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Gold Manipulation, Part 2: How They Do It (And How To Hedge It)
Submitted by Tyler Durden on 02/26/2013
by Martin Sibileau of A View from the Trenches blog,
This is the second of three articles I am posting on the suppression of gold. In the first article I showed that, under mainstream economic theory, the suppression of the gold market is not a conspiracy theory, but a logical necessity, a logical outcome. This second article will show how that suppression takes place. Those familiar with the gold market will likely find nothing new. The third article will examine the implications of this suppression and support the claim of the gold bugs, namely that physical gold will trade at a premium over fiat gold or gold paper is also not a conspiracy theory, but the logical outcome of the current paradigm.
How they do it: The concept
The popular notion, which central bankers would love to destroy, is that gold is a good hedge against inflation. In its simplest form, gold cannot be printed and, as its supply remains anchored, its price should spike if the supply of fiat money increases. The implicit math behind can be represented as follows:
Given a constant demand for money…
Cont...
http://www.zerohedge.com/news/2013-02-26/guest-post-gold-manipulation-part-2-how-they-do-it-and-how-hedge-it
No Way Fed Will Stop Easing: Jim Richards
02/25/2013
Video Link:
http://www.kitco.com/KitcoNewsVideo/index.html?v=13-02-25_James_Rickards_1
No Way Fed Will Stop Easing: Jim Richards
02/25/2013
Video Link:
http://www.kitco.com/KitcoNewsVideo/index.html?v=13-02-25_James_Rickards_1
CFTC Cuts Deal with Precious Metals Scammers
Tuesday February 26, 2013, 4:15am PST
By Michelle Smith - Exclusive to Silver Investing News
Four precious metals firms and three people were recently charged with engaging in illegal precious metals transactions. These activities were part of a multimillion-dollar scheme. Those initially implicated in the scam are “defendants” in a lawsuit filed by the US Commodity Futures Trading Commission (CFTC). The latest group of alleged fraudsters are mere “respondents,” to regulatory orders, as they struck deals with the regulators.
Barclay Metals and Universal Clearing were purportedly precious metals firms on Wall Street. In actuality, these corporations were operated in Florida and were never registered with the commission.
Secured Precious Metals International, a Delaware corporation that was also operated in Florida, and Secured Precious Metals Management, an actual Florida corporation, were also never registered with the commission.
The CFTC has charged these four firms and their owners with engaging in illegal off-exchange financed transactions.
Under the scheme, Barclay Metals and Secured Precious Metals International solicited a leveraged purchase program. Customers were led to believe that they could purchase silver, gold and other metals by paying as little as 20 percent of the purchase price. The remaining portion was allegedly financed by Secured Precious Metals International and Barclay. The metal was then supposedly stored on the customers’ behalf at an independent depository.
Under Dodd-Frank, financed retail commodity transactions must be executed in accordance with the rules of a board of trade, and then only by qualified parties.
In these cases, those requirements were not met, so the CFTC found them to be illegal.
Furthermore, while money was collected from customers, according to the CFTC, trades were never made. The money was instead given to Hunter Wise.
Hunter Wise refers to group of companies — and their principals — that operated as a common enterprise, according to the CFTC. Its business was supposed to be precious metals trading, but regulators allege that these unregistered entities were really “the orchestrator” of a precious metals scheme that is estimated to have brought in at least $46 million thanks to “dealers” such as the aforementioned parties who operated in Florida.
In December, the CFTC filed a lawsuit against Hunter Wise and other companies and individuals for participation in this scam. The announcement portrayed the actions in a very negative fashion, with the agency expressly alleging fraud and deception.
With regards to the latest actions, the CFTC clearly notes that the parties engaged in the same type of behavior. In addition to outlining how they intercepted money on false pretenses, the CFTC notes that “[t]he Respondents’ retail customers never owned, possessed, or received title to the physical commodities that they believed they purchased, no funds were expended by Respondents or Hunter Wise to purchase physical commodities for the customers and no physical commodities were stored for the customers.”
Yet, the acts of the those most recently implicated are portrayed in a much different light. They are not described as deceptive or fraudulent. The only time the word “fraud” is used is when describing the goals of Dodd-Frank. The regulators try to paint the main issue as the failure to comply with the trading rules — not the scamming of individuals.
The benefits of snitching
This change in presentation appears to be one of the benefits of a practice commonly referred to as “snitching.” And it not only has the ability to alter regulators’ vocabulary and focus, but also seems to have the ability to minimize the action they take.
The CFTC agreed to settle these recently announced cases without requiring any admission or denials from the respondents. The terms of that agreement prohibit the parties from directly or indirectly making public statements denying the CFTC’s findings. The parties must also agree to stop engaging in illegal activities and are barred from trading for five years.
Furthermore, they agreed to cooperate “fully and expeditiously” with the CFTC in this action and any action related to the subject matter, including testifying.
The CFTC’s orders, which do not include civil monetary penalties, acknowledge the respondents’ substantial cooperation, the CFTC’s press release states.
In the previous Hunter Wise case, which named 20 defendants, the CFTC announced continuing litigation as the agency is seeking preliminary and permanent civil injunctions and remedial relief, including restitution to customers.
David Meister, the CFTC’s Director of Enforcement, said “[h]ere is a prime example of how the Dodd-Frank Act provided the Commission with additional strong authority to go after wrong-doers, such as, as alleged in the complaint, individuals who prey on people looking to make retail investments in commodities like gold and silver. We will use this new authority to the fullest extent possible.”
Regulators have now shown they can pick and choose when they will stand behind those words. That certainly cannot be encouraging for those who have long waited for the CFTC to take a stand against major firms who are believed to be manipulating the precious metal markets.
Securities Disclosure: I, Michelle Smith, hold no direct investment interest in any company mentioned in this article.
http://silverinvestingnews.com/15840/cftc-cuts-deal-with-precious-metals-scammers.html
APMEX Reports Sales Spike on eBay Bullion Center
February 25, 2013
Last Wednesday, with New York gold down over $40 per ounce, even long time gold bulls were advising caution before committing to further investment. Some precious metals dealers reported a flood of panic selling by anxious investors who were unloading physical coin and bar.
With everyone fearful of lower prices, exactly who was buying all that gold and silver from panicked investors?
Michael Haynes, CEO of APMEX, one of the countries largest precious metals dealers, said "As gold and silver prices continue to drop, long-term investors immediately reacted to the market movement. Recognizing that the precious metals were on sale and at a discount relative to the expected future values, buyers of physical bullion increased purchasing at the APMEX Bullion Center on eBay."
Michael Haynes explained further.
"This was the second largest selling day for the APMEX Bullion Center on eBay since inception about five months ago, beating the next highest selling day by more than 30%. As Gold and Silver prices fell, heavily influenced by the reaction of day traders to the minutes from the recent Federal Reserve Open Market Committee meeting, physical sales of both metals skyrocketed. Buyers of physical Gold and Silver have a moderate to long term view and concluded that with the price movements, the precious metals were on sale and at a discount relative to the expected future values. These investors in physical Gold and Silver apparently see the long term issues faced by the U.S. economy and seek some asset allocation into the non-correlated asset class of precious metals to protect and hedge their investments in paper assets like Stocks and Bonds.”
According to APMEX, the top sellers on the Bullion Center are the 1 oz Silver American Eagle, the 1 oz Gold American Eagle, the 5 gram Statue of Liberty Credit Suisse Gold Bar and the 100 oz Royal Canadian Mint Silver Bar.
Every bull market has corrections which offer long term investors the opportunity to add to positions at bargain prices. The high volume of gold and silver purchases on the eBay Bullion Center indicates that mainstream buyers remain committed to precious metals as a method of wealth preservation.
http://goldandsilverblog.com/apmex-reports-sales-spike-on-ebay-bullion-center-0467/
CME Said to Approach Deutsche Boerse to Weigh Deal Talks
By Nandini Sukumar on February 25, 2013
CME Group Inc. (CME), the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.
CME contacted the Frankfurt-based exchange at the end of last year, before IntercontinentalExchange Inc. (ICE) announced plans to buy NYSE Euronext on Dec. 20, said the people, who asked not to be identified as the information is private. Deutsche Boerse, which had its takeover of NYSE Euronext blocked by European regulators a year ago, is hesitant about entering discussions, the people said. Deutsche Boerse said it’s not in merger talks.
A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15 percent this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse gained 4 percent to 48.56 euros at 3:16 p.m. in Frankfurt today, the biggest jump since September, bringing its value to 9.37 billion euros ($12.5 billion).
“The numbers could be very compelling,” Niamh Alexander, an analyst at KBW Inc. in New York, wrote in a report today. “CME dominates futures in rates, commodities, equities and FX in the U.S. and Deutsche Boerse similar products in Europe.”
Business Overlap
Founded in the 19th century, CME’s business spans agricultural, energy, metal and financial futures linked to securities such as corn, oil, gold and interest rates. Deutsche Boerse’s Eurex business is Europe’s largest derivatives exchange, hosting benchmark contracts on German and French government bonds.
After the December approach, CME and Deutsche Boerse met again last month to debate whether to begin formal takeover talks and haven’t yet made a decision, the people said. No offer has been made, nor have terms been discussed, they said.
Frank Herkenhoff, a spokesman for Deutsche Boerse in Frankfurt, and Allan Schoenberg, a spokesman for CME in London, declined to comment. Deutsche Boerse said in a statement it’s not in merger talks with CME.
CME, like IntercontinentalExchange, has expanded in the past decade through deals, buying the Chicago Board of Trade and New York Mercantile Exchange. It unsuccessfully tried to purchase the London Metal Exchange last year. CME also approached NYSE about a deal with its derivatives business, two people familiar with the situation said last month.
‘Antitrust Risk’
“If a merger were to be pursued, the deal could take nine to 12 months to complete,” Peter Lenardos, exchange analyst at RBC Capital Markets in London, wrote in a report today. “We anticipate political and antitrust risk, since the combination would bring together the largest futures exchanges in the U.S. and European markets.”
European Union regulators blocked Deutsche Boerse’s takeover of New York-based NYSE Euro next in February 2012, citing concern that it would harm competition in derivatives and clearing. NYSE Euronext (NYX) operates London-based Liffe, Europe’s second-largest derivatives market.
IntercontinentalExchange’s $8.2 billion agreement to buy NYSE Euronext has ignited a fresh round of talks for exchange companies -- already the subject of $50 billion in attempted takeovers in the past three years.
Hong Kong
Hong Kong Exchanges & Clearing Ltd. (388), the world’s largest bourse by market value, completed the $2.2 billion takeover of the London Metal Exchange in December. Singapore Exchange Ltd. (SGX), the operator of Southeast Asia’s biggest stock market, has held talks to join London Stock Exchange Group Plc (LSE) by buying a stake in LCH.Clearnet Ltd., Europe’s largest clearinghouse, according to three people familiar with the negotiations.
Nasdaq OMX Group Inc. (NDAQ) held preliminary discussions with Carlyle Group LP (CG) about going private before the talks broke down on price, a person with knowledge of the matter said earlier this month.
Japan Exchange Group Inc. (8697), created by the merger of the nation’s two biggest bourses, may consider an alliance or merger with an overseas exchange, Chief Executive Officer Atsushi Saito said on Feb. 5. The company would consider talking with CME, Deutsche Boerse, BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest trading venue, or Korea Exchange Inc., Saito said.
Deutsche Boerse and its rivals have seen trading volumes drop following the global financial crisis of 2008. Traditional exchanges have also lost market share to new venues such as Bats Chi-X Europe.
Deutsche Boerse last week said it set up a committee to consider opportunities in Asia as fourth-quarter earnings before interest and taxes fell 20 percent to to 185.2 million euros. Deutsche Boerse trimmed its dividend on Feb. 5 and said it will cut about 250 jobs to reduce costs.
To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net or @NandiniSukumar on Twitter
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
http://www.businessweek.com/news/2013-02-25/cme-said-to-approach-deutsche-boerse-for-merger-talks
Deutsche Boerse shares soar on rumours of CME merger
Feb., 25, 2013
Shares in German stock market operator Deutsche Boerse soared nearly 12 percent in midday trading on Monday on rumours the company is in merger talks with CME Group in the United States.
Deutsche Boerse shares topped an intraday high of 52.30 euros, a gain of 11.5 percent over the closing share price on Friday.
A company spokesman declined to comment on a newswire report that Chicago-based CME, the world's largest futures exchange, has approached Deutsche Boerse to consider starting talks on a merger.
spm-etb/ric/hd
http://www.globalpost.com/dispatch/news/afp/130225/deutsche-boerse-shares-soar-rumours-cme-merger
CME Said to Approach Deutsche Boerse to Weigh Deal Talks
By Nandini Sukumar on February 25, 2013
CME Group Inc. (CME), the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.
CME contacted the Frankfurt-based exchange at the end of last year, before IntercontinentalExchange Inc. (ICE) announced plans to buy NYSE Euronext on Dec. 20, said the people, who asked not to be identified as the information is private. Deutsche Boerse, which had its takeover of NYSE Euronext blocked by European regulators a year ago, is hesitant about entering discussions, the people said. Deutsche Boerse said it’s not in merger talks.
A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15 percent this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse gained 4 percent to 48.56 euros at 3:16 p.m. in Frankfurt today, the biggest jump since September, bringing its value to 9.37 billion euros ($12.5 billion).
“The numbers could be very compelling,” Niamh Alexander, an analyst at KBW Inc. in New York, wrote in a report today. “CME dominates futures in rates, commodities, equities and FX in the U.S. and Deutsche Boerse similar products in Europe.”
Business Overlap
Founded in the 19th century, CME’s business spans agricultural, energy, metal and financial futures linked to securities such as corn, oil, gold and interest rates. Deutsche Boerse’s Eurex business is Europe’s largest derivatives exchange, hosting benchmark contracts on German and French government bonds.
After the December approach, CME and Deutsche Boerse met again last month to debate whether to begin formal takeover talks and haven’t yet made a decision, the people said. No offer has been made, nor have terms been discussed, they said.
Frank Herkenhoff, a spokesman for Deutsche Boerse in Frankfurt, and Allan Schoenberg, a spokesman for CME in London, declined to comment. Deutsche Boerse said in a statement it’s not in merger talks with CME.
CME, like IntercontinentalExchange, has expanded in the past decade through deals, buying the Chicago Board of Trade and New York Mercantile Exchange. It unsuccessfully tried to purchase the London Metal Exchange last year. CME also approached NYSE about a deal with its derivatives business, two people familiar with the situation said last month.
‘Antitrust Risk’
“If a merger were to be pursued, the deal could take nine to 12 months to complete,” Peter Lenardos, exchange analyst at RBC Capital Markets in London, wrote in a report today. “We anticipate political and antitrust risk, since the combination would bring together the largest futures exchanges in the U.S. and European markets.”
European Union regulators blocked Deutsche Boerse’s takeover of New York-based NYSE Euro next in February 2012, citing concern that it would harm competition in derivatives and clearing. NYSE Euronext (NYX) operates London-based Liffe, Europe’s second-largest derivatives market.
IntercontinentalExchange’s $8.2 billion agreement to buy NYSE Euronext has ignited a fresh round of talks for exchange companies -- already the subject of $50 billion in attempted takeovers in the past three years.
Hong Kong
Hong Kong Exchanges & Clearing Ltd. (388), the world’s largest bourse by market value, completed the $2.2 billion takeover of the London Metal Exchange in December. Singapore Exchange Ltd. (SGX), the operator of Southeast Asia’s biggest stock market, has held talks to join London Stock Exchange Group Plc (LSE) by buying a stake in LCH.Clearnet Ltd., Europe’s largest clearinghouse, according to three people familiar with the negotiations.
Nasdaq OMX Group Inc. (NDAQ) held preliminary discussions with Carlyle Group LP (CG) about going private before the talks broke down on price, a person with knowledge of the matter said earlier this month.
Japan Exchange Group Inc. (8697), created by the merger of the nation’s two biggest bourses, may consider an alliance or merger with an overseas exchange, Chief Executive Officer Atsushi Saito said on Feb. 5. The company would consider talking with CME, Deutsche Boerse, BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest trading venue, or Korea Exchange Inc., Saito said.
Deutsche Boerse and its rivals have seen trading volumes drop following the global financial crisis of 2008. Traditional exchanges have also lost market share to new venues such as Bats Chi-X Europe.
Deutsche Boerse last week said it set up a committee to consider opportunities in Asia as fourth-quarter earnings before interest and taxes fell 20 percent to to 185.2 million euros. Deutsche Boerse trimmed its dividend on Feb. 5 and said it will cut about 250 jobs to reduce costs.
