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Gold reserve mysteries
2013-JAN-20
Last Wednesday the Bundesbank released a statement to the effect that 300 tonnes of Germany’s gold will be moved from New York and 374 tonnes from Paris. This should be a simple operation: rail or trucks from Paris, and a few military planeloads (or ships) from America – as soon as they have somewhere to store it.
Instead they plan to do it over the next seven years, which is a postponement. This tends to confirm suspicions that the gold does not actually exist. As a side issue, along with the Bundesbank statement is a PDF download with slide number 14 entitled “Storage at the Federal Reserve Bank New York”. It looks like a photomontage rather than real gold, and the come-on is to believe it’s the Bundesbank’s. This gives the game away: the whole exercise is a public relations stunt.
Why hold any gold in New York nowadays? The Soviets are no longer menacing the Fulda Gap. Yes, New York is obviously still a critical trading venue, but not for physical gold – the Bundesbank apparently withdrew 940 tonnes from the Bank of England in 2000, where the physical market is actually located.
The reason this matters is that independent deductive analysis has concluded that the central banks have been supplying the market with physical bullion in order to suppress the price, all of which is either officially denied or goes unanswered. The origin of price suppression actually go back to the 1990s, and was exposed by Frank Veneroso in a paper published in 1998, confirmed by detective work from our own James Turk, and triply confirmed by the evasive responses on this issue given by central banks and the IMF to the Gold Anti-Trust Action Committee (GATA). The public are unaware of this issue because the mainstream media, with the occasional exception, refuses to investigate the subject.
But here is something that joins up a few more dots. We know that Gordon Brown sold half of Britain’s gold at the bottom of the market from 1999-2002. We commonly assume that he was just incompetent. What is not commonly appreciated is that he learned his economics from Ed Balls, the current Shadow Chancellor. As his economics advisor, Balls was the puppet-master and Chancellor Brown the puppet. Ed Balls was also a close friend of Larry Summers, who was US Deputy Secretary of the Treasury from 1995 and then Secretary of the Treasury from 1999 to 2001 – the time of Britain’s gold sales. As Treasury secretary Summers was head of the Exchange Stabilization Fund, the US government’s mechanism for supplying bullion to the markets. In the light of these deeply Keynesian relationships from the mid-1990s, it is unlikely that Brown acted in isolation. More than likely Washington was also supplying the market through swaps and leases that were never recorded as changes of ownership.
The net result is that there is not enough physical gold left in the vault to deliver to Germany, which is why they are stalling for time. What was presented to us last Wednesday was just a desperate attempt to stop the whole issue becoming more public.
Tags: Bank of England, GATA, Germany, gold reserves
Author: Alasdair Macleod
http://www.goldmoney.com/gold-research/alasdair-macleod/gold-reserve-mysteries.html?gmrefcode=dollarc
Delays In Deliveries of Physical Gold : Swiss Refiners Overwhelmed with Orders
by Egon von Greyerz - Matterhorn Asset Management
Published : January 16th, 2013
Egon von Greyerz, founder of Goldswitzerland.com (Matterhorn Asset Management AG) and member of the board of directors of Goldbroker.com told that Swiss gold refiners have been overwhelmed with orders for physical gold and buyers are now experiencing major delays in deliveries.
“I had stated previously that gold would bottom in the last week of December, and this is what happened. That daily, intraday low that we’ve seen was a screaming buy both fundamentally and technically. I can tell you there were many banks and other parties taking advantage of this low.
There has been major buying in the physical market as gold came down in the last week of December, and the first week of January. The Swiss refiners are now working at absolute full capacity. There is a delay in fulfilling orders....
This shows you what I’ve been saying, as gold is dipping, the strong buyers are coming in. The buying came in on the dips and it was so massive from the Swiss banks and from the Middle-East, and the Far-East, that the refiners could not supply them without major delays.
And this is confirming what I’ve been saying continuously, that the manipulation of gold is taking place in the artificial paper market. The paper sellers are selling what they don’t have (physical gold), and they can never deliver. The day the paper buyers realize this, which in my view is not far away, gold will explode.
This is why it is so important, to hold physical gold and to hold it outside of the banking system.
People should not worry about gold dipping because the real buyers are in the physical market and that is the only market we should look at.”
http://www.24hgold.com/english/news-gold-silver-delays-in-deliveries-of-physical-gold--swiss-refiners-overwhelmed-with-orders.aspx?article=4186082900G10020&redirect=false&contributor=Egon+Von+Greyerz
Gold and Basel III
16 January 2013
Source: GoldSeek.com
Przemyslaw Radomski, CFA
Perhaps you have never heard of the Bank for International Settlements (BIS) located in Basel, Switzerland. Perhaps you have never heard of the Basel Committee on Banking Supervision (BCBS), a separate legal entity with headquarters at the BIS. But these two regulatory bodies play a considerably important role in the development of international banking supervisory standards. And, as it happens, they also put forward propositions on how gold is to be seen by the banks.
The BIS was set up in 1930, its goals and means have changed throughout the years and today its main scope of activity is to provide central banks with credit when necessary and to help in achieving monetary and financial stability on an international level. The BCBS was established in 1974 and is primarily concerned with coordinating banking supervisory activities. Both BIS and BCBS are organizations with history but neither of them have legal power to enforce any changes in the law of its members.
On the other hand, it proves that the BCBS has considerable influence among central banks all over the world. In 1988 the Committee outlined what is currently known as Basel I – a set of recommendations on capital requirements. Long story short, bank assets were divided into several groups based on their perceived riskiness (bonds and gold were in the least risky category) and banks were required to cover 8% of their assets according to a special formula. The intuition was that at least a part of all the assets of the banks should be backed up by assets perceived as “safe” (including gold). Even though the BSCB did not have any regulatory power, its members adhered to its requirements, with the level of adherence varying among the countries.
In 2004, Basel II was introduced with more detailed recommendations on capital requirements, banking supervision and market risk. Bank assets were divided into three categories where Tier 1 encompassed assets perceived as least “risky” and Tier 3 comprised of assets perceived as “risky.” The recommendations were amended multiple times; however, they failed to adequately identify the risks associated with structured credit products, like mortgage-backed securities. These risks were severely underestimated or even not identified. As far as gold is concerned, under Basel II it was treated as either Tier 1 or Tier 3 capital, since the BCBS stipulated that:
(…) at national discretion, gold bullion held in own vaults or on an allocated basis to the extent backed by bullion liabilities can be treated as cash and therefore risk-weighted at 0%.
Now, let’s make this absolutely clear, this excerpt comes from the Basel II (!) documentation and NOT from the Basel III one. So, depending on the decision of the country gold was either counted as Tier 1 or Tier 3 capital already under Basel II. Gold was also accepted as collateral with a supervisory haircut of 15%.
The financial meltdown of 2008 prompted the BCBS to revise its recommendations and postulate more restrictive capital requirements. In 2010 the BCBS presented the first official version of its new recommendations, which was called Basel III. Basel III abolished the Tier 3 capital class – all assets fell either under Tier 1 or Tier 2 capital. Under these recommendations gold remained eligible collateral with a haircut of 15% just as it was under Basel II. Moreover, the announcement of the U.S. Federal Deposit Insurance Corporation (FDIC) made on June 18, 2012 and stating that gold bullion is a “zero percent risk-weighted items” (an item perceived as “riskless,” similarly as Tier 1 capital) brought “no change to banking capital rules with respect to gold” as the FDIC spokesperson claimed. So, gold was considered “riskless” in the U.S. under Basel II recommendations and it will remain considered this way under Basel III provisions. No change has been brought about.
The situation looks slightly different in Europe. If you remember, under Basel II gold could be considered a “riskless” asset at national discretion. The EU consists of 27 countries, each with its different supervisory regulations. The European Commission did not automatically consider gold a “riskless” asset, but charged the European Banking Authority (EBA) with the task of identifying which assets are to be legally deemed “riskless.” On the other hand, the European Parliament expressly pointed to gold as a highly liquid asset that should be taken into consideration by the EBA. The EBA review is scheduled to end in 2015, gold is however, already recognized as collateral.
If you feel in any way lost in the jungle of banking regulations relating to gold, do not worry, we have pointed out the most important things you need to know:
* Basel III does NOT, in any significant way, change the way the U.S. regulator sees gold.
* Gold has NOT become the legal tender in any country adhering to the Basel III rules.
* Basel III is NOT a shift toward a gold standard, contrary to what has been rumored.
* The general regulatory trend in the EU seems to point to the inclusion of gold as a “riskless” asset.
What does all of this mean for you? Generally speaking, if gold is officially confirmed as a “riskless” asset by the EBA, then an increase in demand for gold may be seen in the EU. Such an increase, however, would not be a main driver of the price of gold. So, Basel III is not a major factor in the continuing gold bull market. Favorable fundamentals for gold, even without a positive impact from Basel III, are still in place and the long-term trend remains up.
If you have enjoyed this commentary, please check our research essays on gold in Fort Knox and on gold and the dollar collapse. For a more practical view on how we see investments in gold and silver, refer to our essay on gold and silver portfolio.
Thank you for reading. Have a great and profitable week!
Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com
http://news.goldseek.com/GoldSeek/1358353833.php
Credit Suisse Plans Covered-Call Gold ETN
By Olly Ludwig | January 17, 2013
Related ETFs: GLD
Credit Suisse, the bank that recently agreed to sell its European ETF operations to iShares, filed paperwork with regulators to market a gold-linked ETN that will feature long exposure to physical gold coupled with an overlay of call options, a so-called covered-call strategy that could milk extra returns out of a 12-year gold rally that may be growing long in the teeth.
It’s not clear when the Credit Suisse Gold Flows Index ETN will come to market, but prospectuses detailing exchange-traded notes typically surface just prior to the actual launch of a given security, and the regulatory paperwork suggests that ETN’s rollout could come as soon as the end of this month. The ETN will have its primary listing on the Nasdaq and GLDI will be its ticker, the prospectus said.
The ETN, which will come with an annual fee of 0.65 percent of assets, or $65 for each $10,000 invested, will have notional exposure to the bullion ETF SPDR Gold Shares (NYSEArca: GLD) while notionally selling monthly “out of the money” call options, according to the paperwork.
It’s anybody’s guess what the future holds given the lengthy aftermath to the market crash of 2008, but doubts in some corners of the financial market are beginning to surface about whether gold’s long run may be running its course. GLDI might be the perfect security for investors who are on the fence about that issue, as it represents a somewhat neutral view on gold.
Premiums on the notional sale of the call options will be received monthly, the company said. The ETN is designed to enhance current cash flow through those premiums in exchange for giving up any gains beyond 3 percent per month.
Apart from those premium payments softening the blow of a sell-off in GLD, nothing about the security is designed to provide downside protection.
The ETNs, which will mature on Feb. 2, 2033, are subject to early redemption or acceleration “in whole or in part at any time,” according to the prospectus.
They will have an initial “principal amount” of $20 per share.
ETNs are senior unsecured obligations—in this case of Credit Suisse’s Nassau branch. Unlike ETFs, they have no tracking error, but, also unlike ETFs, they represent a credit risk. For example, if Credit Suisse ever faced bankruptcy, holders of GLDI would likely lose their entire investment.
http://www.indexuniverse.com/sections/features/15772-credit-suisse-plans-covered-call-gold-etn.html?utm_source=Twitter&utm_medium=IUFeed&source=email_rt_mc_body
A new Gold Standard is being born
By Ambrose Evans-Pritchard Economics
January 17th, 2013
The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.
Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.
They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.
The Washington Accord, where Britain, Spain, Holland, Switzerland, and others sold a chunk of their gold each year, already seems another era – the Gordon Brown era, you might call it.
That was the illusionary period when investors thought the euro would take its place as the twin pillar of a new G2 condominium alongside the dollar. That hope has faded. Central bank holdings of euro bonds have fallen back to 26pc, where they were almost a decade ago.
Neither the euro nor the dollar can inspire full confidence, although for different reasons. EMU is a dysfunctional construct, covering two incompatible economies, prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time – for better or worse. The only real disagreement is over the speed.
The central bank buyers are of course the rising powers of Asia and the commodity bloc, now holders of two thirds of the world’s $11 trillion foreign reserves, and all its incremental reserves.
It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc. Russia has openly targeted a 10pc share. Variants of this are occurring from the Pacific region to the Gulf and Latin America. And now the Bundesbank has chosen to pull part of its gold from New York and Paris.
Personally, I doubt that Buba had any secret agenda, or knows something hidden from the rest of us. It responded to massive popular pressure and prodding from lawmakers in the Bundestag to bring home Germany’s gold. Yet that is not the end of the story. The fact that this popular pressure exists – and is well-organised – reflects a breakdown in trust between the major democracies and economic powers. It is a new political fact in the global system.
Pimco’s Mohammed El Erian said this may have a knock-on effect:
“In the first instance, it could translate into pressures on other countries to also repatriate part of their gold holdings. After all, if you can safely store your gold at home — a big if for some countries — no government would wish to be seen as one of the last to outsource all of this activity to foreign central banks.
If developments are limited to this problem, there would be no material impact on the functioning and well-being of the global economy. If, however, perceptions of growing mutual mistrusts translate into larger multilateral tensions, then the world would find itself facing even greater difficulties resolving payments imbalances and resisting beggar-thy-neighbour national policies.
“The most likely outcome right now is for Germany’s decision to have minimum systemic impact. But should this be wrong and the decision fuel greater suspicion – a risk scenario rather than the baseline – the resulting hit to what remains in multilateral policy co-operation would be problematic for virtually everybody.
As I reported on Tuesday, gold veteran Jim Sinclair thinks it is an earthquake, comparing it to Charles de Gaulle’s decision to pull French gold from New York in the late 1960s – the precursor to the breakdown of the Bretton Woods system three years later when Nixon suspended gold conversion.
Mr Sinclair predicts that the Bundesbank’s action will prove the death knell of dollar power. I do not really see where this argument leads. Currencies were fixed in de Gaulle’s time. They float today. It is within the EMU fixed-exchange system – ie between Germany and Spain – that we see an (old) Gold Standard dynamic at work with all its destructive power, and the risk of sudden ruptures always present. The global system is supple. It bends to pressures.
My guess is that any new Gold Standard will be sui generis, and better for it. Let gold will take its place as a third reserve currency, one that cannot be devalued, and one that holds the others to account, but not so dominant that it hitches our collective destinies to the inflationary ups (yes, gold was highly inflationary after the Conquista) and the deflationary downs of global mine supply. That would indeed be a return to a barbarous relic.
