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Precious Metals Intervention In The Extreme
GOLD AND METALS DESK, SPECIAL GUEST QUARTERS
DAVE KRANZLER | JANUARY 7, 2014 2:13 PM
A nuclear currency war rooted in the historical intervention of the gold market by the Federal Reserve and the U.S. Treasury.
Anyone who calls what is happening a “flash crash” or hedges on their assertion of “possible” direct intervention is either completely ignorant of the facts or they write their commentary in fear of public ridicule and doubt from other intellectual hedgers. It is what it is: a nuclear currency war rooted in the historical intervention of the gold market by the Federal Reserve and the U.S. Treasury.
Forget the “flash crash” story being widely promoted. The “flash crash” story that says that technical and algo trading caused the plunge. Really? In the absence of a big dose of intervention, the flash crash never happens. Therefore, the only attributable cause by anyone who is being intellectually honest – not just with their readers but with themselves – is that INTERVENTION was culprit
In the last two days, 26+ tonnes was delivered on the Shanghai Gold Exchange. The enormous physical off-take in China is a freight train w/out brakes. From Standard Bank:
“In the physical market we are witnessing strong demand. Since the start of 2014, the SGE premium has jumped higher, reaching $18/oz this morning. The buying frenzy in especially China comes on the back of the seasonal demand pick-up ahead of the country’s New Year, which starts on 31 January…More broadly we have also noted an improvement in Asia demand for gold since mid-December. This is evident in the pickup of our Standard Bank Gold Physical Flow Index”
The manipulation in the gold (NYSEARCA:GLD) market is getting worse by the day as the demand for physical gold from the eastern hemisphere begins to accelerate. It looks like the western Central Banks and their bullion bank market agents are going to work on silver with more focus. SLV (NYSEARCA:SLV) is starting to see physical drawdowns, as is the Comex. The capping in silver is beyond blatant. Turkey imported a record amount of silver last year, as did India.. India’s demand for silver is the substitution of the gold that was cut off by the U.S. Government-induced Indian import controls.
Make no mistake about it. In the face of China’s moves to move away from the U.S. dollar (NYSEARCA:UUP) and bolster their own currency with an historically epochal program of systemic physical gold accumulation, the U.S Government and the Fed are waging a nuclear currency war with a war on the physical gold market at its nexus. Anyone who asserts that it is any less than that is a complete coward.
Contributed by Dave Kranzler, The Golden Truth
http://wallstreetsectorselector.com/2014/01/precious-metals-intervention-extreme/
23 Reasons to Be Bullish on Gold
Laurynas Vegys,
Research Analyst
Casey Research
January 8, 2014 4:23am
(hattip to Seminole Red & basserdan)
It's been one of the worst years for gold in a generation. A flood of outflows from gold ETFs, endless tax increases on gold imports in India, and the mirage (albeit a convincing one in the eyes of many) of a supposedly improving economy in the US have all contributed to the constant hammering gold took in 2013.
Perhaps worse has been the onslaught of negative press our favorite metal has suffered. It's felt overwhelming at times and has pushed even some die-hard goldbugs to question their beliefs… not a bad thing, by the way.
To me, a lot of it felt like piling on, especially as the negative rhetoric ratcheted up. Last year's winner was probably Goldman Sachs, calling gold a "slam-dunk sale" for 2014 (this, of course, after it's already fallen by nearly a third over a period of more than two and a half years—how daring they are).
This is why it's important to balance the one-sided message typically heard in the mainstream media with other views. Here are some of those contrarian voices, all of which have put their money where their mouth is…
• Marc Faber is quick to stand up to the gold bears. "We have a lot of bearish sentiment, [and] a lot of bearish commentaries about gold, but the fact is that some countries are actually accumulating gold, notably China. They will buy this year at a rate of something like 2,600 tons, which is more than the annual production of gold. So I think that prices are probably in the process of bottoming out here, and that we will see again higher prices in the future."
• Brent Johnson, CEO of Santiago Capital, told CNBC viewers to "buy gold if they believe in math… Longer term, I think gold goes to $5,000 over a number of years. If they continue to print money at the current rate, I think it could be multiples of that. I see a slow steady rise punctuated with some sharp upward moves."
• Jim Rogers, billionaire and cofounder of the Soros Quantum Fund, publicly stated in November that he has never sold any gold and can't imagine ever selling gold in his life because he sees it as an insurance policy. "With all this staggering amount of currency debasement, gold has got to be a good place to be down the road once we get through this correction."
• George Soros seems to be getting back into the gold miners: he recently acquired a substantial stake in the large-cap Market Vectors Gold Miners ETF (GDX) and kept his calls on Barrick Gold (ABX).
• Don Coxe, a highly respected global commodities strategist, says we can expect gold to rise with an improving economy, the opposite of what many in the mainstream expect. "You need gold for insurance, but this time the payoff will come when the economy improves. In the past when everything was falling all around you, commodity prices were soaring out of sight. We had three recessions in the 1970s and gold went from $35 an ounce to $850. But this time, gold is going to appreciate when we start getting 3% GDP growth."
• Jeffrey Gundlach, bond guru and not historically known for being a big fan of gold, came out with a candid endorsement of the yellow metal: "Now, I kind of like gold. It's definitely very non-correlated to other assets you may have in your portfolio, and it does seem sort of cheap. I also like the GDX."
• Steve Forbes, publishing magnate and chief executive officer of Forbes magazine, publicly predicted an impending return to the gold standard in a speech in Las Vegas. "A new gold standard is crucial. The disasters that the Federal Reserve and other central banks are inflicting on us with their funny-money policies are enormous and underappreciated."
• Rob McEwen, CEO of McEwen Mining and founder of Goldcorp, reiterated his bullish call for gold to someday top $5,000. "We now have governments willing to seize their citizens' assets. We now have currency controls on the table, which we haven't seen since the late 1960s/early '70s. We have continued debasement of currencies. And the economies of the Western world remain stagnant despite enormous monetary stimulation. All these facts to me are bullish for gold and make me believe the price will bounce back relatively soon."
• Doug Casey says that while gold is not the giveaway it was at $250 back in 2001, it is nonetheless a bargain at current prices. "I've been buying gold for years and I continue to buy it because it is the way you save. I'm very happy to be able to buy gold at this price. All the so-called quantitative easing—money printing—by governments around the world has created a glut of freshly printed money. This glut has yet to work its way through the global economic system. As it does, it will create a bubble in gold and a super-bubble in gold stocks."
And then there's the people who should know most about how sound the world's various types of paper money are: central banks. As a group, they have added tonnes of bullion to their reserves last year…
• Turkey added 13 tonnes (417,959 troy ounces) of gold in November 2013. Overall, it has added 143.6 tonnes (4,616,847 troy ounces) so far this year, up 22.5% from a year ago, in part thanks to the adoption of a new policy to accept gold in its reserve requirements from commercial banks.
• Russia bought 19.1 tonnes (614,079 troy ounces) in July and August alone. With the year-to-date addition of 57.37 tonnes—second only to Turkey—Russia's gold reserves now total 1,015 tonnes. It now holds the eighth-largest national stash in the world.
• South Korea added a whopping 20 tonnes (643,014 troy ounces) of gold in February, and now carries 23.7% more gold on its balance sheet than at the end of 2012." Gold is a real safe asset that can help (us) respond to tail risks from global financial situations effectively and boosts the reliability of our foreign reserves holdings," said central bank officials.
• Kazakhstan has been buying gold every month, at an average of 2.4 tonnes (77,161 troy ounces) through October. As a result, the country's reserves have seen a 21% increase to 139.5 tonnes from a year ago.
• Azerbaijan has taken advantage of a slump in gold prices and has gone from having virtually no gold to 16 tonnes (514,411 ounces).
• Sri Lanka and Ukraine added 5.5 (176,829 troy ounces) and 6.22 tonnes (199,977 troy ounces) respectively over the past year.
• China, of course, is the 800-pound gorilla that mainstream analysts seem determined to ignore. Though nothing official has been announced by China's central bank, the chart below provides some perspective into the country's consumer buying habits.
China ended 2013 officially as the largest gold consumer in the world. Chinese sentiment towards gold is well echoed in a statement made by Liu Zhongbo of the Agricultural Bank of China: "Because gold has capabilities to absorb external economic shocks, growth of its use in the international monetary system will be imminent."
And those commercial banks that have been verbally slamming gold—it turns out many are not as negative as it might seem…
• Goldman Sachs proved itself to be one of the biggest hypocrites: while advising clients to sell gold and buy Treasuries in Q2 2013, it bought a stunning (and record) 3.7 million shares of GLD. And when Venezuela decided to raise cash by pawning its gold, guess who jumped in to handle the transaction? Yes, they claim the price will fall this year, but with such a slippery track record, it's important to watch what they do and not what they say.
• Société Générale Strategist Albert Edwards says gold will top $10,000 per ounce (with the S&P 500 Index tumbling to 450 and Treasuries yielding less than 1%).
• JPMorgan Chase went on record in August recommending clients "position for a short-term bounce in gold." Gold's price resistance to Paulson & Co. cutting its gold exposure, along with growing physical gold demand in Asia, were cited among the main reasons.
• ScotiaMocatta's Sunil Kashyap said that despite the selloff, there's still significant physical demand for gold, especially from India and China, which "supports prices."
• Commerzbank calls for the gold price to enter a boom period this year. Based on investment demand from Asian countries—China and India in particular—the bank predicted the yellow metal will rise to $1,400 by the end of 2014.
• Bank of America Merrill Lynch, in spite of lower price forecasts for gold this year, reiterated they remain "longer-term bulls."
• Citibank's top technical analyst Tom Fitzpatrick stated gold could head to $3,500. "We believe we are back into that track where gold is the hard currency of choice, and we expect for this trend to accelerate going forward."
None of these parties thinks the gold bull market is over. What they care about is safety in this uncertain environment, as well as what they see as enormous potential upside.
In the end, the much ridiculed goldbugs will have had the last laugh.
http://www.caseyresearch.com/articles/23-reasons-to-be-bullish-on-gold
Reasons Why The U.S. Government Is Destroying The Dollar
Jan 08, 2014 - 10:21 AM GMT
By: Dan_Amerman
Overview
The United States government has six interrelated motivations for destroying the value of the dollar:
1. Creating money out of thin air on a massive basis is all that stands between the current state of hidden depression, and overt depression with unemployment levels potentially rivaling those seen in the Great Depression of the 1930s.
2. It is the most effective way to not just pay down current crushing debt levels using devalued dollars, but also to deal with the rapidly approaching massive generational crisis of paying for Boomer retirement promises.
- It creates a lucratively profitable $500 billion a year hidden tax for the benefit of the US government - a tax which is not understood by voters or debated in elections.
- It creates a second and quite different form of hidden taxation by way of generating artificial market highs, which while non-existent in inflation-adjusted terms, do create artificial investment profits that are fully taxable and highly profitable for the US government.
- It is the weapon of choice being used to wage currency war and reboot US economic growth; and
- It is an essential component of political survival and enhanced power for incumbent politicians.
In this article we take a holistic approach to understanding how individual short, medium and long-term pressures all come together to leave the government with effectively no choice but to create a significant rate of inflation that will steadily destroy the value of the dollar over time.
If you have savings, if you rely on a pension, if you are a retiree or Boomer with retirement accounts - any one of these six fundamental motivations is by itself a grave peril to your future standard of living. However, it is only when we put all six together and see how the motivations reinforce each other, that we can most effectively seek personal solutions.
Reason One: The Political Interests Of Self-Serving Politicians
Even after the major tax increases of about $400 billion a year that took effect at the end of 2012, almost 5% of the US economy is still currently funded by deficit spending. From a political perspective, this approximately $750 billion a year in borrowed money is "free money" that politicians often get to disburse on a political district and favored special interest group basis. In other words, roughly $650 per month per above-poverty line American household can be used to reward friends - and can be withheld from enemies - with personal credit being taken by the benevolent politicians for this never-ending largess.
In past decades, politicians were restricted to spending perhaps $200 or $300 per month per household over and above what the government was collecting in taxes, with the difference being borrowed in the bond market. Anything above that would require the unpleasantness of raising taxes, which might put individual politicians in danger of actually losing their position and privileged lifestyle if he or she weren't in a "safe" district. However, in the current climate all limitations are gone, the pork is rolling out on a historically unprecedented basis, and the politicians are wielding unprecedented power.
So why do the limitations usually exist on at least some level, and why are they gone now? Historically, the US government had directly created money out of thin air on a massive basis to fund deficit spending during the Civil War, and also during the Revolutionary War. There is a very good reason such governmental actions are so rare: the value of the US dollar was rapidly destroyed in both instances. So, this spending without limit would not ordinarily be a sensible path. Unless, from the government's perspective, there were other dangers that were considered a greater threat, and that could be addressed only through destroying the value of the dollar.
Reason Two: To Hide A Depression
(I have written numerous articles about various aspects of Reasons Two through Six for some years now, and my long-term readers and subscribers have been well aware of the building pressures. While the emphasis of this article is on the interweaving of the short, medium and long-term relationships between the six reasons, we will first set the stage by taking a few paragraphs each to briefly review the individual government motivation, with a link to a full length article that covers the problem in more depth.)
While you wouldn't know it from government press releases or media headlines, there has been a gaping hole in the US economy since 2008, as illustrated below:
Composition of US Economy
During the first round of the Financial Crisis in 2008 and 2009, the US private sector nearly collapsed, threatening to send the US economy straight into deep depression. We're talking about a $1.3 trillion private sector collapse that was contained only by the government fantastically increasing the money it spent, even while tax revenues were falling. Indeed, the creation of huge government deficits has been all that has maintained even a facade of semi-normalcy. Remove that mechanism, and it is straight to official Great Depression-level unemployment in months.
Even as the true gravity of the situation is hidden from the general public, so too is the true cost of the grossly irresponsible short-term "band-aid" that is being used to cover the hole in the US economy. The destruction of the value of savings in general, as well as the impoverishment of Boomers and retirees in particular, is explained in my article linked below, "Hiding A Depression: How The US Government Does It."
Article Link
Reason Three: A Desperate Attempt To Escape Depression By Waging Currency War
The US government has been waging currency war since September of 2010. Simply put, the US would have great difficulty emerging from depression so long as the US dollar were "strong", because a strong dollar translates to "expensive" US workers who have difficulty competing for market share even in the US economy, let alone abroad. So one reason for a nation intentionally slashing the value of its currency is that its workers become relatively cheaper, enabling them to not only better defend their domestic market share, but to begin to take market share in foreign economies as well. However, when a major player goes on the currency offensive, many trading partners will counterattack in the attempt to defend their own economies, not by making their own currencies stronger, but by weakening them- so that their domestic workers remain relatively inexpensive and will be better able to compete for market share.
To successfully maintain and increase the power of this currency offensive while negating attempted counterattacks, the Federal Reserve chose a radical weapon in the form of QE3 - which began with the public announcement that it would be directly creating money on a massive scale equal to 6% of the US economy indefinitely, with the proceeds going to purchase US government debt and mortgage-backed securities in the secondary markets. Ultimately, the only protections for a symbolic currency such as the US dollar are the policies deployed by the Central Bank to maintain that value. And when the nation's chief central banker directly threatens to use his power to destroy the symbol, rather than preserve it - the threat is extraordinarily effective.
QE3 has been highly successful in reducing the value of US currency relative to both Europe and China. However, Japan has counterattacked with the new Abenomics, a particularly potent form of quantitative easing which has been quite successfully pushing down the value of the yen versus the rest of the world, thereby ratcheting up Japanese export profits.
There is no free lunch, however. While the US government is insisting to the world-at-large that it is not engaged in currency warfare, in order to maintain the plausible deniability that is essential to diplomatic doublespeak, it is also hiding the heavy cost from its own citizens. The US standard of living since the late 1990s has been based on having a "strong" dollar and huge trade deficits - meaning we haven't actually been able to pay for what we consume for a long time. Therefore, even as jobs and the real economy grow, there is a drop in the overall standard of living, which is not evenly weighted, but is disproportionately borne by savers, Boomers and retirees.
A deeper exploration of how this works, including the specific ways that older citizens are - and will continue to be - the primary victims, can be found in my article linked below, "Bullets In The Back: How Boomers & Retirees Will Become Stimulus, Bailout & Currency War Casualties".
Article Link
These second and third components of hiding a depression and waging currency war are tightly interwoven, and could even be called "killing two birds with one stone". The money doesn't exist to keep the US from openly plunging into depression, it simply isn't there for a fiscally responsible government. And covering the economic hole by creating money out of thin air at a rate equal to 6% of the total US economy is so fiscally irresponsible, that few nations dare a counterattack of such magnitude. So for now, massive monetary creation allows the US to not only cover over the current hidden depression, but also to wage all-out currency war to try to emerge from that depression.
While boosting employment is an important motive behind currency warfare, to better understand the agenda of the US government, we'll next explore the greatest financial problem of all, and how destroying the value of the dollar is the intended solution.
Reason Four: Dodging National Bankruptcy
Sometimes households reach the unfortunate point where when they add up the credit cards, mortgage payments, and second mortgage payments - they realize that they will never be able to pay their bills. They know they are bankrupt and there is no way of dodging it. But instead of reducing their spending - they may actually ratchet it up, until all the lines of credit are maxed out, and the bills are all in arrears. Because once bankruptcy is inevitable anyway, why slash your standard of living before you absolutely have to? Partying it up for another few months won't change the destination, so why not?
Fortunately, relatively few ordinary people are so irresponsible as to think that way. There is ample evidence, however, that a good number of politicians hold that mindset when it comes to budget deficits that appear impossible to repay, at least in the conventional manner.
There is a pervasive myth that is being frequently repeated, which is that our children and grandchildren will be slaving away for decades to pay back the money that we've been borrowing to fund this reckless deficit spending. The assumption behind the myth is that were it not for the current spending, the nation would be fine, and therefore increased taxes will be needed to pay back these borrowings over the decades to come.
Except that the nation wouldn't be fine. For like most other major developed nations in the world, the United States has been effectively bankrupt for quite some time, with a day of reckoning that is approaching fast - with or without the current outrageous level of deficit spending.
The graph below is from my article, "Six Layers Of Deficit Impossibilities Mean Retirement Catastrophe".
Total Unfunded US Govt Obligations compared to Median Household Income
As developed step by step in "Six Layers", when we add up current and future federal deficits, as well as unfunded Social Security, Medicare and other unfunded government promises, the total comes to over $785,000 per non-retired household over the coming years that has an above-poverty line income. And this actually isn't even the total cost - it is the excess cost over and above current estimated tax receipts, with those estimated receipts being based on the assumption of a healthy and growing economy. When we drop the assumption of an economy growing at the same rates of the last 50 years, then the shortfall goes far higher - perhaps to over $200 trillion for Social Security and Medicare alone by some recent estimates. That would raise the total shortfall to over $2 million per non-retired and above-poverty-line household.
If taxes can't pay (and it's ludicrous to think they can), and the US doesn't declare bankruptcy, then just how do we cover the gap?
Short answer: pay in full, but make the dollar worth five cents. This drops the per household cost for everything from almost $800,000 down to about $40,000. Painful, but manageable over a period of 20-30 years.
Value of your Savings
Merely make a dollar worth five cents, and those seemingly impossible government promises become quite payable. The problem with this "solution", however, is that it also requires making most people's life savings worth five cents on the dollar.
Reason Five: Create A Massive Hidden Tax
The Federal Reserve effectively controls short, medium and long-term interest rates in the United States, and this means that it controls the borrowing costs of the United States government. As developed in my article linked below, "Hiding A $500 Billion Tax On Savings: How The Government Deceives Millions", by forcing interest rates below the rate of inflation, the Federal Reserve creates about a half trillion dollar per year "windfall" gain for the federal government.
Government Manipulated Interest Rate
This is not "free money", far from it - for every dollar that the government takes in from interest rate manipulations comes directly out of the pockets of savers. That is, for the government to come out ahead by $500 billion per year requires savers and pension funds to come up short by $500 billion per year. This makes it a tax - in all but name. It is also essential to note that two elements have to come together to make this hidden tax work: 1) there have to be low interest rates, and 2) there also has to a substantive real rate of inflation (which can be quite different from the official rate).
Comparison of Hidden Savings Tax & US Federal Tax Receipts
From a politician's perspective, this massive tax - almost three times the size of federal corporate taxation - is a "dream tax". Half a trillion dollars a year is available to spend without overtly raising taxes or increasing deficits! Sure, there is a cost, which is the entirely deliberate destruction of retirement dreams and promises for tens of millions of US workers and retirees - particularly Boomers - as well as pushing forward the insolvency of state and local government pension funds around the country. But the deliberate bankrupting of a generation is a long-term problem with no clear accountability and almost no voter understanding, which means it is more or less irrelevant for how political decisions are made today.
Reason Six: Taxing Inflation As Income
Let's consider three market scenarios when viewed from a governmental tax collection perspective.
1) Falling Markets. If investment markets such as the stock market are falling - then on average, rather than generating taxes for the government, they result in tax deductions, as investors write off their losses. Falling asset values are disastrous for government budgets, because falling investment markets act to reduce government tax collections.
2) Level Markets. If markets are on average neither rising nor falling but going sideways - then while tax deductions are not being generated on a net basis, neither are total tax collections. While this is a better scenario for the government than falling markets, it is still quite problematic for tax collection in general, because one of the primary sources of tax revenues - particularly from the more affluent portion of the population - ceases to exist.
3) Rising Markets. There is nothing like a good bull market to rapidly increase government tax collections. Investors all across the country are ratcheting up their tax payments, and rising markets also tend to generate frequent short-term trading, which means that many of those tax collections will be at the lucrative (for the government) short-term bracket level. It is no coincidence that the only US government surpluses in recent decades occurred at the height of the tech stock bubble, with the often frenetic short-term trading (at short-term tax rates) that was a part of it.
If governments didn't have a means for turning level or falling markets into rising markets - this three-part relationship could be a huge problem, particularly with a struggling economy.
Fortunately for the government - and very unfortunately for investors - there is a very powerful weapon which can turn falling or level markets into rising markets, while radically increasing investment tax revenues. This weapon is inflation, the destruction of the value of the dollar, and it has generated enormous hidden tax revenues for the US government ever since the United States went off the gold standard in 1933.
While these hidden inflation taxes are very well understood by governments and economists, the average voter and investor is not even aware of their existence. To help address this knowledge gap, I have prepared two resources, linked below.