To contact the reporter on this story: Nandini Sukumar in London at nsukumar@bloomberg.net or @NandiniSukumar on Twitter
To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net
http://www.businessweek.com/news/2013-02-25/cme-said-to-approach-deutsche-boerse-for-merger-talks
Fed Action to Prompt Return to Gold Standard: Grant
Feb. 25, 2013
Feb. 25 (Bloomberg) -- James Grant, founder & editor of Grant's Interest Rate Observer, predicts that the result of recent Federal Reserve action will prompt a return to the gold standard for the United States. He speaks on Bloomberg Television's "Bloomberg Surveillance."
( 3 Minute interview)
http://www.bloomberg.com/video/fed-action-to-prompt-return-to-gold-standard-grant-QP9RiAAUQ0aHMjh5c7zh4g.html
Fed Action to Prompt Return to Gold Standard: Grant
Feb. 25, 2013
Feb. 25 (Bloomberg) -- James Grant, founder & editor of Grant's Interest Rate Observer, predicts that the result of recent Federal Reserve action will prompt a return to the gold standard for the United States. He speaks on Bloomberg Television's "Bloomberg Surveillance."
( 3 Minute interview)
http://www.bloomberg.com/video/fed-action-to-prompt-return-to-gold-standard-grant-QP9RiAAUQ0aHMjh5c7zh4g.html
World's Biggest Gold Storage Company Dumps US Citizens
Submitted by Tyler Durden on 02/22/2013 15:09 -0500
Submitted by Simon Black of Sovereign Man blog,
ViaMat, a Swiss logistics company that has been safeguarding precious metals since 1945, is literally the gold standard in secure storage.
They have vaults from Switzerland to Hong Kong to Dubai, and they count among their clients some of the largest mining companies in the world. They know what they’re doing.
And now they’re dumping US citizens.
ViaMat does a great deal of business within the United States. As such, the company is heavily exposed to the insane US regulatory environment.
As an example, the 2010 Foreign Account Tax Compliance Act turned into more than 500 pages of regulation! The costs and risks associated with compliance simply became too much for ViaMat to bear.
This matter-of-fact letter from ViaMat management explains their decision:
“We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the US to private customers with potential US-tax liability.”
This is huge. I can’t possibly overstate the potential ramifications.
For one, the big gold depositories like Gold Money and Bullion Vault ALL use ViaMat as a primary secure storage provider. So it’s only a matter of time before ViaMat’s decision cascades across these other firms.
I have written extensively about this to subscribers of our premium service, Sovereign Man: Confidential; most gold storage firms are all essentially different varieties of the exact same product. They are retail marketing channels that ultimately use ViaMat to store their gold bars. If ViaMat has US exposure, THEY have US exposure. It’s the same risk.
Now, if you’re in the United States in particular, one of the most important (and cost effective) steps you can take in international diversification is to store precious metals overseas.
Gold remains the most effective ‘anti-currency’ out there, a bet against a corrupt financial system and debt-laden sovereign governments. But remember– governments have an unblemished track record of plundering their citizens’ wealth. So if you store your gold in the US, you might as well ask Barack Obama to keep it under his mattress.
If history is any guide, storing gold abroad is critical. And it’s one of those things that you won’t be worse off for doing.
The thing is, it’s equally critical to work with a service provider that has no US exposure.
There are very few options out there. Again, most of the big boys use ViaMat, which has heavy US exposure. Or Brinks, which is a US company.
For nearly a year, I’ve been encouraging our premium subscribers to store their gold with a Singapore-based company that has the most advanced, transparent operation on the planet.
They are 100% Singaporean, and their US regulatory exposure is effectively zero.
They’re also one of the only firms on the planet that actually tests the gold it sells (and stores) through three different methods, including X-ray and ultrasound. This way you know that your gold is, in fact, gold… and not tungsten.
Best of all, they’re launching a new service to receive your existing gold at their facilities in Singapore. So if you’ve just been shut out of ViaMat, or you want to transfer your gold from another facility that has heavy US exposure, these guys will be able to do it.
They are, without a doubt, the best solution out there. And Sovereign Man: Confidential members have received unprecedented discounts and exclusive access to new services offered by this firm.
Storing gold overseas makes sense no matter what happens. And it’s critical to choose a reputable partner with no US exposure. If you agree with this premise and are serious about taking action, I’d encourage you to get started right away with a premium membership. Get the actionable intelligence you need, all backed by our risk-free guarantee.
http://www.zerohedge.com/news/2013-02-22/guest-post-worlds-biggest-gold-storage-company-dumps-us-citizens
Gold And The Potential Dollar Endgame Part 3: Backwardation And Gold
Submitted by Tyler Durden on 02/22/2013 19:24 -0500
Authored by Joe Yasinski and Dan Flynn of Gold Bullion International,
In part one of our series we discussed stock to flow dynamics and their impact on the gold price. To briefly refresh, the stock to flow ratio is simply what percentage of the total stock (all the gold ever mined) is available for sale and this ratio is what determines gold’s price. This is the only relevant ratio when determining gold’s supply. Most analysts myopically stare at mining and scrap supply, yet these are a mere afterthought compared to the existing, and readily saleable gold already spread throughout humanity. The greater the “flow” the greater gold’s availability for purchase and ostensibly, the lower the price and vice versa. In part two of our series we discussed how “paper gold” meaning ETF’s, futures and various derivatives simulate flow where none actually exists. It is our contention that the very existence of this paper flow, rather than metal flow, gives the false impression that there is much more metal available for sale than there actually is. This by definition makes the stock to flow ratio appear to be much lower (more gold available for sale) than actually is and therefore suppresses the price. In the final segment of this series we want to explore an important signal that could identify the demise of paper gold and/or signal a loss of confidence in the $US Dollar and cause an abrupt increase in the stock to flow ratio and the physical gold price.
Before we delve into why backwardation in gold has some very unique and stark implications, let’s first take a moment to understand exactly what backwardation is. While we are at it, we’ll define backwardations mirror twin, contango. Let’s start with contango, since it seems to be the natural state of most commodities not in extremely short supply. The easiest way to visualize contango is to visualize a standard upward sloping yield curve where yield rises as maturity extends. Now visualize the same upward sloping graph but this time representing the price of any particular commodity for delivery out in time. There is first the “spot” price which represents the price paid for any commodity immediately. The farther out you want delivery of your commodity while locking in the price, the higher the cost to do so. Typically, this increase in costs represents a variety of factors of varying influence such as storage costs, time value of money (opportunity cost) etc.
The mirror image of contango is the real subject of this article, and this is called backwardation. Backwardation is the condition where the spot price is higher than the forward price. Backwardation often exists in perishable commodities, right before the harvest. This happens because even though demand is constant throughout the year for a commodity like wheat, the harvest only happens once a year. If you demand delivery right before the harvest, it will be more expensive than taking delivery one month later, after all the grain silos are full. Backwardation is usually a fleeting phenomenon, occurring only when a particular commodity is in short supply and there is great demand for immediate delivery, not in the future.
As discussed in parts 1 and 2 of this series, gold is a unique commodity in that it is not consumed. Gold is certainly not in short supply. Essentially every ounce mined since the dawn of man is scattered around civilization in governmental and private hands. Gold isn’t consumed, it’s hoarded. Estimates of world gold supplies are north of 170,000 tons. So what would backwardation mean in the gold market? If the gold market ever entered backwardation it would offer a seemingly risk free profit opportunity for an arbitrageur. One so inclined would simply sell their gold in the spot market, as it would demand the highest price, and then simultaneously buy a futures contract at a lower price for delivery at a future date. Logically, in an efficient and functioning market enough people would “sell spot gold” and “buy future gold” that the spot price would go down, future prices would go up and the backwardation would disappear. That’s how markets are supposed to work, they take advantage of risk free profits and they disappear. So if and when we see gold in backwardation, it should be considered something like a fire alarm for the system. Something serious is happening. Investors would be rejecting what should be a “risk free” profit opportunity. We would like to suggest two (not mutually exclusive) causes: 1) the threat of counterparty failure and/or 2) loss of confidence in the $US Dollar.
The first implication of gold in backwardation is straightforward and easy to understand. The market is pricing in significant counterparty risk of failure to deliver gold in the future. The paper gold market is highly leveraged and functions as long as participants have confidence in the ability of counterparties to deliver on their contractual obligations. It is interesting to note that the gold market has experienced brief periods of backwardation dating back to the mid-1990s. It is easy to identify the factors of market stress that caused those incidents of gold backwardation in the first place. Several academics as wells as gold analysts and commentators have pointed to these events. Of the several periods of backwardation in the gold market, two of the most interesting and significant followed the September, 1999 Central Bank “Washington Agreement” on Gold and more recently during the dark days of the 2008 financial crisis. In both instances we believe the primary force causing gold backwardation was near catastrophic collapse in counterparty viability.
The Washington Agreement (European Central Bank , 1999) was announced on September 26, 1999 by 15 European Central Banks. As summarized by the World Gold Council, “… they stated that gold would remain an important element of global monetary reserves, and agreed to limit their collective sales to 2,000 tonnes over the following five years, or around 400 tonnes a year. They also announced that their lending and use of derivatives would not increase over the same five-year period. The signatory banks later stated that the total amount of their gold they had out on lease in September 1999 was 2,119.32 tonnes. (World Gold Council, 2013). There is strong anecdotal evidence (VtC, 2012) that for the decade prior or longer, Central Banks had been the primary suppliers of gold and therefore served as a backstop to the rapidly expanding paper gold market. Based on the market reaction immediately following the WAG, the evidence is even more compelling. Given that the signatories of the WAG controlled approximately 45% of global gold reserves, it’s not surprising that in announcing a formal reduction of supply/flow into the market, the price of gold to exploded higher. Real supply was constrained impacting the STF ratio. Further, leveraged paper gold participants scrambled as they realized the previous implied Central Bank backing was going away. Counterparty Risk became real and gold went into backwardation. A large holder of paper gold had to question whether or not his counterparty (bullion bank) would really be able to deliver without official support. What would have previously offered a “risk free” arbitrage opportunity was now a rapidly unwinding collapse. There is wide speculation and some documentation that the panic was not contained until the US (who did not sign the WAG) and the UK stepped forward to supply the market with the needed physical gold to meet the run:
“In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999: George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K." (GATA, 2003)
Now fast forward to the dark days of the 2008 financial crisis. After the September 15, 2008 collapse of Lehman Brothers, a daisy chain of bank defaults seemed inevitable. As paper gold is only as good as the bullion bank selling it, it’s no surprise that again the gold market went into backwardation. This time, however, the price of (paper) gold was not rising. It was falling – and falling fast. During October and November of 2008, the price of gold fell by 20%. Is it possible that this falling gold price was signaling something deeper than potential bank failure? (FOFOA, 2013) We think it is certainly possible, and believe the second implication for gold backwardation is a collapse in confidence in the $US Dollar itself. As pointed out in an April 2011 interview with legendary gold, currency, and commodity investor Jim Sinclair, the Lehman collapse changed the game forever and may have set the stage for the final act in US Dollar hegemony:
“Before the failure of Lehman Brothers, OTC derivatives losses would have almost netted out to zero. You can consider derivatives like a string in a circle with various knots representing all the derivatives transactions. When Lehman went broke, the string broke. When Lehman couldn’t meet its obligations on derivatives, they could no longer be netted out to zero. That’s why the banks went down, and that’s why you had the government bailouts and quantitative easing.” (Sinclair, 2011)
Given the nature of today’s gold market with paper dominating physical flow, it makes sense to us that backwardation driven by a failing $US Dollar could initially coincide with a rapidly falling price of gold. Although this statement may seem counterintuitive, it is important to remember what we discussed in part 2 of this series. The paper gold market dwarfs the physical gold market in size, perhaps 15 or 20 to 1. Today, there is no meaningful separation in the price of physical gold and paper gold. Because paper gold supplies the marginal flow in the gold market, it sets the price. And consider for a moment Exter’s Pyramid:
If true that Lehman was the tipping point that put the global financial system on the brink, a rational response on the part of a paper gold holder (a derivative/financial contract) is not to wait and hope for an allocation or delivery of physical. Instead, the response is to sell immediately and move lower on the inverted pyramid. From central banks to individual savers, we see this happening every day. As the price of paper gold (and physical as there was no Comex/LBMA collapse) fell, real estate, corporate and muni bonds, and stocks fell. Even if the endgame is a dollar collapse, we would expect to first see a rally in US Treasuries and demand for cash, which we did. Further, towards the inverted apex of the pyramid there is ample anecdotal evidence that premiums on physical gold had begun to widen and in some local markets there was very tight supply – so perhaps we were witnessing what many physical gold advocates have been suggesting would ultimately occur. We believe that there were some interesting differences between the gold backwardation of 1999 and 2008.
Academics such as Professor Antal Fekete made a call for the imminent demise of the international monetary system. (Fekete, 2008) and based on his studies of the gold basis believed that gold was entering permanent backwardation. So what would extended or permanent backwardation imply? According to Prof Antal Fekete, “gold going into permanent backwardation means that gold is no longer for sale at any price, whether it is quoted in dollars, yens, euros, or Swiss francs. The situation is exactly the same as is has been for years: gold is not for sale at any price quoted in Zimbabwe currency, however high the quote is. To put it differently, all offers to sell gold are being withdrawn, whether it concerns newly mined gold, scrap gold, bullion or coined gold.”
Dollars would be bidding for gold, but gold simply wouldn’t be accepting dollar bids. This would imply a gold price of zero or infinity, take your pick. Since physical gold would no longer be convertible into dollars.
But as we know, 2009 brought a massive effort on the part of Central Banks and Governments the world over in order to restore confidence in the system. Only through this massive intervention were the markets able to steady themselves. Although damaged, things on the surface seemed to recover and Fekete’s and others calls for $US Dollar collapse seemed premature at best. It seemed that backwardation had subsided.
Today, we encounter investors and speculators that believe many of the issues facing the markets in 2008 have been resolved. To the extent that they have a position in gold, it tends to be a trade with paper gold. Some believe that they will be able to look at various metrics measuring the level of stress in the gold market or even backwardation and “know” when it is time to move to physical. Whether it is evaluating swaps, gold leases, or various versions of calculating the gold basis – they all have their crystal balls. One way of monitoring this is what’s called the GOFO (Gold Forward Offer Rate.) The GOFO rate is defined by the London Bullion Metal Association (LBMA) as… “Gold Forward Offered Rate - these are rates at which contributors are prepared to lend gold on a swap against US Dollars.”
In layman’s terms, the GOFO is the rate someone will loan you dollars on gold collateral. The GOFO rate will be lower than the rate of an uncollaterized loan and should always be positive, meaning costs more to borrow US Dollars than it does gold. If this rate were to ever go negative it would mean that gold is more precious than dollars. Essentially gold would be removing its bid for dollars. For physical gold owners searching for clues to tightness and demand in the physical market, they would be wise to keep a sharp eye on these metrics. It is our belief that this is happening, right now. Money is moving down Exter’s pyramid and while the final denouement may be days, weeks, months or years off, we are certain it would be preferable to be years early as opposed to a day late.
What do you view as a risk-free asset? The US Dollar? If the next global financial fire is coming, how confident are you that your alarm is working?
http://www.zerohedge.com/news/2013-02-22/gold-and-potential-dollar-endgame-part-3-backwardation-and-gold
Gold And The Potential Dollar Endgame Part 3: Backwardation And Gold
Submitted by Tyler Durden on 02/22/2013 19:24 -0500
Authored by Joe Yasinski and Dan Flynn of Gold Bullion International,
In part one of our series we discussed stock to flow dynamics and their impact on the gold price. To briefly refresh, the stock to flow ratio is simply what percentage of the total stock (all the gold ever mined) is available for sale and this ratio is what determines gold’s price. This is the only relevant ratio when determining gold’s supply. Most analysts myopically stare at mining and scrap supply, yet these are a mere afterthought compared to the existing, and readily saleable gold already spread throughout humanity. The greater the “flow” the greater gold’s availability for purchase and ostensibly, the lower the price and vice versa. In part two of our series we discussed how “paper gold” meaning ETF’s, futures and various derivatives simulate flow where none actually exists. It is our contention that the very existence of this paper flow, rather than metal flow, gives the false impression that there is much more metal available for sale than there actually is. This by definition makes the stock to flow ratio appear to be much lower (more gold available for sale) than actually is and therefore suppresses the price. In the final segment of this series we want to explore an important signal that could identify the demise of paper gold and/or signal a loss of confidence in the $US Dollar and cause an abrupt increase in the stock to flow ratio and the physical gold price.
