California are not required to include potentially misleading labeling.”
The site goes further, detailing the steps to “success” of this campaign, advising site visitors: “With proposed ballot initiatives beginning to be certified and many states opening their 2013 legislative sessions this month, now is the time to think about your association’s plans should state legislation or a ballot initiative affecting your industry be introduced in 2013.”
Finally, if you have any doubt about what IFAC’s goals are, you need look no further than a PowerPoint presentation4 that the group is currently giving at symposia and conventions around the world. One of the slides on this presentation states that IFAC promotes “independently determined” studies of safety in its members’ products. By “independent,” they explain that this means: “experts chosen and employed by the manufacturer.” This is the same procedure that gets Monsanto’s products to market: Monsanto gets to do its own safety studies and submit them to the FDA as “proof” that their products won’t harm you.
Front Groups Working to Keep Harmful Food Additives Hidden and on the Market
The Kellen Company has ties with other major industry players. According to a 2011 press release,5 one of the Kellen Company executives was honored as president of the Calorie Control Council, a non-profit association that represents manufacturers and suppliers of low-calorie, sugar-free and reduced sugar foods and beverages. It’s also closely tied to the International Council of Grocery Manufacturers Associations (ICGMA), which, along with IFAC, urged the Codex working group to keep aluminum in food additives, despite the many known health risks associated with aluminum.
According to Truthinlabeling.org,6 there are a number of front groups for the glutamate and artificial sweetener industry in the US. In an article titled: Meet the people who get the job done so effectively, they write:
“In the United States, the glutamate industry has two arms. Both work to keep MSG hidden in food. One is the International Hydrolyzed Protein Council... The second and more active arm is spearheaded by Ajinomoto’s International Glutamate Technical Committee (IGTC) and its American subsidiary, The Glutamate Association (TGA), with representative organizations throughout the world.”
Now here’s where it gets interesting, as it again shows the intricate ties of the glutamate industry with the Kellen Company:
“In 1977, the IGTC spun off The Glutamate Association, with both organizations accommodated under the umbrella of The Robert H. Kellen Company... a trade organization and association management firm, specializing in the food, pharmaceutical, and health care industries. [Editor’s note: although not covered in this article, this is a clue that there are many front groups operating in the drug and health care industry as well, under the careful management of the Kellen Company. Such front groups ensure you will NOT get the truth about drugs and health care issues where corporate profits are at stake.]
The Encyclopedia of Associations (The Glutamate Association, 1990) listed Robert H. Kellen as president of The Glutamate Association. Richard Cristol, executive director of The Glutamate Association, was also Vice President of The Kellen Company. Cristol assumed management of the Washington, DC operations of The Kellen Company and its subsidiary, HQ Services, in 1993...
In 1992, and still in 1998, Andrew G. Ebert, Ph.D., Chairman of the International Glutamate Technical Committee (IGTC), was also Senior Vice President of The Kellen Company. Membership in The Glutamate Association is secret. However, a source from within the glutamate industry, who asked to remain anonymous, told us that besides Ajinomoto, Archer Daniels Midland, Campbell, Corn Products Corporation, McCormick & Company, Pet Foods, Pfizer Laboratories, and Takeda were among its members; and Nestle was a former member.”
The fact that membership is a secret is telling in and of itself, and it’s quite ironic, considering the Glutamate Association is ardently working to keep the presence of glutamate in foods and other products, such as fertilizers and growth promoters, hidden from the consumer... But there’s more. I’ve often discussed the revolving door between the US Food and Drug Administration, and here we see the door swinging yet again. According to another article by TruthInLabeling.org:7
“Influence of the International Glutamate Technical Committee (IGTC) can be felt at every level. [Andrew G.] Ebert has served the Grocery Manufacturers of America; the National Food Processors Association; the Institute of Food Technology; the National Research Council of the National Academy of Sciences Assembly of Life Sciences; the American Medical Association; the FAO/WHO Codex Alimentarius Food Standards Program as an Industry Observer; and the International Food Additives Council (IFAC) as Executive Director. In 1992, FDA appointed both Andrew G. Ebert, Ph.D., IGTC chairman, and Kristin McNutt, Ph.D., paid spokesperson for the IGTC, to the FDA Food Advisory Committee.” [Emphasis mine]
At this point, it would appear The Kellen Company is instrumental in creating and managing front groups for the processed food and chemical industries. These front groups are specifically created to mislead you about the product in question, protect industry profits, and influence regulatory agencies. This amount of collusion simply is not necessary for a food or product that is truly safe and has great intrinsic value, but it must be done for inferior and/or dangerous products that cannot stand up to closer scrutiny by truly independent sources.
What’s more, it appears all these front groups (there are many others not specifically mentioned in this article) have been created in order to have more seats at the Codex meetings, essentially giving chemical companies and major food manufacturers a much louder voice, in order to control the decisions made.
Front Man Steven Milloy, and Other Non-Profit Front Organizations with Ties to Industry
Steven Milloy, author of Green Hell: How Environmentalists Plan to Control Your Life and What You Can Do to Stop Them, and owner and operator of Junkscience.com8 — a site dedicated to denying environmental and health concerns related to pollutants and chemicals, including those used in agriculture and food production — appears to have been registered as a lobbyist with The EOP Group, a lobbying firm based in Washington, DC. Clients of the firm have included the American Crop Protection Association, the Chlorine Chemistry Council, and Edison Electric Institute.9
Milloy’s clients10 included both Monsanto and the International Food Additives Council (IFAC). Milloy has denied ever being a lobbyist, claiming that he was “a technical consultant" for the lobbying firm.
“However, Milloy shows up in federal lobbyist registration data for 1997 as having lobbying expenditures on his behalf, indicating his firm, the EOP Group, believed him to be an active lobbyist, 'technical' or otherwise,” TRWNews11 states in its expose of the industry front man.