" Could Misleading Theory And Jargon Threaten Your Net Worth?" is an easy to follow, illustrated tutorial which shows how the destruction of the value of money can be used to cover over the destruction of the value of assets - even while generating substantial false "income", which is fully taxable even though it doesn't exist in after-inflation form.
Real Value of S&P 2000-2012
Housing Prices& Value of Dollar 2000-2012
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Article Link
As developed in the article, when it comes to the largest components of household net worth for American households, for the 22 out of 40 years analyzed - the destruction of the purchasing power of assets was being (successfully) hidden from the public.
Real After-Inflation & After-Tax Profits, S&P 500 Index, 1997-2012
As shown in the graph above, and developed in my article, " Stealth Taxes Consume Stock Gains & Retirement Plans", about 94% of taxes paid on stock price gains held between 1997 and 2012 weren't actually paid on real income - but rather on inflation. That is, for every $1 of taxes on "real" or after-inflation income, the government was collecting $17 in taxes on phantom income - which had been created by the rate of inflation.
It is difficult to overstate the importance of inflation to the government when it comes to both the level and the reliability of investment tax collections. With no inflation in the mix, it all comes down to the economy and the luck of the markets. And in any given year, falling markets could generate increased tax deductions that could cripple government revenues.
Even a moderate annual rate of inflation, then (whether included in official government inflation estimates or not), is enough to skew investment tax returns strongly in the government's favor. And of course the higher the rate of inflation, the more powerful the financial advantages to the government of this long-standing tax, which as the US government knows quite well from eight decades of experience - most voters don't understand.
The Convergence Of The Six Overwhelming Governmental Motivations
The second half of this article takes a look at the intertwined relationships between the six reasons over the short, medium and long term, and how the six-way motivation to create inflation is far stronger than with any one reason in isolation.
Continue Reading The Article
Daniel R. Amerman, CFA
Website: http://danielamerman.com/
E-mail: mail@the-great-retirement-experiment.com
Daniel R. Amerman, Chartered Financial Analyst with MBA and BSBA degrees in finance, is a former investment banker who developed sophisticated new financial products for institutional investors (in the 1980s), and was the author of McGraw-Hill's lead reference book on mortgage derivatives in the mid-1990s. An outspoken critic of the conventional wisdom about long-term investing and retirement planning, Mr. Amerman has spent more than a decade creating a radically different set of individual investor solutions designed to prosper in an environment of economic turmoil, broken government promises, repressive government taxation and collapsing conventional retirement portfolios
http://www.marketoracle.co.uk/Article43874.html
Ron Paul on ObamaCare: ‘It’s all a tax’
Video first released on 1/2/13
marketsanity.com
“The only way it’s going to disappear quickly is if it totally self-destructs, which is conceivable,” Paul said of Obamacare. “Everybody just quits because they’re getting nowhere with it, and they just opt out.”
There’ll be excuses made, and the politicians will spin it a certain way.”
A Freebie from Uncle Ted
By Turd Ferguson | Friday, January 3, 2014 at 3:32 pm
Ted Butler's "New Year" newsletter was released to subscriber's on Wednesday. He's made it public today through the SilverSeek site.
Here's the link to the full report at SilverSeek:
www.silverseek.com/commentary/2013-–-year-jpmorgan-12815
You should be sure to read the entire report but I want to C&P and highlight two paragraphs below. As regular know, I've been tracking JPM's hoarding of Comex gold and silver deliveries since July of last year. Ted has, too, and these two paragraphs get to the crux of the matter:
"Here’s something new I’ve been meaning to mention. The CME Group (owner-operator of the COMEX) lists a spot month position limit and monthly limit on actual deliveries of 7.5 million silver oz and 300,000 gold ounces by any one trader. Yet the CME is reporting that JPMorgan in its house account took delivery of more than double the amount of gold allowed in any one month. Since JPMorgan held the 6254 gold contracts from first delivery day forward, it also means that JPM was in violation of CME rules limiting spot month holdings in gold futures of 3000 contracts for the entire month. The violations in silver were less egregious but were violations nonetheless.
I’m sure if pressed the CME could come up with some cockamamie excuse why JPMorgan was allowed to hold and take delivery of so many gold and silver contracts in one month, but the real reason is that JPMorgan is above all rules and law. The CFTC backed down on policing JPMorgan and it would be foolish to think the CME would restrict its most important client in any way. Far from a band of brothers, this is a brotherhood of criminals. Besides, rules are for the little people, not JPMorgan."
If you're looking for something to do this weekend, perhaps you should C&P these two paragraphs yourself and send them off to the CFTC for an answer...
mwetjen@cftc.gov
Again, to subscribe to Ted's excellent service, simply click here: www.butlerresearch.com/subscribe.asp
TF
http://www.tfmetalsreport.com/blog/5361/freebie-uncle-ted
A Year of Infamy
Posted Sunday, 29 December 2013
By Andrew Hoffman
(special thanks to the cork)
In my view, 2013 was a key inflection point in modern history; surpassed only by 2008 in terms of irreversible economic damage, but NONE as pertains to unabashed usage of overt (and covert) money printing, market manipulation, and propaganda in a last-gasp attempt to “kick the can” that last, pitiful mile. At least – or more appropriately, as Rizzo said in Grease, the very least – the “pre-QE” efforts of 2008-11 had the semblance of (misguided) officialdom actually believing they were “saving” the world.
Unfortunately, since the current crisis commenced in late 2011 – yielding QE3 and QE4 in the U.S., “whatever it takes” market support in Europe, and “quantitative-qualitative easing” in Japan, TPTB’s intentions have clearly taken on a more malignant tone. In other words, whilst the inflationary after-effects of TARP and other post-2008 money printing schemes were simply considered collateral damage, today’s collapsing currencies, rising political tensions, emerging militarism, and burgeoning financial repression are considered “weapons” to quell the nasty, acrid smell of “the 99%” daring to desire “the 1%’s” blood money.
The year started with Congress selling out America’s interests with the vile “fiscal cliff deal”; in fact, nearly to the minute, given that it was passed in a rare New Year’s Eve session. Ironically, the eleventh hour deal that dramatically reduced the “sequester” cuts created by the paradoxically named “Budget Control Act of 2011” – which itself, was a diluted replacement of what the “Super Committee” failed to achieve – was deemed the “American Taxpayers Relief Act of 2012.” I’m still having trouble understanding that name, given the payroll tax exemption was eliminated for all Americans, whilst top earners received a significant tax increase. But then again, no budget was created by the aforementioned Budget Control Act; whilst essentially all the “sequester cuts” it earmarked for 2013 were cancelled by the October 2013 “Continuing Appropriations Act.” Better yet, said act claimed $20 billion of annual budget savings on a $1.012 trillion budget; when in fact, that “budget” represented just a quarter of the government’s nearly $4 trillion spending plans (let alone, that such budget savings are, as always, “back-end loaded”). Last week, I discussed this very issue in “the truth of the so-called budget deal”; yet, no one seems to care that the deal excludes the $2.8 billion of annual spending considered “essential” – and thus, not subject to negotiation.
As for the national debt, it was $14.2 trillion when Standard & Poor’s stripped America’s triple-AAA rating in August 2011. Today – barely two years later – it stands at $17.3 trillion today; excluding, of course, $5+ trillion of “off balance sheet” debt, and perhaps $200 trillion of “unfunded liabilities.” At the time, S&P’s reasoning was the following…
The downgrade reflects our opinion that the fiscal consolidation plan Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.”
The outlook on the long-term rating is negative, “. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case. -Standard and Poors, August 5, 2011
No sane person, including the most rabid government sympathizer, could opine that, according to S&P’s own criteria, the U.S. credit rating should still be rated AA+ – or even investment grade, for that matter. However, as S&P’s CEO was “forced to resign” immediately following that decision, and S&P itself subsequently sued by the U.S. government, the so-called leading rating agency not only didn’t follow up on its own advice, but raised its outlook in June 2013 – per what I wrote in “S&P hits a new all-time low.” Then again, as Matt Taibbi described earlier this year – as if we didn’t already know – the ratings business is as corrupt as the Wall Street criminals that fund it.
As for the supposed “debt ceiling,” it was “delayed” by the even more inappropriately named “No Budget, No Pay” act of February 2013; thus, allowing it to grow unabated until the arbitrary date of May 18th, 2013. Of course, no budget was created during that time, so “Citigroup Jack” Lew simply stole from U.S. pensioners and along with other accounting chicanery (cumulatively deemed “extraordinary measures”), pushed the debt ceiling breach into October 2013. At that point, the aforementioned “Continuing Appropriations Act of 2014” again delayed the debt ceiling – this time, until the equally arbitrary date of February 7th, 2014”; enabling said “extraordinary measures” to immediately be counted as debt (to the tune of $300+ billion), and starting the clock on a second round of “extraordinary measures” – which this time, will only last until March.
Amazingly, “Tough Talk” Boehner actually allowed the Democrats to insert fine print into the October law, enabling the President to veto any future attempts to cap the national debt. Only a 2/3rds majority of both the House and Senate can stop the President now; which I think we all know can never happen. And thus, when a new “deal” is hashed out on February 6th – likely, with another, even more egregious misnomer of a name – there will be absolutely ZERO consternation about the debt ceiling; which, frankly, may be overtly eliminated in the same manner as it just was in Australia.
“Tapering” and all – which last week, I proved is but a mirage, the Fed now owns one-third of all U.S. Treasury bonds, and one half of all mortgage-backed securities. Overt QE amounted to more than $1 trillion this year – and likely, with covert spending was closer to $1.4 trillion. Moreover, in 2014, the current plan is to spend another $900 billion (taking Treasury and MBS holdings to 50% and 75% of their respective, outstanding totals); whilst government spending rises by 5%, excluding “off balance sheet” items, of course. Thus, I have ZERO doubt that the published national debt will be well above $18 trillion by year-end; and perhaps, if interest rates continue to rise, considerably more. Remember, each 1% increase in interest rates raises annual debt service by nearly $200 billion; and that’s just on the Federal level. The nation as a whole has never been more addicted to ultra-low interest rates; and sadly, the coming wave of adjustable rate resets could make the 2006-08 “subprime” wave look like a mere ripple. Worse yet, in recent years, the Federal government has refinanced most of its debt to short-term maturities and thus is heavily sensitive to even microscopic rate changes.
Of course, I have barely scratched the surface of the infamy that 2013 was; as even the government’s economic crimes and policy errors have been barely touched. Increased financial repression – across the board – has characterized a nation on the verge of a police state. Between FATCA; FBAR; the banning of certain nations from the SWIFT international wiring system; heightened attacks on offshore accounts and telling Germany it must wait until 2020 to receive a measly 300 tonnes of gold, the U.S. government has shown the entire world its lack of respect for investors, both domestic and foreign. It’s no wonder Europe’s largest PM storage operator – ViaMat – has kicked out American investors; which, by the way, is NOT an issue with Miles Franklin’s Brink’s Montreal vault.
Moreover, the economic damage caused by the U.S. government is not all of the direct kind. As discussed in the “Most important article I’ve ever written,” the inflation exported by the Fed’s expanding QE program has caused the average global currency to plunge 20% over the past two years, with the majority occurring in the last nine months or so. Trust me it’s no coincidence that social unrest has erupted in the “Fragile Five” nations of India, Indonesia, Brazil, Turkey, and South Africa, where 25% of the world’s population resides; or, for that matter, many other areas. The “Final Currency War” has officially begun; and now that the Fed is committed to hyper-inflating the dollar for the sake of its Wall Street masters, all other nations are being forced to follow suit. Such is the Ponzi scheme nature of fiat currency; and no nation is a better poster child for such mutually assured destruction tactics than the “Land of the Setting Sun” itself; i.e., Japan.
Internally, both Presidential and Congressional approval ratings have reached all-time lows; in the latter case, below 10%, as each day it becomes increasingly clear how little our elected “representatives” care for America’s best interests. Between the IRS and NSA spying scandals; the Russian-squelched attempt to attack Syria; and the oppressive, inept Obamacare launch, it’s hard to believe there are any remaining believers in the efficacy of America’s government. Heck, when combining the failures of the Bush and Obama regimes, it’s difficult to find a single redeeming moment!
And then, of course, you have the political and economic carnage in the world’s largest population block – Europe. Draghi officially declared the ECB’s intention to create an unelected continental government when he stated he’d do “whatever it takes” to save the Euro in July 2012. And sadly, since then, the European economy has plummeted from hell to something worse. Like the U.S., both overt and covert market manipulation has temporarily masked the horror of economic reality.
However, with European unemployment at an all-time high – in sync with the U.S. Labor Participation rate at a 35-year low – it’s only a matter of time before reality once again steps to the fore. The people’s voices will be heard decisively in the EU Parliamentary election in May 2014; and I assure you, it won’t be pretty. Here at the Miles Franklin Blog, we continue to rate the PIIGS – or more appropriately, the PIFIGS due to France’s cascading economic issues – as the most likely to catalyze the next, irreversible, global financial crisis. And oh yeah, I forget to mention the Cyprus “bail-in”; which, since it shocked the world in March, has been accepted as a global template for future financial crisis. Nope, nothing to worry about here!
Of course, when speaking of potential “crisis catalysts,” I’d be remiss if I didn’t mention India; where, also in May, major national elections could replace the ruling, Wall Street friendly leaders with more traditional, pro-gold factions. The current Indian regime is perhaps the world’s most incompetent; and this year’s suicidal attempt to slow Precious Metals buying is already collapsing upon itself. Silver imports will set an all-time high this year; and as for gold, smuggling has become so prevalent, it has overtaken narcotics as the nation’s top illegal industry after just four months’ time. PHYSICAL premiums have surged to all-time highs above 25% – thus, making a mockery of the fraudulent PAPER markets; and with the Rupee on the cusp of plunging anew, there’s no telling what might happen in 2014. Remember, the Indian government made an insane promise earlier this year to provide heavily subsidized rice to roughly three quarters of the population; and thus, even a modest increase in rice prices could cause the nation’s finances to implode. Sort of like the U.S. national debt’s sensitivity to interest rate changes, to drive the point home.
In the interest of brevity, I’ve left out a whole bunch of things; sort of like Rodney Dangerfield in this hilarious clip from my all-time favorite comedy, Back to School. However, I of course must mention the most egregious – ultimately, self-destructive acts of Precious Metal suppression of our lifetimes. In November’s “(End of the) Manipulation Timeline,” I listed the incredible list of PM-positive headlines since “dollar-priced gold” achieved its all-time high in August 2011; and particularly, throughout 2013’s heinous Cartel attacks, as exemplified by the April 12th-15th “Alternative Currencies Destruction.”
Fortunately, those holding PHYSICAL gold and silver are none for the worse; aside, of course, from the anger, frustration, and helplessness of living through such blatant attacks on their net worth – whilst overvalued assets like stocks, bonds and real estate were supported by the very same entities putting the hammer to gold and silver. Personally, I increased my “stack” by between five and ten percent – in terms of ounces owned; and thus, have turned this year’s lemons into lemonade. Undoubtedly, it was the most mental strain I have ever dealt with – which is saying a lot, given the Cartel hell that was 2008. However, in the end game, both Miles Franklin and I have never been better positioned.
Moreover, if anything, TPTB have only accelerated the end game of fiat currency collapse, by stepping up the money printing whilst causing the tiny, remaining inventories of PHYSICAL gold and silver to be rapidly drained. I mean, seriously, record 2012 Chinese gold demand more than doubled in 2013; whilst even the U.S. Mint set a record high for Silver Eagle sales! Furthermore, with PM prices having been pushed well below the cost of production, the Cartel has inadvertently created what will unquestionably be years, if not decades, of reduced gold and silver production, just when it will be needed most. Frankly, when prices do finally take off – and consequently, permanently break the Cartel’s bonds; I expect government nationalizations and windfall profit taxes to cause further, even more deleterious production declines.
When the ball reaches Times Square at midnight on Tuesday, no one will be happier to put 2013 behind us. It was indeed a “year of infamy”; but fortunately, one that clearly set up better times for 2014 and beyond. Of course, I say “better times” tongue-in-cheek”; as whilst higher gold and silver prices will make PM holders “richer,” such events will likely coincide with a far scarier, more difficult world. The good news is the ultimate, inevitable financial crash will set the stage for a better world in the future; based on honest money, of course. However, getting from “here” to “there” will likely be an extremely dark chapter in human history. Hopefully, you are one of the few taking actions to PROTECT assets amidst what will likely be history’s largest-ever wealth transfer; and equally importantly, preparing for the difficult times ahead.
As always, Miles Franklin is here to help, as it has for the past 24 years. Give us a call, and we’ll be happy to answer your questions any time. All we ask is the opportunity to earn your business; which via premium customer service and the industry’s broadest, most intensive education platform, is our ultimate goal. We consider our clients to be “partners” in the quest to preserve wealth; and thus, are always available.
http://blog.milesfranklin.com/
http://news.goldseek.com/GoldSeek/1388348390.php
The End of Pretend
James Howard Kunstler
December 30, 2013
(special thanks to basserdan)
If being wealthy was the same as pretending to be wealthy then people who care about reality would have a little less to complain about. But pretending is a poor way for a society to negotiate its way through history. It makes for accumulating distortions which eventually undermine the society’s ability to function, especially when the pretending is about money, which is society’s operating system.
The distortion that even simple people care about is that the gap between the rich and the poor is as plain, vast, and grotesque as at any time in our history — except perhaps during slavery times in Dixieland, when many of the poor did not even own their existence. We’ve had plenty of reminders of that in pop culture the last couple of years, including Quentin Tarantino’s fiercely stupid movie Django Unchained and the more recent melodrama 12 Years a Slave. But you have to wonder what young adults weighed down by unpayable college debt think when they go to see them, because without a rebellion that millennial generation will not own their own lives either. They must know it, but they must not know what to do about it.
The pretense and distortions start at the top of American life with a President who broadcasts the message that some kind of “recovery” has occurred in the economic affairs of the country. Either he just wants the public feel better, or he is misled by the people and agencies in his own government, or perhaps he just lies to keep the lid on. To truly recover from the dislocations of 2008, we would have to make a consensual decision to start behaving differently in the process of adapting to the new circumstances that the arc of history is presenting to us. We’d have to decide to leave behind the economy of financialization, suburban sprawl, car dependency, Wal-Mart consumerism, and prepare for a different way of inhabiting North America.
The dislocations of 2008 when the banking system nearly imploded were Nature’s way of telling us that dishonesty has consequences. The immediate dishonesty of that day was the racket in securitizing worthless mortgages — promises to pay large sums of money over long periods of time. The promises were false and the collateral was janky. It got so bad and ran so far and deep that it essentially destroyed the mechanism of credit creation as it had been known until then, and it has not been repaired.
Since then, we have pretended to repair the operations of credit by falsely substituting bank bailouts and Federal Reserve “quantitative easing” (QE) or digital money-printing for plain dealing in borrowed money between honest brokers at the local level. The unfortunate consequence is that in the process we have distorted — and possibly destroyed — the value of our money and the various things denominated in it, especially securities, bonds, stocks and other money-like paper.
The crash of the mortgage racket occurred not just because of swindling and fraud among bankers; in fact, that was only a nasty symptom of something larger: peak oil. I know that many people have come to disbelieve in the idea of peak oil, but that is only another mode of playing pretend. Peak oil, which essentially arrived in 2006, undermined the basic conditions of credit creation in an advanced techno-industrial society dependent on increasing supplies of fossil fuels. Most people, including practically all credentialed economists, fail to understand this. There is a fundamental relationship between ever-increasing energy supplies > economic growth > and credit-based money (or “money,” if you will). When the energy inputs flatten out or decrease, growth stops, wealth is no longer generated, old loans can’t be repaid, and new loans can’t be generated honestly, i.e. with the expectation of repayment. That has been our predicament since 2008 and nothing has changed. We are pretending to compensate by issuing new unpayable debt to pay the interest on our old accumulated debt. This pretense can only go on so long before our economic relations reflect the basic dishonesty of it. Reality is a harsh mistress.
In the meantime, we amuse ourselves with fairy tales about “the shale oil revolution” and “the manufacturing renaissance.” 2014 could be the year that the forces of Nature compel our attention and give us a reason to stop all this pretending. I’ll address this question in next week’s annual yearly forecast.
http://kunstler.com/clusterfuck-nation/the-end-of-pretend/
Look What Big Banks Are Hiding from You Now
Dec 30th, 2013
By Shah Gilani
WallStreetInsightsandIndictments.com
Remember the outrage last July when we found out owners of giant metal storage warehouses, folks like Goldman Sachs and JPMorgan Chase, were delaying delivery of stocks of aluminum so that they could collect more rent on them?
We learned that, since Goldman took over some industrial warehouses in Detroit, the delivery time for aluminum went from six weeks to 16 months.
That got a lot of people mad because, in case you can’t add two and two, raising metal storage costs increases the prices producers who use the stuff pay for it. And of course, they pass those price increases along to consumers.
The CFTC began an investigation. The Justice Department is looking into it too. But not wanting to wait, the London Metal Exchange (LME) acted right away.
The LME is the world’s largest metal exchange. And they oversee the 778 privately owned warehouses (75% of which are owned by just five companies) that stockpile metals traded on the LME. So they got a lot of bad publicity from the fiasco. The LME threatened warehouse owners with a slap in the face if they don’t cut back delayed delivery times to only 50 days, starting April 1, 2014.
Too bad they were a day late and a few million tonnes of metal balls short.
The warehouse owners, it turns out, were already fixing the problem themselves – and have been for three years. Not because they were hell bent on getting ahead of LME rule changes and applying a market solution to a regulatory problem…
But because there’s more money in smarter manipulation.
Since 2010, warehouse owners have been building huge warehouses that aren’t governed by LME rules. According to a Wall Street Journal article from Friday, they’re storing hundreds of millions of tons of metals – like aluminum, copper, nickel, and zinc – in these “shadow warehouses,” as opposed to in LME-sanctioned warehouses.
Let’s use aluminum as an example. Analysts estimate that while there’s about 5.5 million tons of aluminum in authorized, LME-approved warehouses, there’s even more in shadow warehouses – probably between seven and 10 million tons.
Now, here’s the part where I tell you why they’re really doing this, so you don’t get fooled by what you read anywhere else.
Some analysts will postulate that storing millions of tons of metals in “off-exchange” shadow warehouses – while the world looks to spot and future prices posted at the LME as indicative of “real world” prices – will cause price collapses if huge stockpiles of warehoused metals flood the market.