Hopefully, it will be nothing like the interwar system. That was a dollar peg that transmitted US deflation to the whole world when the Fed tightened too hard in 1928 and went berserk in 1930.
A third reserve currency is just what America needs. As Prof Micheal Pettis from Beijing University has argued, holding the world’s reserve currency is an “exorbitant burden” that the US could do without.
The Triffin Dilemma – advanced by the Belgian economist Robert Triffin in the 1960s – suggests that the holder of the paramount currency faces an inherent contradiction. It must run a structural trade deficit over time to keep the system afloat, but this will undermine its own economy. The system self-destructs.
A partial Gold Standard – created by the global market, and beholden to nobody – is the best of all worlds. It offers a store of value (though no yield). It acts a balancing force. It is not dominant enough to smother the system.
Let us have three world currencies, a tripod with a golden leg. It might even be stable.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022332/a-new-gold-standard-is-being-born/
Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.
A new Gold Standard is being born
By Ambrose Evans-Pritchard Economics
January 17th, 2013
The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project.
Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.
They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen.
The Washington Accord, where Britain, Spain, Holland, Switzerland, and others sold a chunk of their gold each year, already seems another era – the Gordon Brown era, you might call it.
That was the illusionary period when investors thought the euro would take its place as the twin pillar of a new G2 condominium alongside the dollar. That hope has faded. Central bank holdings of euro bonds have fallen back to 26pc, where they were almost a decade ago.
Neither the euro nor the dollar can inspire full confidence, although for different reasons. EMU is a dysfunctional construct, covering two incompatible economies, prone to lurching from crisis to crisis, without a unified treasury to back it up. The dollar stands on a pyramid of debt. We all know that this debt will be inflated away over time – for better or worse. The only real disagreement is over the speed.
The central bank buyers are of course the rising powers of Asia and the commodity bloc, now holders of two thirds of the world’s $11 trillion foreign reserves, and all its incremental reserves.
It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc. Russia has openly targeted a 10pc share. Variants of this are occurring from the Pacific region to the Gulf and Latin America. And now the Bundesbank has chosen to pull part of its gold from New York and Paris.
Personally, I doubt that Buba had any secret agenda, or knows something hidden from the rest of us. It responded to massive popular pressure and prodding from lawmakers in the Bundestag to bring home Germany’s gold. Yet that is not the end of the story. The fact that this popular pressure exists – and is well-organised – reflects a breakdown in trust between the major democracies and economic powers. It is a new political fact in the global system.
Pimco’s Mohammed El Erian said this may have a knock-on effect:
“In the first instance, it could translate into pressures on other countries to also repatriate part of their gold holdings. After all, if you can safely store your gold at home — a big if for some countries — no government would wish to be seen as one of the last to outsource all of this activity to foreign central banks.
If developments are limited to this problem, there would be no material impact on the functioning and well-being of the global economy. If, however, perceptions of growing mutual mistrusts translate into larger multilateral tensions, then the world would find itself facing even greater difficulties resolving payments imbalances and resisting beggar-thy-neighbour national policies.
“The most likely outcome right now is for Germany’s decision to have minimum systemic impact. But should this be wrong and the decision fuel greater suspicion – a risk scenario rather than the baseline – the resulting hit to what remains in multilateral policy co-operation would be problematic for virtually everybody.
As I reported on Tuesday, gold veteran Jim Sinclair thinks it is an earthquake, comparing it to Charles de Gaulle’s decision to pull French gold from New York in the late 1960s – the precursor to the breakdown of the Bretton Woods system three years later when Nixon suspended gold conversion.
Mr Sinclair predicts that the Bundesbank’s action will prove the death knell of dollar power. I do not really see where this argument leads. Currencies were fixed in de Gaulle’s time. They float today. It is within the EMU fixed-exchange system – ie between Germany and Spain – that we see an (old) Gold Standard dynamic at work with all its destructive power, and the risk of sudden ruptures always present. The global system is supple. It bends to pressures.
My guess is that any new Gold Standard will be sui generis, and better for it. Let gold will take its place as a third reserve currency, one that cannot be devalued, and one that holds the others to account, but not so dominant that it hitches our collective destinies to the inflationary ups (yes, gold was highly inflationary after the Conquista) and the deflationary downs of global mine supply. That would indeed be a return to a barbarous relic.
Hopefully, it will be nothing like the interwar system. That was a dollar peg that transmitted US deflation to the whole world when the Fed tightened too hard in 1928 and went berserk in 1930.
A third reserve currency is just what America needs. As Prof Micheal Pettis from Beijing University has argued, holding the world’s reserve currency is an “exorbitant burden” that the US could do without.
The Triffin Dilemma – advanced by the Belgian economist Robert Triffin in the 1960s – suggests that the holder of the paramount currency faces an inherent contradiction. It must run a structural trade deficit over time to keep the system afloat, but this will undermine its own economy. The system self-destructs.
A partial Gold Standard – created by the global market, and beholden to nobody – is the best of all worlds. It offers a store of value (though no yield). It acts a balancing force. It is not dominant enough to smother the system.
Let us have three world currencies, a tripod with a golden leg. It might even be stable.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100022332/a-new-gold-standard-is-being-born/
Ambrose Evans-Pritchard has covered world politics and economics for 30 years, based in Europe, the US, and Latin America. He joined the Telegraph in 1991, serving as Washington correspondent and later Europe correspondent in Brussels. He is now International Business Editor in London.
Presenting The Exchange Stabilization Fund In 5 Parts: Is This The Real "Plunge Protection Team"?
Submitted by Tyler Durden on 01/01/2012
When it comes to the fabled President's Working Group on Capital Markets, also known as the Plunge Protection Team, the myths about the subject are certainly far greater than any underlying reality. To be sure, vast amounts of popular folkflore has been expounded into the public arena, with most of it being shot down simply due to it assuming conspiracy theories of such vast scale that the human mind is unable to grasp the complexity, and ultimately the inverse Gordian Knot makes an appearance with the claim that vast conspiracies are largely untenable simply because it is impossible to keep a secret from so many people for so long. Yet what if the secret is not a secret at all but is fully out in the open, and is only a matter of interpretation, and contextualizing? Why just 3 years ago it would appear preposterous to allege the capital markets are a ponzi and that the Fed does everything in its power to keep stocks higher. Well, what a difference three years make: now the Chairman himself in a Washington Post OpEd has admitted that the sole gauge of Fed success is the loftiness of the Russell 2000, neither unemployment nor inflation really matter now that the Fed's third mandate has been fully whipped out. Furthermore, Keynesian economics, and the entire top echelon of the educational system have also been accurately represented as a paradigm which merely perpetuates the status quo as the alternative is the realization that the whole system is a house of cards. As for the global capital markets being nothing short of a ponzi, we merely point you to the general direction of Europe, the ECB and the continent's banks, where the monetary interplay is nothing short of the world's biggest pyramid scheme. Yet the PPT, or whatever it is informally called, does not exist? Consider further that only recently did it become known that the former SecTres Hank Paulson himself was exposed as presenting material non-public information to a bevy of Goldman arb desk diaspora hedge funds, headed by with none other than the head of the President's Working Group on Capital Markets Asset Managers committee David Mindich. So, if contrary to all the evidence that there is some vast underlying pattern, if not a conspiracy per se, one were to take the leap of faith and take the next step, where would one end up? Well, most likely looking at the Exchange Stabilization Fund, or ESF, which Eric deCarbonnel has spent so much time trying to unmask. Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the organization that so many have been trying to expose for years? Watch and decide for yourself.
As a reminder deCarbonnel is not some tinfoil hat clad sub-basement dweller - it was his input that led us to the realization that in attempting to control the Treasury curve, the Fed will, and already has, experiment with selling puts on various Treasury maturities in an attempt to generate reflexivity whereby the synthetic determines the value of the underlying (something ETFs are now doing so very well), the value naturally always being higher, higher, higher irrelevant of what underlying demand there is (and as we showed last week, with a record amount of international outflows in the past month, the demand, at least from abroad, is just not there). So what does Eric assert?
Quite a bit as it turns out.
After months of work, the video series on the Treasury's Exchange Stabilization Fund is finally finished!
Why you should watch these five videos:
It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA's black budget, and is the architect of the world's monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse...
So while nursing that New Year's Day hangover, take some time and watch this series of videos. If nothing else, even if they are merely the extended ramblings of some person that one can quickly dismiss as just the latest fringe lunatic, they do present an alterantive reality to what so many may be accustomed to. After all at the end of the day imagination, the ability to think outside the box, and to see patterns where previously there were none, is the greatest threat to the falling and declining status quo by far.
5 videos
http://www.zerohedge.com/news/presenting-exchange-stabilization-fund-5-parts-real-plunge-protection-team
The Exchange Stabilization Fund and the Gold Reserve Act
Chris Powell, Secretary/Treasurer of http://gata.org, and James Turk, Director of The GoldMoney Foundation and Founder of GoldMoney discuss the Exchange Stabilization Fund in this video.
Jim Sinclair: German Gold Repatriation a Reaction to Geithner’s Take-Down of Gold at $1800 Via the ESF
January 16, 2013
By The Doc
(special thanks to basserdan)
Legendary gold trader Jim Sinclair has sent an email alert to subscribers today stating that the Bundesbank’s announcement that they will repatriate 300 tons of gold from the NY Fed and 374 tons from the Bank of Paris is in direct response to outgoing Treasury Secretary Timothy Geithner’s take-down of gold at $1800 in October via the ESF.
Sinclair states that a Central Bank would not insult another major central bank unless it is an act of financial war, and that a full blown financial gold war is coming as soon as 2015-2017.
Sinclair also states that Geithner’s parting shot to break gold’s back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.
Have we seen the initial shot in a full blown global currency war?
Sinclair’s full alert is below:
From Jim Sinclair:
I respectfully disagree with most of the explanations given today on the why of German actions in gold. My understanding is that the causal event of this notification actually came from the actions of the US Exchange Stabilization Fund and the long term plans to strengthen the euro.
I have published a chart from Patrick showing the extreme change in the ratio of gold to fiat currency presently being held in reserve by Euroland.
First you need to understand what the Exchange Stabilization Fund is and is not. It is an account at a major gold bank in the name of the Exchange Stabilization Fund. This fund can legally trade in gold and does. The President of the USA and the Secretary of the US Treasury run this fund. Those two managers by law are permitted to designate another manager if they wish. The fund can trade long or short, borrow or lend anything. Basically this is a an account that can legally do anything it wants whenever it wants in secret as the year end statement can easily be brought to only benign activates by warehousing all the trades.
Their broker is quite an expert in that strategy to wash year-end positions for clients.
What occurred as I am told is an act in Germany in reaction to a parting shot from the retiring Secretary of the US Treasury via the Exchange Stabilization Fund.
When gold traded at $1918 it was setting up for a challenge of a very important round number, $2000. The sell off was a product of long liquidation in an anticipation of $2000 in a fast market. Gold did fall on its own weight into the $1800 area, however the body block at $1800, $1775 and $1750 was a product of the Exchange Stabilization Fund operating as an account of a major Gold Bank. Seeing that, this gold bank went to the short side for the account of its hedge funds and not wholly owned trading arm. This gold bank issued a public statement that the gold market was dead as a doornail, finished and completed.
On the level of central banking there are no secrets. The long term plan for the currency war between the euro and the dollar is a derivation of the Free Gold Thesis. That means a significant change in the percentage of fiat currency versus gold at market value held by Euroland as reserves. This thesis has a target for cooperating Asian central banks for gold holdings at no less than 15% at market value. I question some of the thesis of Free Gold thinkers, but much of it has been in my writing for more than a decade on what the end game recovery will look like.
I am told that the parting shot to break gold’s back by the Exchange Stabilization Fund was considered a direct attack on the Euro strategy for what the end game recovery will look like. The Free Gold thesis requires significantly higher gold prices to work and to elevate the euro back in reserve by choice category.
The German reaction was not political but rather a direct warning that they could demand return of their gold just like DeGaulle of France did in the 60s by making a direct and immediate demand for conversion of the US dollar holdings into Gold.
A major central bank will not insult another major central bank unless it is an act of financial war. It has not come to that yet, but it is not that far away. It is 2015 to 2017 and not 2020.
The reason that gold is relatively firm after the media leak and release on the night of the 14th is that I am not the only person who knows the real story. The price of gold will go to and beyond $3500. Gold will be market to market by the majority, if not all, major central banks. This will balance the balance sheet of the many and major debtor nations and will provide the platform for recovery after unwinding.
Respectfully,
Jim
(Click on link to read about the Exchange Stabilization Fund From Wikipedia, the free encyclopedia)
http://www.silverdoctors.com/jim-sinclair-german-gold-repatriation-a-reaction-to-geithners-take-down-of-gold-at-1800-via-the-esf/#more-20119
In reference to Jim Sinclair's article on the reason for German gold repatriation.;
Presenting The Exchange Stabilization Fund In 5 Parts: Is This The Real "Plunge Protection Team"?
Submitted by Tyler Durden on 01/01/2012
When it comes to the fabled President's Working Group on Capital Markets, also known as the Plunge Protection Team, the myths about the subject are certainly far greater than any underlying reality. To be sure, vast amounts of popular folkflore has been expounded into the public arena, with most of it being shot down simply due to it assuming conspiracy theories of such vast scale that the human mind is unable to grasp the complexity, and ultimately the inverse Gordian Knot makes an appearance with the claim that vast conspiracies are largely untenable simply because it is impossible to keep a secret from so many people for so long. Yet what if the secret is not a secret at all but is fully out in the open, and is only a matter of interpretation, and contextualizing? Why just 3 years ago it would appear preposterous to allege the capital markets are a ponzi and that the Fed does everything in its power to keep stocks higher. Well, what a difference three years make: now the Chairman himself in a Washington Post OpEd has admitted that the sole gauge of Fed success is the loftiness of the Russell 2000, neither unemployment nor inflation really matter now that the Fed's third mandate has been fully whipped out. Furthermore, Keynesian economics, and the entire top echelon of the educational system have also been accurately represented as a paradigm which merely perpetuates the status quo as the alternative is the realization that the whole system is a house of cards. As for the global capital markets being nothing short of a ponzi, we merely point you to the general direction of Europe, the ECB and the continent's banks, where the monetary interplay is nothing short of the world's biggest pyramid scheme. Yet the PPT, or whatever it is informally called, does not exist? Consider further that only recently did it become known that the former SecTres Hank Paulson himself was exposed as presenting material non-public information to a bevy of Goldman arb desk diaspora hedge funds, headed by with none other than the head of the President's Working Group on Capital Markets Asset Managers committee David Mindich. So, if contrary to all the evidence that there is some vast underlying pattern, if not a conspiracy per se, one were to take the leap of faith and take the next step, where would one end up? Well, most likely looking at the Exchange Stabilization Fund, or ESF, which Eric deCarbonnel has spent so much time trying to unmask. Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the organization that so many have been trying to expose for years? Watch and decide for yourself.
