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Different company, Blockchain Global Ltd.
https://www.thestreet.com/story/14279770/1/bitcoin-miner-btcs-moves-toward-merger-with-blockchain-global.html
Reality Shares Nasdaq Blockchain Economy Index
http://www.realitysharesadvisors.com/indexes/blockchain-index/
The Buzz Surrounding Global Blockchain Technologies Corp. (OTC: BLKCF) (TSX-V: BLOC)
14 Nov, 2017 By: financialbuz
http://www.financialbuzz.com/the-buzz-surrounding-global-blockchain-technologies-corp-otc-blkcf-tsx-v-bloc-933387
Global Blockchain Technologies announces $20m fund to invest in Steem
The blockchain investment company establishes major joint venture to bring funding to startups building on Steem.
By Ian Allison
November 13, 2017 16:05 GMT
Global Blockchain Technologies Corp. has announced a non-binding agreement to create a joint venture withSteemit Inc, to establish a $20m Steem Fund.
The Steem Fund is a venture capital fund for startups building solutions on the Steem blockchain to expand the decentralised social media ecosystem.
Investments from the Steem Fund will be comprised of both Steem tokens tradeable on liquid exchanges and through traditional US dollar investments.
The Steem Fund will be architected to support the accelerated development of applications based on Steem's Smart Media Token (SMT) protocol, allowing native tokens based on the Steem blockchain, said a statement.
SMTs are a technology that allows individual organisations and companies to integrate a customisable and intelligent token system into their website, portal, or platform, it said.
Global Blockchain Technologies Corp. CEO Rik Willard said: "We're proud to be the first publically traded company to make a significant investment in the Steem ecosystem. No current open source and public blockchain protocol is more mature, scalable, and as rapid as Steem.
"We are convinced that traditional media companies from every corner will find that Steem's technology will be a better way to monetize and distribute existing content and future works."
CEO of Steemit Ned Scott said: "Today's announcement makes the future for Steem brighter than ever. The Steem Blockchain is faster and already larger than the Bitcoin and Ethereum blockchains combined, and working with Global Blockchain Technologies Corp. is going to exponentially increase the number of applications built on Steem in an accelerated amount of time."
Steem's Smart Media Token (SMT) protocol is native to the Steem Blockchain. SMTs can be run by any publisher without changing any website infrastructure or functions, breaking down barriers to enter the fastest growing industry in fintech, while creating a mutually beneficial bridge between consumers, content, and media revenue
Global Blockchain and Steemit will jointly determine the ticket size and distribution of all investments, currently planned for full deployment by 2020.
http://www.ibtimes.co.uk/global-blockchain-technologies-announces-20m-fund-invest-steem-smts-1647127
CME Group to Launch Bitcoin Futures Contract
Oct 31, 2017 at 13:52 UTC by Stan Higgins
https://www.coindesk.com/cme-group-plans-launch-bitcoin-futures-contract/?utm_content=buffer4bb7c&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
GLOBAL BLOCKCHAIN COM NPV (OTCMKTS:BLKCF) Builds Out The Team
By Jermaine Farmer - October 29, 2017
GLOBAL BLOCKCHAIN COM NPV (OTCMKTS:BLKCF) is a prime example of where things stand in the blockchain and cryptocurrency space. BLKCF retracted some this week, but had been on a rampage, launching higher on extremely thin trading volume for a couple hundred percent, and then holding onto those gains once liquidity found the shares. The company has been working to establish greater legitimacy ever since. And as we know, there is no better way to achieve that than building out the board and management team.
As such, earlier this month, the company announced the appointments of its new management team consisting of Mr. Steven Nerayoff as Chairman, Mr. Rik Willard as CEO, Mr. Shidan Gouran as President and Mr. Kyle Kemper as Chief Strategy Officer. However, no name is as interesting as Jim Rogers, who has been named to the company’s advisory board (“In addition, the Company is pleased to announce the creation of an advisory board consisting of the following members: Jim Rogers, Jeff Pulver, Gary Rubinoff, Mike Terpin, David Drake, and Manie Eagar.”).
GLOBAL BLOCKCHAIN COM NPV (OTCMKTS:BLKCF) frames itself as an investment company providing investors access to a basket of holdings within the blockchain space, managed by a team of industry pioneers and early adopters of all major cryptocurrencies.
GBT is focused on streamlining the current arduous, lengthy and complicated process that interested investors need to undergo in order to gain exposure to the cryptocurrency space with a view to becoming the first vertically integrated originator and manager of top-tier blockchains and digital currencies. GBT is listed on the TSX Venture Exchange and its common shares trade under the ticker symbol \”BLOC\”.
According to company materials, “Global Blockchain Technologies Corp. is an investment company providing investors access to a basket of holdings within the blockchain space, managed by a team of industry pioneers and early adopters of all major cryptocurrencies. GBT is focused on streamlining the current arduous, lengthy and complicated process that interested investors need to undergo in order to gain exposure to the cryptocurrency space with a view to becoming the first vertically integrated originator and manager of top tier blockchains and digital currencies. GBT is listed on the TSX Venture Exchange and its common shares trade under the ticker symbol “BLOC”. Other information relating to GBT is available on SEDAR at www.sedar.com as well as on the Company’s website at www.globalblockchain.io”
As noted above, the stock has been strong, particularly during its illiquid period. But it has held up well since achieving greater liquidity as well. Recently, we saw this company really build out a number of management positions and establish an advisory board as part of an effort to establish greater legitimacy.
Of all the names involved, the most interesting has to be Jim Rogers (the former partner of George Soros in the Quantum Fund in the 1970’s and 80’s).
The company’s bio on Rogers runs: Mr. Jim Rogers is an American businessman, investor, traveler, financial commentator and author based in Singapore. Jim has authored several best-selling books, including his latest, “Street Smarts: Adventures on the Road and in the Markets” and is currently the Chairman of Rogers Holdings and Beeland Interests, Inc. Jim also co-founded the Quantum Fund with George Soros which went on to capture a 4,200% return in ten years, significantly outperforming the S&P 500 during the same timeframe. Jim then went to create the Rogers International Commodities Index in the 1990’s based on commodities futures. In 2011, Rogers started a new index fund called The Rogers Global Resources Equity Index which focuses on the top companies in agriculture, mining, metals and energy sectors as well as those in the alternative energy space including solar, wind and hydro. Jim is also a frequent contributor to ‘The Washington Post’, ‘The New York Times’, ‘Forbes’, ‘Fortune’ and ‘The Wall Street Journal’ and has served as a guest professor of finance at the Columbia University Graduate School of Business.
Now commanding a market cap of $32.1M, BLKCF has a reserve ($490K) of cash on the books, which compares with virtually no total current liabilities. BLKCF appears to be pre-revenue at this point. However, the company is seeing recent declines on the top-line on a sequential quarterly basis. We will update the story again soon as further details emerge. Sign-up for continuing coverage on shares of $BLKCF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $BLKCF, either long or short, and we have not been compensated for this article.
http://oracledispatch.com/2017/10/29/global-blockchain-com-npv-otcmktsblkcf-builds-team/
The Monage Money Summit is founded by technology luminary Jeff Pulver (also an advisor to Global Blockchain). It is set to be the premier event for investors to learn about upcoming and promising token sales, as well as blockchain startups that stand to be key players in the token economy."
"As an entrepreneur who first started in the VoIP industry, I've known Jeff Pulver for more than a decade and witnessed how he helped coalesce the VoIP startup industry through the Vonage series of conferences, which evolved into being the premier platform for matching VoIP startups with investors," says Shidan Gouran, President of Global Blockchain. "I believe Monage will grow to having the same effect in the blockchain sphere. Our decision to sponsor Monage Money Summit is one that enables exploration, and provides an ongoing forum for pioneering startups looking to disrupt the media industry by using blockchain technologies. It is part of our mission to facilitate growth in the world of crypto technologies, and we believe that this conference is the perfect setting to get great things started."
"Quite simply, blockchains and cryptocurrency tokens are a quantum leap in the evolution of marketplaces, even transforming various forms of social media and communications networks which were once unmonetizable," says Jeff Pulver. "With new business models driven by token economics, combined with AI, these technologies will be the driving force for a continuing Internet revolution. Companies such as Global Blockchain are defining this future. We are thrilled to have them join us as part of our combined commitment to growing the blockchain ecosystem.
http://m.nasdaq.com/press-release/the-growing-interest-in-bitcoin-cryptocurrency-20171020-00514
MoNage Money Summit 2017
Attendees
https://www.monage.io/monage-money-and-ico-summit
Global Blockchain Technologies Corp. Announces Sponsoring of Monage Money Summit
https://www.bloomberg.com/press-releases/2017-10-18/dgap-news-global-blockchain-technologies-corp-announces-sponsoring-of-monage-money-summit
Cryptocurrency Hedge Funds Soaring: What It Means For The Sector
Oct. 23, 2017 9:02 AM ET
Gary Bourgeault
Long only, research analyst, portfolio strategy, media
Summary
Hedge funds targeting cryptocurrencies soar past 100.
The 110 funds hold $2.2 billion at this time.
What it means for the cryptocurrency market.
Just the beginning of a huge upward move.
Source: coindesk
After a period where early adopters enjoyed enormous gains from cryptocurrencies, money managers, now knowing this isn't a fad but a significant trend, are starting to launch hedge funds that target the sector.
The number of hedge funds are now at 110, representing about $2.2 billion in capital ready to be invested in the crypto or blockchain market, according to Reuters, citing Autonomous NEXT.
To understand how quickly this is happening, at the end of 2016 there were 26 hedge funds focusing on cryptocurrencies. Since August 29 of this year the number has doubled from 55.
This is going to add more fuel to the cryptocurrency fire, and will be a strong catalyst to accelerate the growth of the market, even beyond what it has already performed.
Not only are investors not too late, they're really getting in at just the right time when measuring risk versus reward. In the past there was a lot of unknowns that made investment in Bitcoin and other cryptocurrencies extremely risky.
Even now, the majority of the over 1,000 cryptocurrencies available will fail. But as the market continues to slowly mature, there are some cryptocurrencies that are showing signs of sustainability.
But when you consider it doesn't take a lot of money to generate some extraordinary returns, the reward far exceeds the risk, unless someone gets too greedy and invests money they can't afford to lose.
Understanding the cycles of new markets
If you have studied business or economic history, you'll know that a new product or service goes through a visible cycle that can be counted on to recur over and over again; it's guaranteed. I'm talking about products and services that gain traction, not those that never get off the ground or are fads.
Here's how the cycle works. You start with the early adopters, and news starts to emerge that they have made amazing gains in a relatively short period of time. This attracts the attention of other wealthy people or money managers. That's where were things are now at in the cryptocurrency market.
When the so-called smart money starts to get in on the action, any market will start to rapidly grow, bringing even more upward impetus to it. While some have made a lot of the early money, at this stage there's still a lot of money to be made, as the market recognizes the validity of the product or service and want a piece of the action.
In the case of cryptocurrencies, since there are opportunities for new coins to focus on specific market demands, there will be just as many opportunities to generate returns we may see only once in a lifetime, as there was in the recent past.
When this starts to happen, what comes next is the person on the street starts to get wind of the potential to generate meaningful wealth in the sector. We aren't at that stage yet, as a lot of things will have to be developed to make the industry safer and more palatable to the general population.
At that time we will see even more extraordinary growth as people move from the sidelines, and plow their cash into cryptocurrencies.
I think what will eventually trigger that will be when ways to invest in the sector that are understood by the average person on the street are developed. In the U.S., that almost certainly means allowing ETFs to be designed that target the blockchain.
My thought there is it'll probably happen sometime in the middle of 2018. If not by then, it shouldn't be too long afterward.
Mass investment coming - but not yet
While I do believe the majority of regular people will jump into the sector when ETFs are offered, I don't think that will immediately trigger massive investment.
I think many investors, for one, won't understand or possibly, not even have heard about the potential of this market. What some of us that follow markets need to know is we tend to forget that most people aren't familiar which that we follow or read about on a daily basis. That is without a doubt what is happening right now.
Some of my own research concludes that there are a lot of people that haven't even heard of Bitcoin or know what it is, let alone the more exotic label of cryptocurrencies.
What's important to consider is we still have time to get in even if hedge funds are popping up everywhere. They still need to get a grasp of the market, and that will take a little time. What's most important now is cryptos are increasingly becoming a major part of the financial news cycle. This will trigger a lot more interest and investment.
Once it transitions from the financial news cycle to the regular news cycle, that's when retail investors will start to look a lot closer at taking a position in the sector. At that time massive amounts of money will be flowing into the sector.
Investment considerations
I'm not going to get into direct investment in specific cryptocurrencies in this article. Instead, I want to focus on publicly traded companies that are easier to understand.
Among the more interesting are Overstock (OSTK), which I recently wrote up, Bitcoin Investment Trust (OTCQX:GBTC), HIVE Blockchain Technologies Ltd. (OTCPK:PRELF), and Global Blockchain Technologies Corp. (OTCPK:BLKCF).
There are others, but these are the ones I see as having a lot of upside with less risk than others. They will still include a lot of volatility that goes along with this sector.
I want to focus on HIVE Blockchain Technologies Ltd., and Global Blockchain Technologies Corp., both of which I have a position in.
Global Blockchain Technologies Corp. self-identifies as "an investment company providing investors access to a basket of holdings within the blockchain space, managed by a team of industry pioneers and early adopters of all major cryptocurrencies."
While the purpose of the company aligns with what I'm looking for, what made me take a position in it was the team it has in place, as well as being listed on several exchanges at this time.
The team includes Jim Rogers, Rik Willard, Jeff Pulver and Steven Nerayoff, among others. There are few, if any other companies that have that type of talent lined up in this sector.
Based in Canada, HIVE Blockchain Technologies Ltd. says it "operates as a cryptocurrency mining firm. The company focuses on building a bridge from the blockchain sector to traditional capital markets. It mines multiple cryptocurrencies, such as Ethereum, Monero, and ZCash."
Recently the company said it closed a "bought deal private placement" valued at $30 million, with underwriters getting 6 percent of the total. That capital will be used to acquire its second data center; this one located in Reykjanes, Iceland. It will boost its cryptocurrency mining capacity by over 70 percent
Also recently secured for general business purposes was "non-brokered private placement of 4,666,667 common shares at C$1.50 per common share for gross proceeds of $7,000,000."
The primary attractiveness of HIVE Blockchain Technologies Ltd. is it has little in the way of competition.
Where the risk is will be when the U.S. inevitably gives the green light to allow cryptocurrency ETFs to be offered to investors.
The good news is by the time that happens, it could give shareholders some nice returns. After that, depending on how the U.S. market emerges, it'll have to show how it differentiates from its peers.
Conclusion
These companies and others to come offer tremendous upside for investors, with the tremendous risk associated with the market in its early stages slowly shrinking.
Hedge funds are going to drive the industry well into next year, and depending at which stage retail investors get comfortable with taking a position, they will add to the impetus of the crypto sector, pushing the value of the blockchain, cryptocurrencies, and publicly traded companies and instruments to very high levels.
This is the historical pattern with all market segments, and the winners will make a lot of people wealthy, or at least increase their net worth significantly.
The key is to not listen to those suggesting the best part of this market has been missed. We're still in the early stages of growth, and hedge funds are going to take it to a very high level, and once retail investors get in, it's going to skyrocket.
What needs to be done if you're interested in this sector is to educate yourself and not take too long to get in. Once the general public learns about this and responds, there will be little in the way of a good starting point that can generate a lot of gains.
There is no need to panic, only to understand the time to get in will be as more hedge funds and managed money invest in crytocurrencies. If we wait until the public starts taking positions, most of the low-lying fruit will be long gone.
At that time the risk will start to increase as it really does turn into a bubble. We're not close to being in that place at this time.
Disclosure: I am/we are long PRELF, BLKCF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks
https://seekingalpha.com/article/4115405-cryptocurrency-hedge-funds-soaring-means-sector
Cryptocurrency Hedge Funds Soaring: What It Means For The Sector
Oct. 23, 2017 9:02 AM ET
Gary Bourgeault
Long only, research analyst, portfolio strategy, media
Summary
Hedge funds targeting cryptocurrencies soar past 100.
The 110 funds hold $2.2 billion at this time.
What it means for the cryptocurrency market.
Just the beginning of a huge upward move.
Source: coindesk
After a period where early adopters enjoyed enormous gains from cryptocurrencies, money managers, now knowing this isn't a fad but a significant trend, are starting to launch hedge funds that target the sector.
The number of hedge funds are now at 110, representing about $2.2 billion in capital ready to be invested in the crypto or blockchain market, according to Reuters, citing Autonomous NEXT.
To understand how quickly this is happening, at the end of 2016 there were 26 hedge funds focusing on cryptocurrencies. Since August 29 of this year the number has doubled from 55.
This is going to add more fuel to the cryptocurrency fire, and will be a strong catalyst to accelerate the growth of the market, even beyond what it has already performed.