Oh the fear of deflation! I’m shivering in my boots.
Don’t worry. The chance of that happening is exactly between slim and none.
It doesn’t mean metals prices won’t go down. They sure could. It means don’t expect them to go down and stay down, because that ain’t gonna happen unless we get another 2008 meltdown.
Here’s the real reason shadow warehouses are stockpiling metals…
By keeping the true levels of stockpiles from the public metals miners, financiers of metal stockpiles and warehouse owners (of course I’m talking about some giant banks and behemoth metals mining and trading corporations, like Glencore Xstrata Plc., that run this monster game) can profit from information others don’t have.
By casting stockpiles into the shadows and reducing transparency, manipulators can increase volatility, which of course is the essence of trading profitability.
How? Two ways.
First of all, if metals are taken out of the market, removed from the numbers that are counted that determine prices in a supposedly free market price discovery exchange, prices will go up. Now, if you own warehouses full of the stuff, that’s a good thing, right?
Second, there’s a futures market. That’s what they trade at the LME, futures on these metals. If the price of metals is expected to rise, futures prices for those metals will rise too. (This part gets a little technical, but hang in there with me. The payoff is big.)
When you go out on a “term basis” (in time) in the futures market and prices of further and further out delivery months are progressively higher and higher the more distant the futures expiration date, that’s called “contango.”
Metals futures prices are in contango for this reason. If you bought metals today that you needed to store, and you had the option of not buying and storing the metal today but buying the same amount via a futures contract for delivery to you in six months, the person selling you the futures contract might be the owner of the metal today, and he’s being charged for storage. So he will charge you a higher price for the futures contract to make things even. That’s part of what causes contango.
Now think about that.
If I own metals, and I store them in shadow warehouses, and the true amount of that metal in all warehouses isn’t known, but it’s believed to be less than there is (because I’m hiding mine), the price today will be higher. And since I’m charging a lot to other metals stockpilers in my LME warehouses and delaying delivery to collect more rent, which also raises the price of the metal today and therefore raises the futures prices across all delivery months, with the further out being more expensive… guess what. I can sell (short) long-dated futures contracts that I’ve artificially helped manipulate higher to finance my storage of the same metals in all my warehouses. That reduces my cost and increases my profit.
By manipulating stockpiles, smart operators can make money lots of ways.
Another way is by trading the volatility they create in the pricing structure. After all, they are manipulating the prices. If they want to dump stockpiles and trounce prices, don’t you think they’ll short the overpriced futures to profit from falling prices they force down? If you short enough, so what if the price of what you have stockpiled goes down? You will make more on your futures short if you’re a smart cookie. And these guys are smart.
And then they will buy more physical stock and futures at the bottom of the panic-selloff and profit from the price rise too.
What we have here is the freely manipulated market owned by giant banks and corporations freely manipulating everything they can because of their massive size and because they own the means of production, storage, pricing, and the officers of the armies that protect their wealth.
Welcome to the big bank- and mega corporation-owned banana republic of Earth.
Shah
http://www.wallstreetinsightsandindictments.com/2013/12/look-big-banks-hiding-now/#deeplink
Look What Big Banks Are Hiding from You Now
Dec 30th, 2013
By Shah Gilani
WallStreetInsightsandIndictments.com
Remember the outrage last July when we found out owners of giant metal storage warehouses, folks like Goldman Sachs and JPMorgan Chase, were delaying delivery of stocks of aluminum so that they could collect more rent on them?
We learned that, since Goldman took over some industrial warehouses in Detroit, the delivery time for aluminum went from six weeks to 16 months.
That got a lot of people mad because, in case you can’t add two and two, raising metal storage costs increases the prices producers who use the stuff pay for it. And of course, they pass those price increases along to consumers.
The CFTC began an investigation. The Justice Department is looking into it too. But not wanting to wait, the London Metal Exchange (LME) acted right away.
The LME is the world’s largest metal exchange. And they oversee the 778 privately owned warehouses (75% of which are owned by just five companies) that stockpile metals traded on the LME. So they got a lot of bad publicity from the fiasco. The LME threatened warehouse owners with a slap in the face if they don’t cut back delayed delivery times to only 50 days, starting April 1, 2014.
Too bad they were a day late and a few million tonnes of metal balls short.
The warehouse owners, it turns out, were already fixing the problem themselves – and have been for three years. Not because they were hell bent on getting ahead of LME rule changes and applying a market solution to a regulatory problem…
But because there’s more money in smarter manipulation.
Since 2010, warehouse owners have been building huge warehouses that aren’t governed by LME rules. According to a Wall Street Journal article from Friday, they’re storing hundreds of millions of tons of metals – like aluminum, copper, nickel, and zinc – in these “shadow warehouses,” as opposed to in LME-sanctioned warehouses.
Let’s use aluminum as an example. Analysts estimate that while there’s about 5.5 million tons of aluminum in authorized, LME-approved warehouses, there’s even more in shadow warehouses – probably between seven and 10 million tons.
Now, here’s the part where I tell you why they’re really doing this, so you don’t get fooled by what you read anywhere else.
Some analysts will postulate that storing millions of tons of metals in “off-exchange” shadow warehouses – while the world looks to spot and future prices posted at the LME as indicative of “real world” prices – will cause price collapses if huge stockpiles of warehoused metals flood the market.
Oh the fear of deflation! I’m shivering in my boots.
Don’t worry. The chance of that happening is exactly between slim and none.
It doesn’t mean metals prices won’t go down. They sure could. It means don’t expect them to go down and stay down, because that ain’t gonna happen unless we get another 2008 meltdown.
Here’s the real reason shadow warehouses are stockpiling metals…
By keeping the true levels of stockpiles from the public metals miners, financiers of metal stockpiles and warehouse owners (of course I’m talking about some giant banks and behemoth metals mining and trading corporations, like Glencore Xstrata Plc., that run this monster game) can profit from information others don’t have.
By casting stockpiles into the shadows and reducing transparency, manipulators can increase volatility, which of course is the essence of trading profitability.
How? Two ways.
First of all, if metals are taken out of the market, removed from the numbers that are counted that determine prices in a supposedly free market price discovery exchange, prices will go up. Now, if you own warehouses full of the stuff, that’s a good thing, right?
Second, there’s a futures market. That’s what they trade at the LME, futures on these metals. If the price of metals is expected to rise, futures prices for those metals will rise too. (This part gets a little technical, but hang in there with me. The payoff is big.)
When you go out on a “term basis” (in time) in the futures market and prices of further and further out delivery months are progressively higher and higher the more distant the futures expiration date, that’s called “contango.”
Metals futures prices are in contango for this reason. If you bought metals today that you needed to store, and you had the option of not buying and storing the metal today but buying the same amount via a futures contract for delivery to you in six months, the person selling you the futures contract might be the owner of the metal today, and he’s being charged for storage. So he will charge you a higher price for the futures contract to make things even. That’s part of what causes contango.
Now think about that.
If I own metals, and I store them in shadow warehouses, and the true amount of that metal in all warehouses isn’t known, but it’s believed to be less than there is (because I’m hiding mine), the price today will be higher. And since I’m charging a lot to other metals stockpilers in my LME warehouses and delaying delivery to collect more rent, which also raises the price of the metal today and therefore raises the futures prices across all delivery months, with the further out being more expensive… guess what. I can sell (short) long-dated futures contracts that I’ve artificially helped manipulate higher to finance my storage of the same metals in all my warehouses. That reduces my cost and increases my profit.
By manipulating stockpiles, smart operators can make money lots of ways.
Another way is by trading the volatility they create in the pricing structure. After all, they are manipulating the prices. If they want to dump stockpiles and trounce prices, don’t you think they’ll short the overpriced futures to profit from falling prices they force down? If you short enough, so what if the price of what you have stockpiled goes down? You will make more on your futures short if you’re a smart cookie. And these guys are smart.
And then they will buy more physical stock and futures at the bottom of the panic-selloff and profit from the price rise too.
What we have here is the freely manipulated market owned by giant banks and corporations freely manipulating everything they can because of their massive size and because they own the means of production, storage, pricing, and the officers of the armies that protect their wealth.
Welcome to the big bank- and mega corporation-owned banana republic of Earth.
Shah
http://www.wallstreetinsightsandindictments.com/2013/12/look-big-banks-hiding-now/#deeplink
Fourteen ways you can avoid being forced into Obamacare.
Business Insider
Dec. 30, 2013
There are 14 different ways you may qualify for a 'hardship waiver.'
Last week, the Obama administration announced that anyone whose health plan was cancelled due to the Affordable Care Act and believe other plans offered are unaffordable will receive a 'hardship waiver.' This waiver exempts them from the individual mandate and allows them to purchase a cheaper catastrophic plan that was previously available only to those under the age of 30.
But losing your health insurance is not the only experience that qualifies a person for a waiver. In fact, there are 13 other ways that people qualify.
Here are all 14 straight from the Centers for Medicare and Medicaid:
1. You were homeless.
2. You were evicted in the past 6 months or were facing eviction or foreclosure.
3. You received a shut-off notice from a utility company.
4. You recently experienced domestic violence.
5. You recently experienced the death of a close family member.
6. You experienced a fire, flood, or other natural human-caused disaster that caused substantial damage to your property.
7. You filed for bankruptcy in the last 6 months.
8. You had medical expenses you couldn't pay in the last 24 months.
9. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
10. You expect to claim a child as a tax dependent who's been denied coverage in Medicaid and the Children's Health Insurance Program (CHIP), and another person is required by court order to give medical support to the child.
11. As a result of an eligibility appeals decision, you're eligible either for: 1) enrollment in a qualified health plan (QHP) through the Marketplace, 2) lower costs on your monthly premiums, or 3) cost-sharing reductions for a time period when you weren't enrolled in a QHP through the Marketplace.
12. You were determined ineligible for Medicaid because your state didn't expand eligibility for Medicaid under the Affordable Care Act.
13. received a notice saying that your current health insurance plan is being cancelled, and you consider the other plans available unaffordable.
14. You experienced another hardship in obtaining health insurance.
http://www.silverbearcafe.com/private/12.13/avoid.html
The Art of Giving
Bob Moriarty
Archives
Dec 30, 2013
I traveled a lot during 2013 visiting projects. By far the most interesting and rewarding visit was one I made to Mexico with Gordon Holmes of The Au Report and Jeff Phillips of Global Market Development. We were in Mexico to give hundreds of wheelchairs away. I learned a lot about the Art of Giving.
Gordon Holmes started a foundation named the Lookout Ridge Foundation https://sites.google.com/site/thelookoutridgefoundation/ years ago. It donates wheelchairs to needy persons all over the world. Jeff Phillips began a foundation he calls the India Phillips Foundation http://indiaphillips.com/ in memory of his daughter India who died literally overnight two years ago. Gordon and Jeff donated wheelchairs on their behalf and Almaden Minerals also contributed. I was asked along as part of a site visit to Almaden.
The UN estimates that 150 million people in the world need wheelchairs and cannot afford them. Neither can their governments afford even the cheapest of wheelchairs for them. Jeff and Gordon give wheelchairs to a few when they can. It is part of the art of giving.
I think that everyone can remember some gift in their life that carries substantial memories. It might have been a bike when you were five or an engagement ring in your twenties. You remember back fondly with the thoughtfulness and wonder that came with the gift.
Multiply that by 100 and that’s what these wheelchairs mean to those who receive them. Gordon has asked me a couple of times to come on a trip where he was giving away a trailer load of wheelchairs but something always came up until this last May when I went to Mexico and participated in one of their mass distributions.
Since the cost of transportation is such a large part of the total price of the wheelchairs, Gordon waits until he can fill a container with wheelchairs. He collects the ages and sizes of those the chairs are intended for. Wheelchairs are sized for the person getting the chair and for the type of terrain they will be used with.
Lookout Ridge has donated over 10,000 wheelchairs through various programs it is associated with. Gordon has personally distributed wheelchairs in Mexico, Ghana, Mali and the Philippines. On the trip I went on, Almaden Minerals paid for a number of chairs as part of a corporate contribution.
We did distributions in two different towns. All I can say about the distributions was that it was heart wrenching to see the gratitude the people showed who got them and family members. I saw people almost crawling in who were in their 70s and forced to use a tree branch to stumble along. Children who had never had mobility all of a sudden could zoom around for the first time in their lives. Old women with one leg could now visit shops without pain. It was moving, the most moving experience I have ever seen.
150 million people still need wheelchairs and without the generosity of Gordon Holmes, Jeff Phillips, Almaden Minerals and you, they will do without. Every donation, no matter how large or how small will go into chairs, not administration. Donations are tax deductable in both Canada and the US.
If you want to know the Art of Giving, try giving. You can donate here before January 1 and take a deduction for 2013.
###
Bob Moriarty
President: 321gold
Archives
http://www.321gold.com/editorials/moriarty/moriarty123013.html
The Art of Giving
Bob Moriarty
Archives
Dec 30, 2013
I traveled a lot during 2013 visiting projects. By far the most interesting and rewarding visit was one I made to Mexico with Gordon Holmes of The Au Report and Jeff Phillips of Global Market Development. We were in Mexico to give hundreds of wheelchairs away. I learned a lot about the Art of Giving.
Gordon Holmes started a foundation named the Lookout Ridge Foundation https://sites.google.com/site/thelookoutridgefoundation/ years ago. It donates wheelchairs to needy persons all over the world. Jeff Phillips began a foundation he calls the India Phillips Foundation http://indiaphillips.com/ in memory of his daughter India who died literally overnight two years ago. Gordon and Jeff donated wheelchairs on their behalf and Almaden Minerals also contributed. I was asked along as part of a site visit to Almaden.
The UN estimates that 150 million people in the world need wheelchairs and cannot afford them. Neither can their governments afford even the cheapest of wheelchairs for them. Jeff and Gordon give wheelchairs to a few when they can. It is part of the art of giving.
I think that everyone can remember some gift in their life that carries substantial memories. It might have been a bike when you were five or an engagement ring in your twenties. You remember back fondly with the thoughtfulness and wonder that came with the gift.
Multiply that by 100 and that’s what these wheelchairs mean to those who receive them. Gordon has asked me a couple of times to come on a trip where he was giving away a trailer load of wheelchairs but something always came up until this last May when I went to Mexico and participated in one of their mass distributions.
Since the cost of transportation is such a large part of the total price of the wheelchairs, Gordon waits until he can fill a container with wheelchairs. He collects the ages and sizes of those the chairs are intended for. Wheelchairs are sized for the person getting the chair and for the type of terrain they will be used with.
Lookout Ridge has donated over 10,000 wheelchairs through various programs it is associated with. Gordon has personally distributed wheelchairs in Mexico, Ghana, Mali and the Philippines. On the trip I went on, Almaden Minerals paid for a number of chairs as part of a corporate contribution.
We did distributions in two different towns. All I can say about the distributions was that it was heart wrenching to see the gratitude the people showed who got them and family members. I saw people almost crawling in who were in their 70s and forced to use a tree branch to stumble along. Children who had never had mobility all of a sudden could zoom around for the first time in their lives. Old women with one leg could now visit shops without pain. It was moving, the most moving experience I have ever seen.
150 million people still need wheelchairs and without the generosity of Gordon Holmes, Jeff Phillips, Almaden Minerals and you, they will do without. Every donation, no matter how large or how small will go into chairs, not administration. Donations are tax deductable in both Canada and the US.
If you want to know the Art of Giving, try giving. You can donate here before January 1 and take a deduction for 2013.
###
Bob Moriarty
President: 321gold
Archives
http://www.321gold.com/editorials/moriarty/moriarty123013.html
Obamacare Showdown: Missouri Bill to Gut Obamacare, Ban Penalties, Ban Healthcare Exchange; How Would Obama Respond?
Friday, December 27, 2013
Mish's Global Economic Trend Analysis
If enough states act, we are on the way to a constitutional showdown over Obamacare. The Washington Times reports Missouri bill would gut Obamacare
Next month, the Missouri Senate will consider a bill which would effectively cripple the implementation of the Affordable Care Act within the state.
Following the lead of South Carolina, where lawmakers are fast-tracking House Bill 3101 in 2014, and Georgia, where HB707 was recently introduced by Rep. Jason Spencer, Missouri State Senator John T. Lamping (R-24) pre-filed Senate Bill 546 (SB546) to update the Health Care Freedom Act passed by Missouri voters in 2010. It passed that year with more than 70% support.
SB546 would ban Missouri from taking any action that would “compel, directly or indirectly, any person, employer, or health care provider to participate in any health care system.” That means the state would be banned by law from operating a health care exchange for the federal government.
The bill also proposes suspending the licenses of insurers who accept federal subsidies which result in the “imposition of penalties contrary to the public policy” set forth in the legislation. Since it is unlikely that any insurer would then accept a subsidy, not a single employer in the state could be hit with the employer-mandate penalties those subsidies trigger.
Following significant portions of the Tenth Amendment Center’s four-step plan to nullify Obamacare on a state-level, Fox News Senior Judicial Analyst Judge Andrew Napolitano noted that such actions were not just legal, but effective.
“If enough states do this, it will gut Obamacare because the federal government doesn’t have the resources … to go into each of the states if they start refusing,” he said.
Tenth Amendment Center national communications director Mike Maharrey suggested that a large-scale effort against the Act would be coming. “Our sources tell us to expect at least ten states moving in this direction in the coming months. But that will only come true if people start calling their state representatives and senators right now. State lawmakers need to know they should introduce bills to ban the state from participating in any Obamacare programs.”
Nullify Obamacare
Inquiring minds are investigating the Nullify Obamacare website for further information.
INTRODUCTION
States have always held the prerogative of whether or not they will enforce or participate in federal acts or regulatory programs. This legislative package seeks to ban the state from enforcing or assisting in the enforcement of the federal Patient Protection and Affordable Care Act of 2010. It also seeks to ban the State, along with all its political subdivisions, from operating or participating in the operation of a health care exchange under the federal act. It also provides for penalties for violations of the act.
FOUR STEPS
Step 1: Ban State Enforcement, Participation and Material Support
Step 2: Reject Medicaid Expansion
Step 3: Protect Residents from Mandates
Step 4: Challenge the IRS’s illegal ObamaCare taxes
LEGAL BASIS
The “approach is on sound legal footing”
-Mercer University law professor David Oedel, part of the legal team that represented Georgia in its court challenge to Obamacare
There is a long-standing legal tradition which supports the choice of the State to determine whether or not they will participate in a federal act.
James Madison, writing in Federalist #46, recommended state responses to “unwarrantable” (unconstitutional) or merely “unpopular” federal acts which included “a refusal to cooperate with officers of the Union.”
Supported by Supreme Court opinions spanning more than 150 years, the “anti-commandeering doctrine” is the legal principle that states are not required to help the federal government enforce federal acts or regulatory programs.
The cases are as follows:
* 1842 Prigg: The Court held that states were not required to enforce federal slavery laws.
* 1992 New York: The Court held that Congress could not require states to enact specified waste disposal regulations.
* 1997 Printz: The Court held that “the federal government may not compel the states to enact or administer a federal regulatory program.”
* 2012 Sebelius: The Court held that states could not be required to expand Medicaid even under the threat of losing federal funding.
Anti-commandeering is virtually undisputed by legal experts from both the left and right.
EFFECT
A number of states following this plan will “gut Obamacare.”
-Judge Andrew Napolitano on Fox News, 12-10-13
For more details on each of the steps, please see Model Legislation: Nullify Obamacare in 4 Steps
How Would Obama Respond?
Regardless of the constitutionality of this action by states, how could Obama act in response?
I suppose Democrats could cut off various state funding. But that would take a Democratic controlled Congress (and its pretty safe to assume that's not going to happen).
Would the Federal government setup health exchanges in states? With what funding?
This could get interesting if even three states nullify Obamacare, and allegedly 10 states are considering such action.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/#q0wyG0OfqWybq5UM.99
Christmas Wishes
23 December 2013
By GE Christenson
Santa: The following are our Christmas wishes for the bottom 95% of Americans – as measured by either income or total assets.
A People’s QE: The Fed creates $85,000,000,000 (perhaps reducing to $75 Billion in January) per month - Quantitative Easing or QE - and feeds it to the bankers, the wealthy, and the politicians. A people’s QE is for the Quality Enhancement of the bottom 95% - an additional $85,000,000,000 per month distributed to 315 million people in the U.S. Santa: please deliver $270 to each person monthly, or at current prices, about 14 ounces of silver per person per month, or about 3 ounces of gold per person every 14 months.
CONGRESS: It would be grand if congressional approval ratings stayed above 70% because congressional actions beneficially represented the nation and the needs of the people instead of large corporate interests and their own payoffs. Santa: we know this is probably hopeless, but please make congress and the government more truthful.
JOBS FOR AMERICANS: Does shipping jobs offshore and closing factories make America stronger and a better place to live? The “profit for me but unemployment for you” approach is not a good plan. Santa: please open American factories and create more local jobs.
FINANCIAL INDUSTRY: We pray for a new financial industry that encourages a productive economy instead of gouging the middle class to promote CEO bonuses. Santa: this is a tough one, but your help would be appreciated.
HEALTH: Most of us would benefit from a medical profession that encourages good health, prevention, and sane living instead of highly profitable sick care, huge medical expenses, and the “take a pill” mentality promoted by the big Pharmaceutical companies. Santa: we need healthier food, less drugs, more exercise, and fewer destructive habits.
FAIR MARKETS: Price fixing, such as in the markets for LIBOR, currencies, bonds, gold, silver, and crude oil damage the integrity and credibility of markets and hurt the lower 95% with a higher cost of living. However, price fixing enhances banker bonuses. Santa: please help the 95%!
HONEST MONEY: Does it make sense that the dollars EARNED by actual work are valued the same as the “funny money” dollars that the Fed “prints?” Santa: please bring honest money back to our world.
PEACE ON EARTH: War is highly profitable for many businesses but it kills and hurts people. Santa: please inspire peace and good will in the hearts of the warmongers.
My Christmas Wish is that we will live in a better world that includes honest money, real markets, and individual good health. Have a warm and loving Christmas and a 2014 filled with more hard assets and fewer paper assets.
GE Christenson
The Deviant Investor
http://news.goldseek.com/GoldSeek/1387814047.php
Christmas Wishes
23 December 2013
By GE Christenson
Santa: The following are our Christmas wishes for the bottom 95% of Americans – as measured by either income or total assets.