As a reminder deCarbonnel is not some tinfoil hat clad sub-basement dweller - it was his input that led us to the realization that in attempting to control the Treasury curve, the Fed will, and already has, experiment with selling puts on various Treasury maturities in an attempt to generate reflexivity whereby the synthetic determines the value of the underlying (something ETFs are now doing so very well), the value naturally always being higher, higher, higher irrelevant of what underlying demand there is (and as we showed last week, with a record amount of international outflows in the past month, the demand, at least from abroad, is just not there). So what does Eric assert?
Quite a bit as it turns out.
After months of work, the video series on the Treasury's Exchange Stabilization Fund is finally finished!
Why you should watch these five videos:
It is impossible to understand the world today without knowing what the ESF is and what it has been doing. Officially in charge of defending the dollar, the ESF is the government agency which controls the New York Fed, runs the CIA's black budget, and is the architect of the world's monetary system (IMF, World Bank, etc). ESF financing (through the OSS and then the CIA) built up the worldwide propaganda network which has so badly distorted history today (including erasing awareness of its existence from popular consciousness). It has been directly involved in virtually every major US fraud/scandal since its creation in 1934: the London gold pool, the Kennedy assassinations, Iran-Contra, CIA drug trafficking, HIV, and worse...
So while nursing that New Year's Day hangover, take some time and watch this series of videos. If nothing else, even if they are merely the extended ramblings of some person that one can quickly dismiss as just the latest fringe lunatic, they do present an alterantive reality to what so many may be accustomed to. After all at the end of the day imagination, the ability to think outside the box, and to see patterns where previously there were none, is the greatest threat to the falling and declining status quo by far.
5 videos
http://www.zerohedge.com/news/presenting-exchange-stabilization-fund-5-parts-real-plunge-protection-team
Why It’s Taking 7 Years For Gold To Be Returned To Germany
Jan. 16, 2013
KingWorldNews.com
Today acclaimed money manager Stephen Leeb told King World News the reason Germany is only getting small portions of their gold sent to them over the years is because the gold is not at the Fed. Leeb also believes the United States is now running out of physical gold to sell in their price suppression scheme. Here is what Leeb had to say: “There are two main parties engaged in a battle for economic and monetary supremacy in the world. This is China vs the United States. Interestingly, at least for a period of time, both countries don’t want to see the price of gold take off.”
Stephen Leeb continues:
“The Chinese don’t want to see the price of gold take off because they still want to buy a lot of it. The Chinese took in at least 1,000 tons of gold last year, and maybe even more. This total represents Hong Kong imports plus their own production.
This year the Chinese are really going to play the game much more aggressively with these Shanghai markets that are going to have international players actively trading in them. They will also trade derivatives, and the Chinese will accumulate gold through their new ETF.
The trouble the Chinese have is their internal production of gold is becoming more difficult to maintain....
They just can’t, like so many others, replace the gold reserves, which would then be exploited in future mining.
It’s extraordinary up to now the percentage of reserves the Chinese have been mining, up to 35% of their gold reserves. I’ve never seen any country mine that percentage of reserves for any metal. You look at the pace of their mining and you can easily conclude they are desperate for gold.
If the gold price lifts off, that poses a major threat to the US dollar. So the United States has been the leader in the gold price suppression scheme. This is why so much gold has left Western vaults. The Germans now want their gold back from the Fed.
So Germany has asked for the gold stored at the Fed to be returned to Germany. The amount of gold the US supposedly has stored for the Germans is 1,536 tons. This can certainly be shipped to Germany. Yet it’s going to take 6 or 7 years to return a small portion of the gold to Germany? Why?
They ship much more oil than gold. This is ridiculous. What do they expect? Do they expect the gold to blow up? Last I heard gold doesn’t even oxidize or even tarnish, much less blow up. Why can’t they just load it on a ship or on planes and send it? Something doesn’t add up here, Eric.
The reality here is that the German gold has been leased out and it’s not sitting in the vault. So the Fed has agreed to return very small portions of the German gold each year, which is supposedly stored at the Fed. Well, the gold isn’t there and that’s why it is going back to Germany in small portions each year.
People also need to remember gold is not going down much, because the US doesn’t have enough to sell. The problem is what you sell in the physical market, you have to deliver. At a certain point, the US will run out of other countries gold to sell. The US will reach a point where they have to hope that the gold price doesn’t start to really fly.
There is a strong bid for gold every time it goes down. When the cat gets out of the bag, and I think the Germans are helping the cat get out of the bag, at a certain point when all of the gold moving from West to East is stopped, the price of gold will really begin to ramp up in price.
Where will the gold come from to satisfy the demand? Where will the gold come from to send back to Germany? And do you know what the Chinese will say? They will say, ‘OK, we will let our banks hold the yuan, but in contrast to your dollar, our yuan will be backed by gold.’
What will countries prefer to hold, the yuan, backed by gold, or the US dollar, which is backed by absolutely nothing? So we are now getting to a situation where we are getting close to the end game.”
Leeb also spoke about silver: “Switching gears to silver, we all know there are shenanigans that go on in the silver market. Regardless, China wants to accumulate a great deal of physical silver. China knows silver is a monetary metal.
It’s also important to note that Warren Buffett recently purchased the largest solar project in the world. Well, the Chinese know what Warren Buffett knows, and that is solar is the future. The Chinese are going to need a staggering amount of silver to accomplish this task.
The Chinese know that oil, coal, and other alternatives are becoming much more scarce, and so they are designing the entire country’s energy infrastructure around things like solar. Again, this will require quantities of silver that most likely can’t even be facilitated.
People wonder why are we seeing shortages in the silver market right now? Well, yes, there is investment demand, absolutely. But the Chinese are also in the silver market buying every single ounce they can get their hands on for the energy needs.
So silver is going to levels in the future that investors can’t even fathom today? Silver, next to oil, is the single most important commodity and strategic resource on the planet. I would also add that the quality junior mining shares will eventually enter a mania that will be one for the history books.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/1/16_Why_Its_Taking_7_Years_For_Gold_To_Be_Returned_To_Germany.html
Germany’s Entire Gold Hoard At The Fed May Already Be Gone
Jan. 16, 2013
Eric King
KingWorldNews.com
Today a legend in the business told King World News, “... the German gold hoard, which is supposed to be stored at the Fed, may already be gone.” Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also believes countries like Germany, Austria, and others are in serious danger of having claims on their gold stored at the Fed evaporate.
Here is what Barron had to say: “This has been happening for quite some time. In fact, I can remember hearing 6 or 7 years ago that Gaddafi wanted all of his gold back from New York. There were several tons going on a transport plane out of New York once a week to Libya.”
Keith Barron continues:
“He (Gaddafi) just didn’t trust any other government with it. Of course we all know what happened to him eventually. His gold has kind of gone missing (appropriated), and nobody knows where it is now. This is the problem the Germans, Austrians, and various other countries are facing.
They don’t want their gold to go missing....
“In the case of Germany, the gold was sent abroad to France, and to the Federal Reserve Bank of New York during the Cold War because of fears the Russians may overrun Germany and seize the gold.
Those kind of fears evaporated a long time ago, and there is no reason for the Germans to have the gold elsewhere. In the last year, somebody in the ministry was interviewed and they were asked why the gold was still abroad? They said, ‘To facilitate trading.’ Well, this is exactly why the gold shouldn’t be elsewhere. It should be sitting there as the patrimony of the country, and it should be inviolate.
The latest round of gold repatriation was started by Hugo Chavez, and in Chavez’ case nobody knows if he is alive or dead right now. So we have seen a pattern from Saddam Hussein, to Gaddafi, and now Chavez, that anyone who interferes in the gold market or attempts to threaten the US dollar’s dominance ends up dead.
Ecuador decided to take a page out of Chavez’s book and ask for Ecuador’s gold back. So their gold was repatriated. The Germans and the Austrians were the latest to have public discussions asking the question, ‘Where is our gold?’
Now the Germans have decided to take back their gold out of France, and apparently small portions of their gold will be sent from the Fed to Germany in coming years. I do believe a lot of Germany’s gold has been leased out internationally, through the bullion banks. So the reality is that the German gold hoard, which is supposed to be stored at the Fed, may already be gone.
There was the situation quite a few years ago when Drexel Burnham Lambert went down. They had borrowed 17 tons of gold from the Bank of Portugal, and when Drexel failed, the Bank of Portugal never got it back. Its claim evaporated when Drexel evaporated.
If you look at what happened to Portugal, the question becomes, should key bullion banks fail, would Germany and other nations forfeit their gold because the existing leases and claims would simply evaporate, as was the case with Portugal? This is something to consider. Countries such as Austria and others were getting paid to participate in gold leasing. I’m sure in the fine print it states if the bullion bank conducting the lease fails, the gold is lost, again, as was the case with Portugal and their 17 tons of lost gold.
I believe that most of the Western world’s gold, which is supposed to be in central bank vaults, has been leased out. Much of it is now in private hands in India, and what remains continues going East to China and other Asian vaults. So most of the Western gold has vanished from the vaults and it’s now just a book entry.
These various Western countries and bullion banks simply roll these leases over when they come due, and the gold never gets returned back to the countries. So it’s very interesting to see what’s going on. Obviously the trust is breaking down in the system.
Maybe we are going to see a bit of a run to the exits when more of this gold has to be repatriated, and the bullion banks are going to have to buy it from somewhere or fail. I just don’t think there is enough available physical gold out there to cover all of the outstanding loans. It’s just not out there in the marketplace to be acquired. For what it’s worth, all of this is very bullish for the gold price going forward.”
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/1/16_Germanys_Entire_Gold_Hoard_At_The_Fed_May_Already_Be_Gone.html
Bundesbank Repatriates Gold
Shows Importance of Possession or Allocated Storage
BY MARK O'BYRNE 01/16/2013
This morning, the Bundesbank presented a new management plan for Germany’s 270,000 gold bars, the world’s second largest gold holdings trailing only the United States.
Germany’s central bank will repatriate part of its $200 billion gold reserves stored in vaults in the Federal Reserve in New York and the Banque de France in Paris. It is believed that the Bundesbank may have repatriated the gold in order to be prepared for a systemic crisis and currency crises.
World Official Gold Holdings
International Financial Statistic, January 2013*
Germany's central bank plans to retrieve some 1,500 tonnes of gold stored in the vaults of the Federal Reserve as well as its 450 tonnes of gold with the Banque de France.
This is an important development as it shows how gold is reasserting itself as an important monetary asset. This could lead to a further increase in investment demand in the coming months - especially in western markets where investment demand has been tepid at best in recent months.
Storing German gold reserves outside Germany was a legacy of World War II when the allies allowed Germany to have a new currency but took possession of their gold reserves.
Then with the threat of the Soviet Union and East Germany during the Cold War, the Bundesbank was happy to leave their gold reserves in the Federal Reserve, BOE and in Paris. Now a more confident Germany but one which is very concerned about the euro crisis nonetheless wishes to store their gold reserves in Germany.
The move comes about after the exertion of a lot of political pressure by the German people, press and politicians who are concerned about the eurozone debt crisis and continuing debasement of the euro.
XAU/EUR Exchange Rate, 2008-2013 – (Bloomberg)
Spiegel, a German weekly, reported last year that some in Germany had been campaigning for the repatriation of the country’s gold bars.
Called the “Gold Action” initiative, the campaign warned that there is an acute danger that German gold could be expropriated as a result of the global financial and debt crisis, and activists are concerned that the German government – also the eurozone’s paymaster – could soon be forced to sell its gold to cover the costs of the crisis.
Besides the location of the gold, there were also concerns about the nature of the gold.
The German Court of Auditors told legislators that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites. It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It is said that Frankfurt has no register of the numbered gold bars according to The Telegraph.
This suggests that the German gold reserves were not allocated. Ordinarily, central bank monetary reserves are held in an allocated format.
The incident is reminiscent of General De Gaulle’s move in 1968 when he took delivery of French gold reserves from America which hastened an end to the London Gold Pool and to America moving from a fixed gold price of $35/oz and to the 1970’s gold market when gold rose 24 times.
It shows a growing lack of trust in the U.S. Federal Reserve and a lack of trust amongst the central banks themselves. It is likely to lead to a further decline of trust in the U.S. dollar.
Significantly, the development is being picked up very widely in mainstream, non specialist financial press and media who rarely cover gold. Therefore, an entire new audience is realising how central banks increasingly value gold as a monetary reserve.
It is close to going viral on Twitter and on the internet.
Yesterday, PIMCO (@PIMCO) co-founder and the largest bond manager in the world, Bill Gross tweeted:
“Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other?“
His tweet was retweeted 276 times and favourited 31 times.
Daily Telegraph News in the UK tweeted (@TelegraphNews )
"Extraordinary breakdown in trust between leading central banks" leads Bundesbank to pull gold from New York and Paris
The Telegraph’s tweet was retweeted 184 times and also favourited 31 times.
In recent years, besides Reuters, Bloomberg, CNBC , the FT and the Telegraph in the UK, gold rarely gets covered in the non specialist financial media such as The Guardian, The Times, BBC, Sky etc and rarely in the tabloid press.
We view this as a contrarian indicator and believe that as gold continues its journey from the fringe to the mainstream in the coming years - it will be covered in all business and financial media as frequently as stocks, the FTSE, the S&P 500 (etc.), are today. You may even see gold prices quoted on the BBC and CNN and Jeremy Paxman and Piers Morgan talking about currency wars and gold.
Finally, the move shows that possession remains nine-tenths of the law and the vital importance of owning physical gold in the safest way possible.
Legendary gold trader Jim Sinclair said the Bundesbank’s move “sends a message about storing gold near you and taking delivery no matter who is holding it.”
He said it is a pivotal event in the gold market and the latest warning for investors that they should keep metal bars under their physical control, rather than relying onpaper contracts.
"This sends a message about storing gold near you and taking delivery no matter who is holding it. When France did this years ago it sent panic amongst the U.S. financial leadership. History will look back on this salvo as being the beginning of the end of the U.S .dollar as the reserve currency of choice," he said.
The Bundesbank’s gold repatriation shows the vital importance of either taking possession of physical gold or storing bullion in an allocated format with the strongest, non financial and non banking counter parties in the world. Allocated storage should be sought in locations where there is little risk of expropriation or nationalisation.
