Even after the Dow and the S&P 500 closed at new all-time highs, closely followed contrarian Marc Faber keeps sounding the alarm.
"We have a bubble in everything, everywhere," the publisher of The Gloom, Boom & Doom Report told CNBC's "Squawk Box" on Friday. Faber has long argued that the Federal Reserve's massive asset purchasing programs and near-zero interest rates have inflated stock prices.
The catalyst for a market decline, as he sees it, could be a "raise in interest rates, not engineered by the Fed," referring an increase in bond yield
There are two short interviews back to back here, both totaling a bit over 4 minutes---and they run concurrently. The first reader through the door with this CNBC video clip yesterday, was Ken Hurt.
[Early Thursday], the Fed released its latest Z.1 (Flow of Funds report) for the second quarter, there were no surprises: thanks to the relentless liquidity injections by global central banks (charted here) resulting in record stock market levels, total household net worth rose once more, increasing by $1.4 billion in the quarter (up from a downward revised $1.2 billion in the previous quarter) to a new record high $81.5 billion.
This was the result of a $95.4 trillion in total assets, offset by $13.9 trillion in liabilities, mostly mortgage debt of $9.4 trillion, as well as some $3.2 trillion in consumer credit, which may or may not account entirely for the student debt bubble.
But perhaps most importantly, the percentage of financial assets as a percentage of total, just rose to the record high level it has never in the past surpassed: 70.3%. As the chart below shows, this is the highest proportion that financial assets have ever hit in the entire history of modern US society. Every time financial assets hit 70.3% of total, either housing values finally pick up and offset the disproportional increase in financial assets, or there has been a crash in financial asset values themselves.
This article, with some excellent charts, appeared on the Zero Hedge website at 1:46 p.m. EDT on Thursday---and it's the first of two stories in a row that I found in yesterday's King Report.
Of late, talk has been that the ECB’s balance sheet would come to the rescue. Count me as deeply skeptical of all the bullish ECB “QE” liquidity propaganda. As such, I see a world of somewhat waning liquidity abundance with an increasingly destabilizing King Dollar bias. There’s risk that escalating EM stress and attendant “hot money” outflows lead to a self-reinforcing de-risking/de-leveraging dynamic. EM companies and countries at this point have way too much dollar-denominated debt. At some point, contagion might negatively impact market expectations for the global economy at large, perhaps leading to a more generalized global “risk off” backdrop.
From the Z.1 we know that Security Credit was up $161bn year-over-year, or 13.7%, to a record $1.333 TN. Fed Funds and Repurchase Agreements were little changed y-o-y at $3.792 TN. Security Broker/Dealer Assets were actually down about 5% y-o-y to $3.388 TN. Funding Corps were down 3.3% y-o-y to $1.312 TN. Clearly, securities leveraging remains integral to overall Credit system operations.
At the same time, there are important sources of global leverage outside the purview of Fed monitoring and Z.1 reporting. There are myriad avenues for “carry trades,” securities shorting and “off-shore” securities financing vehicles, not to mention the murky world of (hundreds of Trillions of) derivatives.
Doug's commentary was posted on the prudentbear.com Internet site on Friday evening---and it's a must read that I'll deal with later today. I thank reader U.D. for sending it along.
The following post-referendum poll from Lord Ashcroft does a good summary of who voted how and why. However, the most telling distinction is the following:
How will last night's vote look like in 5, 10 or 15 years when today's 17 year olds are Scotland's prime demographic?
This short Zero Hedge article has an excellent set of numbers---and it's worth a minute of your time. I thank reader U.D. for sharing it with us. There was a story about this subject as well posted on the euobserver.com Internet site yesterday. It's headlined "Scotland's referendum - nothing and everything changes". My thanks go out to Roy Stephens for that one.
The Scots have lost their stab at independence by a tiny 10-percent margin. Analysts predicted that only a ‘yes’ vote would send waves throughout Europe, but the dire economic situation of other independence-seeking regions can’t be eclipsed so easily.
In a historic referendum on Thursday, Scotland voted 55 to 45 percent to stay in the four-nation United Kingdom.
This 'yes' vote, many have said, would become a major precedent for others to follow - but can this apparent loss by an already prosperous Scotland serve as a demotivator for others? After all, according to the Venetians, or the Catalans, the far more centralized nature of their own main governments - just one factor to consider here - puts them in a markedly different situation to that of Scotland.
This article appeared on the Russia Today website at 9:47 a.m. Moscow time on their Friday morning, which was 1:47 a.m. EDT---and it's courtesy of Roy Stephens.
Catalan leader Artur Mas has said the Scottish referendum has reinforced his plan to hold a similar vote at home.
Speaking in Barcelona on Friday (19 September), he noted that the devolved Catalan parliament is likely to pass a law on the referendum later the same day.
“I will sign the decree on this consultation in Catalonia. In fact, I will call this consultation on 9 November as agreed some months ago with the majority of Catalan political forces”.
He said he would have preferred it if Scotland had voted Yes.
This news item showed up on the euobserver.com Internet site at 4:06 p.m. Europe time yesterday---and it's the second story in a row from Roy Stephens.
Banks borrowed less than expected from the European Central Bank in a disappointing start for a program intended to encourage more lending to businesses and households and to pump money into the ailing eurozone economy.
