U.S. stocks fell Tuesday, with the S&P 500 and the Dow Jones Industrial Average falling for a third straight day on uncertainty over when the Federal Reserve will begin to scale back stimulus and self-fulfilling fears the market was overdue for a pullback from record levels.
The Dow Jones Industrial Average dropped more than 100 points during the session before settling at 15,914.62, down 94.15 points, or 0.6%, taking it well below the psychologically important 16,000 level. The drop was the index’s biggest one-day decline since Nov. 7.
The S&P 500 lost 5.75 points, or 0.3%, to 1,795.15 and the Nasdaq Composite declined 8.06 points, or 0.2%, to 4,037.20.
“I hate to use the words, ‘we’re due,’ but we’ve gone straight up,” said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.
This news item was posted on the marketwatch.com Internet site just after the markets closed in New York yesterday afternoon...and I thank Roy Stephens for today's first story.
It seems some among the mainstream media believe "the economy is improving." In the interests of clearing up that little misunderstanding, we hope the following chart will clarify which "economy" is improving...
That's all there is to this tiny story, but the chart in this Zero Hedge article from yesterday afternoon is a must to see...and I thank reader M.A. for bringing it to our attention.
What keeps us up at night? Well I can’t speak for the others, having spoken too much already to please PIMCO’s marketing specialists, but I will give you some thoughts about what keeps Mohamed and me up at night. Mohamed, the creator of the “New Normal” characterization of our post-Lehman global economy, now focuses on the possibility of a” T junction” investment future where markets approach a time-uncertain inflection point, and then head either bubbly right or bubble-popping left due to the negative aspects of fiscal and monetary policies in a highly levered world.
Investors are all playing the same dangerous game that depends on a near perpetual policy of cheap financing and artificially low interest rates in a desperate gamble to promote growth. The Fed, the BOJ (certainly), the ECB and the BOE are setting the example for global markets, basically telling investors that they have no alternative than to invest in riskier assets or to lever high quality assets. “You have no other choice,” their policies insinuate. “Get used to negative real interest rates, move out on the risk spectrum and in the process help heal the real economy,” they seem to command.
This commentary was posted on the Zero Hedge website early yesterday morning EST...and my thanks go out to Manitoba reader Ulrike Marx for her first offering in today's column.
Overnight, The Wall Street Journal reported a financial factoid well-known to regular readers: namely that as a result of a broken system that ever since the LTCM bailout has encouraged banks to become take on so much risk they become systematically important (as in their failure would "end capitalism as we know it"), and thus Too Big To Fail, there has been an unprecedented roll-up of existing financial institutions especially among the top, while the smaller, less "relevant", if far more prudent banks have been forced out of business. "The decline in bank numbers, from a peak of more than 18,000, has come almost entirely in the form of exits by banks with less than $100 million in assets, with the bulk occurring between 1984 and 2011. More than 10,000 banks left the industry during that period as a result of mergers, consolidations or failures, FDIC data show. About 17% of the banks collapsed."
The point here is that the number of banks is largely irrelevant: it is obvious that the big will keep on getting bigger, and the Big 5 banks will do all in their power to either acquire their profitable competition or put everyone else out of business. However, the far bigger question is what happens to bank deposits once the Fed start to taper, ends QE or outright unwinds its balance sheet, which ultimately would soak up trillions from bank deposits. Because if there is one thing that is clear is that without the Fed, and without commercial bank loan creation (which has been non-existent in the past 5 years), bank balance sheet would be exactly where they were the day Lehman died.
Finally, one does not need to go any further than the following chart from the OCC [See Table 9, Page 36 for the precious metals. - Ed] showing total bank derivative holdings for all US banks and just the Top 4. The punchline: just the 4 biggest U.S. banks hold $217.5 trillion, or 93% of the total $233.9 trillion in derivatives.
This Zero Hedge piece is worth spending a few minutes on...and I'll have more on the precious metal derivatives in The Wrap. This is the second news item in a row from Ulrike Marx.
As somewhat expected - though hoped against by many Detroit union workers - Judge Steven Rhodes appears to have confirmed Detroit is eligible for bankruptcy protection (after pointing out that the city's accounting was accurate...and it is indeed insolvent) making this the largest ever muni bankruptcy.
The city will now begin working toward its next major move - the submission of a plan to re-adjust its more than $18 billion in debt - including significant haircuts for pension funds and bondholders. With Detroit as precedent, we can only imagine the torrent of other cities in trouble that will be willing to fold.
He did provide an "out" though: Rhodes warns the city that just because pension rights can be impaired, doesn't mean he will approve a plan with steep cuts.
This is another article from Zero Hedge, this one from late yesterday morning EST...and I thank reader M.A. for his second contribution to today's missive. There was also a 2-page story about this in The New York Times yesterday...and it's worth your while as well. It's courtesy of Roy Stephens.
Grant Williams "pulls no punches" in this all-encompassing presentation as the "Things That Make You Go Hmmm" author reflects on what is behind us and looks ahead at the ugly reality that we will face when "the impurities of QE are finally flushed from the system."
Central bankers of today have "changed everything" he chides, "in ways that will ultimately end in disaster." Following extraordinarily easy monetary policies across all of the world's central banks, Williams explains why "we are now near the popping point of the 3rd major bubble of the last 15 years," each bigger than the last.
The only way Janet Yellen avoids being at the helm when this ship goes down is to blow an even bigger bubble than Bernanke's government bond experiment, "which is highly unlikely." From how QE works, why many don't "feel" wealthy anymore, to the fact that "the geniuses that gave this thing life, don't have the guts to kill it," Williams warns, ominously, "the bills have come due on the blissful latest 30 years."
This absolute must watch 32-minute video is another piece from the Zero Hedge website yesterday. Grant's presentation begins at the 2:00 minute mark...and I thank reader Joe Nordgaard for finding it for us.
Households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures.
In the past year, families have withdrawn £23bn from their long-term savings accounts to convert into cash and put into current accounts - the equivalent of around £900 for every household in the country.
It is the most dramatic evidence yet that Britons are paying for the rising cost of living by raiding their savings accounts.
No surprises here, as this is happening in just about every country in the Western world at the moment. This SkyNews story was picked up by the uk.news.yahoo.com Internet site early yesterday morning GMT...and my thanks go out to West Virginia reader Elliot Simon.
The cost of insuring British debt against default has fallen below the levels for the US, Switzerland, Japan and every major eurozone state except Germany, marking a dramatic change of view on UK’s economic prospects.
Credit default swaps (CDS), used for insuring and trading sovereign debt, are “pricing” British bonds as if they were top-notch AAA quality. This comes amid growing speculation that rating agencies may soon shift gears and start to upgrade the UK.
The CDS contracts for the UK have been on a downward trend for months as growth picks up, cutting below countries that still have AAA ratings such as Austria, Australia and Canada.
As you already know, dear reader, computer algorithms and high-frequency trading can set a price/value on anything that they choose to...including affecting credit ratings if necessary. This Ambrose Evans-Pritchard article was posted on the telegraph.co.uk Internet site on Monday evening...and my thanks go out to Roy Stephens once again. It's worth reading.
A committee of MPs challenged the existing system of oversight for the security services by asking the head of MI5 to justify his claims that the Guardian has endangered national security by publishing leaks from the former NSA contractor Edward Snowden.
In an unprecedented step, Keith Vaz, the chairman of the home affairs select committee, announced that spy chief Andrew Parker had been summoned to give evidence in public to the Commons committee next week.
The decision was taken at a private session of the select committee on Tuesday before the body heard evidence from Guardian editor Alan Rusbridger seeking to justify the Guardian's decision to publish a string of stories based on US and UK intelligence agency files leaked by Snowden to the media.
This very interesting news item was posted on The Guardian's website late yesterday evening GMT...and it's another offering from Roy Stephens, for which I thank him.
Ukrainian President Viktor Yanukovych prevented a palace coup against his government on Tuesday. His party managed to see off a vote of no confidence initiated by opposition leader Vitali Klitschko. Yanukovych didn't even bother to show up to the turbulent debate.
When they heard that the opposition had lost the vote of no confidence on Tuesday, thousands of anti-government protestors gathered outside Ukraine's parliament in Kiev vented their anger with deafening chants of "Shame, shame!" They had moved as close to the building as police roadblocks let them. Buses blocked the entrances to parliament, while a large contingent of police cordoned off a wider area.
Inside, the plans of the opposition leadership to force Yanukovych's prime minister, Nikolai Azarov, out of office went up in smoke. A total of 187 MPs voted for the motion of no confidence introduced by the alliance led by boxing world champion Vitali Klitschko. That was nine more than the 178 that had been pledged to the opposition before the vote. Even a member of Yanukovych's ruling Party of Regions voted against the government.
This article was posted on the German website spiegel.de very early yesterday evening Europe time...and it's another contribution from Roy Stephens.
the Netherlands, our close cultural kin.
But before we all flagellate ourselves – let alone think of copying the Shanghai success formula – just remember one thing. There is a body of scholarship showing that the collapse of the fertility rate to dangerously low levels across east Asia is the direct consequence of school cramming and "education fever".
This is well-known to demographers and those who follow the Far East closely, but less known in the West. The CIA World FactBook says fertility rates have fallen to: Hong Kong (1.04%), Singapore (1.10), Taiwan (1.15), Japan (1.20), Korea (1.22%). These figures may be a little too low. Japan and Singapore have seen a small bounce lately.
But the picture is clear enough, and Shanghai is thought to be around 1.08 percent at this point, a harbinger of things to come across China's eastern seaboard. They are all far below the stability level of 2.1 percent. The whole of east Asia faces an acute ageing crisis. It has already begun in Japan.
This blog from Ambrose Evans-Pritchard yesterday is a very interesting read and it's the second-last offering of the day from reader Roy Stephens.
United States Vice President Joe Biden said during a tour of Asia on Tuesday that the US is “deeply concerned” about recent efforts by China to re-draw airspace surrounding a series of islands between Taiwan and Japan.
"We, the United States, are deeply concerned by the attempt to unilaterally change the status quo in the East China Sea," Biden said during a Tuesday news conference alongside Japanese Prime Minister Shinzo Abe.
The airspace in that area has traditionally been controlled by Japan, but claimed by the Chinese as well. Late last month China proclaimed a portion of that area in the East China Sea as within their own air defense zone, prompting international tensions to tighten between all those involved in the Pacific Rim.