Milloy also headed up the now defunct corporate front group, The Advancement of Sound Science Coalition (TASSC). According to TRWNews,12 TASSC and the Junkscience.com site were one and the same. Integrity in Science,13 which lists non-profit organizations with close ties to industry, reports that TASSC received financial support from hundreds of corporations, including the likes of Procter & Gamble, Exxon, Dow Chemical, and Philip Morris. I’ll leave it up to you to guess what kind of ‘sound science’ was advanced by those sources...
“Its objective is to act as a speakers bureau to deliver the corporate message that environmental public policy is not currently based on 'sound science,' and to counter excessive regulations that are based on what it considers 'junk' science,” Integrity in Science states. [Emphasis mine]
Other non-profit organizations that are in actuality doing the bidding of various industry giants include:
* Air Quality Standards Coalition, “created specifically to battle the clean air proposals, the coalition operates out of the offices of the National Association of Manufacturers, a Washington-based trade group. Its leadership includes top managers of petroleum, automotive and utility companies”
* Alliance for the Prudent Use of Antibiotics, while sounding like it would work for your benefit, actually gets “unrestricted grants” from a long list of pharmaceutical companies
* Alliance to Save Energy, which “supports energy efficiency as a cost-effective energy resource under existing market conditions and advocates energy-efficiency policies that minimize costs to society and individual consumers,” was founded by, among others: BP...
* American Academy of Pediatrics receives $1 million annually from infant formula manufacturers. Other donors include (but is not limited to) the National Cattlemen's Beef Association, Johnson & Johnson Consumer Products, both Wyeth’s and Merck’s vaccine divisions, the Food Marketing Institute, the Sugar Association, and the International Food Information Council (IFIC) — which you will see below, is not only a front group for the glutamate industry; it’s also the coordinating agent for a new alliance of over 50 industry groups aimed at directing the dialogue and altering public opinion about large-scale, genetically engineered and chemical-based food production
* American Council for Fitness and Nutrition. This one takes the cake with a member list that includes the American Bakers Association, the American Meat Institute, the Biscuit & Cracker Manufacturers Association, Chocolate Manufacturers Association, Coca-Cola, Hershey’s, National Confectioners Association and many others that are FAR from suited to devise appropriate “comprehensive, long-term strategies and constructive public policies for improving the health and wellness of all Americans”
IFIC Created 'Crisis Management' Protocol in Case Truth Would Be Exposed
Although their names may differ, many of the functions of these groups overlap, as they’re really serving the same industry. TruthInLabeling explains how front groups such as these serve the distinct interests of the industry, not your or your children’s health, even when their well-chosen name may mislead you to think otherwise.14 Take the International Food Information Council (IFIC) for example:
“In 1990, faced with the threat of a '60 Minutes' segment... that might expose the toxic potential of monosodium glutamate, IFIC became actively involved in representing the interests of the glutamate industry. The IFIC represents itself as an 'independent' organization. It sends attractive brochures to dietitians, nutritionists, hospitals, schools, the media, and politicians, proclaiming the safety of monosodium glutamate. In 1990, an anonymous person sent us a copy of a 'Communication Plan' dated July-December 1991, that detailed methods for scuttling the '60 Minutes' segment on MSG, or, failing that, provided for crisis management.
...Depending on the roles they play, researchers might be considered agents of the glutamate industry. In addition, there are those who promote the products of those they work for, just as public relations firms do, but these organizations highlight the fact that they are nonprofit corporations, while minimizing the fact that they promote the products of those who financially support them. The International Food Information Council (IFIC) and the International Life Sciences Institute (ILSI) are examples of such glutamate-industry agents.”
50+ Industry Front Groups Form New Alliance to 'Balance Public Dialogue' on Food Production
As reported by Sustainable Food News15 on March 17, more than 50 of these front groups, working on behalf of food and biotechnology trade groups, have formed a brand new alliance called Alliance to Feed the Future. Again, the alliance is being coordinated by the glutamate-protecting International Food Information Council (IFIC). The stated aim of the alliance is to "balance the public dialogue on modern agriculture and large-scale food production."
“The Alliance to Feed the Future said "in an effort to meet the world’s increasing food needs responsibly, efficiently and affordably," its members want to 'tell the real story of' and dispel "misperceptions about modern food production and technology,'” the article states.16
The groups comprising the alliance represent multi-national food, biotech, and chemical companies that generate hundreds of billions of dollars-worth of revenue each year. Some of the most notable of these 50 industry groups include the very players already mentioned in this article. For the full list of all 50+ groups that are part of the alliance, please see the original article:17
American Soybean Association
Biotechnology Industry Organization (which represents biotech crop giants Monsanto, DuPont, and Syngenta)
Calorie Control Council (which represents the artificial sweetener industry)
Council for Biotechnology Information
Grocery Manufacturers Association (GMA)
International Food Additives Council (IFAC)
According to the featured article:18
“When asked by Sustainable Food News what misperceptions the group seeks to dispel, Dave Schmidt, CEO at the International Food Information Council, who coordinates the alliance, said the most common misperceptions - perpetuated by what he calls 'a large popular culture' that can be found in recent 'books and movies' - are that 'technology is bad and we need to go back to a time when there was less technology. Or, food processing or large-scale food production is bad.'
...The alliance's aim is to educate who he called 'opinion leaders,' including those in the university sector, professional societies, journalists and government officials. However, another target demographic is the 'informed consumer,' who he expects will find the group's information online.
The Alliance's effort appears to be an attempt to squelch the growing consumer perception that modern food production can have a negative impact on the health of humans and the environment as espoused by the organic and sustainable food movement.” [Emphasis mine]
Meanwhile, close to a dozen of the members of this new industry alliance have resigned from the Leonardo Academy's National Sustainable Agriculture Standards Committee,19 which is currently developing a national standard for sustainable agriculture under the rules of the American National Standards Institute (ANSI). According to Russell Williams of the American Farm Bureau Federation, this exodus occurred because:
“...the committee is dominated by environmental groups, certification consultants, agro-ecology and organic farming proponents. Based on their recent actions, it is apparent that these groups have neither the vision nor desire to speak for mainstream agriculture or the 95 percent of farmers who will be materially affected by any resulting standard.”