For breaking news and commentary on financial markets and gold, follow us on Twitter.
http://www.financialsense.com/contributors/mark-o-byrne/bundesbank-repatriates-gold?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fso+%28Financial+Sense%29&utm_term=FSO
Bundesbank Repatriates Gold
Shows Importance of Possession or Allocated Storage
BY MARK O'BYRNE 01/16/2013
This morning, the Bundesbank presented a new management plan for Germany’s 270,000 gold bars, the world’s second largest gold holdings trailing only the United States.
Germany’s central bank will repatriate part of its $200 billion gold reserves stored in vaults in the Federal Reserve in New York and the Banque de France in Paris. It is believed that the Bundesbank may have repatriated the gold in order to be prepared for a systemic crisis and currency crises.
World Official Gold Holdings
International Financial Statistic, January 2013*
Germany's central bank plans to retrieve some 1,500 tonnes of gold stored in the vaults of the Federal Reserve as well as its 450 tonnes of gold with the Banque de France.
This is an important development as it shows how gold is reasserting itself as an important monetary asset. This could lead to a further increase in investment demand in the coming months - especially in western markets where investment demand has been tepid at best in recent months.
Storing German gold reserves outside Germany was a legacy of World War II when the allies allowed Germany to have a new currency but took possession of their gold reserves.
Then with the threat of the Soviet Union and East Germany during the Cold War, the Bundesbank was happy to leave their gold reserves in the Federal Reserve, BOE and in Paris. Now a more confident Germany but one which is very concerned about the euro crisis nonetheless wishes to store their gold reserves in Germany.
The move comes about after the exertion of a lot of political pressure by the German people, press and politicians who are concerned about the eurozone debt crisis and continuing debasement of the euro.
XAU/EUR Exchange Rate, 2008-2013 – (Bloomberg)
Spiegel, a German weekly, reported last year that some in Germany had been campaigning for the repatriation of the country’s gold bars.
Called the “Gold Action” initiative, the campaign warned that there is an acute danger that German gold could be expropriated as a result of the global financial and debt crisis, and activists are concerned that the German government – also the eurozone’s paymaster – could soon be forced to sell its gold to cover the costs of the crisis.
Besides the location of the gold, there were also concerns about the nature of the gold.
The German Court of Auditors told legislators that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites. It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It is said that Frankfurt has no register of the numbered gold bars according to The Telegraph.
This suggests that the German gold reserves were not allocated. Ordinarily, central bank monetary reserves are held in an allocated format.
The incident is reminiscent of General De Gaulle’s move in 1968 when he took delivery of French gold reserves from America which hastened an end to the London Gold Pool and to America moving from a fixed gold price of $35/oz and to the 1970’s gold market when gold rose 24 times.
It shows a growing lack of trust in the U.S. Federal Reserve and a lack of trust amongst the central banks themselves. It is likely to lead to a further decline of trust in the U.S. dollar.
Significantly, the development is being picked up very widely in mainstream, non specialist financial press and media who rarely cover gold. Therefore, an entire new audience is realising how central banks increasingly value gold as a monetary reserve.
It is close to going viral on Twitter and on the internet.
Yesterday, PIMCO (@PIMCO) co-founder and the largest bond manager in the world, Bill Gross tweeted:
“Report claims Germany moving gold from NY/Paris back to Frankfurt. Central banks don’t trust each other?“
His tweet was retweeted 276 times and favourited 31 times.
Daily Telegraph News in the UK tweeted (@TelegraphNews )
"Extraordinary breakdown in trust between leading central banks" leads Bundesbank to pull gold from New York and Paris
The Telegraph’s tweet was retweeted 184 times and also favourited 31 times.
In recent years, besides Reuters, Bloomberg, CNBC , the FT and the Telegraph in the UK, gold rarely gets covered in the non specialist financial media such as The Guardian, The Times, BBC, Sky etc and rarely in the tabloid press.
We view this as a contrarian indicator and believe that as gold continues its journey from the fringe to the mainstream in the coming years - it will be covered in all business and financial media as frequently as stocks, the FTSE, the S&P 500 (etc.), are today. You may even see gold prices quoted on the BBC and CNN and Jeremy Paxman and Piers Morgan talking about currency wars and gold.
Finally, the move shows that possession remains nine-tenths of the law and the vital importance of owning physical gold in the safest way possible.
Legendary gold trader Jim Sinclair said the Bundesbank’s move “sends a message about storing gold near you and taking delivery no matter who is holding it.”
He said it is a pivotal event in the gold market and the latest warning for investors that they should keep metal bars under their physical control, rather than relying on paper contracts.
"This sends a message about storing gold near you and taking delivery no matter who is holding it. When France did this years ago it sent panic amongst the U.S. financial leadership. History will look back on this salvo as being the beginning of the end of the U.S .dollar as the reserve currency of choice," he said.
The Bundesbank’s gold repatriation shows the vital importance of either taking possession of physical gold or storing bullion in an allocated format with the strongest, non financial and non banking counter parties in the world. Allocated storage should be sought in locations where there is little risk of expropriation or nationalisation.
For breaking news and commentary on financial markets and gold, follow us on Twitter.
http://www.financialsense.com/contributors/mark-o-byrne/bundesbank-repatriates-gold?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+fso+%28Financial+Sense%29&utm_term=FSO
Germany's Bundesbank brings gold reserves home
Wed Jan 16, 2013 7:00am EST
* Kept some reserves abroard for security in Cold War
* Plans to hold 50 pct of gold reserves in Frankfurt by 2020
* To transfer 300 tonnes from New York, 374 tonnes from Paris
* Holdings at Banque de France no longer needed due to euro
By Eva Kuehnen
FRANKFURT, Jan 16 (Reuters) - Germany's Bundesbank plans to bring home some of its gold reserves stored in the United States' and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.
Germany amassed gold reserves in the post-war era thanks to rapid economic expansion that saw growing exports to the United States, where its dollar claims were turned into gold under the Bretton Woods agreement that Germany joined in 1952.
As the Cold War set in, Germany kept its gold reserves put, keeping them out of reach of the Soviet empire. But government officials have grown uneasy about the storage set-up and have called for the Bundesbank to inspect the bars.
The Bundesbank now wants to change the arrangement too, even though it has said it does not see a need to count the bars or check their gold content itself and considers written assurances from the other central banks as sufficient.
With the end of the Cold War it was no longer necessary to keep Germany's gold reserves "as far to the west and as far from the Iron Curtain as possible", Bundesbank board member Carl-Ludwig Thiele told reporters on Wednesday.
The German Federal Court of Auditors, which oversees the government's financial management, called last October for an official inspection of the gold reserves stored at foreign central banks, because they have never been fully checked.
"To hold gold as a central bank creates confidence," Thiele said. "If I hold gold in my own vaults, I have to check it myself," he said, adding that "a complete shift is not appropriate."
Beginning this year, the Bundesbank plans to transfer 300 tonnes of gold from the Federal Reserve in New York and all of its gold stored at the Banque de France in Paris, 374 tonnes, to Frankfurt.
By 2020, it wants to hold half of the nearly 3,400 tonnes of gold valued at almost 138 billion euros - only the United States holds more - in Frankfurt, where it stores about a third of its reserves. The rest is kept at the Federal Reserve, the Banque de France and the Bank of England.
The Bundesbank gained more space in its vaults after the transition to the euro from the deutschmark.
It did not want to disclose how much the gold transfers would cost and how the gold would be transported.
Before German reunification in 1990, 98 percent of Germany's gold was stored abroad. The Bundesbank then started to bring its gold home and in 2000 transferred 931 tonnes from the Bank of England to Germany. It will continue to hold about 13 percent of its gold reserves in London, even after 2020.
With the introduction of the euro, the Bundesbank sees no need to hold any reserves at the Banque de France as it will no longer need them for exchange for foreign currency.
"This is above all a historical anomaly which is now being corrected," said David Marsh, chairman of think tank OMFIF, which issued a report earlier this month in which it foresaw growing importance for gold due to uncertainty stemming from the rise of China's renminbi as an alternative to the dollar.
http://www.reuters.com/article/2013/01/16/bundesbank-gold-idUSL6N0AL7T020130116
Bundesbank Official Statement On Gold Repatriation
Submitted by Tyler Durden on 01/16/2013 08:29 -0500
Bond Central Banks France Germany New York Fed Reserve Currency
When we first heard about it, we thought Handelsblatt had gotten something very wrong. The implications were just so staggering. Turns out the news was spot on. Here is the official announcement from the Bundesbank, which roundly refutes all the spin the Frankfurt bank spoon-fed the people in October and November when it repeated time after time that there is nothing wrong with keeping German gold in NY and Paris, and on the contrary, it was better for everyone involved.
From the Bundesbank:
By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centres abroad within a short space of time.
The following table shows the current and the envisaged future allocation of Germany’s gold reserves across the various storage locations:
31 December 2012 31 December 2020
Frankfurt am Main 31 % 50 %
New York 45 % 37 %
London 13 % 13 %
Paris 11 % 0 %
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise. As capacity has now become available in the Bundesbank’s own vaults in Germany, the gold stocks can now be relocated from Paris to Frankfurt.
* * *
So it took the Bundesbank over 10 years to figure out that "the Bundesbank is no longer dependent on Paris as a financial centre in which to exchange gold for an international reserve currency should the need arise."
Well, as long as it has nothing to do with the recent political schism between socialist beggar France and the only country left in Europe that is not an all out parasite, all is well.
Finally, compare the above statement with the following from November:
Remarks On German Gold Reserves:
Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.
In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in times like these by conducting a “phantom debate” on the safety of our gold reserves.
The arguments raised are not really convincing. And I am glad that this is common sense for most Germans. Following the statement by the President of the Federal Court of Auditors in Germany, the discussion is now likely to come to an end – and it should do so before it causes harm to the excellent relationship between the Bundesbank and the US Fed.
Let’s get back to facts and figures: I would like to remind you that our gold reserves are part of the German currency reserves. These were accumulated over time thanks, in part, to Germany’s economic boom in the 1950s and 1960s. Germany’s growing economic strength, especially its strong external position, resulted in rather large trade account surpluses, most of them acquired in US dollars. At that time, the International Monetary System, known as the Bretton Woods System, was dominated by the US currency. As long as this system was in force, which was up until 1971, the US Fed was obliged to exchange its currency for gold.
Any current account surplus thus resulted in an increase in Germany’s gold reserves. This gold was stored in US vaults for obvious reasons [ZH: sorry, we don't have an econ PhD: what are the "obvious reasons"?]. This was not only the case for the gold hold by the Bundesbank – it was, in fact, common practice. By the way: it was the only practical thing to do, since running a trade account deficit meant a decrease in gold stocks.
Thus, we are now looking back at sixty years not only of fruitful cooperation in many fields and international fora, but also of storing gold and trading via the New York Fed. As a matter of fact, it is sensible for us to do so in New York, as Frankfurt is not a gold trading venue.
Throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed [ZH may, and likely will, soon provide a few historical facts which will cast some serious doubts on this claim. Very serious doubts]. And for this, Bill, I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed’s trusted partner in future, and we will continue to take advantage of the Fed’s services by storing some of our currency reserves as gold in New York.
At the same time, you can be assured that we are confident that our gold is in safe hands with you. The days in which Hollywood Germans such as Gerd Fröbe, better known as Goldfinger, and East German terrorist Simon Gruber, masterminded gold heists in US vaults are long gone. Nobody can seriously imagine scenarios like these, which are reminiscent of a James Bond movie with Goldfinger playing the role of a US Fed accounting clerk.
While gold is important, we have to combat a crisis of confidence in the euro area. This is the task we need to concentrate on. And we will do so.
http://www.zerohedge.com/news/2013-01-16/bundesbank-official-statement-gold-repatriation
basserdan, German gold repatriation is a very important development. Great article!
JPMorgan's New Metal Scheme
Comment Posted by Brittany Stepniak - Tuesday, January 15th, 2013
JPMorgan's won again – in the face of great controversy.
The fund finally won a two year battle with U.S. regulators. According to Reuters, JPMorgan Chase & Co. has officially been given permission to go forth with some controversial plans at the tail end of 2012.
These plans will permit all U.S. retail investors to trade physical copper quite easily via an ETF for the first time in our nation's history.
Meanwhile, industrial users fear this will inflate prices since a big chunk of the retail market will now covet the copper; typically more popular for its functional purposes in plumbing and cooling systems.
Bob Kickham is a senior vice president of sourcing at Luvata, a company that makes heat-transfer products used in refrigeration equipment and air conditioning. In an interview he said, "It's a sad day for industrial users and consumers. The outcome of the report is a nonsense."
Reuters reports:
They say the removal of up to 183,000 tonnes of copper, which would be used as collateral against shares in the funds, would have a "devastating" effect on the market.
While that is only a tiny part of a 20-million-tonne annual global market, fabricators worry that it accounts for the majority of the metal available in exchange-bonded warehouses.
They argue there is not enough metal available outside the exchange networks for immediate delivery to prevent a squeeze in supply because it is tied up in long-term contracts.
But that isn't the only concern.
Market manipulation conspiracy woes are in full force, and it's for good reason nowadays. Recent finance conspiracies that have been exposed to the public eye prove that a lot goes on behind closed doors...
JPMorgan is no stranger to the finance conspiracy game. Throughout 2012, it experienced quite a backlash of traducement after getting away with silver manipulation due to “lack of evidence” as the four-year manipulation investigation screeched to a halt in August.
The general public responded with outrage that the conniving banksters behind the manipulation schemes got away with true economic malice. Billionaires and silver investors like Eric Sprott openly admitted that silver was severely “undervalued” while gold ownership was under serious suspicion for being over-subscribed and over-pledged.
Once again, experts and the general public alike are a little worried about how JPMorgan is now manipulating another metal market with this new copper ETF.
Senator Carl Levin wrote a passionate letter detailing the problematic issues associated with such a plan of action. Back in July, his letter suggested that the JMP FX Physical Copper Trust had the immediate potential of creating a precarious “bubble and burst cycle” for copper. Senator Levin asserted that there are no other similar metal ETFs available on the NYSE and this copper ETF “will disrupt the market supply of copper by removing from the market a substantial percentage of the copper available for immediate delivery.”
Apparently the regulators have looked past these burdens...
On the contrary, other commodity ETFs have created some successful winners like the SPDR Gold Trust (GLD). It is the second-largest ETF in the market. The iShares Gold Trust (IAU) and the iShares Silver Trust (SLV), numbers two and three, also own the metal directly.