Not only are investors not too late, they're really getting in at just the right time when measuring risk versus reward. In the past there was a lot of unknowns that made investment in Bitcoin and other cryptocurrencies extremely risky.
Even now, the majority of the over 1,000 cryptocurrencies available will fail. But as the market continues to slowly mature, there are some cryptocurrencies that are showing signs of sustainability.
But when you consider it doesn't take a lot of money to generate some extraordinary returns, the reward far exceeds the risk, unless someone gets too greedy and invests money they can't afford to lose.
Understanding the cycles of new markets
If you have studied business or economic history, you'll know that a new product or service goes through a visible cycle that can be counted on to recur over and over again; it's guaranteed. I'm talking about products and services that gain traction, not those that never get off the ground or are fads.
Here's how the cycle works. You start with the early adopters, and news starts to emerge that they have made amazing gains in a relatively short period of time. This attracts the attention of other wealthy people or money managers. That's where were things are now at in the cryptocurrency market.
When the so-called smart money starts to get in on the action, any market will start to rapidly grow, bringing even more upward impetus to it. While some have made a lot of the early money, at this stage there's still a lot of money to be made, as the market recognizes the validity of the product or service and want a piece of the action.
In the case of cryptocurrencies, since there are opportunities for new coins to focus on specific market demands, there will be just as many opportunities to generate returns we may see only once in a lifetime, as there was in the recent past.
When this starts to happen, what comes next is the person on the street starts to get wind of the potential to generate meaningful wealth in the sector. We aren't at that stage yet, as a lot of things will have to be developed to make the industry safer and more palatable to the general population.
At that time we will see even more extraordinary growth as people move from the sidelines, and plow their cash into cryptocurrencies.
I think what will eventually trigger that will be when ways to invest in the sector that are understood by the average person on the street are developed. In the U.S., that almost certainly means allowing ETFs to be designed that target the blockchain.
My thought there is it'll probably happen sometime in the middle of 2018. If not by then, it shouldn't be too long afterward.
Mass investment coming - but not yet
While I do believe the majority of regular people will jump into the sector when ETFs are offered, I don't think that will immediately trigger massive investment.
I think many investors, for one, won't understand or possibly, not even have heard about the potential of this market. What some of us that follow markets need to know is we tend to forget that most people aren't familiar which that we follow or read about on a daily basis. That is without a doubt what is happening right now.
Some of my own research concludes that there are a lot of people that haven't even heard of Bitcoin or know what it is, let alone the more exotic label of cryptocurrencies.
What's important to consider is we still have time to get in even if hedge funds are popping up everywhere. They still need to get a grasp of the market, and that will take a little time. What's most important now is cryptos are increasingly becoming a major part of the financial news cycle. This will trigger a lot more interest and investment.
Once it transitions from the financial news cycle to the regular news cycle, that's when retail investors will start to look a lot closer at taking a position in the sector. At that time massive amounts of money will be flowing into the sector.
Investment considerations
I'm not going to get into direct investment in specific cryptocurrencies in this article. Instead, I want to focus on publicly traded companies that are easier to understand.
Among the more interesting are Overstock (OSTK), which I recently wrote up, Bitcoin Investment Trust (OTCQX:GBTC), HIVE Blockchain Technologies Ltd. (OTCPK:PRELF), and Global Blockchain Technologies Corp. (OTCPK:BLKCF).
There are others, but these are the ones I see as having a lot of upside with less risk than others. They will still include a lot of volatility that goes along with this sector.
I want to focus on HIVE Blockchain Technologies Ltd., and Global Blockchain Technologies Corp., both of which I have a position in.
Global Blockchain Technologies Corp. self-identifies as "an investment company providing investors access to a basket of holdings within the blockchain space, managed by a team of industry pioneers and early adopters of all major cryptocurrencies."
While the purpose of the company aligns with what I'm looking for, what made me take a position in it was the team it has in place, as well as being listed on several exchanges at this time.
The team includes Jim Rogers, Rik Willard, Jeff Pulver and Steven Nerayoff, among others. There are few, if any other companies that have that type of talent lined up in this sector.
Based in Canada, HIVE Blockchain Technologies Ltd. says it "operates as a cryptocurrency mining firm. The company focuses on building a bridge from the blockchain sector to traditional capital markets. It mines multiple cryptocurrencies, such as Ethereum, Monero, and ZCash."
Recently the company said it closed a "bought deal private placement" valued at $30 million, with underwriters getting 6 percent of the total. That capital will be used to acquire its second data center; this one located in Reykjanes, Iceland. It will boost its cryptocurrency mining capacity by over 70 percent
Also recently secured for general business purposes was "non-brokered private placement of 4,666,667 common shares at C$1.50 per common share for gross proceeds of $7,000,000."
The primary attractiveness of HIVE Blockchain Technologies Ltd. is it has little in the way of competition.
Where the risk is will be when the U.S. inevitably gives the green light to allow cryptocurrency ETFs to be offered to investors.
The good news is by the time that happens, it could give shareholders some nice returns. After that, depending on how the U.S. market emerges, it'll have to show how it differentiates from its peers.
Conclusion
These companies and others to come offer tremendous upside for investors, with the tremendous risk associated with the market in its early stages slowly shrinking.
Hedge funds are going to drive the industry well into next year, and depending at which stage retail investors get comfortable with taking a position, they will add to the impetus of the crypto sector, pushing the value of the blockchain, cryptocurrencies, and publicly traded companies and instruments to very high levels.
This is the historical pattern with all market segments, and the winners will make a lot of people wealthy, or at least increase their net worth significantly.
The key is to not listen to those suggesting the best part of this market has been missed. We're still in the early stages of growth, and hedge funds are going to take it to a very high level, and once retail investors get in, it's going to skyrocket.
What needs to be done if you're interested in this sector is to educate yourself and not take too long to get in. Once the general public learns about this and responds, there will be little in the way of a good starting point that can generate a lot of gains.
There is no need to panic, only to understand the time to get in will be as more hedge funds and managed money invest in crytocurrencies. If we wait until the public starts taking positions, most of the low-lying fruit will be long gone.
At that time the risk will start to increase as it really does turn into a bubble. We're not close to being in that place at this time.
Disclosure: I am/we are long PRELF, BLKCF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks
https://seekingalpha.com/article/4115405-cryptocurrency-hedge-funds-soaring-means-sector
HIVE Blockchain Stock Has Momentum, Influential Backers
HIVE Blockchain Technologies Ltd. (CVE:HIVE) looks poised for strong growth in revenues and earnings as blockchain gains market acceptance
SmallCapPower | October 17, 2017:
One of the early entrants to the rapidly-evolving blockchain technologies industry and the only publicly-listed cryptocurrency miner, HIVE Blockchain Technologies Ltd.’s (TSXV:HIVE) stock price has nearly doubled since its listing on September 18, 2017. This momentum could continue as HIVE has recently acquired a second data center (raising its mining capacity by 70%) along with a $30 million in financing that would enable it to expand inorganically. Additionally, renewed interest in the rapidly-evolving blockchain technologies could bring new investor money into this well-capitalized and well-backed technology company.
Investment thesis
Early entrant to the rapidly-growing blockchain technologies
Recent developments – acquisition of second data center and $30 million capital raise renew investor interest
A large and growing market opportunity
Amongst first publicly-traded blockchain companies
HIVE Blockchain is one of the early entrants to the rapidly-evolving blockchain technologies industry and is the only publicly-listed cryptocurrency miner. HIVE has partnership with, and is backed by, Genesis Mining, one of the world’s leading cryptocurrency mining hash rate providers that owns 30% of the Company. Genesis Mining is key advisor to HIVE Blockchain, with significant technical expertise and existing relationships with manufacturers.
On September 15, 2017, HIVE Blockchain completed its first acquisition of a state-of-the-art GPU-based blockchain data centre in Reykjanes, Iceland. Post the acquisition, HIVE is focused on establishing a market presence and scaling its mining business to multiple cryptocurrencies. Another strategic investor in HIVE Blockchain is U.S. Global Investors (NASDAQ:GROW), which announced recently the purchase of 17 million shares of HIVE.
Acquisition of a second data center and $30 million capital raise further bolters operations
Less than one month after its first data center acquisition, HIVE announced the acquisition of a second data center and a $30 million bought-deal financing. On October 11, 2017, HIVE Blockchain completed the acquisition of a second cryptocurrency mining facility located in Iceland from Genesis for $5.0 million and the issuance of 2,000,000 common shares of the Company. Concurrently, HIVE Blockchain also completed a $30M bought-deal equity financing to fund the acquisition, and for general working capital purposes. The acquisition increased the Company’s cryptocurrency mining capacity by over 70%. As part of the capital raises, Genesis Mining exercised its right to maintain up to a 30% interest in HIVE and subscribed for 4.7 million shares at $1.50 for additional gross proceeds of $7 million to HIVE Blockchain. The Company has an option to acquire an additional three mining facilities from Genesis Mining in stable jurisdictions with access to low power.
Blockchain could be a disruptor, offering a significant opportunity for companies such as HIVE
Blockchain is the database technology that underpins the rapidly-growing cryptocurrencies and encompasses a distributed ledger architecture, unlike traditional databases where all information is at one central database. Blockchain eliminates the need for an independent third party to validate a transaction, as the blockchain is able to ensure transactions and information is correct.
Role of miners: Public and enterprise blockchains are secured and maintained by miners, which are nodes of computers that validate and process the transactions on the blockchain. In other words, blockchains rely on miners to secure transactions and control the creation of new digital currencies on a blockchain.
Role of miners in blockchain
Market opportunity: Blockchain has the potential to fundamentally change and lower transaction costs. According to analysis by the Economist, annual revenues earned by the banking system for processing payments were approximately $1.7 trillion in 2014, or 2% of global GDP at the time. Hence there exists significant potential for blockchain technologies to capture a large portion of this opportunity. Blockchain will fundamentally alter today’s platforms for finance, insurance, and governance, among others.As the need for mining blockchains grows, HIVE will aggressively expand hash power capacity and rapidly develop into a large, competitive player in this space.
According to Coinmarketcap, the total cryptocurrency market totaled ~US$172 billion as of October 16, 2017, with Bitcoin contributing nearly US$93 billion to the total, followed by Ethereum at $32.1 billion.
Total market capitalization of Cryptocurrencies (US$ billion)
Source: CoinMarketCap
Outlook
Backed by Genesis, the world’s leading cryptocurrency mining hash rate provider, HIVE Blockchain looks poised for strong growth in revenues and earnings over the next several years as the blockchain market gains strong market acceptance. With two cash-flow positive GPU-based mining facilities and the possibility of acquiring three more facilities with sufficient capital available ($32 million), the Company is well positioned to capture a share of the large and growing market opportunity. HIVE Blockchain estimates TTM EBITDA of ~US$7 million on the initial data centre alone and the addition of four more centers could easily quadruple that figure to roughly $30 million. Since its listing on September 18, 2017, HIVE’s stock price has nearly doubled to $2.73 for a market capitalization of $619 million, which seems high given lack of revenues and profits currently. However with revenues and EBITDA expected to grow meaningfully over the coming quarters, the stock could make new highs as investors who want to have exposure to this sunrise industry enter this well-capitalized and well-backed technology company.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in any of the companies mentioned above.
To read our full disclosure, please click on the button below
https://smallcappower.com/analyst-articles/hive-blockchain-stock/
Thanks for posting the bloomberg article!
Bitcoin Needs Electricity, Gold CONDUCTS Electricity
Commodities / Gold and Silver 2017
Oct 09, 2017 - 05:42 PM GMT
By: MoneyMetals
Mike Gleason: It is my privilege now to welcome in Frank Holmes, CEO and Chief Investment Officer at US Global Investors. Mr. Holmes has received various honors over the years, including being named America's Best Fund Manager for 2016 by the Mining Journal. He is also the co-author of the book The Goldwatcher: Demystifying Gold Investing and is a regular guest on CNBC, Bloomberg, Fox Business as well as right here on the Money Metals podcast. Frank, welcome back and thanks for joining us again. How are you today?
Frank Holmes: Excellent. Thank you, my friend. Thank you.
Mike Gleason: Well, to start out here, Frank, I know you recently attended and spoke at the Denver Gold Show and I always like to talk to insiders like yourself following those sorts of events because you can always glean some good insights on the mood of the industry and how things are really going in the precious metals community. Now the mining industry has taken a pretty good beating over the last few years and it continues to struggle a bit even as we seem to be in a new bull cycle that began in late 2015. You've got your new gold fund now, GOAU, so you've got lots on insights into the mining industry and know lots of gold bugs. So, what did you glean from the conference Frank? What was the mood in general? Give us some highlights there if you would.
Frank Holmes: Well I think my presentation was well received when I explained how the quant world and data mining, and these other what they call alternative investment research companies, are providing new insight the way investing is taking place. Understanding the paradigm shift on that data collection and that analysts love their old reports on mid asset value, are irrelevant. They're not relevant to picking stocks today. And you have to go with the forces of physics either as electromagnetic rebounding to the mean is a cheap stock and math says it will rebound or has strong momentum. And you can take a universe of 88 gold stocks and take it down to 28 and far outperform the GDX or GDXJ.
Using data that was foreign to a lot of these analysts and recognizing ... the other thing I think worth commenting on was gold and this whole thing on Bitcoin, is it a competition for bullion? It is not. First of all, without electricity Bitcoin is not worth any money. It needs electricity. Gold is always gold. It conducts electricity and it will always have its materiality for currency in addition to being jewelry. But I think that's really important is to recognize that it's so much easier, this idea of crowdfunding, to go and open up an exchange and trade 24/7 all these different currencies all around the world than it is to open a brokerage account. And I think that this excessive regulations is basically seeing people migrate over to angel investing, crowdfunding such as into cryptocurrencies, et cetera. And I think that's the bigger danger is to overall investing in trading in the capital markets. So they're the comments that I made and that seem to have come back with many written messages to me regarding the quants and how they're changing the landscape.
But I think the other part that's important for your listeners is that there were 1,100 people there. Now they don't allow investment bankers in. Research analysts, traders, CEOs, gold analysts from the buy and sell side, they're allowed to participate and there were 1,100. The week before there was a big event for the juniors (junior miners) but this event is the premiere event of the world. And I was impressed with it. The conversations looking for companies that are going to be taken over. What's the probability. Because the seniors are desperate for future production and where is that growth going to come from because they're just not finding the gold as fast as they're mining. So, the Newmonts of the world have to go and strike deals like they did with Continental in Columbia to get a foothold into high grade big geographic footprints. So I thought that was interesting. I think that in the next 12 months there's going to be lots of M&A work. And the other part was the royalty companies seem to get a new sort of respect for how their positioned in the capital markets in that gold space.
Mike Gleason: Yeah definitely. Sounds like there is a wave of optimism there and some good things ahead. Now I wanted to get back to some of the cryptocurrency conversation here. Your firm, Frank, US Global Investors, recently made an investment in HIVE Blockchain Technologies and you have been appointed chairman of the board there. Given you are heavily involved in the cryptocurrency space now, we'd like to get your take on a topic of growing interest in the metals community. You alluded to this a moment ago but cryptocurrencies, Bitcoin in particular, have been seen by many as another form of honest money. You've obviously maybe shot a little bit of a hole in what it is that is needed in order to continue the cryptocurrency world, that being electricity. But since you’re a fan at least in part of both metals and blockchains. What are your thoughts on how metals might fit in with this emerging technology, Frank?
Frank Holmes: Well let's just focus on this emerging technology. We go back to the internet and it was actually very boring when it first come out because it was very slow and it used to be a joke that it was just porn and dark things. And now it's fast porn. No, I'm kidding. But the real catalysts for the internet exploding in usage were emails, AOL. And long before Yahoo came out to give you free email. And then people saw the incredible capacity for this channel of distribution of information. Well I think that the Bitcoin and Ethereum are doing that for blockchain technology and that there's a huge scramble to be able to apply this so that you'll be able to trade stocks 24/7.
And when I was doing my research and I went to the largest cryptocurrency event, that used to be where the gold show used to be held in New York at the Marriott. I was just shocked to see how many young people were there. Many more than ever when gold was peaking. And two is that they weren't drinking scotch and whiskey at the bar and beer, they were drinking Pepsi and coffee. That really threw me off to just watch those young people and how they're looking at it. And then to find out that the keynote speaker was a CEO of Fidelity. Fidelity is a massive multi-trillion dollar asset management company and they have all their employees on Bitcoin. They have a wallet and you can buy goods in the store. And seeing that she's the keynote and that the New York Stock Exchange when it was launching GOAU they were commenting that they had put money into Coinbase along with USAA in San Antonio.
So, at Coinbase you can open an account so easily and they will now let your 10,000 or 50,000 or 100,000 of coins show up as an asset over all in your portfolio. USAA and all that should do that at Fidelity. So I said well it's something really that's not mainstream and then in the summer it came out in the Wall Street Journal that Fidelity is doing it. But really it didn't seem to captivate a lot of people's interest. And I think that the big part with the New York Stock Exchange is just their worry of being Uberized the way taxi cabs were with having stock trading 24/7 and a lot cheaper.