The central bank said on Thursday that it would allot nearly 83 billion euros, or about $107 billion, to 255 commercial banks next week. Estimates of how much money banks would borrow had varied widely, but many analysts said before the announcement that anything less than €100 billion would be a disappointment.
The program is part of a broader effort by the central bank to inject as much as €1 trillion into the eurozone economy, and the borrowing data on Thursday was closely watched as an indicator of whether the central bank would be able to meet its goal. The loans are meant to drive down the cost of borrowing and encourage lending, especially in countries like Italy and Portugal, where a lack of credit has impeded economic growth.
This article appeared on The New York Times website on Thursday sometime---and it's something I found in yesterday's edition of the King Report.
The CIA’s European Division has halted its operations in Western Europe in response to several spying scandals in Germany and the continent’s negative reaction to the revelations of spying by the National Security Agency on European leaders and citizens.
The stand-down order has been in effect for two months. It was designed to give CIA officers time to examine whether they were being careful enough and to evaluate whether spying on allies is worth running the risk of discovery, a U.S. official who has been briefed on the situation told the Associated Press.
Case officers in friendly European countries have largely forbidden from undertaking "unilateral operations" such as meeting with sources they have recruited within allied governments. The continent’s countries have long been used as safe venues to conduct meetings between CIA officers and sources from the Middle East and other high priority areas; those encounters have been rerouted to other locales.
The spying stand-down comes at an inopportune time, AP reported, citing worries over Western extremists heading to Syria and Iraq to join with the Islamic State, as well as the standoff with Russia over influence on Ukraine and the independence movement in the eastern part of the country. Tensions have grown between the US and its European allies since Edward Snowden's NSA revelations in June 2013.
This very interesting story appeared on the Russia Today website at 6:20 p.m. Moscow time on their Friday evening---and it's another contribution from Roy Stephens.
Kiev and self-defense forces signed a memorandum aimed at effectively halting all fighting in eastern Ukraine after talks in Minsk. It creates a buffer zone, demands a pullback of troops and mercenaries, and bans military aviation flybys over the area.
The signed memorandum consists of nine points, former Ukrainian president Leonid Kuchma told journalists following peace talks in Minsk, Belarus.
“The first one is stopping the use of weapons by both sides, the second is terminating new formations of units on military bases as of September 19. The third is banning the use of all types of weapons and offensive action,” Kuchma said.
The agreement outlines a buffer zone of 30 km (18.6 miles) and bans all military aircraft from flying over part of eastern Ukrainian territory, except for the OSCE's aerial vehicles, Kuchma told RIA Novosti following the meeting.
This story showed up on the Russia Today website at one minute to midnight Moscow time on their Friday night, which as 3:59 p.m. EDT. I thank Roy Stephens for sending it our way.
The 200 trucks are carrying foods, including cereals and canned products, power generators, medical supplies, warm clothes and bottled drinking water - 2,000 tonnes all in all.
Before the convoy’s departure Ukrainian customs officials and International Red Cross representatives were repeatedly invited to inspect the cargo. Both refused without offering any reasons.
It is a third batch of Russian humanitarian aid being delivered to the southeast of Ukraine by truck The first two convoys delivered a total of four thousand tonnes humanitarian supplies to Lugansk.
This article showed up on the itar-tass.com Internet site at 5:22 a.m. Moscow time on their Saturday morning---and once again I thank Roy Stephens for finding it for us.
The Group of Twenty (G20) members have supported Russia’s participation in the G20, Australian chief treasurer Joe Hockey told reporters on Friday. He will preside over the G20 meeting of foreign ministers and heads of Central Banks that will be held on September 20 -21.
Asked whether Australia would try to block Russia’s participation in the G20 summit in Brisbane due in November, Hockey said not Australia, but G20 members take decisions on anybody’s participation in G20 work.
The G20 member countries say the door should not be closed, and Russia should take part in the forum. The dialogue should be continued, according to all the G20 member countries. He said G20 is an economic, not a political forum.
This article appeared on the itar-tass.com Internet site at 8:34 a.m. on Friday morning Moscow time---and it's another story from Roy Stephens.
Drug maker GlaxoSmithKline was fined $492 million on Friday for bribing doctors in China in the biggest such penalty ever imposed by a Chinese court.
The court sentenced the company's former China manager, Briton Mark Reilly, and four Chinese co-defendants to prison but postponed the sentences for two to four years, suggesting they may never be served. The court said it granted leniency because the defendants confessed.
The case, first publicized in mid-2013, highlighted the widespread use of payments to doctors and hospitals by sellers of drugs and medical equipment in a poorly funded health system that Chinese leaders have promised to improve. The fine is the largest such penalty ever imposed by a Chinese court.
This very interesting article showed up on the newsmax.com Internet site at 7:38 a.m. EDT on Friday---and it's the first offering of the day from West Virginia reader Elliot Simon.
Japan has decided to delay the announcement of a new round of sanctions against Russia over the Ukraine crisis, which had been earlier planned for Friday, senior government sources have told ITAR-TASS.
The postponement comes as Tokyo wants to follow Moscow’s reaction towards the move. However, Japan has not yet decided to call off the sanctions and is expected to detail the restrictions later.
The announcement could be made next week during the visit of Japanese Prime Minister Shinzo Abe to New York, where he will attend the session of the United Nations General Assembly.