This Russia Today news item was posted on their Internet site early on Tuesday evening Moscow time, which was late yesterday morning in New York. I thank Roy Stephens for his final offering in today's column.
British Prime Minister David Cameron faced demands for the return of priceless artifacts looted from Beijing in the 19th century on Wednesday, the last day of his visit to China.
"When will Britain return the illegally plundered artifacts?" the organisation asked, referring to 23,000 items in the British Museum which it says were looted by the British Army, part of the Eight-Nation Alliance that put down the Boxer Rebellion at the end of the 19th century, a popular uprising against the incursion of European imperial powers in China.
To the Chinese, the ransacking of the Forbidden City, and the earlier destruction of the Old Summer Palace in Beijing in 1860 -- about which one British officer wrote: "You can scarcely imagine the beauty and magnificence of the places we burnt. It made one?s heart sore to burn them" -- remain key symbols of how the country was once dominated by foreign powers.
Well, dear reader, if you want to know one of the reasons that Britain gave Hong Kong back to China without a whimper, this is one of them...along with the other opium war that occurred earlier in the 19th century. This absolute must read commentary was posted on the france24.com Internet site early this morning...and I thank South African reader B.V. for sliding it into my in-box in the wee hours of this morning. That link to the "opium war" in this paragraph is a must read as well, as it includes China's connection to silver, amongst other things. We haven't heard the last of this, and one has to wonder what new direction China will go from here, as they're obviously turning up the heat on many fronts now.
Huawei Technologies Co., China’s largest maker of phone network equipment, said there is no basis for U.S. scrutiny of its contract to supply broadband equipment for a project in South Korea.
“Our gear is world-proven and trusted, connecting almost one-third of the world’s population,” Scott Sykes, a spokesman for Shenzhen-based Huawei, said in an e-mail today. “The motivations of those that might groundlessly purport otherwise are puzzling.”
U.S. Senator Dianne Feinstein, chairman of the Select Committee on Intelligence, and Senator Robert Menendez, who leads the Committee on Foreign Relations, sent a letter last week to Defense Secretary Chuck Hagel, Secretary of State John Kerry and James Clapper, the director of national intelligence. The lawmakers expressed concern that Huawei’s involvement creates risks for the U.S.-South Korea alliance, including for U.S. troops based on the peninsula.
If this isn't a case of the pot calling the kettle black, I don't know what is. This Bloomberg news item was posted on their website early yesterday evening Mountain Time...and I thank reader 'David in California' for bringing it to my attention, and now to yours.
1. Grant Williams: "Stunning Event is About to Completely Alter the War on Gold". 2. Jean-Marie Eveillard: "There Are Absolutely Terrifying Risks Facing Global Markets". 3. Ron Rosen: "60-Year Market Veteran - This Will Send Gold and Oil Soaring".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
According to World Gold Council, gold is entering the country unofficially through India’s porous borders helped to meet pent-up demand, together with an influx of recycled gold that was drawn out by higher prices and promotions offered by retailers during the third quarter to end-September.
“Reports that a good market for 10-tola (100 grams) bars is re-emerging, due to the relative ease with which they can be concealed, reinforce this view,” the WGC said in a report last month.
The WGC report also noted that Thailand is being used as a route to channel gold into other markets, notably India and Vietnam.
“Investigations and seizures by financial intelligence agencies in the recent past have revealed that smugglers are now flying consignments of gold to Bangladesh and Nepal and then using couriers to carry them across the border,” the report said.
No story surprises me regarding gold smuggling into India. This one was posted on the firstpost.com Internet site yesterday...and it's worth reading. My thanks go out to Ulrike Marx once again.
Gold smugglers are adopting the methods of drug couriers to sidestep a government crackdown on imports of the precious metal, stashing gold in imported vehicles and even using mules who swallow nuggets to try to get them past airport security.
"Gold and narcotics operate as two different syndicates but gold smuggling has become more profitable and fashionable," said Kiran Kumar Karlapu, an official at Mumbai's Air Intelligence Unit.
"There has been a several-fold increase in gold smuggling this year after restrictions from the government, which has left narcotics behind."
From travellers laden head-to-toe in jewellery to passengers who conceal carbon-wrapped gold pieces in their bodies - in the mistaken belief that metal detectors will not be set off - Indians are smuggling in more bullion than ever, government officials say, driven by the country's insatiable demand for the metal.
This news item was posted on the Economic Times of India website this morning IST...and it's another contribution from Ulrike Marx.
Korea Exchange Inc. will begin physical gold trading on March 24 as Park Geun Hye’s government seeks to wring tax revenue out of a market that’s dominated by illegal transactions.
The exchange will use 1 gram units of bullion of 99.99 percent purity to spur liquidity and delivery will be in 1 kilogram bars, the bourse said in a statement today. Trading will start on a test basis for two weeks from Feb. 10 before full operations, it said.
South Koreans hold seven times as much gold as the 104.4 metric tons in their central bank’s vaults and the majority of trading is on the black market to evade import duty and value- added tax, according to government estimates. Park, who marks the one-year anniversary of her election as president this month, scaled back welfare pledges in September as her administration forecast the first drop in revenue in four years.
This Bloomberg story found a home over at the mineweb.com Internet site yesterday...and it's the final contribution of the day from Ulrike Marx.
For gold and silver bullion buyers, the question arises of where to take delivery of and safeguard your precious metals.
Taking physical delivery of your gold or silver is often the most rewarding part of the purchasing experience, as it gives you, the bullion investor, a fuller understanding of the real value of tangible monetary assets.
As one of the industry's leading bullion dealers, we at GoldSilver.com pride ourselves on investing and buying bullion right alongside our customers.
Because we are such proponents of taking physical delivery first, we have compiled a few creative storage solutions based on voluntary, anonymous, customer feedback.
This very interesting commentary was posted on the 24hgold.com Internet site on Monday...and it's definitely worth reading. My thanks go out to Elliot Simon for sending it our way.
A GATA supporter wrote the other day to the investor relations officer of a silver mining company in which he is invested to complain about the company's seeming indifference to the manipulation of the monetary metals markets. He soon received this reply:
"Thanks for your email. We share your frustration about the silver price. However, we don't attempt to take action against the bullion bankers for manipulation because 1) it is primarily the responsibility of the U.S. Commodity Futures Trading Commission, not the companies, to regulate these markets, so the companies would have to sue the bullion banks too; 2) manipulation is just too difficult to prove; 3) such a lawsuit would take many years and cost many millions of dollars with no certainty as to the outcome; and 4) every company invests its cash where it thinks it can create the biggest return to shareholders.
"In our case, we think investing shareholder money in things we can control, such as growing our business and our profits, is of greater benefit to our shareholders than investing in things we cannot control, such as suing the bullion bankers and the CFTC, both of which have far more financial and human clout than we companies do. They would just outspend us and stall for time."
This is the biggest bulls hit cop-out I can think of. There are a multitude of ways that the silver/gold mining industry [or a group of its members] can take a stand without a lawsuit of any kind...and it would put enormous pressure on the CFTC and the bullion banks involved. Of course it would be helpful if the World Gold Council and The Silver Institute would get onside on this...but these two organizations are there for precisely the purpose of insuring that this sort of action is never taken. All current and past directors of these organizations sold out to the dark side of The Force long before they were "invited" to serve in them.
I found this story on the gata.org Internet site last evening...and it's a must read for sure.
At least three U.S. regulators will meet on Dec. 10 to adopt the final version of the Volcker rule banning banks from making speculative bets with their own money, according to three people familiar with the planning.
The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are scheduling meetings to act on the rule on that date, said the people, who requested anonymity because the schedule hasn’t been announced.
Two other agencies that need to approve the rule -- the Commodity Futures Trading Commission and the Securities and Exchange Commission -- are trying to arrange Dec. 10 votes as well, three other people familiar with that effort said. The agencies are not required to approve the rule at the same time.
The agencies’ approval would be the final stage in the process of adopting the Volcker rule, a centerpiece of the 2010 Dodd-Frank Act designed to prevent a repeat of the 2008 global credit crisis. The final version is also expected to extend the rule’s compliance dates, which was sought by Wall Street banks and trade groups.
This must read Bloomberg story was posted on their website yesterday afternoon MST...and I found it embedded in a GATA release.
Goldman Sachs and JPMorgan Chase have finally overcome a regulatory rebuke that had been hanging over both banks since the Federal Reserve performed stress tests this year on large financial firms.
In March, Goldman and JPMorgan passed the tests, which are held annually and are intended to assess whether banks have the financial strength to get through sharp downturns in the economy and the markets. But in an unexpected reproach, the Fed said that it had identified significant weaknesses in the plans that JPMorgan and Goldman had submitted to show what might happen to their capital during periods of stress.
The regulator told Goldman and JPMorgan to come up with improved capital plans, and it threatened to stop the banks from paying out dividends and performing stock buybacks if the perceived flaws were not addressed.
On Monday, the two banks effectively put the matter behind them when the Fed announced that it did not object to plans that the firms had resubmitted.
This article was posted on The New York Times website very early yesterday evening EST...and is courtesy of Phil Barlett.
Bernard Madoff's longtime lieutenant testified on Monday that several former colleagues were deeply enmeshed in Madoff's decades-long Ponzi scheme, using everything from fake trades to a refrigerator to hide the truth about the fraud.
Frank DiPascali, Madoff's one-time chief financial officer, told jurors in New York federal court that the scheme stretched back "as far as I can remember," to his earliest days at the firm as a 19-year-old in the mid-1970s.
DiPascali, 57, is the government's star witness in its case against five former Madoff employees charged with abetting Madoff's fraud. It is the first criminal trial stemming from the scheme, which imploded in late 2008 and cost investors an estimated $17 billion.
This Reuters piece was picked up by The New York Times website early yesterday evening as well...and it's also the second offering in a row from reader Phil Barlett.
The most important chart that nobody at the Fed seems to pay any attention to, and certainly none of the economists who urge the Fed to accelerate its monetization of Treasury paper, is shown below: it shows the Fed's total holdings of the entire bond market expressed in 10 Year equivalents (because as a reminder to the Krugmans and Bullards of the world a 3 Year is not the same as a 30 Year).