At this time, it is still difficult to determine exactly how this physical copper ETF will affect copper prices. JPMorgan definitely has the upper hand here: as they will now be able to market products through their investment advisory businesses.
Senior politicians, investors, and analysts alike remain skeptical and leery: they too believe JPMorgan is using this new copper ETF simply as a means to an end – a way to control and rig the copper market like they've done with silver and gold.
Chris Powell from GATA (Gold Anti-Trust Committee) believes this kind of market manipulation will bring about the untimely “destruction of markets. It's the manipulation of the value of all capital labor and goods and services in the world. What they are doing [The Gold Cartel and central banks] is really to seize control of everything economic in the world, and really surreptitiously, behind people's backs.”
Powell and Bill Murphy stand for GATA's fight against central banks and their stealthy means of manipulating the price of metals, sighting that it creates an unjust tyrannical system within our economy.
We will keep you updated with copper plays and alert you to any credible manipulation speculation schemes that may unfold along the way...
http://www.wealthwire.com/news/metals/4320?r=1
Profit From Power Elite's Key Sector Price Inflation With Gold
Commodities / Gold and Silver 2013
Jan 12, 2013 - 07:43 AM
By: DeepCaster_LLC
“The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.
Zero-bound interest rates, QE maneuvering, and ‘essentially costless’ check writing destroy business models and stunt investment decisions which offer increasingly lower ROIs and ROEs.”
Bill Gross, Founder & Co-CIO, PIMCO, 1/3/2013
For several years, Notable Independent Commentators, including Deepcaster, have warned that the Elite Central Banks’ Orgy of Fiat Currency Printing, a la QE etc, would result in Price Inflation.
So it is no surprise to us that The Bond King, Bill Gross of PIMCO, with about $2 Trillion under Management, would finally warn, in his January, 2013 letter to Investors, of Impending Price Inflation in Key Commodities.
Of course, General Price Inflation is already here, if one looks at the Real Numbers (e.g., U.S. CPI at 9.8% per shadowstats.com) as opposed to the Bogus Official Ones.
Going forward, this Mega Bank-generated Price Inflation provides considerable Profit Opportunities, but only in certain kinds of Commodities, and especially in one Sector Bill Gross does not specifically mention. (See Notes 1, 2, 3 and 4)
In sum, Policies actually being Implemented by the Power-Banker Elite virtually ensure a continuation of Fiat-Currency Depreciating Policies, and thus Price Inflation in Certain Commodities Sectors, as well as Increasing Risk of Systemic Destabilizing à la 2008-2009.
Yet consider also that the “Regulators” continue to accede to the Mega Banks wishes.
“Basel Committee's revised LCR prompts relief and concerns
The Basel Committee on Banking Supervision's decision to give global banks an additional four years to meet liquidity requirements was aimed at ensuring that the change wouldn't discourage lending to the real economy. Some banks have already benefited from the revised liquidity coverage ratio, with their share prices increasing. GFMA welcomed the Basel panel's decision to allow mortgage-backed securities and equities to be included in banks' liquidity buffers.
Basel panel's allowance of MBS in buffers faces scrutiny
The Basel Committee on Banking Supervision's decision to let banks include equities and residential mortgage-backed securities in Basel III liquidity buffers is gaining plaudits and criticism. Bankers welcome the revision, but experts say it is unlikely to significantly lift a slack securitization market. The change also presents challenges for regulators
Significantly, Many Mortgage Backed Securities are still Toxic if Mark-to-Market Standards are applied, which they are no longer required to be.
So, de facto, the Banks may “count” Toxic Securities as part of their Liquidating Buffer.
Worse yet, the Regulators have, once again, administered a mere slap on the wrist to Major Banks which engaged in unacceptable practices. For example
Banks settle mortgage-related legal disputes
Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and other major banks agreed to pay a total of $20 billion to settle two legal disputes related to the mortgage crisis. BofA agreed to pay Fannie Mae $11.6 billion. In a separate dispute, 10 lenders agreed to pay more than $8.5 billion over foreclosure practices.”
sifma SmartBrief, 1/8/2013
Hardly a deterrent going forward.
In effect, this policy allows Risk to continue to Threaten Systemic Stability and its wealth of Individual Investors.
Making matters worse for Systemic Stability and Investors alike, is the Mega-Bankers’ Cartel (see Note 5) ongoing Manipulation, not just of Precious Metals but of a Wide Variety of Markets.
While Deepcaster, GATA and others have been complaining about such Manipulation for years, the Situation has become so threatening to Systemic Stability that even the Most Reputable and successful Investment Managers such as PIMCO’s CEO, Mohammed El-Erian, are complaining about the Risks inherent in such intervention as well.
“The investment recommendations made by many financial commentators are now dominated by cross-asset class relative valuation rather than the fundamentals of the investment itself….
“This is an understandable approach as unusual central bank activism has artificially elevated certain asset prices. Yet the dominance of this increasingly popular advice comes with potential risks that need to be well understood and well managed.
“Several asset classes now have highly manipulated prices due to experimental central bank activities, both actual and signalled. The more this happens, the more investors come under pressure to migrate to higher risk investments in search of returns….
“Just a few weeks ago the Federal Reserve announced it is targeting a further $1 trillion in asset purchases in 2013, representing a third of its existing balance sheet. Other central banks -- particularly the Bank of England, the Bank of Japan, and the European Central Bank -- are also expected to expand their balance sheets again in the months ahead….
“There is a limit to how far central banks can divorce prices from fundamentals….at some point, and it is hard to tell when exactly, the private sector will increasingly refuse to engage in situations deemed excessively artificial and overly rigged….
“Have no doubt: Central banks are both referees and players in today's markets. With 2013 starting with so many liquidity-induced deviations, investors would be well advised to take greater care when pursuing opportunities that rely mainly on the ‘central bank put.’” (emphasis added)
“Beware the ‘Central Bank Put’”, Mohamed El-Erian, ft.com, 01/07/13
Chief Executive and co-Chief Investment Officer of PIMCO
El-Erian is Spot-On correct about the Risks Associated with Investment in “Highly Manipulated Asset Classes, which is why Deepcaster’s portfolio Recommendations aim both to Minimize Risk from and to Profit from, these and others.
But it also makes certain Real Assets even more attractive going forward.
Thus the Big Smart Money is responding accordingly, moving Money into Gold and certain other commodities (See Notes 1, 2, 3 and 4).
For example, notwithstanding ongoing Cartel (Note 5) Precious Metals Price Suppression and in response to Japanese Prime Minister Abe’s pledge to spur Inflation, Japanese Pension Funds ($3.36 Trillion in Assets!) plan to double their Gold Holdings in the next two years according to Bloomberg Business Week.
A word to the wise: Go for the Gold.
Best regards,
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
http://www.marketoracle.co.uk/Article38462.html
Profit From Power Elite's Key Sector Price Inflation With Gold
Commodities / Gold and Silver 2013
Jan 12, 2013 - 07:43 AM
By: DeepCaster_LLC
“The future price tag of printing six trillion dollars’ worth of checks comes in the form of inflation and devaluation of currencies either relative to each other, or to commodities in less limitless supply such as oil or gold.
Zero-bound interest rates, QE maneuvering, and ‘essentially costless’ check writing destroy business models and stunt investment decisions which offer increasingly lower ROIs and ROEs.”
Bill Gross, Founder & Co-CIO, PIMCO, 1/3/2013
For several years, Notable Independent Commentators, including Deepcaster, have warned that the Elite Central Banks’ Orgy of Fiat Currency Printing, a la QE etc, would result in Price Inflation.
So it is no surprise to us that The Bond King, Bill Gross of PIMCO, with about $2 Trillion under Management, would finally warn, in his January, 2013 letter to Investors, of Impending Price Inflation in Key Commodities.
Of course, General Price Inflation is already here, if one looks at the Real Numbers (e.g., U.S. CPI at 9.8% per shadowstats.com) as opposed to the Bogus Official Ones.
Going forward, this Mega Bank-generated Price Inflation provides considerable Profit Opportunities, but only in certain kinds of Commodities, and especially in one Sector Bill Gross does not specifically mention. (See Notes 1, 2, 3 and 4)
In sum, Policies actually being Implemented by the Power-Banker Elite virtually ensure a continuation of Fiat-Currency Depreciating Policies, and thus Price Inflation in Certain Commodities Sectors, as well as Increasing Risk of Systemic Destabilizing à la 2008-2009.
Yet consider also that the “Regulators” continue to accede to the Mega Banks wishes.
“Basel Committee's revised LCR prompts relief and concerns
The Basel Committee on Banking Supervision's decision to give global banks an additional four years to meet liquidity requirements was aimed at ensuring that the change wouldn't discourage lending to the real economy. Some banks have already benefited from the revised liquidity coverage ratio, with their share prices increasing. GFMA welcomed the Basel panel's decision to allow mortgage-backed securities and equities to be included in banks' liquidity buffers.
Basel panel's allowance of MBS in buffers faces scrutiny
The Basel Committee on Banking Supervision's decision to let banks include equities and residential mortgage-backed securities in Basel III liquidity buffers is gaining plaudits and criticism. Bankers welcome the revision, but experts say it is unlikely to significantly lift a slack securitization market. The change also presents challenges for regulators
Significantly, Many Mortgage Backed Securities are still Toxic if Mark-to-Market Standards are applied, which they are no longer required to be.
So, de facto, the Banks may “count” Toxic Securities as part of their Liquidating Buffer.
Worse yet, the Regulators have, once again, administered a mere slap on the wrist to Major Banks which engaged in unacceptable practices. For example
Banks settle mortgage-related legal disputes
Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and other major banks agreed to pay a total of $20 billion to settle two legal disputes related to the mortgage crisis. BofA agreed to pay Fannie Mae $11.6 billion. In a separate dispute, 10 lenders agreed to pay more than $8.5 billion over foreclosure practices.”
sifma SmartBrief, 1/8/2013
Hardly a deterrent going forward.
In effect, this policy allows Risk to continue to Threaten Systemic Stability and its wealth of Individual Investors.
Making matters worse for Systemic Stability and Investors alike, is the Mega-Bankers’ Cartel (see Note 5) ongoing Manipulation, not just of Precious Metals but of a Wide Variety of Markets.
While Deepcaster, GATA and others have been complaining about such Manipulation for years, the Situation has become so threatening to Systemic Stability that even the Most Reputable and successful Investment Managers such as PIMCO’s CEO, Mohammed El-Erian, are complaining about the Risks inherent in such intervention as well.
“The investment recommendations made by many financial commentators are now dominated by cross-asset class relative valuation rather than the fundamentals of the investment itself….
“This is an understandable approach as unusual central bank activism has artificially elevated certain asset prices. Yet the dominance of this increasingly popular advice comes with potential risks that need to be well understood and well managed.
“Several asset classes now have highly manipulated prices due to experimental central bank activities, both actual and signalled. The more this happens, the more investors come under pressure to migrate to higher risk investments in search of returns….
“Just a few weeks ago the Federal Reserve announced it is targeting a further $1 trillion in asset purchases in 2013, representing a third of its existing balance sheet. Other central banks -- particularly the Bank of England, the Bank of Japan, and the European Central Bank -- are also expected to expand their balance sheets again in the months ahead….
“There is a limit to how far central banks can divorce prices from fundamentals….at some point, and it is hard to tell when exactly, the private sector will increasingly refuse to engage in situations deemed excessively artificial and overly rigged….
“Have no doubt: Central banks are both referees and players in today's markets. With 2013 starting with so many liquidity-induced deviations, investors would be well advised to take greater care when pursuing opportunities that rely mainly on the ‘central bank put.’” (emphasis added)
“Beware the ‘Central Bank Put’”, Mohamed El-Erian, ft.com, 01/07/13
Chief Executive and co-Chief Investment Officer of PIMCO
El-Erian is Spot-On correct about the Risks Associated with Investment in “Highly Manipulated Asset Classes, which is why Deepcaster’s portfolio Recommendations aim both to Minimize Risk from and to Profit from, these and others.
But it also makes certain Real Assets even more attractive going forward.
Thus the Big Smart Money is responding accordingly, moving Money into Gold and certain other commodities (See Notes 1, 2, 3 and 4).
For example, notwithstanding ongoing Cartel (Note 5) Precious Metals Price Suppression and in response to Japanese Prime Minister Abe’s pledge to spur Inflation, Japanese Pension Funds ($3.36 Trillion in Assets!) plan to double their Gold Holdings in the next two years according to Bloomberg Business Week.
A word to the wise: Go for the Gold.
Best regards,
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
http://www.marketoracle.co.uk/Article38462.html
Bundesbank wants to bring German gold
14.01.2013, 21:07 clock
After the establishment of large parts of the German Bundesbank's gold reserves for safety were deposited with the Allies. Now, the gold from New York and Paris to be retrieved.
Frankfurt, the Bundesbank has developed a new concept, where she wants to continue storing their gold reserves. According to information of the Handelsblatt sees this approach which will be announced next Wednesday before, to revalue the domestic locations, in New York for less to store gold and even to hoard any more gold in Paris.
Thus, the central bank reacts to a report of the Federal Court to examine the financial statements of the Bundesbank and had advised her to create a current bearings concept and documented.
Why the Bundesbank gets the gold reserves to Germany
On Wednesday, the Federal Bank introduces a new concept for supporting the German gold reserves. First details of the plans.
Currently, the gold of the Bundesbank outsourced their claims to New York, London, Paris and Frankfurt. In the American Federal Reserve store 45 percent of the total 3,396 tonnes of gold in the Bank of England in London, 13 percent, in the Bank of France in Paris eleven percent and 31 percent at its headquarters in Frankfurt. This distribution is about to change.
Bundesbank board member Carl-Ludwig Thiele had already said last fall that there was no compelling reason for storage in the French capital. Originally, the Federal Republic had during the Cold War and the division of Germany for security its gold to various partner countries, including France distributed. This argument no longer applies. Paris still speaks against another argument: Unlike in London or New York, the Bundesbank would receive in the event of a world crisis, no foreign currency.
http://www.handelsblatt.com/politik/deutschland/reserven-bundesbank-will-deutsches-gold-zurueckholen/7629600.html
It Begins: Bundesbank To Commence Repatriating Gold From New York Fed
by Tyler Durden on 01/14/2013
In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.
Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.
It would be very ironic, if the Bundesbank, which many had assumed had bent over backwards to accommodate Mario Draghi's Goldmanesque demands to allow implicit monetization of peripheral nations' debts has just "returned the favor" by launching the greatest physical gold scramble of all time.