Japanese media reports said Tokyo was due to announce the expansion of sanctions against a range of individuals from Russia and the self-proclaimed Luhansk and Donetsk People’s Republics, to be subject to the asset freeze and visa ban.
This article put in an appearance on the itar-tass.com Internet site on Friday morning Moscow time---and it's the final offering of the day from Roy Stephens, for which I thank him.
Japan's government cut its overall economic assessment for the first time in five months as private consumption is struggling to recover from the slump caused by April's sales tax hike, clouding the outlook for a sustained recovery.
The government on Friday cut its view on private consumption, which accounts for about 60 percent of the economy, saying that consumer spending is seen pausing although a pick-up trend remains intact.
The assessment followed a run of weak indicators, including falling household spending, which raised doubt about the strength of an expected bounce in the current quarter - a crucial factor for Prime Minister Shinzo Abe's decision in December on whether to proceed with a second tax rise next year.
So much for rampant money printing. A Japanese bond isn't worth the paper it's printed on. This Reuters story, filed from Tokyo, was posted on their website at 12:25 p.m. EDT on Friday---and it's another article I found in yesterday's edition of the King Report. It's worth reading.
1. Art Cashin: "The Next 7 Days May Trigger a Global Stock Market Crash" 2. Bill Fleckenstein: "Responds to Outrageous CNBC Interview" 3. John Ing: "Russians Stunned as Chinese Leader Pushed Gold Backed Yuan"
[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]
At an event [on Thursday] to mark the start of Shanghai Gold Exchange’s gold trading in the city’s free-trade zone (SFTZ) and the creation of the International Board, the Shanghai Gold Exchange and the World Gold Council have stated they will be actively cooperating to develop the SFTZ as an international hub for gold and to work together to develop the gold market in the region. The event was attended by Zhou Xiaochuan, Governor of the People’s Bank of China, Mr. Xu Luode, the Chairman of Shanghai Gold Exchange and Aram Shishmanian, CEO of the World Gold Council.
This collaboration follows on from a partnership signed between the China Gold Association and the World Gold Council in Beijing last week at the China Gold Congress and Expo, which they jointly sponsored. This partnership seeks to promote further international enterprise in China and to enhance the global understanding of China’s role within the global supply chain.
As we commented on the report concerning WGC and PBoC co-operation, one hopes these co-operations are close and will thus help lift the veil on some of the statistical anomalies that beset analytical reports on the massive Chinese gold sector.
This commentary by Lawrie was posted on the mineweb.com Internet site on Thursday---and is worth reading.
In his latest commentary about gold market manipulation, Julian Phillips of the Gold Forecaster letter reviews the establishment of the London Gold Pool, the gold market-rigging mechanism of the Western central banks in the 1960s. The U.S. dollar survived the gold pool's collapse, Phillips writes, because the dollar was still required to purchase oil from the Middle East.
I found this gold-related story embedded in a GATA release yesterday---and I thank Chris Powell for writing the above paragraph of introduction.
GATA again will have a big part in the New Orleans Investment Conference this year, what with GATA Chairman Bill Murphy and your secretary/treasurer making presentations, your secretary/treasurer debating Casey Research founder Doug Casey about whether the gold market is manipulated, and former Federal Reserve Chairman Alan Greenspan not only speaking but taking questions from the audience.
Conference sponsor Brien Lundin of Gold Newsletter and the Jefferson Companies in Louisiana is asking for help in devising questions for Greenspan, and GATA has appended his appeal.
This GATA release from yesterday is worth your time, if you have any left, that is.
Investors in exchange-traded funds backed by silver have stayed loyal to the metal longer than those who bought gold.
The CHART OF THE DAY shows shares outstanding for the biggest U.S. silver ETF surpassing those for the nation’s largest gold fund by the most since 2006, when the iShares Silver Trust was created. Retail buyers are sticking with silver even as prices fell 4.4 percent this year, the most of any precious metal. Gold’s 2 percent gain wasn’t enough to halt declines in selling, and assets in the SPDR Gold Trust are set for a second annual loss.
“The perception is that silver will do well, and should outperform gold as the economic recovery strengthens,” Tom Kendall, the head of commodities research at Credit Suisse in London, said in a telephone interview. “Belief in silver’s dual properties, as a financial asset and also as an industrial metal, appears to remain strong.”
Well, dear reader, there's nothing in here that you don't already know, as Ted Butler and I have been talking about this for several months already. The reasons given for why silver is pouring into SLV is mostly bulls hit, but it's nice to see that at least one news outlet has considered it worth featuring. This silver-related article was posted on the Bloomberg website at 5 p.m. MDT on Thursday---and I thank Elliot Simon for bringing it to our attention.
Wall Street’s and the media’s attention was riveted single-mindedly on whether or not the Fed would include in its statement the two words, “considerable time,” the two vaguest, stretchable latex words available that describe absolutely nothing and leave the door wide open for wishful thinkers of every stripe. That’s what the Fed’s gyrations since the financial crisis have so successfully accomplished; they have reduced the market, a place of price discovery, to a crummy joke.
The Fed delivered those two words, but during the press conference, Fed Chair Janet Yellen doused them with so many qualifiers that they’ve become even more meaningless, if that were even possible.
Wishful thinkers still see Yellen as a pure dove, while others worry that she has turned into a closet hawk who is afraid of letting this tsunami of free liquidity inflate asset bubbles and build up risks so immense that even a minor hiccup would bring down the entire financial system once again. And this time, under her watch.