A People’s QE: The Fed creates $85,000,000,000 (perhaps reducing to $75 Billion in January) per month - Quantitative Easing or QE - and feeds it to the bankers, the wealthy, and the politicians. A people’s QE is for the Quality Enhancement of the bottom 95% - an additional $85,000,000,000 per month distributed to 315 million people in the U.S. Santa: please deliver $270 to each person monthly, or at current prices, about 14 ounces of silver per person per month, or about 3 ounces of gold per person every 14 months.
CONGRESS: It would be grand if congressional approval ratings stayed above 70% because congressional actions beneficially represented the nation and the needs of the people instead of large corporate interests and their own payoffs. Santa: we know this is probably hopeless, but please make congress and the government more truthful.
JOBS FOR AMERICANS: Does shipping jobs offshore and closing factories make America stronger and a better place to live? The “profit for me but unemployment for you” approach is not a good plan. Santa: please open American factories and create more local jobs.
FINANCIAL INDUSTRY: We pray for a new financial industry that encourages a productive economy instead of gouging the middle class to promote CEO bonuses. Santa: this is a tough one, but your help would be appreciated.
HEALTH: Most of us would benefit from a medical profession that encourages good health, prevention, and sane living instead of highly profitable sick care, huge medical expenses, and the “take a pill” mentality promoted by the big Pharmaceutical companies. Santa: we need healthier food, less drugs, more exercise, and fewer destructive habits.
FAIR MARKETS: Price fixing, such as in the markets for LIBOR, currencies, bonds, gold, silver, and crude oil damage the integrity and credibility of markets and hurt the lower 95% with a higher cost of living. However, price fixing enhances banker bonuses. Santa: please help the 95%!
HONEST MONEY: Does it make sense that the dollars EARNED by actual work are valued the same as the “funny money” dollars that the Fed “prints?” Santa: please bring honest money back to our world.
PEACE ON EARTH: War is highly profitable for many businesses but it kills and hurts people. Santa: please inspire peace and good will in the hearts of the warmongers.
My Christmas Wish is that we will live in a better world that includes honest money, real markets, and individual good health. Have a warm and loving Christmas and a 2014 filled with more hard assets and fewer paper assets.
GE Christenson
The Deviant Investor
http://news.goldseek.com/GoldSeek/1387814047.php
Money, Gold And Liberty – What Has Changed In 2013?
Gold Silver Worlds | December 23, 2013
In this article, Claudio Grass looks back and answers the question what really changed in 2013 when it comes to money, (physical) gold and liberty. In his position of managing director at Global Gold Switzerland, he is in touch with a lot of people in the gold industry. Besides, his expertise in monetary history helps him to provide sound and fundamental views on money and currency. This article comes from the latest Global Gold Outlook Report, released earlier today. Read the full report or subscribe for future updates on www.globalgold.ch.
The last year has been an interesting year in many respects, especially for precious metals. We saw strange fluctuations in the gold price, mainly because of the paper market, and also “creative” ideas by governments on how to control their citizens and their wealth. It seems that on a daily basis more and more is uncovered on how the US is spying on its citizens through the NSA. Also FATCA, which will be implemented shortly, will make all financial assets of US persons transparent to the IRS. What about: Privacy? Democracy? And above all: Liberty? Sadly, we think that these principles have been thrown overboard and it is unlikely that the infringements of natural rights will end any time soon.
In the following I would like to share my personal thoughts about how I experienced the past twelve months and what key elements I am focusing on. I can tell you what I am not focusing on: the mainstream media. I recently came across the following quote by Professor Mark Crispin Miller: “Media manipulation in the U.S. today is more efficient than it was in Nazi Germany, because here we have the pretense that we are getting all the information we want. That misconception prevents people from even looking for the truth.” I believe that this is not only true for the US, but also for most of the other countries across the globe. The media has become the main propaganda tool of governments and large corporations. In the United States, six corporations control 90% of what people read, watch and listen to. If you are looking for valuable information you need to look beyond the mainstream media. This is what we have been trying to do since the very beginning with our different reports and articles.
Gold is your insurance!
A few weeks ago, while having dinner in Zurich I had a conversation with a conservative Swiss Banker, working for one of the oldest private banks in Switzerland. When I told him what we do at Global Gold he said: “So you work with the real stuff – dealing with real money!”. He went on to tell me that he holds physical gold as his own personal insurance. His remarks highlight the most important aspect why someone should hold physical precious metals. Gold is not a speculative vehicle, but rather an insurance policy against the collapse of the financial and monetary system. Neither my clients nor I know exactly when the collapse will take place, however we are all convinced that it is long overdue and will happen eventually due to the unsustainability of the current system. What has changed since the price decrease of more than 700 USD since the peak in 2011? Absolutely nothing!
Fiat currency is not real money!
J.P. Morgan once said: “Gold is money – everything else is credit”. Although I don’t share a lot in common with the Morgans, I fully agree with this quote. What most people consider money today is nothing more than debt! I am critic of un-backed currencies in general, a credit-based monetary system is, however, much more dangerous than “simply” having an un-backed currency. A backed currency, such as a gold standard, restricts the powers that be from issuing new currency whenever they need it. Our credit or debt-based system however implies that no matter what happens, the money supply has to be constantly increased, because as everyone knows debts need to be repaid with interest. Assuming a constant velocity of money over time, there is no way the debt, which is the basis of our money, can be repaid if the money supply is not increased. The system is, therefore, inflationary in its root and is bound to fail in the long run. As Voltaire already noted: “Paper money eventually returns to its intrinsic value – zero.” The only question is not if but rather when.
Will the money printing stop?
No! The FED announcing that it will reduce its asset purchasing program by 10 billion on a monthly basis is like an arsonist saying “I will use a bit less gasoline in the future”. I am confident that real interest rates will stay low for the foreseeable future. Why? First, I believe that the CPI is manipulated in favor of the government. If you take the statistics calculated by Shadow Stats, for example, the current US inflation figure is closer to 5%. One-year government bond yields would have to increase almost 40-fold to come close to that number. That isn’t really a likely scenario with the debt levels worldwide standing where they are today. Governments simply cannot afford to pay more interest on their debt.
Secondly, I am an Austrian. To me, inflation is the increase in the money supply per se; this means that I don’t measure the debasement of a currency by an arbitrary basket of goods (CPI) defined by the government. Newly created money doesn’t flow evenly into an economy and lead to a steady increase in all prices. Although we have hardly seen any increase in the CPI figures, we have seen other prices increase, mainly asset prices!
Keynes is dead!
Sometimes I feel like a broken record, however I can’t stop myself from emphasizing what I think is the biggest problem of our times: DEBT! Roghoff and Reinhard said once that the 5 most expensive words in history have been “this time it’s different”. I agree, this time will not be different! The most optimistic scenario I can think of (with today’s debt levels) is an average double-digit inflation rate over the next 10 years, which will reduce the debt levels of governments back to sustainable levels. It seems to me that most central bankers worldwide have dismissed the ideas of the beloved and “prudent” Keynes and have adopted Gono-Economics as their leading economic theory.
As you might know Gideo Gono is and has been the governor of the Reserve Bank of Zimbabwe since 2003. In this time he has helped make Zimbabwe one of the most prosperous nations on this earth and has created more (nominal) wealth than all of the world’s central bankers put together!
No more property rights? Almost!
What we have seen until now is just a foretaste. The bail-in in Cyprus, the restructuring of debt in Greece and of course the negative interest rates are all just the beginning of much bigger things to come. Wealth redistribution by means such as higher taxation, negative interest rates and outright confiscation will intensify in the coming years. The IMF recently came out with a report in which they analyze the benefits of a “one-time” wealth tax of 10% on government debt levels. Confiscation or other measures can happen in any country, I do think, however, that it is a prudent approach to keep one’s wealth in a country such as Switzerland. Why? Switzerland has a federalist system of government, which limits the power of central government and has a long-standing history of respecting property rights. More importantly, however, Switzerland is in a very sound fiscal state. Such countries are not only unlikely to confiscate, they simply have no need to do so.
Monetary history as you compass in turbulent times
My mentor Ferdinand Lips always told me that teaching and talking about monetary history is one of the most important things we can do, because there is a deep misconception regarding this issue. This is especially true today, a time where understanding monetary history is more important than ever. This is one of the reasons, why we have started a series of book summaries. In this Outlook you will find a summary of Lips’ “Gold Wars”. I cannot think of a book that has impacted me and the way I understand the world more than this book. I really hope that you enjoy the summary and also find the time to read the full book.
As Mark Twain said: “History doesn’t repeat itself, but it does rhyme.”. Therefore everyone should understand the details of monetary history to understand how to prepare for the times ahead.
Changes during the past year
If you look beyond the noise of the price fluctuations in the paper gold prices you will realize that nothing has substantially changed or at least nothing, which negatively impacts the reason, why my clients and I personally hold gold. If anything, everything I have mentioned until now is an indication that the reasons why most people hold gold are more relevant and actual than ever. The mainstream media seems to have a different opinion. The physical gold market, however, speaks a completely different language. The Chinese and the Asians in general are buying gold like there is no tomorrow and all the refineries I deal with are still reporting massive delays because they are unable to cope with the high demand.
I personally have been accumulating gold since 2003, when I first came in contact with monetary history through Ferdinand Lips. What do I do when the insurance premium on the health insurance cover I couldn’t afford just a couple of months ago becomes 30% cheaper? I buy it! I simply do the same for my insurance against a monetary collapsed. In my view that is the only prudent thing to do.
This article comes from the latest Global Gold Outlook Report, released earlier today. Read the full report or subscribe for future updates on www.globalgold.ch.
http://goldsilverworlds.com/money-currency/money-gold-and-liberty-what-has-changed-in-2013/
Federal Reserve Market Invtervention In Extremis
Dec. 20, 2013
The Golden Truth
For all of you who are still trying to figure out why the stock market has shot up like a bat out of hell despite the fact that the Fed has reduced (at least temporarily) the amount of monthly money printing, please take the time to read this article written by former Assistant Treasury Secretary and highly respected academic Paul Craig Roberts: Manipulations Rule The Markets
It's no secret that the economy in the U.S. is starting to fall apart again, along with that of the rest of the world. In order for the Fed and the Obama Government to keep feeding us the lies about the economy, it is important that the Fed - in conjunction with the U.S. Treasuries Exchange Stabilization Fund - keep the stock market moving higher and the price of gold capped at an extraordinarily low manipulated level (I'm currently working on an article that will demonstrate how the Fed manipulates the gold market using Comex paper gold futures).
Meanwhile,China keeps hoovering up all of the physical gold that is being stored in NYC and London vaults: What's Happening To All The Gold? That's a video interview on Bloomberg News with an analyst based in London who recently toured the primary gold vaults in London. Guess what? They are becoming quite empty...
Finally, I just published two separate articles which explain why the housing market - based on both new and existing home sales - is getting ready to plunge back into a nasty bear again. You can read those here: The Housing Market Bear Is Growling and here: November Existing Home Sales - Look Out Below.
Based on everything I observe and research, I have two holiday recommendations: 1) if you no longer trust the Government and understand just what a Ponzi scheme our system is, start taking as much phony paper money as you can afford and quickly accumulate physical gold and silver that you keep outside of the banking and financial system - that last point is of critical importance; 2) if you think you are going to list your home for sale in mid-January and get the same price your friendly local real estate broker quoted you back in July, forget about it - get your home listed and price it to sell if you really want to move or recapture any equity value it has right now. By this time next year I believe people will be shocked at how much the housing market has fallen apart.
One more point on housing. While the FHA did not make a big public announcement about this, starting Jan 1 it has lowered the size of mortgage it is willing to guarantee in 650 counties. In some cases the reduced mortgage size is substantial. The FHA now funds over 20% of all new mortgages, including a wide swathe of subprime-quality borrowers. Essentially you can kiss that part of market demand good-bye unless prices fall by a significant amount.
At any rate, have a great weekend and if you are taking most of next week off, Buon Natale. If you are traveling, auguri e buon viaggio!
POSTED BY DAVE IN DENVER AT 12:20 PM
http://truthingold.blogspot.com/
Post Unavailable
Additional Information
The Great QE Taper Caper Interest-Rates / Quantitative Easing
Dec 21, 2013 - 11:11 AM GMT
By: Andy_Sutton
Let’s do a little flashback this week and then look at some things and try to make some sense of what happened yesterday as the Great Taper Caper unfolds. We go back to March 3rd, 2009. Ben Bernanke was in front of Congress. He was allegedly under oath. He was asked directly by Senator Bernie Sanders this important question: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke gave a one-word answer – “No”.
There are a couple of problems with all this obviously, but let’s get the more subtle ones first. This is yet another golden opportunity to point out who really runs the show from a monetary perspective. Those ‘dollars’ aren’t even dollars. That is the first problem. They are ‘not-so-USFed’ notes. They are debt. They don’t belong to the people, rather they hang like a millstone around the collective neck of We the People. Second problem, why was Bernanke allowed to leave that hearing without being charged, at a minimum with obstruction? Because the banksters run the show, that’s why. Those hearings everyone pays such rapt attention to are theater.
I have little doubt there are some in Congress who really would love to do the right thing, but they all know their boundaries – and the rules. You don’t mess with the ‘fed’ regardless of who the puppet is. The funny thing is people want to politicize Bernanke, yet he belongs to both parties and their thinking, which is another indication as to the true state of affairs. Sure, there was some hubbub about getting rid of him the last time around and he received the smallest percentage of the vote of any chairman in history. More theater. It wouldn’t matter if they nominated and confirmed Donald Duck to run the ‘fed’, it would still be a cesspool of iniquity.
There are undoubtedly some other issues in place from 2009, but those are the big ones. Before anyone endeavors to understand what went on yesterday, they must understand the order of things. The USGovt largely exists to enforce the laws that benefit the corporations that put said representatives in power. They are not representatives of the people anymore. Anyone who wants to challenge that should just take a look at the laws that have been passed over the last 30 years or so and see who benefitted the most from those laws. It certainly wasn't We the People.
The Big Taper – What do We Really Know?
Having said all that as a preamble, let’s move on to yesterday. What do we really know about QE and its status? Let’s use the 2009 exchange as a basis for expounding on what might be true. Can we trust these people? They’ve lied about everything from TARP and its purpose to the amount of funny money committed to bailing out the ‘fed’s’ member banks (owners by definition), to the status of Germany’s gold. Yet we’re suddenly supposed to take them at their word when they say they’re going to dial back their money creation by $10 billion a month? I don’t think so.
Remember, this is the outfit that won’t permit an audit because of ‘national security’, among other reasons. No kidding - if people found out what really went on there, we’d probably be at war overnight, if not sooner. So there is really no way to know what is going on. For all we know they might have decided to hike the numbers from $85 billion/month to $100 billion/month and that is what goosed the markets. Here’s what I think is going on:
I think that there are an uncomfortable number of people who are becoming aware of what is really going on. Sure, it doesn’t show right now because it isn’t a huge percentage, but it doesn’t take much as history repeatedly demonstrates. People are starting to wake up to the fact that these asset bubbles are, in fact, creations of the banksters, as we Austrian economists have been pointing out since long before this author was even born. It is starting to click in people’s minds and make some sense.
Remember whom the banksters blamed for the 2008 credit crunch? They blamed you and your mortgage. It was your fault the world almost ended. Timeout. There have been real estate bubbles before. There have been people willing to take on more debt than they could handle for a long time now and we never had this kind of problem. No, the fact that the world nearly ended wasn’t your fault. The fact that you had a mortgage wasn’t the cause of the 2008 disaster either. One of the main causes of the ‘crisis’ was the absolutely ludicrous use of credit default swaps (see chart below).
While you might have made a foolish financial decision, that didn’t bring the global financial system to the precipice of ruin as these cretins would have you believe. No, it was their fault. They took your mortgage, packaged it up with a hundred other mortgages, paid off some shill to slap a triple-A rating on it and sold it all over the world. Then, to make matters worse, outfits like AIG wrote trillions in ‘insurance’ against losses from these packaged mortgages. And when they all went bust in a short period of time, suddenly it was ‘Houston, we have a problem’. The problem was leverage. The problem is still leverage. Nothing has changed. Nothing was learned. Yet the biggest ‘consumer protection’ bill of all time did little more than force the banks to add a few more pages of fine print to various credit agreements, stripped you of your status as a depositor, and made you susceptible to Cyprus-like monetary confiscations. For the People, by the People, of the People, right? Wrong. Not anymore. That world is gone.
Getting back to yesterday, this establishment, if you will, needs to be protected. The dollar has value (sarcasm mine) only because people have the confidence that they can walk into a store and exchange it for something of real value. When you really think about it, every time you engage in such a transaction, someone truly is getting something for nothing. Sure, we work for the paper, but the paper is worth nothing. It would be much more honorable to work for a dozen eggs or a bushel of wheat. In similar fashion, the establishment is only able to succeed because people have confidence in it. If that confidence is lost, then the establishment becomes impotent.
So what is the establishment anyway? It is basically the entirety of what is going on right now. It is the political environment, the monetary/economic environment, and the consumer behavior environment all wrapped into one package. In short, it is the status quo. And right now, the status quo is working out masterfully for the banksters and the folks behind the curtain. The status quo/establishment must be protected. That’s what yesterday was all about, in my opinion. They need to show that the markets can live without full bore QE. Even if it only ends up being a one-day pop, the message has already been delivered. Psychologically, it is the first message that resonates the most and has the most impact. The truth about yesterday will come out in time, but it won’t matter so much to the average person. By then the party line will have been delivered and reinforced ad nauseum and it will take a tremendous amount of effort to convince the average person otherwise.
The intent of yesterday’s lame announcement by a perceived lame duck fed chair had, at a minimum, three purposes:
1) Demonstrate that the not-so-USFed is able to cut back on its props without destroying the markets and that the current mania is NOT a bubble. The burst in the major indexes yesterday backed that up as discussed above. Consider the fact that much of the trading volume on a daily basis is done by computers. Roll that together with what happened yesterday. There was a quick sell-off followed by a 350 point run in the Dow. The moves were of similar proportion in the other indexes. The initial read here is that the markets were about to react in the same manner as they did when WSJ reporter Hilsenrath leaked the possibility of a taper back in May, then Bernanke made his faux pas. According to Zerohedge, Hilsenrath cranked out a 700+ word article about the FOMC announcement in exactly three minutes. The markets, particularly on the bond side, tanked. The same move had started yesterday, and then suddenly it was lights out. This reeks of Plunge team action. No doubt the big shots made some serious money between 2 and 4 PM on Wednesday.
2) Reinforce the notion that the not-so-USFed is open to more laissez-faire policy. This is utter nonsense, because nobody even bothered to mention rates, which weren’t (and won’t be) changed. We don’t know a lot about Janet Yellen, but we know she’s a big time dove when it comes to monetary policy. She’s never seen a prop, an intervention, or an interference that she’s not loved. She will NOT be in charge just like the ‘Bernank’ was never in charge, but having a compliant CEO who is willing to go along with the Board of Directors (and in this case, the shareholders) is always a good thing. And when you’re pulling off a heist of epochal proportions, you need to have a mouthpiece that really believes the rubbish he or she spews forth.
3) Push forth the concept that the USEconomy is strong enough to stand on its own. There are not many things in life that are certain, but the fact that the USEconomy is hooked on debt, government assistance, and economic interference is probably one of them. I will say categorically that if we see a boost in the economy after this alleged pullback in QE that either the pullback was a fabrication and, in truth, the amount was likely increased, or that the economic statistics are being further cooked. Perhaps a little (or a lot) of both.
Supporting this assertion is the growing reliance on government assistance and the large chunk of flesh the new Stasi healthcare regulations are going to take from the average American over the next year or two. Add to that the fact that the ‘jobs’ we’re creating are generally of a below subsistence level nature. We’re going to have more people looking for help, not less. The economy, in the aggregate, is becoming more dependent on these props, not less. That is the dirty secret the establishment needs hidden. Even among those considered more prosperous, the accumulation of high interest rate debt is growing at an alarming rate.
Topping it all off is the fact that collateralized loan obligations are back – big time. The article skims over the risk and is largely of the type that says ‘move along, there is nothing to see here’, but the fact that these products are back, coupled with leverage ratios that are greater than 2007 all point in one direction – another blowout fracture of the banking system is in the cards. But never fear, they’ve got the ultimate backstop this time – you.
By Andy Sutton
http://www.my2centsonline.com
http://www.marketoracle.co.uk/Article43666.html
A stock market paradox? Fed taper followed by a rally
John H. Makin | Real Clear Markets
December 20, 2013
aei.org
US Federal Reserve Chairman Ben Bernanke responds to reporters during his final planned news conference before his retirement, at the Federal Reserve Bank headquarters in Washington, December 18, 2013.
The "Fed's taper decision signals end of era for easy money" blares the Financial Times headline, the day after the U.S. stock market has risen to record levels following the taper announcement. Wasn't the much-maligned QE that the Fed has begun to taper/reduce supposed to be causing a stock market bubble? So why does starting to take it away trigger a sharp stock market rally?
There are three reasons for the apparent paradox. First, although the Fed nominally reduced asset purchases from $85 billion per month to $75 billion per month, it indicated additional easing through two alternative and more effective channels. It raised the bar for boosting the federal funds rate to "well past the time the unemployment rate declines below 6.5 percent." That means a threshold at least as low as 6 percent, down from the 6.5 percent previously indicated. Also, the Fed increased its focus on the persistent disinflation plaguing the economy (core PCE index has dropped to a 1.1 percent year over year pace, well below the Fed's preferred 2 percent) by emphasizing for the first time that the reduced unemployment-rate-tightening threshold will be maintained for longer "especially if projected inflation continues to run below the committee's 2 percent long-run goal." The additional emphasis on a potential deflation threat was underscored by a dovish dissent by Boston FRB President Eric Rosengren who vted against the modest taper as a "premature" action.
Second, a positive aspect of the Fed's December 18 announcement and the following press conference conducted by Chairman Ben Bernanke was a reduction in policy uncertainty. Markets, households and firms now know that the Fed is encouraged by economic performance and that if it remains so, tapering will continue. In addition, the Fed is now clearly more attentive to deflation risks of which it had been somewhat dismissive. It will require a lower unemployment rate, down from 6.5 to at least 6 percent, to trigger a higher federal funds rate and more serious tightening. Markets also know that if the economy weakens again or deflation approaches, the tapering signal will be reversed or the unemployment-rate-tightening threshold will be lowered further. Of course, whether or not such measures would help the economy remains an open question and there lies an ongoing problem for the Fed.