From Handelsblatt:
Die Bundesbank hat ein neues Konzept ausgearbeitet, wo sie künftig ihre Goldreserven lagern will. Nach Informationen des Handelsblatts (Dienstausgabe) sieht dieses Konzept, das am kommenden Mittwoch bekanntgegeben werden soll, vor, den heimischen Standort aufzuwerten, in New York dafür weniger Gold zu lagern und überhaupt kein Gold mehr in Paris zu horten.
Derzeit lagert das Gold der Bundesbank ihren Angaben zufolge in New York, London, Paris und Frankfurt. In der amerikanischen Notenbank Fed lagern 45 Prozent der insgesamt 3.396 Tonnen Gold, in der Bank of England in London 13 Prozent, in der Banque de France in Paris elf Prozent und im Hauptsitz in Frankfurt 31 Prozent. Diese Verteilung soll sich nun ändern.
We present it in the original for fear of losing something in translation, but in broad English terms the above reads as follows:
The German Bundesbank is developing a new approach as to where its gold will be stored. According to exclusive information, to be fully announced on Wednesday, the bank will in the future hold less gold in the New York Fed, and no more hold in Paris (Banque de France). As a result, the distribution of German gold, of which 45% is held in New York, 13% in London, 11% in Paris and 31% in Frankfurt, is about to change.
There is no need to explain why this is huge news (for those who have not followed our series on the concerns and issue plaguing German gold can catch up here, here, here, here, and certainly here) . At least no need for us to explain. Instead we will let the Bundesbank do the explanation. The following section is the answer provided by the Bundesbank itself in late October in response to the question why it does not move the gold back to Germany:
The reasons for storing gold reserves with foreign partner central banks are historical since, at the time, gold at these trading centres was transferred to the Bundesbank. To be more specific: in October 1951 the Bank deutscher Länder, the Bundesbank’s predecessor, purchased its first gold for DM 2.5 million; that was 529 kilograms at the time. By 1956, the gold reserves had risen to DM 6.2 billion, or 1,328 tonnes; upon its foundation in 1957, the Bundesbank took over these reserves. No further gold was added until the 1970s. During that entire period, we had nothing but the best of experiences with our partners in New York, London and Paris. There was never any doubt about the security of Germany’s gold. In future, we wish to continue to keep gold at international gold trading centres so that, when push comes to shove, we can have it available as a reserve asset as soon as possible. Gold stored in your home safe is not immediately available as collateral in case you need foreign currency. Take, for instance, the key role that the US dollar plays as a reserve currency in the global financial system. The gold held with the New York Fed can, in a crisis, be pledged with the Federal Reserve Bank as collateral against US dollar-denominated liquidity. Similar pound sterling liquidity could be obtained by pledging the gold that is held with the Bank of England.
And in case the above was not clear enough, below is the speech Buba's Andreas Dobret delivered to none other than NY Fed's Bill Dudley in early November:
Please let me also comment on the bizarre public discussion we are currently facing in Germany on the safety of our gold deposits outside Germany – a discussion which is driven by irrational fears.
In this context, I wish to warn against voluntarily adding fuel to the general sense of uncertainty among the German public in times like these by conducting a “phantom debate” on the safety of our gold reserves.
The arguments raised are not really convincing. And I am glad that this is common sense for most Germans. Following the statement by the President of the Federal Court of Auditors in Germany, the discussion is now likely to come to an end – and it should do so before it causes harm to the excellent relationship between the Bundesbank and the US Fed.
Throughout these sixty years, we have never encountered the slightest problem, let alone had any doubts concerning the credibility of the Fed [ZH may, and likely will, soon provide a few historical facts which will cast some serious doubts on this claim. Very serious doubts]. And for this, Bill, I would like to thank you personally. I am also grateful for your uncomplicated cooperation in so many matters. The Bundesbank will remain the Fed’s trusted partner in future, and we will continue to take advantage of the Fed’s services by storing some of our currency reserves as gold in New York.
Incidentally, what Zero Hedge did provide after this article, was factual evidence that the Buba's very much "trusted partner" had been skimming it on physical gold deliveries on at least one occasion, in "Exclusive: Bank Of England To The Fed: "No Indication Should, Of Course, Be Given To The Bundesbank..."
So we wonder: what changed in the three months between November and now, that has caused such a dramatic about face at the Bundesbank, and that in light of all of the above, will make is explicitly very unambigous that the act of gold repatriation, assuming of course that Handelsblatt did not mischaracterize what is happening and misreport the facts, means the "excellent relationship" between the Fed and Buba, not to mention Banque de France which will shortly hold precisely zero German gold, has just collapsed.
Also, if the Bundesbank is first, who is next?
Finally, once the scramble to satisfy physical gold deliverable claims manifests itself in the market, we can't help but wonder what will happen to the price of gold: both paper and physical?
http://www.zerohedge.com/news/2013-01-14/it-begins-bundesbank-commence-repatriating-gold-new-york-fed
Jay Taylor Talks Gold Manipulation, Investing, and The Ideal Gold Junior
1/13/2013
FutureMoneyTrends.com just released a great interview with Jay Taylor, the Chief Editor of MiningStocks.com. Jay has one of the best track records in the industry and is a highly respected analyst. Gold manipulation, gold as money, the gold price, investing, and one of his top junior gold picks are all discussed during our interview.
When we asked what kind of qualities he looks for in a gold junior, he said Brazil Resources (TSXV: BRI & OTC: BRIZF) was one of his top picks. As FutureMoneyTrends.com members know, this is not only one of our top picks, but our single largest position in any of the gold junior mining companies.
On The Gold Price...
"As we saw in 1980 there will be huge amounts of people that finally lose confidence and throw in the towel on the policy makers and then there will be a rush to gold like we've never seen before. When people start to insist on delivery of their gold, for the huge amounts of paper that's out there in the futures market...God help us, the price is going to go to the moon."
Gold Manipulation...
"With respect to gold manipulation, the central bank comes right out and says yeah but we have the legal right to do so"
What juniors are worth buying...
It's very difficult for juniors to raise capital. You have to start out by looking at management. A company that I like very much and one that is a top pick in my newsletter is Brazil Resources. This company a company that's headed up by Amir Adnani and Amir has proven his medal in the past with Uranium Energy. Amir has the qualities that are most important in management. He's a big picture guy, he's a good people person and he knows how to delegate and he attracts top talent underneath him. The financial markets and financial institutions really respect him. He's able to raise capital.
This is a MUST WATCH interview with one of the most respected and successful resource analysts.
Brazil Resources Top Shareholder is the KCR Fund, ran by Doug Casey, Marin Katusa, and Rick Rule.:
http://www.futuremoneytrends.com/index.php/interviews/382-how-to-invest-in-mining-stocks-jay-taylor-of-miningstockscom
Jay Taylor Talks Gold Manipulation, Investing, and The Ideal Gold Junior
1/13/2013
FutureMoneyTrends.com just released a great interview with Jay Taylor, the Chief Editor of MiningStocks.com. Jay has one of the best track records in the industry and is a highly respected analyst. Gold manipulation, gold as money, the gold price, investing, and one of his top junior gold picks are all discussed during our interview.
When we asked what kind of qualities he looks for in a gold junior, he said Brazil Resources (TSXV: BRI & OTC: BRIZF) was one of his top picks. As FutureMoneyTrends.com members know, this is not only one of our top picks, but our single largest position in any of the gold junior mining companies.
On The Gold Price...
"As we saw in 1980 there will be huge amounts of people that finally lose confidence and throw in the towel on the policy makers and then there will be a rush to gold like we've never seen before. When people start to insist on delivery of their gold, for the huge amounts of paper that's out there in the futures market...God help us, the price is going to go to the moon."
Gold Manipulation...
"With respect to gold manipulation, the central bank comes right out and says yeah but we have the legal right to do so"
What juniors are worth buying...
It's very difficult for juniors to raise capital. You have to start out by looking at management. A company that I like very much and one that is a top pick in my newsletter is Brazil Resources. This company a company that's headed up by Amir Adnani and Amir has proven his medal in the past with Uranium Energy. Amir has the qualities that are most important in management. He's a big picture guy, he's a good people person and he knows how to delegate and he attracts top talent underneath him. The financial markets and financial institutions really respect him. He's able to raise capital.
This is a MUST WATCH interview with one of the most respected and successful resource analysts.
Brazil Resources Top Shareholder is the KCR Fund, ran by Doug Casey, Marin Katusa, and Rick Rule.:
http://www.futuremoneytrends.com/index.php/interviews/382-how-to-invest-in-mining-stocks-jay-taylor-of-miningstockscom
Crash Course: Equity Financing in the Mining Sector
Visual Capitalist
1/13/2013
http://www.visualcapitalist.com/equity-financing-mining-exploration-sector
Betrayed by Basel
By SIMON JOHNSON
1/10/2012
Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”
The fundamental assumption of modern bank regulation is that nations need to coordinate, and they negotiate the relevant international standards in the Swiss city of Basel, home to the Bank for International Settlements, under whose auspices such negotiations are held. The United States has an important seat at the table, but so do the Europeans and others. These negotiations are shaped by three main forces: the United States, Britain and the euro zone, with Japan often siding with the euro zone. (It’s one country, one vote, so this can easily go against the United States.)
This week the Basel Committee on Banking Supervision, as it is known, let us down – once again. Faced with renewed pressure from the international banking lobby, these officials caved in, as they did so many times in the period leading to the crisis of 2007-8. As a result, our financial system took a major step toward becoming more dangerous. (A visual representation of the Basel Committee’s centrality to all key regulatory matters is clear on this organizational chart, as well as in its charter.)
Why did this happen? Must Basel always let us down? And is there any alternative?
You will no doubt have noticed that very large banks with a global span have an unusual degree of political influence. In particular, they have the ability to threaten the economic recovery. Their line is: if you don’t give us what we want, credit will not flow and jobs will not come back.
Policy makers in Washington are often impressed by this line, although less frequently than they used to be. More and more, managers have begun to understand that the people who run large banks have distorted incentives. Because they receive downside protection from the public sector – the too-big-to-fail phenomenon – bank executives want to take a great deal of risk. When things go well, they get the upside; when things go badly, that is largely someone else’s problem.
How does that desire for risk manifest itself? The banks lobby for the ability to fund themselves with more debt and less equity, and they also want to be less safe on other dimensions, including holding fewer liquid assets.
The Basel Committee this week agreed to water down its liquidity requirements. Felix Salmon of Reuters has a good explanation of why this is a bad idea. Writing in The Atlantic, Jesse Eisinger and Frank Partnoy have a very nice article about continued fragility of banking, because investors think the banks are hiding trouble in the published balance sheets. Confidence in the system is not restored by relaxing regulation.
The deeper problem with the Basel Committee is it overrepresents the euro-zone Europeans. Not only is the euro zone in great difficulty because of economic mismanagement, but its leaders are hoping to get out of their current predicament in part by relaxing bank regulation.
The idea that the Basel process is all about expertise – or smart people working out the right answers – is exploded by Sheila Bair’s book, “Bull by the Horns.” Read Chapter 3, in which she describes in convincing detail the fight over the Basel II agreement during the mid-2000s (and Chapter 4, which is more about how some United States agencies play against in each and on behalf their clients, the big banks).
What we saw before 2007 and what we see now is not officials applying some sort of optimization procedure or sensible independent thinking. Rather, this is about an industry that wants to take more risk because that is how it gets larger subsidies. And this industry is expert at playing the regulators off against each other, including across borders. The Europeans are again the patsy.
Unfortunately, some United States officials are so captured or captivated by the ideology of modern banking that they want to play along. For example, as Ms. Bair mentions, the most dangerous “advanced approaches” of Basel II were developed by the Federal Reserve Bank of New York – not surprising, given how close many people at that institution are to Wall Street. Those advanced approaches let the banks set their own risk-weights on assets, essentially using complex math to determine what was risky and what was relatively safe. Of course, they were almost completely wrong, and Basel II was a dismal failure.
Thank goodness Ms. Bair and her colleagues at the Federal Deposit Insurance Corporation resisted the full implementation of Basel II. Their insistence on simpler safeguards, including a tough cap on debt relative to bank size, helped make our financial crisis less severe than it would otherwise have been. The Europeans drank the Basel II Kool-Aid, and their banks loaded up on poorly understood risks. They will lose a decade of growth partly for this reason.
Now we have moved on to what is known as Basel III, and again the Europeans want to double down by letting the banks do want they want. The stock price of European banks jumped on the news of the latest Basel Committee relaxation of the rules – you should interpret that as a larger expected transfer from taxpayers to bank insiders and (perhaps) stockholders.
The United States must go it alone. Basel agreements should be a floor on our bank regulation (including bank capital, leverage and liquidity), not a ceiling. If our tighter rules induce dangerous banking activities to leave the United States, that is fine. In fact, we should offer to help them pack.
We need a financial sector that works for the real economy – not a continuation of the dangerous, nontransparent government subsidy schemes that have brought the Europeans to their knees.
http://economix.blogs.nytimes.com/2013/01/10/betrayed-by-basel/
Betrayed by Basel
By SIMON JOHNSON
1/10/2012
Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”
The fundamental assumption of modern bank regulation is that nations need to coordinate, and they negotiate the relevant international standards in the Swiss city of Basel, home to the Bank for International Settlements, under whose auspices such negotiations are held. The United States has an important seat at the table, but so do the Europeans and others. These negotiations are shaped by three main forces: the United States, Britain and the euro zone, with Japan often siding with the euro zone. (It’s one country, one vote, so this can easily go against the United States.)
This week the Basel Committee on Banking Supervision, as it is known, let us down – once again. Faced with renewed pressure from the international banking lobby, these officials caved in, as they did so many times in the period leading to the crisis of 2007-8. As a result, our financial system took a major step toward becoming more dangerous. (A visual representation of the Basel Committee’s centrality to all key regulatory matters is clear on this organizational chart, as well as in its charter.)
Why did this happen? Must Basel always let us down? And is there any alternative?
You will no doubt have noticed that very large banks with a global span have an unusual degree of political influence. In particular, they have the ability to threaten the economic recovery. Their line is: if you don’t give us what we want, credit will not flow and jobs will not come back.
Policy makers in Washington are often impressed by this line, although less frequently than they used to be. More and more, managers have begun to understand that the people who run large banks have distorted incentives. Because they receive downside protection from the public sector – the too-big-to-fail phenomenon – bank executives want to take a great deal of risk. When things go well, they get the upside; when things go badly, that is largely someone else’s problem.
How does that desire for risk manifest itself? The banks lobby for the ability to fund themselves with more debt and less equity, and they also want to be less safe on other dimensions, including holding fewer liquid assets.