Clearly, FOMC members, and particularly Yellen, would try hard to dodge blame. But after having printed $3 trillion, and after having forced short-term rates to near zero – and below the rate of inflation – for what likely will be more than six years, and after having messed with the markets throughout, they too can imagine that blame for the fiascos these policies might end up causing will be hard to dodge.
This guest commentary by Wolf Richter was posted on David Stockman's website on Thursday some time---and today's first article is courtesy of Roy Stephens.
Imagine a trillion-dollar market that runs on faxes and phone calls while routinely tying up investors’ money for months before they get any return.
That’s not fiction: It’s the unregulated market for leveraged corporate loans. In a financial system that is increasingly automated, the origination and trading of loans is in the relative dark ages while money pours in from mainstream investors such as Kansas and New York pension plans and mutual funds catering to individuals seeking high yields in an era of near-zero interest rates.
The antiquated structure of a market that’s ballooned from a mere $35 billion in 1997 poses a growing threat, raising the odds of gridlock in a downturn when investors expect to get their money back with a click of a button. As of yet, no regulators have taken responsibility for fixing the deficiency.
This longish, but very interesting Bloomberg article, filed from New York, appeared on their Internet site at 9:29 a.m. Denver time yesterday morning---and it's courtesy of reader Howard Wiener.
Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday.
It was kind of a strange segment.
Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy.
Sounding taken aback, Fleckenstein answered: "I don't misunderstand monetary policy. I closed my short fund in 2009 because I knew the Fed would print money."
"If you want to pursue idiots like the Fed, and their crazy policies, and you think you can get out in time, go for it," Fleckenstein said.
This article, with the 2:27 minute video clip at the bottom of the page, was posted on the CNBC website at 11:52 a.m. EDT on Tuesday---and I thank reader David Ball for sending it our way.
Voters in Scotland rejected independence from Britain in a referendum that had threatened to break up a 307-year union, according to projections by the BBC and Sky early Friday.
The outcome was a deep disappointment to the vocal, enthusiastic pro-independence movement led by the Scottish first minister, Alex Salmond, who had seen an opportunity to turn a centuries-old nationalist dream into reality, and forced the three main British parties into panicked promises to grant substantial new power to the Scottish Parliament.
The decision spared Prime Minister David Cameron of Britain a shattering defeat that would have raised questions about his ability to continue in office and diminished his nation’s standing in the world.
This article appeared on The New York Times website---and Roy Stephens sent it our way very late last night. Roy also sent a Reuters article about it linked here.
An independent Flanders with Brussels as its capital will be best for the Flemish people who represent 60 percent of the Belgium population, and provide 80 percent of its economy, Flemish MP Tom van Grieken told RT.
Following in the footsteps of Scotland, Veneto in Italy and Catalonia in Spain, and Belgium’s Flemish region may become the next to hold a referendum on independence. The Flanders area of northern Belgium has been claiming its own sovereignty for years, and if it succeeds, Belgium may be no more, along with its being the symbol of a united Europe.
The 2008 financial crisis has boosted separatism movements in Europe, with rich and developed regions in a number of countries starting to voice their discontent with policies from the capital, and the necessity to feed economically weak regions. However, for such Scotland, Catalonia and Flanders it is also a question rooted in the history of the formation of the countries they belong to.
Dutch-speaking Flanders and French-speaking Wallonia have always been rich and well-developed regions, connected to each other despite language and cultural differences. The artificial creation of the Belgian state put these nations into a difficult situation, forcing them to coexist with people they don’t feel any connections with. Meanwhile, Scotland’s independence vote has inspired the Flemish people with hope to finally create their own state.
This interesting article put in an appearance on the Russia Today website at 11:43 a.m. on their Thursday morning, which was 3:43 a.m. EDT---and it's another contribution from Roy Stephens.
Ukrainian President Petro Poroshenko’s visit to Washington [was] the consummation of a marriage made back in February, when the Obama administration ripped up a compromise agreement between elected president Yanukovich and the rebels who were seeking to overthrow him. Overnight, the U.S. government endorsed the rebels’ seizure of power, and it has not wavered in its support of the coup leadership from that point.
Poroshenko will arrive in town buoyed by Congressional passage of H.Res. 726, a resolution “Strongly supporting the right of the people of Ukraine to freely determine their future, including their country’s relationship with other nations and international organizations, without interference, intimidation, or coercion by other countries.”
The lie is in the very title of the bill, however, as in supporting an anti-democratic coup against a legally elected government, the US has undermined, not supported, the right of the Ukrainian people to “freely determine their future… without interference…by other countries.”
This guest commentary by Daniel McAdams appeared on the David Stockman website on Thursday---and once again I thank Roy Stephens for sending it.
President Barack Obama has declined to supply Ukraine with “lethal aide” despite the passionate plea for more military equipment that Ukrainian President Petro Poroshenko made to Congress earlier on Thursday.
During a White House meeting between the two leaders that occurred after Poroshenko’s address to Congress, President Obama said the United States would keep working to mobilize the international community in order for the conflict in Ukraine to be solved diplomatically, Reuters reports.
Following the meeting, Poroshenko said he was pleased with Washington’s help, and expressed hope that the shaky ceasefire in Ukraine would eventually lead to stability and peace.