The third and final reason for the market's positive initial response to taper is surprising. As my British friend and colleague, Andrew Hunt has pointed out — Fed and American commentators take note — so far in 2013 the Fed's actual monthly purchase of bonds — the size of QE — has averaged $94 billion, or $9 billion above the advertised pace of $85 billion per month. Yet apparently no one has noticed and the Fed hasn't advertised the extra QE . If no one noticed the gap, apparently a $9 or $10 billion difference in QE is no big deal.
One wonders what all the fuss over a nominal $10 billion QE cut is about. In fact, if markets require it, the Fed apparently will keep QE at $85 billion, notwithstanding the nominal advertised $75 billion figure. With the average 2013 monthly increase in M2 liquidity well below the monthly QE average, the money multiplier remains well below one, driven down by the banks' unwillingness to lend. That unwillingness is understandable in view of persistent regulatory pressure for banks to boost reserves coupled with weak loan demand.
Where to next? If disinflation continues to drift toward deflation, the demi taper will fade from memory, more easing will be required, and interest rates will fall again while stocks struggle. Perhaps the big surprise of 2014 will be "the great rotation" from stocks back into bonds. Now wouldn't that be a shock!
American Enterprise Institute resident scholar John Makin writes AEI's monthly Economic Outlook.
http://www.aei.org/article/economics/monetary-policy/federal-reserve/a-stock-market-paradox-fed-taper-followed-by-a-rally/
Jim Rickards: Don’t worry Wall Street, the Fed’s (still) got your back
Dec. 19, 2013
By Nicole Goodkind | Daily Ticker – 2 hours 57 minutes ago
Fed Chairman Ben Bernanke announced Wednesday that the Federal Reserve would begin tapering its $85 billion monthly bond-buying program in January.
The $10 billion dollar monthly cut to the Fed’s purchases of Treasuries and mortgage-backed securities comes amid a series of positive economic indicators including a falling unemployment rate, higher GDP and improving housing numbers.
Bernanke stated that he expected further tapering at future meetings and hinted that interest rates would not rise before 2015.
Markets reacted to the news by jumping to record highs, which may seem counterintuitive to some.
“We didn’t get a pure tapering, we got two messages: one is they’re going to begin tapering in modest amounts and the other was that they’ve made it very clear that they’re not going to raise interest rates for a very long time,” says Jim Rickards, senior managing partner at Tangent Capital. “What the Fed is saying is ‘Don’t worry we’ve got your back, you can borrow money for as long as you want,’ and that’s what the stock market wanted.”
So why did the Fed decide to taper at all? Watch the video above to find out.
As for Bernanke, he’ll be passing the baton to Janet Yellen, who’s expected to be confirmed by the Senate as soon as today. She’ll most likely stay the course says Rickards.
“It’s a very high hurdle for [Yellen] to reverse course," but “she might because she’s more dovish than Bernanke and I expect a recession in 2014,” he notes.
While markets reached new highs on the news of tapering, gold continued its descent, falling below $1,200 an ounce. Rickards knows that the price of gold is down 30% from its highs but "on the physical side, the shelves are being stripped bare,” he says.
“China and Europe are just buying every ounce they can get their hands on and that actually makes sense," Rickards explains. "If the price is being suppressed because weak hands are dumping it or there’s manipulation in the market, you would expect people to buy it.”
When things turn around, says Rickards, “you’re going to find there’s no gold available.”
http://finance.yahoo.com/blogs/daily-ticker/fed-to-wall-street--don-t-worry--we-ve-got-your-back-151902965.html
‘Volcker Rule’ could hamstring big banks’ gold and silver trades
The implementation of the ‘Volcker Rule’ over the next two years will, in theory, prevent the big banks dealing in gold and silver for their own speculative purposes.
Author: Lawrence Williams
Posted: Thursday , 12 Dec 2013
LONDON (MINEWEB) -
Much has been made, particularly by the gold and silver bulls, of High Frequency Trading (HFT) by the mega banks like JP Morgan and Goldman Sachs as the possible (or probable) reason for some of the big take-downs in the respective metals prices which seem to have been occurring with increasing frequency over the past two years.
Trading patterns have been illogical with huge selling orders of paper metal into the futures markets, usually at a time of day when markets are thin, thus driving prices down enormously, and prompting even more stop loss sales from algorithmic computer trading programs. It is felt that no trader would sell in this manner as it hugely reduces any trading profits that might be made on the downs, although can lead to substantial profits being taken on any subsequent recovery.
Thus, the ‘blame’ for these strange, enormous paper sales, that dwarf physical trade is very much felt to lie at the door of massive trades by the big banks. JP Morgan and Goldman Sachs are oft quoted as the principal culprits – particularly as the trades often seem to follow very adverse comment on the likely movement of the gold and silver price by these banks’ commodity analysts – with the apparent takedowns taking place a couple of days later.
It is highly unlikely that such mega trades are made on behalf of normal clients, unless of course the clients are Western Central Banks which may have an agenda to keep the gold price down and thus give effective support for their fiat currencies, the value of which tend to be rated against the gold price.
But now there is U.S. legislation due over the next couple of years which could hamstring the banks from making these mega trades on their own account. As Jeff Nichols puts it in his latest www.nicholsongold.com newsletter, this provision has come to be known as the ‘Volcker Rule’ and bans the largest U.S. banks from engaging in speculative trading, and has now been approved by the U.S. financial regulatory agencies – with, Nichols reckons, important implications for gold and silver.
The Rule, a provision of the 2010 Dodd-Frank Wall Street Reform Act, forthwith prohibits banks with federally insured deposits from trading activities undertaken for their own benefit. This practice, known as “proprietary trading,” involves acquiring or taking positions as principal for the bank’s own account any security, derivative, option, or contract for the sale of a commodity for future delivery for the purpose of selling the security or position in the near term or otherwise with the intent to resell in order to profit from short-term price movements.
The new legislation is due to come into effect in April next year, although full compliance is put off for another 15 months. The banks, though, are being told in the meantime to report information to show they are making ‘good faith’ efforts to comply.
In theory, as Nichols comments, this should mean that U.S. banks, including the likes of Goldman Sachs and JPMorgan, are now prohibited from trading gold and silver – including forward, futures, and options contracts – except on behalf of customers and not for their own short-term speculative gains.
However, there is a possible flaw in this argument. According to Nichols, controls would be implemented by the U.S. Fed and if the Fed is the primary client behind the massive gold take-downs, as many believe it to be, not much may change with respect to gold.
It may not, however, want to make itself be seen to be openly responsible for gold suppression – if it is so involved. Silver is another matter though as the Fed may not concern itself overly with silver price movements, relying on it following the gold price up and down. And in any case silver, being a much smaller market, may be more easily manipulated by the banks’ other well-heeled clients.
Nichols comments further on the big banks’ market involvement that, when prices are trending lower, program selling exaggerates the downward trend – and contributes to prices falling beneath their fundamental equilibrium level. Conversely, when prices are in a rising phase, large-scale buying at key chart points, exaggerates the bullish trend as it did in the 2011 run up to gold’s all-time high. What’s more, he reckons, this undercover trading, as he calls it, has been made even more profitable by the Fed’s near-zero interest rate policy and the easy access to liquidity necessary for large-scale trading.
Nichols’ conclusion is that once the Volcker Rule is fully in place, gold and silver fundamentals should matter much more and he feels these fundamentals are very positive – not least the huge flows of physical metal from weak hands in the West to much firmer ones in the East.
There is also, of course, the possibility - likelihood perhaps - that the big banks will find ways of circumventing the Volcker Rule, perhaps with Fed help, and not much will change, but it should lead to perhaps a little more transparency in the sector, which would not be an adverse result.
A far more cynical viewpoint comes from James West writing in his Midas Letter. West comments that the long delay in implementation of the Volcker Rule "is to permit the various lobby groups and associations funded by the banks to mount an assault in court before any of the positions that would technically be in contravention of the rule as of today need be unwound. This in turn is in full expectation by the duplicitous banks and regulators that the key foundations of the rule will, in fact, be thrown out in court by an equally duplicitous justice system."
West goes on to comment, in even more extreme terms: "What happens next" West comments, "is the subject of ongoing and intensifying chicanery among central banks, financial institutions at the top of the economic food chain, and our now obviously and (I hope you can’t find any fault with the categorization) criminally duplicitous government of the United States of America, and the U.S. Federal Reserve Bank. (Which in reality, is a branch of government, technicalities notwithstanding.) So don’t be surprised that the temerity of the largest criminal enterprise in the history of the world now exists so confidently in broad daylight that the taking with one hand while giving back with the other is a matter for tandem press releases by the agency who acts as banker to the enterprise. Rather, expect more of the same"
This is obviously a veryy cynical and jaundiced viewpoint but West may have a point in that the policing of the Volcker Rule will be in the hands of the U.S Federal Reserve which many believe to be the instigator of much of the recent activity in the gold market which has been hugely successful in driving down the gold price. Anyway, watch this space to see how things progress with the Volcker Rule implementation, if it does indeed come into force in its current form, or otherwisew,over the next year and a half. We reserve judgement for the moment.
http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=221594&sn=Detail
‘Volcker Rule’ could hamstring big banks’ gold and silver trades
The implementation of the ‘Volcker Rule’ over the next two years will, in theory, prevent the big banks dealing in gold and silver for their own speculative purposes.
Author: Lawrence Williams
Posted: Thursday , 12 Dec 2013
LONDON (MINEWEB) -
Much has been made, particularly by the gold and silver bulls, of High Frequency Trading (HFT) by the mega banks like JP Morgan and Goldman Sachs as the possible (or probable) reason for some of the big take-downs in the respective metals prices which seem to have been occurring with increasing frequency over the past two years.
Trading patterns have been illogical with huge selling orders of paper metal into the futures markets, usually at a time of day when markets are thin, thus driving prices down enormously, and prompting even more stop loss sales from algorithmic computer trading programs. It is felt that no trader would sell in this manner as it hugely reduces any trading profits that might be made on the downs, although can lead to substantial profits being taken on any subsequent recovery.
Thus, the ‘blame’ for these strange, enormous paper sales, that dwarf physical trade is very much felt to lie at the door of massive trades by the big banks. JP Morgan and Goldman Sachs are oft quoted as the principal culprits – particularly as the trades often seem to follow very adverse comment on the likely movement of the gold and silver price by these banks’ commodity analysts – with the apparent takedowns taking place a couple of days later.
It is highly unlikely that such mega trades are made on behalf of normal clients, unless of course the clients are Western Central Banks which may have an agenda to keep the gold price down and thus give effective support for their fiat currencies, the value of which tend to be rated against the gold price.
But now there is U.S. legislation due over the next couple of years which could hamstring the banks from making these mega trades on their own account. As Jeff Nichols puts it in his latest www.nicholsongold.com newsletter, this provision has come to be known as the ‘Volcker Rule’ and bans the largest U.S. banks from engaging in speculative trading, and has now been approved by the U.S. financial regulatory agencies – with, Nichols reckons, important implications for gold and silver.
The Rule, a provision of the 2010 Dodd-Frank Wall Street Reform Act, forthwith prohibits banks with federally insured deposits from trading activities undertaken for their own benefit. This practice, known as “proprietary trading,” involves acquiring or taking positions as principal for the bank’s own account any security, derivative, option, or contract for the sale of a commodity for future delivery for the purpose of selling the security or position in the near term or otherwise with the intent to resell in order to profit from short-term price movements.
The new legislation is due to come into effect in April next year, although full compliance is put off for another 15 months. The banks, though, are being told in the meantime to report information to show they are making ‘good faith’ efforts to comply.
In theory, as Nichols comments, this should mean that U.S. banks, including the likes of Goldman Sachs and JPMorgan, are now prohibited from trading gold and silver – including forward, futures, and options contracts – except on behalf of customers and not for their own short-term speculative gains.
However, there is a possible flaw in this argument. According to Nichols, controls would be implemented by the U.S. Fed and if the Fed is the primary client behind the massive gold take-downs, as many believe it to be, not much may change with respect to gold.
It may not, however, want to make itself be seen to be openly responsible for gold suppression – if it is so involved. Silver is another matter though as the Fed may not concern itself overly with silver price movements, relying on it following the gold price up and down. And in any case silver, being a much smaller market, may be more easily manipulated by the banks’ other well-heeled clients.
Nichols comments further on the big banks’ market involvement that, when prices are trending lower, program selling exaggerates the downward trend – and contributes to prices falling beneath their fundamental equilibrium level. Conversely, when prices are in a rising phase, large-scale buying at key chart points, exaggerates the bullish trend as it did in the 2011 run up to gold’s all-time high. What’s more, he reckons, this undercover trading, as he calls it, has been made even more profitable by the Fed’s near-zero interest rate policy and the easy access to liquidity necessary for large-scale trading.
Nichols’ conclusion is that once the Volcker Rule is fully in place, gold and silver fundamentals should matter much more and he feels these fundamentals are very positive – not least the huge flows of physical metal from weak hands in the West to much firmer ones in the East.
There is also, of course, the possibility - likelihood perhaps - that the big banks will find ways of circumventing the Volcker Rule, perhaps with Fed help, and not much will change, but it should lead to perhaps a little more transparency in the sector, which would not be an adverse result.
A far more cynical viewpoint comes from James West writing in his Midas Letter. West comments that the long delay in implementation of the Volcker Rule "is to permit the various lobby groups and associations funded by the banks to mount an assault in court before any of the positions that would technically be in contravention of the rule as of today need be unwound. This in turn is in full expectation by the duplicitous banks and regulators that the key foundations of the rule will, in fact, be thrown out in court by an equally duplicitous justice system."
West goes on to comment, in even more extreme terms: "What happens next" West comments, "is the subject of ongoing and intensifying chicanery among central banks, financial institutions at the top of the economic food chain, and our now obviously and (I hope you can’t find any fault with the categorization) criminally duplicitous government of the United States of America, and the U.S. Federal Reserve Bank. (Which in reality, is a branch of government, technicalities notwithstanding.) So don’t be surprised that the temerity of the largest criminal enterprise in the history of the world now exists so confidently in broad daylight that the taking with one hand while giving back with the other is a matter for tandem press releases by the agency who acts as banker to the enterprise. Rather, expect more of the same"
This is obviously a veryy cynical and jaundiced viewpoint but West may have a point in that the policing of the Volcker Rule will be in the hands of the U.S Federal Reserve which many believe to be the instigator of much of the recent activity in the gold market which has been hugely successful in driving down the gold price. Anyway, watch this space to see how things progress with the Volcker Rule implementation, if it does indeed come into force in its current form, or otherwisew,over the next year and a half. We reserve judgement for the moment.
http://www.mineweb.com/mineweb/content/en/mineweb-gold-analysis?oid=221594&sn=Detail
The Definitive History of Bitcoin
In 2008, the aftermath of the Subprime Mortgage Crisis created the perfect storm for the emergence of Bitcoin. Here is the definitive history of the famous crypto-currency.
http://www.visualcapitalist.com/the-definitive-history-of-bitcoin
The Volcker Rule Just Arrived… Here Are the Two Worst Things about It
Dec 12th, 2013
By Shah Gilani
WallStreetInsightsandIndictments
We’ve talked a lot about the so-called Volcker Rule. I’ve called it a “cop-out” and “joke” and tracked its bloated path from 300 pages to nearly 1,000.
Well, now it’s here.
On Tuesday the rule was signed-off on by the five regulatory bodies that will have to enforce it when it goes into effect in July 2015 (supposedly). And getting it done and approved was no Little Feat*.
The Volcker Rule comes down to this: It stops banks and any other financial institutions that are backstopped by the Fed or the FDIC, generally speaking, taxpayers, from betting on their own behalf (proprietary or “prop” trading).
Don’t get me wrong. I’m thrilled that the Volcker Rule passed. And I’ll be thrilled when it goes into effect.
But everything is not as it seems.
Let me show you…
First, what’s not thrilling is that the five regulatory horsemen (make that pack mules), who have their own agendas and their own masters, who are supposed to enforce the Volcker Rule will all have to use their own judgement and interpretation of the rule succinctly laid out in almost a thousand pages.
Second, what else is not thrilling is that this ain’t over ’til it’s over. July 2015 is a line in the sand. The Fed can forward that to July 2016, or July 2017, if they want. Whenever the start date is, it won’t be before what’s already started – the legal challenges and backdoor dilution efforts by some of our better-paid legislators in Congress, and the big banks and their lobbyists have slashed and burned what’s now on the table.
Here’s the deal, really. There’s no reason banks should have broker-dealer businesses. There’s no cause for banks to be market-makers. The only hedging banks should be allowed to do is to hedge their loan portfolios and the government and municipal bonds they are allowed to invest in. Trading? Why should taxpayer-backed big banks even be in the trading business?
If they weren’t, don’t you think there’d be a lot more lending going on?
Now it’s incumbent upon me, more often than not “The Indictor,” to give a shout-out to an American hero who was instrumental in bringing the Volcker Rule front and center.
Thank you, Jamie Dimon.
Yesterday the JPMorgan Chase CEO said, “I’m glad that we now have certainty; I think we’ll be able to manage with Volcker.”
Thank you, Captain America, for your always unselfish efforts in promoting yourself as the most prudent bank manager in history, having guided your bank so successfully through the 2008 financial crisis with only a few hundred billion dollars of help. Thank you for initially bashing the proposed Volcker Rule, then so generously losing more than $6 billion (you and I both know it was way more that) and lying through your teeth that it was a hedge position the London Whale was executing that went wrong. If you had admitted it was greed and not a hedge position, we might never have gotten the Volcker Rule. But now, thanks to you, the rule addresses how “hedging” can be a smoke screen for unbridled lying, cheating, thieving, and greedmongering. Thank you, I love you, man!
As far as additional thanks, I want to thank the Federal Reserve and the SEC and the OCC and the FDIC and the CFTC for making the Rule just 71 pages long, with only an 882-page “preamble.” At least there’s no room in there for interpretation. Oh, and all the lawyers on Wall Street and K Street want to thank all of you, too, for creating thousands of billable hours finding and exploiting loopholes.
But, I’m sorry, I don’t know who to thank for watering down the “certification” requirement that makes CEOs sign off on compliance. It was harshly proposed that CEOs certify their wards are in compliance with the rules. But now they’ll only have to certify that they have compliance procedures in place, that they have made an effort to follow the rules.
That’s a relief for all of us.
After all, look how many CEOs who have to sign-off on their financials and how honest they are, under the oppressive and rigorously enforced Sarbanes-Oxley laws, have gone to jail for lying about their institutions’ financial numbers and true condition. Heaven forbid another law like S-O fills America’s jails as it has with criminals. The total count has already surpassed two or three jailbirds (long live the folks from Enron).
Okay, okay, sorry for all the sarcasm.
But this whole thing is a joke to me. The inordinate and frightening rise of financial services behemoths has tilted America onto its side – the side that’s run by bank officers and money-mad oligarchs.
For God’s sake and America’s, we have to break up the big banks and separate lending from investment banking and trading. But it will be no Little Feat*.
Shah
P.S. *Little Feat is one of my favorite bands of all time. They got their name in a Baltimore studio, after spending so much time working on their first album (“Feats Don’t Fail Me Now”… get it, it’s amazing) that one band member said, “If we ever finish this it will be no little feat.” Another band member said, “That’s it, that’s what we should call the band. Little Feat.” And so it was.
Posted in Washington
http://www.wallstreetinsightsandindictments.com/2013/12/the-volcker-rule-just-arrived-here-are-the-two-worst-things-about-it/
Big Six Bank Stocks Outperforming Market by Ten Times - Nomi Prins
By Greg Hunter
December 9, 2013
(special thanks to basserdan)
Nomi Prins, former Wall Street banker and author, says, “There’s this myth . . . that somehow the Fed’s quantitative easing (money printing) is helping to create jobs.” What’s really going on? Prins says, “The big six bank stocks are outperforming the rise in the stock market generally by ten times, and that is really not talked about very much, and that’s a big multiple.” Prins goes on to say, “They are the ones who have received the most benefit, and they are the ones who are still in trouble.” Can the Fed stop supporting the big banks? According to Prins, “The banks can’t survive without the Fed support, period. . . . The Fed will not discontinue its program of helping these banks because the levels of problems are still the same.” According to Prins, depositors could be in trouble during the next banking calamity. Prins contends, “That is a danger. Depositors could lose money because the FDIC would not be able to contain a mega fallout. . . . They’re creating a facade of stability until it falls apart.” Join Greg Hunter as he goes One-on-One with Nomi Prins, best-selling author of “It Takes a Pillage.”
New York City Has The Most Homeless Children Since The Great Depression
Submitted by Tyler Durden on 12/11/2013
Submitted by Michael Snyder of The Economic Collapse blog,
At a time when Wall Street is absolutely swimming in wealth, New York City is experiencing an epidemic of homelessness. According to the New York Times, the last time there was this many homeless children in New York City was during the days of the Great Depression. And the number of homeless children in the United States overall recently set a new all-time record.
As I mentioned yesterday, there are now 1.2 million public school kids in America that are homeless, and that number has gone up by about 72 percent since the start of the last recession. As Americans, we like to think of ourselves as "the wealthiest nation on the planet", and yet the number of young kids that don't even have a roof over their heads at night just keeps skyrocketing. There truly are "two Americas" today, and unfortunately most Americans that live in "good America" don't seem to really care too much about the extreme suffering that is going on in "bad America". In the end, what kind of price will we all pay for neglecting the most vulnerable members of our society?
If you live in "good America", I very much encourage you to read an excellent piece about homelessness in New York City that was just published in the New York Times. What some young kids have to go through on a nightly basis should break all of our hearts...
She wakes to the sound of breathing. The smaller children lie tangled beside her, their chests rising and falling under winter coats and wool blankets. A few feet away, their mother and father sleep near the mop bucket they use as a toilet. Two other children share a mattress by the rotting wall where the mice live, opposite the baby, whose crib is warmed by a hair dryer perched on a milk crate.
Could you imagine having your own family live like that? The name of the little girl in the story is Dasani, and every night her family sleeps in a city-run homeless shelter that sounds like it is straight out of a horror movie...
Her family lives in the Auburn Family Residence, a decrepit city-run shelter for the homeless. It is a place where mold creeps up walls and roaches swarm, where feces and vomit plug communal toilets, where sexual predators have roamed and small children stand guard for their single mothers outside filthy showers.