So, I think that that's the big trend and along I was trying to launch a cryptocurrency, ETF, or a product with that and I just kept bringing up cul-de-sacs. Had to back that car out, back that truck out. It didn't matter if it was the U.S., the SEC, or Canada with the OSC. They're just so consumed that AML (Anti Money Laundering) supersedes, even though you can track Bitcoin, supersedes anything else. So that's why you've not seen anything come out directly where you can trade Bitcoin into an ETF.
So I've been working on this and then all of the sudden I hear from my friend Frank Giustra saying, "Look, we have this deal. Do you know much about this space?" And I said "Oh, yes. I've been working on it. And I just keep running into cul-de-sacs." And he said, "Well, why don’t you explore it” and explored it and I said, "You know what, I'll be come your third biggest shareholder, and I will go on the board,” because I think that HIVE is so special and unique because it's the mining business.
And the company behind HIVE is Genesis Mining and Genesis Mining is the largest cryptocurrency miner in the word. They have a million people give them 500 bucks a year and one of the things I learned was that if you want to do mining of cryptocurrency you need to have cheap energy like two cents a kilowatt hour. So you find that a lot of these big dealer centers are in Iceland where it's cool and you have cheap electricity. Google is there. Facebook is there and so is Genesis. And you need to have computer graphic cards because the processing power to validate a transaction. So, you found that NVIDIA stock has taken off because the cryptocurrency companies like Genesis have been massive buyers of their computer graphics cards.
And so, with that, I said, "You mean, we're going to be investing in a company that's mining and validating transactions all over the world, and we create new coins, fresh coins, mint coins, virgin coins” … however you want to characterize them. We are not trafficking on the silk road. We are not buying and selling a coin that could have been painted et cetera. No. We're the creator because we validate transactions and you get paid every time you validate a blockchain transaction. So, I became extremely excited about this opportunity and so far we've made for our shareholders more than 500% on their money.
Mike Gleason: That's fantastic. Now I'd like to get your take on the U.S. dollar. The dollar had a miserable performance through the first eight months of the year and bottomed in early September at 91.5. The greenback then bounced and has enjoyed a very good rally since then. What is driving this rally in your view and are you expecting the dollar to keep moving higher in the months ahead, Frank?
Frank Holmes: Well, historically it does get a bit of a rally going into the year end. That's one. Two is the 5-year government bond. The 5-year government bond is positive now, the yield. So, the CPI number is 1.9 and you just take whatever the government is trying to entice you to buy their 5-year government bond, subtract the CPI number… it recalibrates every month and it gives you a good idea for where fund falls are going for real rates return. And whenever the five year government bond and the two year government bond are negative, gold is positive. And so, we went from a 1.4 to 1.5 5-year government bond to a 1.93. Now it's just slightly positive but that was enough to sort of have the dollar rally and gold come off in the past month.
But I think that unless you really get change, you get fiscal change, trying to get the tax code streamlined and trying to get other parts of the legislation body in its Beltway to streamline regulations. We need to have the TSA preferred, how you can fly much more quickly now, rather than those two hour waits to fly and to go and catch your flight. You know most people in San Antonio were driving to Houston rather than going to wait two hours for an hour flight. And so, you're seeing now this TSA preferred. That's just streamlining processes and this has to be done for the movement of money, for opening a trading accounts, for opening up investment accounts, et cetera. If we don't get those things, we're going to have to have negative real interest rates to keep the economy going. Or you're going to have to a very weak dollar to drive exports.
And I think that Trump has been a master disrupter. He's so disruptive to the Beltway Party, which is the regulatory regime that's been their professional regulatory. I've listened to other people like Bernanke spoke about the difficulty for Jimmy Carter and Trump to take on the Beltway Party. But he's different and so he's trying to push for the streamline of regulations. If he can, rates can trade higher and I think that the dollar will just trade with the real interest rates relative to the rest of the world.
But I remain very positive on gold. It's amazing to see how well gold has done this year. The gold stocks have had a great run until the GDXJ blew up. Basically, they captured 95% of all fund flows. Therefore, they had to be concentrated owning more than 20 companies 20% means they had to do a force takeover. They had to back out of that one and they blew out three billion dollars. They brought in five billion dollars over 12 months and then they did an exit in only a matter of weeks of three billion dollars. And that really damaged the bid side and bruised people. It's like getting hit by Mike Tyson. You just don't heal quickly when he hits you and it's the same thing with the gold stocks. But I think there's some just fabulous gold stocks out there that are ripe to be taken over, that have very strong positive cash flow. The weaker dollar in the U.S. and the higher gold prices, there's very strong margins for companies like Klondex.
Mike Gleason: Yeah, certainly can be interesting as we go towards the latter part of the year here to see what might be sustained in this correction in gold or if it can rebound and get back to where it was maybe a month ago or so. We did have a good first half of the year in the metals but the markets obviously have hit some of those headwinds here recently, a rising dollar and so forth that you alluded to. If you would, give us your bull case for metals in near term and then also if you would maybe a bear case as well and then kind of expand more on which side you're betting on, as we begin to wrap up here.
Frank Holmes: Well, there's the two drivers for gold: love trade and fear trade. And the fear trade dominates the psychic of Americans and the same thing with Europeans in that’s predominantly negative real interest rates. So whenever the government has to monetize most of their debt, and basically negative real interest rates are losing money and buying their government bonds, gold does well. I don't think that they can raise rates significantly without a massive streamlining of regulations and the government is doing everything to try to stop Trump from doing that. So, I think we're going to end up still living with negative interest rates.
Now, the other positive part, for the U.S., is that the dollar is down but the exports are up. So we have our strong industrial base. And it's showing up in PMI, that's Purchasing Manufacturer's Index, which is a forward looking index. It's not like GDP, which is looking out the rear view mirror. This is like looking with headlights looking down six months. And the one month is above the three month, and that's really positive for global growth. So I remain positive and constructive towards it. What could derail it? North Korea could derail it. China's policies could derail it. And I think that if rates were to surge dramatically in the U.S., that could derail it.
But I don't think that's going to happen. We're in a very constructive mode and it's a great opportunity for stock picking. I just spoke at a conference in Vancouver yesterday, and I commented on ... By the way, I commented on HIVE. I was asked and I said, "You know, if you're a value investor, HIVE is extremely overvalued.” But if you are a first mover advantage in the first public company where funds can go by and get exposure to crypto-mining. It is not. It's like Tesla, it's like Amazon. They will always trade at lofty valuations. And so, it's extremely attractive that way when you look at it as being first mover advantage.
Mike Gleason: Well that's great stuff as usual. Thanks as always for joining us. It's a real honor to hear your thoughts and we appreciate your time as always. Now before we let you go, please tell our listeners a little bit more about your firm and your services and then also mention the Frank Talk Blog so people can learn more about that if they're not already checking it out.
Frank Holmes: Well, we are USfunds.com, makes it so easy, just go to USfunds.com, sign up for investor alert. It's right in the middle of the page. And we write every week and we do a game film analysis, three strengths or weaknesses for last week and opportunities and threats that can come out next week. Sort of forward looking like game film and looking back.
And the Frank Talk is my global travels and I try to be insightful and learn about how we've applied quant math. What's called quantamentals to stock picking. And especially we launched our GOGO Canadian gold ETF and we've launched one here in the U.S., which we're really proud of because the ten year index based on those smart factors, both performs of GDXJ say 94% of the time are rolling 12 month periods. So we think that GOAU, we'll write about it, we'll tell you about the changes. And we also have unique products like JETS which is also an ETF listed on the New York Stock Exchange.
Mike Gleason: Yeah, it's great stuff. Certainly the Go Gold fund is looking very good from what I've been reading about. Obviously performing just as you were hoping it would and continued success there. We always appreciate it and good luck with the other endeavors that you have going on and keep up the good work on those market commentaries and we'll certainly look forward to our next conversation. Take care, Frank.
Frank Holmes: Take care, my friend.
Mike Gleason: Well that will do it for this week. Thanks again to Frank Holmes, CEO of US Global Investors and manager of the recently launched GOAU Gold Fund. For more information, the site is USfunds.com. Be sure to check out the previously mentioned Frank Talk blog while you're there for some of the best market commentary you will find anywhere on gold and other related topics. Again, you can find all that at USfunds.com, and you can also go to GOAUETF.com for more information on that new gold fund.
Check back next Friday for our next Weekly Market Wrap Podcast. Until then, this has been Mike Gleason with Money Metals Exchange. Thanks for listening and have a great weekend everybody.
By Mike Gleason
MoneyMetals.com
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review
http://www.marketoracle.co.uk/Article60434.html
A Cryptocurrency Miner Is Going Public…And It’s Huge
Sep. 18, 2017 12:55 AM ET
Summary
*HIVE:TSXV is trading on Monday, September 18th
* 30% owned by Genesis Mining, the largest Bitcoin cloud miner in the world with 700,000 customers
* First time a real cryptocurrency company has entered the public markets
HIVE Blockchain Technologies Ltd. will list on the TSX Venture Exchange Monday, September 18th, under the symbol TSX.V: HIVE.
The company is backed by Genesis Mining, the largest cloud Bitcoin miner in the world with 700,000 customers. Genesis owns 30% of HIVE.
HIVE’s launch transaction involves the acquisition of an initial state-of-the-art blockchain infrastructure facility in Iceland from Genesis.
The facility produces mined cryptocurrency around the clock like RIGHT NOW.
This is one of the first (I think it is the first, but I could have missed something) real and legitimate pure play in the public markets for investors.
So I expect it to be a big deal and get lots of attention. If you’re an investor that doesn’t buy Bitcoin or Ethereum directly, this could be a simple proxy—as I’ll explain below, while this company does have growing revenue and positive cash flow, I would expect the stock to trade closely with Ethereum.
HIVE also has an option to acquire at least four additional data centres from Genesis in Iceland and/or Sweden. (This could be very important very quickly if these options get exercised; the growth rate in the public company would increase dramatically.)
HIVE has an exclusive arrangement with Genesis to operate its data centres covered by a master service agreement. That’s a fancy way of saying that’s it baked in the cake that Genesis will hand off more data centres in the future to HIVE.
“The time has come for the blockchain and cryptocurrency sector to come together with public equity markets. HIVE will become a leading infrastructure company for the blockchain era, and introduce this exciting sector to a new audience of investors. This is a strategic opportunity for Genesis to access capital and build a bigger business publicly than we ever imagined building our first home-based bitcoin mining machines five years ago.”
– Marco Streng, Co-founder and CEO of Genesis Group
So what is the business model? Well it looks to me like:
1. Genesis buys the gear and builds a Crypto-mining data centre.
2. The moment the servers are flipped on, the centre is mining crypto-coin.
3. The crytocoin is exchanged for US dollars (or stored).
4. The data centre can then be transferred to HIVE where the public markets will give the data centre a valuation X times cash flow proven by the number of coins it mines.
5. Genesis uses the money from public markets to buy more gear and builds more centres.
6. Repeat.
To me this looks like the closest thing to a legal money-printing machine outside of the US Bureau of Engraving and Printing.
Using the news release from SEDAR (the Canadian equivalent of EDGAR, where public companies have to post their news releases and quarterly financials), I am able to make some pie-in-the-sky guesses about revenue:
“Based on the computational capacity of the first Data Centre, the historical prices, and required hash rates, and using a mine and immediately sell strategy, the trailing 12 month EBITDA would have been approximately US$7 million.”
EBITDA is an acronym—Earnings Before Interest, Taxes, Depreciation and Amortization—that basically means cash flow. EBITDA=cash flow, which is what most business valuations are based on now.
The mining facility will probably (I’m guessing) be mining mostly Ethereum.
That news release was issued in June so the $7 million shows what the centre would have mined hypothetically from June 2016 to June 2017.
Earnings for the following twelve months will be much, much higher but take a guess as revenue from this company will be strongly correlated to the price of Ethereum.
The Genesis Mining Group were much the original pioneers in mining Ethereum. Their first large-scale Bitcoin mining facility was built in 2014 using custom hardware.
This was followed up in 2016 with the construction of the world’s largest Ether mining facility — specifically built to support the Ethereum Project at an early stage of its development.
So they figured out a way to mine Ethereum for profit back in 2016 when it was under $15. Who knows how much money they have made this year.
Here’s how the share structure looks like:
Genesis Mining (the private company) received $9,000,000 and 30% of HIVE stock for the data center, which was 67,975,428 shares. The shares are subject to escrow with a hold period of four months and one from September 13th.
There was 100 million shares in the public shell, which is held almost entirely by management (see names below). These shares are released quarterly—25% will be free trading immediately, then another 25% in November, then Feb 2018 and May 2018.
There was 55 million shares issued at 30 cents, which went to mostly Canadian institutions/fund managers. There was very strong demand here, as there is no real legitimate way to play crypto currency.
They had to increase this financing to meet the Street’s strong demand. I think that bodes well for the stock trading tomorrow morning.
This stock is not free trading until December. So the initial free trading amount of stock (called the “float”) that the public can buy is fairly small at 20 million or so.
There will be 226,584,760 shares out total, and once you add in 22.6 million stock options and 700,000 warrants, there is a fully diluted 249,917,759 shares.
I expect the stock to open between 60 cents – $1 on the first day. I will probably buy some more if that happens (I’m already long from when it was Leeta Gold Corp: TSXV:LTA. the original shell company).
I will say again it’s the first cryptocurrency miner to trade in the public markets (that I see) meaning there will be HUGE interest in the stock and not just from buyers.
As I wrote in an earlier post the cryptocurrency mining industry is currently a $7 billion a year industry and growing 100% year-over-year.
Until now, all the miners have been private, meaning NOBODY outside the owners have known just how the financial end of the business operates. You can bet that every quarterly filing that HIVE puts out, every North America analyst study it like it’s the Bible.
One confident prediction I will make is that you won’t see positive net revenue anytime, every little bit of cryptocurrency mined will be plowed right back into the business. HIVE will be adding more hash power (think computing power; CPU power) as soon as they can find room for new servers.
The management team and directors that is running HIVE is impressive (almost a complete opposite of some ICOs that I have looked at). HIVE is the result of a partnership between Hong Kong-based Genesis Mining and Vancouver-based Fiore Group, which is headed by Frank Giustra aka the founder of Lionsgate Entertainment, NYSE: LGF.A.
Other members on the board include Harry Pokrandt, Frank Holmes (CEO of US Global out of Texas), and Olivier Roussy Newton. All of these guys pass the Google and LInkedin test with flying colours (I particularly recommend Olivier’s twitter feed).
THIS IS GOING TO BE INTERESTING IN SO MANY WAYS. There has been no way for investors to get exposure to crypto directly other than through initial coin offerings (ICOs), which have had poor disclosure and vague use of proceeds.
ICOs may not be shady, but they’re not transparent like they were being closely watched by the SEC…which HIVE will be, being a public company in cryptocurrency.
In conclusion, HIVE has been gifted a solid business with revenue flowing from day one from a market leader in an industry that has seen hyper-growth in 2017 and looks set for the next decade. Even Jamie Dimon would like this deal.
So I think the business is going to do well, given the management team’s intimate knowledge of the business partnering up with one of the top junior finance teams in North America. And you can be sure I’ll be keeping everybody updated on how they’re doing.
If it opens up under 80 cents, I am probably a buyer. There are very few quality ways for investors to play the crypto space in the public markets, and I think this company will attract a lot of attention in its first few months. It will have a honeymoon for at least a couple quarters.
Please note I own shares in HIVE.
Disclosure: I am/we are long hive.
Additional disclosure: I own stock in HIVE:TSXV
https://seekingalpha.com/instablog/458873-the-new-currency-frontier/5042756-cryptocurrency-miner-going-public-s-huge
The World’s Favorite New Tax Haven Is the United States
Bloomberg By Jesse Drucker
15 hours ago
Last September, at a law firm overlooking San Francisco Bay, Andrew Penney, a managing director at Rothschild & Co., gave a talk on how the world’s wealthy elite can avoid paying taxes.
His message was clear: You can help your clients move their fortunes to the United States, free of taxes and hidden from their governments.
Some are calling it the new Switzerland.
After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.
“How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” wrote Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”
Rothschild, the centuries-old European financial institution, has opened a trust company in Reno, Nev., a few blocks from the Harrah’s and Eldorado casinos. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.
The U.S. “is effectively the biggest tax haven in the world” —Andrew Penney, Rothschild & Co.
The firm says its Reno operation caters to international families attracted to the stability of the U.S. and that customers must prove they comply with their home countries’ tax laws. Its trusts, moreover, have “not been set up with a view to exploiting that the U.S. has not signed up” for international reporting standards, said Rothschild spokeswoman Emma Rees.
Others are also jumping in: Geneva-based Cisa Trust Co. SA, which advises wealthy Latin Americans, is applying to open in Pierre, S.D., to “serve the needs of our foreign clients,” said John J. Ryan Jr., Cisa’s president.