Earlier in the day, however, Poroshenko suggested that NATO give “special” security status to Ukraine. Addressing the US Congress, he called on Washington to provide Kiev with “more military equipment, lethal and non-lethal” to “keep peace” in the eastern part of his country.
This is the second article from the Russia Today website. It was posted there at 2:48 p.m. Moscow time yesterday afternoon---and it's also another offering from Roy Stephens. Roy also sent a link to Poroshenko's speech in front of the Imperial Senate. [I know, it is nauseating, but still, please do watch it. What Poroshenko is saying is that which the US deep state is thinking, and as such, it deserves our utmost attention (even if that means grabbing a psychological barf bag). - The Saker]---and the link is here.
U.S. imperialism was once a fearsome force—-mainly for ill. Under the latter heading, Washington’s savage destruction of Vietnam four decades ago comes readily to mind. But now the American Imperium has become just a gong show on the Potomac—even as its weapons have gotten more lethal and its purposes more spurious and convoluted.
There is no more conspicuous proof than Obama’s quixotic “war” on ISIS. The quote marks are necessary, of course, because the White House insists that this is merely a counter-terrorism project that is not really a war; that the campaign to “degrade, disrupt and destroy” the Islamic State will not deploy a single American soldier—at least not one with his or her boots on; and that the heavy lifting on the ground against the barbaric ISIS hordes will be conducted by a “broad coalition” of so far nameless nations.
In truth, the whole thing is a giant, pathetic farce. There will be no coalition, no strategy, no boots, no ISIS degradation, no gain in genuine safety and security for the American homeland. This is an utterly misbegotten war against an enemy that has more urgent targets than America, but a war which will nonetheless fire-up the already boiling cauldron of Middle Eastern tribal, religious and political conflict like never before. There is no name for what Obama is attempting except utter folly.
Even before Secretary Kerry brought his medicine show to Paris, it was evident there is no coalition of the willing—or even the bought.
This commentary by David Stockman showed up on his website on Thursday sometime---and it's the final contribution of the day from Roy Stephens, for which I thank him.
Jim was interviewed on Russia Today's "Boom Bust" program on Wednesday and, as usual he has lots to say. The interview runs from the 3:40 minute mark to the 11:20 minute mark. Also on the program following Jim, is Marshall Auerback---and there aren't any flies on him, either.
I thank reader Harold Jacobsen for bringing this interview to our attention.
The first interview is with David P. out of Europe---and it's headlined "A Major War is Now Raging in the Gold Market"---and the second with Egon von Greyerz is entitled "Here is the Great-Game Changer That Will Shock the World". And lastly is this commentary by Nigel Farage---and it bears the headline "The Chilling Truth About Putin, Europe and Gold"
[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 super-rich are looking to protect their wealth through buying record numbers of "Italian job" style gold bars, according to bullion experts.
The number of 12.5 kg gold bars being bought by wealthy customers has increased 243pc so far this year, when compared to the same period last year, said Rob Halliday-Stein founder of BullionByPost.
The bars which are made from pure gold and are worth more than £300,000 each at today's prices of $1,223 (£760) an ounce.
The sales of 1kg gold bars, worth about £25,000 each, has doubled during the three months ended August, when compared to the same period last year, according to ATS Bullion sales figures.
Sales of the more popular gold coins such as the quarter ounce sovereign and one ounce Krugerrand have also doubled this year, according to figures from BullionByPost.
This gold-related news item appeared on The Telegraph's website at 10:45 a.m. BST on Thursday London time---and I found it embedded in a GATA release. It is, of course, worth reading.
USA Watchdog's Greg Hunter this week interviewed Sprott Asset Management's John Embry about manipulation of the monetary metals markets. "I have never seen it any more intense in terms of pressure in the paper market, which indicates we are near the end and there is something seriously wrong with the system," Embry says.
The interview is headlined "Gold and Silver End Game Here: John Embry" and can be read and watched at USAWatchdog.com Internet site. Harold Wiener was one of the first people through the door with this interview, but I borrowed the above paragraph of introduction from Chris Powell.
China will give foreign investors direct access to its gold market for the first time today as the biggest-consuming nation seeks to exert more influence over prices while boosting the yuan’s global use.
The Shanghai Gold Exchange will start trading contracts in the city’s free-trade zone that will be linked to its domestic spot market and available to about 40 international members including Goldman Sachs Group Inc. and UBS AG. Access was previously limited to some Chinese units. Gold in China this year cost as much as $31 an ounce more and $42 less than the London spot price, according to data compiled by Bloomberg.
“It’s indicative of the ambition to move the gold market more to where the consumption is,” Victor Thianpiriya, commodity strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “It makes sense that price discovery occurs in the center of consumption.”
This Bloomberg article, co-filed from Singapore and Beijing, appeared on their website at 8:05 a.m. MDT yesterday---and it's another article I found in a GATA release very early yesterday morning.
Federal Reserve Chair Janet Yellen says "it could take until the end of the decade" to shrink the Fed's record investment portfolio to more normal levels.
The Fed's response to the 2008 financial crisis has swollen its balance sheet to more than $4.4 trillion from less than $1 trillion roughly six years ago. Fed officials responded to the downturn in the economy with three rounds of bond purchases to try to hold down long-term borrowing rates to spur spending.
The Fed plans to end its latest round of buying Treasurys and mortgage bonds after its next meeting in October. It would then look to reduce its balance sheet once it begins raising a key short-term rate from its record low near zero.