Before we delve into why backwardation in gold has some very unique and stark implications, let’s first take a moment to understand exactly what backwardation is. While we are at it, we’ll define backwardations mirror twin, contango. Let’s start with contango, since it seems to be the natural state of most commodities not in extremely short supply. The easiest way to visualize contango is to visualize a standard upward sloping yield curve where yield rises as maturity extends. Now visualize the same upward sloping graph but this time representing the price of any particular commodity for delivery out in time. There is first the “spot” price which represents the price paid for any commodity immediately. The farther out you want delivery of your commodity while locking in the price, the higher the cost to do so. Typically, this increase in costs represents a variety of factors of varying influence such as storage costs, time value of money (opportunity cost) etc.
The mirror image of contango is the real subject of this article, and this is called backwardation. Backwardation is the condition where the spot price is higher than the forward price. Backwardation often exists in perishable commodities, right before the harvest. This happens because even though demand is constant throughout the year for a commodity like wheat, the harvest only happens once a year. If you demand delivery right before the harvest, it will be more expensive than taking delivery one month later, after all the grain silos are full. Backwardation is usually a fleeting phenomenon, occurring only when a particular commodity is in short supply and there is great demand for immediate delivery, not in the future.
As discussed in parts 1 and 2 of this series, gold is a unique commodity in that it is not consumed. Gold is certainly not in short supply. Essentially every ounce mined since the dawn of man is scattered around civilization in governmental and private hands. Gold isn’t consumed, it’s hoarded. Estimates of world gold supplies are north of 170,000 tons. So what would backwardation mean in the gold market? If the gold market ever entered backwardation it would offer a seemingly risk free profit opportunity for an arbitrageur. One so inclined would simply sell their gold in the spot market, as it would demand the highest price, and then simultaneously buy a futures contract at a lower price for delivery at a future date. Logically, in an efficient and functioning market enough people would “sell spot gold” and “buy future gold” that the spot price would go down, future prices would go up and the backwardation would disappear. That’s how markets are supposed to work, they take advantage of risk free profits and they disappear. So if and when we see gold in backwardation, it should be considered something like a fire alarm for the system. Something serious is happening. Investors would be rejecting what should be a “risk free” profit opportunity. We would like to suggest two (not mutually exclusive) causes: 1) the threat of counterparty failure and/or 2) loss of confidence in the $US Dollar.
The first implication of gold in backwardation is straightforward and easy to understand. The market is pricing in significant counterparty risk of failure to deliver gold in the future. The paper gold market is highly leveraged and functions as long as participants have confidence in the ability of counterparties to deliver on their contractual obligations. It is interesting to note that the gold market has experienced brief periods of backwardation dating back to the mid-1990s. It is easy to identify the factors of market stress that caused those incidents of gold backwardation in the first place. Several academics as wells as gold analysts and commentators have pointed to these events. Of the several periods of backwardation in the gold market, two of the most interesting and significant followed the September, 1999 Central Bank “Washington Agreement” on Gold and more recently during the dark days of the 2008 financial crisis. In both instances we believe the primary force causing gold backwardation was near catastrophic collapse in counterparty viability.
The Washington Agreement (European Central Bank , 1999) was announced on September 26, 1999 by 15 European Central Banks. As summarized by the World Gold Council, “… they stated that gold would remain an important element of global monetary reserves, and agreed to limit their collective sales to 2,000 tonnes over the following five years, or around 400 tonnes a year. They also announced that their lending and use of derivatives would not increase over the same five-year period. The signatory banks later stated that the total amount of their gold they had out on lease in September 1999 was 2,119.32 tonnes. (World Gold Council, 2013). There is strong anecdotal evidence (VtC, 2012) that for the decade prior or longer, Central Banks had been the primary suppliers of gold and therefore served as a backstop to the rapidly expanding paper gold market. Based on the market reaction immediately following the WAG, the evidence is even more compelling. Given that the signatories of the WAG controlled approximately 45% of global gold reserves, it’s not surprising that in announcing a formal reduction of supply/flow into the market, the price of gold to exploded higher. Real supply was constrained impacting the STF ratio. Further, leveraged paper gold participants scrambled as they realized the previous implied Central Bank backing was going away. Counterparty Risk became real and gold went into backwardation. A large holder of paper gold had to question whether or not his counterparty (bullion bank) would really be able to deliver without official support. What would have previously offered a “risk free” arbitrage opportunity was now a rapidly unwinding collapse. There is wide speculation and some documentation that the panic was not contained until the US (who did not sign the WAG) and the UK stepped forward to supply the market with the needed physical gold to meet the run:
“In front of 3 witnesses, Bank of England Governor Eddie George spoke to Nicholas J. Morrell (CEO of Lonmin Plc) after the Washington Agreement gold price explosion in Sept/Oct 1999: George said "We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K." (GATA, 2003)
Now fast forward to the dark days of the 2008 financial crisis. After the September 15, 2008 collapse of Lehman Brothers, a daisy chain of bank defaults seemed inevitable. As paper gold is only as good as the bullion bank selling it, it’s no surprise that again the gold market went into backwardation. This time, however, the price of (paper) gold was not rising. It was falling – and falling fast. During October and November of 2008, the price of gold fell by 20%. Is it possible that this falling gold price was signaling something deeper than potential bank failure? (FOFOA, 2013) We think it is certainly possible, and believe the second implication for gold backwardation is a collapse in confidence in the $US Dollar itself. As pointed out in an April 2011 interview with legendary gold, currency, and commodity investor Jim Sinclair, the Lehman collapse changed the game forever and may have set the stage for the final act in US Dollar hegemony:
“Before the failure of Lehman Brothers, OTC derivatives losses would have almost netted out to zero. You can consider derivatives like a string in a circle with various knots representing all the derivatives transactions. When Lehman went broke, the string broke. When Lehman couldn’t meet its obligations on derivatives, they could no longer be netted out to zero. That’s why the banks went down, and that’s why you had the government bailouts and quantitative easing.” (Sinclair, 2011)
Given the nature of today’s gold market with paper dominating physical flow, it makes sense to us that backwardation driven by a failing $US Dollar could initially coincide with a rapidly falling price of gold. Although this statement may seem counterintuitive, it is important to remember what we discussed in part 2 of this series. The paper gold market dwarfs the physical gold market in size, perhaps 15 or 20 to 1. Today, there is no meaningful separation in the price of physical gold and paper gold. Because paper gold supplies the marginal flow in the gold market, it sets the price. And consider for a moment Exter’s Pyramid:
If true that Lehman was the tipping point that put the global financial system on the brink, a rational response on the part of a paper gold holder (a derivative/financial contract) is not to wait and hope for an allocation or delivery of physical. Instead, the response is to sell immediately and move lower on the inverted pyramid. From central banks to individual savers, we see this happening every day. As the price of paper gold (and physical as there was no Comex/LBMA collapse) fell, real estate, corporate and muni bonds, and stocks fell. Even if the endgame is a dollar collapse, we would expect to first see a rally in US Treasuries and demand for cash, which we did. Further, towards the inverted apex of the pyramid there is ample anecdotal evidence that premiums on physical gold had begun to widen and in some local markets there was very tight supply – so perhaps we were witnessing what many physical gold advocates have been suggesting would ultimately occur. We believe that there were some interesting differences between the gold backwardation of 1999 and 2008.
Academics such as Professor Antal Fekete made a call for the imminent demise of the international monetary system. (Fekete, 2008) and based on his studies of the gold basis believed that gold was entering permanent backwardation. So what would extended or permanent backwardation imply? According to Prof Antal Fekete, “gold going into permanent backwardation means that gold is no longer for sale at any price, whether it is quoted in dollars, yens, euros, or Swiss francs. The situation is exactly the same as is has been for years: gold is not for sale at any price quoted in Zimbabwe currency, however high the quote is. To put it differently, all offers to sell gold are being withdrawn, whether it concerns newly mined gold, scrap gold, bullion or coined gold.”
Dollars would be bidding for gold, but gold simply wouldn’t be accepting dollar bids. This would imply a gold price of zero or infinity, take your pick. Since physical gold would no longer be convertible into dollars.
But as we know, 2009 brought a massive effort on the part of Central Banks and Governments the world over in order to restore confidence in the system. Only through this massive intervention were the markets able to steady themselves. Although damaged, things on the surface seemed to recover and Fekete’s and others calls for $US Dollar collapse seemed premature at best. It seemed that backwardation had subsided.
Today, we encounter investors and speculators that believe many of the issues facing the markets in 2008 have been resolved. To the extent that they have a position in gold, it tends to be a trade with paper gold. Some believe that they will be able to look at various metrics measuring the level of stress in the gold market or even backwardation and “know” when it is time to move to physical. Whether it is evaluating swaps, gold leases, or various versions of calculating the gold basis – they all have their crystal balls. One way of monitoring this is what’s called the GOFO (Gold Forward Offer Rate.) The GOFO rate is defined by the London Bullion Metal Association (LBMA) as… “Gold Forward Offered Rate - these are rates at which contributors are prepared to lend gold on a swap against US Dollars.”
In layman’s terms, the GOFO is the rate someone will loan you dollars on gold collateral. The GOFO rate will be lower than the rate of an uncollaterized loan and should always be positive, meaning costs more to borrow US Dollars than it does gold. If this rate were to ever go negative it would mean that gold is more precious than dollars. Essentially gold would be removing its bid for dollars. For physical gold owners searching for clues to tightness and demand in the physical market, they would be wise to keep a sharp eye on these metrics. It is our belief that this is happening, right now. Money is moving down Exter’s pyramid and while the final denouement may be days, weeks, months or years off, we are certain it would be preferable to be years early as opposed to a day late.
What do you view as a risk-free asset? The US Dollar? If the next global financial fire is coming, how confident are you that your alarm is working?
http://www.zerohedge.com/news/2013-02-22/gold-and-potential-dollar-endgame-part-3-backwardation-and-gold
World's Biggest Gold Storage Company Dumps US Citizens
Submitted by Tyler Durden on 02/22/2013 15:09 -0500
Submitted by Simon Black of Sovereign Man blog,
ViaMat, a Swiss logistics company that has been safeguarding precious metals since 1945, is literally the gold standard in secure storage.
They have vaults from Switzerland to Hong Kong to Dubai, and they count among their clients some of the largest mining companies in the world. They know what they’re doing.
And now they’re dumping US citizens.
ViaMat does a great deal of business within the United States. As such, the company is heavily exposed to the insane US regulatory environment.
As an example, the 2010 Foreign Account Tax Compliance Act turned into more than 500 pages of regulation! The costs and risks associated with compliance simply became too much for ViaMat to bear.
This matter-of-fact letter from ViaMat management explains their decision:
“We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the US to private customers with potential US-tax liability.”
This is huge. I can’t possibly overstate the potential ramifications.
For one, the big gold depositories like Gold Money and Bullion Vault ALL use ViaMat as a primary secure storage provider. So it’s only a matter of time before ViaMat’s decision cascades across these other firms.
I have written extensively about this to subscribers of our premium service, Sovereign Man: Confidential; most gold storage firms are all essentially different varieties of the exact same product. They are retail marketing channels that ultimately use ViaMat to store their gold bars. If ViaMat has US exposure, THEY have US exposure. It’s the same risk.
Now, if you’re in the United States in particular, one of the most important (and cost effective) steps you can take in international diversification is to store precious metals overseas.
Gold remains the most effective ‘anti-currency’ out there, a bet against a corrupt financial system and debt-laden sovereign governments. But remember– governments have an unblemished track record of plundering their citizens’ wealth. So if you store your gold in the US, you might as well ask Barack Obama to keep it under his mattress.
If history is any guide, storing gold abroad is critical. And it’s one of those things that you won’t be worse off for doing.
The thing is, it’s equally critical to work with a service provider that has no US exposure.
There are very few options out there. Again, most of the big boys use ViaMat, which has heavy US exposure. Or Brinks, which is a US company.
For nearly a year, I’ve been encouraging our premium subscribers to store their gold with a Singapore-based company that has the most advanced, transparent operation on the planet.
They are 100% Singaporean, and their US regulatory exposure is effectively zero.
They’re also one of the only firms on the planet that actually tests the gold it sells (and stores) through three different methods, including X-ray and ultrasound. This way you know that your gold is, in fact, gold… and not tungsten.
Best of all, they’re launching a new service to receive your existing gold at their facilities in Singapore. So if you’ve just been shut out of ViaMat, or you want to transfer your gold from another facility that has heavy US exposure, these guys will be able to do it.
They are, without a doubt, the best solution out there. And Sovereign Man: Confidential members have received unprecedented discounts and exclusive access to new services offered by this firm.
Storing gold overseas makes sense no matter what happens. And it’s critical to choose a reputable partner with no US exposure. If you agree with this premise and are serious about taking action, I’d encourage you to get started right away with a premium membership. Get the actionable intelligence you need, all backed by our risk-free guarantee.
http://www.zerohedge.com/news/2013-02-22/guest-post-worlds-biggest-gold-storage-company-dumps-us-citizens
Currency Wars: Bye, Bye Petrodollar- Buy, Buy Gold
http://cdn1.hubspot.com/hub/233034/CURRENCY_WARS_BYE,_BYE_PETRODOLLAR_-_BUY,_BUY_GOLD_CHRIS_SANDERS_GOLDCORE_INSIGHT_FEBRUARY_2013-01.pdf
Great article.
Currency Wars: Bye, Bye Petrodollar- Buy, Buy Gold
http://cdn1.hubspot.com/hub/233034/CURRENCY_WARS_BYE,_BYE_PETRODOLLAR_-_BUY,_BUY_GOLD_CHRIS_SANDERS_GOLDCORE_INSIGHT_FEBRUARY_2013-01.pdf
Great article.
UK, China central banks to discuss currency swap line
LONDON | Fri Feb 22, 2013 5:11am EST
(Reuters) - The Bank of England said on Friday it would discuss setting up a reciprocal three-year yuan-sterling swap line with the People's Bank of China to finance bilateral trade and investment.
The two central bank banks will work together to sign the final agreement shortly, it added.
The latest step builds on the BoE's statement last month that it was ready "in principle" to adopt a currency swap line with its Chinese counterpart, as the yuan or the renminbi starts to emerge as a world reserve currency.
The BoE said on Friday the arrangement would be used to finance trade and direct investment between the two countries and to support domestic financial stability if needed.
"In the unlikely event that a generalized shortage of offshore renminbi liquidity emerges, the Bank (of England) will have the capability to provide renminbi liquidity to eligible institutions in the UK," BoE Governor Mervyn King said.
This would be the latest in a string of bilateral currency agreements that China has signed in the past three years to promote use of the yuan in trade and investment.
European and U.S. officials have been pressing China for years to do more to open up the yuan to market forces, saying its artificial weakness was one of the key imbalances of the global economy.
Beijing is slowly delivering, although it still keeps a tight rein on gains for the currency for fear it will weaken its export-powerhouse economy, which has been the biggest engine of global growth for a decade.
Britain, always anxious to bolster London's status as Europe's biggest financial centre, launched an offshore yuan currency and bond market to great fanfare last year, and a swap deal would cement its role as the leading centre in the Group of Seven industrialized nations for offshore yuan trade.
(Reporting by Olesya Dmitracova and William Schomberg; Editing by Jeremy Laurence)
http://www.reuters.com/article/2013/02/22/us-britain-china-swap-idUSBRE91L0BO20130222
Naked Silver Shorts
Published : February 09th, 2013
The world is waking up to the silver manipulation story...FINALLY!
The mechanisms of manipulation are being exposed. Those silver short "hedges" held by JP Morgan, Citibank and HSBC are a ridiculous house of cards supposedly justified by the following physical silver:
1) Hedged LBMA Warehouse silver
2) Hedged COMEX Warehouse silver
3) Hedged SLV Inventories
4) Hedged Pasqua-Lama & San Cristobal future production
5) Hedged Silver Wheaton royalty streams
6) Hedged silver producers
7) Hedged refiner and smelter silver inventories
8) Hedged jewelery manufacturers
9) Hedged retail bullion dealers
10) Other mystery hedges on mystery silver bullion
According to our good friend (ha!) Jeffrey Christian there's about 3.3B ounces of physical silver that are hedged...at least that's what he said at the 2012 Silver Summit.
http://www.cpmgroup.com/our-market-views/presentation/all/cognitive-dissonance-silver-and-politics-silver-summit-october-25-2012
But what does this really mean? Most legitimate hedges are closed out at the end of their term as they are set up to hedge against price fluctuation risk over a specific period of time. Clearly, there is little reason to go in and out of legitimate hedges that are mitigating price risk on owned metal unless physical metal is added or subtracted from inventory. So not all of the 3.3B oz need be hedged multiple times during the year. Sure, there are legit "traders" out there but they gain legitimacy ONLY due to the real market participants who are hedging the price of their owned metal.