Trident Trust Co., one of the world’s biggest providers of offshore trusts, moved dozens of accounts out of Switzerland, Grand Cayman, and other locales and into Sioux Falls, S.D., in December, ahead of a Jan. 1 disclosure deadline.
“Cayman was slammed in December, closing things that people were withdrawing,” said Alice Rokahr, the president of Trident in South Dakota, one of several states promoting low taxes and confidentiality in their trust laws. “I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland.”
Rokahr and other advisers said there is a legitimate need for secrecy. Confidential accounts that hide wealth, whether in the U.S., Switzerland, or elsewhere, protect against kidnappings or extortion in their owners’ home countries. The rich also often feel safer parking their money in the U.S. rather than some other location perceived as less-sure.
“I do not hear anybody saying, ‘I want to avoid taxes,’ ” Rokahr said. “These are people who are legitimately concerned with their own health and welfare.”
No one expects offshore havens to disappear anytime soon. Swiss banks still hold about $1.9 trillion in assets not reported by account holders in their home countries, according to Gabriel Zucman, an economics professor at the University of California at Berkeley. Nor is it clear how many of the almost 100 countries and other jurisdictions that have signed on will actually enforce the new disclosure standards, issued by the Organisation for Economic Co-operation and Development, a government-funded international policy group.
There’s nothing illegal about banks luring foreigners to put money in the U.S. with promises of confidentiality as long as they are not intentionally helping to evade taxes abroad. Still, the U.S. is one of the few places left where advisers are actively promoting accounts that will remain secret from overseas authorities.
Rothschild’s Reno office is at the forefront of that effort. “The Biggest Little City in the World” is not an obvious choice for a global center of capital flight. If you were going to shoot a film set in Las Vegas circa 1971, you would film it in Reno. Its casino hotels tower above the bail bondsmen across the street, available 24/7, as well as pawnshops stocked with an array of firearms. The pink neon lights at casinos like Harrah’s and the Eldorado still burn bright. But these days, their floors are often empty, with travelers preferring to gamble in Las Vegas, an hour’s flight away.
The offices of Rothschild Trust North America LLC aren’t easy to find. They’re on the 12th floor of Porsche’s former North American headquarters building, a few blocks from the casinos. (The U.S. attorney’s office is on the sixth floor.) Yet the lobby directory does not list Rothschild. Instead, visitors must go to the 10th floor, the offices of McDonald Carano Wilson LLP, a politically connected law firm. Several former high-ranking Nevada state officials work there, as well as the owner of some of Reno’s biggest casinos and numerous registered lobbyists. One of the firm’s tax lobbyists is Robert Armstrong, viewed as the state’s top trusts and estates attorney, and a manager of Rothschild Trust North America.
The trust company was set up in 2013 to cater to international families, particularly those with a mix of assets and relatives in the U.S. and abroad, according to Rothschild. It caters to customers attracted to the “stable, regulated environment” of the U.S., said Rees, the Rothschild spokeswoman.
“We do not offer legal structures to clients unless we are absolutely certain that their tax affairs are in order; both clients themselves and independent tax lawyers must actively confirm to us that this is the case,” Rees said.
The managing director of the Nevada trust company is Scott Cripps, an amiable California tax attorney who used to run the trust services for Bank of the West, now part of French financial-services giant BNP Paribas SA. Cripps explained that moving money out of traditional offshore secrecy jurisdictions and into Nevada is a brisk new line of business for Rothschild.
“There’s a lot of people that are going to do it,” said Cripps. “This added layer of privacy is kicking them over the hurdle” to move their assets into the U.S. For wealthy overseas clients, “privacy is huge, especially in countries where there is corruption.”
One wealthy Turkish family is using Rothschild’s trust company to move assets from the Bahamas into the U.S., he said. Another Rothschild client, a family from Asia, is moving assets from Bermuda into Nevada. He said customers are often international families with offspring in the U.S.
For decades, Switzerland has been the global capital of secret bank accounts. That may be changing. In 2007, UBS Group AG banker Bradley Birkenfeld blew the whistle on his firm helping U.S. clients evade taxes with undeclared accounts offshore. Swiss banks eventually paid a price. More than 80 Swiss banks, including UBS and Credit Suisse Group AG, have agreed to pay about $5 billion to the U.S. in penalties and fines.
“I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland”
Those firms also include Rothschild Bank AG, which last June entered into a nonprosecution agreement with the U.S. Department of Justice. The bank admitted helping U.S. clients hide income offshore from the Internal Revenue Service and agreed to pay an $11.5 million penalty and shut down nearly 300 accounts belonging to U.S. taxpayers, totaling $794 million in assets.
The U.S. was determined to put an end to such practices. That led to a 2010 law, the Foreign Account Tax Compliance Act, or Fatca, that requires financial firms to disclose foreign accounts held by U.S. citizens and report them to the IRS or face steep penalties.
Inspired by Fatca, the OECD drew up even stiffer standards to help other countries ferret out tax dodgers. Since 2014, 97 jurisdictions have agreed to impose new disclosure requirements for bank accounts, trusts, and some other investments held by international customers. Of the nations the OECD asked to sign on, only a handful have declined: Bahrain, Nauru, Vanuatu—and the United States.
“I have a lot of respect for the Obama administration because without their first moves we would not have gotten these reporting standards,” said Sven Giegold, a member of the European Parliament from Germany’s Green Party. “On the other hand, now it’s time for the U.S. to deliver what Europeans are willing to deliver to the U.S.”
The Treasury Department makes no apologies for not agreeing to the OECD standards.
“The U.S. has led the charge in combating international tax evasion using offshore financial accounts,” said Treasury spokesman Ryan Daniels. He said the OECD initiative “builds directly” on the Fatca law.
For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”
Firms aren’t wasting time to make the most of the current environment. Bolton Global Capital, a Boston-area financial advisory firm, recently circulated this hypothetical example in an e-mail: A wealthy Mexican opens a U.S. bank account using a company in the British Virgin Islands. As a result, only the company’s name would be sent to the BVI government, while the identity of the person owning the account would not be shared with Mexican authorities.
The U.S. failure to sign onto the OECD information-sharing standard is “proving to be a strong driver of growth for our business,” wrote Bolton’s chief executive officer, Ray Grenier, in a marketing e-mail to bankers. His firm is seeing a spike in accounts moved out of European banks—“Switzerland in particular”—and into the U.S. The new OECD standard “was the beginning of the exodus,” he said in an interview.
The U.S. Treasury is proposing standards similar to the OECD’s for foreign-held accounts in the U.S. But similar proposals in the past have stalled in the face of opposition from the Republican-controlled Congress and the banking industry.
At issue is not just non-U.S. citizens skirting their home countries’ taxes. Treasury also is concerned that massive inflows of capital into secret accounts could become a new channel for criminal money laundering. At least $1.6 trillion in illicit funds are laundered through the global financial system each year, according to a United Nations estimate.
Offering secrecy to clients is not against the law, but U.S. firms are not permitted to knowingly help overseas customers evade foreign taxes, said Scott Michel, a criminal tax defense attorney at Washington, D.C.-based Caplin & Drysdale who has represented Swiss banks and foreign account holders.
“To the extent non-U.S. persons are encouraged to come to the U.S. for what may be our own ‘tax haven’ characteristics, the U.S. government would likely take a dim view of any marketing suggesting that evading home country tax is a legal objective,” he said.
Rothschild says it takes “significant care” to ensure account holders’ assets are fully declared. The bank “adheres to the legal, regulatory, and tax rules wherever we operate,” said Rees, the Rothschild spokeswoman.
Penney, who oversees the Reno business, is a longtime Rothschild lawyer who worked his way up from the firm’s trust operations in the tiny British isle of Guernsey. Penney, 56, is now a managing director based in London for Rothschild Wealth Management & Trust, which handles about $23 billion for 7,000 clients from offices including Milan, Zurich, and Hong Kong. A few years ago he was voted “Trustee of the Year” by an elite group of U.K. wealth advisers.
In his September San Francisco talk, called “Using U.S. Trusts in International Planning: 10 Amazing Feats to Impress Clients and Colleagues,” Penney laid out legal ways to avoid both U.S. taxes and disclosures to clients’ home countries.
In a section originally titled “U.S. Trusts to Preserve Privacy,” he included the hypothetical example of an Internet investor named “Wang, a Hong Kong resident,” originally from the People’s Republic of China, concerned that information about his wealth could be shared with Chinese authorities.
Putting his assets into a Nevada LLC, in turn owned by a Nevada trust, would generate no U.S. tax returns, Penney wrote. Any forms the IRS would receive would result in “no meaningful information to exchange under” agreements between Hong Kong and the U.S., according to Penney’s PowerPoint presentation reviewed by Bloomberg.
Penney offered a disclaimer: At least one government, the U.K., intends to make it a criminal offense for any U.K. firm to facilitate tax evasion.
Rothschild said the PowerPoint was subsequently revised before Penney delivered his presentation. The firm provided what it said was the final version of the talk, which this time excluded several potentially controversial passages. Among them: the U.S. being the “biggest tax haven in the world,” the U.S.’s low appetite for enforcing other countries’ tax laws, and two references to “privacy” offered by the U.S.
“The presentation was drafted in response to a request by the organizers to be controversial and create a lively debate among the experienced, professional audience,” Rees said. “On reviewing the initial draft, these lines were not deemed to represent either Rothschild’s or Mr. Penney’s view. They were therefore removed.”
—With assistance from David Voreacos and Patrick Gower
http://finance.yahoo.com/news/world-favorite-tax-haven-united-050104222.html
The Birth Of The PetroYuan (In 2 Pictures)
Submitted by Tyler Durden on 01/21/2016
h/t @FedPorn
(h/t the cork)
As we previously detailed, two topics we’ve deemed critically important to a thorough understanding of both global finance and the shifting geopolitical landscape are the death of the petrodollar and the idea of yuan hegemony.
In November 2014, in “How The Petrodollar Quietly Died And No One Noticed,” we said the following about the slow motion demise of the system that has served to perpetuate decades of dollar dominance:
Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company - the end of the system that according to many has framed and facilitated the US Dollar's reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop.
The main thrust for this shift away from the USD, if primarily in the non-mainstream media, was that with Russia and China, as well as the rest of the BRIC nations, increasingly seeking to distance themselves from the US-led, "developed world" status quo spearheaded by the IMF, global trade would increasingly take place through bilateral arrangements which bypass the (Petro)dollar entirely. And sure enough, this has certainly been taking place, as first Russia and China, together with Iran, and ever more developing nations, have transacted among each other, bypassing the USD entirely, instead engaging in bilateral trade arrangements.
Falling crude prices served to accelerate the petrodollar’s demise and in 2014, OPEC nations drained liquidity from financial markets for the first time in nearly two decades:
By Goldman’s estimates, a new oil price “equilibrium” (i.e. a sustained downturn) could result in a net petrodollar drain of $24 billion per month on the way to nearly $900 billion in total by 2018. The implications, BofAML notes, are far reaching: "...the end of the Petrodollar recycling chain is said to impact everything from Russian geopolitics, to global capital market liquidity, to safe-haven demand for Treasurys, to social tensions in developing nations, to the Fed's exit strategy.”
Shifting to the idea of yuan hegemony, China is aggressively pushing its Silk Road Fund and Asian Infrastructure Investment Bank.
The $40 billion Silk Road Fund is backed by China’s FX reserves, the Export-Import Bank of China, and China Development Bank and seeks to increase ROIC for Chinese SOEs by investing in infrastructure projects across the developing world, while the $50 billion AIIB is funded by 57 founding member countries (the US and Japan have not joined) and will serve to upend traditionally dominant multilateral institutions which have failed to respond to the rising influence and economic clout of their EM membership. China will push for the yuan to play a prominent role in the settlement of AIIB transactions and may look to establish special reserves in both the AIIB and Silk Road fund to issue yuan-denominated loans.
Back in early November, SWIFT data showed that 15 new countries had joined a list of nations settling more than 10% of their trade deals with China in yuan. "This is a good sign for [yuan] adoption rates and internationalisation. In particular, Canada's [yuan] usage for payments, which has increased greatly over this period, is very interesting since we have not seen strong adoption of the [yuan] from North America to date,” Astrid Thorsen, Swift's head of business intelligence said.
Earlier that month, China and Russia indicated that going forward, more trade between the two countries would be settled in yuan. From Reuters, last November:
Russia and China intend to increase the amount of trade settled in the yuan, President Vladimir Putin said in remarks that would be welcomed by Chinese authorities who want the currency to be used more widely around the world.
Spurred on by their often testy relations with the United States, Russia and China have long advocated reducing the role of the dollar in international trade.
Curtailing the dollar's influence fits well with China's ambitions to increase the influence of the yuan and eventually turn it into a global reserve currency. With 32 percent of its $4 trillion foreign exchange reserves invested in U.S. government debt, China wants to curb investment risks in dollar.
The quest to limit the dollar’s dominance became more urgent for Moscow this year when U.S. and European governments imposed sanctions on Russia over its support for separatist rebels in Ukraine.
"As part of our cooperation with this country (China), we intend to use national currencies in mutual transactions.The initial deals for rouble and yuan are taking place. I want to note that we are ready to expand these opportunities in (our) energy resources trade," Putin said at the time, suggesting that going forward, Russia may look to settle sales of oil in yuan.
Sure enough, Gazprom has confirmed that since the beginning of the year, all oil sales to China have been settled in renminbi. From FT:
Russia’s third-largest oil producer, is now settling all of its crude sales to China in renminbi, in the most clear sign yet that western sanctions have driven an increase in the use of the Chinese currency by Russian companies.
Russian executives have talked up the possibility of a shift from the US dollar to renminbi as the Kremlin launched a “pivot to Asia” foreign policy partly in response to the western sanctions against Moscow over its intervention in Ukraine, but until now there has been little clarity over how much trade is being settled in the Chinese currency.
Gazprom Neft, the oil arm of state gas giant Gazprom, said on Friday that since the start of 2015 it had been selling in renminbi all of its oil for export down the East Siberia Pacific Ocean pipeline to China.
Russian companies’ crude exports were largely settled in dollars until the summer of last year, when the US and Europe imposed sanctions on the Russian energy sector over the Ukraine crisis...
Gazprom Neft responded more rapidly than most, with Alexander Dyukov, chief executive, announcing in April last year that the company had secured agreement from 95 per cent of its customers to settle transactions in euros rather than dollars, should the need to do so arise.
Mr Dyukov later said the company had started selling oil for export in roubles and renminbi, but he did not specify whether the sales were significant in scale.
According to Gazprom Neft’s first-quarter results issued last month, the East Siberian Pacific Ocean pipeline accounted for 37.2 per cent of the company’s crude oil exports of 1.6m tonnes in the three months to March 31.
With that, the "PetroYuan" has officially been born and while FT notes that "other Russian energy groups have been more reluctant to drop the dollar for settlement of oil sales," the fact that Russian producers are now openly considering a shift at the same time that officials in the US and Europe are openly discussing stepped up economic sanctions suggests renminbi settlements may become more commonplace going forward.
To understand why and to what extent this is significant in the current environment, consider the following from WSJ:
Officials of the Organization of the Petroleum Exporting Countries, which declined to cut oil production last year, reasoned that maintaining high production levels would protect market share in crucial importing nations.;
But Chinese customs data released Friday show that China’s crude imports from some big OPEC nations have plummeted, while imports from Russia surged 36% in 2014. Meanwhile, imports from Saudi Arabia fell 8% and those from Venezuela dropped 11%.
To summarize: Western economic sanctions on Russia have pushed domestic oil producers to settle crude exports to China in yuan just as Russian oil is rising as a percentage of total Chinese crude imports. Meanwhile, the collapse in crude prices led to the first net outflow of petrodollars from financial markets in 18 years, and if Goldman's projections prove correct, the net supply of petrodollars could fall by nearly $900 billion over the next three years. All of this comes as China is making a concerted push to settle loans from its newly-created infrastructure funds in renminbi.
Putting it all together, the PetroYuan represents the intersection of a dying petrodollar and an ascendant renminbi.
http://www.zerohedge.com/news/2016-01-21/birth-petroyuan-2-pictures
The Demise Of Dollar Hegemony: Russia Breaks Wall St's Oil-Price Monopoly
Tyler Durden on 01/12/2016
Submitted by William Engdahl via New Eastern Outlook,
Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy.
Later in November the Russian Energy Ministry has announced that it will begin test-trading of a new Russian oil benchmark. While this might sound like small beer to many, it’s huge. If successful, and there is no reason why it won’t be, the Russian crude oil benchmark futures contract traded on Russian exchanges, will price oil in rubles and no longer in US dollars. It is part of a de-dollarization move that Russia, China and a growing number of other countries have quietly begun.