Is the Information You’re Given Created by a Front Group Pretending to Be 'Independent'?
As TruthInLabeling points out, the industry has manipulated public knowledge using innocent-sounding front groups for a very long time. As I’ve already shown, the International Food Additives Council (IFAC) is a perfect example of how industry giants can masquerade as a so-called non-profit, independent organization. While their membership still remains secret, the directors and officers on the IFAC board show quite plainly who’s running the show when it comes to food additives?and IFAC is obviously NOT a group of consumer advocates.
Another example can be shown through the distribution of information about MSG, which has been completely directed by the industry itself, through The Glutamate Association:
"Present FDA practice includes distributing unsolicited copies of an FDA Medical Bulletin that assures physicians that MSG is safe; and distributing similar material to food service people. In the January-February, 2003 FDA Consumer magazine, the FDA's Michelle Meadows, in an article titled: MSG: A Common Flavor Enhancer, spewed out paragraphs that look like they came right off The Glutamate Association or the International Glutamate Information Service Web pages. Trying to convince us that MSG is 'safe' while saying nothing."
The same goes for genetically engineered crops, prescription drugs, artificial sweeteners and a whole host of other harmful substances used in food production and medicine. You can bet if there’s a harmful substance out there that makes money, there are at least one or more front groups, posing as independent non-profit organizations, disseminating anything but independent safety reviews and information pertaining to it...
As for the Codex meetings, and the Group on Food Additives in particular; they’re being shrewdly manipulated by multiple front groups, which ensures that their side comes across as the strongest and most vocal. It also creates the illusion of consensus, when in fact it’s nothing but collusion... It’s high time to pull back the curtain and see who’s really pulling the strings and levers. And whenever you hear the talking points from Alliance to Feed the Future or the International Food Additives Council (IFAC), you now know exactly who is talking, and why. It’s an alliance of multi-national food-, biotech-, and chemical companies that are hell-bent on protecting hundreds of billions of dollars-worth of annual revenue in the face of a burgeoning organic and sustainable food movement. Believe what they tell you at your own risk...
Keep Fighting for Labeling of Genetically Engineered Foods
While California Prop. 37 failed to pass last November, by a very narrow margin, the fight for GMO labeling is far from over. The field-of-play has now moved to the state of Washington, where the people's initiative 522, "The People's Right to Know Genetically Engineered Food Act," will require food sold in retail outlets to be labeled if it contains genetically engineered ingredients. As stated on LabelitWA.org:
"Calorie and nutritional information were not always required on food labels. But since 1990 it has been required and most consumers use this information every day. Country-of-origin labeling wasn't required until 2002. The trans fat content of foods didn't have to be labeled until 2006. Now, all of these labeling requirements are accepted as important for consumers. The Food and Drug Administration (FDA) also says we must know with labeling if our orange juice is from fresh oranges or frozen concentrate.
Doesn't it make sense that genetically engineered foods containing experimental viral, bacterial, insect, plant or animal genes should be labeled, too? Genetically engineered foods do not have to be tested for safety before entering the market. No long-term human feeding studies have been done. The research we have is raising serious questions about the impact to human health and the environment.
I-522 provides the transparency people deserve. I-522 will not raise costs to consumers or food producers. It simply would add more information to food labels, which manufacturers change routinely anyway, all the time. I-522 does not impose any significant cost on our state. It does not require the state to conduct label surveillance, or to initiate or pursue enforcement. The state may choose to do so, as a policy choice, but I-522 was written to avoid raising costs to the state or consumers."
Remember, as with CA Prop. 37, they need support of people like YOU to succeed. Prop. 37 failed with a very narrow margin simply because we didn't have the funds to counter the massive ad campaigns created by the No on 37 camp, led by Monsanto and other major food companies. Let's not allow Monsanto and its allies to confuse and mislead the people of Washington and Vermont as they did in California. So please, I urge you to get involved and help in any way you can, regardless of what state you live in.
* No matter where you live in the United States, please donate money to these labeling efforts through the Organic Consumers Fund.
* If you live in Washington State, please sign the I-522 petition. You can also volunteer to help gather signatures across the state.
* For timely updates on issues relating to these and other labeling initiatives, please join the Organic Consumers Association on Facebook, or follow them on Twitter.
* Talk to organic producers and stores and ask them to actively support the Washington initiative.
http://articles.mercola.com/sites/articles/archive/2013/05/29/codex-front-groups.aspx
Gold Update - A Plague Of Experts
May 30 2013
Peter Tenebrarum
SeekingAlpha
As we have pointed out on previous occasions, there has been a "full court press" in the financial media against gold. It is amazing that an alleged barbarous relic of no particular importance (according to Fed chief Bernanke, the U.S. treasury only hangs on to its gold due to a kind of misguided nostalgia -- i.e., because it's a tradition) all of a sudden receives so much attention.
It is noteworthy in this context that it garnered far less attention while its price went up. Today we regularly hear people holding forth about gold we have never heard from before. They only popped up once it broke through technical support and suffered a mini crash. Evidently here was a nest of gold bears somewhere -- and most of them appear woefully uninformed about the gold market. However, that hasn't kept the financial press from publishing their screeds. It should also be pointed out in this context that so far, the low established in the course of the mid-April crash continues to hold. All the bearish forecasts published since then have yet to prove their worth.
As we have mentioned as well, it is certainly possible to construct a valid bearish argument for gold. It is possible with regard to every financial asset at any point in time to fashion both bullish and bearish arguments that have at least theoretical validity. One can then contrast the bullish and bearish arguments and try to figure out which of them are likely to gain the upper hand.