As we, and the TBAC, have been pounding the table over the past year, the amount of securities that the Fed can absorb without crushing the liquidity in the "deepest" bond market in the world is rapidly declining, and specifically now that the Fed has refused to taper, it is absorbing over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week. The total number as per the most recent weekly update is now a whopping 33.18%, up from 32.85% the week before.
You've already read all the text of the Zero Hedge piece from early yesterday afternoon EST, but it's the chart that makes the story worth the trip...and I thank Manitoba reader Ulrike Marx for her first offering in today's column.
Another week another record high.
“To understand the Great Depression is the Holy Grail of macroeconomics. Not only did the Depression give birth to macroeconomics as a distinct field of study, but also—to an extent that is not always fully appreciated—the experience of the 1930s continues to influence macroeconomists' beliefs, policy recommendations, and research agendas. And, practicalities aside, finding an explanation for the worldwide economic collapse of the 1930s remains a fascinating intellectual challenge.” Ben. S Bernanke, Essays on the Great Depression, 2000
No longer is the understanding of the Great Depression the “Holy Grail” of economics.” It’s been supplanted by understanding today’s extraordinary ongoing global Credit and speculative Bubble cycles.
Dr. Bernanke and others focus primarily on what they believe were policy errors during the Thirties, with surprisingly little attention paid to “Roaring Twenties” policies and excesses. If only the Fed had understood the need to open up the monetary floodgates, they claim. Fed money printing could have been used to recapitalize the banking system, rectify insufficient demand and reflate consumer and asset prices. The Great Depression could have and should have been avoided.
Doug must have posted this on the prudentbear.com Internet site very late on Friday, as I checked for it twice earlier that evening so I could include it in my Saturday missive, but it wasn't there. But here it is now...and it's a must read.
Violent clashes broke out in the Ukrainian capital on Sunday as protesters stormed the Kiev mayor’s office in the biggest display of anger over the president's refusal to sign an agreement with the European Union.
Hundreds of thousands of protesters defied a government ban on public rallies to mass on Kiev’s Independence Square on Sunday, demanding that President Viktor Yanukovich resign.
Police initially allowed the demonstration to rally peacefully, but when a few thousand protesters tried to storm the nearby presidential administration building, riot police used tear gas and truncheons to drive them back. Dozens of people with what appeared to be head injuries were taken away by ambulance.
Reporting from the city hall in Kiev, FRANCE 24’s Eastern Europe correspondent Gulliver Cragg said the storming first appeared to be the work of a small rebel group that had broken away from the main, peaceful march.
This news item was posted on the france24.com Internet site sometime yesterday...and my thanks go out to Roy Stephens for his first contribution to today's column. The New Great Game is still on between Russia and the West, and the people of the Ukraine are paying the price for that.
Around 5,000 opposition protestors gathered in the center of Kiev overnight. The pro-European demonstrators erected tents and barricades on Independence Square. The opposition, centered around boxer Vitali Klitschko, now wants to blockade important administrative buildings.
Mass protests in Ukraine widened further on Monday as confrontations between opposition protestors and government forces intensified. With more than 100 people being injured in clashes over the weekend, German Chancellor Angela Merkel has cautioned against violence at peaceful demonstrations. She urged Ukraine President Viktor Yanukovych and his government to "do everything possible to always protect freedom of expression and the right to peaceful demonstrations."
Government spokesman Steffen Seibert said the pro-European rallies in Ukraine were sending out a "very clear message," and he added: "It is to be hoped that President Yanukovych perceives that message." Seibert added that the protestors also have to take responsibilities for their own responsibilities, "so that there is no escalation."
This article on the situation in the Ukraine was posted on the German website spiegel.de yesterday during the Europe lunch hour...and its also courtesy of Roy Stephens. The original headline read "Opposition Protestors in Ukraine Erect Tent City in Kiev Overnight".
Israeli Prime Minister Benjamin Netanyahu claims that Iran is after the physical destruction of Israel and wants to create a new Holocaust. This is a false claim. The meaning of the statements by Iran's Supreme Leader Ayatollah Ali Khamenei and former President Mahmoud Ahmadinejad is that the Islamic Republic seeks a referendum in which all the Palestinians, as well as Jews and Christians of the historical Palestine, would participate, and through which the "government" of Israel would be de-established.
The reality is that Iran does not present an existential threat to the people of Israel. It is, in fact, Israel that is a serious threat to Iran.
Former Israeli Defence Minister Ehud Barak, anticipated the extent of a retaliatory response by Iran to an Israeli strike on its nuclear facilities to be limited to an estimated "500 death". "I don't think the result would be a world war or even a regional war," Yuval Steinitz, Israeli Minister of International Relations and Minister of Strategic Affairs, said on June 23. "I think Iran's possibilities to retaliate are very limited. It's also not in their interest to start a drawn-out war with the US. After all, their relations in the region are rather sensitive. I suppose there would be a response of two or three days of missile fire, perhaps even on Israel, on American bases in the Gulf. But I don't think it would be more than that - very limited damage."
The message is twofold: Israel is contemplating a military strike on Iran and it is, therefore, Israel, not Iran that is a menace to the security of a sovereign nation. Moreover, in the event of a military strike, Iran would be unable to present a serious threat to the security and the existence of Israel.
This commentary was posted on the aljazeera.com Internet site last Friday...and I thank South African reader B.V. for bringing it to our attention. This is definitely worth reading, especially for students of the New Great Game.
Australia's spy agency offered to share data about citizens with key partners, a 2008 document revealed by U.S. secrets-leaker Edward Snowden indicated.
The document included notes of a discussion among Australia and four partners on whether to share "medical, legal or religious information," and raised concern among rights advocates that the intelligence agency, then-known as the Defense Signals Directorate, may have been operating beyond its legal mandate, the British publication The Guardian reported Sunday.
The Australian intelligence agency, now called the Australian Signals Directorate, indicated it could share material without some of the privacy restraints imposed by other countries, the leaked document indicated.
"DSD can share bulk, unselected, un-minimized [raw] metadata as long as there is no intent to target an Australian national," notes from an intelligence conference said. "Unintentional collection is not viewed as a significant issue."
This UPI story, filed from Canberra, was posted on their Internet site yesterday...and it's the third news item of the day from Roy Stephens.
Protesters took to the streets of the Thai capital Bangkok again on Monday as a campaign to force the country’s Prime Minister Yingluck Shinawatra from power entered its second week.
Riot police fired rounds of teargas at demonstrators as they surged around barricades surrounding Government House, which houses Yingluck’s offices.
A Thai court issued an arrest warrant for protest leader Suthep Thaugsuban on charges of "insurrection" Monday for trying to topple the government, police said in a televised statement. The charges can carry a lifetime prison term or a death sentence, although capital punishment is rarely carried out in Thailand.
The renewed protests come after a weekend of unrest in the capital, which claimed the lives of at least three people and left dozens others injured. The violence is the latest turn in a conflict pitting Bangkok’s urban middle class and royalist elite against the mostly poor, rural supporters of Yingluck and her brother, Thaksin Shinawatra, a populist former prime minister ousted in a 2006 military coup.
This news item was posted on the france24.com Internet site yesterday...and is another offering from Roy Stephens.
In an era when the Obama administration has been focused on new forms of conflict — as countries use cyber-weapons and drones to extend their power — the dangerous contest suddenly erupting over a pile of rocks in the East China Sea seems almost a throwback to the Cold War.
Suddenly, naval assets and air patrols are the currency of a shadow conflict between Washington and Beijing that the Obama administration increasingly fears could escalate and that American officials have said could derail their complex plan to manage China’s rise without overtly trying to contain it. As in the Cold War, the immediate territorial dispute seems to be an excuse for a far larger question of who will exercise influence over a vast region.
The result is that, as the Chinese grow more determined to assert their territorial claims over a string of islands once important mainly to fishermen, America’s allies are also pouring military assets into the region — potentially escalating the once obscure dispute into a broader test of power in the Pacific.
This 2-page essay, co-filed from Beijing and Tokyo, was posted on The New York Times website on Sunday sometime...and I consider it well worth reading. It's another contribution from Roy Stephens, for which I thank him.
Beijing's recent establishment of a new air defense zone in the East China Sea is exacerbating long-running disputes with its neighbors Japan and Taiwan -- and threatens to draw the U.S. military into a larger regional conflict.
If it were only a matter of distance, the solution to a dispute over a small group of hotly contested islands in the East China Sea would be simple. Taiwan, which is just 200 kilometers (125 miles) away from the islands, would take the prize. The Chinese mainland is farther off, at 330 kilometers away, and the Japanese island of Okinawa even more distant, at 400 kilometers. Why then shouldn't small Taiwan take control of the five uninhabited islands and three rock outcroppings, known as the Diaoyu in China and Senkaku in Japan?
While Taiwan does lay claim to the islands, so do its more powerful neighbors, China and Japan. And the dispute is, unfortunately, not about distance. It has to do with influence and natural resources, with hegemony and nationalism, and with bitter historical memories and fresh, global aspirations -- in short, it's a toxic mixture of geopolitics. In fact, a military crisis is brewing in East Asia -- one that is being played out hundreds of thousands of kilometers away from these desolate islands.
Here's another essay on this subject. This one appeared on the spiegel.de Internet site yesterday...and it's the second last contribution of the day from Roy Stephens.
The latest flurry of claims, counterclaims and saber-rattling over the disputed islands between China, Japan and South Korea has been made more serious by the decision of the U.S. government to challenge China's assertion of control with a flight of B-52 bombers.
It has been for some years a commonplace for historically minded commentators to suggest that the rise of China is reminiscent of the rise of the Kaiser's Germany in the years before 1914.
In its different times, each country enjoyed dramatic economic growth, equally dramatic increases in military budgets, an assertive foreign policy and a deep resentment that other countries had and continued to conspire to keep them down.
The sudden crisis that has loomed over the islands that Japan calls the Senkakus and that China calls the Diaoyus (not forgetting the reef Koreans call Ieodo) thus triggers memories of the various diplomatic spats that erupted in the Balkans, Morocco and elsewhere in the years before 1914.
This commentary by UPI editor emeritus Martin Walker, filed from London, was posted on their Internet site just after midnight GMT on Monday...and is the final contribution of the day from Roy Stephens, for which I thank him. It's also worth reading as well.