It is no place for children. Yet Dasani is among 280 children at the shelter. Beyond its walls, she belongs to a vast and invisible tribe of more than 22,000 homeless children in New York, the highest number since the Great Depression, in the most unequal metropolis in America.
You can read the rest of that excellent article right here. Sadly, there are countless other children just like Dasani that live like this day after day, month after month, year after year.
Shouldn't we be able to do better than this as a society? After all, the stock market has been hovering near record highs lately, and Wall Street is absolutely drenched with wealth for the moment.
With so much wealth floating around, why are New York City subways being "overrun with homeless" right now?
Something has gone horribly wrong.
I think that a recent editorial by David Simon, the creator of the Wire, summarized things pretty well. We are not "one America" anymore, and most of the people that live in "good America" don't really care much about those living in "bad America"...
America is a country that is now utterly divided when it comes to its society, its economy, its politics. There are definitely two Americas. I live in one, on one block in Baltimore that is part of the viable America, the America that is connected to its own economy, where there is a plausible future for the people born into it. About 20 blocks away is another America entirely. It's astonishing how little we have to do with each other, and yet we are living in such proximity.
There's no barbed wire around West Baltimore or around East Baltimore, around Pimlico, the areas in my city that have been utterly divorced from the American experience that I know. But there might as well be.
Once upon a time, things were different in America. Nobody resented businessmen for building strong businesses and making lots of money. And successful businessmen such as Henry Ford hired large numbers of American workers and paid them very well. He felt that his workers should make enough money to buy the cars that they were building. In those days, businessmen were loyal to their workers and workers were loyal to those that employed them.
Unfortunately, those days are long gone. Today, in business schools all over America students are taught that the sole purpose of a corporation is to make as much money as possible for the stockholders. Not that there is anything wrong with making money. But at this point we have elevated greed above all other economic goals. Taking care of one another isn't even a consideration anymore.
In the old days, big businesses actually needed our labor. But that is now no longer the case. Today, corporations are shipping millions of our jobs overseas and they are replacing as many of us with technology as they possibly can. The value of the labor of the working man is declining with each passing day.
As a result, the fortunes of big business and American workers are increasingly diverging. For example, the disconnect between employment levels and stock prices has never been greater in this country. If you doubt this, just check out this chart.
And instead of fixing things, Barack Obama is negotiating a secret treaty which will result in millions more American jobs being shipped overseas. The following is a brief excerpt about this secret treaty from an Australian news source...
The government has refused the Senate access to the secret text of the trade deal it is negotiating in Singapore, saying it will only be made public after it has been signed.
As the final round of ministerial talks on the Trans-Pacific Partnership resumed on Sunday, Nobel prize-winning economist Joseph Stiglitz wrote to each of the 12 participating nations warning that the deal and the secrecy surrounding it presented ''grave risks''.
So why aren't we hearing much about this secret treaty from U.S. news sources?
If this is going to affect millions of American jobs, shouldn't the mainstream media be making a big deal out of this?
And even if we weren't losing millions of jobs to the other side of the planet, we would still be losing millions of jobs to advancements in technology. In fact, a CNBC article that was posted earlier this week seems to look forward to the day when nobody will have to worry about the low pay that fast food workers get anymore because they will all be replaced by droids...
Maybe so, but as fast food workers protest low wages and the president of the United States equates hard work with the right to decent pay, the rise of technology once again proves to be no stunt, or laughing matter. McDonald's, where food production is already about as mechanized as food science allows, stopped updating the famous number "served" figure at its restaurants back in 1994—just short of 100 billion—but how long will it be before trillions are served their burgers and fries by a drone, after being cooked by a droid? Those machines work for cheap, and the best thing is, they have no concept of hard work, or dignity, or the foresight to consider whether or not the "cool" things they can do ultimately contribute, or detract, from a strong, consumer-dependent economy.
So what is the solution to all of this?
Where will the millions of desperately needed jobs for "bad America" come from?
Well, it appears that good ideas are in short supply these days. In fact, some of the ideas being promoted by our "leaders" are absolutely insane. For example, one prominent entrepreneur recently suggested that the solution to our employment crisis is for Congress to pass an immigration bill which would bring in 30 million more low-skilled workers over the next ten years...
Middle class Americans face a tough future because robots and machinery are eliminating their jobs, according to Steve Case, an entrepreneur who earned roughly $1 billion by creating the first successful internet firm, America Online.
But Congress could help the situation by passing an immigration bill that would import some foreign entrepreneurs and almost 30 million low-skilled workers over the next decade, Case told an audience of D.C. lobbyists and lawyers gathered on Tuesday by the business-backed Bipartisan Policy Center.
Exactly how would this improve the employment situation in this country?
I still cannot figure that one out.
But there are people out there that actually believe this stuff.
Meanwhile, many parts of Europe are suffering through similar things.
The unemployment rate in the eurozone recently hit a new all-time high, and the number of people living in poverty in Europe just continues to grow...
Over 124 million people in the European Union – or almost a quarter of its entire population - live under the threat of poverty or social exclusion, a report by EU’s statistical office has revealed.
Last year, 124.5 million people, or 24.8 percent of Europe’s population were at risk of poverty or social exclusion, compared to 24.3 percent in 2011 and 23.7 percent in 2008, the Eurostat said in a document published earlier in the week.
So what is going to fix this?
Where are the good jobs for workers in North America and Europe going to come from in the years ahead?
http://www.zerohedge.com/news/2013-12-11/new-york-city-has-most-homeless-children-great-depression
This Is How Much The Banks Paid To Get The "Volcker Rule" Outcome They Desired
Tyler Durden on 12/11/2013 14:14 -0500
Curious how much the various banks who stood to be impacted by or, otherwise, benefit from either a concentration or dilution of the Volcker rule? According to OpenSecrets, which crunched the numbers, here is how much being able to continue prop trading meant to some of the largest US banks and lobby groups:
* American Bankers Association: $6.495 million
* JPMorgan: $4 million
* Wells Fargo: $4.440 million
* Citigroup: $4.240 million
* Independent Community Bankers of America: $3.581 million
* Bank of America: $2 million
Not bad considering the loophole-ridden Volcker Rule will effectively permit "hedge" books (where an army of lawyers paid $1000/hour defines just what a hedge is) to continue piling on billions of dollars in wildly profitable, Fed reserve funded trades.
From OpenSecrets:
Regulators approved the Volcker rule yesterday, a central piece of the Dodd-Frank bill that limits the ability of banks to engage in high-risk trading. Their decision comes in spite of heavy lobbying from the rule's main opponents: the banks themselves.
The American Bankers Association, which represents the interests of banks of all sizes, spent nearly $6.5 million on lobbying in the first nine months of 2013, with much of that money going to lobbying on behalf of "Dodd-Frank issues." Wells Fargo and Citigroup each spent just over $4 million, while the Independent Community Bankers of America, another organization that represents banks, spent nearly $3.6 million. All three lobbied on the Dodd-Frank legislation.
Bank of America, meanwhile, spent just under $2 million on the Volcker rule and other issues, while JPMorgan Chase spent more than $4 million and listed "implementation and interpretation of the Volcker Rule" as one of its concerns.
The final rule is seen as a defeat for the commercial banking industry, which has already voiced its unhappiness with the decision.
Congrats on the math, alas completely flawed conclusion: obviously the banks wouldn't spend tens of millions not to achieve their goal, which they have - cover up a Rule which is only superficially named for Paul Volcker (even he admitted he had zero contribution in its drafting), and which was almost certainly penned by the banking lobby, in a way that allows banks to continue their prop trading status quo, only this time with the implicit blessing of the government. And since everyone knows how this movie ends, can we just please fast forward to the bit where one after another bank has to once again be bailed out on the taxpayer dime.
Finally, there are those who will be disgusted at how cheaply US politicians can be bought for. That is, sadly, an accurate observation. Recall from Presenting The Greatest ROI Opportunity Ever:
The dream of virtually anyone who has ever traded even one share of stock has always been to generate above market returns, also known as alpha, preferably in a long-term horizon. Why? Because those who manage to return 30%, 20% even 10% above the S&P over the long run, become, all else equal (expert networks and collocated flow-frontrunning HFT boxes aside), legendary investors in the eyes of the general public, which brings the ancillary benefits of fame and fortune (usually in the form of 2 and 20). This is the ultimate goal of everyone who works on Wall Street. Yet, ironically, what most don't realize, is that these returns, or Returns On Investment (ROI), are absolutely meaningless when put side by side next to something few think about when considering investment returns.
Namely lobbying.
Because it is the ROIs for various forms of lobbying the put the compounded long-term returns of the market to absolute shame. As the following infographic demonstrates, ROIs on various lobbying efforts range from a whopping 5,900% (oil subsidies) to a gargantuan 77,500% (pharmaceuticals).
How are these mingboggling returns possible? Simple - because they appeal to the weakest link: the most corrupt, bribable, and infinitely greedy unit of modern society known as 'the politician'.
Yet who benefits from these tremendous arbitrage opportunities? Not you and I, that is for certain.
No - it is the faceless corporations - the IBM Stellar Sphere, the Microsoft Galaxy, Planet Starbucks - which are truly in the control nexus of modern society, and which, precisely courtesy of these lobbying "efforts", in which modest investments generate fantastic returns allowing the status quo to further entrench itself, take advantage of this biggest weakness of modern "developed" society to make the rich much richer (a/k/a that increasingly thinner sliver of society known as investors), who are the sole beneficiaries of this "Amazing ROI" - the stock market is merely one grand (and lately broken, and very much manipulated) distraction, to give everyone the impression the playing field is level.
http://www.zerohedge.com/news/2013-12-11/how-much-banks-paid-get-volcker-rule-outcome-they-desired
Jeb Handwerger: Follow the Fundamentals in Mining Markets
Dec. 10, 2013
TICKERS: ASC, CSQ; CX6, LODE, KOR, E, ITH; THM, K; KGC, LK, LKY, NOV, NUG; NULGF, PZG, GEM, PLG, PRB, SYH, TSM; TAS; TASXF; T61, UCU; UURAF, URZ
Source: JT Long of The Mining Report (12/10/13)
Jeb Handwerger It may seem like a confusing time to be a mining investor, but Jeb Handwerger, of Gold Stock Trades, insists it doesn't take a rocket scientist. "Stick to the fundamentals," he says. "The technicals will eventually reflect the fundamentals." In this interview with The Mining Report, Handwerger talks about what companies have the right foundation to shine after the market dusts itself off and starts to climb.
Section of interview;
TMR: What else in Nevada should investors watch?
JH: I've always told my subscribers to watch Kinsley Mountain. Let me back up a little. In 2011, Fronteer Gold Inc. (FRG:TSX; FRG:NYSE.MKT), which had the Long Canyon discovery, was our major pick. Many of my subscribers and I made a lot of money off of the takeout by Newmont Mining Corp. (NEM:NYSE) for $2.3 billion ($2.3B). Pilot Gold Inc. (PLG:TSX) is the spin out of Fronteer. Pilot has one of the top geologists who helped advance Long Canyon for Fronteer, Moira Smith. Pilot recently hit nice results from Kinsley Mountain. After selling Fronteer after the Newmont takeout, I just got back in and took an initial position after the good results. It's very impressive. Once this market turns, people are going to become aware that this may have the potential to be the next Long Canyon.
http://www.theaureport.com/pub/na/15751
Jeb Handwerger: Follow the Fundamentals in Mining Markets
Dec. 10, 2013
TICKERS: ASC, CSQ; CX6, LODE, KOR, E, ITH; THM, K; KGC, LK, LKY, NOV, NUG; NULGF, PZG, GEM, PLG, PRB, SYH, TSM; TAS; TASXF; T61, UCU; UURAF, URZ
Source: JT Long of The Mining Report (12/10/13)
Jeb Handwerger It may seem like a confusing time to be a mining investor, but Jeb Handwerger, of Gold Stock Trades, insists it doesn't take a rocket scientist. "Stick to the fundamentals," he says. "The technicals will eventually reflect the fundamentals." In this interview with The Mining Report, Handwerger talks about what companies have the right foundation to shine after the market dusts itself off and starts to climb.
Section of interview;
TMR: Are you finding any gold opportunities in Canada?
JH: I recently took a position in Probe Mines Limited (PRB:TSX.V). Probe is developing the Borden Lake project in Ontario. It has made a high-grade discovery near infrastructure and has potential to expand. This project is a unique find because it's a totally new discovery. It may be a totally new district. The potential for it to be huge and grow is great. It's one of the few stocks that's outperforming in one of the toughest junior resource markets. The outperforming companies are going to be the first to build value for shareholders in the coming upswing. Probe recently announced metallurgy, which was very impressive with good recoveries and key for the preliminary economic assessment.
http://www.theaureport.com/pub/na/15751
JPMorgan to Enter the Virtual Currency Race
Posted on December 11, 2013 by The Silver Bug
Sprottmoneyblog
JPM bitcoin patent
The crypto-currency arena just got a little more crowded. Enter JPMorgan. Well known in the precious metals community for their manipulation in the silver market, JPMorgan is now entertaining the idea of releasing their own form of a digital currency. The rise in digital currencies, most notably Bitcoin, has been fueled by the demand of the free market for a decentralized currency. A currency that is not subject to the extreme manipulations our current fiat system faces.
On November 28th, JPMorgan submitted a patent for their own form of a digital currency. They are calling this “Web-Cash”. The intentions of this new digital currency is to allow customers and merchants the ability to avoid costly third-party payment processors, such as Paypal, Visa and MasterCard to name a few. Exactly what Bitcoin now does. The following is from eCreditDaily, which reported on this story earlier today:
If this “web cash” system — as JPMorgan Chase calls it — seems familiar, it should. It smacks of the peer-to-peer transactions of bitcoins and other cryptocurrencies that increasingly are making the world’s biggest banks uneasy about the future of e-commerce.
The patent, first revealed by LetsTalkBitcoin.com, is a fascinating look into JPMorgan’s veiled outlook on the evolving but growing bitcoin universe, and other more widely-accepted payment systems.
JPMorgan’s proposed system offers another eerily familiar component, which seemingly mimics “blockchain,” a publicly available, permanent ledger of bitcoin transactions.
Although I am a huge advocate of free competing currencies, I am very skeptical that JPMorgan is going to offer the solution the free market is looking for. As stated at the beginning of this post, JPMorgan is known best in the precious metals community for their manipulation in the silver market. Let us also not forget the infamous “London Whale“. To say the least, they are not very trustworthy.
Regardless of whether the free market adopts JPMorgan’s ”Web-Cash”, or whether the founder of e-gold is able to introduce his “gold backed bitcoin“, the trend is clear. People are getting sick and tired of the dog and pony show that is our current fiat system. A trend that both gold and silver are sure to benefit from. Until then, enjoy these artificially depressed prices and keep stacking. I know I am.
http://sprottmoneyblog.com/jpmorgan-to-enter-the-virtual-currency-race/#
JPMorgan to Enter the Virtual Currency Race
Posted on December 11, 2013 by The Silver Bug
Sprottmoneyblog
JPM bitcoin patent
The crypto-currency arena just got a little more crowded. Enter JPMorgan. Well known in the precious metals community for their manipulation in the silver market, JPMorgan is now entertaining the idea of releasing their own form of a digital currency. The rise in digital currencies, most notably Bitcoin, has been fueled by the demand of the free market for a decentralized currency. A currency that is not subject to the extreme manipulations our current fiat system faces.
On November 28th, JPMorgan submitted a patent for their own form of a digital currency. They are calling this “Web-Cash”. The intentions of this new digital currency is to allow customers and merchants the ability to avoid costly third-party payment processors, such as Paypal, Visa and MasterCard to name a few. Exactly what Bitcoin now does. The following is from eCreditDaily, which reported on this story earlier today:
If this “web cash” system — as JPMorgan Chase calls it — seems familiar, it should. It smacks of the peer-to-peer transactions of bitcoins and other cryptocurrencies that increasingly are making the world’s biggest banks uneasy about the future of e-commerce.
The patent, first revealed by LetsTalkBitcoin.com, is a fascinating look into JPMorgan’s veiled outlook on the evolving but growing bitcoin universe, and other more widely-accepted payment systems.
JPMorgan’s proposed system offers another eerily familiar component, which seemingly mimics “blockchain,” a publicly available, permanent ledger of bitcoin transactions.
Although I am a huge advocate of free competing currencies, I am very skeptical that JPMorgan is going to offer the solution the free market is looking for. As stated at the beginning of this post, JPMorgan is known best in the precious metals community for their manipulation in the silver market. Let us also not forget the infamous “London Whale“. To say the least, they are not very trustworthy.
Regardless of whether the free market adopts JPMorgan’s ”Web-Cash”, or whether the founder of e-gold is able to introduce his “gold backed bitcoin“, the trend is clear. People are getting sick and tired of the dog and pony show that is our current fiat system. A trend that both gold and silver are sure to benefit from. Until then, enjoy these artificially depressed prices and keep stacking. I know I am.
http://sprottmoneyblog.com/jpmorgan-to-enter-the-virtual-currency-race/#
JPMorgan Chase Building Bitcoin-Killer
By BRIAN COHEN – Dec. 9, 2013
Thanksgiving day, while many of us were eating turkey, The United States Patent and Trademark Office (USPTO) published JPMorgan Chase’s (Chase) patent application 20130317984, “Method and system for processing internet payments using the electronic funds transfer network.” The application was filed with the USPTO on August 5th, 2013.
Without mentioning Bitcoin or cryptocurrencies at all for that matter, Chase appears to be building a competing centralized network to Bitcoin. The application defines the problems that legacy banking has with online transactions and then provides a detailed explanation how Chase will address these problems with this new technology. The application states that Chase’s technology is a “new paradigm.” Moreover that it permits the creation of “virtual cash” (also referred to as “web cash”) with a “real-time digital exchange of value.”
I will start with extracting the problems that Chase identified which are strikingly similar to those addressed by the revolutionary Bitcoin payment protocol.
Bitcoin has been singled out as a game changer when it comes to the legacy cost of wire transfers:
“…to date, there is no efficient way for consumers to make payments to other consumers using the Internet. All traditional forms of person-to-person exchange include the physical exchange of cash or checks rather than a real-time digital exchange of value. In addition, the high cost of retail wire transfers (i.e., Western Union) is cost prohibitive to a significant portion of society…”
Bitcoin has been hailed as frictionless:
“…Two significant drawbacks with …Internet POS payments are that: 1) a pre-existing relationship between the consumer and the merchant must exist; and 2) the consumer is required to provide the merchant with his or her account and/or PIN. The first drawback of some of the above models cannot be practically overcome as it is impossible for a consumer to have pre-existing relationships with all of the potential merchants conducting business on the Internet….”
Bitcoin has also been ballyhooed for it use with micro-payments and payments under ten dollars due to its zero to negligible fee structure:
“…Although credit and debit cards have emerged as the most popular form of payment over the Internet, there are drawbacks associated with each of these payment types. Notably, each have a relatively high cost that includes a processing fee plus a merchant discount of 1.4% and up. The relatively high fees support the credit card business model. While credit and debit cards may continue to be a viable payment option for merchants selling relatively high ticket items over the Internet, credit and debit cards are not economically viable for purchases of lower cost items. For lower-cost items, the relatively high transaction processing fees plus the discount result in the transaction processing fee consuming a relatively high proportion of the total revenue generated by the product sale…”
No Stranger to Bitcoin
Chase took a swipe (pun intended) at Bitcoin by specifically not mentioning it in the patent application:
“…It is predicted that credit cards will be the dominant on-line point of sale (POS) payment choice for at least the next five years. While new Internet payment mechanisms have been rapidly emerging {Brian’s note: cough…cough…Bitcoin}, consumers and merchants have been happily conducting a growing volume of commerce using basic credit card functionality. None of the emerging efforts to date have gotten more than a toehold in the market place and momentum continues to build in favor of credit cards…”
However, Chase is no stranger to Bitcoin. Chase critic and Bitcoin pundit Max Keiser has been quite outspoken about his dislike for the legacy institution. Kashmir Hill of Forbes also wrote how Chase bank effectively shuttered the once high flying Bitcoin player Bitinstant in “Bitcoin Companies and Entrepreneurs Can’t Get Bank Accounts:”
“{I}n Hong Kong in April, {BitInstant CEO Charlie} Schrem got notice from Chase that Bitinstant’s account was being suspended immediately…”
Bitcoin causing Friction
For a currency that has been lauded for its frictionless characteristics, Bitcoin sure has been causing a lot a friction over at the legacy banking institutions.
Chase noted in the patent the high cost of Western Union. Over at Bitcoin Magazine we broke the story “Western Union Says Bitcoin Not Ready For Primetime.” Western Union has since pulled the the presentation referenced in the story from their website and have distanced themselves from the cryptocurrency. Bitcoin statistics website Coinometrics recently revealed that Bitcoin has surpassed Western Union in volume and it appears to be catching up with other payment networks. Finally, Bank of America just surprised everyone by releasing a report “Bitcoin: a first assessment,” initiating coverage of the cryptocurrency and noting that “BTC surpasses Western Union in market capitalization.”
Chase is also the largest bank member of the Federal Reserve system (Reference Charter: NAT – Nationally chartered member bank). Said another way, the Federal Reserve has oversight of Chase. The The Federal Reserve Bank of Chicago recently released Chicago Fed Letter: Bitcoin a Primer. And outgoing Fed Chairman Ben Bernanke recently wrote to the U.S. Senate who held hearings on virtual currencies that:
“…In general, the Federal Reserve would only have authority to regulate a virtual currency product if it is issued by, or cleared or settled through, a banking organization that we supervise…”
and further stated that:
“{Bitcoin} may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.”