Even that exercise is fraught with many uncertainties, especially in the short to medium term (it is much easier to come to conclusions about longer term outcomes). This is because we cannot know in advance which issues market participants will focus on in the short term. For instance, stock markets have risen in bubble-like fashion to a level of overvaluation on a par with the valuations seen at previous historical peaks, in spite of a very weak economy and a notable decline in earnings growth rates. This mainly happened because investors chose to focus on the 'eternal' Bernanke put instead of on the rather bleak underlying reality.
Dubious Arguments
In any event, the point we want to make is that many of the arguments that have been forwarded in recent weeks by gold bears make no sense whatsoever. Let us look at a few recent examples that weren't produced by unknown scribblers, but by the gold analysts of major banking institutions. For instance, Barron's reports on a recent analysis by Commerzbank:
The steady exit from gold exchange-traded funds is as good a barometer as any for today’s low investment appetite for the metal. But here’s another way of looking at the outflows: Versus the size of central-banks’ gold buying.
For some analysts, ETFs have grown so important that central banks’ activities are now something of an afterthought. Commerzbank’s strategists lay out the numbers this morning. Central banks bought about 30 tons of gold during April. So far in May, investors have pulled out the equivalent of 117 tons from ETFs like SPDR Gold Trust (GLD) and iShares Gold Trust (IAU). They’ve yanked more than 290 since the start of the quarter, according to the same figures. '[T]he 30 tons or so of gold purchased by central banks in April -- as we reported yesterday -- thus appear to be but a drop in the ocean,' write the firm’s strategists in a morning note. (emphasis added)
What is missing here is a mention that the "290 tons yanked from ETFs" are a drop in the ocean as well. As we have pointed out many times, the buying and selling by central banks and gold ETFs is essentially immaterial to gold's price. It is just as immaterial as variations in the mine supply are. It simply makes no sense at all to focus on these data when trying to analyze gold. The total supply of gold is an estimated 175,000 tons. On the LBMA alone, as much gold is traded every three to four days as is supplied by mines in an entire year. Anyone who is looking at the paltry amounts ETF and central banks buy or sell in a period of three months is trying to analyze gold as if it were an industrial commodity. However, gold is not an industrial commodity, it is first and foremost a monetary commodity.
Gold must therefore akin to a currency and must be analyzed in a similar manner. Since the biggest component of gold demand is the reservation demand of current gold holders, one can only indirectly arrive at conclusions as to whether gold is more likely to rise or fall in the medium term (that its price will rise in the long term in terms of fiat confetti is a given, since the supply of the latter is always expanded at a far greater rate).
The notion that ETF sales are relevant to the gold price was also repeated in a bearish analysis released by Credit Suisse on Wednesday. Credit Suisse has the distinction of having turned bearish on gold before its recent swoon, but nevertheless several of its arguments demand rebuttal. All the talk about 450 tons of gold being sold here and absorbed there can be safely ignored of course, as can the notion that gold was in a bubble (we have already explained why gold is far from bubble territory). We will therefore only look at the more nuanced arguments.
“The rationale behind the February call was Credit Suisse’s sense that the most fear-inducing chapter of the post-2008 crash environment began to draw to a close after the European Central Bank’s July 2012 decision to finally commit to being the lender of last resort to help the eurozone weather its debt crisis. The cornerstone for a slow recovery was finally in place, which undercut gold’s fear-based allure.
To this we would note that it is true that a fear premium that was embedded in gold's price has been taken away after the market's worst fears regarding the probability of euro area sovereign defaults receded. To think that the central bank somehow put in place the cornerstone for a slow recovery is however erroneous. Central economic planning hasn't suddenly begun to work as if by magic. Moreover, it is far from certain that the debt crisis is over. Let us not forget, the Draghi OMT put has yet to be put to the test.
'Behind the latest call, published last week, is that the other major motivation for buying gold since the crisis—namely to hedge against inflation in the face of rapid expansion of central bank balance sheets, simply hasn’t been necessary. In fact, it’s been difficult to create any inflation at all, and a significant increase in the velocity of all the money sloshing around in the economy has not yet come to pass.
Financial markets have decided that the remaining risks can be navigated in relative safety and so a growing number of investors think the opportunity cost of gold is too high a price to pay,' the report said.”(emphasis added)
The opportunity cost of holding gold remains actually a strongly bullish factor, as real interest rates (nominal rates minus inflation expectations) remain deeply negative. So this is a spurious argument. As to the idea that the need to hedge against inflation as somehow disappeared, this is preposterous. The need has rarely been greater. The Fed has inflated the true US money supply by 80% since 2008 and continues to inflate it at a brisk rate. The fact that officially reported CPI hasn't increased much is not relevant in this context. For one thing, CPI has been tame throughout gold's bull market to date. It seems highly likely that it will eventually rise strongly, but the time lag involved can be very large -- very often many years, even decades can pass before a vast increase in the money supply brings about a notable rise in final goods prices.
With regards to velocity, this is simply an erroneous concept. It is far more accurate to speak about the demand for money. Velocity is nothing but a fudge factor that is used in the tautological equation of exchange of the Fisherian quantity theory of money. When this so-called velocity is deemed to be low, what is really happening is that the demand to hold cash balances is high. However, a high demand for holding cash balances is not a bearish factor for the gold price, but a bullish one. This is so because gold is a substitute for cash holdings. Anyone holding gold is essentially holding cash in form of another currency. In short, what CS believes to be a bearish argument is really a bullish one. The remainder of CS's argument concerns itself with deliberations about ETF selling, which as we have pointed out above is simply nonsensical from the outset.
If this is all the bears can come up with, you should buy gold with both hands. As far as we are concerned, a bearish argument that may have some validity is that the rate of growth of the U.S. budget deficit is declining. However, as we have previously discussed, the current budget deficit estimates may prove to be overoptimistic, as there was a large one-off effect occasioned by people rushing to take capital gains and corporations distributing dividends prior to the tax hikes instituted earlier this year. Moreover, the budget is highly sensitive to bubble revenue. If the stock market bubble should falter, a large source of revenue (capital gains tax) will disappear.