1. John Embry: "Get Ready For a Worldwide Depression and Historic Social Unrest". 2. James Turk: "Metals War Rages and Today's Plunge in Gold and Silver". 3. Richard Russell: "Gold Smash and Danger For a Major Market". 4. Egon von Greyerz: "The Frightening Black Swan That Will Shock the World". 5. Robert Fitzwilson: "The Central Planners Most Terrifying Nightmare". 6. Michael Pento: "The Most Remarkable Predictions For the Year 2014". 7. Dr. Paul Craig Roberts: "U.S. Corruption and World Interference Failing". 8. KWN Special: "The Most Remarkable News In The Gold & Silver Markets". 9. The first audio interview is with Egon von Greyerz...and the second audio interview is with Dr. Paul Craig Roberts.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
Despite the beginning of the wedding season in November, gold imports have remained low. This has resulted in a fall in gold jewellery sales, which have gone down by 25% in comparison with last year. The economic slowdown and barriers imposed on gold imports by the Centre since June 2013 have led to lower imports for the last 3 months.
According to the latest figures, October saw the fifth lowest gold imports for a month in Gujarat in the last five years. Only 203kg was imported in November and 127kg in September. Imports in November this year are less than one percent of imports in the same period last year. In November 2012, 18.998 metric tonnes (MT) of gold was imported in the state.
"These are pre-placed orders, from much before the restrictions came into effect. Imports will continue to remain low in the coming months as bullion traders are being cautious," said Monal Thakkar, president, Amrapali Industries.
Silver imports recorded a 4-month high in 2013. This year, silver imports in November are at 163.849 metric tonnes compared to 0.137 MT of silver imports in November last.
This news item, filed from Ahmedabad, was posted on The Times of India website during their lunch hour today IST...and it's courtesy of Ulrike Marx.
Back in October gold researcher Koos Jansen and Jan Skoyles of The Real Asset Co. in London called attention to commentary by Zhang Jie, deputy editor of the Chinese publication Global Finance and a consultant to the China Gold Association, which cited the Federal Reserve's manipulation of the gold market to protect the U.S. dollar's standing as the world reserve currency.
Jansen has obtained a much better English translation of this Chinese commentary, and it includes this observation about gold leasing by Western central banks: "Through continuous gold leasing the gold in the market can be circulated and produce derivatives, creating more and more paper gold. This is very significant for the United States. Gold leasing is a major tool for the Federal Reserve and other central banks in the West to secretly control and regulate the gold market, creating gold credit derivatives and global credit conflict."
The new translation, headlined "Gold Leasing Is a Tool for the Global Credit Game," is posted at Jansen's Internet site.
There's a lot more in this GATA release than what is mentioned in the above three paragraphs, as Chris Powell has a fair amount to say...and a few other links as well. This is certainly worth your time.
Maintaining grossly disproportionate positions in the gold futures market, JPMorgan Chase is manipulating the market and governments may be part of the manipulation, Casey Research's chief economist, Bud Conrad, tells Dan Ameduri of Future Money Trends in an interview done a few days ago at the Metals and Minerals Investment Conference in San Francisco and posted today.
Conrad adds that a country that is accumulating gold -- presumably China -- might want to smash the futures price down to facilitate its acquisition of real metal, as by liquidation of shares in the gold exchange-traded fund GLD, a speculation recently offered by Eric Sprott of Sprott Asset Management in Toronto and William Kaye of Pacific Group in Hong Kong.
Conrad's interview with Ameduri is 11 minutes long and it was posted at Future Money Trends Internet site last Friday. I thank Chris Powell for wordsmithing 'all of the above'...and this interview is a must watch.
German financial regulator BaFin has started an official investigation of suspected manipulation of benchmark gold and silver prices set by a number of international banks.
The information regarding the investigation was reported by the Wall Street Journal Deutschland. WSJ journalists got an official confirmation from a BaFin spokesman: "Apart from Libor and Euribor, BaFin is also looking into other benchmark setting procedures at individual banks such as for gold and silver prices."
During the last year, the biggest global banks have been found guilty of rigging benchmark lending rates and manipulating the world's interest rates derivatives market, which involves trading in contracts that have a total notional value of tens of trillions of dollars.
This is another story I found embedded in a GATA release yesterday. This one was posted on the voiceofrussia.com Internet site last Friday. The actual headline reads "Germany's Regulators Investigate Manipulation in the Gold Market".
Economist and former banker Alasdair Macleod writes that Middle Eastern oil exporters are likely to turn away from the U.S. dollar and toward Europe and Asia as the United States reduces its purchases of oil from abroad.
Whether those oil exporters put more of their foreign exchange surpluses into gold, Macleod writes, may have as much impact on the gold and currency markets as what China does. His commentary is headlined "Arab Gold" and it's posted at his financeandeconomics.org Internet site. This is another item I found in a GATA release yesterday.
Four Gulf Cooperation Council countries will announce the introduction of a common currency by the end of December, a Bahraini daily reported on Sunday.
The common currency to be announced by Bahrain, Kuwait, Qatar, and Saudi Arabia will be pegged to the dollar, a source told the Akhbar Al Khaleej newspaper.
"The decision to peg the Gulf currency to the dollar is political and is not related to the economy," the source said.
"From an economic point of view, it would have been better to peg the new currency to a basket of currencies because the volume of trade of the Gulf states with the countries of the European Union is much larger than that of their commerce with the United States. Gulf exports of oil to the European Union are estimated to constitute about 70 per cent of European imports," the source said.
This story was posted on the gulfnews.com Internet site on Sunday...and is another article I found over at the gata.org website on Sunday.
How studiously Western journalists strive to miss the crucial point about gold.
One of them, Matthew Hart, who is touring news media outlets to promote his new book about the monetary metal, whose excerption in Vanity Fair magazine was brought to your attention a couple of weeks ago went on National Public Radio in the United States for five minutes on Sunday and lamented the extreme human and environmental costs of getting the metal out of the ground.
NPR's interviewer, Scott Simon, eagerly suggested that the metal isn't worth the trouble: "Hearing what it takes to get gold out of the ground might make people look down at, let's say, a gold wedding band on their finger and wonder if it's really worth it."
Yes, Mr. Simon, let's stop mining gold and continue to allow central banks to set the value of all capital, labor, goods, and services in the world -- and not only to set those values but to set them surreptitiously and undemocratically.
Here is another on-the-money commentary by GATA's secretary/treasurer Chris Powell. There are various links in this GATA dispatch as well...and it's worth reading.
Peter Munk built Barrick Gold Corp. into the world’s largest gold producer by expanding into Africa and South America. Now former Goldman Sachs Group Inc. President John Thornton is betting on China to help revive the beleaguered company’s fortunes.
Thornton, 59, currently co-chairman, already helps to oversee long-term corporate strategy. As part of that remit, he’s trying to establish partnerships with Chinese companies that may include investment in Barrick and future mining projects, said the people, who asked not to be identified discussing a private matter. China Investment Corp., the country’s largest sovereign wealth fund, is among potential partners Barrick has met with, the people said.
The leadership change at Barrick comes at the end of a difficult year for the company. It has lost 45 percent of its market value in 2013 while debt levels have soared after a slump in gold prices, rising operating expenses and a cost blowout at an $8.5 billion mining project in the Andes.
With a Goldman Sachs guy running Barrick, it's a sure thing that whatever he does won't be in the best interests of its shareholder, or the precious metals they dig out of the ground. This Bloomberg news item was posted on their Internet site yesterday afternoon Denver time.
Noting that the price of gold is starting to fall below the cost of production, Zero Hedge observed last night: "Not even Bernanke, Yellen, or all the paper gold exchange-traded funds in the world will be able to do much to suppress gold prices from reaching their fair value when gold production hits a standstill and when demand, especially by China, is still in the hundreds of tons each year."
The Zero Hedge commentary speculates about the gradual shutdown, company by company, of the gold mining industry as production costs cannot be recovered.
Of course there's no telling when enough of the world outside of a few central banks will wise up to paper gold and when the central banks that have been leasing and swapping their metal surreptitiously for price suppression will run out of metal they're prepared to lose, just as the central banks operating the London Gold Pool reached that threshold in March 1968. The next moment of transition might be many years away, or it could come tomorrow. (Most likely it will be a Sunday night U.S. Eastern time, which is when such things are usually sprung on the world by its unelected rulers.)
What may be most remarkable about the present is the silence of the gold mining industry and its supposed representative, the World Gold Council -- silence that, as the Zero Hedge commentary suggests, soon may be dead silence. [That applies in spades to the members of The Silver Institute as well. - Ed]
This is another excellent commentary by Chris...and the link to the Zero Hedge piece is embedded. It's a must read for sure.
We've focused a great deal on gold over the years, and we've taken a lot of heat in the last two, during which the price of gold has dropped by a third. Are we fanatics refusing to face reality, or are we doing the right thing, staying the course through thick and thin?
BIG GOLD's Jeff Clark has a well-reasoned answer for us below. I hope all our readers take his message to heart.
Given that all the reasons gold rose from 2001 to 2011 are still in force, I am convinced gold's current correction is the setup for a second big surge—and, ultimately, a true gold mania of historic proportions.
Just because gold doesn't seem to be reacting to Fed money-printing at the moment doesn't mean it won't. Sooner or later, reality trumps fantasy. Reason says that you can't quintuple your balance sheet in five years and expect no repercussions. The Fed keeps hinting it will taper its money printing, but it still has not. We've had QE1, QE2, Operation Twist, and now QE3… none of them has worked, and the new Fed chair wants to print even more money.
This commentary by Jeff Clark, with an introduction by Louis James, was contained in yesterday's edition of the Casey Daily Dispatch...and it's definitely worth reading.
Former Federal Reserve Chairman Alan Greenspan said the U.S. economy probably will grow more slowly next year than some forecasters predict and indicated that a record U.S. stock market isn’t in a bubble.
“This does not have the characteristics, as far as I’m concerned, of a stock market bubble,” Greenspan said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “It could come out that way but I don’t see it at this stage.”
Greenspan said that even with the rise in equities, the U.S. economy is restrained by a “degree of uncertainty” that is reducing investment. Economists who forecast 2.5 percent to 3 percent growth next year may be too optimistic, he said.
It's depressing to see a man of his age lie through his teeth like that, but that's why he makes the big bucks. This Bloomberg news item was posted on their Internet site late on Wednesday evening MST...and it's the first offering of the day from Roy Stephens.