The Basel Committee this week agreed to water down its liquidity requirements. Felix Salmon of Reuters has a good explanation of why this is a bad idea. Writing in The Atlantic, Jesse Eisinger and Frank Partnoy have a very nice article about continued fragility of banking, because investors think the banks are hiding trouble in the published balance sheets. Confidence in the system is not restored by relaxing regulation.
The deeper problem with the Basel Committee is it overrepresents the euro-zone Europeans. Not only is the euro zone in great difficulty because of economic mismanagement, but its leaders are hoping to get out of their current predicament in part by relaxing bank regulation.
The idea that the Basel process is all about expertise – or smart people working out the right answers – is exploded by Sheila Bair’s book, “Bull by the Horns.” Read Chapter 3, in which she describes in convincing detail the fight over the Basel II agreement during the mid-2000s (and Chapter 4, which is more about how some United States agencies play against in each and on behalf their clients, the big banks).
What we saw before 2007 and what we see now is not officials applying some sort of optimization procedure or sensible independent thinking. Rather, this is about an industry that wants to take more risk because that is how it gets larger subsidies. And this industry is expert at playing the regulators off against each other, including across borders. The Europeans are again the patsy.
Unfortunately, some United States officials are so captured or captivated by the ideology of modern banking that they want to play along. For example, as Ms. Bair mentions, the most dangerous “advanced approaches” of Basel II were developed by the Federal Reserve Bank of New York – not surprising, given how close many people at that institution are to Wall Street. Those advanced approaches let the banks set their own risk-weights on assets, essentially using complex math to determine what was risky and what was relatively safe. Of course, they were almost completely wrong, and Basel II was a dismal failure.
Thank goodness Ms. Bair and her colleagues at the Federal Deposit Insurance Corporation resisted the full implementation of Basel II. Their insistence on simpler safeguards, including a tough cap on debt relative to bank size, helped make our financial crisis less severe than it would otherwise have been. The Europeans drank the Basel II Kool-Aid, and their banks loaded up on poorly understood risks. They will lose a decade of growth partly for this reason.
Now we have moved on to what is known as Basel III, and again the Europeans want to double down by letting the banks do want they want. The stock price of European banks jumped on the news of the latest Basel Committee relaxation of the rules – you should interpret that as a larger expected transfer from taxpayers to bank insiders and (perhaps) stockholders.
The United States must go it alone. Basel agreements should be a floor on our bank regulation (including bank capital, leverage and liquidity), not a ceiling. If our tighter rules induce dangerous banking activities to leave the United States, that is fine. In fact, we should offer to help them pack.
We need a financial sector that works for the real economy – not a continuation of the dangerous, nontransparent government subsidy schemes that have brought the Europeans to their knees.
http://economix.blogs.nytimes.com/2013/01/10/betrayed-by-basel/
(underlined are links in article)
Katchum's Macro-Economic Blob: List of All Correlations
vrijdag 11 januari 2013 Update:
List of all Correlations
I have found many correlations since I started blogging in January 2012.
So I wanted to summarize once again all correlations in this update. Positive correlations mean that if one goes up, the other goes up too. Negative correlations mean that if one goes up, the other goes down.
Positive correlations:
1) Silver premium Vs. Silver Price
2) Baltic Dry Vs. Industrial Commodities
3) Baltic Dry Vs. Copper
4) Copper Vs. S&P
5) Oil Vs. Dow Jones
6) Agriculture Price Vs. Health of Economy
7) Agriculture Vs. Fertilizer Price
8) CRB Index Vs. Commodity prices (oil, agriculture, metals)
9) MZM velocity Vs. Inflation
10) MZM velocity Vs. 10 year U.S. treasury yield
11) Case-Shiller Index Vs. Housing Market Index
12) Capacity Utilization Vs. Inflation
13) Rhodium Price Vs. Automotive Industry
14) Housing Price Vs. Rise of Wages
15) O-metrix Score Vs. Stock Value
16) Outlay Spending Vs. Hyperinflation
17) Gold Money Index Vs. Gold Price
18) Stock Dividend to Bond Yield ratio Vs. Stock Price
19) War Vs. Silver Price
20) Exchange Rate Vs. Treasury Bond Valuation
21) PMI Vs. GDP Growth Rate
22) Gold Lease Rate Vs. Gold Price
23) Economy of Australia/Canada Vs. Industrial Commodities
24) Jim Sinclair's Fed Custodials Vs. Gold Price
25) LCNS silver net short positions Vs. Silver Price
26) ECB Deposit Rate Vs. Euribor and Deposit Facility
27) China Gold Imports from Hong Kong Vs. Gold Price
28) AUD/USD Vs. Iron Ore
29) Chinese yoy GDP growth Vs. Chinese yoy Power Consumption
30) Chinese yoy Power Consumption Vs. Chinese yoy Power Production
31) M1 and Gold
32) Obesity Vs. Debt
33) Global Equity Prices Vs. Global EPS revisions
34) Total Public Debt Vs. Interest Payment on Debt
35) U.S. Bond Yields Vs. Interest Payment on Debt
36) Federal Reserve Balance Sheet Vs. S&P
37) Federal Reserve Balance Sheet Vs. Gold Price
38) Balance Sheet Ratio Fed/ECB Vs. EUR/USD
39) China Manufacturing PMI Vs. Base Metal Prices
40) COMEX stock level Vs. CFTC Open Interest
41) Manufacturing component of Industrial Production Vs. CRB Metals Index
42) Net Short Interest Gold Vs. Gold Price
43) Central Bank Net Gold Buying Vs. Gold Price
44) LCNS silver Vs. Silver Open Interest
45) Bond Yields Vs. Gold Price
46) Gold Miners Bullish Percent Index Vs. GDX
47) Daily Sentiment Index Gold Vs. Gold Price
Negative correlations:
1) Copper Price Vs. Copper Futures Contango
2) Interest Rates Vs. P/E ratio of gold mines
3) Non-Farm Payrolls Vs. Unemployment Rate
4) Federal Debt Held by Foreigners Vs. U.S. Bond Yields
5) Size of Governments Vs. Their Economies
6) Stocks Vs. U.S. Dollar
7) Silver Stock at CME Vs. Silver Price
8) China Reserve Requirements Vs. Shanghai Real Estate Prices
9) Capacity Utilization Vs. Unemployment Rate
10) Net Commercial Short Positions Vs. Bond Yields
11) Net Non-Commercial Long Positions Vs. Bond Yields
These are a lot of correlations that you need to monitor on a day to day basis!
http://katchum.blogspot.com/2013/01/update-list-of-all-correlations.html
Note: All numbered correlations are linked in original article
Katchum's Macro-Economic Blob: List of All Correlations
vrijdag 11 januari 2013 Update:
List of all Correlations
I have found many correlations since I started blogging in January 2012.
So I wanted to summarize once again all correlations in this update. Positive correlations mean that if one goes up, the other goes up too. Negative correlations mean that if one goes up, the other goes down.
Positive correlations:
1) Silver premium Vs. Silver Price
2) Baltic Dry Vs. Industrial Commodities
3) Baltic Dry Vs. Copper
4) Copper Vs. S&P
5) Oil Vs. Dow Jones
6) Agriculture Price Vs. Health of Economy
7) Agriculture Vs. Fertilizer Price
8) CRB Index Vs. Commodity prices (oil, agriculture, metals)
9) MZM velocity Vs. Inflation
10) MZM velocity Vs. 10 year U.S. treasury yield
11) Case-Shiller Index Vs. Housing Market Index
12) Capacity Utilization Vs. Inflation
13) Rhodium Price Vs. Automotive Industry
14) Housing Price Vs. Rise of Wages
15) O-metrix Score Vs. Stock Value
16) Outlay Spending Vs. Hyperinflation
17) Gold Money Index Vs. Gold Price
18) Stock Dividend to Bond Yield ratio Vs. Stock Price
19) War Vs. Silver Price
20) Exchange Rate Vs. Treasury Bond Valuation
21) PMI Vs. GDP Growth Rate
22) Gold Lease Rate Vs. Gold Price
23) Economy of Australia/Canada Vs. Industrial Commodities
24) Jim Sinclair's Fed Custodials Vs. Gold Price
25) LCNS silver net short positions Vs. Silver Price
26) ECB Deposit Rate Vs. Euribor and Deposit Facility
27) China Gold Imports from Hong Kong Vs. Gold Price
28) AUD/USD Vs. Iron Ore
29) Chinese yoy GDP growth Vs. Chinese yoy Power Consumption
30) Chinese yoy Power Consumption Vs. Chinese yoy Power Production
31) M1 and Gold
32) Obesity Vs. Debt
33) Global Equity Prices Vs. Global EPS revisions
34) Total Public Debt Vs. Interest Payment on Debt
35) U.S. Bond Yields Vs. Interest Payment on Debt
36) Federal Reserve Balance Sheet Vs. S&P
37) Federal Reserve Balance Sheet Vs. Gold Price
38) Balance Sheet Ratio Fed/ECB Vs. EUR/USD
39) China Manufacturing PMI Vs. Base Metal Prices
40) COMEX stock level Vs. CFTC Open Interest
41) Manufacturing component of Industrial Production Vs. CRB Metals Index
42) Net Short Interest Gold Vs. Gold Price
43) Central Bank Net Gold Buying Vs. Gold Price
44) LCNS silver Vs. Silver Open Interest
45) Bond Yields Vs. Gold Price
46) Gold Miners Bullish Percent Index Vs. GDX
47) Daily Sentiment Index Gold Vs. Gold Price
Negative correlations:
1) Copper Price Vs. Copper Futures Contango
2) Interest Rates Vs. P/E ratio of gold mines
3) Non-Farm Payrolls Vs. Unemployment Rate
4) Federal Debt Held by Foreigners Vs. U.S. Bond Yields
5) Size of Governments Vs. Their Economies
6) Stocks Vs. U.S. Dollar
7) Silver Stock at CME Vs. Silver Price
8) China Reserve Requirements Vs. Shanghai Real Estate Prices
9) Capacity Utilization Vs. Unemployment Rate
10) Net Commercial Short Positions Vs. Bond Yields
11) Net Non-Commercial Long Positions Vs. Bond Yields
These are a lot of correlations that you need to monitor on a day to day basis!
http://katchum.blogspot.com/2013/01/update-list-of-all-correlations.html
Note: All numbered correlations are linked in original article
SLIDESHOW: Analyst Favorites of the Metals Channel Global Mining Titans Index
Forbes
Metal channel 2013
By Metals Channel Staff, updated Friday, January 11, 2:17 PM
THIS SLIDE: #1 OF 25
Read more at http://www.metalschannel.com/slideshows/analyst-favorites/#BCEp20cLtlGqh5mU.99
http://www.metalschannel.com/slideshows/analyst-favorites/
More Raw Footage from ‘The Bubble’ – Jim Rogers
January 8, 2013|Posted By Adam Sharp
Another brilliant series of raw cuts, this time featuring legendary investor Jim Rogers, from the upcoming film The Bubble. Of the hundreds of interviews I’ve seen with Mr. Rogers, this is possibly the best. Why? Probably due to the fact that the film’s writer, Thomas Woods, is an Austrian/free-market economist like Rogers.
“American finance is going to be in a (relative) decline for the next 2 or 3 decades… 10 years ago, most IPOs were done in NY…”
“It will be good for us all when this central bank eventually disappears…”
http://www.bearishnews.com/post/5234
More Raw Footage from ‘The Bubble’ – Jim Rogers
January 8, 2013|Posted By Adam Sharp
Another brilliant series of raw cuts, this time featuring legendary investor Jim Rogers, from the upcoming film The Bubble. Of the hundreds of interviews I’ve seen with Mr. Rogers, this is possibly the best. Why? Probably due to the fact that the film’s writer, Thomas Woods, is an Austrian/free-market economist like Rogers.
“American finance is going to be in a (relative) decline for the next 2 or 3 decades… 10 years ago, most IPOs were done in NY…”
“It will be good for us all when this central bank eventually disappears…”
http://www.bearishnews.com/post/5234
AIG Should Sue the Government
Jan 10th, 2013
By Shah Gilani
Check your indignation at the door.
If you think it’s outrageous that AIG might join a lawsuit seeking $25 billion in damages from the U.S. Government (which means you) for bailing it out with $182 billion of your money, you’re not alone.
But, don’t let your visceral reaction to what seems like ingratitude on steroids blind you.
Things are only what they seem on the surface.
The suit is being brought by Starr International, which was, at one time, AIG’s largest shareholder. Starr is controlled by Hank Greenberg, AIG’s founder and former CEO. The suit seeks remuneration in the Federal Courts, claiming shareholders’ rights to due process and equal protection were violated under Fifth Amendment safeguards against seizing property without just compensation.
What’s driving the lawsuit?
Greenberg wants AIG to join the Starr suit. AIG has said that it will weigh its options.
Understandably, reaction to AIG even contemplating joining the suit is that it would be “disgusting.” In fact, I highly doubt they will, precisely because of the backlash.
But…
What if Starr was suing the New York Federal Reserve Bank for taking billions of dollars from AIG to pay 100 cents on the dollar to AIG’s counterparties, monies that they were not entitled to, but that they needed because they were veering into insolvency?
Would that be disgusting? Would it then be disgusting if AIG joined that suit?
Would you be outraged if you knew (remembered) that a few of the counterparties that reaped billions from AIG, courtesy of the New York Fed’s theft, were foreign banks including Deutsche Bank AG and American too-big-to-fail banks including JP Morgan Chase, Bank of America, and the winner in the AIG cash grab-bag, the venerable Goldman Sachs?
Would you be disgusted if you knew (remembered) that Timmy Geithner was president of the New York Fed back then? Would you remember that the chairman of the New York Fed at the time was a former partner and board member of Goldman Sachs, namely one Stephen Friedman? That’s the same Stephen Friedman who had to step down, from the Fed – not Goldman – because he used inside information on Goldman’s bailout to buy more Goldman stock! Would you be disgusted if you knew (remembered) that the then-Secretary of the Treasury, Hank Paulson, formerly Goldman’s CEO, was in daily touch with the New York Fed and knew exactly who was getting backdoor bailouts against AIG’s backstop?
You’d be disgusted, right? Well, that’s exactly how it happened.
So here’s something you may not know, something that you may not be so indignant about, something that’s not disgusting: Starr International is suing the New York Fed.
I believe that AIG absolutely, positively should join in that suit filed in the U.S. District Court in Manhattan.
If you believe that the Fed is a proxy for the U.S. Government, or if you believe, like I do, that the U.S. Government is a proxy for the Fed, then you might think twice about AIG joining the Starr suit against the Government.