So here's my question: If only 3.3B oz of physical silver are available for legitimate hedging why is the COMEX trading at volumes of 100B oz per year? And how in the WORLD does the LBMA "transfer" over 130B ounces of PHYSICAL silver every year?
Clearly something is very wrong when people like Jeffrey Christian claim that "hedging" at these volumes EVERY YEAR is legitimate.
***Keep an eye on Pasqua-Lama, San Cristobal and other silver mines that are being relied upon to deliver physical silver into forward silver sales contracts...Governments have a funny way of hanging onto their TRUE wealth when economic troubles start.
Mark my words...
"The wealth of every nation lies in their soil, not in their bank vaults."
May the Road you choose be the Right Road.
Bix Weir
www.RoadtoRoota.com
PS - I have posted this article with a very appropriate graphic on the website
http://www.24hgold.com/english/news-gold-silver-naked-silver-shorts.aspx?article=4231719450G10020&redirect=false&contributor=Gold+price+management
U.S. lawmakers target ECB to stop Iran from using euros
WASHINGTON/FRANKFURT | Thu Feb 21, 2013 12:36pm EST
(Reuters) - U.S. lawmakers are crafting a bill aimed at stopping the European Central Bank from handling business from the Iranian government, a congressional aide said on Thursday, an attempt to stop Tehran from using euros to develop its nuclear program.
The bill, in the early stages of drafting, would target the ECB's cross-border payment system and impose U.S. economic penalties on entities that use the European Central Bank to do business with Iran's government, the aide said on condition of anonymity.
The central bank's so-called Target2 system is used to settle cross-border payments in Europe and processes around 350,000 payments daily, according to the most recent figures made available.
Although the ECB already complies with European Union sanctions against Iran, the proposed bill is aimed at pressing Europe to do more to prevent Iranian firms and banks from using the Target2 system to conduct transactions involving euros.
"The ECB ensures that no illegitimate transactions are cleared in Target2," a spokesman for the euro zone's central bank said. "But any sanctions are EU sanctions and not an ECB competence."
The ECB provision is part of a wider U.S. bill aimed at choking off funds to the Iranian government, which the West accuses of developing nuclear weapons. Tehran denies the charges.
It is unclear when the bill would be introduced or whether there would eventually be support in the U.S. Congress or by the Obama administration to enact another set of economic sanctions.
The United States and the European Union have worked mostly in tandem in imposing harsh economic sanctions against Iran, which have so far slashed the country's oil revenues, disrupted trade and weakened its currency.
ECB representatives are due in Brussels at the start of March for working discussions on various Iran sanctions issues, EU sources said, though the meetings were not specifically to discuss Target2.
Last year, U.S. lawmakers were successful in pressuring Belgium-based SWIFT electronic payment system to block Iranian transactions. SWIFT, which facilitates the bulk of global cross-border payments, disconnected designated Iranian financial firms from its messaging system after European regulators ordered the company to do so.
(Reporting by Paul Carrel in Frankfurt, Justyna Pawlak in Brussels and Rachelle Younglai in Washington. Editing by Jeremy Gaunt.)
http://www.reuters.com/article/2013/02/21/us-ecb-iran-idUSBRE91K0V420130221
Are You About to Lose Your Savings in the Global Currency War?
Feb 20, 2013
By: Money_Morning
Peter Krauth writes: You may not have even noticed, but the first shots have already been fired in the next World War.
Only this time there are no tanks, fighter jets, nuclear subs, or missiles. And it's not the North against South, or even East against West.
It's war by other means and it pits fiat currency against fiat currency in a multi-trillion dollar knock-down drag out between the world's central bankers.
At stake is nothing less than the value of your life savings.
Its goal is to cheapen worldwide currencies-which could make every dollar you own worth even less.
Thanks to horrible fiscal mismanagement, virtually every nation in the world now wants its own currency to become cheaper against those of other nations.
Welcome to the currency wars.
Think of it as a race to the bottom. But where it stops nobody knows.
The Lies Behind the Currency War
James Rickards, senior managing director of Tangent Capital Partners, and author of Currency Wars: The Making of the Next Global Crisis, thinks this battle is about an effort to get economies going by importing inflation rather than attempting to boost exports.
But I believe it's about both reflating economies and stimulating exports. After all, national leaders are becoming increasingly desperate.
And though they'd like us to think otherwise, the currency war is here, and it's escalating.
In fact, G-7 finance ministers and central bank governors recently released a statement to try and downplay the intensifying currency war noting that, "...we will not target exchange rates."
Yet true-to-form, these high profile leaders are doing the exact opposite of what they're saying.
In the wake of the financial crisis, the world had seen unprecedented yet (until now) coordinated financial stimulus. But today central banks are so addicted to the temporary "fix" from printing money, they have little concern for its effects on other nations.
Now barely a day goes by without a currency war-related headline. In fact, here are two I came across last week: "Global Monetary System Headed for Collapse" and "The Fed's Global Unintended Consequence."
There are plenty of others and you can expect quite a few more as this situation continues its downward spiral.
Upping the Ante
Of course, the U.S. has been labeling China as a currency manipulator for several years now. They claim the Yuan is kept artificially low so that Chinese imports remain cheap.
Talk about the pot calling the kettle black...
Over the last four years, America doubled the entire debt accumulated since the nation's founding, going from $8 trillion to $16 trillion in the hole. What's more, The Federal Reserve's balance sheet recently set a notorious record, ringing in at over $3 trillion for the first time ever.
Then the Swiss, hurting from the effects of a strong Franc (CHF), decided that their currency was getting too strong and set a floor under it so the EUR/CHF rate couldn't drop below 1.20.
French President Hollande also recently told members of the European parliament that EU leaders "need to think about our currency, the euro. We must have an exchange rate policy otherwise it will have rates that do not reflect the strength of its economy."
But the most aggressive player in the currency war, at least so far, is Japan.
For a host of reasons, including zombie banks and horrible demographics, Japan's economy has stagnated and deflated for an entire generation. Its flagship Nikkei index peaked near 40,000 in 1989, yet today stands at 11,300.
With two straight quarters of contraction, Japan is "officially" back in recession.
In desperation, Japan is trying ever more Keynesian sleight of hand to reflate its economy. The new prime minister, Shinzo Abe, has promised aggressive unlimited stimulus and more money printing to try and jumpstart the economy.
But with an all-in real debt-to-GDP ratio close to 500%, Japan's probably the riskiest place to carry out such an experiment.
Already the Nikkei is up 30% over the past three months, and the Yen has given up almost 20% against the greenback since early October.
Just last week the U.S. undersecretary for international affairs, Lael Brainard, supported Japan's move. She said the G-7 normally prefer exchange rates set by the market, but sometimes "excess volatility or disorderly movements" means finance ministers have to step in and manipulate rates. So much for a free market, or even market-determined exchange rates, for that matter.
The risks are so high in Japan that this could realistically be where the first major currency crisis begins. Only this time, it could initiate the trend toward a total collapse of the world's fiat money system.
Not to be outdone, Venezuela, South America's largest oil producer, has just devalued its currency by 32%. That's the fifth straight time Venezuela has devalued in only nine years. It will help with the government's budget deficit, but it tramples the buying power of Venezuelans.
The country's annual inflation is already running at 22%, but this move threatens to make it even worse.
Many Latin American leaders are pros at this game. A little over a decade ago Argentina defaulted on its foreign bonds, thanks mainly to massive government overspending and corruption, which caused the public debt to mushroom. Making matters worse, Brazil devalued the real, hurting Argentine exports.
Is any of this starting to sound familiar?
I hope so, because not long ago Argentina banned estimates of true inflation by private economists from being made public.
Now, as the authoritarian regime grows ever more desperate, they've even resorted to fixing prices. On Feb.5th, major retailers agreed to freeze their prices until April 1st.
The Currency War Endgame
Unfortunately, I believe the U.S. is on the same path as pretty much the rest of the world. The end game is a race to the bottom because really, under a fiat money system, there's nowhere else to go.
This was recently confirmed by Kyle Bass, founder and principal of Hayman Capital Management, a Dallas hedge fund. Bass has profited handsomely from prescient calls on events from the subprime mortgage meltdown to Greek sovereign debt restructuring.
In a recent discussion with a senior Obama official, Bass disclosed that he asked how the U.S. would be able to grow exports if they don't allow nominal wage deflation. The official's answer: "We're just going to kill the dollar."
By now you're probably wondering how you can protect your net worth from all these central bank shenanigans. In my view, the answer is to own and accumulate gold.
Gold is the go-to safe haven as currencies are debased. If you don't believe me, just ask the Japanese, who now have to pay more than ever to buy an ounce of gold.
They've just seen the precious metal's price in Japanese Yen break out to a new all-time high.
So I suggest you ignore what central banks say, and instead do what they do: BUY GOLD.
China has been quietly accumulating gold since it last announced its reserves. Back in 2009 it reported a total of 1,054 tonnes. Thanks to massive and growing gold imports into Hong Kong and domestic gold production, it's likely that China's official stash is much higher today, likely approaching 4,000 tonnes, with some estimates considerably higher.
That would place them ahead of Germany, whose official holdings are at 3,396 tonnes. It's little wonder why Germany has decided to bring its gold home now.
According to figures from the World Gold Council, last year central banks accumulated more gold than at any time since 1964. That's almost 535 metric tons, with Russia, Brazil, and Iraq in the lead.
Despite this record central bank buying binge, gold still remains a dangerously small percentage of their total reserves.
It's clear that gold is regaining its rightful place as a cornerstone asset. As we continue down our current path, it's increasingly likely gold will once again assume its traditional role as true money.
The signs are there and growing louder by the day. The currency war is intensifying. I hope you'll heed its warning and buy yourself some gold.
But you should do it while your dollars still have some purchasing power.
Source :http://moneymorning.com/2013/02/20/are-you-about-to-lose-your-savings-in-the-currency-war/
http://www.marketoracle.co.uk/Article39107.html
Where to Buy Gold in Difficult Times: Jay Taylor
Source: Sally Lowder of The Gold Report (2/20/13)
According to the calendar, it is still winter and gold markets still face some tough sledding, says Jay Taylor, host of the radio show "Turning Hard Times into Good Times." Big investors are leaving the market and small investors hesitate to reenter. But in this interview with The Gold Report, Taylor points to some spots where selective investors can find value and growth potential.
Section of Article:
________________________________________________________________
JT: I am now much more selective on the explorers, but I have several on my list.
I like Brazil Resources Inc. (BRI:TSX.V; BRIZF:OTCQX) a lot. One should always start by looking at management, and Chairman Amir Adnani is highly regarded. He did a remarkable job for Uranium Energy Corp. (UEC:NYSE.MKT). Brazil Resources has at least one very good, advanced-stage property now, and has arranged financing with Brazilinvest Group, a financial concern that owns a lot of the company's shares.
TGR: Amir has moved his companies forward. Brazil is a great mining address, although lesser known and understood. Do you see any issues there?
JT: Politically, Brazil is one of the better jurisdictions these days and it has the geology.
Cont...
http://www.theaureport.com/pub/na/15027
SAC Capital Partners Bets A Quarter Billion On Gold, Silver, & Mining Shares
February 19, 2013 | By Tekoa Da Silva
While the mainstream media continues to spew out bearish news and headlines on precious metals and (especially) mining shares, SAC Capital Partners LP, a $20 billion dollar group of hedge funds founded by Stephen A. Cohen, quietly positioned itself in over $240 million dollars worth of gold, silver, and mining share investments during Q4 2012.
Of great interest is the structure of those positions. They are indicating, that the firm is expecting a massive spike in both gold and silver, as well as a staggering move higher in the mining shares.
Starting out, the firm increased it’s holdings in gold and silver mining shares from roughly $54.9 million, to $122.2 million, a total increase of over $65 million. Companies included many of the major producers such as AngloGold, Barrick, Goldcorp, and surprisingly, included junior producers, such as Fortuna Silver Mines Inc and Timmins Gold Corp.
-The firm took an over $20 million dollar “straddle” position on the SLV ETF, which indicates the firm believes we will see a massive and volatile spike coming in the price of silver—either up or down.
-The firm took an over $61 million dollar “straddle” position on the GLD, which similar to the SLV position, indicates the firm believes we will see a massive and volatile spike coming in the price of gold—either up or down.
(For reference, an option “straddle” position entails buying both a call and a put option against an underlying security, for a specified date and strike price. To become profitable, the underlying security must spike up or down far enough to offset the premium cost of both the call and put options. This strategy can be thought of as “betting on volatility”)
-Lastly, the firm purchased over $36 million dollars worth of call options on various gold and silver mining companies—indicating the firm is expecting a staggering move higher in mining shares sometime in the next two years or less.
Bottom Line: While some funds may be experiencing redemptions and forced selling of metals and mining shares, this firm is taking monstrously large positions—many of them being in call options—with the expectation of staggering moves higher in the months and years ahead.
To view the entire 13-f filing as reported by S.A.C. Capital Advisors, L.P., visit this page link at: SEC.gov
Enjoy the article? Please support the site by sharing this URL page link with friends, family, and your favorite chat forum.
Thanks,
Tekoa Da Silva
Bull Market Thinking
http://bullmarketthinking.com/sac-capital-partners-bets-a-quarter-billion-on-gold-silver-mining-shares/
Physical Gold And Silver Tightness To Continue
http://seekingalpha.com/article/1191091-physical-gold-and-silver-tightness-to-continue
Toyotsu Pays $1.04 Million to Matamec for Continued Execution of Kipawa Feasibility Study
Goal of Kipawa mine project is to supply heavy rare earths for the production and marketing of hybrid and electric vehicles
MONTREAL, QUEBEC--(Marketwire - Feb. 19, 2013) - Matamec Explorations Inc. ("Matamec" or the "Company") (TSX VENTURE:MAT)(MHREF) is pleased to announce that the Company has received $1.04 million CDN from its Japanese partner Toyotsu Rare Earth Canada Inc. ("Toyota" or "TRECan"), a subsidiary of Toyota Tsusho Corp. ("TTC"). The goal of the Kipawa mine project is to supply Toyota with heavy rare earths ("HREE") for the production and marketing of hybrid and electric vehicles.
To date Matamec has received $13,195,629 CDN of the maximum $16M CDN for the completion of a definitive feasibility study on the Kipawa HREE deposit, which is expected in the second quarter of 2013. The Company will be issuing an update on the feasibility study by the latest for the upcoming PDAC conference which takes place March 3-6, 2013 in Toronto, Canada.
"I am very pleased by the advancement of our efforts being made by the Matamec team on the Kipawa feasibility study," said Andre Gauthier, President and CEO of Matamec Explorations. "The continued financial commitment by Toyotsu positions Matamec strategically to be one of the first companies to supply heavy rare earths for hybrid and electric vehicles in North America."
Under the terms of the Joint Venture Agreement ("JVA") by which TRECan can acquire 49% undivided interest in the Kipawa HREE Deposit, Matamec received $8.5M CDN for the first 25% undivided interest on July 18, 2012. To acquire the second 24% undivided interest, TRECan has to pay to Matamec a maximum amount of $7.5M CDN. The $1.04M CDN is the fourth of a number of successive payments in the completion of the $7.5M CDN, but the fifth overall payment received from TRECan. Matamec will transfer the 24% undivided interest to TRECan when it will receive a cumulative maximum amount of $7.5M CDN.
About Toyotsu and TRECan
Established for more than 60 years and subsidiary of Toyota Motor Group, TTC is a general trading company that develops business together with over 400 consolidated group companies in Japan and overseas, with customers around the world, via a global network covering Japan and more than 60 other countries worldwide. TRECan is a subsidiary of TTC especially created for the Kipawa HREE deposit JVA. TTC has four rare earth projects globally including in India, Vietnam, Indonesia (HREE) and Canada (HREE Kipawa JV). For further information, please view the TTC 2012 Annual Report online.
About Matamec
Matamec Explorations Inc. is a junior mining exploration company whose main focus is in developing the Kipawa HREE deposit with TRECan. Following the positive conclusion of the PEA study filed on SEDAR in March 2012 and the hiring of a VP Project development and Construction, Matamec and TRECan decided to move directly to the feasibility study. The March 2012 press release highlighted that the project has robust economics such as: $606 million before-tax value (NPV8%), a 36.9% before-tax IRR, $2.8 billion revenue, $1.67 billion EBITDA, a before-tax payback period of 2.4 years, etc. (see press release dated January 30, 2012).