Another bearish argument that deserves consideration is the fact that gold has stopped reacting positively to what should, on the surface at least, be bullish news. However, this can probably be explained by the fact that the perceptions regarding declining risk of sovereign defaults in the euro area have removed some of the risk premium that was previously embedded in gold's price. Now that this premium is gone, the market is once again free to take other factors into account.
Conclusion
The gold bears should really think of a few better reasons if they want to make a bearish case for gold that stands up to scrutiny. Several of the most important drivers of the gold price remain very bullish, among them negative real interest rates, a brisk expansion of the money supply and the piling up of ever greater risks in the debt and other risk asset markets.
To be sure, there are a few bearish arguments that deserve consideration, but in our opinion they hold less water than the bullish arguments at this stage. This is further buttressed by recent developments on the technical front.
Addendum: Gold in 2013 Vs. Gold In 1976
Ironically, the Commerzbank analysis included a comparison of the 1976 correction pattern with the 2013 correction pattern, which according to the analysts should best be ignored. We will reproduce it anyway:
(click to enlarge)
The above chart shows gold's 1976 correction pattern compared to the 2013 pattern. As Barron's notes: "The firm isn’t reading much into it and makes a point of calling it 'not something to trade on.'" To this we say: We shall see. (Chart via Commerzbank.)
http://seekingalpha.com/article/1472251-gold-update-a-plague-of-experts
'Bazooka at a knife fight' – the April 12 gold takedown –
The chances of the initial gold sale which precipitated the April 12 gold price crash as being 'legal' were infinitesimal. Gene Arensberg does the maths.
Author: Lawrence Williams
Posted: Friday , 31 May 2013
LONDON (MINEWEB) -
There have already been a number of post mortems on the extraordinary trading events which precipitated the huge crash in the gold price of mid-April. Indeed we have already published some ourselves on Mineweb, and perhaps it might be considered over-egging the pudding to look at yet another analysis of these events given they occurred now well over a month ago. However our attention has been drawn to a post by Gene Arensberg on his ‘Got Gold’ site (http://www.gotgoldreport.com/2013/05/so-much-for-position-limits-on-comex-gold.html ) which analyses the events in some detail, and draws the conclusion that the ‘attack’ on gold could not have been accomplished without hugely breaching COMEX position limits, and that the takedown was probably illegal under U.S. financial regulations. Despite this it is presumed highly unlikely that any authorities will take any action as a result given those authorities are largely seen to be in the control of the financial elite, who were in all probability responsible for the extraordinary sales of gold into the markets on that fateful day.
Of course the reasoning behind what definitely appears to be a very deliberate takedown of the markets will probably remain unknown. GATA and its adherents will undoubtedly believe that this was an orchestrated move by the U.S. Fed, and what are seen as its bullion banking allies, to suppress the price of gold and thus protect the perception of U.S. dollar strength at the expense of the beleaguered gold investor, who may be seen to have benefited too much from the yellow metal’s rising price over the previous 12 years.
Others will suggest that it was purely a piece of very costly financial manipulation to protect short position holders given that gold had appeared, up to that time, to be beginning a good recovery back towards its 2012 levels. This theory might well gain traction given that three of the biggest players, Credit Suisse, Societe Generale and Goldman Sachs had all come up with strong sell recommendations for gold immediately prior to April 12. Indeed Goldman Sachs had made an almost unprecedented recommendation to sell gold short only two days beforehand – a point noted strongly by Grant Williams in a recent presentation to a major CFA conference in Singapore (see Little respite for gold – yet).
What Arensberg has done though is go into the maths behind the initial sell orders said to have totalled some 124 tonnes which precipitated the initial price collapse. (Some 400 tonnes was believed to have been sold off later that day). The 124 tonnes appears to have been sold almost instantaneously and Arensberg notes “what we do know is that the volume spiked to an unprecedented level April 12 and Monday, April 15 and that initial sale triggered an avalanche of trading and trailing stops. The net effect was that the initial order was indeed large enough and sold into the market fast enough that it literally overwhelmed the gold futures market. Whoever it was used a bazooka at a knife fight. The selling panic that ensued will be talked about for generations.” with the caveat that at the time of writing that “We do not have the actual trade data which would include the actual orders and the sellers of those orders. Without that, this is pure speculation and subject to receiving that actual data.”
However, in looking at the maths behind the transactions Arensberg notes that the 124 tonnes would have amounted to around 40,000 COMEX contracts, while the position limit at that time of the month would have been 3,000 contracts for an individual trader. So, on Arensberg’s calculations he notes that “in order for the initial 124 tonne sale to have occurred “legally” it would have had to have been 14 traders, all with zero orders open, all acting simultaneously, all acting independently, in their own self-interest, without colluding with each other to “sell-for-effect” or conspiring to foment a price smash.” The chances of this happening are, to say the least, infinitesimal.
Yet the Commodities Futures Trading Commission (CFTC), the regulatory body supposed to oversee such dealings is seen to be making no attempt to investigate.
Arensberg poses the following questions: “Who was the large trader who decided to hammer the gold market with 40,000 contracts all at once? How did that trader manage to do so without running afoul of the CME Group position limits or the CFTC regulators? Was the initial trade by one, two or many traders? If by one or two, then there is no way in hell the trade was “legal” under the position limits. If by many traders all acting at once, then how is that possible without their conspiring in advance to do so? (We are talking about the initial smash trade here, not the ensuing stops triggered.)”
Lots of questions. No real answers.