The setting of an oil benchmark price is at the heart of the method used by major Wall Street banks to control world oil prices. Oil is the world’s largest commodity in dollar terms. Today, the price of Russian crude oil is referenced to what is called the Brent price. The problem is that the Brent field, along with other major North Sea oil fields is in major decline, meaning that Wall Street can use a vanishing benchmark to leverage control over vastly larger oil volumes. The other problem is that the Brent contract is controlled essentially by Wall Street and the derivatives manipulations of banks like Goldman Sachs, Morgan Stanley, JP MorganChase and Citibank.
The ‘Petrodollar’ demise
The sale of oil denominated in dollars is essential for the support of the US dollar. In turn, maintaining demand for dollars by world central banks for their currency reserves to back foreign trade of countries like China, Japan or Germany, is essential if the United States dollar is to remain the leading world reserve currency. That status as world’s leading reserve currency is one of two pillars of American hegemony since the end of World War II. The second pillar is world military supremacy.
US wars financed with others’ dollars
Because all other nations need to acquire dollars to buy imports of oil and most other commodities, a country such as Russia or China typically invests the trade surplus dollars its companies earn in the form of US government bonds or similar US government securities. The only other candidate large enough, the Euro, since the 2010 Greek crisis, is seen as more risky.
That leading reserve role of the US dollar, since August 1971 when the dollar broke from gold-backing, has essentially allowed the US Government to run seemingly endless budget deficits without having to worry about rising interest rates, like having a permanent overdraft credit at your bank.
That in effect has allowed Washington to create a record $18.6 trillion federal debt without major concern. Today the ratio of US government debt to GDP is 111%. In 2001 when George W. Bush took office and before trillions were spent on the Afghan and Iraq “War on Terror,” US debt to GDP was just half, or 55%. The glib expression in Washington is that “debt doesn’t matter,” as the assumption is that the world—Russia, China, Japan, India, Germany–will always buy US debt with their trade surplus dollars. The ability of Washington to hold the lead reserve currency role, a strategic priority for Washington and Wall Street, is vitally tied to how world oil prices are determined.
In the period up until the end of the 1980’s world oil prices were determined largely by real daily supply and demand. It was the province of oil buyers and oil sellers. Then Goldman Sachs decided to buy the small Wall Street commodity brokerage, J. Aron in the 1980’s. They had their eye set on transforming how oil is traded in world markets.
It was the advent of “paper oil,” oil traded in futures, contracts independent of delivery of physical crude, easier for the large banks to manipulate based on rumors and derivative market skullduggery, as a handful of Wall Street banks dominated oil futures trades and knew just who held what positions, a convenient insider role that is rarely mentioned in polite company. It was the beginning of transforming oil trading into a casino where Goldman Sachs, Morgan Stanley, JP MorganChase and a few other giant Wall Street banks ran the crap tables.
In the aftermath of the 1973 rise in the price of OPEC oil by some 400% in a matter of months following the October, 1973 Yom Kippur war, the US Treasury sent a high-level emissary to Riyadh, Saudi Arabia. In 1975 US Treasury Assistant Secretary, Jack F. Bennett, was sent to Saudi Arabia to secure an agreement with the monarchy that Saudi and all OPEC oil will only be traded in US dollars, not Japanese Yen or German Marks or any other. Bennett then went to take a high job at Exxon. The Saudis got major military guarantees and equipment in return and from that point, despite major efforts of oil importing countries, oil to this day is sold on world markets in dollars and the price is set by Wall Street via control of the derivatives or futures exchanges such as Intercontinental Exchange or ICE in London, the NYMEX commodity exchange in New York, or the Dubai Mercantile Exchange which sets the benchmark for Arab crude prices. All are owned by a tight-knit group of Wall Street banks–Goldman Sachs, JP MorganChase, Citigroup and others. At the time Secretary of State Henry Kissinger reportedly stated, “If you control the oil, you control entire nations.” Oil has been at the heart of the Dollar System since 1945.
Russian benchmark importance
Today, prices for Russian oil exports are set according to the Brent price in as traded London and New York. With the launch of Russia’s benchmark trading, that is due to change, likely very dramatically. The new contract for Russian crude in rubles, not dollars, will trade on the St. Petersburg International Mercantile Exchange (SPIMEX).
The Brent benchmark contract are used presently to price not only Russian crude oil. It’s used to set the price for over two-thirds of all internationally traded oil. The problem is that the North Sea production of the Brent blend is declining to the point today only 1 million barrels Brent blend production sets the price for 67% of all international oil traded. The Russian ruble contract could make a major dent in the demand for oil dollars once it is accepted.
Russia is the world’s largest oil producer, so creation of a Russian oil benchmark independent from the dollar is significant, to put it mildly. In 2013 Russia produced 10.5 million barrels per day, slightly more than Saudi Arabia. Because natural gas is mainly used in Russia, fully 75% of their oil can be exported. Europe is by far Russia’s main oil customer, buying 3.5 million barrels a day or 80% of total Russian oil exports. The Urals Blend, a mixture of Russian oil varieties, is Russia’s main exported oil grade. The main European customers are Germany, the Netherlands and Poland. To put Russia’s benchmark move into perspective, the other large suppliers of crude oil to Europe – Saudi Arabia (890,000 bpd), Nigeria (810,000 bpd), Kazakhstan (580,000 bpd) and Libya (560,000 bpd) – lag far behind Russia. As well, domestic production of crude oil in Europe is declining quickly. Oil output from Europe fell just below 3 Mb/d in 2013, following steady declines in the North Sea which is the basis of the Brent benchmark.
End to dollar hegemony good for US
The Russian move to price in rubles its large oil exports to world markets, especially Western Europe, and increasingly to China and Asia via the ESPO pipeline and other routes, on the new Russian oil benchmark in the St. Petersburg International Mercantile Exchange is by no means the only move to lessen dependence of countries on the dollar for oil. Sometime early next year China, the world’s second-largest oil importer, plans to launch its own oil benchmark contract. Like the Russian, China’s benchmark will be denominated not in dollars but in Chinese Yuan. It will be traded on the Shanghai International Energy Exchange.
Step-by-step, Russia, China and other emerging economies are taking measures to lessen their dependency on the US dollar, to “de-dollarize.” Oil is the world’s largest traded commodity and it is almost entirely priced in dollars. Were that to end, the ability of the US military industrial complex to wage wars without end would be in deep trouble.
Perhaps that would open some doors to more peaceful ideas such as spending US taxpayer dollars on rebuilding the horrendous deterioration of basic USA economic infrastructure. The American Society of Civil Engineers in 2013 estimated $3.6 trillion of basic infrastructure investment is needed in the United States over the next five years. They report that one out of every 9 bridges in America, more than 70,000 across the country, are deficient. Almost one-third of the major roads in the US are in poor condition. Only 2 of 14 major ports on the eastern seaboard will be able to accommodate the super-sized cargo ships that will soon be coming through the newly expanded Panama Canal. There are more than 14,000 miles of high-speed rail operating around the world, but none in the United States.
That kind of basic infrastructure spending would be a far more economically beneficial source of real jobs and real tax revenue for the United States than more of John McCain’s endless wars. Investment in infrastructure, as I have noted in previous articles, has a multiplier effect in creating new markets. Infrastructure creates economic efficiencies and tax revenues of some 11 to 1 for every one dollar invested as the economy becomes more efficient.
A dramatic decline for the role of the dollar as world reserve currency, if coupled with a Russia-styled domestic refocus on rebuilding America’s domestic economy, rather than out-sourcing everything, could go a major way to rebalance a world gone mad with war. Paradoxically, the de-dollarization, by denying Washington the ability to finance future wars by the investment in US Treasury debt from Chinese, Russian and other foreign bond buyers, could be a valuable contribution to genuine world peace. Wouldn’t that be nice for a change?
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine "New Eastern Outlook”.
http://www.zerohedge.com/news/2016-01-12/demise-dollar-hegemony-russia-breaks-wall-sts-oil-price-monopoly
They’ll Call It “The G-20 Massacre!”
Author : Bill Holter
Published: November 11th, 2014
Very “quietly” the world’s 20 largest economies will meet in Brisbane, Australia later this coming week. I use the word “quietly” because here in the U.S. almost no mention of the upcoming meeting has been made. I even searched for news on the event and almost could find none. Strange? Well yes and no, quite strange because it surely is big news especially with all that has been going on but not strange because here in the U.S. we must keep a happy face on things which very well may not be the outcome this time around. I wasn’t sure how I was going to write this piece but I guess it’s just easiest to tell you what I think the result will be and then explain why.
In my opinion, once this meeting is over next Sunday all hell could break loose financially. I say this because much has already been put into place ahead of time and it is my expectation the U.S. and her dollar will at a minimum be taken off of “the top shelf” or at least be pushed back from the front. Let me put forth some of the many available dots and see if they can’t be connected.
First, if you remember last year’s summit, President Obama was not pictured in the center as the U.S. has always been at nearly all meetings such as these traditionally. If I recall, I believe I commented that he was positioned on one of the ends and I took it as “not a very good sign” at the time. This time around, President Obama will arrive as a “neutered” force after the Democrats lost total control of Congress. This fact is not lost on the world, they now know President Obama has no collateral nor clout left and will be the lamest duck president in history. One could argue this point but he has lost Congress while having the lowest public approval rating of any U.S. president.
We also know that China has been making business deals, setting up renminbi currency hubs, and either preparing for or actually doing trade in local currencies or their own all over the world. The Chinese have been forming these deals WITHOUT the use of dollars. Russia, who for the last 5-6 months have been the focus of “Western sanctions” have also been active in doing trade deals, particularly with China. If you recall, Russia achieved their “Holy Grail” gas deal earlier this year with China worth an estimated $400 billion. Mr. Putin announced this past Friday a 2nd deal with China which will further intertwine the two nations in trade. Please also remember that Russia has recently made moves on Arctic energy reserves while U.S. “majors” such as Exxon/Mobil will not be able to participate in unless they break Mr. Obama’s sanction rules. Are the sanctions “good” for American business?
Before the upcoming G-20 summit there will also be two other meetings scheduled early this week, APEC (Asia Pacific Economic Coordination) and also a BRICS meeting. President Xi of China released a statement this past Sunday regarding the upcoming APEC meeting by saying “China wants to live in harmony with all its neighbors.” Please understand that this is not just a “flowery” comment, it is the way China thinks and does business. The world understands this and also understands how the U.S. has been doing business for years. The BRICS “pre G-20 meeting” has already announced goals including the launch of new BRICS bank, its funding and also the restructuring of IMF quotas.
I would like to speak of “the timing setup” before going any further. There will be these two pre meetings and then the G-20 meeting itself… and also another piece of breaking news which I find VERY curious! It has been announced out of London that UBS has agreed to a fine for …wait for it …wait for it…”manipulating the prices of gold and silver!!!”
First off, we have been told every single day for over 15 years that we are wacked out, tin foil hat wearing conspiracy freaks forever even uttering such nonsense, now we find out it was true…all along …and we are not so crazy after all! Secondly, other banks are reported also to follow UBS in ‘fessing up so it was a “conspiracy,” only it wasn’t “theory,” it was FACT! (I wonder what ole’ Martin Armstrong, Doug Casey and all the other apologists will have to say about this?). I plan to speak about this more, later in the week.
I’ll bet you thought I was done with “timing” since the above paragraph was so long? No, there is more. I would like to add in several other “aligned stars.” We now know that GOFO forward rates are now more backward than any time in the last 10 years, the Shanghai physical silver inventory is nearly depleted, mints all over the world have gone “back order” and last but not least, December COMEX silver is currently contracted to deliver nearly 10 ounces of silver for every registered (available for delivery) ounce they say they have! One other little tidbit will be next Monday the 17th, Hong Kong and Shanghai plan on “linking” their exchanges, curious timing?
OK, so that’s the back ground leading up to the G-20 meeting which concludes next Sunday. Just looking at the two “pre” meetings alone can give you a flavor as to what will be discussed and very possibly agreed upon. The U.S., no matter what the outcome will certainly lose clout. The possibility however does exist and the stars are currently aligned for the U.S. to be isolated, berated and punished. In my opinion, China will not allow a sledge hammer financial blow to the U.S. and will probably allow at least some “grace” in its exit from “reserve currency status.” China has spent years positioning herself. The BRICS and APEC have made deals, set up settlement infrastructure and now will begin “funding.” The U.S. on the other hand has spent the last five years adding another $8+ trillion to her balance sheet while the Federal Reserve levered itself up to nearly 80 to 1 while quadrupling its balance sheet. We fiddled while China methodically positioned herself and the world to move away from the dollar.
Could this be it? Could it really be “over” for the American fiat experiment? Will the world tell a politically neutered president of the biggest bankrupt nation in history what the rules are rather than being dictated to as has always been the case in our lifetimes? Will China quietly assume the role of “fair arbiter” of international disputes? Will China assume the role as the center of the financial world? Will China assume the role as the chief financier of trade? Will power really shift from New York/London to Shanghai/Beijing? I think at this point it is a given, the only question is “how, how fast, and when?” The conditions now exist for the answer to be “overnight and after next weekend”. Our (western) world is about to change, maybe even violently in overnight fashion, do not be taken by surprise because by now it should not be!
http://blog.milesfranklin.com/theyll-call-it-the-g-20-massacre
Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada
by Tyler Durden on 11/10/2014
Zerohedge.com
The march of global de-dollarization continues. In the last few days, China has signed direct currency agreements with Canada becoming North America's first offshore RMB hub, which CBC reports analysts suggest "could double maybe even triple the level of Canadian trade between Canada and China," impacting the need for Dollars.But that is not the week's biggest Petrodollar precariousness news, as The Examiner reports, a new chink in the petrodollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petrodollar system. As Simon Black warns, "It’s happening... with increasing speed and frequency."
As CBC reports,
Authorized by China's central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar.
Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.
"It's something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there," said CBC's Catherine Cullen, reporting from Beijing.
Sovereign Man's Simon Black has some ominous thoughts on Canada's move...
It’s happening. With increasing speed and frequency.
The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.
China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.
Moreover, just today, hot off the presses, the central banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia.
This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.
And as Black notes, everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.
Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.
The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.
Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed.
Nothing goes up or down in a straight line. And given how volatile Europe and the global economy continue to be, the dollar may certainly be in for its surges and bumps in the coming months.
But over the long-term it’s glaringly obvious where this trend is going: the rest of the world no longer wants to rely on the US dollar, and they’re making it a reality whether the US likes it or not.
* * *
And now, no lesser oil-producing state than controversial Qatar has signed an agreement too.. seemingly opening up the door to Petrodollar panic... (as The Examiner reports)
The petro-dollar system is the heart and soul of America's domination over the global reserve currency, and their right to make all nations have to purchase U.S. dollars to be able to buy oil in the open market. Bound through an agreement with Saudi Arabia and OPEC in 1973, this de facto standard has lasted for over 41 years and has been the driving force behind America's economic, political, and military power.
But on Nov. 3 a new chink in the petro-dollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petro-dollar system.
While this new agreement between China and Qatar is only for the equivalent of $5.7 billion over the next three years, Qatar becomes the 24th nation to open its Forex market to the Chinese currency, and solidifies acceptance of the Yuan as a viable option for the future in the Middle East.
China's central bank announced Monday that it has signed a currency swap deal worth 35 billion yuan (about 5.7 billion US dollars) with the central bank of Qatar.
The three-year deal could be extended upon agreement by the two sides,said a statement on the website of the People's Bank of China (PBOC).
Also on Monday, the two sides signed a memorandum of understanding on Renminbi clearing settlement in Doha. China agreed to extend the RMB Qualified Foreign Institutional Investor scheme to Qatar, with an initial quota of 30 billion yuan.
The deal marked a new step forward in financial cooperation between the two countries, and will facilitate bilateral trade and investment to help maintain regional financial stability, the statement said. - China Daily
It is perhaps no coincidence that the term for the new agreement is set for three years, and is within the exact time frame being predicted by the director of the Finance Institute under the Development Research Center of the State Council, Zhang Chenghui for the Renminbi to become fully convertible in the global financial system.
The need for new markets and a more stable trade currency in Qatar could be tied to a new report issued last week by French bank BNP Paribas which showed that petro-dollar recycling has fallen to its lowest levels in 18 years, signifying that even oil producing nations in the Middle East are finding it difficult to trust the U.S. dollar, and facilitate its use in trade due to its depreciation since the advent of the Federal Reserve's massive QE programs.
Nearly every week now, China, Russia, or one of the BRICS nations are finalizing agreements that supersede the old system of dollar trade and reliance on the petro-dollar system. And as many countries begin to reject the dollar due to the exported inflation that is growing in nations that are relegated to having to hold them for global oil purchases, alternatives such as the Chinese Yuan will become a more viable option, especially now that the Asian power has taken over the top spot as the world's biggest economy.
http://www.zerohedge.com/news/2014-11-10/petrodollar-panic-china-signs-currency-swap-deal-qatar-canada
The Heart Of The Ponzi??