In parallel, the Company is exploring more than 35km of strike length in the Kipawa Alkalic Complex for rare earths-yttrium-zirconium-niobium-tantalum mineralization on its Zeus property.
The company is also exploring for gold, base metals and platinum group metals. Its gold portfolio includes the Matheson JV property located along strike and in close proximity to the Hoyle Pond Mine in the prolific mining camp of Timmins, Ontario.
In Quebec, the Company is exploring for lithium and tantalum on its Tansim property and for precious and base metals on its Sakami, Valmont and Vulcain properties. As well, it is exploring for gold together with Northern Superior Resources Inc. on the Lesperance/Wachigabau property.
Contact:
Andre Gauthier, President
(514) 844-5252
info@matamec.com
Edward Miller, Director IR
(514) 844-5252 ext. 205
edward.miller@matamec.com
www.matamec.com
http://finance.yahoo.com/news/toyotsu-pays-1-04-million-123000111.html
Toyotsu Pays $1.04 Million to Matamec for Continued Execution of Kipawa Feasibility Study
Goal of Kipawa mine project is to supply heavy rare earths for the production and marketing of hybrid and electric vehicles
MONTREAL, QUEBEC--(Marketwire - Feb. 19, 2013) - Matamec Explorations Inc. ("Matamec" or the "Company") (TSX VENTURE:MAT)(MHREF) is pleased to announce that the Company has received $1.04 million CDN from its Japanese partner Toyotsu Rare Earth Canada Inc. ("Toyota" or "TRECan"), a subsidiary of Toyota Tsusho Corp. ("TTC"). The goal of the Kipawa mine project is to supply Toyota with heavy rare earths ("HREE") for the production and marketing of hybrid and electric vehicles.
To date Matamec has received $13,195,629 CDN of the maximum $16M CDN for the completion of a definitive feasibility study on the Kipawa HREE deposit, which is expected in the second quarter of 2013. The Company will be issuing an update on the feasibility study by the latest for the upcoming PDAC conference which takes place March 3-6, 2013 in Toronto, Canada.
"I am very pleased by the advancement of our efforts being made by the Matamec team on the Kipawa feasibility study," said Andre Gauthier, President and CEO of Matamec Explorations. "The continued financial commitment by Toyotsu positions Matamec strategically to be one of the first companies to supply heavy rare earths for hybrid and electric vehicles in North America."
Under the terms of the Joint Venture Agreement ("JVA") by which TRECan can acquire 49% undivided interest in the Kipawa HREE Deposit, Matamec received $8.5M CDN for the first 25% undivided interest on July 18, 2012. To acquire the second 24% undivided interest, TRECan has to pay to Matamec a maximum amount of $7.5M CDN. The $1.04M CDN is the fourth of a number of successive payments in the completion of the $7.5M CDN, but the fifth overall payment received from TRECan. Matamec will transfer the 24% undivided interest to TRECan when it will receive a cumulative maximum amount of $7.5M CDN.
About Toyotsu and TRECan
Established for more than 60 years and subsidiary of Toyota Motor Group, TTC is a general trading company that develops business together with over 400 consolidated group companies in Japan and overseas, with customers around the world, via a global network covering Japan and more than 60 other countries worldwide. TRECan is a subsidiary of TTC especially created for the Kipawa HREE deposit JVA. TTC has four rare earth projects globally including in India, Vietnam, Indonesia (HREE) and Canada (HREE Kipawa JV). For further information, please view the TTC 2012 Annual Report online.
About Matamec
Matamec Explorations Inc. is a junior mining exploration company whose main focus is in developing the Kipawa HREE deposit with TRECan. Following the positive conclusion of the PEA study filed on SEDAR in March 2012 and the hiring of a VP Project development and Construction, Matamec and TRECan decided to move directly to the feasibility study. The March 2012 press release highlighted that the project has robust economics such as: $606 million before-tax value (NPV8%), a 36.9% before-tax IRR, $2.8 billion revenue, $1.67 billion EBITDA, a before-tax payback period of 2.4 years, etc. (see press release dated January 30, 2012).
In parallel, the Company is exploring more than 35km of strike length in the Kipawa Alkalic Complex for rare earths-yttrium-zirconium-niobium-tantalum mineralization on its Zeus property.
The company is also exploring for gold, base metals and platinum group metals. Its gold portfolio includes the Matheson JV property located along strike and in close proximity to the Hoyle Pond Mine in the prolific mining camp of Timmins, Ontario.
In Quebec, the Company is exploring for lithium and tantalum on its Tansim property and for precious and base metals on its Sakami, Valmont and Vulcain properties. As well, it is exploring for gold together with Northern Superior Resources Inc. on the Lesperance/Wachigabau property.
Contact:
Andre Gauthier, President
(514) 844-5252
info@matamec.com
Edward Miller, Director IR
(514) 844-5252 ext. 205
edward.miller@matamec.com
www.matamec.com
http://finance.yahoo.com/news/toyotsu-pays-1-04-million-123000111.html
Guest Post: Five Tools To Protect Your Privacy Online
Submitted by Tyler Durden on 02/15/2013 18:23 -0500
Google Guest Post KIM
Submitted by Simon Black of Sovereign Man blog,
We’ve discussed many times before - hardly a month goes by without some major action against Internet users... from Obama’s ‘kill switch’, to ACTA, SOPA and PIPA, to stasi tactics against people like Kim Dotcom.
Online privacy is becoming more important by the day. And nobody is going to give it to you, you have to take steps yourself to secure it.
Below are five different tools and services that will get you started:
1. Tor Browser
Tor is a great weapon in the fight for online anonymity as it allows you to surf the web without giving up your location and other personal data to the websites you visit.
The Tor Browser Bundle is the easiest and most secure way to get started; simply download it, and start surfing the web with the Tor Browser. It’s available for Windows, Mac, and Linux.
Learn more about and download the Tor Browser Bundle here
2. Duck Duck Go
If you want privacy, don’t search with Google.
Google store all of your searches to customize ads for you, but even worse, they can hand over the whole list of searches to any government agency that are curious about what you’ve been looking at for the last couple years.
A better alternative is Duck Duck Go, a completely anonymous search engine that does not store any information about you or your searches. The search results are essentially identical to Google’s, so there’s no loss of quality.
Search with Duck Duck Go here
3. HTTPS Everywhere
HTTPS Everywhere is a plug-in for Firefox and Google Chrome that tries to force a website to connect in secure mode, thus encrypting your traffic with the website you are visiting. This makes your browsing more secure because it prevents eavesdropping thieves or state-mafia from intercepting your unencrypted Internet traffic.
Download HTTPS Everywhere here
4. Cryptocat
Cryptocat is an encrypted chat that beats Facebook and Skype when it comes to security and privacy. If you want to chat in private then this is one simple solution. It’s also open source, which means you can see the full code and be sure there are no government “backdoors” built in.
Read more about and download Cryptocat here
5. Silent Circle
Silent Circle is a new player on the market, but it is founded by “old” players in the security and encryption industry. One of the founders, Phil Zimmerman, is also the creator of PGP, one of the most-used encryption platforms in the world.
Silent Circle is a suite of products offering:
Encrypted email
Encrypted video chat
Encrypted phone calls
Encrypted text messaging
Silent Circle is the only service on this list that is not free. But having the gold standard of encryption may be worth it for you. It is for me.
Read more about Silent Circle here
Bottom Line
You can set up most of the tools we discussed in 5 minutes. Each of them will go a long way in securing your privacy online.
http://www.zerohedge.com/news/2013-02-15/guest-post-five-tools-protect-your-privacy-online
Exclusive: Big powers to offer easing gold sanctions at Iran nuclear talks
By Arshad Mohammed
WASHINGTON | Fri Feb 15, 2013 3:30pm EST
(Reuters) - Major powers plan to offer to ease sanctions barring trade in gold and other precious metals with Iran in return for Iranian steps to shut down the nation's newly expanded Fordow uranium enrichment plant, Western officials said on Friday.
The officials said the offer is to be presented to Iran at February 26 talks in Almaty, Kazakhstan, and they acknowledged that it represents a relatively modest update to proposals that the six major powers put forward last year.
Speaking on condition of anonymity, the officials said their decision not to make a dramatically new offer in part reflected skepticism that Iran is ready to make a deal ahead of its June 14 presidential election.
The group, which includes Britain, China, France, Germany, Russia and the United States - and is known as the P5+1 - wants Iran to do more to prove that its nuclear program is for only non-military purposes and to permit wider U.N. inspections.
Iran denies it is seeking nuclear weapons but has refused, in recent years, to halt its uranium enrichment, a process that can produce fuel for nuclear reactors or, ultimately, for bombs.
Israel, which is regarded as the Middle East's only nuclear power and which views a nuclear-armed Iran as an existential threat, has raised the possibility of taking military action to halt the Iranian atomic program.
While stressing he wants to resolve the dispute with Iran through diplomacy, U.S. President Barack Obama on Tuesday repeated a veiled military threat, saying "we will do what is necessary to prevent them from getting a nuclear weapon."
EXPANSION
The core of the new offer revises last year's demand that Iran stop producing higher-grade uranium, ship any stockpiles out of the country and close down its underground enrichment facility at Fordow, near the holy Iranian city of Qom.
"The next proposal is remarkably close to the old one," said one official who spoke on condition of anonymity, describing it as "a way to test whether they are serious or not."
"We don't think the Iranians have given us reason to do much more," he said. "It's basically an update ... so it does require a little bit more from Iran in terms of cooperation with the (International Atomic Energy Agency) and at Fordow."
According to the IAEA's November report, Iran has increased the number of centrifuges at Fordow, an underground plant that could be largely impervious to attack from the air, by 644 to 2,784 since mid-August.
It has been enriching uranium at Fordow with one quarter of the total, or 696, centrifuges. Western diplomats say Iran is technically ready to sharply expand enrichment at Fordow but that, as of last week, it was not believed to have done so.
In further defiance of international demands that it scale back uranium enrichment, Iran this week said it was installing advanced enrichment machines at its main plant at Natanz, adding to Western worries it may be able to refine uranium even faster.
According to an IAEA report released in mid-November, Iran has a stockpile of 134.9 kg of 20 percent enriched uranium, bringing it closer to the ability to produce the 90 percent uranium needed to provide fissile material for atomic bombs.
Israeli Prime Minister Benjamin Netanyahu last year said Iran must not be allowed to amass enough enriched uranium for a single weapon, suggesting it would do so by the spring or summer of 2013 and implying a decision on whether to use military force against Iranian nuclear sites would have to be made by then.
Western officials said their new demands take into account the advances at Fordow as well as their desire that Iran cooperate more broadly with the IAEA, the U.N. nuclear watchdog.
While declining to provide exact details on what the P5+1 members would demand of Iran, a second Western official said the group wanted the steps to "build in buffer time" to ensure that it would take Iran "more time to restart Fordow."
"We use very careful wording such as 'decreasing readiness of Fordow'. These are face-saving words," this official said.
EASING PRECIOUS METALS SANCTIONS
The added inducement for Iran in the new offer is to suspend sanctions on trade in gold and precious metals, something that could be used as part of barter transactions that might allow Iran to circumvent increasingly tight financial sanctions.
It goes beyond last year's proposal, in which the powers offered sanctions relief on aviation spare parts, fuel for a medical reactor and other civil nuclear cooperation.
The Western officials described their new proposal as "more for more" - meaning that they are seeking more steps to curtail Iran's nuclear program in exchange for greater inducements on their part, but they admitted it is not a dramatic shift.
"It's still more for more, (but) not much more," said the second Western official.
Iran has so far been unwilling to embrace any of the P5+1's offers, including one made in October 2009 under which Iran would ship out much of its enriched uranium in exchange for fuel for the Tehran Research Reactor that produces medical isotopes.
The United States and the European Union have over the last 14 months put in place increasingly tough sanctions on Iran that directly target its lifeline oil industry.
The EU last year imposed an embargo on its members buying Iranian crude, while the United States moved to force other nations to curtail their oil imports from Iran with the threat of cutting off their banks from the U.S. financial system.
In a step to close a loophole under which third countries could barter for oil, U.S. President Barack Obama last July signed an executive order that would allow him to penalize any company that helped Iran acquire gold or other precious metals.
Any companies that did so could have their assets under U.S. jurisdiction frozen and be denied access to the U.S. financial system, a powerful deterrent to any bank or trading company.
The European Union bars trade in gold, precious metals and diamonds with Iranian public bodies and with the central bank.
The Western officials declined to specify precisely how the United States and European Union might ease such sanctions.
It is unclear whether the Iranians would find such an offer appealing or even the basis for further talks, or whether they might hold out for a much more comprehensive offer that the P5+1 do not, at present, appear ready to put on the table.
"It's not the crown jewel," said one Western official of the sanctions relief now on offer.
The offer may also stir up opposition in the U.S. Congress, which passed sanctions that went into effect on February 6 that tighten controls on sales of precious metals to Iran.
Bankers told Reuters in Istanbul that U.S. sanctions on gold are killing off Turkey's gold-for-gas trade with Iran and have stopped state-owned lender Halkbank from processing other nations' energy payments to the OPEC oil producer.
Senator Robert Menendez, chairman of the U.S. Senate Foreign Relations Committee and an advocate of harsh sanctions on Iran, said easing sanctions depended on Iranian behavior.
"I believe yielding on this sanction or any other sanction depends wholly on what the Iranians are willing to do," Menendez said. "If they are willing to perform concrete steps towards stopping and dismantling their nuclear weapons program, that's when we can consider easing some of our sanctions."
A Republican congressional aide said most members of his party would oppose sanctions relief until Iran met all its U.N. obligations and suggested Congress could strip the president of the flexibility, known in Washington jargon as "waiver authority," on whether or not to impose gold sanctions.
"While Congress gave the President a national security waiver, Congress can and should move to take it away in the next round of sanctions legislation if he intends to give the Iranians a pass in exchange for peanuts," he said.
(Additional reporting by Fredrik Dahl in VIENNA; Editing by Warren Strobel and Jackie Frank)
http://www.reuters.com/article/2013/02/15/us-iran-nuclear-gold-idUSBRE91E0TP20130215
Hard Times, USA: Would You Consider Thinking Differently About Poverty and Poor and Homeless People?
A huge number of Americans feel vulnerable every day of every week, their future unknown. What are you going to do about it?
February 4, 2013
By Don Hazen
Editor's note: There are more than one million homeless people in America, and 138 million people who live paycheck to paycheck. Many more are struggling, wondering how they'll make rent or get enough food. Those numbers are astounding. This is America. Many proudly think our society is fair, but the evidence overwhelmingly shows that fairness in America is a myth. In the weeks and months ahead, AlterNet will shine a light on America's economic injustice in an ongoing series, "Hard Times USA." Since many have chosen to look aside, or believe the traditional ways of doing politics will fix things, there is still much to learn about how this problem will be solved, or not solved.
We are launching our ongoing series with two articles today: Part 1 looks at how America punishes poor people living on the street, part of a larger pattern of dealing with poverty through criminalization rather than social and policy fixes that have been shown to work better. Part 2, below, addresses the growing apathy toward the plight of the poor after decades of conservative demonization. As the gap between the wealthy and the poor keeps growing, there is a sense that more and more people don't want to deal with the poor. Is that how you want our society to be? What's your role? It's time to rethink poverty.Part 3 in our series, running Wednesday, looks at copper theft as a means of survival in California's poorest city. Part 4 will look into the psychology of how people react when they encounter homeless people on the street. Much more to come. -- Don Hazen, executive editor of AlterNet
What do the words poor, hungry, homeless, destitute, and economic hardship mean to you? Would you rather not think about it? Can I ask you a harder question? Have you lost your empathy for people who may be down and out? Or maybe it is in reserve, waiting for a chance to be revitalized.
The ability of the U.S. to deal with problems of money, housing, healthcare, food and the basics of life for many millions of people, is pretty damn rotten. The problem is getting worse. Increasingly, as the gap between rich and poor keeps growing, more people may be less interested in and have less empathy for the people who are left out. That is what I am wondering about.
Some of us were lucky, some privileged, and some of us have been able to achieve a level of economic security where we never have to worry about the necessities for the rest of our lives. But a very large number of Americans, a shocking number really, feel vulnerable every day of every week. Their future is unknown. They don't even how they are going to get through tomorrow.