Dinosaurs, Dodos, and soon "Bears"...What happens when they there's no one left to sell to?
You just read the entire one-sentence article...but it's the graph that makes the commentary worthwhile, and it's a must to view! I thank Ulrike Marx for her first offering in today's column...and for sending this Zero Hedge piece our way.
With every other bear throwing in the towel left and right these days, we fully expected that the latest letter by SocGen's Albert Edwards would have something about "how much he hates looking at himself in the mirror, but..." and then we would be served with some garbage like the following margin expectations chart.
Luckily none of that happened. Instead we were greeted by the sharp insight and keen intellect that we have grown to expect from AE, and that have disappeared from the repertoire of so many other sellouts and lemming cheerleaders. Ironically, the topic of Edwards' latest piece is precisely the chart above - the explosion in future margins, or rather the complete lack thereof. In fact, what Edwards is seeing is quite the opposite...To wit:
The margin squeeze that is unfolding as unit labour costs climb above company selling price inflation leaves the economy extremely vulnerable to a downturn in the investment cycle. Business output inflation is measuring a wider basket of goods and services than the Fed?s favoured measure of inflation, the core personal consumption expenditure (PCE) deflator, but it does move in a very similar fashion (see chart below). Low pricing power is leaving the US economy more vulnerable than many suppose. In my view, a full-blown profits and investment downturn is most likely to be triggered by Asian and EM devaluations releasing surplus capacity onto the West and crushing pricing power even further. As Ian Harwood, my former boss used to say, ?"Watch the profit cycle closely. We ignore it at our peril?."
This commentary by Albert Edwards found a home over at the Zero Hedge website on Wednesday...and I thank Roy Stephens for his first contribution to today's column.
As the Fed embarked on its stimulus endeavor, excess reserves banks hold at the Fed exploded from $1.9 billion in August 2009 to over $2.2 trillion as of September 2013, making up almost 84 percent of the monetary base, points out, writes Robert Auerbach in an article for the Huffington Post.
Banks do not pump those reserves into the economy by lending the money to consumers or businesses. Instead, they hold them as excess reserves because the Fed decided in October 2008 to pay them interest on reserve balances, Auerbach explains. Banks see that risk-free 0.25 percent rate as preferable to lending the funds out to consumers or businesses.
But the time bomb of excess reserves may explode if inflation increases, warns Auerbach, a former economist with the House of Representatives Financial Services Committee and the U.S. Treasury's Office of Domestic Monetary Affairs.
"If short-term interest rates rise above 3 percent, the Fed may have to pay perhaps 3 percent interest on excess reserves to keep the time bomb from exploding into the economy as the banks invest in more lucrative income earning assets."
No surprises here, of course. This article was posted on the moneynews.com website on Tuesday during the New York lunch hours...and it's courtesy of West Virginia reader Elliot Simon.
This 4:00 minute exchange between Jim and Mike was posted on the youtube.com Internet site on Monday...and it definitely worth watching. I thank reader Brad Robertson for sending it our way yesterday.
Eight of the top U.S. banks, including JPMorgan Chase & Co. and Bank of America Corp., may have an additional exposure of between $56.5 billion and $104 billion in potential mortgage-related payouts, an S&P report said.
Banks have faced a new wave of lawsuits as the government investigates their role in the packaging and sale of mortgage-backed securities comprising of bad loans in the run up to the financial crisis.
"Notably, mortgage-related litigation has recently gotten a second wind and has expanded beyond investor claims," S&P credit analysts led by Stuart Plesser wrote in the report.
The government has been seeking to hold firms liable under the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 (FIRREA), which it uses to recover civil penalties for losses to federally insured financial institutions.
This moneynews.com story was posted on their website early on Wednesday morning EST...and I thank Elliot Simon for his second contribution of the day.
American scientists have made an unsettling discovery. Crop farming across the prairies since the late 19th Century has caused a collapse of the soil microbia that holds the ecosystem together.
They do not know exactly what role is played by the bacteria. It is a new research field. Nor do they know where the tipping point lies, or how easily this can be reversed. Nobody yet knows whether this is happening in other parts of the world.
A team at the University of Colorado under Noah Fierer used DNA gene technology to test the 'verrucomicrobia' in Prairie soil, contrasting tilled land with the rare pockets of ancient tall grass found in cemeteries and reservations. The paper published in the US journal Science found that crop agriculture has "drastically altered" the biology of the land. "The soils currently found throughout the region bear little resemblance to their pre-agricultural state," it concluded.
You might say we already knew this. In fact we did not.
I was raised on a farm in my youth back in the 1950s...and as they say, you can take the boy out of the country, but you can never take the country out of the boy. This longish but very interesting essay from Ambrose was posted on the telegraph.co.uk Internet site very late on Wednesday evening...and is the sort of story that would show up in my Saturday column anyway. It's another contribution from Roy Stephens.
Canada allowed the U.S. National Security Agency (NSA) to conduct widespread surveillance during the 2010 Group of 20 summit in Toronto, according to a media report that cited documents from former NSA contractor Edward Snowden.
The report by the Canadian Broadcasting Corporation is the latest potential embarrassment for the NSA as a result of Snowden's leaks, although it remains unclear precisely what information the agency was looking for during the summit.
Snowden has already revealed the agency spied on close allies such as Germany and Brazil, prompting heated diplomatic spats with Washington.
The CBC report, first aired late on Wednesday, cited briefing notes it said showed the United States turned its Ottawa embassy into a security command post during a six-day spying operation by the top-secret U.S. agency as President Barack Obama and other world leaders met that June.
This Reuters story was posted on their Internet site during the New York lunch hour yesterday...and it's courtesy of Manitoba reader Ulrike Marx. Here's another story on it from the Russia Today website...and its courtesy of Roy Stephens.
French intelligence services worked “very closely” with the U.S. National Security Agency in spying on the country’s citizens, Le Monde reported, citing documents it said it obtained from Edward Snowden.
The outrage expressed by the French president after reports of NSA spying in the country made it seem like France was a “perfect victim,” the afternoon daily said. The documents, however, show that French intelligence agencies transfered massive amounts of data from France to their U.S. and U.K. counterparts, Le Monde said.
The level of cooperation today is such that personal information from Africa or the Middle East passing through France -- even on French citizens -- may be passed on to the NSA, the daily said.
This very short Bloomberg story, filed from Paris, was posted on their Internet site in the wee hours of yesterday morning Denver time...and it's also courtesy of Ulrike Marx.
EU home affairs commissioner Cecilia Malmstrom Wednesday (27 November) faced accusations that she has been too soft in her response to the US spying programme.
The commissioner told deputies in the civil liberties committee that she had closed an inquiry into allegations the US intelligence agency was accessing people’s financial details from the Belgian-based Swift company.
Malmstrom had earlier told reporter that the commission “won’t suspend any agreement with an international partner based on two newspaper articles.”
Dutch liberal MEP Sophie In 't Veld called the commission’s investigation into the Swift agreement a sham.
This news item was posted on the euobserver.com Internet site early on Wednesday evening...and it's definitely worth reading. I thank Roy Stephens for sharing it with us.
U.K. traders who’ve come under investigation for rigging benchmark rates may find themselves in another difficult situation -- unable to find a good lawyer.
The top attorneys at specialist white-collar crime firms say that, in the past few months, they’ve seen the largest number of finance workers ever seeking advice as probes into the London interbank offered rate, or Libor, expand to the manipulation of currency, derivatives and precious metals benchmarks.
About half a dozen law firms in the British capital specialize in advising individuals facing regulatory and criminal probes, while the largest London and U.S. based firms generally represent institutions. The increase in probes means that in a growing number of cases, the most experienced lawyers for individuals are turning traders away.
“There is an unprecedented increase in the number of individuals who need specialist legal advice,” said David Corker, a defense lawyer at Corker Binning. “The supply of such lawyers is limited because hitherto white-collar crime has been seen as largely a boutique or highly specialist area.”
This short news item, filed from London, was posted on the Bloomberg website late Thursday afternoon MST...and my thanks go out to Ulrike Marx for sharing it with us.
Bank of England Governor Mark Carney took action to restrain the U.K.’s house-price boom by ending incentives for mortgage lending in a package aimed at curbing “evolving risks” to financial stability.
“This will help keep the housing market on a sustainable path and ensure the broader economy continues to receive the stimulus it needs, for as long as it needs, to sustain the recovery,” Carney told reporters in London today. “By acting now in a graduated fashion, authorities are reducing the likelihood that larger interventions will be needed later.”
The pound rose and construction stocks fell as Carney unveiled changes to the central bank’s Funding for Lending Scheme that will mean it only applies to business loans from 2014 and will no longer be available for household borrowing. Regulators will also end a measure that allowed banks to not hold capital against mortgages granted under the program.
This Bloomberg article, filed from Brussels, was posted on their website very early yesterday morning Denver time...and it's another contribution from Ulrike Marx, for which I thank her.
The list of euro-zone countries with immaculate credit ratings took another hit this week. On Friday morning, Standard & Poor's (S&P) removed the Netherlands' top rating, downgrading the country to AA+. This leaves only three countries in the common currency area with the best grade of AAA: Finland, Luxembourg and Germany. Two years ago, six countries still had that rating.
S&P stated the downgrade resulted from weaker prospects for economic growth than previously anticipated. The agency said the atmosphere would make it more difficult for the government to reach its fiscal targets. Despite a "stable" outlook for the Netherlands, the company said the development of the country's per capita gross domestic product is "persistently lower" than nations with similarly high levels of economic development. The other two major rating agencies, Moody's and Fitch, have also threatened the Netherlands with a downgrade.
Dutch Finance Minister Jeroen Dijsselbloem, who is also president of the Euro Group, recently announced that his country would violate the European Commission's deficit rules despite an additional €6 billion ($8.16 billion) austerity package.
The credit ratings of all nations are junk, as the debt that they've issued will never, ever be paid back in a currency worth anything near what its purchasing power is today. This news item was posted on the German website spiegel.de yesterday during the European lunch hour...and I thank Roy Stephens for sending it.
The protocol highlight of Friday's Eastern Partnership Summit was supposed to be the formal signing of an agreement between Ukraine and the European Union. But Ukrainian President Viktor Yanukovych no longer wants to be Europe's new best friend, so he put the deal on ice.