Filed in Economy by SRSrocco
October 10, 2014
http://srsroccoreport.com/the-heart-of-the-ponzi/the-heart-of-the-ponzi/#comments
This Is How I See It
Author : Bill Holter
Published: June 18th, 2014
(special thanks to the cork)
I wrote Mission “UN” Accomplished on Monday and talked about how Iraq has not been put to bed and in fact has become an even bigger problem than it has been. Whether officially admitted or not, Iraq’s oil was the reason we were there in the first place. It was viewed as a source that we could both control and profit from. Unfortunately, this will most likely destabilize the entire region and create a brand new and much higher price range for oil. This is happening at a very bad time both economically and financially. The world’s economy is slowing demonstrably and the financial system is showing cracks, higher oil prices will only exacerbate the weaknesses.
The recent “find” in China that collateral either never was or has disappeared is now spreading to other ports and many more institutions. Even if the economy was strong which it is not, the fact that collateral is gone or never was will be devastating to the financial sector both in China and with financial institutions far away.
The recent “collateral” problem will surely spread to other markets as well, not just base metals. The one particular market where this is important is gold. “We” have argued for years that it just wasn’t there, it couldn’t be. “It couldn’t be” because more has been claimed than we knew existed. This is also the case for silver. Eric Sprott has argued that many “claimed” inventories cannot exist all at once as the total adds up to more than has been mined. This is the root of it, let me explain.
The world has existed on the words “trust me.” The world has followed what the U.S. ordered for many many years whether they liked it or not. After 1971 we were able to turn the worlds’ eyes away from our gold reserves by creating the artificial demand of the petrodollar. Now, oil is on the verge of trading and settling in many different currencies and the demand for dollars is about to dry up. This situation alone has been reason for the U.S. to go to war or depose rulers in the past. Now we have a situation where many nations all at once will shun the dollar, were Saudi Arabia to do this publicly I believe the dollar will drop 5-10% in purchasing power within a week’s time. They are probably already accepting non dollars privately.
Now we have the recent revelation that “collateral” does not exist, the result is that everyone will be scrambling for verification of collateral. This will be like a witch hunt and long standing agreements, friendships, cooperatives and even as big as treaties will be broken. Then, we must of course add religion into the mix.
This is how I see it. We are headed toward a global shooting war.”
WWIII in my opinion had already started and has been waged through the financial, technological and political markets. The financial markets have been held together by derivatives to show a placid picture; vanished collateral will upset the order further.
Because the “old world order” seems to be collapsing, a new world order will arise. There is no telling how this may shake out and who the ultimate partnership may be. We look now and see Russia and China partnering and isolating the U.S. The question remains, who is going to stand with the U.S.? Saudi Arabia and their oil? Europe who needs and receives energy from Russia (which is in the process of not arriving)? South American countries that have had the screws put to them by Wall St. for over 50 years? African nations whom we have ignored (while China has courted them)? I am not even sure that we could count Israel in our corner the way we have treated them over the last 5 years. Who? Who will stand with the U.S. while the new “teams” are being chosen?
I am truly fearful that lunatics who have been running the show finally realize that “the show is over.” I am afraid that triggers will be pulled and used as “blame.” Blame (cover) for an economy and financial system that is imploding behind the scenes. I am afraid that the powers that be will try to “cover” the reality that the Ponzi scheme is ending and will point to war as the reason …it all went south.
Many wars in years gone by were initiated because of poor economies and used to boost growth. The New York Times (shame on them) wrote this past weekend that the global economy is weak because there are not enough wars. The problem is that in today’s world, man has the ability to destroy the playing table. Paul Craig Roberts wrote 2 weeks ago that he believes the U.S. is planning a first strike and now believes that nuclear war can be won. He believes that Russia and China know that this strategy is in the works and may be forced to preempt our first strike. His thoughts may be found here.
Unfortunately, we have arrived at a point where the reality of bankruptcy is now about to be revealed by the lack of collateral. We are about to find out how fraudulent the world is and has been for at least 10 (maybe 101 since 1913) years. The danger is that those who committed the fraud decide to kick the table over in desperation. As the saying goes, desperate people do desperate things; the problem now is that Russia and China know this. I hope that Mr. Roberts is wrong but I am afraid that he is not.
All you need to do is look around for yourself. No, the mainstream media will not tell you about it even if they do scratch the surface for appearances. Iraq and the entire Middle East is a slow motion train wreck that is about to fast forward. Russia has shut off gas supplies to the Ukraine and the Ukraine retaliates by preventing Russian gas through to Europe. China hacks the U.S.; the U.S. hacks China and then puts Chinese officers on their most wanted list. These are all “declarations of war,” what do you think will happen when someone finds out that their “collateral” (gold) is missing?
http://blog.milesfranklin.com/this-is-how-i-see-it
Putin's aide proposes anti-dollar alliance to force US to end Ukraine's civil war
June 18, 2014
Sergey Glazyev, the economic aide of Vladimir Putin, published an article outlining a plan for "undermining the economic strength of the US" in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
In his article, published by Argumenty Nedeli, Putin's economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow's portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won't be able to service their debts to European banks.
According to Glazyev, the so-called "third phase" of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole "safe haven" in the world. Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.
Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US. Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick.
Glazyev's set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed's printing press. Putin's advisor proposes the creation of a "broad anti-dollar alliance" of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US' aggression.
Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America's attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin's aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe's independence from the US and a war against the dollar.
Valentin Mândrasescu
Read more: http://voiceofrussia.com/2014_06_18/Putins-aide-proposes-anti-dollar-alliance-to-force-US-to-end-Ukraines-civil-war-8030/
Bill Black on the Rule of Predatory Finance Over Argentina
Posted by Jesse
at 10:13 PM 17 June 2014
(special thanks to basserdan)
As you know I think that this ruling by the Supreme Court, written by Antonin Scalia, which essentially puts the Argentine people and the other creditors at the mercy of the demands of a few vulture funds, may prove to be a watershed, or perhaps trigger, event in the excesses of crony capitalism and the Empire of the Dollar.
The blowback from this action on foreign assets held in the US, and on US corporate assets held overseas, may be profound.
The BRICs will be having their annual summit in mid-July. And the US has certainly given them something to think about, set at least a part of their agenda, and given them a common cause of concerns, over the past four or five months. I see no reason for optimism that a ruling elite, grown in-bred and self-absorbed in its hubris, will do anything different in its self-serving policies.
If there ever was a time for enlightened leadership to rise to the occasion it is now. And in looking over the current crop of puffed-up princes and predators, we can see none.
Putin's aide proposes anti-dollar alliance to force US to end Ukraine's civil war
June 18, 2014
Sergey Glazyev, the economic aide of Vladimir Putin, published an article outlining a plan for "undermining the economic strength of the US" in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
In his article, published by Argumenty Nedeli, Putin's economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow's portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won't be able to service their debts to European banks.
According to Glazyev, the so-called "third phase" of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole "safe haven" in the world. Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.
Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US. Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick.
Glazyev's set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed's printing press. Putin's advisor proposes the creation of a "broad anti-dollar alliance" of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US' aggression.
Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America's attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin's aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe's independence from the US and a war against the dollar.
Valentin Mândrasescu
Read more: http://voiceofrussia.com/2014_06_18/Putins-aide-proposes-anti-dollar-alliance-to-force-US-to-end-Ukraines-civil-war-8030/
Explaining NYC's Record Homelessness In One Disastrous Chart
by Tyler Durden on 06/07/2014
ZeroHedge.com
By any measure, New York City’s homelessness crisis broke every record during the final year of the Bloomberg administration. The already record-high homeless shelter population soared even higher, to more than 50,000 people per night. There are, of course, numerous reasons for this disastrous situation but we suspect the following chart, from the coalition of the homeless, may just be enough to wake up the average American to the reality of this 'recovery'.
Over the past year, the average monthly number of homeless people sleeping each night in the New York City shelter system increased by 7 percent, from 50,135 people in January 2013 to 53,615 people in January 2014 – the highest level ever recorded.
The following are the tragic benchmarks of the past year in New York City:
The average number of homeless children living in municipal shelters increased by 8 percent over the prior year, reaching an all-time-high 22,712 children in January 2014.
The average number of homeless families in shelters increased by 6 percent over the past year, reaching a record-high 12,724 families in January 2014.
The average number of homeless single adults sleeping each night in the New York City shelter system rose five percent to 11,342 women and men in January 2014, a new record.
Average shelter stays for homeless families with children rose by two months (60 days), or 16 percent, during the past year. The average shelter stay for homeless families with kids reached a record-high 14.5 months (435 days) in January 2014.
The average shelter stay for homeless families without children rose to more than 17 months (518 days), the longest ever recorded. Average shelter stays for childless families in emergency shelter rose by more than a month (34 days), or 7 percent, during the past year.
The number of newly homeless families entering the shelter system, 13,465 families in FY 2013, was 12 percent higher than the previous City fiscal year.
More New Yorkers sought emergency shelter: A remarkable 111,210 different men, women and children slept in the shelter system during FY 2013, a five percent increase over the previous City fiscal year.
More children slept in NYC’s municipal shelter system: During FY 2013, City data show 40,189 different girls and boys lived in homeless shelters, a 7 percent increase from the previous City fiscal year.
And this is among the most critical reason why...
Thank you Ben Bernanke... working for Main Street once again
Source: coalition for the homeless
http://www.zerohedge.com/news/2014-06-07/explaining-nycs-record-homelessness-one-disastrous-chart
Russia Group Forms for $3 Billion Zimbabwe Platinum Mine Project
By Yuliya Fedorinova
Jun 6, 2014 12:28
Bloomberg.com
Vi Holding, a closely held Russian company, and state corporations Rostec and Vnesheconombank formed a group to develop the world’s second-largest platinum deposit in Zimbabwe, Rostec’s press office said.
Today’s comments from Moscow-based Rostec confirmed Russian press reports from earlier this week. The partners may invest as much as $3 billion in the Darwendale resource, with possible production capacity of 600,000 ounces of platinum a year, Kommersant said yesterday, citing people familiar with the situation that it didn’t identify.
Zimbabwe along with South Africa, Russia and North America is among the world’s largest producers of platinum group metals. Darwendale holds 19 metric tons of platinum equivalent in proven reserves and 755 tons of probable resources, and would mark the first major Russian investment in the to the region.
Vi Holding last year bought 50 percent of Ruschrome Mining, which holds the license for Darwendale, Kommersant reported. Vi Holding is owned by entrepreneur Vitaliy Machitski, chairman at aluminum producer Vimetco NV. (VICO)
Vnesheconombank’s press service declined to comment. Representatives of Vimetco weren’t immediately able to provide comment from Machitski.
To contact the reporter on this story: Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net
To contact the editors responsible for this story: John Viljoen at jviljoen@bloomberg.net Alex Devine
http://www.bloomberg.com/news/2014-06-06/russia-group-forms-for-3-billion-zimbabwe-platinum-mine-project.html
BREAKING NEWS: US EXPATS IN MEXICO LEFT STRANDED IN LATEST FATCA ESCALATION
DollarVigilante.com
June 7, 2014
[Editor's Note: The following post is by TDV Editor-In-Chief, Jeff Berwick]
As the first set of Foreign Account Tax Compliance Act (FATCA) compliance issues for banks worldwide is set to come into effect on July 1 we have seen a flurry of banks around the world advising US citizens that they will be immediately closing their accounts.
None has been so far reaching as this notice sent to US citizens who have accounts at Banamex USA in Mexico this week, however.
Banamex USA's parent, Banamex, is the second largest bank in Mexico and there are over 1 million US citizens living in Mexico, by far the largest amount of any country, and so this news will be felt over a very widespread area.
Notices have begun to be sent by Banamex USA, a bank operating in Mexico and used by many American expats in Mexico, to all US citizens notifying them that their accounts will be closed within 30 days.
Here, here and here you will find three separate online discussions surrounding Banamex USA's summary closure of American's accounts.
In most of the forums people know the reason why - FATCA - but in one of the forums in particular the people are not even aware of FATCA and its implications. This action by Banamex USA is, of course, because of FATCA, which has forced 77,000 banks in 70 countries to surrender all information on American customers to the Internal Revenue Service (IRS) or be extorted and possibly put out of business altogether.
Banamex USA, a subsidary of Citibank with its headquarters in Los Angeles, has sent letters to many US customers informing them that their accounts will be closed June 30. As one online commenter wrote:
"No more SS check deposits: no more linking of accounts to Banamex Mexico, no more credit card, no more ATM for free, no more nada."
One customer was told that it was a "bank decision" with no reason given why. This move has left former account holders scrambling to find a bank that will let them open an account without their presence in Mexico, something likely impossible to find.
It does not appear that all accounts will be closed, but nobody knows Banamex USA's strategy here, even banking insiders in the US who we have contacted who are confused about what is going on.
What's for sure is this: Are you an American expatriate living abroad or an American currently thinking of moving abroad? This could and likely will happen to you.
OPTIONS FOR US EXPATS IN MEXICO
There are many ways to protect yourself and to sidestep many of the issues that FATCA will be bringing upon US citizens trying to transact in the financial system worldwide.
In the case of Americans who live and/or spend a large amount of time each year in Mexico one solution is to attain Mexican citizenship (this is a process that TDV Passports can help with). By doing this you can still have bank accounts in Mexico if you so chose as you can open the account as a Mexican citizen, not as a US citizen, thereby not being restricted by banks that do wish to deal with US citizens due to the egregious nature and expense of filing with the US government all transactions of US citizens.
Having a second citizenship, especially for US citizens, is a very prudent move as it has become very difficult to do anything financially, worldwide, as a US citizen. It also has a tremendous amount of side-benefits including large tax breaks (up to nearly $200,000 per year, tax free, for a married couple if they live outside of the US)... and if you choose to renounce your US citizenship the benefits can be massive for those with a high net worth or income as this would unchain US citizens from the worldwide taxation imposed on them by the US government.
Other options that are still available to US citizens is to re-organize their affairs internationally using things like offshore trusts which are specifically set-up in a way that FATCA regulations do not apply to it. This is a service, for high net worth (over $1 million) US citizens that is offered exclusively by TDV Wealth Management (TDVWM). TDVWM has recently held two Crisis Conferences in Panama and in Mexico helping US citizens stay ahead of the curve and to organize their affairs prior to events, which we predicted, such as more banks worldwide closing accounts for Americans.
We also predict that more countries in the West will begin to enact FATCA like controls as the economy in the West continues to fall and governments begin to enact more egregious worldwide taxation laws. In the case of Canadians, for example, many "snowbirds" (those that are retired and usually spend six months or more per year in the US) are beginning to be deemed "US resident" even without their knowledge and will soon find themselves under attack by the IRS for tax liabilities. As well, the Canadian and US governments have reached all manner of agreements tying the sharing of financial information between the two countries.
As we've researched and written here and at TDV Wealth Management Crisis Conferences (which we will be holding another one soon, likely in Mexico due to recent events), FATCA is very real and Americans abroad will be forced to adapt and quickly. Many might simply end up without a bank account altogether and unable to open one abroad when they get this now all-too-common letter that your bank no longer wants to serve you.
We hate to constantly be the bearer of bad news but those who have been following TDV know that we have been warning of these events for a number of years. And we expect things to go nowhere but downhill from here as governments in the West implement nefarious capital controls such as FATCA.
Stay tuned at The Dollar Vigilante blog as we continue to cover FATCA and its consequences and offer insights, news, analysis and solutions to protect yourself at The Dollar Vigilante newsletter. And pass along this particular news to US citizens who are Mexican expats to inform them to prepare for more bank account closures for US citizens and what they can be doing about it to protect themselves.
Have a FATCA story or concern? Join the discussion with other Dollar Vigilantes!
http://dollarvigilante.com/blog/2014/6/4/breaking-news-us-expats-in-mexico-left-stranded-in-latest-fa.html
California gets hip to bitcoin: Senate banking committee approves bill to legalize crypto-currencies
Michael Carney_PandoDaily BY MICHAEL CARNEY
ON JUNE 5, 2014
The state of California appears poised to become a lot more welcoming to bitcoin. A bill to officially legalize cryptocurrencies and other alternative forms of money, recently passed the California Assembly by a unanimous 75 to 0 vote and yesterday was approved by the state Senate Banking and Financial Institutions Committee by a 7 to 1 vote. The next step for the bill dubbed AB-129 Lawful Money is a full vote on the senate floor and then, possibly, a date with Governor Jerry Brown.
Currently, the California Corporations Code Section 107 states that “No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.”
As written, bitcoin would be deemed illegal money, and thus the bitcoin developers and custodians of the bitcoin protocol could be deemed in violation of the law. The same is true of the dozens of other altcoins that have sprung up in bitcoin’s wake, as well as other mediums of exchange like cupons, gift cards, and loyalty points. AB-129, if passed into law, would override the language of Section 107, making the development, distribution, and use of cryptocurrencies legal in California.
California is already home to dozens of bitcoin startups and investors, none of which have been prosecuted for violating the California Corporations Code – playing fast and loose with Money Transmitter regulations, however, has caught the attention of law enforcement. Given the lack of enforcement, and the overwhelming momentum of bitcoin and other digital currencies, this regulatory change is merely a formality.