The above three paragraphs are all there is to this brief AP story from yesterday---and it's courtesy of West Virginia reader Elliot Simon.
The U.S. House of Representatives today overwhelmingly passed a bill that would open up Federal Reserve monetary policy decisions to a congressional audit, reviving a measure passed in 2012.
But the legislation approved by the Republican-dominated House is expected to meet a fate similar to its predecessor's: death in the Democratic-controlled Senate.
The "Federal Reserve Transparency Act" passed 333-92 in a bipartisan vote. It is largely similar to the 2012 "Audit the Fed" bill championed by former libertarian Representative Ron Paul.
I thank reader Brad Robertson for sending me this Reuters story yesterday, but I borrowed the headline from a GATA release.
Illinois’ sluggish jobs recovery is coming at a tremendous cost. For every post-recession job created in Illinois, nearly two people have enrolled in the Supplemental Nutrition Assistance Program, commonly known as food stamps.
In the recession era, the number of Illinoisans dependent on food stamps has risen by 745,000. Without adequate job creation in the state, Illinois families have had no choice but to depend upon food stamps to put bread on the table.
The Prairie State has had the worst recovery from the Great Recession of any state in the U.S. There are nearly 300,000 fewer Illinoisans working today than in January 2008, and 170,000 fewer payroll jobs.
This interesting article was posted on the illinoispolicy.org Internet site on Tuesday---and I found it in yesterday's edition of the King Report.
Thursday’s vote to decide whether Scotland should be independent of the United Kingdom has bolstered Texans campaigning to split the state from the United States.
Texas Nationalist Movement president Daniel Miller, who wants the state’s legislature to put the secession question on a state-wide ballot, said Scotland’s referendum is a positive sign for his movement.
“If Scotland can do it, so can Texas,” Miller told Reuters. The top US cattle- and oil-producing state would be the 12th largest economy in the world, larger than Mexico or Spain, said Miller, whose organisation has campaigned for secession since the late 1990s.
Miller said Scotland’s referendum has increased interest in the Texas movement and the fact that a free Texas would lose big federal institutions like NASA and multiple military bases was of no concern to him.
“Win or lose, the Scottish referendum is both serving as a source of inspiration and information about what’s happening here in Texas,” Miller said.
This news item appeared on the france24.com Internet site on Wednesday sometime---and it's the first offering of the day from Roy Stephens.
$30 million will be given to those who help identify the perpetrators of the downing of the Malaysian Airlines flight MH17 in eastern Ukraine that killed all 298 on board, said an independent German fraud investigation company.
Two months have passed since the Malaysia Airlines plane on its way from Amsterdam to Kuala Lumpur was shot-down in eastern Ukraine on July 17 with 298 crew and passengers on board who all died in the crash. A preliminary report into the disaster carried out by Dutch investigators and issued on September 9 said that the MH17 crash was a result of structural damage caused by a large number of high-energy objects that struck the Boeing from the outside.
The investigation company Wifka, based in Schleswig-Holstein, north Germany said that it has been charged with investigating the case of the downing.
Wifka said that the client who preferred to stay anonymous will pay $30 million dollars to whoever provides evidence that identifies those behind the shoot down.
This story appeared on the Russia Today website at 4:11 p.m. Moscow time on their Wednesday afternoon, which was 8:11 a.m. EDT in New York. It's the second offering in a row from Roy Stephens. South African reader B.V. sent us a similar story headlined "‘£18million for whoever tells us who shot down MH17’: German detective agency offers huge bounty after anonymous backers provide massive war chest". It was posted on the dailymail.co.uk Internet site yesterday as well.
Ukrainian Prime Minister Arseniy Yatsenyuk said Wednesday he had ordered the defense minister to keep the country's armed forces in the highest state of combat readiness.
"I ask the defense minister and the interior minister [to ensure] full combat readiness and supply everything that the army or the National Guard needs," he said.
Earlier on Wednesday, a Russian Foreign Ministry's human rights representative stressed the countries, truly interested in putting an end to the crisis in Ukraine, must suppress the attempts to derail the ceasefire by what he called the "war party" in Kiev.
This short article appeared on the RIA Novosti website at 4:22 p.m. Moscow time yesterday afternoon---and I thank Roy Stephens for sending it.
Russia views the recent Ukrainian law on special status of parts of the Donetsk and Luhansk region as a step in the right direction, the Foreign Ministry said on Wednesday.
"This document is regarded by Russia as a step in the right direction and in line with the agreements outlined in the Geneva joint statement by Russia, Ukraine, the United States and the EU on April 17, as well as in the Berlin declaration of July 2," the ministry said in a statement.
"It creates a foundation for the launch of a comprehensive constitutional process in Ukraine, including the start of a dialogue aimed at facilitating the national reconciliation in that country," the statement said.
The ministry also expressed hope that all the provisions of the law would be strictly implemented by Kiev authorities in order to avoid a return to confrontation and violence in eastern Ukraine.
This story is also from the RIA Novosti website. This one showed up there at 6:05 p.m. Moscow time yesterday evening---and once again my thanks go out to Roy Stephens.
The future relationship between Ukraine and natural gas company Gazprom depends on resolving lingering debt issues, the Russian company said.
Gazprom says it's owed $5.3 billion from Ukrainian energy company Naftogaz. Similar debt issues in 2006 and 2009 resulted in suspension of gas deliveries, and Gazprom said it's time to pay up.