As a result, the highlight is now a different and, above all, sensitive one: German Chancellor Angela Merkel met the unyielding Yanukovych on Friday morning. But in what context? A German protocol official had a loud phone conversation in the hotel lobby: "The Ukrainians want the interpreter to sit at the table, as well," he exclaimed. They had brought a flag, he continued, before asking if that would be a problem. And, ah yes, the Ukrainian delegation wanted to sit on right-hand side. "At first glance, I can't see any downside for us," the official said carefully into his mobile phone.
With delicate details of ice-age diplomacy like these, the summit has been thrown back from what should have been the prelude to a very good friendship. It is not just the failure of the agreement that is on display in Vilnius, but also the failure of the EU's strategy toward Eastern Europe as it devolves into mere helpless announcements.
This is another news item that Roy Stephens extracted from the spiegel.de Internet site yesterday. It's a must read for sure, especially for all serious students of the New Great Game.
Despite a ratings 'upgrade' Spain's youth unemployment rate has re-surged to a record 57.4% (just below that of Greece which still tops the scary chart list at 58%). Italy and Portugal also saw notable rises (despite the former's record low short-dated bond yields) at 41.2% and 36.5% respectively. Ireland and France saw modest improvements but overall the Euro-zone's youth unemployment just keeps rising. In spite of all the rhetoric from Merkel, Van Rompuy, and Barroso, 24.4% of Europe's under-25 population is unemployed.
This is another Zero Hedge piece from yesterday. The above paragraph is all the words there are, but the graph is definitely worth the trip...and it's another contribution from Ulrike Marx.
Messages between traders in a commodities chat room last week ranged from the dating habits of Kim Kardashian’s mother to West African pirates plundering oil and gas reserves to a riddle.
Chat-room messages, like these provided to Bloomberg News by a participant, have taken the role of exchanges or trading pits in markets that lack them. They are a place to discuss offers and prices for currencies and energy swaps, as well as to gossip about reality TV stars or tell bad jokes. They also leave a trail of dealers’ online behavior.
The investment-banking arm of UBS AG, Switzerland’s largest bank, told employees yesterday it was banning the use of multi-bank and social chat rooms as regulators around the world probe manipulation in the $5.3 trillion-a-day foreign-exchange market. JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc are considering similar actions. Transcripts of chat room discussions helped regulators identify traders’ wrongdoing in the rigging of global benchmark interest rates, or Libor.
This Bloomberg story, filed from New York, was posted on their Internet site late Wednesday evening EST...and I thank Ulrike Marx for sending it our way.
On November 7, when the ECB announced a "surprising" rate cut, 67 out of 70 economists who never saw it coming, were shocked. We were not. As we observed ten days prior, Europe had just seen the latest month of record low private sector loan growth in history. Or rather contraction.
Back than we said that "one of our favorite series of posts describing the "Walking Dead" monetary zombie-infested continent that is Europe is the one showing the abysmal state Europe's credit creation machinery, operated by none other than the
Bank of Italy's, Goldman's ECB's Mario Draghi, finds itself in." We concluded: "we now fully expect a very unclear Draghi, plagued by monetary zombie dreams, to do everything in his power, even though as SocGen notes, he really has no power in this case, to show he has not lost control and start with a rate cut in the November ECB meeting (eventually proceeding to a full-blown QE) in order to boost loan creation."
Less than two weeks later he did just that. The problem, as the ECB reported today, is that not only did M3 decline once more, to 1.4% or the slowest pace in over 2 years and well below the ECB's 4.5% reference growth value, but more importantly lending to companies and households shrank 2.1% in October - the biggest drop on record!
Draghi's monetary zombies are winning.
This must read commentary was posted on the Zero Hedge website yesterday morning EST...and it's also courtesy of Ulrike Marx.
The Greek economy will stay in recession in 2014 for the seventh consecutive year, according to the OECD.
The Paris-based Organisation of Economic Co-operation and Development (OECD) think-tank forecasts a further 0.4 percent economic slowdown next year in its economic survey of Greece published Wednesday (27 November), lower than the 0.6 percent growth currently projected by the Greek government and its creditors.
It also says that Greece will struggle to bring its debt burden below a massive 160 percent of GDP by the end of the decade, nearly 40 percent higher than the 124 percent expected by the European Commission.
The OECD states that a sharp fall in prices could also force Greece to seek more time and money from its creditors. Greece is currently three years into a €240 billion emergency loan programme.
This story, filed from Brussels, was posted on the euobserver.com Internet site on Thursday morning Europe time...and once again I thank Roy Stephens for bringing this new item to our attention.
Two decades after the start of its economic miracle, India is falling behind its rival China. Corruption is rampant, and investors are pulling out of the country. Will parliamentary elections next year offer a fresh start?
Hailed for two decades for its miraculous ascent, India's economy is now faltering. Growth, once around 10 percent, is now less than half that. The International Monetary Fund (IMF) predicts it will ultimately be under 4 percent for the current year, as it was last year as well.
That would mean India's economy is growing only half as fast as that of China, which serves as factory to the world. China's economy, too, is flagging at the moment, but at a comparatively luxurious level. India, though, faces the challenge of freeing its population from poverty. One third of all Indians scrape by on less than $1.25 (€0.90) a day. Only high growth rates will help them move closer to prosperity.
This 2-page essay, which is a very interesting read, was posted on the German website spiegel.de late yesterday morning Europe time...and it's courtesy of Roy Stephens once again.
The U.S. military is conducting daily flights through China’s newly declared air-defense zone without notifying Beijing authorities in advance, a U.S. defense official said today.
The disclosure indicates that U.S. flight activity in the area, where China has unilaterally sought to exert control, is more extensive than was previously known. The Pentagon had acknowledged a flight by two unarmed B-52 bombers through the air zone earlier this week.
The defense official, who asked not to be named discussing military operations, wouldn’t specify the type of aircraft used in subsequent flights nor say whether any of them are armed.
“It’s very important the U.S. signal to the Chinese that we’re not going to be bullied and that we’re going to adhere to our commitments,” which include a defense treaty with Japan, said Nicholas Burns, a former U.S. undersecretary of state for political affairs from 2005 to 2008.
This short Bloomberg story showed up on their website during the Denver lunch hour yesterday...and it's must read for all students of the New Great Game. If you can believe it, I found this article all by myself!
Chinese companies have pumped billions into Africa to secure access to natural resources, boosting countries' economies along the way. Ordinary citizens aren't reaping the benefits, though, and have become increasingly wary of the new investors.
In a three-part series, SPIEGEL is exploring fundamental changes occurring in Africa -- a continent the West has long written off, but is now being embraced by other countries. This is Part I of the series. An introduction can be read here.
This very interesting essay was posted on the spiegel.de Internet site late yesterday afternoon...and is certainly another must read for all students of the New Great Game. I thank Roy Stephens for his final contribution to today's column.
1. Grant Williams: "Shocking Chart Shows Gold Will See Astronomical Levels". 2. Dr. Paul Craig Roberts: "Former U.S. Treasury Official - China To Dominate U.S." 3. Egon von Greyerz: "Gold, Money, China and Frightening Worldwide Destruction".
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
The price of Bitcoin is now within a stone's throw of the price of gold.
The digital currency already set a record earlier today on the Mt. Gox exchange, touching $1,242 (it's since come back down to $1,162).
Meanwhile, gold is at $1,250 an ounce.
At this point, the unending surge in Bitcoin prices appears to be riding a wave of speculative momentum. The price of a March Bitcoin future on Swedish-based ICBIT.se (though on admittedly thin volume) is more than $1,700.
The Dutch had tulip bulbs in the 18th century. The 21st century will be remembered for Bitcoin. You couldn't make this stuff up. This story, if you wish to dignify it with that name, was posted on the businessinsider.com Internet site yesterday morning EST...and I thank Scott Pluschau for sending it our way.
Venezuela's central bank president denied on Thursday that the institution is carrying out any transactions with Wall Street banks, a day after a senior government source said it was evaluating a swap agreement involving its gold reserves.
Opposition leaders and local media have reported that Venezuela is seeking to boost availability of hard currency through transactions with Goldman Sachs and Bank of America.
"With respect to the institutions you've mentioned, the central bank ... is not carrying out any operations with these institutions," Central Bank President Eudomar Tovar said at a press conference in response to a question about the reports.
This Reuters news item, filed from Caracas, was posted on their website early Thursday afternoon EST...and I found it embedded in a GATA release.
Gold trade between Turkey and Iran will resume, albeit at lower levels than last year, once sanctions on Iran are eased, Iran's ambassador to Turkey said on Friday.
Turkey's gold trade with Iran boomed in 2012 when Ankara was paying for its natural gas and oil imports with Turkish lira and Iranians were using those deposits held in Turkey's Halkbank to buy gold.
"Certainly the gold trade between Iran and Turkey will resume," the ambassador, Ali Reza Bigdeli, told reporters in the Turkish capital on Friday.
"Due to the problems in money transfers in 2012, the gold trade rose. I don't think that we are still in the same situation that would require us to trade in gold in those amounts," he said.
This Reuters story, filed from Ankara, was posted on their website very early yesterday morning EST...and I found it embedded in a GATA release as well.
Despite the major under-supply of platinum and strong upcoming demand, platinum prices remain at levels that leave many South African mines under water.
Exactly how the price of platinum is determined – particularly in futures markets – needs to come under scrutiny.
Are the futures markets dominating the physical markets, rather than the other way round? Does this mean that futures markets can basically set the price at any level? Is the traditional function of the market not being turned on its head?
Precisely, dear reader! This encouraging story that asks all the right questions, was posted on the miningweekly.com Internet site yesterday. An unidentified reader from South Africa brought this to our attention.
Gold merchants in the state of Kerala in India could be setting a trend of sorts with their dual pricing system. Two organisations in the Southern state are bringing out separate rates for daily sale at retail points.
Market traders say the move is an upshot of the spurt in smuggling which has spawned a grey market for retail gold. The difference in rates also indicates the yawning demand supply gap and bristling competition among traders of the precious metal, and goes beyond being just a tool to attract customers.
The South Western state of Kerala boasts of a large number of reputed brands, with the state accounting for a sizeable chunk of the country’s gold market.