Arensberg thus notes that “no one would sell that many gold contracts so fast unless it was with the express intent to drive the market lower and by doing so, trigger sell stops of many other traders - which is, of course, trading for effect, which is patently illegal. (And yes, we know it happens all the time, but there you go.)” and goes on to describe COMEX and CME rules and position limits as so much ‘sausage meat’ which can effectively be ignored by the major players with total impunity. (If interested in further details of Gene Arensberg's assessment do click on the link in the first paragraph and read his analysis in full.)
We commented in a previous article how much the scales are weighed against the small investor given the trading latitudes given to the major players with their high frequency trading algorithms and their seeming ability to ignore any supposed controls on their activity. In short the average investor, whether it be in the stock market, or in commodities, is at an enormous disadvantage and in general these markets move at the whim of the big guys. Occasionally they can be overwhelmed by market events – but even then the biggest sharks will probably still come out on top – it’s the middle range ones, and, of course, the small investor, who may lose their shirts unless they guess right.
iPad Version: Picture - Man works on phones at gold futures trading pit at New York Mercantile Exchange: REUTERS/Mike Segar
http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=192631&sn=Detail
The Social Cost Of Capitalism
Paul Craig Roberts
May 31, 2013
When I was a graduate student in economics, the social cost of capitalism was a big issue in economic theory. Since those decades ago, the social costs of capitalism have exploded, but the issue seems no longer to trouble the economics profession.
Social costs are costs of production that are not born by the producer or included in the price of the product. There are many classic examples: the pollution of air, water, and land from mining, fracking, oil drilling and pipeline spills, chemical fertilizer farming, GMOs, pesticides, radioactivity released from nuclear accidents, and the the pollution of food by antibiotics and artificial hormones.
Some economists believe that these traditional social costs can be dealt with by well defined property rights. Others think that benevolent government will control social costs in the interests of society.
Today there are new social costs brought by globalism. For developed countries, these are unemployment, lost consumer income, tax base, and GDP growth, and rising trade and current account deficits from the offshoring of manufacturing and tradable professional service jobs. The trade and current account deficits can result in a falling exchange value of the currency and rising inflation from import prices. For underdeveloped countries, the costs are the loss of self-sufficiency and the transformation of agriculture into monocultures to feed the needs of international corporations.
Economists are oblivious to this new epidemic of social costs, because they mistakenly think that globalism is free trade and that free trade is always beneficial.
Economists are also unaware of the social costs of deregulation. The ongoing financial crisis which requires massive public subsidies to "banks too big to fail" is a social cost resulting from government accommodating Wall Street pressure to deregulate the financial system by repealing the Glass-Steagall Act, by removing the position limits on speculators, by preventing the CFTC from regulating derivatives, and by turning the Anti-Trust Act into dead-letter law and permitting massive economic concentrations. The social costs of successful corporate lobbying is enormous. But economists who believe that markets are self-regulating imagine that an enormous gain in efficiency has occurred, not massive social costs.
In order to keep the deregulated financial system afloat, the Federal Reserve has monetized trillions of dollars of debt over the last several years. Real interest rates have been driven into negative territory. Retirees are unable to earn any interest income on their savings and have to draw down their capital in order to cover their living expenses.
The liquidity injected into financial markets by the Federal Reserve's policy of quantitative easing has produced huge bond and stock market bubbles. When they pop, more American wealth will be wiped out and more jobs will be lost.
Consider just one example of the social costs of jobs offshoring. When US corporations produce abroad the goods and services that they market to Americans, the goods and services that flow into the US arrive as imports. Thus, the trade deficit rises dollar for dollar.
The trade deficit means that the US has imported more than it has earned in foreign currencies by exporting. For most countries this would be a problem, but not for the US. The US dollar is the world reserve currency, which means that it is the means of international payment and that foreign central banks hold US dollars as reserves to secure the values of their own currencies.
With the passage of time, this advantage becomes a disadvantage, because foreigners use the dollars gained from their trade surpluses to buy up American income-producing assets. They buy US Treasury bonds and US corporate bonds, and the interest income leaves the country. They purchase US companies, and the profits, dividends and capital gains leave the country. They lease Chicago's parking meters and American toll roads, and the revenues flow abroad.
The enormous outflow of income streams creates a large current account deficit for the US, which means that foreigners have even more surplus dollars with which to buy up more US assets. In other words, a chronic trade deficit is a way to redirect a country's revenues and profits into overseas hands.
The ownership of a country changes from its own citizens to foreigners. According to Reuters, in 1971 foreign companies owned 1.3% of all corporate US assets. http://www.reuters.com/article/2008/08/27/us-companies-ownership-usa-idUSN2744743020080827
By 2008 foreigners owned 14.2 percent of all US industries, including 21.5% of mining, 25% of manufacturing, 30.2% of wholesale trade, 12% of information industries, 12% of real estate, 15% of finance and insurance, 25% of professional, scientific, and technical services, 11% of entertainment and recreation and 11% of accommodation and food services, according to a report from Economy In Crisis. http://americawakeup.net/ownership
Numerous famous American brand names now are companies owned by foreigners.
Budweiser belongs to a Dutch company. Alka Seltzer belongs to a German company.
Firestone belongs to a Japanese company. The magazines Car and Driver and Woman's Day are owned by a French company. Gerber baby food and Purina dog food belong to Swiss companies. Hellman's Mayonnaise and Ben & Jerry's ice cream belong to UK companies. Many thousands of former US companies have moved into foreign control as a result of the US trade deficit, which is swollen by the offshored production of US corporations.
The policy of chasing lowest labor cost abroad, that is, of pursuing absolute advantage, the antithesis of comparative advantage which is the basis of free trade, is the redirection of US profits, capital gains, rents, interest, parking meter and toll road fees into foreign hands.
Thus, there is a high social cost from corporate executives pursuing short-term profits in order to maximize their performance bonuses. The profits from offshored production are not indications of economic efficiency and social welfare. Most likely, the social costs to the US of offshored production are larger than the profits gained, making jobs offshoring a net loss to the US economy. There is little doubt that the social costs of GMOs exceed the profits of Monsanto.