"The future relationships between the companies are fully dependent on settling the debt payout issue," the company's board said in a statement Tuesday.
This UPI story appeared on their Internet site at 8:41 a.m. EDT yesterday---and it's another contribution from Roy Stephens.
Turkey remains a key ally of the US despite Ankara’s refusal to back Washington’s bombing campaign against the Islamic State in Syria, the State Department said. Ankara is fighting claims that militants are entering Syria and Iraq through its territory.
"When it comes to Turkey, we share a partnership with them that's essential," deputy spokeswoman Marie Harf said on Wednesday.
"They play a key role obviously in the region. And ISIS is a threat to Turkey's security. And they felt the ripple effect from this, quite frankly, more than most countries in the region."
Turkey was present at a meeting last week, where the US tried to get a coalition together to deal with the problem presented by the Islamic State (IS, formerly ISIS/ISIL). Although 10 Muslim nations in the Middle East did sign up, such as Saudi Arabia and Qatar, Turkey abstained.
This news item appeared on the Russia Today website at 4:12 p.m. Moscow time on their Wednesday afternoon---and it's the final offering of the day from Roy Stephens, for which I thank him on your behalf.
Sina.com reports that the PBOC will use their Standard Lending Facility to add 500bn in liquidity.
Not sure what to make of this news on the face of it as they have been drawing liquidity out of the system, but nothing around this size.
Update: Sina.com is citing a banking analysist Qui Guanhua whi says they will be providing 100bn yuan to each bank today and tomorrow with a 3 month duration.
It looks like a short term pump rather than anything more worrying but we’ll keep an eye on it.
That's all there is to this story that was posted on the forexlive.com Internet site on Tuesday---and it's another article I found embedded in yesterday's edition of the King Report.
Cash, gold and “real” assets, such as infrastructure and agricultural resources, are the place to be for investors, argues best-selling author and economist James Rickards.
Rickards, who wrote The Currency Wars and The Death of Money, is adamant that he is not a pessimistic sort of guy. But he has few soothing words to say about the economy.
The global economy, in his view, has been in depression since 2007 and investors may yet face either deflation or much higher inflation – and potentially both.
“Ultimately inflation has to come,” he says.
Jim made these comments when he was speaking in Australia last week---and an executive summary of what he had to say was posted on the afrsmartinvestor.com.au Internet site. I thank Harold Jacobsen for digging this up for us.
1. Rick Rule: "Massive Fund Flows Pouring Into Gold and Silver" 2. Gerald Celente: "Propaganda Aside, It's Bad Out There and Getting Worse" 3. Victor Sperandeo: "Legend Warns of Destructive New Policies for U.S. and Europe"
[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]
Gold prices dipped Wednesday on concerns about a stronger dollar ahead of the Federal Reserve policy statement and in response to Barclays lowering its gold forecast.
But the precious metal may get a reprieve in the short term as the Fed’s statement, released after gold settled, reiterated that the central bank will keep interest rates low for a “considerable time” after it curtails its bond buying program.
As for the vote on Scotland’s independence, Edward Meir of INTL FCStone expects the “no” vote to prevail, but said markets could get dicey if it doesn’t.
“We do expect to see a massive short-covering rally in gold if Scotland votes ‘yes’, an event that should be momentous in terms of the economic fallout on both the U.K. and Europe,” Meir said.
Well, dear reader, the only reason that gold 'dipped' yesterday, is because JPMorgan et al were standing by to make sure it happened. This marketwatch.com story showed up on their website at 3:22 p.m. EDT yesterday---and I found this article over at the Sharps Pixley website.
Gold has been knocked down last night, not by anything said or done by the Federal Reserve yesterday, but by rising fear of Scotland's secession from the United Kingdom and the separatism it is likely to encourage throughout Europe, Mike Kosares of Centennial Precious Metals in Denver writes.
This fear---and the usual algorithmic trading programs, Kosares contends, have goosed the dollar.
This has "Zip-a-Dee-Doo-Dah" about Scotland. Da boyz always like to hit gold and silver at the 6 p.m. EDT open---and after what they did earlier in the day, the down ticks at the open were 'all the usual suspects' in action, kicking the precious metals while they were down. This commentary appeared on the usagold.com Internet site yesterday---and I found it over at the gata.org Internet site.
In a recent call with Eric Sprott, founder of Sprott Inc., he said he was still buying physical gold -and planned to keep buying it for as long as he could. The gold shortage that he talked about in our May interview is still there, and economically, things aren’t getting better. “When people finally decide they want to buy gold, there probably won’t be any gold,” he explained.
This interview by Henry Bonner was posted on the sprottglobal.com Internet site on Wednesday---and it's definitely worth reading.
BlackRock Inc, the world's largest asset manager, has asked regulators to force exchanges to lower their access fees and require greater transparency of broker dealer-run trading venues known as "dark pools."
The New York-based company outlined a set of proposals aimed at boosting public confidence in the equity markets in a letter on its website to the U.S. Securities and Exchange Commission dated Sept. 12. It said that while the market is "not broken or in need of large scale change," improving current rules would help promote fairness, order and efficiency.