This very interesting story, filed from Mumbai, was posted on the mineweb.com Internet site yesterday...and I thank Ulrike Marx for bringing it to my attention, and now to yours.
A short-supply of gold in India, the world's largest consumer of the precious metal, is forcing Indians to recycle family heirlooms, melted down to be reused as gifts during the ongoing wedding season.
Some one million couples are expected to get married in the ongoing wedding season that runs through May, as the season has 71 auspicious wedding days. About 33,000 couples were married on 19 November alone, the highest on any day so far this year, reported Reuters.
Gold demand typically surges during the wedding season, which follows the festival season, as gold jewellery is gifted to the bride and the bridegroom. A ring, a pendant or earrings typically weigh 5-10 grams while a necklace or a pair of bangles could weigh upwards of 50 grams.
However, government restrictions on surging gold imports, blamed for amplifying the country's trade deficit, and three upward revisions to the import taxes on gold, have made it hard for jewelers to source the raw material.
This story was posted on the International Business Times website yesterday morning GMT...and it's another article from Ulrike Marx, for which I thank her.
Sri Lanka scrapped a 100 percent surcharge on gold imports and cut import duty with immediate effect, officials said on Friday, after measures imposed in mid-2013 to curb purchases of the metal from abroad halted them completely in the third quarter.
Apart from removing the customs surcharge, the government cut import duty to 7.5 percent from 10 percent, partly to help the island's struggling jewellery industry, officials said.
Sri Lanka placed a 10 percent duty on gold imports in June to discourage traders who were buying it abroad then smuggling it from Sri Lanka to top gold consumer India, where prices for the metal were higher. It later followed up with the 100 percent surcharge.
This Reuters news item, filed from Colombo, was posted on their website late yesterday morning EST...and I thank Ulrike Marx for her final offering in today's column.
Gold researcher Koos Jansen calls attention to the minutes of a U.S. State Department meeting in April 1974 summoned by Secretary of State Henry Kissinger to consider the danger that the price of gold might get beyond the U.S. government's control.
The objective of U.S. policy about gold during this time has not been secret; GATA has cited government records demonstrating it.
But the minutes published by Jansen tonight are especially remarkable for making explicit the U.S. government's recognition of what some gold advocates call "the golden rule" -- that is, whoever has the most gold makes the rules.
This commentary easily falls into the absolute must read category...and it's worth reading twice in my opinion. It was posted on the gata.org Internet site in the wee hours of Friday morning EST.
The Federal Reserve has created an economic problem worthy of a Shakespearean tragedy. On the one hand they have worked tirelessly to support the markets and prevent an economic depression while on the other hand, they have also created a problem for which is no clear solution. The bond buying program instituted by the Fed has been similar to casting economic spells over global markets, convincing them that all is well. However, deciphering their next move has been an exercise in reading economic entrails for forward guidance.
You can imagine the twelve ‘witches’ of the FOMC mixing a brew of unemployment statistics, GDP forecasts, inflation expectations and shreds of economic data into a ‘witches brew’ that will determine whence tapering begins. The market is obsessed with this date and it has coloured every significant market movement since the Fed shocked market watchers and delayed ‘the taper’ after their meeting in September. Market indices have gyrated with economic data as they get added to the cauldron of economic decision making that the twelve governors stir to generate apparitions for market participants to interpret.
These images have bedeviled markets in a ‘fair is foul and foul is fair’ interpretation of events. Even yesterday, a gauge of upcoming home sales fell in October for the fifth straight month, the latest sign that higher prices and borrowing costs are denting the housing rebound. While this news should be negative for the stock market, in fact it rallied, in hopes that tapering might be delayed and continued stimulus would push markets even higher. The latest housing data "are a reason for the Fed to remain cautious” about slowing the bond-buying, said Jim O'Sullivan, chief U.S. economist at High Frequency Economics. Once again market participants are left to interpret the foggy images appearing above the economic cauldron the FOMC stirs for guidance.
This commentary by David Franklin was posted on the sprottgroup.com Internet site yesterday...and it's definitely worth reading.
"It's only a question of time before the central banks lose control," David Stockman warns a shocked CNBC anchor, "and a panic sets in when people realize that these values are massively overstated."
The outspoken author of The Great Deformation rages "the Fed is exporting its lunatic policies worldwide," as central banks around the world have followed the Fed's lead, "for either good reasons of defending their own currency and their trade and their exchange rate, or because they're replicating the Fed's erroneous policies."
If one cares to look, Stockman adds, "there are bubbles everywhere," citing Russell 2000 valuations of 75x LTM earnings as an example, "that makes no sense. It's up 43% in the last year, but earnings of the Russell 2000 companies have not increased at all." This is dangerous, he strongly cautions, "I haven't seen too many bubbles in history" that haven't ended violently.
This short Zero Hedge piece from yesterday afternoon has a 3-minute CNBC video clip embedded in it...and it's worth your time as well. I thank Manitoba reader Ulrike Marx for her first offering in today's column.
Do you remember the days when travel used to be glamorous and sexy? The mere prospect of getting on an airplane was tremendously exciting. Friends and family would come with you to the gate to see you off and pick you up.
Today, millions of passengers in the Land of the Free will take off their shoes and assume the “I surrender” pose inside a radiation machine that provides negligible benefit and maximal cost to taxpayers.
Our modern security theater is a stark contrast to the past. But there’s been something else happening over the last several decades that is even more insidious… and far less obvious.
This very interesting commentary by Simon was posted on the sovereignman.com Internet site yesterday...and I thank reader M.A. for pointing it out.
The message is sinking in: Economies of the rich world face super-easy money far into the future and central banks are now convinced it's the least of all policy evils.
Despite rumblings of dissent about the financial bubbles and iniquities associated with zero interest rates and money printing, 2013 is ending with a remarkable certainty among global investors that cheap money is around for the long haul.
That's not to say money managers are all cheer leading this. Many who spoke at Reuters Investment Outlook summit last week doubted its long-term efficacy and feared its social and political fallout even as waves of cheap cash continue to push stock markets to new records.
This Reuters piece, filed from London, was posted on their website in the wee hours of yesterday morning EST...and I found it embedded in a GATA release. The real headline reads Analysis: Surfing central banks in a benign 'QE trap'. It's well worth reading in my opinion.
Russian President Vladimir Putin dismissed European leaders’ criticism of Ukraine's decision to delay a key EU pact, as thousands rallied in Kiev in a third day of protests.
Kiev announced last week it was halting efforts to integrate with the European Union, saying the economy could not afford to sacrifice trade with Russia and would rather focus on restoring ties with Moscow.
The EU accused Russia of pressuring its smaller neighbour not to sign the deal.
EU President Herman Van Rompuy and European Commission head Jose Manuel Barroso said they "strongly disapproved" of Russia's actions, prompting Putin to urge European leaders to tone down their criticism.
This story, filed from Kiev, was posted on the france24.com Internet site yesterday...and it's the first contribution of the day from Roy Stephens.
Former Italian Prime Minister Silvio Berlusconi was expelled from parliament for violating an anti-corruption law, ending a 19-year tenure that spanned four recessions that did little to dent his personal popularity.
The Senate voted to strip the 77-year-old billionaire of his seat, Speaker Pietro Grasso said today. The decision ends a three-month process begun after Berlusconi, who won three general elections and spent nine years as premier, lost his final appeal against a 2012 tax-fraud conviction.
The expulsion completes the downfall of Italy’s most influential politician. Berlusconi, who presented himself as a tax-cutter with the managerial talent to spur the economy, was hampered as head of government by criminal trials and squabbles within his parliamentary coalitions. In the last two years, as a member of the ruling alliances led by Mario Monti and Enrico Letta, he supported, and then criticized, austerity policies.
This Bloomberg news item, filed from Rome, was posted on their website yesterday morning Denver time...and it's courtesy of Roy Stephens as well.
Iran has begun talks with potential investors in its energy industry, oil minister Bijan Zanganeh told the Financial Times, after Tehran struck a nuclear deal that may help western oil giants move back into the country someday.
Iran is home to some of the world's largest oil and gas reserves, but U.S. energy firms have been barred by Washington from Iran for nearly two decades.
Many of Europe's biggest oil and gas companies had planned multi-billion dollar investments to help develop Iranian reserves. But U.S. pressure drove them away from Iran in the late 2000s for fear of jeopardizing their U.S. interests.
This Reuters story, filed from Dubai, was borrowed from a Financial Times article yesterday...and I thank Casey Research's own Laurynas Vegys for bringing it to our attention.
It didn't take long to escalate Iran-Saudi relations, or the lack thereof, following this weekend's nuclear (non) deal. Moments ago Iran's Fars news agency reported that Iran’s coast guards have seized two Saudi fishing vessels after they entered the Islamic Republic's territorial waters, a provincial official announced on Wednesday.
“Yesterday, the coast guards deployed in the country’s Southern waters came to spot two vessels in Iran’s protected waters in the South using electronic and optic tools and equipment,” Commander of Bushehr province Coast Guards Qalandar Lashkari said. He said that the Iranian coast guards rushed to the scene and were faced with two vessels which were illegally fishing in the Iranian waters under the Saudi flag.
It was not immediately clear if, as in the case of China's air defense zone, the U.S. promptly decided to drive a battleship in Iran's territorial waters, just because it can. However, the Saudi response will certainly be just as acute.
This news item was posted on the Zero Hedge website early yesterday morning EST...and I thank Ulrike Marx for sharing it with us. It's a must read, especially for serious students of the New Great Game.
Defense Secretary Chuck Hagel, in a phone call on Wednesday with his Japanese counterpart, reaffirmed that the U.S.-Japanese defense treaty covers a small island group where China established a new airspace defense zone last week.
Hagel, in a call with Defense Minister Itsunori Onodera, "commended the Japanese government for exercising appropriate restraint" following China's announcement and pledged to consult closely with Tokyo to avoid unintended incidents around the islands, a Pentagon spokesman said.
China and Japan both claim possession of the islands.
Those above three paragraphs are all there is to this Reuters piece that was posted on their website late yesterday morning EST...and it's another contribution from Ulrike Marx.
Asia is on the cusp of a full-blown arms race. The escalating clash between China and almost all its neighbours in the Pacific has reached a threshold. All other economic issues at this point are becoming secondary.