But don't expect mainstream economists to pay any attention. They are still waxing eloquently about the advantages of Globalism's gift of the New Economy of high unemployment and low wages, financial crisis and dollar erosion. http://rt.com/usa/dollar-danger-as-world-currency-977/
http://www.silverbearcafe.com/private/05.13/socialcost.html
Hon. Paul Craig Roberts is the John M. Olin Fellow at the Institute for Political Economy, Senior Research Fellow at the Hoover Institution, Stanford University, and Research Fellow at the Independent Institute. A former editor and columnist for The Wall Street Journal and columnist for Business Week and the Scripps Howard News Service, he is a nationally syndicated columnist for Creators Syndicate in Los Angeles and a columnist for Investor's Business Daily. In 1992 he received the Warren Brookes Award for Excellence in Journalism. In 1993 the Forbes Media Guide ranked him as one of the top seven journalists.
He was Distinguished Fellow at the Cato Institute from 1993 to 1996. From 1982 through 1993, he held the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies. During 1981-82 he served as Assistant Secretary of the Treasury for Economic Policy. President Reagan and Treasury Secretary Regan credited him with a major role in the Economic Recovery Tax Act of 1981, and he was awarded the Treasury Department's Meritorious Service Award for "his outstanding contributions to the formulation of United States economic policy." From 1975 to 1978, Dr. Roberts served on the congressional staff where he drafted the Kemp-Roth bill and played a leading role in developing bipartisan support for a supply-side economic policy.
Don't Listen To Pundits That Overhype The Lumber Price Correction
May 31 2013
Teenie Cap Research
There have recently been several articles published on sites such as Sum Zero and Business Insider about "Lumber prices plunging to 5 month lows" while housing prices continue to uptick. As Tyler Durden puts it, "we are left assuming that they are building houses with hopium, as opposed to wood, these days..."
Business InsiSoberlook published this chart which makes it look like Lumber prices are taking a major hit.
(click to enlarge)
If you look at a longer picture though, lumber prices are still high relative to historical prices:
(click to enlarge)
Although lumber prices have come off recent highs (which were also near decade highs) by about 25%, they are still near prices not seen since 2006.
As Nate Silver points out in his book "The Signal and the Noise", sometimes short term data is just noise and needs to be ignored.
Lumber ETF's such as CME Random Length Lumber Futures (LB), Claymore/Clear Global Timber ETF (CUT), iShares S&P Global Timber & Forestry ETF (WOOD) have all remained near 52 week highs despite the recent pullback in lumber prices highlighting investors' confidence in the industry.
US lumber REIT Plum Creek Timber (PCL) has only retreated about 10% which is considerably less than lumber prices and is still up by over 25% over the last year.
I wouldn't write off the housing recovery due to a small short term correction in the lumber market though in my opinion there are for more troubling charts such as the Baltic Dry Index and Uranium SWU prices which I would like to see recover before betting on a full economic recovery.
http://seekingalpha.com/article/1473051-don-t-listen-to-pundits-that-overhype-the-lumber-price-correction
Gold Update - A Plague Of Experts
May 30 2013
Peter Tenebrarum
SeekingAlpha
As we have pointed out on previous occasions, there has been a "full court press" in the financial media against gold. It is amazing that an alleged barbarous relic of no particular importance (according to Fed chief Bernanke, the U.S. treasury only hangs on to its gold due to a kind of misguided nostalgia -- i.e., because it's a tradition) all of a sudden receives so much attention.
It is noteworthy in this context that it garnered far less attention while its price went up. Today we regularly hear people holding forth about gold we have never heard from before. They only popped up once it broke through technical support and suffered a mini crash. Evidently here was a nest of gold bears somewhere -- and most of them appear woefully uninformed about the gold market. However, that hasn't kept the financial press from publishing their screeds. It should also be pointed out in this context that so far, the low established in the course of the mid-April crash continues to hold. All the bearish forecasts published since then have yet to prove their worth.
As we have mentioned as well, it is certainly possible to construct a valid bearish argument for gold. It is possible with regard to every financial asset at any point in time to fashion both bullish and bearish arguments that have at least theoretical validity. One can then contrast the bullish and bearish arguments and try to figure out which of them are likely to gain the upper hand.
Even that exercise is fraught with many uncertainties, especially in the short to medium term (it is much easier to come to conclusions about longer term outcomes). This is because we cannot know in advance which issues market participants will focus on in the short term. For instance, stock markets have risen in bubble-like fashion to a level of overvaluation on a par with the valuations seen at previous historical peaks, in spite of a very weak economy and a notable decline in earnings growth rates. This mainly happened because investors chose to focus on the 'eternal' Bernanke put instead of on the rather bleak underlying reality.
Dubious Arguments
In any event, the point we want to make is that many of the arguments that have been forwarded in recent weeks by gold bears make no sense whatsoever. Let us look at a few recent examples that weren't produced by unknown scribblers, but by the gold analysts of major banking institutions. For instance, Barron's reports on a recent analysis by Commerzbank:
The steady exit from gold exchange-traded funds is as good a barometer as any for today’s low investment appetite for the metal. But here’s another way of looking at the outflows: Versus the size of central-banks’ gold buying.