Most startups likely were unaware that California law outlawed bitcoin. But large companies – think Apple, Google, Facebook, eBay, and PayPal – surely were aware of the statute. One has to wonder if this law had any impact on their collective hesitancy to embrace crypto-currencies.
The latest version of the bill includes a notable change from earlier drafts. The bill now awaiting a Senate vote removes the requirement that all lawful currencies have a “value based on the dollar,” aka a dollar-denominated exchange rate. Such exchange rates exist for nearly all crypto-currencies today, but it’s conceivable that this may not always be the case. If bitcoin or another altcoin becomes a ubiquitous currency, its users may never need to exchange it into dollars, and thus such an exchange rate could be abandoned. Now, such a future scenario would still fall within the letter of the law.
California isn’t first US state to show a willingness to embrace bitcoin. New York, led by state Department of Financial Services superintendent Benjamin Lawsky, has been the most proactive, holding numerous rounds of public hearings and instituting new regulations and licenses around exchange, money transmission, and mining operations. The US Senate too has held bitcoin hearings while a number of state and local politicians have begun accepting bitcoin campaign contributions.
AB-129 isn’t a law yet, meaning the bill could either fail to get the necessary Senate support or be changed substantially before ultimately reaching Governor Brown’s desk. But given the momentum behind bitcoin, and the landslide early votes, it seems likely that California is about to make alternative currencies legal in the state once and for all.
http://pando.com/2014/06/05/california-gets-hip-to-bitcoin-senate-banking-committee-approves-bill-to-legalize-cryptocurrencies/
Gov. Fallin signs state legal tender bill
June 5, 2014
Edmundson.com
State now recognizes gold and silver coins as hard money
Special to The Sun
OKLA. CITY — Gov. Mary Fallin signed a historic bill (SB862) Wednesday to recognize gold and silver coins as legal tender in the state. Oklahoma joins Utah, Texas and Louisiana as states that have removed taxes on gold and silver coins and nearly a dozen other states are currently considering legislation to recognize gold and silver coins as hard money.
The United States Constitution (Article I: Section 10) enables states to declare gold and silver coins as legal tender and gives them the impetus to remove all taxes on gold and silver. APIA is the leading organization promoting sound money and working to uphold this article of the Constitution.
“I commend the people of Oklahoma, particular Sen. Clarke Jolley and Gov. Mary Fallin, for asserting their state’s constitutional right to declare gold and silver legal tender,” said American Principles in Action Chairman Sean Fieler. “With the Federal Reserve actively suppressing interest rates and eroding the purchasing power of the U.S. dollar, it is welcome news to see one more state give its citizens tax-free access to money that holds its value over time.”
American Principles in Action was the leading group promoting this state legal tender bill in Oklahoma and they continue to work to promote sound money legislation across the U.S.
American Principles In Action is a 501(c)(4) organization dedicated to preserving and propagating the universal principles of America’s founding — that we are all, “created equal, endowed by our Creator with certain unalienable rights, and among these are life, liberty and the pursuit of happiness.”
- See more at: http://www.edmondsun.com/business/x1396877472/Gov-Fallin-signs-state-legal-tender-bill#sthash.AlkFUUaT.dpuf
Oklahoma Recognizes Gold and Silver Coins as Legal Tender
June 5, 2014
Mish's Global Economic Trend Analysis
OpenStates.Org notes Oklahoma SB862 was signed by Governor Mary Fallin yesterday.
SB862 recognizes gold and silver coins as legal tender in the state.
Here is the Text of SB862.
Although the bill recognizes gold and silver as legal tender, it also states "No person may compel another person to tender or accept gold or silver coins that are issued by the United States government, except as agreed upon by contract."
Actually, no one should be compelled to take any currency.
Shirley & Banister Public Affairs emailed this statement today:
Oklahoma joins Utah, Texas, and Louisiana, as states that have removed taxes on gold and silver coins, and nearly a dozen other states are currently considering legislation to recognize gold and silver coins as hard money.
The United States Constitution (Article I: Section 10) enables states to declare gold and silver coins as legal tender and gives them the impetus to remove all taxes on gold and silver. APIA is the leading organization promoting sound money and working to uphold this article of the Constitution.
"I commend the people of Oklahoma, particular Senator Clarke Jolley and Governor Mary Fallin, for asserting their state's constitutional right to declare gold and silver legal tender,” said American Principles in Action Chairman Sean Fieler. “With the Federal Reserve actively suppressing interest rates and eroding the purchasing power of the U.S. dollar, it is welcome news to see one more state give its citizens tax free access to money that holds its value over time."
American Principles in Action was the leading group promoting this state legal tender bill in Oklahoma and they continue to work to promote sound money legislation across the U.S.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Read more at http://globaleconomicanalysis.blogspot.com/2014/06/oklahoma-recognizes-gold-and-silver.html#xeKL7TObeycbKBov.99
Steve Forbes: Link dollar to gold or face Great Depression II
BY PAUL BEDARD
JUNE 3, 2014
WashingtonExaminer.com
Steve Forbes: Link dollar to gold or face Great Depression II
BY PAUL BEDARD
JUNE 3, 2014
WashingtonExaminer.com
Russia: Financial and Energy Interests Seem to Exceed Political Stakes
by Fabrice Drouin-Ristori - GoldBroker
Published : June 05th, 2014
A new signal, this time coming from large corporations distancing themselves from White House political decisions, that sanctions against Russia are ineffective : Exxon and BP are maintaining their partnership with Russia.
We’re talking about two of the largest oil companies opposing sanctions that Washington wants to impose on Russia.
French giant Total also signed an agreement with Lukoil, the second most important oil company in Russia.
Financial and, above all, energy interests seem to matter more than political issues. Russia can no longer be ignored as an energy power, despite a few de-stabilization attempts.
In these conditions, it is important to observe what will be the currencies used to settle those contracts and energy exchanges, because this will put the dollar’s hegemony at risk and, thus, the international monetary system which is based on a fiat currency that is, by definition, non convertible in tangible assets.
To those partnerships we can add the recent agreement between China and Russia on a gas deal worth 400 Billion dollars. This total value has been expressed in dollar terms in the media, but the currency of settlement of this gigantic partnership has not been officially stated. Given that Russia and China have been defiant of the use of dollars for months on end, one can certainly doubt that they’ll be using dollars to settle this enormous energy exchange.
China also wishes to have more influence in determining the price of gold via the Shanghai Gold Exchange.
Russia, as an energy powerhouse (with the help of China and Iran), cannot be questioned, and it will (along with its non-Western partners) dictate in what currency the settlement of those energy exchanges will be done. The critical mass represented by a Russia-China-Iran (along with the BRICS) alliance seems to have been reached, and nothing is standing in the way of the advent of a multi-polar world under heavy influence from the East, with consequences for the international monetary system.
If the dollar is not used in that settlement, as it obviously won’t be, it may, as the world’s reserve currency, rapidly lose some of its value on the currency markets.
Furthermore, if the dollar collapses or there is global defiance of it, all dollar holders will be quickly looking for a money or an asset that will really guarantee the role a world reserve currency is supposed to play, i.e. its capacity of preserving value.
Just by looking at the amount of gold imported monthly by China and Russia (and also by the BRICS) one can easily imagine what asset could be playing this role and who wishes its return in the international monetary system. Some are talking about the IMF’s Special Drawing Right (SDRs) being at the base of the future monetary system, but this would still be virtual money and would be hard to reconcile with the fact that China and, above all, Russia do not want to tolerate Western hegemony through the IMF anymore.
For the moment the price of « paper » gold is still retreating and is even under a little pressure, under $1,300 an ounce, and the number of « interventions » on the price even are more and more blatant. It’s almost as if it were becoming urgent for some large bullion banks to cover their positions on their gold and silver derivatives in this context of the end of the London Gold Fix (read my analysis on the end of the London fix and its potential implications on derivatives).
To conclude, let’s compare two charts in parallel :
1) Gold price correction just before the major upward movement of the late ‘70s. The price corrected by -48% before rising parabolically.
2) Stock market crash of 1929.
A number of geopolitical and financial events are lining up in a way that we are getting confirmation that the international monetary system will have to somehow be reset.
Fabrice Drouin Ristori
Founder/CEO Goldbroker.com
ceo@goldbroker.com - Twitter @fabricedrouin
Thanks to Fabrice Drouin-Ristori from www.goldbroker.com
http://www.24hgold.com/english/news-gold-silver-russia-financial-and-energy-interests-seem-to-exceed-political-stakes.aspx?article=5515063282H11690&redirect=false&contributor=Fabrice+Drouin-Ristori
Renminbi clearing bank to open in London
2014-06-02 08:47
China DailyWeb
Editor: Gu Liping
A yuan clearing bank will be officially appointed in the United Kingdom in June, said Mark Boleat, policy chairman for the City of London Corp, in an exclusive interview with China Daily.
"There will be a clearing bank in London. In due course, there will be an announcement," Boleat said on Friday.
The news will be an endorsement for London's efforts to become an offshore yuan center. Other European financial centers in the race to become a yuan center include Frankfurt, Paris, Switzerland and Luxembourg.
An official clearing bank facilitates efficient clearing of offshore renminbi transactions, achieved through the appointed bank's direct cooperation with the People's Bank of China, the country's central bank.
Boleat said having a clearing bank in London will act as a signal for London's growing yuan activities, although activities are already cleared through many commercial banks' own channels.
For example, in December Standard Chartered teamed up with Agricultural Bank of China to provide their own yuan clearing platform, making use of the two banks' expertise and client base in the UK and China.
Boleat's news follows a memorandum of understanding China and the UK signed in April to work together on a clearing bank for London.
A week before that agreement was reached, China also signed a memorandum with Germany to work on appointing a clearing bank in Frankfurt, highlighting the fierce competition between European financial centers for more yuan activities.
Boleat said his team has been working on the idea for some time with the People's Bank of China, Bank of England and many banks in London, and the PBOC has now decided to appoint the clearing bank.
"We assume it's going to be a Chinese bank, because that's the way the PBOC does things," Boleat said.
He said another key announcement is expected on Chinese banks opening new branches, after a long lobbying process to achieve this.
Previously, Chinese banks, as well as many other international banks, were only allowed to set up subsidiaries, which are subject to the strict capital requirements that apply to Britain's local banks, hence the lending and financing capacity is proportional to the balance sheet of the subsidiary itself.
Branches, in contrast, have a lending and financing capacity proportional to their parent company's balance sheet and are thus able to give Chinese companies significantly greater lending and financing services.
In a letter sent by the Association of Foreign Banks to Britain's Treasury in 2012, a group of Chinese banks expressed frustration at their inability to open branches in London.
"The pressure came from the Chinese banks, and that's perfectly proper. Without the pressure from the Chinese banks, it may not get looked at," Boleat said.
Last year, the Bank of England announced foreign banks would be allowed to apply for a branch license, although only for wholesale businesses. Retail businesses still needed to be conducted under subsidiary license, to protect individual depositors.
Although none of the Chinese banks have said they have applied for a branch license, Boleat said the assessment of their applications is already in progress.
"I have no doubt there will be branch licenses in due course," Boleat said.
http://ecns.cn/business/2014/06-02/117011.shtml
(special thanks to basserdan)
This past Tuesday Reuters reported that the Shanghai Gold Exchange got the approval from the central bank to launch a "global trading platform"
http://www.reuters.com/article/2014/05/27/us-china-gold-pricing-idUSKBN0E70HE20140527 .
This is truly big news and somehow I almost missed it. This will allow the Shanghai exchange to compete with and thus draw some power away from both the New York and London markets.
Why is this "big news" or even important you ask? For several outright reasons and for one that is not so obvious but I think will be in retrospect. First, the timing of this comes while the London fix is under scrutiny. The silver fix is apparently being abandoned and the gold fix is losing "fixers" and may be down to just two participants which obviously won't work from the sake of "appearance". Also, this comes at a time that Russia and China are announcing partnerships and speaking in terms of currencies to be used...theirs, not ours.
It is important to understand that the Shanghai exchange is the largest PHYSICAL market in the world. This is important because it precludes leverage. "Leverage" that can be used to push prices around with the sale of tens or even hundreds of tons in just minutes to crash the price (we saw at least two instances of this this past week). It means that if someone wants to sell, they must deliver the goods and settlement in cash is not allowed. It means that there will be no room for "naked" sales or sales from entities that do not intend to deliver but instead only want to "make" price...lower. This will become the new rule, if you sell... you must then deliver the goods. This is the obvious stuff, I also think that there is more to this than meets the eye at present.
If you have read my writings over the past month then you know that it is my theory that China would like to usurp the dollar's role of the world's reserve currency. I believe that they would like to "ratio" gold to the yuan in some fashion. A global platform "open" to all will in my opinion allow and aid China to operate (in) the gold markets. Yes, the previous sentence was a play on words and if you subtract the word "in" then you will understand where I am going with this.
I believe that China is now THE largest owner of gold in the world. The U.S. has liquidated its' gold over the years and the Europeans have either leased much of their gold out or it has been leased "for them". The Germans and Austrians might give you an opinion on this. OK, so if I am correct about China being the largest holder of gold in the world what would this mean and what would China naturally want? Obviously it means "power" and that power has shifted and gravitated toward them with each purchase of gold by them and each sale by the West. It also means that they would like to "make" (there is that word again) a higher price for gold but not for the reason that first comes to your mind. I know, your first thought was probably of course China wants a higher gold price, it will make them rich and own it at a great profit.
NO! The Chinese do not think in this manner. They do not think in terms of "oh darn it, I should have waited a week or two to buy because I could have bought gold cheaper". No, this thought process is exclusive to Westerners who deep down want gold and silver to go higher so they can "make" more dollars or pounds or whatever. Follow this through and see if it doesn't make sense. If China were to make an announcement that they own and have now stored some big number like 5,000, or 8,133 tons (no just kidding because that number would be too plagiaristic!) or even 10,000 tons they would kill several birds with one stone. They would "own" proof that the U.S. must have sold them some of their stash because there is no other place it could have come from, ie Ft. Knox or from gold that was custodied in N.Y. for other Western nations. This in turn would pull back the curtain of lies so to speak on the dollar which would probably panic within days if not hours from such an announcement. The U.S. will be on life support without even one single bullet fired. China in my opinion has the ability to change the rules by simply announcing a large weight of gold holdings ...because a large number is believable, verifiable and also had to be someone else's gold in large part.
Now, the next logical step is that New York and London would be stripped of their power to "price" gold because it "may or may not really be gold". I say that it isn't "gold" that they are trading while the Nadlers and Jeff Christians of the world say that it is... we will see. The one thing that we do already and will know is that any "gold" bought or sold in Shanghai is the real, shiny, 99.999 fine type. Through this exchange, China will have the ability to price gold far higher than it is currently. They can either "buy buy buy", stand for any and all gold at a chosen higher price or just sit back and let it happen. By "let it happen" I am saying that the market will discern for itself what "is and isn't" gold. We could see days where Shanghai gold goes up $100 while COMEX gold goes down $100. So, which one is the real price of gold?
Ah yes, there is just one more part to my theory and one that is a bit sketchy but I think makes total sense. If China announces and knows that they have more gold than anyone else, wouldn't they want to price it high enough to stifle any competition? Meaning that if gold became priced at levels where the common man was forbidden economically to buy, there would be little individual competition for the metal. In fact, a very high price might even bring out some selling and thus some extra supply for China to buy.
You see, having the largest stash of gold AND the largest physical market is like a one two punch where they can dictate price and negate the paper frauds that are NY and London. Gold will then become a cash and carry market and no matter what happens on the COMEX, THE price will be the Shanghai price. It's a pretty cool deal if you can get it, own the most of something, put your competitors out of business, punish them for their fraud, and make the price whatever you choose within reason. They know what they are doing and I'm pretty sure that they've known for quite some time now.
Regards,
Bill Holter,
Miles Franklin Associate Writer
http://www.lemetropolecafe.com/james_joyce_table.cfm?pid=11534
GOOD TIMES OVER
Foreign banks fall out of love with US
by Tom Braithwaite, Financial Times
June 3, 2014 - 12:10
The lights have been dimmed at some major foreign banks in New YorkThe lights have been dimmed at some major foreign banks in New York (Keystone)
Pity the Porsche salesmen of Connecticut. Before the financial crisis, first UBS and then Royal Bank of Scotland built two of the world's largest trading floors in the state.
At the time, UBS issued a press release boasting that its floor was "approximately the size of two football fields", and served by a "garage with room for 500 cars".
Today, the buildings - which are just across the street from each other - look like monuments to a lost era. The infrastructure is still there but RBS's floor never hummed as it was supposed to. UBS only enjoyed a brief burst of the good times before the turmoil of 2008 and the doldrums of recent years. Now, the rooms are becoming even quieter.
Under regulatory pressure and amid a downturn in trading, RBS announced last week that it would cut about 300 jobs in mortgage trading over the next two years. To fill the void left by its own staff cuts, UBS has even relocated some of its "back office" compliance staff to bulk out the floor, like seat fillers who take the stars' places at the Oscars ceremony. The garage is presumably less full of flash cars, too.