And it is quite a range of people. More than 100 million are teetering on the edge in the working/middle-class and more than a million, depending on how you count (812,000 people live in the entire city of San Francisco), are homeless for some part of the year, living on the streets, in cars, or bouncing from street to shelter, barely surviving.
Many think that statistics make readers eyes glaze over. Maybe that's true. But let's stop and consider, please, just a small batch of stats that help paint the picture:
• 43.9 percent of Americans — that is roughly 137 million people — are living on the edge of collapse: a job loss, health crisis or income-crushing emergency, and they would not have enough money to cover expenses "at the federal poverty level" for three months.
• Nearly 40 percent of American households — which translates to more than 100 million people — live paycheck to paycheck.
• More than 46 million Americans live at or below the poverty level, which is $23,201 for a family of four. That's $5,800 per person.
• 6 million people have no income other than food stamps, which means they are living on $6,000 a year.
Can you imagine living on $5,800 a year? Honestly, I can't. It is too far outside my imagination. It causes me psychic pain to think about it, which helps me understand why people want to shut their eyes at the word poverty (not everyone, of course). But it is easy to think: if the problem is so immense, what can I, one person, do to help? It is a good question, for which there is no easy answer. But we can all try.
We live in a society where many of our leaders think that we as a nation spend too much money on the “safety net,” even as we freshly mint new billionaires all the time. We are, some experts say, in an “Age of Austerity.” The conservatives in America spend many millions demonizing the poor, blaming them, and working assiduously to make them poorer.
America's most effective anti-poverty programs are Social Security, Medicare and Medicaid. And stunningly, these programs are under attack.
Currently, only 10 percent of seniors are in poverty. Without Social Security more than half would be. Before Medicare, barely half of seniors had healthcare, but soon more than 95 percent did. With so few people earning pensions, a humane country might consider how to increase Social Security, since it was always meant to be a supplement for retirement. But that is not on the agenda.
The obvious ways to solve the immense problem of inequity would be raising taxes on the wealthy, (beyond returning to where they were before the Bush tax cuts; or taxing capital gains at higher than 15 percent); reducing our role as the military policeman of the world, which requires enormous military spending; and achieving public financing of elections to reduce the influence of the wealthy and all the lobbies that blanket our capitol with lobbyists all taking a piece of our revenue for their purposes. These are all the obvious solutions to put us in a better position to serve more of our people. Virtually all books written by reformers all say the same at the end — we have to do these things.
But you know what? None of that is going to happen. At least, not anytime soon. Or maybe never. Just one example: every year for the past 30 years or more, the influence of money on politics has increased. Now it takes a billion dollars to run for president. Expecting reform vis a vis poverty to fix the system for poor people is like waiting for Godot. Given the division in our country, the gerrymandered House of Representatives will give the conservatives veto over pretty much everything into the future. And corporate power means corporations will continue to have their needs met before those who need resources and help to have a decent life. And I'm not even mentioning climate change, which in the end may have the biggest impact on making people poor.
What that all means is that we have to take it upon ourselves to do something. I know it may seem outlandish, but there is very little chance things will change unless we take matters into our own hands. Everyone can do something constructive, but especially the 40 million people in our country who are the “mass affluent" — and the 1 percent who are the super-wealthy. We all got where we are for many reasons, but most of the reasons for success have to do with being born into a class and families with resources; we were able to go to college, often to good schools; we network with our friends and get more power, money and influence. Or we got lucky in other ways: sports, a special talent, or where we lived.
I know, this isn't the way we normally think. We say: damn, the government is taking 35-40 percent of my money already, and I'm supposed to use more of it to help others? Well, yes, that is what I mean. A key way we can really help is to give parts of ourselves to the cause — our time, our money, stuff we don't need, jobs we can give poor people, even temporary or part time.
The Mormons tithe their members 10 percent. I know, they use some of that money to build a powerful hyper-capitalist business structure worth billions. But they also make sure that no one in their communities are destitute. It's time we, who care, take a page from the Mormons and tithe ourselves for a more fair America.
A week or so ago, I was walking on the outskirts of Union Square, in New York City, in the freezing late afternoon. A guy was sitting on the sidewalk asking for money as people walked by. Since I was thinking about what I have written here, I stopped. I asked him what was up, why he was asking for money. He said, “You know, you are the first person all day who stopped to talk with me. I’m not without skills, I need a job, but I am down and out."
I asked him where he slept. He said he would go up to the Bronx to the projects and sleep in the hallways. I gave him money to get a room for a night. I have no idea how he spent the money, or if his story was true. But I was willing to take the chance. And I was quite sure that no one had talked to him. It was a small, isolated gesture. But we can make millions of these gestures, and make a difference.
We as a society, or many of us anyway, like to think of ourselves as fair. But we tolerate living in a society that is grossly unfair. What's up with that? We throw up our hands; we divert our eyes.
I’m suggesting that we who are privileged have more one-to-one relationships with people in need, even give them money directly. Of course, it’s better to get to know people who are very poor or homeless before giving. But take a stand. Don’t wait for our governments, which are cutting back support, or the mythical day when poverty might be eradicated.
The myth that many poor people don’t know how to manage cash when given money is mostly a myth. In fact, a book published three years ago, titled Just Give Money To the Poor describes how more than 45 developing nations provide impoverished families with cash grants, no strings attached. The idea is that poor people are best equipped to eradicate poverty, and it has proven a success.
“The key is to trust poor people and directly give them cash — not vouchers or projects or temporary welfare, but money they can invest and use and be sure of,” the authors wrote.
Paul Boden is the organizing director for the Western Regional Advocacy Project, which works to expose and eliminate the root causes of poverty and homelessness. He said that government officials and charitable organizations continuously believe they need to decide how poor people use money.
“Whatever little dime a poor person is able to get into their frickin' pocket, somebody else wants a piece of it, and thinks they’re more entitled to it, that they’ll spend it better, they’ll do something wiser with it,” Boden said. “They pass all this judgment on panhandlers on what they’re going to do with this money. But how the fuck does the panhandler know what you do with your money?”
This is why AlterNet has decided to publish this series on poverty and economic injustice. Absolutely, there are many terrific people, organizations, books, and materials to help us understand poverty. And there are some new insights and analysis that can perhaps contribute to a future debate. At AlterNet we hope to highlight the most worthy, but we will also emphasize the best approaches for each of us to dive in and help.
Still there are limitations to what we can research, investigate and write. There are many stories about poverty. We can provide heartbreaking narratives about families in distress. But until millions of us are willing to take some kind of a stand beyond what we learn from more data and more depressing stories, more than we have been willing to do so far, then sadly, very little will change. In fact, it might get worse.
Absent a book and a moment like Michael Harrington's Another America, which riveted millions of people, or a president with the clout of Lyndon Johnson and a large Democratic majority in both Houses of Congress which created the New Society and War on Poverty, the mechanisms of a failed and divided political system — doing the same thing over and over — will not carry the day.
In my opinion, at this moment in time, the best way to help poor people is to give them help directly — resources in their hands, a job, a car to get to a job, car insurance, a roof over their head, some security for a fixed amount of time, cash for food and medicine. I know this goes against the conventional wisdom, but it often works. At least it is a concrete step toward transcending the unfairness that has become as American as apple pie.
Don Hazen is the executive editor of AlterNet.
http://www.alternet.org/hard-times-usa/hard-times-usa-would-you-consider-thinking-differently-about-poverty-and-poor-and?page=0%2C0
Tightness Continues in the Precious Metals Market
zaterdag 16 februari 2013
by Katchum
There are several indicators of a tight gold market right now and I want to show you this in the following analysis.
First, I should remind you that gold lease rates have started to rise again after several years. Especially the 1 month gold lease rate which has gone positive recently (Chart 1). This is a positive for gold.
Chart 1: Gold Lease rate
As you know, gold lease rate = LIBOR - GOFO. So at this moment GOFO is going down much more than LIBOR is going down. Let's look at those charts (Chart 2 and Chart 3).
Chart 2: LIBOR 3 Month
Chart 3: Gold Forward Rate 3 Month
Since February 2013 the GOFO dropped precipitously from 0.34% to 0.24%. If this continues to go down, we could even see negative GOFO rates and that means gold is in backwardation. Each time this happens it means there is tightness in the gold market and gold will move higher.
Some definitions first:
GOFO is the interest paid if we lend gold and borrow US$ for the same period. LIBOR is the London Inter Bank Offered Rate, the interest on an unsecured US$ loan, and GLR the Gold Lease Rate, the interest on an unsecured gold loan.
So why is the gold market tight? If people want their physical gold back in large quantities, that means bullion banks need to provide the gold. The bullion bank then swaps $US for gold. So they receive the gold to the unallocated account and then request allocation of the physical gold and then deliver it to the customer. But this swapping will drive down the GOFO and that is what we see happening in February.
As you may have recalled, I said that people want their gold back. We saw a jump in registered gold on 31 January at the COMEX and I thought that could indicate that people want to take delivery. I said that total gold inventory would drop. On Chart 4 we can see that playing out. The green dots (total gold inventory) is starting to drop as predicted.
Chart 4: Gold Stock COMEX
Another indicator of a tight gold market can be seen in the CFTC report. As U.S. bank shorters are getting out of their short positions, this could indicate that the gold market is bottoming out. On the other hand, U.S. bank short positions in the silver market are still at an all time high. Shorters have difficulty to get out of their silver short position and this could indicate that a short squeeze is coming soon in the silver market, especially at these low silver prices of $30/ounce.
U.S. banks have made use of the 1 week Chinese lunar holiday to make the price drop in precious metals in a low volume market. Though, I believe that this low volume manipulation of the precious metals price will soon normalize in the following week, when Shanghai reopens their gold exchange.
To illustrate tightness in the precious metals market further it is good to monitor the premiums for several dealers. For example, APMEX is still posting high premiums in the silver market of around 14% for 1-19 silver coins (Chart 5b) and Shanghai silver premiums are rising in February 2013 (Chart 5a).
Chart 5a: Shanghai Silver Premium
Chart 5b: APMEX Silver Premium
As a final indicator, investors can look at the recent supply and demand numbers coming from the World Gold Council. They reported just recently that gold supply is declining by 1.4% in 2012 due to lower recycling. I already predicted this decline in gold supply in a previous article of mine.On the other hand, the gold demand from central banks soared and will continue for at least 5 years. I also predicted this to happen in another article of mine.
Conclusion:
Investors shouldn't worry about the gold price declining, this is a healthy consolidation phase we are entering in now. Of course, we hear about George Soros lightening up his gold positions, Jim Rogers starting to hedge the gold price and Dennis Gartman shorting gold, but I see that more as a contrarian indicator. In the long term, fundamentals will win the battle.
Geplaatst door Albert Sung op 10:11
http://katchum.blogspot.com/2013/02/tightness-continues-in-precious-metals.html
Exclusive: Big powers to offer easing gold sanctions at Iran nuclear talks
By Arshad Mohammed
WASHINGTON | Fri Feb 15, 2013 3:30pm EST
(Reuters) - Major powers plan to offer to ease sanctions barring trade in gold and other precious metals with Iran in return for Iranian steps to shut down the nation's newly expanded Fordow uranium enrichment plant, Western officials said on Friday.
The officials said the offer is to be presented to Iran at February 26 talks in Almaty, Kazakhstan, and they acknowledged that it represents a relatively modest update to proposals that the six major powers put forward last year.
Speaking on condition of anonymity, the officials said their decision not to make a dramatically new offer in part reflected skepticism that Iran is ready to make a deal ahead of its June 14 presidential election.
The group, which includes Britain, China, France, Germany, Russia and the United States - and is known as the P5+1 - wants Iran to do more to prove that its nuclear program is for only non-military purposes and to permit wider U.N. inspections.
Iran denies it is seeking nuclear weapons but has refused, in recent years, to halt its uranium enrichment, a process that can produce fuel for nuclear reactors or, ultimately, for bombs.
Israel, which is regarded as the Middle East's only nuclear power and which views a nuclear-armed Iran as an existential threat, has raised the possibility of taking military action to halt the Iranian atomic program.
While stressing he wants to resolve the dispute with Iran through diplomacy, U.S. President Barack Obama on Tuesday repeated a veiled military threat, saying "we will do what is necessary to prevent them from getting a nuclear weapon."
EXPANSION
The core of the new offer revises last year's demand that Iran stop producing higher-grade uranium, ship any stockpiles out of the country and close down its underground enrichment facility at Fordow, near the holy Iranian city of Qom.
"The next proposal is remarkably close to the old one," said one official who spoke on condition of anonymity, describing it as "a way to test whether they are serious or not."
"We don't think the Iranians have given us reason to do much more," he said. "It's basically an update ... so it does require a little bit more from Iran in terms of cooperation with the (International Atomic Energy Agency) and at Fordow."
According to the IAEA's November report, Iran has increased the number of centrifuges at Fordow, an underground plant that could be largely impervious to attack from the air, by 644 to 2,784 since mid-August.
It has been enriching uranium at Fordow with one quarter of the total, or 696, centrifuges. Western diplomats say Iran is technically ready to sharply expand enrichment at Fordow but that, as of last week, it was not believed to have done so.
In further defiance of international demands that it scale back uranium enrichment, Iran this week said it was installing advanced enrichment machines at its main plant at Natanz, adding to Western worries it may be able to refine uranium even faster.
According to an IAEA report released in mid-November, Iran has a stockpile of 134.9 kg of 20 percent enriched uranium, bringing it closer to the ability to produce the 90 percent uranium needed to provide fissile material for atomic bombs.
Israeli Prime Minister Benjamin Netanyahu last year said Iran must not be allowed to amass enough enriched uranium for a single weapon, suggesting it would do so by the spring or summer of 2013 and implying a decision on whether to use military force against Iranian nuclear sites would have to be made by then.
Western officials said their new demands take into account the advances at Fordow as well as their desire that Iran cooperate more broadly with the IAEA, the U.N. nuclear watchdog.
While declining to provide exact details on what the P5+1 members would demand of Iran, a second Western official said the group wanted the steps to "build in buffer time" to ensure that it would take Iran "more time to restart Fordow."
"We use very careful wording such as 'decreasing readiness of Fordow'. These are face-saving words," this official said.
EASING PRECIOUS METALS SANCTIONS
The added inducement for Iran in the new offer is to suspend sanctions on trade in gold and precious metals, something that could be used as part of barter transactions that might allow Iran to circumvent increasingly tight financial sanctions.
It goes beyond last year's proposal, in which the powers offered sanctions relief on aviation spare parts, fuel for a medical reactor and other civil nuclear cooperation.
The Western officials described their new proposal as "more for more" - meaning that they are seeking more steps to curtail Iran's nuclear program in exchange for greater inducements on their part, but they admitted it is not a dramatic shift.
"It's still more for more, (but) not much more," said the second Western official.
Iran has so far been unwilling to embrace any of the P5+1's offers, including one made in October 2009 under which Iran would ship out much of its enriched uranium in exchange for fuel for the Tehran Research Reactor that produces medical isotopes.
The United States and the European Union have over the last 14 months put in place increasingly tough sanctions on Iran that directly target its lifeline oil industry.
The EU last year imposed an embargo on its members buying Iranian crude, while the United States moved to force other nations to curtail their oil imports from Iran with the threat of cutting off their banks from the U.S. financial system.
In a step to close a loophole under which third countries could barter for oil, U.S. President Barack Obama last July signed an executive order that would allow him to penalize any company that helped Iran acquire gold or other precious metals.
Any companies that did so could have their assets under U.S. jurisdiction frozen and be denied access to the U.S. financial system, a powerful deterrent to any bank or trading company.
The European Union bars trade in gold, precious metals and diamonds with Iranian public bodies and with the central bank.
The Western officials declined to specify precisely how the United States and European Union might ease such sanctions.
It is unclear whether the Iranians would find such an offer appealing or even the basis for further talks, or whether they might hold out for a much more comprehensive offer that the P5+1 do not, at present, appear ready to put on the table.
"It's not the crown jewel," said one Western official of the sanctions relief now on offer.
The offer may also stir up opposition in the U.S. Congress, which passed sanctions that went into effect on February 6 that tighten controls on sales of precious metals to Iran.
Bankers told Reuters in Istanbul that U.S. sanctions on gold are killing off Turkey's gold-for-gas trade with Iran and have stopped state-owned lender Halkbank from processing other nations' energy payments to the OPEC oil producer.
Senator Robert Menendez, chairman of the U.S. Senate Foreign Relations Committee and an advocate of harsh sanctions on Iran, said easing sanctions depended on Iranian behavior.