For some analysts, ETFs have grown so important that central banks’ activities are now something of an afterthought. Commerzbank’s strategists lay out the numbers this morning. Central banks bought about 30 tons of gold during April. So far in May, investors have pulled out the equivalent of 117 tons from ETFs like SPDR Gold Trust (GLD) and iShares Gold Trust (IAU). They’ve yanked more than 290 since the start of the quarter, according to the same figures. '[T]he 30 tons or so of gold purchased by central banks in April -- as we reported yesterday -- thus appear to be but a drop in the ocean,' write the firm’s strategists in a morning note. (emphasis added)
What is missing here is a mention that the "290 tons yanked from ETFs" are a drop in the ocean as well. As we have pointed out many times, the buying and selling by central banks and gold ETFs is essentially immaterial to gold's price. It is just as immaterial as variations in the mine supply are. It simply makes no sense at all to focus on these data when trying to analyze gold. The total supply of gold is an estimated 175,000 tons. On the LBMA alone, as much gold is traded every three to four days as is supplied by mines in an entire year. Anyone who is looking at the paltry amounts ETF and central banks buy or sell in a period of three months is trying to analyze gold as if it were an industrial commodity. However, gold is not an industrial commodity, it is first and foremost a monetary commodity.
Gold must therefore akin to a currency and must be analyzed in a similar manner. Since the biggest component of gold demand is the reservation demand of current gold holders, one can only indirectly arrive at conclusions as to whether gold is more likely to rise or fall in the medium term (that its price will rise in the long term in terms of fiat confetti is a given, since the supply of the latter is always expanded at a far greater rate).
The notion that ETF sales are relevant to the gold price was also repeated in a bearish analysis released by Credit Suisse on Wednesday. Credit Suisse has the distinction of having turned bearish on gold before its recent swoon, but nevertheless several of its arguments demand rebuttal. All the talk about 450 tons of gold being sold here and absorbed there can be safely ignored of course, as can the notion that gold was in a bubble (we have already explained why gold is far from bubble territory). We will therefore only look at the more nuanced arguments.
“The rationale behind the February call was Credit Suisse’s sense that the most fear-inducing chapter of the post-2008 crash environment began to draw to a close after the European Central Bank’s July 2012 decision to finally commit to being the lender of last resort to help the eurozone weather its debt crisis. The cornerstone for a slow recovery was finally in place, which undercut gold’s fear-based allure.
To this we would note that it is true that a fear premium that was embedded in gold's price has been taken away after the market's worst fears regarding the probability of euro area sovereign defaults receded. To think that the central bank somehow put in place the cornerstone for a slow recovery is however erroneous. Central economic planning hasn't suddenly begun to work as if by magic. Moreover, it is far from certain that the debt crisis is over. Let us not forget, the Draghi OMT put has yet to be put to the test.
'Behind the latest call, published last week, is that the other major motivation for buying gold since the crisis—namely to hedge against inflation in the face of rapid expansion of central bank balance sheets, simply hasn’t been necessary. In fact, it’s been difficult to create any inflation at all, and a significant increase in the velocity of all the money sloshing around in the economy has not yet come to pass.
Financial markets have decided that the remaining risks can be navigated in relative safety and so a growing number of investors think the opportunity cost of gold is too high a price to pay,' the report said.”(emphasis added)
The opportunity cost of holding gold remains actually a strongly bullish factor, as real interest rates (nominal rates minus inflation expectations) remain deeply negative. So this is a spurious argument. As to the idea that the need to hedge against inflation as somehow disappeared, this is preposterous. The need has rarely been greater. The Fed has inflated the true US money supply by 80% since 2008 and continues to inflate it at a brisk rate. The fact that officially reported CPI hasn't increased much is not relevant in this context. For one thing, CPI has been tame throughout gold's bull market to date. It seems highly likely that it will eventually rise strongly, but the time lag involved can be very large -- very often many years, even decades can pass before a vast increase in the money supply brings about a notable rise in final goods prices.
With regards to velocity, this is simply an erroneous concept. It is far more accurate to speak about the demand for money. Velocity is nothing but a fudge factor that is used in the tautological equation of exchange of the Fisherian quantity theory of money. When this so-called velocity is deemed to be low, what is really happening is that the demand to hold cash balances is high. However, a high demand for holding cash balances is not a bearish factor for the gold price, but a bullish one. This is so because gold is a substitute for cash holdings. Anyone holding gold is essentially holding cash in form of another currency. In short, what CS believes to be a bearish argument is really a bullish one. The remainder of CS's argument concerns itself with deliberations about ETF selling, which as we have pointed out above is simply nonsensical from the outset.
If this is all the bears can come up with, you should buy gold with both hands. As far as we are concerned, a bearish argument that may have some validity is that the rate of growth of the U.S. budget deficit is declining. However, as we have previously discussed, the current budget deficit estimates may prove to be overoptimistic, as there was a large one-off effect occasioned by people rushing to take capital gains and corporations distributing dividends prior to the tax hikes instituted earlier this year. Moreover, the budget is highly sensitive to bubble revenue. If the stock market bubble should falter, a large source of revenue (capital gains tax) will disappear.
Another bearish argument that deserves consideration is the fact that gold has stopped reacting positively to what should, on the surface at least, be bullish news. However, this can probably be explained by the fact that the perceptions regarding declining risk of sovereign defaults in the euro area have removed some of the risk premium that was previously embedded in gold's price. Now that this premium is gone, the market is once again free to take other factors into account.
Conclusion
The gold bears should really think of a few better reasons if they want to make a bearish case for gold that stands up to scrutiny. Several of the most important drivers of the gold price remain very bullish, among them negative real interest rates, a brisk expansion of the money supply and the piling up of ever greater risks in the debt and other risk asset markets.
To be sure, there are a few bearish arguments that deserve consideration, but in our opinion they hold less water than the bullish arguments at this stage. This is further buttressed by recent developments on the technical front.
Addendum: Gold in 2013 Vs. Gold In 1976
Ironically, the Commerzbank analysis included a comparison of the 1976 correction pattern with the 2013 correction pattern, which according to the analysts should best be ignored. We will reproduce it anyway:
(click to enlarge)
The above chart shows gold's 1976 correction pattern compared to the 2013 pattern. As Barron's notes: "The firm isn’t reading much into it and makes a point of calling it 'not something to trade on.'" To this we say: We shall see. (Chart via Commerzbank.)
http://seekingalpha.com/article/1472251-gold-update-a-plague-of-experts