Sanctioned
Fearful of an outright withdrawal, Connecticut has offered incentives to keep the banks in the state, betting that they will remain significant employers.
But at the national level, the reverse is true: policy is being developed that will arguably make the US less attractive for overseas banks.
The Federal Reserve is imposing tough stress tests and capital requirements on foreign broker-dealers that have more than $50bn in assets. Its motivation seems clear: officials are keen to avoid propping up an ailing overseas bank, as they did with emergency lending during the last crisis.
RBS is in the process of slimming down below the $50bn threshold. Most of its peers - notably Barclays - are also making changes to comply with, or mitigate against, the impact of new rules.
Then there are the legal penalties for foreign banks in the US. HSBC, Standard Chartered, Credit Suisse and BNP Paribas are being clobbered by US authorities for wrongdoing that ranges from enabling tax evasion (in the case of Credit Suisse), to failing to prevent money laundering (HSBC), to violating US sanctions (Standard Chartered). BNP has also set aside money to settle a sanctions case.
Executives at each of those banks have said they feel hard done by - though they have not said it very loudly for fear of further antagonising a justice system they suggest is capricious, politically motivated and harsh.
US banks, notably JPMorgan Chase, have also paid multibillion-dollar penalties in recent months. But some foreign bank executives have intimated that they are the objects of discrimination based on nation origin.
The record shows that they have paid a large proportion of the biggest penalties - but does not prove whether or not that is because they are worse behaved.
Muted Defense
In different times, the foreign banks might have received support from some US politicians.
A report from the mayor of New York and the senior Democratic senator for the state condemned "a greater perceived litigation risk [which has] reduced the appeal of the US market to many foreign firms" and "a complex and sometimes unresponsive regulatory framework . . . forcing more business overseas". The report urged reform and warned of a "chilling fact that if we do nothing . . . we will no longer be the financial capital of the world".
Alas for the banks, that report was written back in January 2007 by then New York mayor Michael Bloomberg and Charles Schumer, still the senior senator for New York.
It was a call to arms to compete with the "light-touch" regulation then favoured in London.
However, since catastrophe also befell the UK's financial sector in 2008, few politicians have voiced similar sentiments. Mr Bloomberg has been replaced by the more leftwing Bill de Blasio. Mr Schumer remains in place but is now a very muted defender of Wall Street.
One French politician blames US hegemony for emboldening the authorities' in their harsh response. He may have a point. Because of the continued dominance of the dollar, and partly because UK regulators have also adopted a tougher posture, there is little chance of New York being eclipsed as a financial centre.
Fears about competition may re-emerge over time. But the days in which Swiss banks compared their trading floors to American football fields or boasted of the size of their parking lots look to be gone for good.
Copyright The Financial Times Limited 2014
http://www.swissinfo.ch/eng/business/Foreign_banks_fall_out_of_love_with_US.html?cid=38714508
Renminbi clearing bank to open in London
2014-06-02 08:47
China DailyWeb Editor: Gu Liping
A yuan clearing bank will be officially appointed in the United Kingdom in June, said Mark Boleat, policy chairman for the City of London Corp, in an exclusive interview with China Daily.
"There will be a clearing bank in London. In due course, there will be an announcement," Boleat said on Friday.
The news will be an endorsement for London's efforts to become an offshore yuan center. Other European financial centers in the race to become a yuan center include Frankfurt, Paris, Switzerland and Luxembourg.
An official clearing bank facilitates efficient clearing of offshore renminbi transactions, achieved through the appointed bank's direct cooperation with the People's Bank of China, the country's central bank.
Boleat said having a clearing bank in London will act as a signal for London's growing yuan activities, although activities are already cleared through many commercial banks' own channels.
For example, in December Standard Chartered teamed up with Agricultural Bank of China to provide their own yuan clearing platform, making use of the two banks' expertise and client base in the UK and China.
Boleat's news follows a memorandum of understanding China and the UK signed in April to work together on a clearing bank for London.
A week before that agreement was reached, China also signed a memorandum with Germany to work on appointing a clearing bank in Frankfurt, highlighting the fierce competition between European financial centers for more yuan activities.
Boleat said his team has been working on the idea for some time with the People's Bank of China, Bank of England and many banks in London, and the PBOC has now decided to appoint the clearing bank.
"We assume it's going to be a Chinese bank, because that's the way the PBOC does things," Boleat said.
He said another key announcement is expected on Chinese banks opening new branches, after a long lobbying process to achieve this.
Previously, Chinese banks, as well as many other international banks, were only allowed to set up subsidiaries, which are subject to the strict capital requirements that apply to Britain's local banks, hence the lending and financing capacity is proportional to the balance sheet of the subsidiary itself.
Branches, in contrast, have a lending and financing capacity proportional to their parent company's balance sheet and are thus able to give Chinese companies significantly greater lending and financing services.
In a letter sent by the Association of Foreign Banks to Britain's Treasury in 2012, a group of Chinese banks expressed frustration at their inability to open branches in London.
"The pressure came from the Chinese banks, and that's perfectly proper. Without the pressure from the Chinese banks, it may not get looked at," Boleat said.
Last year, the Bank of England announced foreign banks would be allowed to apply for a branch license, although only for wholesale businesses. Retail businesses still needed to be conducted under subsidiary license, to protect individual depositors.
Although none of the Chinese banks have said they have applied for a branch license, Boleat said the assessment of their applications is already in progress.
"I have no doubt there will be branch licenses in due course," Boleat said.
http://ecns.cn/business/2014/06-02/117011.shtml
Dynacor Gold - The Numbers Don't Lie And A Re-Rating Will Follow Soon
Jun. 3, 2014
The Investment Doctor
SeekingAlpha.com
Disclosure: I am long DNGDF. (More...)
Summary
* Dynacor Gold should be seen as a services provider and not as a mining company.
* Dynacor expects to expand its operation base by 160% before the end of this year, and by 300% within the next 36 months.
* Using a conservative starting point, the NPV8% of Dynacor's toll milling business is $3.78/share.
* Additionally, Dynacor has a net cash position of almost $20M which increases daily.
Introduction
In this article I'll have a closer look at Dynacor Gold (OTC:DNGDF) which is quite a special company. Instead of mining gold, the company is actually a services provider as it does not operate its own mine, but allows smaller miners to use Dynacor's mill to process their ore. I will explain why this company should be valued as a services provider and not as an exploration company.
The volume on the US exchange isn't too bad with 11,000 shares per day, but I'd still recommend to trade in shares of Dynacor Gold through the facilities of the Toronto Stock exchange where the company is listed with DNG as its ticker symbol. The average daily dollar volume there is approximately $60,000.
As always, all images in this article were directly taken from the company's website, press releases, technical reports and presentations. As Dynacor is a Canadian company I have - where applicable - recalculated all amounts from CAD into USD using an USD/CAD exchange rate of 1.08.
What is toll milling and what are the advantages and risks?
Alright, let's start by explaining what toll milling actually is. A toll milling company is a company which owns a mill and processes mineralized ore from third parties which don't have their own processing facility and thus need to rely on third-party operated mills like Dynacor's mill. Dynacor purchases the mineralized ore and processes it to end up with gold and silver as end-product, which the company then sells.
So who are Dynacor's suppliers of ore? Those are usually artisanal miners which produce a limited amount of tonnes per day and don't have their own processing facilities as it wouldn't be efficient to have a mill with a throughput of just a few tonnes per day. And when I say 'artisanal miners,' I really mean those are 'mom and pop' type of operations where a father and his sons are recovering ore.
Why are these people selling to toll mill operators? There's a straightforward answer (actually there are several reasons) to this question as well. First of all, artisanal miners don't have their own processing facilities and it wouldn't make sense for them to build one, because their output is so low. Would it be a good idea to 'pool together' with a few fellow miners? Probably, yes. But don't forget most of these people aren't too keen on taking the responsibility of operating a mill (and I don't mean this in a negative way. Miners are miners and can't always be familiar with (legal and administrative) procedures inherent to owning and operating a mill). Additionally, if the paperwork of the mill hasn't been filed correctly, the facility will be destroyed and the owners/operators could be sentenced to 20 years in jail. That's not really a risk those artisanal miners are willing to take.
Secondly, a professionally managed processing facility should obtain higher recovery rates than small-scale plants. This is confirmed by seeing Dynacor Gold's recovery rate which is consistently around 95%. This means that Dynacor's plant is very efficient, and it definitely makes sense for the artisanal miners to use an efficient plant with a recovery rate of 95% instead of trying it themselves, reaching a recovery rate of 60% and facing 20 years in jail.
I have now highlighted the advantages for the artisanal miners, but what's Dynacor's main advantage? Well first of all, it isn't really subject to the price of gold. Should the gold price go down to $1000/oz, its margins will obviously be lower, but the company won't go out of business. Additionally, by operating just a mill, it doesn't get involved in the (very) capital-intensive mining business and as such doesn't have huge operational risks. These three reasons make it very attractive to have a closer look at a toll milling company to capture benefits from the mining sector.
Are there risks? Of course there are. As said, should the gold price go down, Dynacor's margins will be lower. Should the gold price go up, Dynacor shareholders won't benefit as much from a price rise compared to gold miners. Additionally, there's always a legislative risk even though the company has been toll milling in Peru for several years now. As you can see, Dynacor's business isn't very exciting, the company mainly is just a boring 'services provider.'
Another key factor Dynacor will have to take into consideration is that it will have to make sure it continues to purchase the ore from legal miners, as acquiring ore from illegal mines would result in an immediate shutdown of the mill. And a shutdown is actually an understatement, because as you can see later in this article, the Peruvian army is using illegal mills to practice with explosive devices, so Dynacor would be pretty stupid to risk everything it has by buying illegal ore.
The fact that the company is doing everything legally can be found in the statement the company is allowed to export the gold from Peru again after a thorough check from the government where the ore was sourced from, which would not have been the case if the gold was derived from 'suspicious' ore. As Dynacor has now also promised to buy the ore from a list of miners/mining companies approved by the government, I dare to say the risk of Dynacor 'accidentally' buying illegal ore is reduced to practically zero as it will be able to prove it bought the ore from operations which were undeniably approved by the government.
How does Dynacor Gold make its money?
Okay, let's now see how Dynacor generates its cash flow. First of all, it purchases mineralized ore from the artisanal miners. Milling doesn't happen for free, and Dynacor charges a fee per processed tonne of ore, and probably also charges extra for the use of chemicals et cetera. Through grade control, Dynacor is able to effectively estimate the gold and silver content in the ore, and pays a percentage of the face value after deducting an allowance based on the expected recovery rate.
By paying a discounted value of the ore (which is a common business practice), Dynacor is actively taking steps to mitigate the gold price risk, in order to be covered against short-term price volatility.
The recent crackdown on illegal mining in Peru - good news for Dynacor Gold, but what's Peru's end game?
The reason why the toll milling business in Peru is receiving more attention than before is caused by the fact the Peruvian government is coming down hard on illegal mining activities in the country. And as actions speak louder than words do, the Peruvian army regularly raids illegal mining and milling activities, and destroys the illegal operating plants.
This means that the legal Peruvian miners have less possibilities to process the ore at illegal plants, so the government is actually helping the legal milling companies to strengthen its position in the country. Unfortunately this also had a negative impact on Dynacor, as it had to cease production for about a month until some details were clarified. This was an unfortunate event, but I think it will be a non-recurring event, given the situation was resolved quite fast.
So what's Peru's long-term plan? As the government seems to be very serious about formalizing the mining activities in the country and end the illegal mining and milling activities, that there are plans for a bigger end game. As a lot of these artisanal miners don't pay (enough) taxes, I think we are evolving to a scenario whereby the toll mill will already levy an 'anticipative' tax on the artisanal miners. This would create a quadruple win-situation; official milling companies get the support from the government, illegal mining will be stopped, the artisanal miners can now 'come clean,' and the government receives the taxes it's owed.
So if this is a fantastic business model, why aren't there more companies entering the scene?
I don't want to be a party-pooper, but recently at least two other small Canadian companies have entered Peru and are aiming to start up their own toll milling businesses, meaning Dynacor will face some competition in the near future.
But I'm not really scared, because the Peruvian pie is large enough to share with several others. On top of that, Dynacor has been working in Peru for quite a while and probably has the necessary relationships to attract more ore for its new facilities. So whilst at first sight it might look like the competition will destroy Dynacor's first mover advantage, I'm not worried at all, because after all, most of these milling facilities will remain limited to just a few hundred tonnes a day, which is peanuts. Additionally, as I explained in the previous paragraph, a lot of currently operating mills were destroyed by the government during raids against illegal milling. This means that there will most definitely be a demand for new (legal!) milling capacity, so I personally expect new entrants in this space just to replace old (illegal) processing facilities so that there won't be a change in the supply/demand equilibrium. The Peruvian small-scale mining sector is huge, and there's room for a lot of additional capacity without disturbing the pricing mechanism.
This all sounds nice, but what's the value of Dynacor's toll milling business?
As the company should be seen as a services provider and not as a mining company, you can't really determine its fair value by calculating an NPV on a pre-determined mine life, which is the case with 'real' mining companies.
A first question you'd have to ask yourselves is 'is its revenue model perpetual?' The answer to this question actually isn't that simple. Whilst one would be quick to say 'yes, it's perpetual as it's a service providing company,' one has to look at the underlying type of business, and mines (even the artisanal ones) have per definition a finite mine life. Does this mean Dynacor's revenue model also has an end date? Yes, but as I expect the smaller mines to be up and running for the next few decades, I will assume Dynacor's business model has an infinite (well, 'quasi-infinite' would be a better description) life expectancy, so I can use the formula (net cash flow / discount rate) to determine the fair value.
Let's dig in the company's financial statements. In 2013, Dynacor generated an operating cash flow of $10.3M and will have spent approximately $1M in sustaining capital expenditures (note: I don't add expansion capex to the equation as that wouldn't be fair, considering expansion capex usually are non-recurring and one-time events). Allow me to be conservative and apply an additional 20% discount to this number (to take a gold price fluctuation and possible higher taxes into consideration). This results in an after tax net cashflow of roughly $7M per year in a very conservative scenario.
As you all know, the formula to calculate the NPV of a perpetual revenue model is (net cash flow / discount rate). If I'd use a discount rate of 8% (because it's a proven business model which has been operating in the past few years without any issues), the fair value for the current toll mill operation would be $88M.
However, that's just the current situation. The company was producing at a rate of 230 tonnes per day, and expects to increase this throughput to 300 tonnes per day (+25%) and to achieve a run rate of 600 tonnes per day at its new facility in Chala (which should be up and running at 300 tonnes per day within a year).
So the production rate should increase by an astonishing 160% later this year which will obviously have a huge impact on the operating cash flow as well. Even if I'd be very conservative and let the cash flow increase by just 100% (to err on the safe side), Dynacor should have a net operating cash flow of roughly $15M by the end of this year. If I'd once again try to determine the fair value by using a discount rate of 8%, both the Chala and Huanca mill will have an NPV8% of $188M, based on a production rate of 600 tonnes per day. Keep in mind this production rate will very likely be increased further down the road but I'm not taking that into consideration right now.
If I'd now use a ratio of 50/50 for both scenario's (again, to be on the conservative side, as there's no doubt the company should be at a run rate of 600 tonnes per day by the end of this year), the toll milling business should be valued at $138M.
Source: financial statements
If this already sounds exciting (again, my assumptions are quite conservative!), don't forget to add the net cash value to the equation, as the company had a net cash position (here: current assets + deferred tax assets - total liabilities) of $17.6M (and a net working capital position of $17.8M, see previous image), resulting in a total fair value of $155M for Dynacor Gold.
And oh, I didn't even take the Tumipampa exploration asset into account, where a maiden NI43-compliant resource estimate is expected later this year.
Investment thesis
Dynacor Gold should see its processing capacity increase by 160% by the end of this year, and this will have huge consequences for the free cash flow of the company and should result in a re-valuation of the share price by the market.
I have established a fair value of $155M for Dynacor Gold, which results in a fair value of $4.24/share, which is 173% higher compared to the last closing price of $1.55. Even though the share price has tripled in 18 months time, it's not too late to get in, as you're investing in a company with a proven business model and management team, backed by $0.49/share in positive working capital. Throw in an expected 160% production increase by the end of this year and a 300% increase within the next 2-3 years, and this company might very well be one of the best growth-stories in the mining sector. Additionally, you get the exploration upside from Tumipampa thrown in for free.
Even though the company isn't paying a dividend right now, income investors should also put Dynacor on their radar, as the company wants to become a dividend payer down the road. If Dynacor would pay out just 1/3rd of its net annual cash flow at 600 tonnes per day, the annual dividend would be $0.12/year for a yield of 8.4%.
Editor's Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
http://seekingalpha.com/article/2250173-dynacor-gold-the-numbers-dont-lie-and-a-re-rating-will-follow-soon