"I believe yielding on this sanction or any other sanction depends wholly on what the Iranians are willing to do," Menendez said. "If they are willing to perform concrete steps towards stopping and dismantling their nuclear weapons program, that's when we can consider easing some of our sanctions."
A Republican congressional aide said most members of his party would oppose sanctions relief until Iran met all its U.N. obligations and suggested Congress could strip the president of the flexibility, known in Washington jargon as "waiver authority," on whether or not to impose gold sanctions.
"While Congress gave the President a national security waiver, Congress can and should move to take it away in the next round of sanctions legislation if he intends to give the Iranians a pass in exchange for peanuts," he said.
(Additional reporting by Fredrik Dahl in VIENNA; Editing by Warren Strobel and Jackie Frank)
http://www.reuters.com/article/2013/02/15/us-iran-nuclear-gold-idUSBRE91E0TP20130215
China Readying Bullion-Backed Gold ETFs
February 14th at 9:11am by John Spence
China is set to introduce its first gold ETFs backed by physical bullion as early as this year, the Financial Times reports, citing the World Gold Council.
“The launch of gold ETFs in China has been hotly anticipated by some gold bulls, who believe it could trigger a new wave of demand for the precious metal,” the newspaper reports.
The amount of bullion held by gold ETFs listed around the world increased 274.9 metric tons over 2012, reaching a record 2,632.5 tons on Dec. 20, or the equivalent of a year’s worth of mining production. [Gold ETFs: Bullion Prices Up for 12th Straight Year]
SPDR Gold Shares (NYSEArca: GLD) is the largest such ETF, controlling 1,326 metric tons of gold, or more than $70 billion of assets under management.
Marcus Grubb, managing director for investment at the World Gold Council, said new rules adopted last month by Chinese regulators “effectively paves the way for physical commodity ETFs,” according to the FT report.
“Where ETFs are likely to score highly in China is with larger scale investors such as institutional or sovereign wealth,” he added.
Full disclosure: Tom Lydon’s clients own GLD.
http://www.etftrends.com/2013/02/china-readying-bullion-backed-gold-etfs/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+etftrends-feed+%28ETF+Trends%29
Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?
By Michael, on February 12th, 2013
(special thanks to the Cork)
Petrogold: Are Russia And China Hoarding Gold Because They Plan To Kill The Petrodollar?Will oil soon be traded in a currency that is thousands of years old? What would a "gold for oil" system mean for the petrodollar and the U.S. economy? Are Russia and China hoarding massive amounts of gold because they plan to kill the petrodollar? Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe. This has created an overwhelming demand for U.S. dollars and U.S. debt. But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade? The truth is that it doesn't take a lot of imagination to figure that out. Demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before. So are Russia and China accumulating unprecedented amounts of gold right now because they eventually plan to cut the legs out from under the petrodollar and they want to gobble up huge stockpiles of gold before the cat is out of the bag? Of course they will never admit this publicly, but there are rumblings out there that this is exactly what is happening.
Not that you can really blame any nation that wants to get into gold right now. News outlets all over the globe are telling us that we are in the midst of a "currency war" as central banks all over the planet race to devalue their currencies.
So why would anyone want to be in paper in such an environment?
And of course the Federal Reserve is one of the biggest offenders. The Fed has been printing money like it is going out of style, and nobody at the Fed or in the U.S. government really seems too concerned that all of this money printing could be endangering the petrodollar.
But the truth is that the Fed is endangering the petrodollar. Just read some foreign news stories about the U.S. dollar. They mock us for our reckless money printing.
In the end, our recklessness will make it very easy for the rest of the world to ditch the U.S. dollar.
At some point, it will happen. In fact, there are persistent rumors that Russia and China actually intend to make it happen.
Many believe that this is the reason both nations have been hoarding so much gold recently.
Just check out how much gold Russia has been accumulating. The following is from a recent Bloomberg article...
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
And Russia's gold hoarding appears to have accelerated last year. According to one recent report, Russia added 3.2 million ounces of gold to their reserves in 2012 alone.
But of even greater concern is China. Nobody really knows how much gold China has, because they do not tell us, but all indications point to the fact that Chinese gold hoarding has gone into overdrive. The following is from a Zero Hedge article from a few months ago...
Because while earlier today we were wondering (rhetorically, of course) what China is doing with all that excess trade surplus if it is not recycling it back into Treasurys, now we once again find out that instead of purchasing US paper, Beijing continues to buy non-US gold, in the form of 68 tons in imports from Hong Kong in the month of June. The year to date total (6 months)? 383 tons. In other words, in half a year China, whose official total tally is still a massively underrepresented 1054 tons, has imported more gold than the official gold reserves of Portugal, Venezuela, Saudi Arabia, the UK, and so on, and whose YTD imports alone make it the 14th largest holder of gold in the world. Realistically, by now China, which hasn't provided an honest gold reserve holdings update to the IMF in years, most certainly has more gold than the IMF, and its 2814 tons, itself. Of course, the moment the PBOC does announce its official updated gold stash, a gold price in the mid-$1000 range will be a long gone memory.
As I wrote about the other day, nobody produces more gold than China does, and nobody imports more gold than China does.
Everyone agrees that China seems to have an insatiable appetite for gold, but nobody can agree on exactly how much gold they actually have. One recent estimate put China's gold reserves at more than 7,000 tons of gold, but it could even be much higher than that. Nobody really knows.
So what are Russia and China up to?
Well, for a long time both nations have expressed displeasure with the fact that the U.S. dollar is the de facto currency of the world. Leaders from both nations have suggested the possibility of adopting a new global reserve currency, but up to this point no real contenders have emerged to dethrone the U.S. dollar.
So for now, the U.S. dollar reigns supreme in international trade. Sadly, even though most Americans greatly benefit from the petrodollar, most of them do not even know what it is. For those that do not fully understand the petrodollar, the following is a good explanation of the petrodollar from a recent article by Christopher Doran...
In a nutshell, any country that wants to purchase oil from an oil producing country has to do so in U.S. dollars. This is a long standing agreement within all oil exporting nations, aka OPEC, the Organization of Petroleum Exporting Countries. The UK for example, cannot simply buy oil from Saudi Arabia by exchanging British pounds. Instead, the UK must exchange its pounds for U.S. dollars. The major exception at present is, of course, Iran.
This means that every country in the world that imports oil—which is the vast majority of the world's nations—has to have immense quantities of dollars in reserve. These dollars of course are not hidden under the proverbial national mattress. They are invested. And because they are U.S. dollars, they are invested in U.S. Treasury bills and other interest bearing securities that can be easily converted to purchase dollar-priced commodities like oil. This is what has allowed the U.S. to run up trillions of dollars of debt: the rest of the world simply buys up that debt in the form of U.S. interest bearing securities.
And all of this has worked out very nicely for the United States. It has created a massive demand for U.S. dollars and U.S. debt.
But what would happen if the rest of the world rejected the petrodollar system and adopted a "petrogold" system instead?
A recent article by Jim Willie discussed how a petrogold system might work...
The crux of the non-US$ trade vehicle devised as a USDollar alternative will be the Gold Trade Note. It will enable peer-to-peer payments to be completed from direct account transfers independent of currency, and most importantly, not done through the narrow pipes and channels controlled by the bankers with their omnipresent SWIFT code system among the world of banks. The Gold Trade Note will act much like a Letter of Credit, serve as a short-term bill, and maybe even push aside the near 0% short-term USTreasury Bills that litter the banking landscape. Any bond or bill earning almost no interest is veritable clutter. The zero bound USTreasurys open the door in a big way for replacement by a better vehicle. The new trade notes will involve posted gold as collateral, whose entire system for trade usage will bear a massive gold core that also will include silver and platinum, maybe other precious metals. The idea is to avoid the FOREX systems, to avoid the USDollar, and to avoid the banks as much as possible in a peer-to-peer system that can be executed between parties holding Blackberry devices or simple PC to complete the payments on transactions. If Gold is ignored by the corrupt bankers, then Gold will be the center of the new trade system and the solution in providing a globally accepted USDollar alternative.
And Russia and China would greatly benefit from a petrogold system.
Today, Russia is the number one oil exporter on the planet.
China is the number two consumer of oil in the world, and at this point they are actually importing more oil from Saudi Arabia than the United States is.
Does it make sense that they should remain locked into a system that forces them to use U.S. dollars for all of their oil transactions?
And now Russia even has the number one oil company in the world. The following is from a recent article by Marin Katusa...
Exxon Mobil is no longer the world's number-one oil producer. As of yesterday, that title belongs to Putin Oil Corp – oh, whoops. I mean the title belongs to Rosneft, Russia's state-controlled oil company.
Rosneft is buying TNK-BP, which is a vertically integrated oil company co-owned by British oil firm BP and a group of Russian billionaires known as AAR. One of the top-ten privately owned oil producers in the world, in 2010 TNK-BP churned out 1.74 million barrels of oil equivalent per day from its assets in Russia and Ukraine and processed almost half that amount through its refineries.
With TNK-BP in its hands, Rosneft will be in charge of more than 4 million barrels of oil production a day. And who is in charge of Rosneft? None other than Vladimir Putin, Russia's resource-full president.
And Russian gas giant Gazprom supplies a huge percentage of the natural gas that Europe uses...
Gazprom, the Russian state gas company, already has Europe wrapped around its little finger. Russia supplies 34% of Europe's gas needs, and when the under-construction South Stream pipeline starts operating, that percentage will increase. As if those developments weren't enough, yesterday Gazprom offered the highest bid to obtain a stake in the massive Leviathan gas field off Israel's coast.
Gazprom in control of Europe's gas, Rosneft in control of its oil. A red hand stretching out from Russia to strangle the supremacy of the West and pave the way for a new world order– one with Russia at the helm.
Russia and China have a tremendous amount of leverage when it comes to energy. What if they got together with a bunch of oil producing nations in the Middle East and decided to set up a system where oil is traded for gold? Would not much of the rest of the world go along with such a system?
Of course if that happened the U.S. financial system would crash. We would no longer be able to export our inflation to the rest of the globe and prices would rise dramatically. Demand for U.S. government debt would go through the floor and interest rates on that debt and on everything else in our economy would skyrocket. Economic activity would grind to a standstill and the financial markets would collapse.
And that would just be for starters.
Most Americans simply don't understand that Russia and China have the power to collapse the U.S. economy by going to a gold for oil system. All they have to do is pull the trigger.
The other day I wrote an article entitled "Show This To Anyone That Believes That 'Things Are Getting Better' In America" which discussed all of the reasons why the U.S. economy is already collapsing. But as bad as things are now, this is nothing compared to what things will be like when the petrodollar dies.
So pay keen attention to anything in the news about Russia or China suggesting that oil should be traded for gold. When Russia and China pull the trigger, things will get messy very quickly.
http://theeconomiccollapseblog.com/archives/petrogold-are-russia-and-china-hoarding-gold-because-they-plan-to-kill-the-petrodollar
Russia & China Know Final Currency Devaluation Is Coming
Feb. 14, 2013
Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, states that most of what we are seeing today, including the action in key global markets, is all part of a charade. He also warns, “Russia and China know that the final devaluation of the fiat currencies is coming soon.”
Below is Fitzwilson’s exclusive piece for KWN:
“In the 1920s a popular phrase was ‘Follow the bouncing ball.’ The phrase was created by Max Fleischer of Fleischer Studios. Included among the characters attributed to Fleischer Studios were Superman, Popeye, and Fitz the Dog, later to be renamed Bimbo.
“Following the ball was an early form of a sing-a-long. As the audience watched a cartoon, subtitles for the music appeared at the bottom of the screen, and a bouncing ball would hover over the words to the song so that the audience could participate.
An economic and investment version of following the bouncing ball is the Dollar Index....
“The largest component of the Dollar Index is the euro. The rest of the mix contains a few other European currencies and the Japanese yen.
In recent years, we have become transfixed by the back and forth oscillations of the index. Other than the precipitous decline from the highs prior to the introduction of the euro to the current level of roughly 80, it has been an insight-devoid oscillation appropriate only for traders.
We have been following the bouncing ball as intended. The dollar goes up, the euro weakens. Coincidentally, swaps occur between central banks at the same time. For example, if the U.S. Fed provides dollars to the Europeans, the dollar weakens as they are converted into euros and the euro rises. It often occurs around solvency crises, keeping the aggregate bankingsystem from capsizing and on a seemingly even keel. The pattern then reverses. It is all part of the charade.
We find that following the Dollar Index is a worthless exercise if one wants to gauge the condition of the currency markets. Will it go to 50 as some suggest? Perhaps, but that will only occur if the current range of the high 70s to low 80s cannot be defended. The usefulness of the Index is to divert our attention from the real battle being waged between the fiat currency bloc, the yuan, and gold.
The currencies that comprise the Dollar Index and the dollar itself are really part of the same team. The components move around a bit to create excitement, but those countries and their currencies are joined at the financial hip. We recently saw Japan appear to be getting out of line with Mr. Abe’s call for unlimited printing, but then subsequently saw an announcement that the yen had depreciated “enough”.
This is all part of the pretend drama that the fiat currencies are engaged in a currency war. If there is a war, it is the fiat group against gold and the yuan. A wondering mind, however, might consider the possibility that the latest moves by Japan are really about rearmament given their growing tensions with China and North Korea. An announcement of rearmament would be politically problematic. Unlimited stimulus would provide the perfect politically correct cover for rearmament. One can only ruminate on the possibilities.
Talk of currency wars continues to dominate the financial news. Ghosts of the ‘30s and the “beggar thy neighbor” policies have been resurrected. This is not about beggaring a neighbor this time around. This is not about nationalistic policies to provide markets for goods and employment for citizens.
In the Western bloc countries, this time around it is about allowing citizens to remain unemployed. It is about maintaining banking systems at all costs. It is really a policy of “beggaring thy citizens”, not thy neighbor. It is about power. It is about China wanting to regain what they consider their historic role as the economic powerhouse. Russia and China both know that gold is sovereignty and power.
Gold, oil and the success or failure of the yuan as a reserve currency are the only bouncing balls that matter in this game of Titans. As investors, we can only step out of the fiat currency arena and acquire what the powerful desire, primarily oil and precious metals. Tangible assets should also be accumulated, not for their role in global supremacy, but their intrinsic value for whatever comes next.
The devaluation of fiat currency is on a non-linear trajectory. The dollar deteriorated relatively slowly for 90 years. It deteriorated rapidly in the next 10 years. The final destruction will take only a few years. It could virtually happen overnight as we saw with Venezuela and North Korea.
The template was unveiled in the ‘30s with Roosevelt, and that was to confiscate the gold first and then devalue. Venezuela followed that same approach which was to reclaim their gold and then devalue. Russia and China know that the final devaluation of the fiat currencies is coming soon. Their version of the template is to produce and purchase as much gold as possible in anticipation of the final throes of the dollar as the reserve currency. One needs only to be following the relatively few real bouncing balls to know how and when this story ends.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/14_Russia_%26_China_Know_Final_Currency_Devaluation_Is_Coming.html
Russia & China Know Final Currency Devaluation Is Coming
Feb. 14, 2013
Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News. Fitzwilson, who is founder of The Portola Group, states that most of what we are seeing today, including the action in key global markets, is all part of a charade. He also warns, “Russia and China know that the final devaluation of the fiat currencies is coming soon.”
Below is Fitzwilson’s exclusive piece for KWN:
“In the 1920s a popular phrase was ‘Follow the bouncing ball.’ The phrase was created by Max Fleischer of Fleischer Studios. Included among the characters attributed to Fleischer Studios were Superman, Popeye, and Fitz the Dog, later to be renamed Bimbo.
“Following the ball was an early form of a sing-a-long. As the audience watched a cartoon, subtitles for the music appeared at the bottom of the screen, and a bouncing ball would hover over the words to the song so that the audience could participate.
An economic and investment version of following the bouncing ball is the Dollar Index....
“The largest component of the Dollar Index is the euro. The rest of the mix contains a few other European currencies and the Japanese yen.
In recent years, we have become transfixed by the back and forth oscillations of the index. Other than the precipitous decline from the highs prior to the introduction of the euro to the current level of roughly 80, it has been an insight-devoid oscillation appropriate only for traders.
We have been following the bouncing ball as intended. The dollar goes up, the euro weakens. Coincidentally, swaps occur between central banks at the same time. For example, if the U.S. Fed provides dollars to the Europeans, the dollar weakens as they are converted into euros and the euro rises. It often occurs around solvency crises, keeping the aggregate banking system from capsizing and on a seemingly even keel. The pattern then reverses. It is all part of the charade.