Recently over at my Blog on Medium, I discussed how MasterCard created a tab based system (think “bar tab”, not “browser tab”) for micro-payments and payments under ten dollars. Through Mastercard Labs’, Mastercard filed for patent application 20130297485, “Crowd-Sourced Credit Rating and Debt Tracking System to Facilitate Small Purchases on Trust Based Credit:”
“…as merchants are charged fees for processing credit/debit card transactions the fee charged can reduce or even outweigh the profit made from the sale, especially in the case of small transactions. As such, many merchants impose a lower bound on credit/debit card transactions, accept credit/debit card transactions and incur a loss, or refuse credit/debit card transactions outright (for example, merchants for whom the majority of transactions are small)…”
“…{With this invention the} purchaser can initiate a transaction and instead of paying using a credit card or cash, the consumer can use trust based credit “tab” with the merchant and pay its bill at a later time. Based on this selection, a credit transaction request (identifying the consumer, the merchant and the credit amount) can be transmitted to the system server. In response, the system server can generate a report with the consumer’s credit transaction history and credit profile and transmit the information back to the merchant. The merchant can elect to approve and finalize the credit transaction or decline…”
How It Works
Under The Hood: Internet Pay Anyone
“…The structural components to the system of the present invention include:
a Payment Portal Processor; a digital Wallet;
an Internet Pay Anyone (IPA) Account;
a Virtual Private Lockbox (VPL);
an Account Reporter;
the existing EFT networks;
and a cash card.
“…The Payment Portal Processor (PPP) is a software application that augments any Internet browser with e-commerce capability. The PPP software sits in front of and provides a secure portal for accessing (finking to) the user’s. Demand Deposit Accounts (DDA) and IPA accounts. The PPP enables the user to push electronic credits from its DDA and IPA accounts to any other accounts through the EFT network…”
“…The {technology} …includes freely publishing the payment address and making it available to users of an internet portal or search engine…”
“…Currently, all Internet transactions use “pull” technology in which a merchant must receive the consumer’s account number (and in some cases PIN number) in order to complete a payment. The payment methods of the present invention conversely use “push” technology in which users (consumers or businesses) push an EFT credit from their IPA or DDA accounts to a merchant’s account, without having to provide their own sensitive account information…”
A New Paradigm
“…The present invention represents a new paradigm for effectuating electronic payments that leverages existing platforms, conventional payment infrastructures and currently available web-based technology to enable e-commerce in both the virtual and physical marketplace. The concept provides a safe, sound, and secure method that allows users (consumers) to shop on the Internet, pay bills, and pay anyone virtually anywhere, all without the consumer having to share account number information with the payee. Merchants receive immediate payment confirmation through the Electronic Funds Transfer (EFT) network so they can ship their product with confidence that the payment has already been received. The present invention further enables small dollar financial transactions, allows for the creation of “web cash” as well as provides facilities for customer service and record-keeping…”
Ability to Process Credit Transaction Over Electronic Funds Transfer Network
“…only debit related transactions are currently initiated on the EFT system. The EFT credit message of the present invention thus represent a significant advancement in art which has no peers with respect to electronic commerce…”
Pay Anyone without Traditional Legacy Fees
“… providing the ability for anyone with an account at an institution to transfer funds to anyone else who also has an account at the same or a different institution. The pay anyone feature of the present invention allows parties to electronically transmit funds instantaneously without the expense of today’s wiring fees…”
Eliminates Chargebacks and Significantly Reduces Costs
“…For the merchant, the present invention significantly reduces the transactional cost as compared to the use of credit cards. The method also provides a reduction in fraud and credit losses, while the finality of the transaction virtually eliminates dispute and chargeback processing from the viewpoint of the financial institution. For financial institutions, the present invention all but eliminates the potential of fraud that is inherent with credit card transactions. As consumers are typically only responsible for the first $50 of fraudulent transactions, banks typically absorb the sometimes significant costs associated with fraud. The ability for hackers to steal consumer’s account numbers (e.g., credit card numbers) from an Internet merchant is completely eliminated since the merchant never receives such information…”
Virtual Cash
“…The majority of the prior art electronic Wallets on the Internet today are primarily used as a convenience vehicle, merely providing a method of storing account number information and other form filling functions (e.g., shipping addresses). In contrast to traditional Wallets, the PPP enhanced Wallet of the present invention is associated with one or more DDA and/or IPA accounts. The PPP thus provides the user with a form of virtual cash that is secure and guaranteed. The PPP further contains a receipt feature and archive feature that maintains a transaction history of all payment activity with respect to accounts linked to the PPP…”
“The Payment Portal Processor provides the user with a form of virtual cash that is secure and guaranteed.”
It Has Backbone
The IPA Technology has been in development since at least the year 2000 when 6,609,113 “Method and system for processing internet payments using the electronic funds transfer network” was filed (and subsequently granted) by the USPTO.
The Chase is On
I view this technology and patent application as an overwhelming good thing. Bitcoin is driving Innovation. It has been said that credit cards and the legacy banking system in use today was never meant for use over the internet. Chase’s updated Internet Pay Anyone technology appears to come head to head with Bitcoin. I previously discussed at eCommerceBytes in “How PayPal Almost Liberated Cyprus” how PayPal was the precursor to Bitcoin. While it remains to be seen if this technology is a “Bitcoin Killer,” other players such as eBay/PayPal (which have been riding under Bitcoin’s coattails through marketing gimmicks) ought to pay close attention to this emerging technology. If Bitcoin does get a “toehold” in the marketplace, we just might see this technology activated. The Chase is on.
By Brian Cohen
http://letstalkbitcoin.com/jpmorgan-chase-building-bitcoin-killer/#.Uqck5dJDuSq
Timing Is (Not) Everything
by James Howard Kunstler
December 9, 2013
(special thanks to basserdan)
“Federal Reserve officials are closer to winding down their controversial $85 billion-a-month bond-purchase program, possibly as early as December, in the wake of Friday’s encouraging jobs report.”
That from the much-deservedly maligned John Hilsenrath, widely regarded to be the Federal Reserve’s ventrioloquist dummy over at the Wall Street Journal, as in, from God’s mouth to the jittery multitudes. Of course the jobs number was just another highly seasoned and over-leavened cupcake from the Bureau of Labor Statistic’s magic hedonic oven, so you can be sure that the predicate of that statement is… how to put it delicately… the latest arrant lie with hypothetical icing on top.
Everybody knows that the Federal Reserve’s money-pumping operations have become a replacement for what used to be an economy. Therefore, no more money pumping = no more so-called economy. It’s that simple. But it doesn’t mean that the Federal Reserve won’t make a gesture and I wouldn’t be surprised if they try it during the season that Santa Claus hovers over the national consciousness — or what little of that remains when you subtract the methedrine, the Kanye downloads, the fear of an $11,000 bill for an emergency room visit requiring three stitches, and all the other epic distractions of our time.
The next meeting of the Fed’s Open Market Committee (FOMC), where such things as taper-or-not are considered, is Dec. 17. The Fed has to make some kind of gesture to retain any credibility, so I suspect they’ll go for a symbolic shaving of five or ten billion a month off the current official bond-buying operation number of $85 billion a month (or $1.2 trillion a year). If they don’t do it, no one will ever believe them again. I call it the “head-fake” taper, because it is essentially a false move.
The catch is that the Fed has more than one back door for vacuuming up all sorts of other miscellaneous financial trash paper securitized by promises already broken, moldy sheet-rock housing, college loans defaulted on, car payments that stopped arriving eighteen months ago, credit cards maxed to oblivion, sovereign foreign economies visibly whirling down the drain, and untold casino bet derivative hedges. Loose talk has it that the Fed is buying up way more dodgy debt than the official number of $85 billion a month. And why not? They bailed out way more than the $700 billion official TARP figure back in 2009 — everything from insolvent European banks to Floridian motels on the REO junk-pile — so nobody should take any particular taper number seriously. They’ll just backfill as necessary.
But even in a world of seemingly no consequence, things happen. One pretty sure thing is rising interest rates, especially when, at the same time as a head-fake taper, foreigners send a torrent of US Treasury paper back to the redemption window. This paper is what other nations, especially in Asia, have been trading to hose up hard assets, including gold and real estate, around the world, and the traders of last resort — the chumps who took US T bonds for boatloads of copper ore or cocoa pods — now have nowhere else to go. China alone announced very loudly last month that US Treasury debt paper was giving them a migraine and they were done buying anymore of it.
Japan is in a financial psychotic delirium scarfing up its own debt paper to infinity. Who’s left out there? Burkina Faso and the Kyrgystan Cobblers’ Union Pension Fund? The interest rate on the US 10-year bond is close to bumping up on the ominous 3.0 percent level again. Apart from the effect on car and house loans, readers have pointed out to dim-little-me that the real action will be around the interest rate swaps. Last time this happened, in late summer, the too-big-to-fail banks wobbled from their losses on these bets, providing a glimpse into the aperture of a black hole compressive deflation where cascading chains of unmet promises blow financial systems past the event horizon of universal default and paralysis where money stops moving anywhere and people must seriously reevaluate what money actually is.
I think we’ll see them try the head-fake taper. They must. It will be backstopped by and saturated in statistical lying, and everyone will have trouble parsing the probable effect because the chronic dishonesty loose in this land will have deformed and impaired all metrics of true value. At the heart of whatever remains of this economy is fire, and the officers of the Federal Reserve are playing with it. Pretty soon, we’ll get the un-taper, the final surrender to the crack-up boom that awaits before the western world has to go medieval.
http://kunstler.com/clusterfuck-nation/timing-is-not-everything/
NSA Inks Landmark Deal to Share Information With Central Banks
Dec 09, 2013 - 10:41 AM GMT
By: David_Hague
Dear reader put away your charts and graphs. Forget about fundamental and technical analysis. Ignore financial statements and trends. The extraordinary agreement to share information between the National Security Agency [NSA], a host of European, Russian, Canadian and Chinese spy agencies and the world's Central Banks will ensure that the only relevant force in Global Stock markets will be the trading activity of the world's Central Banks. Thanks to the data gathering of the NSA and its subsidiary spy agencies around the world, the Central Banks will be privy to the most confidential conversations and communications from the boardroom, the bedroom and the trading floor. Central Banks will now be able to trade with inside information that could only be dreamed about in years gone by.
Market Assistance Directive [MAD]
In the past, only employees at the NSA, their friends and families were able to trade and profit using the confidential information captured in NSA's confidential PRISM surveillance sweeping activities. The funds these individuals were able to devote to these insider trades were insignificant to the global markets. However this new agreement, [called the 'Market Assistance Directive' [MAD] will allow the Central Banks to use their unlimited resources to trade and profit based on inside information on an almost unimaginable scale.
Ask yourself one question
"Poppycock!" you say. "Balderdash!" you exclaim. Dear reader, I too shared your cynicism and disbelief regarding the possibility of such an agreement existing until I spoke with my good friend and trusted confidante Gustavo Laframboise-Pierre, Global Director of Statistical Creation at the European Central Bank [ECB]. Dear reader, before you click away in an indignant fit of outrage at the mere suggestion of this preposterous reality. I would encourage you to ask yourself one question. Would you or any of your trusted friends and honorable family members, if given access to inside information that would allow one to guarantee oneself untold wealth, without fear of legal reprisal, by trading in the stock market based on this inside information, would you or they turn the opportunity down? Dear reader, I thought so. Please continue reading.
It is the norm
Prior to the unique MAD agreement only the thousands of employees of the NSA and other security agencies, their friends and family, their political masters, paramours and twitter followers, have had the ability to use the PRISM surveillance capability to know every grain of inside information that exists in the world. Massive profits on their personal trading accounts are inevitable. It is a denial of human nature to believe that this activity is not only prevalent, it is the norm.
Statistics that would support whatever lunatic policies
But I digress; my conversation with Gustavo would enlighten me as to the New World Order that now permeates our capital markets and our global economy. For those of you not familiar with Gustavo, my friendship with such a highly placed member of the ECB executive traced its roots back to my days on Wall Street and to his days in New York when he was my bookie. His fortunes changed dramatically one day when a senior member of the ECB on a junket to New York placed an astonishingly large, incorrect and foolish bet on the outcome of the 2010 World Cup. The only way the debt could be settled was for the senior member of the ECB to offer Gustavo an obscenely highly paid sinecure at the ECB. Gustavo traded Brooklyn and Fulton Street for Paris and the Champs-Élysées. He became the ECB's Global Director of Statistical Creation. His notional job was to make up statistics that would support whatever lunatic policies were being proposed by central banks around the world. Gustavo's complete lack of moral fiber coupled with his gift for numbers allowed him to excel at his job.
Truthfully I had left my home in New York to avoid some rather inconvenient lawsuits
I was in Rome on business, [well truthfully I had left my home in New York to avoid some rather inconvenient lawsuits from my banks and other sundry creditors relating to my inability to make payments on my credit cards, lines of credit, loans, mortgages, and overdraft fees.] In any event, imagine my surprise as I strolled down the Via Veneto when I spied Gustavo [I surmised that he was in town visiting one of his mistresses] exiting the Gucci store, laden with what appeared to be their entire inventory.
We strolled to the uber-chic Rome Cavalieri Hotel
I greeted him with a smile and suggested we repair to the nearest bistro for a lunch and libation. I helped with his bags and we strolled to the uber-chic Rome Cavalieri Hotel on Via Alberto so that we might feast at la Pergola, perhaps the finest restaurant in Europe. Dear reader, I had dined with Gustavo before. I knew that the meal would be charged to his expense account at the ECB. Today my empty wallet and penury would not prevent me from enjoying a culinary delight. We were seated at a prestigious seat by the window that offered us a magnificent view of St. Peter's Basilica. Gustavo's legendary expense account ensured that we received premium service.
Have you won the lottery?
Gustavo, I enquired, "Have you won the lottery? You must have $50,000 of Gucci accessories in these bags?" "David" he giggled, "It is better than that", he continued. "The central banks, thanks to an agreement with the world's spy agencies, [this would be the aforementioned MAD agreement] we bankers are now privy to not only the emails and phone calls of all the world's politicians, business leaders, journalists, accountants, lawyers but to the innermost thoughts of every citizen who uses an electronic device for communication".
We relegate to destitution any soul who dares to challenge us
"With this information we can use our resources to control the global markets. Now there is no trade, no event, no market information that we bankers do not know in advance. We can literally make as much money as we want. At the same time we relegate to destitution any soul who dares to challenge us. All we had to do to finalize the agreement was to promise to kick back 20% of our profits to the senior members of the spy agencies and 10% of our profits to their political masters."
Remy Martin Black Pearl Luis XIII
I almost choked on my Remy Martin Black Pearl Luis XIII Cognac as I digested Gustavo's statement. Little did I know that this particular brand of Cognac that Gustavo had requested, was worth $30,000/bottle. [Oh, how glorious it must be to be a banker with an expense account.] However, as a frequent beneficiary of Gustavo's largesse I guess I should not complain.] "Gustavo" I exclaimed, "Do the words insider trading, market manipulation, extortion, thievery, invasion of privacy, immoral, illegal and just plain wrong not mean anything to you bankers?" "Don't you read the papers David?" He replied.
You cannot put bankers in jail
"Bankers have been given immunity from prosecution for any misdeed or imperfection no matter how damaging it is to the markets, the global economy and society. HSBC, JP Morgan Chase, European banks, the list goes on. Banks are fined but no individual banker goes to jail. How many times do bankers need to skate on corruption charges before you get it through your thick skull that you can fine the bank but you cannot put bankers in jail?" Gustavo postulated.
Richer than King Midas
He continued, "We central bankers will share the data gathering efforts with the world's commercial or retail banks for a [big] fee. Our prudence will ensure that the inside information is shared fairly." The profits the banks will make on these trades will guarantee their survival. Furthermore it will ensure the bank executives become richer than King Midas. It is truly a win-win situation." I poked at the remainder of my appetizer, 'scampi carpaccio with two caviars', and eagerly awaited the first course, 'liquorice consommé with sweet pepper cream and squid salad'. Gustavo had come a long way from his days making book from his car outside Madison Square Garden, I thought to myself. His notion of win-win was certainly unique.
There are two types of wealth in this world
"Gustavo", I replied, "I don't know where to begin. How does any of this help Main Street and the masses? This sounds like a conspiracy by the 1% to own the entire universe". "I am glad you brought that up David" he slurred. [The effects of his overindulgence of the Cognac was starting to have the usual impact] "That whole silly Occupy movement and its childish 99% versus the 1% was our creation. The 1% is a phrase we coined to give us cover as we filled our pockets. You see David; there are two types of wealth in this world. The first is wealth created by innovators, creators, entrepreneurs, risk-takers, hard workers, savers: diligent, honest, principled, prudent, responsible men and woman", Gustavo pontificated.
Bankers have 'got your backs
"These remarkable people, as they created wealth also created jobs and enhanced their community. The world rightfully respects, celebrates, admires, encourages and emulates their efforts. The other type of wealth is created by creatures like me who scam, suck, pillage and plunder the public purse and Main Street's wallets. We create nothing. We central bankers and our commercial and retail cousins contribute nothing. We take what we can while convincing the masses that we 'have got their backs.' Can you believe that bankers are still able to pay themselves tens of millions of dollars a year after the damage they have done to the global economy?" Gustavo opined.
Consultants, lobbyists and other assorted leeches
His sermon continued, "If the public ever thought about it for a moment, their anger would not be focused on the notional 1% who accumulated their wealth the old fashioned way [They earned it] Rather the anger would be focused on the '10%.' The scoundrels like myself: bankers, consultants, lobbyists and other assorted leeches who drain the public's purse while adding to their own personal fortune". I was quite taken aback. Candor, honesty and critical self analysis were not attributes I usually expected from Gustavo. I smiled at the waiter as he delivered my main course, a very appealing 'soya poached fillet of beef with garlic dandelion and wasabi purée'. I continued my conversation with Gustavo by asking him why he was sharing all this information with me. Was he not concerned that I might publish some of this, clearly confidential, information? "David, have you heard nothing I have said, Bankers are immune from prosecution". He said sardonically.
Unless you write your commentary in crayon and pass it out on street corners
He looked sternly in my eyes as he said, "Furthermore, unless you write your commentary in crayon and pass it out on street corners, either we or the NSA will become aware your attempt to undermine our dominance. We will simply disable your computer and delete your files. If you persist in inconveniencing us we will turn your file over to our 'Blackmail' department who will examine your life with a fine tooth comb, discover your secrets and threaten you with exposure unless you cease and desist."
SPECTRE is in charge
Dear reader, like you, based on Gustavo's insights, I could not help thinking that the players in our global capital markets were more reminiscent of James Bond's nemesis, SPECTRE [SPecial Executive for Counter-intelligence, Terrorism, Revenge and Extortion] than a functioning system for the free and fair exchange of goods and capital. I said as much to Gustavo as I had the first bite of my Caciocavallo Podolico. This cheese is the pride of Italy. At $500/lb, it has the same value by weight as silver. I would strongly recommend this taste sensation should you ever be dining with a banker and their expense account. As I waited for his response, [he was busy talking to his broker], I gazed out the window at the Vatican and wondered if there might be spiritual salvation to guide us through the financial quagmire we had entered. I then remembered that the Vatican Bank scandals indicated that there would be no guidance from that direction. [Oh please dear reader, curtail your disapproval. Just Google 'Vatican Bank scandals' and see for yourself.]
La Dolce Vita
Gustavo smiled at me as he hung up his phone. "I just made a million dollars in two hours based on information this new MAD Agreement' provided me", he boasted. "The best part is that because I have set up Trusts in tax havens around the world I will not have to pay any taxes. Isn't life grand?" I sighed as gazed through the window and watched a beggar appealing for donations from shoppers on the Via Veneto. I guess this is what 'la Dolce Vita' is all about?
David Hague
Funny Business
David can be reached at davidhague@rogers.com
http://www.marketoracle.co.uk/Article43477.html
NSA Inks Landmark Deal to Share Information With Central Banks
Dec 09, 2013 - 10:41 AM GMT
By: David_Hague
Dear reader put away your charts and graphs. Forget about fundamental and technical analysis. Ignore financial statements and trends. The extraordinary agreement to share information between the National Security Agency [NSA], a host of European, Russian, Canadian and Chinese spy agencies and the world's Central Banks will ensure that the only relevant force in Global Stock markets will be the trading activity of the world's Central Banks. Thanks to the data gathering of the NSA and its subsidiary spy agencies around the world, the Central Banks will be privy to the most confidential conversations and communications from the boardroom, the bedroom and the trading floor. Central Banks will now be able to trade with inside information that could only be dreamed about in years gone by.
Market Assistance Directive [MAD]
In the past, only employees at the NSA, their friends and families were able to trade and profit using the confidential information captured in NSA's confidential PRISM surveillance sweeping activities. The funds these individuals were able to devote to these insider trades were insignificant to the global markets. However this new agreement, [called the 'Market Assistance Directive' [MAD] will allow the Central Banks to use their unlimited resources to trade and profit based on inside information on an almost unimaginable scale.
Ask yourself one question
"Poppycock!" you say. "Balderdash!" you exclaim. Dear reader, I too shared your cynicism and disbelief regarding the possibility of such an agreement existing until I spoke with my good friend and trusted confidante Gustavo Laframboise-Pierre, Global Director of Statistical Creation at the European Central Bank [ECB]. Dear reader, before you click away in an indignant fit of outrage at the mere suggestion of this preposterous reality. I would encourage you to ask yourself one question. Would you or any of your trusted friends and honorable family members, if given access to inside information that would allow one to guarantee oneself untold wealth, without fear of legal reprisal, by trading in the stock market based on this inside information, would you or they turn the opportunity down? Dear reader, I thought so. Please continue reading.
It is the norm
Prior to the unique MAD agreement only the thousands of employees of the NSA and other security agencies, their friends and family, their political masters, paramours and twitter followers, have had the ability to use the PRISM surveillance capability to know every grain of inside information that exists in the world. Massive profits on their personal trading accounts are inevitable. It is a denial of human nature to believe that this activity is not only prevalent, it is the norm.
Statistics that would support whatever lunatic policies
But I digress; my conversation with Gustavo would enlighten me as to the New World Order that now permeates our capital markets and our global economy. For those of you not familiar with Gustavo, my friendship with such a highly placed member of the ECB executive traced its roots back to my days on Wall Street and to his days in New York when he was my bookie. His fortunes changed dramatically one day when a senior member of the ECB on a junket to New York placed an astonishingly large, incorrect and foolish bet on the outcome of the 2010 World Cup. The only way the debt could be settled was for the senior member of the ECB to offer Gustavo an obscenely highly paid sinecure at the ECB. Gustavo traded Brooklyn and Fulton Street for Paris and the Champs-Élysées. He became the ECB's Global Director of Statistical Creation. His notional job was to make up statistics that would support whatever lunatic policies were being proposed by central banks around the world. Gustavo's complete lack of moral fiber coupled with his gift for numbers allowed him to excel at his job.