Beijing's implicit threat to shoot down any aircraft that fails to adhere to its new air control zone in the East China Sea is a watershed moment for the world. The issue cannot easily be finessed. Other countries either comply, or they don't comply. Somebody has to back down.
The gravity of the latest dispute should by now be obvious even to those who don't pay attention the Pacific Rim, the most dangerous geostrategic fault line in the world.
This Ambrose Evans-Pritchard blog was obviously posted on the telegraph.co.uk Internet site before the U.S. Air Force flew two B-52 bombers through the disputed air space now claimed by China. I posted a ZH story about that incident yesterday. This AE-P commentary is an absolute must read...and I thank Roy Stephens for bringing this critical news item to our attention.
The escalating standoff in the Pacific is seen by Beijing and Seoul as proof that Japan is reviving its military mindset.
The deepening confrontation between Japan and its giant neighbour, China, over a disputed island chain, which this week sucked in US military forces flying B-52 bombers, holds no terrors for Kenji Fujii, captain of the crack Japanese destroyer JS Murasame.
As a battleship-grey drizzle sweeps across Yokosuka harbour, home port to the Japan maritime self-defence force and the US Seventh Fleet, Fujii stands four-square on his helicopter deck, a totemic red Japanese sun-ray ensign flapping at the flagstaff behind him. His stance exudes quiet purposefulness.
The Murasame, armed with advanced missiles, torpedoes, a 76mm rapid-fire turret cannon and a vicious-looking Phalanx close-in-weapons-system (CIWS) Gatling gun, is on the front line of Japan's escalating standoff with China and its contentious bid to stand up for itself and become a power in the world once again. And Fujii clearly relishes his role in the drama.
Here's more recent commentary on this incident that was posted on The Guardian website late yesterday evening GMT...and it, too, is a must read. It's the final offering of the day from Roy Stephens, for which I thank him.
1. Investors Intelligence: "We Haven't Seen Shocking Numbers Like This in Years". 2. Louise Yamada: "Still The Fed's Party - Melt Up?". 3. Tom Fitzpatrick: "Fantastic Chart Shows Key Commodity That May Help Gold". 4. The audio interview is with William Kaye.
[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests, to them, and not to me. Thank you. - Ed]
The U.S. Federal Reserve was pressing JPMorgan Chase & Co. to distance itself from its metals warehousing business more than a year ago, documents seen by Reuters show, long before the issue became a focal point in the debate over Wall Street's role in physical commodities trading.
A series of letters between JPMorgan's lawyers and the Fed, released to Reuters through a Freedom of Information Act request, show Wall Street's primary regulator took a tough stance on the bank's efforts to hold onto the global network of Henry Bath & Sons warehouses, part of the larger RBS Sempra commodity trading business it bought in mid-2010.
The correspondence shows the Fed balked at JPMorgan's request to turn the one-time trading assets into a strictly arms-length financial investment back in June 2012, and told the bank it must provide quarterly updates on what it was doing to either comply with banking rules, or sell the business.
This interesting Reuters story was picked up by the businessinsider.com Internet site very early yesterday morning...and I thank Scott Pluschau for bringing it to our attention.
Judging by the keynote presentations at the San Francisco Metals and Mining Investment Conference, there seems to be a bit of a consensus developing among the pro-gold mining analysts. They all do seem to feel that now may well be the time to take the plunge back into gold stocks, although one needs to be highly selective when it comes to the juniors – perhaps less so if going for the Tier 1 producers. Never mind that some have been preaching similar views throughout the way down, but seldom has there been such close correlation in their opinions.
What does also seem to have been of particular note about the recent event is the big fall in numbers of attendees and in participating junior mining companies. Even a year ago when the industry was depressed already, numbers of both at this event remained reasonable, although far from breaking any records. What will be really interesting now is how much lower the attendances will be at the Minerals Exploration roundup in Vancouver in January and at the PDAC in Toronto in March.
While both these events see major participation from the manufacturers and the Canadian provinces, one suspects that overall numbers will likely be down – perhaps quite severely and there will be many juniors staying away altogether given they are in cash preservation mode and the cost of attending these events, particularly when one adds in time and accommodation as well as exhibit and booth design costs, starts becoming significant when the treasury may be down to a few thousand dollars. While not many quoted companies have yet fallen off the exchanges as unable to meet requirements, the attrition rate is likely to start to increase strongly in the next few months if the gold price, in particular, stays at around current levels – or, horror of horrors, dips further.
This commentary by Lawrence Williams was posted on the mineweb.com Internet site yesterday...and it's worth reading if you have time for it. It's another story courtesy of Ulrike Marx.
In the second part of this exclusive 18-minute video interview for Matterhorn Asset Management, independent financial journalist Lars Schall talked with book author Dimitri Speck about, inter alia: the prime virtues of gold as the antagonist of the fiat money/credit system; the notable central bank arrangement between the U.S. Fed and the Deutsche Bundesbank in 1967 preparing the terrain for the dollar standard; the asset price inflation phases that followed ever after; the rising importance of gold in the central banking system; and last but not least Speck’s views on the rigging of the silver market in light of intraday statistics.
This video interview arrived in my in-box in the wee hours of this morning, and I haven't had the time to watch it yet.
Mike Kosares of Centennial Precious Metals in Denver muses on the question of who is benefiting from the recent retreat in the gold price. Kosares seems inclined to think that it has had something to do with the need to repatriate Venezuela's and Germany's foreign-vaulted gold reserves. Whatever the cause, Kosares writes, the gold price suppression perpetrated by the London Gold Pool in the 1960s...and by the gold sales of the United States and the International Monetary Fund in the 1970s "collapsed in a heap and gold rose in multiples, and both events represented the calm before a major monetary storm."
GATA doesn't know if any of us will live to see that day. All we can do is try to hasten it and thereby restore free markets, liberty, democracy, fairness, and progress.
This commentary was posted on the usagold.com Internet site yesterday...and I borrowed "all of the above" from Chris Powell's GATA release, for which I thank him.
This is Part 5 of the excellent series on money by Mike Maloney. It runs for just under 30 minutes...and was posted on the youtube.com Internet site two days ago...and it's definitely worth watching.
Bron Suchecki from The Perth Mint deals with the 'lunatic fringe' of the precious metal world as gently as possible in his latest commentary posted over at the goldchat.blogspot.com Internet site. It's definitely worth reading...and his comments, along with another link, was posted on the gata.org Internet site yesterday.
Goldman Sachs Group Inc. and Bank of America Corp. are among Wall Street firms that offered deals to help Venezuela obtain U.S. dollars amid a plunge in the nation’s foreign reserves.
A swap proposed by Goldman Sachs would provide $1.68 billion in cash and be backed by $1.85 billion of the central bank’s gold, documents obtained by Bloomberg News show. Bank of America said it could be an intermediary for $3 billion in payments to firms seeking U.S. dollars, documents show. Neither deal has been completed, a government official with direct knowledge of the matter said, requesting anonymity because the talks are private.
Dollars are becoming scarce in Venezuela, limiting the supply of products from medicine to toilet paper in a nation that imports about three-quarters of goods it consumes. Foreign reserves dropped 28 percent this year, touching a nine-year low of $20.7 billion this month, largely because 70 percent of the assets are in gold. The metal plunged 26 percent in the period.
This Bloomberg news item was posted on their website early yesterday morning MST. I found this story in a GATA release whose headline reads "Goldman to BofA Pitch Venezuela Deals to Drum Up Dollars." Chris made the comment that..."Instead of pawning its gold, Venezuela should try demanding gold as payment for its oil. The banks would start paying Venezuela monthly protection money just for the country's refraining from doing that."
Turkey’s gold exports to Iran may hike dramatically if western sanctions against Iran are eased, said Ayhan Güner, head of Turkey’s Jewelry Exporters Association, via a written statement on Nov. 25.
“We can increase our gold exports to Iran dramatically if the sanctions against Iran are eased,” he noted.
More importantly, Turkey may export jewelry to Iran, which has been banned by Iran, he said.
“It will be very positive for our sector if we can sell jewelry, other than gold, to Iran,” he added.
This short story, filed from Istanbul, was posted on the hurriyetdailynews.com Internet site on Tuesday...and I thank Ulrike Marx once again for finding it for us.
Jewellers across India are in a quandary. Even as gold prices jumped by $3.52 (Rs 220) to $509 (Rs 31,720) per ten grams in Mumbai on November 27, given the ongoing marriage season demand and amidst a firm global trend, large jewellers across the nation are struggling given their severe inventory crunch.
"We have stocks that would last only ‘til the year end. A major worry has been that debt has been rising because we now have to pay the cost of gold upfront, whereas earlier, gold was available on lease," said Suman Mehta, bullion retailer at Mumbai's Zaveri Bazaar.
"There is a severe inventory crunch. While big jewellery houses have a large inventory bank and would not have been impacted with the government's norms, smaller jewellers have been caught off guard by RBI’s strictures," said Manoj Kedia, another jeweller.
This mineweb.com story, filed from Mumbai yesterday, is worth reading...and it's also courtesy of Ulrike Marx.
Far from slowing down, net Chinese gold imports through Hong Kong accelerated in October to 131.2 tonnes according to figures sent to Reuters today - the seventh month this year that China has imported over 100 tonnes of gold and the sixth in a row. Imports appear once again to be being stimulated by the lower gold prices currently prevailing. A Bloomberg comment suggests the figure was slightly lower at 129.9 tonnes and that this demand strength is also due to jewellers and retailers purchasing gold to build up stocks ahead of what is usually the peak demand season for gold purchases on the Chinese mainland and in Hong Kong itself.
Again this increased volume of imports through the former British Crown Colony highlights how conservative the estimated figure for Chinese gold imports via this route of 1,000 tonnes, so frequently quoted by most media, was when it was made by the World Gold Council, using GFMS figures, much earlier in the year. The statistics now show that the 1,000 tonne figure has probably been reached comfortably already now we are almost at the end of November and the likely figure for imports through Hong Kong alone this year will be more like 1,200 tonnes. This ties in strongly with the recent report from China’s biggest jewellery company Chow Tai Fook of almost doubled sales through the first half of the current year as the Chinese continue to buy gold in volume.
This excellent and absolute must read commentary by Lawrie Williams, was posted on the mineweb.com Internet site yesterday morning GMT...and I thank Ulrike Marx for today's last story, and her final contribution to today's column.