We find that following the Dollar Index is a worthless exercise if one wants to gauge the condition of the currency markets. Will it go to 50 as some suggest? Perhaps, but that will only occur if the current range of the high 70s to low 80s cannot be defended. The usefulness of the Index is to divert our attention from the real battle being waged between the fiat currency bloc, the yuan, and gold.
The currencies that comprise the Dollar Index and the dollar itself are really part of the same team. The components move around a bit to create excitement, but those countries and their currencies are joined at the financial hip. We recently saw Japan appear to be getting out of line with Mr. Abe’s call for unlimited printing, but then subsequently saw an announcement that the yen had depreciated “enough”.
This is all part of the pretend drama that the fiat currencies are engaged in a currency war. If there is a war, it is the fiat group against gold and the yuan. A wondering mind, however, might consider the possibility that the latest moves by Japan are really about rearmament given their growing tensions with China and North Korea. An announcement of rearmament would be politically problematic. Unlimited stimulus would provide the perfect politically correct cover for rearmament. One can only ruminate on the possibilities.
Talk of currency wars continues to dominate the financial news. Ghosts of the ‘30s and the “beggar thy neighbor” policies have been resurrected. This is not about beggaring a neighbor this time around. This is not about nationalistic policies to provide markets for goods and employment for citizens.
In the Western bloc countries, this time around it is about allowing citizens to remain unemployed. It is about maintaining banking systems at all costs. It is really a policy of “beggaring thy citizens”, not thy neighbor. It is about power. It is about China wanting to regain what they consider their historic role as the economic powerhouse. Russia and China both know that gold is sovereignty and power.
Gold, oil and the success or failure of the yuan as a reserve currency are the only bouncing balls that matter in this game of Titans. As investors, we can only step out of the fiat currency arena and acquire what the powerful desire, primarily oil and precious metals. Tangible assets should also be accumulated, not for their role in global supremacy, but their intrinsic value for whatever comes next.
The devaluation of fiat currency is on a non-linear trajectory. The dollar deteriorated relatively slowly for 90 years. It deteriorated rapidly in the next 10 years. The final destruction will take only a few years. It could virtually happen overnight as we saw with Venezuela and North Korea.
The template was unveiled in the ‘30s with Roosevelt, and that was to confiscate the gold first and then devalue. Venezuela followed that same approach which was to reclaim their gold and then devalue. Russia and China know that the final devaluation of the fiat currencies is coming soon. Their version of the template is to produce and purchase as much gold as possible in anticipation of the final throes of the dollar as the reserve currency. One needs only to be following the relatively few real bouncing balls to know how and when this story ends.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/2/14_Russia_%26_China_Know_Final_Currency_Devaluation_Is_Coming.html
Putin Turns Black Gold to Bullion as Russia Outbuys World
By Scott Rose & Olga Tanas - Feb 11, 2013 7:42 AM ET
bloomberg
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
Gold, coveted by Russian rulers including Tsar Nicholas II and the Bolshevik leader whose forces assassinated him, Vladimir Lenin, has soared almost 400 percent in the period of Putin’s purchases. Central banks around the world have printed money to escape the global financial crisis, sapping investor appetite for dollars and euros and setting off a scramble for safety.
In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, data compiled by Bloomberg show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 -- less than half what it is now -- the president told the central bank to buy.
Putin’s Call
During a tour that November of the Magadan region in the Far East, where Polyus Gold International Ltd. and Polymetal International Plc have operations, Putin told Bank Rossii not to “shy away” from the metal. “After all, they’re called gold and currency reserves for a reason,” Putin said, according to a Kremlin transcript.
At the time, gold was at an 18-year high of $495 an ounce and the Moscow-based central bank held 387 tons, or 2.2 percent of its $165 billion total reserves. The share reached 3.5 percent within a month, according to data compiled by Bloomberg.
Gold for immediate delivery fell a third day today, dropping 0.6 percent to $1,657.80 an ounce as of 4:35 p.m. in Moscow. It rose 7 percent last year, the 12th straight year of gains. Analysts expect the metal to advance again in 2013, to $1,825 by the end of the year, according to the median of 26 forecasts in a Bloomberg survey.
Dmitry Peskov, Putin’s spokesman, declined to comment today on Putin’s interest in gold.
Lucky Guy
“Putin’s gold strategy fits in with his resource nationalism, statist agenda,” said Tim Ash, head of emerging- market research at Standard Bank Plc in London. “It’s kind of a defensive play, but it worked, right?” Ash said in an interview in Moscow. “You need luck in politics and business, and clearly the guy has it.”
Other world leaders haven’t been as lucky. Gordon Brown, as U.K. finance minister, sold almost 400 tons of gold in the 30 months to March 2002, when prices were at two-decade lows. London tabloids have referred to the period as Brown’s Bottom.
Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons, Grubb said by phone from London, where his industry group is based.
‘Significant Switch’
“That’s a very significant switch, and obviously a very positive one for the gold market,” Grubb said.
While Putin is leading the gold rush in emerging markets, developed nations are liquidating. Switzerland unloaded the most in the past decade, 877 tons, an amount now worth about $48 billion, according to International Monetary Fund data through November. France was second with 589 tons, while Spain, the Netherlands and Portugal each sold more than 200 tons.
Even after Putin’s binge, though, Russia’s total cache of about 958 tons is only the eighth largest, the World Gold Council said in a Feb. 8 report. The U.S. is No. 1 with about 8,134 tons, followed by Germany with 3,391 tons and the Washington-based IMF with 2,814 tons. Italy, France, China and Switzerland are fourth through seventh. While gold accounts for 9.5 percent of Russia’s total reserves, it accounts for more than 70 percent in the U.S., Germany, Italy and France.
Truth Street
Russia keeps about two-thirds of its stockpile in a greenish gray stone-and-glass building on Ulitsa Pravdy, or Truth Street, in central Moscow. The road is named after Pravda, the official newspaper of the Communist Party, which also was headquartered there.
Then-Prime Minister Putin became the first Russian leader to visit the complex on Jan. 24, 2011, according to the government’s website. He toured the 17,000 square-meter facility, which includes 1,500 square meters of storage, with First Deputy Chairman Georgy Luntovsky, posing for photographs lifting an ingot. Most of the bars weigh 10 to 14 kilograms (22 to 31 pounds) and are boxed in plastic or wooden crates alongside an emergency supply of banknotes.
Technically, state metals depositary Gokhran has the exclusive right to buy all gold mined in the country. In practice, it lets commercial banks buy from producers directly, usually in the form of project financing, said Sergey Kashuba, chairman of the Russian Union of Gold Producers in Moscow.
When the central bank buys gold, it’s from those commercial banks, led last year by OAO Sberbank, OAO Nomos Bank, VTB Group and OAO Gazprombank, Kashuba said. Russia produced 205 tons of gold last year, making it No. 4 after China, Australia and the U.S., according to U.S. Geological Survey estimates.
Tight Security
Security is tight along the entire production chain, Kashuba said. Just two organizations are allowed to move partially refined gold from miners in the Far East and northern Siberia to processing facilities in other parts of the country, he said. One is FeldSvyaz, a courier service that reports directly to Putin. The other, SpetsSvyaz, was split off from Stalin’s NKVD secret police in 1939 to transport precious metals and state secrets, according to its website.
Russia has gone through bouts of hoarding before. Tsar Alexander II ordered his government to start amassing bullion in 1867, just months after selling Alaska, now the No. 2 gold- producing U.S. state, for $7.3 million. His grandson, Nicholas II, introduced the gold standard in 1897, then needed a loan from France to ward off speculators and save the system in 1906.
Lenin’s Link
Nicholas, Russia’s last tsar was forced to free the ruble in 1914 as war broke out in Europe. Lenin’s revolutionary government reinstated the gold link along with a new currency in 1922. While Soviet rubles were nominally backed by gold, sales of the metal to citizens were halted in 1930, making the peg meaningless.
When Lenin’s Bolsheviks seized power in Petrograd, as St. Petersburg was then known, in 1917, one of their first targets was the State Bank and its gold, which they captured at 6 a.m. on Nov. 7, according to Bank Rossii’s website. They soon nationalized all the banks, confiscating any gold found in vaults and deposit boxes.
Communist Secrecy
Communist secrecy regarding the country’s gold holdings fueled speculation that party elites had amassed a huge hoard of bullion that they spirited out of the country before the Soviet Union disintegrated in 1991.
Viktor Gerashchenko, the last Soviet central banker and a two-time chairman of Bank Rossii, has repeatedly denied such speculation, including last February.
“When people ask about the party’s gold, my answer is always: Are you an idiot or something?” Gerashchenko, 75, told Afisha magazine.
For now, with more than five years left in Putin’s term, Russia plans to keep on buying.
“The pace will be determined by the market,” First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. “Whether to speed that up or slow it down is a market decision and I’m not going to discuss it.”
To contact the reporters on this story: Scott Rose in Moscow at rrose10@bloomberg.net; Olga Tanas in Moscow at otanas@bloomberg.net
http://www.bloomberg.com/news/2013-02-10/putin-turns-black-gold-into-bullion-as-russia-out-buys-world.html
Russia Flips Petrodollar On Its Head By Exporting Crude, Buying Record Gold
Submitted by Tyler Durden on 02/10/2013
Alexei Ulyukayev Central Banks China Crude Davos France Global Economy International Monetary Fund Nationalism Netherlands Portugal Quantitative Easing Reserve Currency Switzerland Vladimir Putin World Gold Council
China has been a very active purchaser of gold for its reserves in the last few years, as we extensively covered here and here, but another nation has taken over the 'biggest buyer' role (for the same reasons as China).
Central banks around the world have printed money to escape the global financial crisis, and as Bloomberg reports, IMF data shows Russia added 570 metric tons in the past decade. Putin's fears that "the U.S. is endangering the global economy by abusing its dollar monopoly," are clearly being taken seriously as the world's largest oil producer turns black gold into hard assets. A lawmaker in Putin's party noted, "the more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency."
Putin’s gold strategy fits in with his resource nationalism, statist agenda, as Bloomberg notes when Russia defaulted in 1998 it took 28 barrels of oil to buy one ounce of gold, was 11.5 barrels when Putin came to power and when in 2005 it had fallen to 6.5 barrels (less than half what it is now), he went all in, telling the central bank to buy.
Russia has gone through bouts of hoarding before - from 1867's Tsar Alexander II to Lenin, for now, with more than five years left in Putin’s term, Russia plans to keep on buying - "The pace will be determined by the market," First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. "Whether to speed that up or slow it down is a market decision and I’m not going to discuss it."
Via Bloomberg,
Putin Turns Black Gold Into Bullion as Russia Out-Buys World
When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.
Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.
“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.
...
In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, Bloomberg data show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 -- less than half what it is now -- the president told the central bank to buy.
During a tour that November of the Magadan region in the Far East, where Polyus Gold International Ltd. and Polymetal International Plc have operations, Putin told Bank Rossii not to “shy away” from the metal. “After all, they’re called gold and currency reserves for a reason,” Putin said, according to a Kremlin transcript.
Lucky Guy
At the time, gold was trading at an 18-year high of $495 an ounce and the Moscow-based central bank held 387 tons, or 2.2 percent of its $165 billion total reserves. The share reached 3.5 percent within a month, according to data compiled by Bloomberg.
An ounce of gold for immediate delivery traded at $1,670 as of 7:24 p.m. Moscow time on Feb. 8. It rose 7 percent last year, the 12th straight year of gains. Analysts expect the metal to advance again in 2013, to $1,825 by the end of the year, according to the median of 26 forecasts in a Bloomberg survey.
“Putin’s gold strategy fits in with his resource nationalism, statist agenda,” said Tim Ash, head of emerging- market research at Standard Bank Plc in London. “It’s kind of a defensive play, but it worked, right?” Ash said in an interview in Moscow. “You need luck in politics and business, and clearly the guy has it.”
Brown’s Bottom
Other world leaders haven’t been as lucky. Gordon Brown, as U.K. finance minister, sold almost 400 tons of gold in the 30 months to March 2002, when prices were at two-decade lows. London tabloids have referred to the period as Brown’s Bottom.
Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons,
...
While Putin is leading the gold rush in emerging markets, developed nations are liquidating. Switzerland unloaded the most in the past decade, 877 tons, an amount now worth about $48 billion, according to International Monetary Fund data through November. France was second with 589 tons, while Spain, the Netherlands and Portugal each sold more than 200 tons.
No Hoard
Communist secrecy regarding the country’s gold holdings fueled speculation that party elites had amassed a huge hoard of bullion that they spirited out of the country before the Soviet Union disintegrated in 1991.
...
“When people ask about the party’s gold, my answer is always: Are you an idiot or something?” Gerashchenko, 75, told Afisha magazine.
For now, with more than five years left in Putin’s term, Russia plans to keep on buying.
“The pace will be determined by the market,” First Deputy Chairman Alexei Ulyukayev said in an interview in Davos, Switzerland, on Jan. 25. “Whether to speed that up or slow it down is a market decision and I’m not going to discuss it.”
http://www.zerohedge.com/news/2013-02-10/russia-flips-petrodollar-its-head-exporting-crude-buying-record-gold
Marin Katusa of Casey Research recently spoke to FutureMoneyTrends.com to discuss gold as an investment.
Marin lays out the case for gold ownership, why you should buy it and what his forecast is over the next year.
What will shock you though is if you listen to Marin closely at about the 3:20 mark, he reveals an insider's secret about a small gold junior mining company that he is the largest single shareholder through the KCR fund, which he is partnered with Rick Rule of Sprott Asset Management and Doug Casey of Casey Research. Marin talks about a potential multi-million ounce gold discovery at a project that a very well known geologist is dying to get his hands on since he believes it mimics a major discovery that he was previously responsible for developing for a billion dollar gold miner. Though this is not inside information, it is information that is not known to the public at all, at least until now.
(Video link)
http://www.futuremoneytrends.com/index.php/interviews/404-marin-katusa-back-to-talk-about-the-gold-sector
Bankrun ? 43 tons delivery request for physical gold on the COMEX for February
Publication date : 2013-02-02
Fabrice Drouin Ristori
It seems that the gold repatriation request from Germany gave ideas to many investors, countries and sovereign or investment funds. Case in point, if we analyse the delivery requests on the COMEX for the month of February, we see that they are reaching the astronomical amount of 43,26 tons of physical gold, or 1,391,000 ounces of gold to deliver.
Why is this information paramount ?
As explained by Harvey Organ :
Because, for comparison purposes, delivery requests for the month of December 2012, normally a record month for deliveries, amounted to only 10 tons of gold.
Secondly, because the COMEX is normally a « paper » gold market in which investors rarely request converting their contracts into physical gold. Large investors, bullion banks and investment funds looking to acquire physical gold generally do it on the LBMA in London. Thus it’s possible that the LBMA is also showing signs of scarcity, with this movement toward the COMEX to acquire physical gold.
And, thirdly, because since the ‘70s, it’s the first time that there is such a request for physical gold delivery from the COMEX.
The run on physical gold is accelerating.
Now as mentioned by 321gold.com, the COMEX can force cash settlement in the sense that investors will get cash instead of physical gold. The same thing is true for ETF. Investors won't lose everything but they won't be able to get physical gold when the price explode higher.
Let us also note :
• Gold just reached a historic peak in yen yesterday, at 153,000 yen per ounce of gold.
• Physical silver production in 2012 fell to 33 million ounces, from 36 million in 2011. Not especially good news for the investment banks that are massively short silver, because they will have to deal with very important delivery requests (converting paper contracts into physical silver) from investors in the coming months, as this bank run on gold and silver continues.
Related article : Germany Announces End of Game of Musical Chairs in Gold
Fabrice Drouin Ristori - Founder/CEO Goldbroker.com (FDR Capital)
ceo@goldbroker.com
Twitter : @FabriceDrouin
Goldbroker.com on Twitter and Facebook
Goldbroker.com is a physical gold and silver broker recommended by GATA (Gold Anti-Trust Action Committee)
https://www.goldbroker.com/news/physical-gold-43-tons-delivery-request-comex-february-ban-run-193.html
NOW YOU CAN ENCRYPT YOUR CALLS, TEXTS TO PROTECT THEM FROM BEING SPIED ON
Feb. 6, 2013
http://www.theblaze.com/stories/2013/02/06/now-you-can-encrypt-your-calls-texts-to-protect-them-from-being-spied-on/
NOW YOU CAN ENCRYPT YOUR CALLS, TEXTS TO PROTECT THEM FROM BEING SPIED ON
Feb. 6, 2013
http://www.theblaze.com/stories/2013/02/06/now-you-can-encrypt-your-calls-texts-to-protect-them-from-being-spied-on/