Truthfully I had left my home in New York to avoid some rather inconvenient lawsuits
I was in Rome on business, [well truthfully I had left my home in New York to avoid some rather inconvenient lawsuits from my banks and other sundry creditors relating to my inability to make payments on my credit cards, lines of credit, loans, mortgages, and overdraft fees.] In any event, imagine my surprise as I strolled down the Via Veneto when I spied Gustavo [I surmised that he was in town visiting one of his mistresses] exiting the Gucci store, laden with what appeared to be their entire inventory.
We strolled to the uber-chic Rome Cavalieri Hotel
I greeted him with a smile and suggested we repair to the nearest bistro for a lunch and libation. I helped with his bags and we strolled to the uber-chic Rome Cavalieri Hotel on Via Alberto so that we might feast at la Pergola, perhaps the finest restaurant in Europe. Dear reader, I had dined with Gustavo before. I knew that the meal would be charged to his expense account at the ECB. Today my empty wallet and penury would not prevent me from enjoying a culinary delight. We were seated at a prestigious seat by the window that offered us a magnificent view of St. Peter's Basilica. Gustavo's legendary expense account ensured that we received premium service.
Have you won the lottery?
Gustavo, I enquired, "Have you won the lottery? You must have $50,000 of Gucci accessories in these bags?" "David" he giggled, "It is better than that", he continued. "The central banks, thanks to an agreement with the world's spy agencies, [this would be the aforementioned MAD agreement] we bankers are now privy to not only the emails and phone calls of all the world's politicians, business leaders, journalists, accountants, lawyers but to the innermost thoughts of every citizen who uses an electronic device for communication".
We relegate to destitution any soul who dares to challenge us
"With this information we can use our resources to control the global markets. Now there is no trade, no event, no market information that we bankers do not know in advance. We can literally make as much money as we want. At the same time we relegate to destitution any soul who dares to challenge us. All we had to do to finalize the agreement was to promise to kick back 20% of our profits to the senior members of the spy agencies and 10% of our profits to their political masters."
Remy Martin Black Pearl Luis XIII
I almost choked on my Remy Martin Black Pearl Luis XIII Cognac as I digested Gustavo's statement. Little did I know that this particular brand of Cognac that Gustavo had requested, was worth $30,000/bottle. [Oh, how glorious it must be to be a banker with an expense account.] However, as a frequent beneficiary of Gustavo's largesse I guess I should not complain.] "Gustavo" I exclaimed, "Do the words insider trading, market manipulation, extortion, thievery, invasion of privacy, immoral, illegal and just plain wrong not mean anything to you bankers?" "Don't you read the papers David?" He replied.
You cannot put bankers in jail
"Bankers have been given immunity from prosecution for any misdeed or imperfection no matter how damaging it is to the markets, the global economy and society. HSBC, JP Morgan Chase, European banks, the list goes on. Banks are fined but no individual banker goes to jail. How many times do bankers need to skate on corruption charges before you get it through your thick skull that you can fine the bank but you cannot put bankers in jail?" Gustavo postulated.
Richer than King Midas
He continued, "We central bankers will share the data gathering efforts with the world's commercial or retail banks for a [big] fee. Our prudence will ensure that the inside information is shared fairly." The profits the banks will make on these trades will guarantee their survival. Furthermore it will ensure the bank executives become richer than King Midas. It is truly a win-win situation." I poked at the remainder of my appetizer, 'scampi carpaccio with two caviars', and eagerly awaited the first course, 'liquorice consommé with sweet pepper cream and squid salad'. Gustavo had come a long way from his days making book from his car outside Madison Square Garden, I thought to myself. His notion of win-win was certainly unique.
There are two types of wealth in this world
"Gustavo", I replied, "I don't know where to begin. How does any of this help Main Street and the masses? This sounds like a conspiracy by the 1% to own the entire universe". "I am glad you brought that up David" he slurred. [The effects of his overindulgence of the Cognac was starting to have the usual impact] "That whole silly Occupy movement and its childish 99% versus the 1% was our creation. The 1% is a phrase we coined to give us cover as we filled our pockets. You see David; there are two types of wealth in this world. The first is wealth created by innovators, creators, entrepreneurs, risk-takers, hard workers, savers: diligent, honest, principled, prudent, responsible men and woman", Gustavo pontificated.
Bankers have 'got your backs
"These remarkable people, as they created wealth also created jobs and enhanced their community. The world rightfully respects, celebrates, admires, encourages and emulates their efforts. The other type of wealth is created by creatures like me who scam, suck, pillage and plunder the public purse and Main Street's wallets. We create nothing. We central bankers and our commercial and retail cousins contribute nothing. We take what we can while convincing the masses that we 'have got their backs.' Can you believe that bankers are still able to pay themselves tens of millions of dollars a year after the damage they have done to the global economy?" Gustavo opined.
Consultants, lobbyists and other assorted leeches
His sermon continued, "If the public ever thought about it for a moment, their anger would not be focused on the notional 1% who accumulated their wealth the old fashioned way [They earned it] Rather the anger would be focused on the '10%.' The scoundrels like myself: bankers, consultants, lobbyists and other assorted leeches who drain the public's purse while adding to their own personal fortune". I was quite taken aback. Candor, honesty and critical self analysis were not attributes I usually expected from Gustavo. I smiled at the waiter as he delivered my main course, a very appealing 'soya poached fillet of beef with garlic dandelion and wasabi purée'. I continued my conversation with Gustavo by asking him why he was sharing all this information with me. Was he not concerned that I might publish some of this, clearly confidential, information? "David, have you heard nothing I have said, Bankers are immune from prosecution". He said sardonically.
Unless you write your commentary in crayon and pass it out on street corners
He looked sternly in my eyes as he said, "Furthermore, unless you write your commentary in crayon and pass it out on street corners, either we or the NSA will become aware your attempt to undermine our dominance. We will simply disable your computer and delete your files. If you persist in inconveniencing us we will turn your file over to our 'Blackmail' department who will examine your life with a fine tooth comb, discover your secrets and threaten you with exposure unless you cease and desist."
SPECTRE is in charge
Dear reader, like you, based on Gustavo's insights, I could not help thinking that the players in our global capital markets were more reminiscent of James Bond's nemesis, SPECTRE [SPecial Executive for Counter-intelligence, Terrorism, Revenge and Extortion] than a functioning system for the free and fair exchange of goods and capital. I said as much to Gustavo as I had the first bite of my Caciocavallo Podolico. This cheese is the pride of Italy. At $500/lb, it has the same value by weight as silver. I would strongly recommend this taste sensation should you ever be dining with a banker and their expense account. As I waited for his response, [he was busy talking to his broker], I gazed out the window at the Vatican and wondered if there might be spiritual salvation to guide us through the financial quagmire we had entered. I then remembered that the Vatican Bank scandals indicated that there would be no guidance from that direction. [Oh please dear reader, curtail your disapproval. Just Google 'Vatican Bank scandals' and see for yourself.]
La Dolce Vita
Gustavo smiled at me as he hung up his phone. "I just made a million dollars in two hours based on information this new MAD Agreement' provided me", he boasted. "The best part is that because I have set up Trusts in tax havens around the world I will not have to pay any taxes. Isn't life grand?" I sighed as gazed through the window and watched a beggar appealing for donations from shoppers on the Via Veneto. I guess this is what 'la Dolce Vita' is all about?
David Hague
Funny Business
David can be reached at davidhague@rogers.com
http://www.marketoracle.co.uk/Article43477.html
NSA Inks Landmark Deal to Share Information With Central Banks
Dec 09, 2013 - 10:41 AM GMT
By: David_Hague
Dear reader put away your charts and graphs. Forget about fundamental and technical analysis. Ignore financial statements and trends. The extraordinary agreement to share information between the National Security Agency [NSA], a host of European, Russian, Canadian and Chinese spy agencies and the world's Central Banks will ensure that the only relevant force in Global Stock markets will be the trading activity of the world's Central Banks. Thanks to the data gathering of the NSA and its subsidiary spy agencies around the world, the Central Banks will be privy to the most confidential conversations and communications from the boardroom, the bedroom and the trading floor. Central Banks will now be able to trade with inside information that could only be dreamed about in years gone by.
Market Assistance Directive [MAD]
In the past, only employees at the NSA, their friends and families were able to trade and profit using the confidential information captured in NSA's confidential PRISM surveillance sweeping activities. The funds these individuals were able to devote to these insider trades were insignificant to the global markets. However this new agreement, [called the 'Market Assistance Directive' [MAD] will allow the Central Banks to use their unlimited resources to trade and profit based on inside information on an almost unimaginable scale.
Ask yourself one question
"Poppycock!" you say. "Balderdash!" you exclaim. Dear reader, I too shared your cynicism and disbelief regarding the possibility of such an agreement existing until I spoke with my good friend and trusted confidante Gustavo Laframboise-Pierre, Global Director of Statistical Creation at the European Central Bank [ECB]. Dear reader, before you click away in an indignant fit of outrage at the mere suggestion of this preposterous reality. I would encourage you to ask yourself one question. Would you or any of your trusted friends and honorable family members, if given access to inside information that would allow one to guarantee oneself untold wealth, without fear of legal reprisal, by trading in the stock market based on this inside information, would you or they turn the opportunity down? Dear reader, I thought so. Please continue reading.
It is the norm
Prior to the unique MAD agreement only the thousands of employees of the NSA and other security agencies, their friends and family, their political masters, paramours and twitter followers, have had the ability to use the PRISM surveillance capability to know every grain of inside information that exists in the world. Massive profits on their personal trading accounts are inevitable. It is a denial of human nature to believe that this activity is not only prevalent, it is the norm.
Statistics that would support whatever lunatic policies
But I digress; my conversation with Gustavo would enlighten me as to the New World Order that now permeates our capital markets and our global economy. For those of you not familiar with Gustavo, my friendship with such a highly placed member of the ECB executive traced its roots back to my days on Wall Street and to his days in New York when he was my bookie. His fortunes changed dramatically one day when a senior member of the ECB on a junket to New York placed an astonishingly large, incorrect and foolish bet on the outcome of the 2010 World Cup. The only way the debt could be settled was for the senior member of the ECB to offer Gustavo an obscenely highly paid sinecure at the ECB. Gustavo traded Brooklyn and Fulton Street for Paris and the Champs-Élysées. He became the ECB's Global Director of Statistical Creation. His notional job was to make up statistics that would support whatever lunatic policies were being proposed by central banks around the world. Gustavo's complete lack of moral fiber coupled with his gift for numbers allowed him to excel at his job.
Truthfully I had left my home in New York to avoid some rather inconvenient lawsuits
I was in Rome on business, [well truthfully I had left my home in New York to avoid some rather inconvenient lawsuits from my banks and other sundry creditors relating to my inability to make payments on my credit cards, lines of credit, loans, mortgages, and overdraft fees.] In any event, imagine my surprise as I strolled down the Via Veneto when I spied Gustavo [I surmised that he was in town visiting one of his mistresses] exiting the Gucci store, laden with what appeared to be their entire inventory.
We strolled to the uber-chic Rome Cavalieri Hotel
I greeted him with a smile and suggested we repair to the nearest bistro for a lunch and libation. I helped with his bags and we strolled to the uber-chic Rome Cavalieri Hotel on Via Alberto so that we might feast at la Pergola, perhaps the finest restaurant in Europe. Dear reader, I had dined with Gustavo before. I knew that the meal would be charged to his expense account at the ECB. Today my empty wallet and penury would not prevent me from enjoying a culinary delight. We were seated at a prestigious seat by the window that offered us a magnificent view of St. Peter's Basilica. Gustavo's legendary expense account ensured that we received premium service.
Have you won the lottery?
Gustavo, I enquired, "Have you won the lottery? You must have $50,000 of Gucci accessories in these bags?" "David" he giggled, "It is better than that", he continued. "The central banks, thanks to an agreement with the world's spy agencies, [this would be the aforementioned MAD agreement] we bankers are now privy to not only the emails and phone calls of all the world's politicians, business leaders, journalists, accountants, lawyers but to the innermost thoughts of every citizen who uses an electronic device for communication".
We relegate to destitution any soul who dares to challenge us
"With this information we can use our resources to control the global markets. Now there is no trade, no event, no market information that we bankers do not know in advance. We can literally make as much money as we want. At the same time we relegate to destitution any soul who dares to challenge us. All we had to do to finalize the agreement was to promise to kick back 20% of our profits to the senior members of the spy agencies and 10% of our profits to their political masters."
Remy Martin Black Pearl Luis XIII
I almost choked on my Remy Martin Black Pearl Luis XIII Cognac as I digested Gustavo's statement. Little did I know that this particular brand of Cognac that Gustavo had requested, was worth $30,000/bottle. [Oh, how glorious it must be to be a banker with an expense account.] However, as a frequent beneficiary of Gustavo's largesse I guess I should not complain.] "Gustavo" I exclaimed, "Do the words insider trading, market manipulation, extortion, thievery, invasion of privacy, immoral, illegal and just plain wrong not mean anything to you bankers?" "Don't you read the papers David?" He replied.
You cannot put bankers in jail
"Bankers have been given immunity from prosecution for any misdeed or imperfection no matter how damaging it is to the markets, the global economy and society. HSBC, JP Morgan Chase, European banks, the list goes on. Banks are fined but no individual banker goes to jail. How many times do bankers need to skate on corruption charges before you get it through your thick skull that you can fine the bank but you cannot put bankers in jail?" Gustavo postulated.
Richer than King Midas
He continued, "We central bankers will share the data gathering efforts with the world's commercial or retail banks for a [big] fee. Our prudence will ensure that the inside information is shared fairly." The profits the banks will make on these trades will guarantee their survival. Furthermore it will ensure the bank executives become richer than King Midas. It is truly a win-win situation." I poked at the remainder of my appetizer, 'scampi carpaccio with two caviars', and eagerly awaited the first course, 'liquorice consommé with sweet pepper cream and squid salad'. Gustavo had come a long way from his days making book from his car outside Madison Square Garden, I thought to myself. His notion of win-win was certainly unique.
There are two types of wealth in this world
"Gustavo", I replied, "I don't know where to begin. How does any of this help Main Street and the masses? This sounds like a conspiracy by the 1% to own the entire universe". "I am glad you brought that up David" he slurred. [The effects of his overindulgence of the Cognac was starting to have the usual impact] "That whole silly Occupy movement and its childish 99% versus the 1% was our creation. The 1% is a phrase we coined to give us cover as we filled our pockets. You see David; there are two types of wealth in this world. The first is wealth created by innovators, creators, entrepreneurs, risk-takers, hard workers, savers: diligent, honest, principled, prudent, responsible men and woman", Gustavo pontificated.
Bankers have 'got your backs
"These remarkable people, as they created wealth also created jobs and enhanced their community. The world rightfully respects, celebrates, admires, encourages and emulates their efforts. The other type of wealth is created by creatures like me who scam, suck, pillage and plunder the public purse and Main Street's wallets. We create nothing. We central bankers and our commercial and retail cousins contribute nothing. We take what we can while convincing the masses that we 'have got their backs.' Can you believe that bankers are still able to pay themselves tens of millions of dollars a year after the damage they have done to the global economy?" Gustavo opined.
Consultants, lobbyists and other assorted leeches
His sermon continued, "If the public ever thought about it for a moment, their anger would not be focused on the notional 1% who accumulated their wealth the old fashioned way [They earned it] Rather the anger would be focused on the '10%.' The scoundrels like myself: bankers, consultants, lobbyists and other assorted leeches who drain the public's purse while adding to their own personal fortune". I was quite taken aback. Candor, honesty and critical self analysis were not attributes I usually expected from Gustavo. I smiled at the waiter as he delivered my main course, a very appealing 'soya poached fillet of beef with garlic dandelion and wasabi purée'. I continued my conversation with Gustavo by asking him why he was sharing all this information with me. Was he not concerned that I might publish some of this, clearly confidential, information? "David, have you heard nothing I have said, Bankers are immune from prosecution". He said sardonically.
Unless you write your commentary in crayon and pass it out on street corners
He looked sternly in my eyes as he said, "Furthermore, unless you write your commentary in crayon and pass it out on street corners, either we or the NSA will become aware your attempt to undermine our dominance. We will simply disable your computer and delete your files. If you persist in inconveniencing us we will turn your file over to our 'Blackmail' department who will examine your life with a fine tooth comb, discover your secrets and threaten you with exposure unless you cease and desist."
SPECTRE is in charge
Dear reader, like you, based on Gustavo's insights, I could not help thinking that the players in our global capital markets were more reminiscent of James Bond's nemesis, SPECTRE [SPecial Executive for Counter-intelligence, Terrorism, Revenge and Extortion] than a functioning system for the free and fair exchange of goods and capital. I said as much to Gustavo as I had the first bite of my Caciocavallo Podolico. This cheese is the pride of Italy. At $500/lb, it has the same value by weight as silver. I would strongly recommend this taste sensation should you ever be dining with a banker and their expense account. As I waited for his response, [he was busy talking to his broker], I gazed out the window at the Vatican and wondered if there might be spiritual salvation to guide us through the financial quagmire we had entered. I then remembered that the Vatican Bank scandals indicated that there would be no guidance from that direction. [Oh please dear reader, curtail your disapproval. Just Google 'Vatican Bank scandals' and see for yourself.]
La Dolce Vita
Gustavo smiled at me as he hung up his phone. "I just made a million dollars in two hours based on information this new MAD Agreement' provided me", he boasted. "The best part is that because I have set up Trusts in tax havens around the world I will not have to pay any taxes. Isn't life grand?" I sighed as gazed through the window and watched a beggar appealing for donations from shoppers on the Via Veneto. I guess this is what 'la Dolce Vita' is all about?
David Hague
Funny Business
David can be reached at davidhague@rogers.com
http://www.marketoracle.co.uk/Article43477.html
Great post cork!
Great post cork!
The great game accelerates…
Alasdair Macleod – 09 December 2013
(special thanks to the cork)
In the jigsaw that is the Great Game of Asia pieces which heretofore made little sense on their own are beginning to slot in to give us an idea of the final picture. These disparate pieces are as varied as China’s claim of territorial rights over Japan’s Senkaku Islands, NATO’s backing off from Syria, America’s détente with Iran and the surprising move by Iran to improve relations with the other Gulf States. The Chinese yuan is now second only to the US dollar in trade finance, displacing the euro. George Osborne, UK Chancellor at very short notice recently flew over to China, when there was already a British delegation there. And this week, again at little notice David Cameron flies to China for top level meetings with the new president and the premier, promoted by the British media as a trade mission.
There are also a few gold-coloured pieces in want of a slot in the puzzle. The Arabs are recasting some of their gold into one-kilo bars ahead of the introduction of a spot gold contract on the Dubai Gold and Commodity Exchange in a deliberate move away from LBMA standards. Chinese gold imports are far, far greater than Western analysts acknowledge. Despite accelerating physical demand from the Far East, Western capital markets insist on suppressing the gold price, forcing physical metal to rapidly disappear from Western vaults into the anonymity of Asia.
If we stand back to get an overall impression of how this jigsaw fits together, the guiding hand of China can be imagined throughout. While one can read too much into any big-picture action, things do seem to be working for China. The Senkaku dispute, with its provocative Air Defence Identification Zone looks like a kung-fu feint, designed to throw America off-balance and into defending her alliances with Japan and other long-standing allies. America has ended up wrong-footed over regional policy, hampered by a newly-appointed and inexperienced ambassador in Japan and by the imminent retirement of her ambassador in Beijing. All this detracts America from addressing China’s more important interests. Washington is now belatedly sending high-level envoys to the region, but this will be to no avail.
We must conclude that China’s future interest is no longer with America, which has been her largest trading partner. Her new ambitions are predominantly towards Asia through the Shanghai Cooperation Organisation (SCO), which is an economic bloc she jointly runs with Russia and has ambitions for the whole continent, excluding for the moment only South-East Asia and Japan. The spread of current member states, observers and associates covers more than half the world’s population. This she sees as her home turf with lots to develop. And the most important outstanding strategic objective for China is to do away with the US dollar for Asian cross-border trade, and also eventually with all other trade wherever possible.
This explains why America finds herself parked in a cul-de-sac labelled Senkaku. China is instead turning to London to utilise strong existing links with Hong Kong to develop a yuan alternative for trade finance for her non-Asian trade, which is why Cameron and Co are getting so excited. And even before this move, the financial power behind China’s economic renaissance has been sufficient to knock the euro into third place for trade finance.
We now turn to the Middle East. China’s interest in absorbing the Middle East into her sphere of influence is obvious, given her current and future energy requirements; but she will also want to tap into the enormous wealth in the region. Her link into it is through Iran, an SCO Observer State, to which she provided covert support during the Ahmadinejad years. One can only speculate about the degree of Chinese influence behind Iranian political developments, with Iran now aligning herself with China’s view that trade matters more than belligerence with her perceived enemies. However, if one acknowledges China’s strategic and trade interests, there is a ready explanation behind Iran’s diplomatic moves to heal the rift with Saudi Arabia and other members of the Gulf Cooperation Council.
The great-game strategy for the Middle-East appears to have been to force the US to resign as regional policeman, which has happened in two stages. Initially Russia brokered a deal over Syria, leaving America and her NATO partners completely outflanked. This was followed by a similar move over Iran, guided possibly by China. There will be no leaving party, and the role of American policeman will be replaced by common peaceful trade interests throughout Asia.
We can begin to see how our jigsaw puzzle might complete. But there is an extra piece for which there is no place, and that is the dollar. It is simply becoming surplus to requirements; and here again China has America cornered. After concluding her alliances with the Middle East she will control directly and indirectly almost all the world’s above-ground stocks of gold, which in the final analysis is more powerful than any fiat currency, reserve status or not.
One can only speculate about how much of this is self-inflicted by the Americans. Was it her overt imperialism that undermined her, or is it the Fed’s monetary policy? I also remember Alan Greenspan’s undiplomatic remarks over China’s stock of US Treasuries, when he pointed out that they had the problem, not America.
That is for post-event analysis, but for now Western markets seem to be unaware of these important developments, leaving the dollar/gold pair more mispriced than perhaps at any point in history. Physical gold is being cornered, leaving Western capital markets operating as little more than casinos backed only by hot air. The dollar will one day be a bit-player in international trade, meaning that enormous quantities are becoming redundant and will have to be sold for something else.
After the inevitable upwards explosion in the dollar price of gold, we shall be left wondering at what price we will need to offer our goods and services to get some of it back from Asia.
end
http://harveyorgan.blogspot.com/2013/12/dec-9gold-in-backwardation-for-front.html