One point of outrage, expressed by the idiots and liars in Congress, fuming over AIG even thinking about joining the Starr suit, is that AIG had a choice, they could have gone into bankruptcy and not taken taxpayer money, so how dare they turn and shame their “saviors!”
That’s a lie. AIG would never, as in never, have been allowed to go belly-up. If the too-big-to-fail banks were all too big to fail, then the failure of the largest insurance company in the world – the world – would have had repercussions not only for policyholders and reinsurers and counterparties, but for the banks and markets where AIG held its investment portfolios.
No, AIG was used by the NY Fed and the Government. It became the line in the sand as far as articulated and backdoor policies to protect the interests of global capitalism.
And that’s not wrong.
That is, unless you believe that free markets should be free and that government interference on an ever-growing scale is a part of the protected class shoving us into the cellar of a type of socialism where capitalist profits are privatized and losses are socialized.
Give me a break.
AIG won’t have the stomach to join either or both suits, to come out and say, “We desperately need to shine a harsh light on the partnership between the Fed, the government, and the protected class, to expose the conspiracy to cover their own backsides. So we’re joining this suit. It’s to our own public relations detriment but for the betterment of free markets, even though we know that, in the end, if the truth becomes transparent, neither an insurance company our size or any too-big-to-fail bank should ever be allowed to bring the world to its knees again.”
You go, Hank Greenberg!
Best,
Shah
http://www.wallstreetinsightsandindictments.com/2013/01/aig-should-sue-the-government/#deeplink
Debt Sells Like Hot Cakes as Corporations Raise Cash; Bernanke Fed Distortions
1/9/2013
Mike Shedlock
In five January business days, corporations sold $52.75 billion in debt according to Informa Global Markets. MarketWatch highlights that point in companies sell debt like hot cakes
Companies have flooded the market with new debt to start the year, even after the recent jump in Treasury yields, as they deem market conditions good enough and eager buyers plentiful enough to make deals go smoothly.
Companies have already sold $52.75 billion in debt this month — in five business days, according to the firm.
“Many issuers are taking advantage of the stable markets before their earning blackouts begin,” said Edward Marrinan, a credit strategist at RBS. “We expect more of the same today and see no reason for the extremely strong market tone to change anytime soon.”
Analysts expect companies to sell about $111 billion this month, according to a poll by Informa.
On the sovereign side, MarketWatch reports Mexico issued $1.5 billion in 30-year bonds at a record low yield of 4.19%. Turkey sold $1.5 billion in 10-year debt at a record low 3.47%
Flooding the Market With Debt
*Bank of America Corp. BAC sold $6 billion in debt on Tuesday
*Staples SPLS and Toyota Motor Credit each sold more than $1 billion
*Berkshire Hathaway Finance Corp. BRK.A issued $500 million
*Comcast Corp. CMCSA sold $2.95 billion in bonds.
Little to No "Net Cash"
As a result of these operations, cash on corporate balance sheets will rise. In turn, expect to see more nonsensical reports about "cash on the sidelines".
I have discussed this point many times before.
On May, 11, 2012, In Cash Cow Liquidity Comparison: Where's the Cash and Where's the Debt? A Look at the Top 50 Companies, I noted "net cash on hand at the top 50 companies is negative to the tune of $1.479 trillion. If one considers short-term investments to be cash equivalents, then net cash is negative $1.251 trillion. Only if long-term investments are included does the number go positive."
At the time of that report, cash was approximately $4.554 trillion and debt was $4.503 trillion.
Simply put there is no net cash on the sidelines. Companies are raising cash, but they are also raising debt.
Apple and Microsoft are two companies with genuine cash on the books. I will do a "Cash Cow" update again.
Bernanke Fed Distortions
By the way, this action is one of the severe distortions of actions by the Bernanke Fed. In pushing rates low, those on fixed income have to accept pathetic yields on treasuries and corporate bonds.
This has had a net positive effect on equities but it has also royally screwed those needing income to survive. For further discussion, please consider Hello Ben Bernanke, Meet "Stephanie"
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2013/01/debt-sells-like-hot-cakes-as.html#TZEggxWqJqltAGh7.99
Nice find Pro-Life! From the article;
Of course, such a bill would make actual metals confiscation feasible, as authorities would have names, addresses and amounts of gold and silver held by private citizens.
Precious Metals Investors Should Watch What The Fed Does, Not What The Fed Says
January 6, 2013
Tim Iacono
Disclosure: I am long GLD, SLV, PSLV. (More...)
The gold price notched its 12th straight year of gains in 2012 and silver rebounded from losses in 2011 to advance for the ninth time in the last dozen years, outpacing the yellow metal's overall gains with much more volatility, as prices for both metals saw big moves early in the new year.
Precious metals were pushed higher in early-2013 trading after a resolution of Washington's "fiscal cliff" budget woes that, essentially, just "kicked the can down the road" two months, and then gold and silver tumbled when the release of December Federal Reserve meeting minutes indicated central bank money printing might end sooner than expected. Meanwhile, December coin sales in the U.S. surged and the Indian government looked at further curbs on gold imports.
After rising above $1,690 an ounce for the first time in two weeks and then tumbling to $1,630, the gold price fell 1.1 percent during the first week of trading this year, from $1,675.20 an ounce to $1,656.80, now down 13.8 percent from its 2011 high. Silver was even more volatile, plunging more than $1.50 an ounce on Thursday before ending 0.6 percent below its 2012 close, falling from $30.35 an ounce to $30.18 and now down 39.0 percent from its high almost two years ago.
Before delving into recent events that sparked these big moves and contemplating the way forward, it's worth reflecting briefly on the remarkable run that both gold and silver have had over the last decade or so. As shown in the graphic below from Gold Price, the metals' gains against the U.S. dollar have been some of the biggest, but all the world's paper money has steadily been losing value against precious metals in the ongoing "Race to Debase."
(click to enlarge)
You can get a good sense of the relative volatility of the two metals via the annual returns shown in the table.
Importantly, it's been a much smoother ride for gold, however, the overall gain for silver has been greater, now up almost 400 percent since 2003 in U.S. dollar terms versus a gain of nearly 300 percent for the yellow metal.
Going all the way back to the beginning of the bull market in 2000-2001, gold is now up over 500 percent compared to a gain of over 600 percent for silver, all of which prompts the question of whether we've reached the end of the road for these metals.
With the Fed "signaling the end of quantitative easing" (a phrase that, like you perhaps, I quickly grew tired of hearing last week), have we reached the end of the precious metals bull market?
Not by a long shot.
Though twitchy futures traders sold first and asked questions later when hearing that "several" on the Fed's policy committee thought "it would probably be appropriate to slow or to stop purchases well before the end of 2013," in the fullness of time, it will be realized that futures market selling simply provided another opportunity for long-term investors and central banks to increase their precious metals holdings at better prices.
Based on the Fed's track record of predicting the future, this has to have been one of dumbest reasons to sell gold and silver in recent years. Recall that just a few years ago, the Fed spent inordinate amounts of meeting time discussing their "exit strategy" - and then they went on to buy a couple trillion dollars worth of mortgage-backed securities and government debt with newly printed money.
Watch what the Fed does, not what they say, when it comes to the long road back to normalizing monetary policy. Their asset purchases have helped to foster an unprecedented, "freakishly low" interest rate environment for a recovering U.S. housing market and for spendthrift politicians in Washington. Both would have to make very painful adjustments absent the Fed's largess and the last thing that Ben Bernanke wants to do is remove the "punch bowl" too early.
The world's central banks continue to follow extraordinarily expansionary monetary policies while systemic risk in the world's financial system mounts and confidence in the global monetary system fades. The release of the latest Fed meeting minutes hasn't changed any of this.
The news from the Fed came after lawmakers in Washington voted for a two-month break before jumping Out of the Frying Pan, Into the Fire when it comes to the nation's budget woes and it won't take long before investors and credit rating agencies once again realize just how inept U.S. policy makers are when it comes to reining in spending and boosting revenue.
The "fiscal cliff" hasn't really been averted, just delayed, and the negative impact that the upcoming debate/developing crisis will have on the U.S. dollar should be positive for precious metals, as it was 18 months ago.
Investors in the U.S. certainly didn't like what they heard about Washington's budget troubles in recent weeks as the U.S. Mint reported that gold and silver coin sales surged last month. Gold coin sales rose to 76,000 ounces, up from 65,500 ounces a year ago, to register the highest December sales total since 1998. Silver eagle coin sales dropped 19 percent from a year ago to 1.6 million ounces, but this ranked as the third best December on record.
Both gold and silver coin sales fell sharply for the year, down 25 percent and 15 percent, respectively, for the lowest sales totals since 2007. However, strong year-end buying continued in the new year with first week coin sales on a near-record pace as attention is again focused on the budget mess in the nation's capital.
Investors continue to hold a near-record amount of gold in exchange traded funds around the world, however, those holdings dipped last week. The $71 billion SPDR Gold Shares ETF (GLD) has shed almost nine tonnes of the metal since the first of the year, but it is less than one percent from its all-time high set in December, and Bloomberg data showed total known gold ETF holdings at about 2,600 tonnes, just 0.2 percent below its recent record high.
The $9.5 billion iShares Silver Trust ETF (SLV) shed 24 tonnes on Thursday and Friday, but this followed an addition of 39 tonnes on the last day of 2012, putting the current holdings at one of the highest levels since silver peaked nearly two years ago. Also, the premium for the Sprott Physical Silver Trust (PSLV) rose to 1.94 percent on Friday, its highest level since mid-November, more indications that investors are buying while futures traders were selling.
In India, the government seems intent on making it more difficult for their people to buy gold as Finance Minister Palaniappan Chidambaram said on Wednesday that taxes on gold imports may be raised yet again in order to reduce their trade deficit and support the currency. Chidambaram noted, "We may be left with no choice but to make it a little more expensive to import gold. This matter is under Government's consideration."
Since India remains the world's biggest source of gold demand, this continues to be one of the more important (and intriguing) stories in the gold market today. Last week, it was highlighted by this report(.pdf) from the Reserve Bank of India on the problems being faced and the various measures that could be taken to reduce their gold imports, but, it seems clear to me that, more than anything else, this is simply a sign of the times.
There remains strong demand for gold in India for a very simple reason - through the centuries, it has been a safe, low-risk investment. Moreover, in recent years, it has consistently produced higher returns than the paper assets that the Indian government is now pushing in what is a variant of Gresham's Law, where "good" money is preferred over "bad" money. About the only thing that higher taxes and duties are likely to accomplish is to foster a booming business in smuggling gold, similar to what happened in India in the 1970s when the gold price last surged.
India's problem isn't gold imports - its problems lie elsewhere - and this is yet one more example of a government treating the symptoms of a problem, rather than the problems itself.
Additional disclosure: I also own gold and silver coins and bars.
http://seekingalpha.com/article/1097011-precious-metals-investors-should-watch-what-the-fed-does-not-what-the-fed-says?source=feed
Washington's Hegemonic Ambitions Are Not in Sync With Its Faltering Economy
Paul Craig Roberts
1/8/2013
In November the largest chunk of new jobs came from retail and wholesale trade. Businesses gearing up for Christmas sales added 65,700 jobs or 45% of November's 146,000 jobs gain. With December sales a disappointment, these jobs are likely to reverse when the January payroll jobs report comes out in February. Family Dollar Stores CEO Howard Levine told analysts that his company's customers were unable to afford toys this holiday season and focused instead on basic needs such as food. Levine said that his customers "clearly don't have as much for discretionary purchases as they once did."
For December's new jobs we return to the old standbys: health care and social assistance and waitresses and bartenders. These four classifications accounted for 93,000 of December's new jobs, 60% of the 155,000 jobs.
Obviously, the economy is not going anywhere except down. It takes approximately 150,000 new jobs each month to stay even with population growth and new entrants into the work force. Few of the jobs that are being created pay well, and the constant, consistent demand for more poorly paid waitresses, bartenders and hospital orderlies is difficult to believe. If Americans cannot afford toys for their kid's Christmas, how can they afford to eat and drink out?
Media spin seeks to create a recovery out of thin air, but these graphs from John Williams (shadowstats.com) show the reality:
Keep in mind that the 7.8% unemployment rate (U.3) that is headlined by the financial media does not include discouraged workers who have ceased to look for jobs. The government's U.6 rate includes workers who have been too discouraged to seek work for less than a year. This rate of unemployment is 14.4%, almost twice the U.3 rate that the media prefers to report.
In 1994 the US government defined out of existence unemployed Americans who have been discouraged from finding work for more than a year. John Williams estimates the long term discouraged workers. When his estimate is added to the U.6 measure, the US unemployment rate stands at 23%, three times the reported rate.
The rate of unemployment is so high because millions of US jobs have been offshored and given to Chinese, Indian, and other workers and because remaining businesses have been concentrated in few hands in violation of the anti-trust laws. (Go to this URL to see the concentration of the media: http://frugaldad.com/2011/11/22/media-consolidation-infographic/ )
We need to be concerned about a financial media and economics profession that believes a recovery is underway when the unemployment rate is so high and the real median income is so low. It is a mystery how any set of policymakers could possibly have believed that a country whose economy is driven by consumer expenditures can continue to expand when the jobs that produce the incomes that drive the economy are given to foreigners in foreign lands.
Essentially, Americans were told a packet of lies designed to win their gullible acceptance to an economy that produces high returns for Wall Street, shareholders, and corporate executives at the expense of everyone else in the country. The wage savings from the use of overseas labor means large rewards for the one percent and Family Dollar customers who cannot afford to buy toys for their children at Christmas.
www.paulcraigroberts.org
http://www.silverbearcafe.com/private/01.13/faltering.html
This Guy Turned $20K Into $2 Million (You Can, Too)
Self-Directed Investor Chris Camillo discusses the strategy behind his investments. He speaks on Bloomberg Television's "Street Smart."
(Source: Bloomberg)
http://www.bloomberg.com/video/this-guy-turned-20k-into-2-million-you-can-too-piX08ijaQ7WeFEyhxEau8g.html
Wanted to share this with the board. I totally agree with him on the biggest upcoming trend in investing "crowd fund investing".
This Guy Turned $20K Into $2 Million (You Can, Too)
Self-Directed Investor Chris Camillo discusses the strategy behind his investments. He speaks on Bloomberg Television's "Street Smart."
(Source: Bloomberg)
http://www.bloomberg.com/video/this-guy-turned-20k-into-2-million-you-can-too-piX08ijaQ7WeFEyhxEau8g.html
Wanted to share this with the board. I totally agree with him on the biggest upcoming trend in investing "crowd fund investing".