Questions about the safety and fairness of the mostly electronic markets have risen in recent years following a raft of high-profile trading glitches by numerous market participants, causing hundreds of millions of dollars of losses. Those concerns hit the mainstream in late March with author Michael Lewis' book "Flash Boys: A Wall Street Revolt," which claimed the markets were rigged in favor of high-speed traders.
This Reuters story, filed from New York, appeared on their Internet site at 6:01 p.m. EDT on Monday evening---and it's something I found in yesterday's edition of the King Report.
United Airlines, the only major U.S. carrier to post a quarterly loss this year, is offering its flight attendants buyouts of as much as $100,000 as it seeks to rein in costs.
Employees who accept the early-exit plan will be eligible for lump-sum payments, said a spokeswoman, Megan McCarthy, who declined to disclose the formula needed to reach the maximum. United also is recalling 1,450 furloughed attendants, most of whom took voluntary leave one to two years ago, she said.
United, a unit of United Continental Holdings Inc., is hoping for at least 2,100 takers from an attendants workforce of more than 23,000 after some senior employees sought the offer, McCarthy said. Attendants back from furlough also will help United bolster airports that were too thinly staffed, she said.
This Bloomberg story, filed from Atlanta, showed up on their website at 10 p.m. Denver time on Monday evening. Reader Michael Cheverton, who sent me this story, had this to say about it---"Hi Ed, the staggering part about this article is that they say UAL shares are up 31% this year. For an industry that is in shambles and a company that will probably never make a profit again, that says something pertinent about just how screwed up the markets are." He would be right about that.
A fifth of France’s 100 richest people have moved a total of €17 billion to neighbouring Belgium in recent years, a report showed at the weekend, saying the exodus is largely due to French socialist President François Hollande’s tax policies.
The report, published in Belgian financial daily L’Echo, lists France’s richest man, LVMH CEO Bernard Arnault, media moguls Stéphane Courbit and Bernard Tapie, as well as the Mulliez family, which controls the Auchan supermarket chain, among those who have made the move.
But many of France’s wealthy appear to have crossed over the border only recently.
Many “have shown up in the past three years, in other words since François Hollande was inaugurated as president,” the paper writes, attributing it to the socialist government’s pressure to get the economy back into the black amid soaring unemployment and a ballooning deficit.
This news item showed up on the france24.com Internet site sometime on Monday---and it's the first contribution of the day from Roy Stephens.
Russian President Vladimir Putin and German Chancellor Angela Merkel discussed in a phone call on Monday the situation around the current ceasefire regime and deliveries of Russian gas to Europe, the Kremlin said.
"Putin and Merkel exchanged opinions on the situation with deliveries of Russian natural gas to EU member-states and agreed that the consultations in a three party format should continue," a statement on the Kremlin website said.
The leaders also discussed the development of the situation in Ukraine with focus on the importance of strict compliance with the ceasefire regime by the sides of the internal Ukrainian conflict and the effective monitoring of the situation by the Organization for Security and Cooperation in Europe, the Kremlin said.
This article appeared on the RIA Novosti website at 11:57 p.m. Moscow time on their Monday night, which was 3:57 p.m. in New York. I thank South African reader B.V. for sharing it with us.
Reliable natural gas deliveries to Europe depend largely on contractual issues in Ukraine, Russian energy company Gazprom said Tuesday.
Gazprom in June cut gas supplies to Ukraine because of ongoing disputes over pricing and debt. Ukraine pays some of the highest prices for natural gas in the region. Russia had offered a discounted price, though the Ukrainian government said it suspected the offer was politically motivated.
Russia meets about a quarter of Europe's gas needs, though most of that gas runs through the Soviet-era transit network in Ukraine. Similar rows in 2006 and 2009 left European consumers in the cold and Gazprom says the onus is now on Ukraine.
This UPI article put in an appearance on their website at 10:28 a.m. EDT on Tuesday---and it's the second contribution of the day from Roy Stephens.
With the ruble hitting record lows once again today against the U.S. dollar, it appears concerns over U.S. dollar liquidity are growing in Russia. The Russian central bank has unveiled an FX swap operation, allowing firms to borrow dollars in exchange for Rubles for a duration of 1 day (at a cost of 7%p.a.). Of course, this squeeze on USD funding - driven by Western sanctions - will, instead of isolating Russia, force Russian companies (finding USD transactions prohibitively expensive) into the CNY-axis, thus further strengthening the Yuanification of world trade and the ultimate demise of the USD as reserve currency.
And funding sanctions appear to have driven the Central Bank to supply U.S. dollar liquidity into an apparently squeezed market...
As Bloomberg reports---"Sanctions and closed access to foreign-exchange liquidity from the West” is feeding demand for dollars, DmitryPolevoy, chief economist ING.
Foreign-exchange liquidity has “virtually dried out,” with volumes sinking to about $100 million per day, compared with $1 billion to $2 billion previously, according to Natalia Orlova, the chief economist for OAOAlfa Bank in Moscow.
This article appeared on the Zero Hedge website at 2:50 p.m. EDT yesterday afternoon---and it's another contribution from reader B.V.
Modi is due to visit the U.S. in exactly twelve days from now. But there is nothing of the American rhetoric that used to mark a Manmohan Singh visit to the White House.
An idea was thought of initially to propitiate Modi by granting him the privilege of addressing the US Congress. But it has been quietly shelved.
The heart of the matter is that there had been a pronounced 'militarization' of India's strategic outlook through the past 10-15 years, which was a period of high growth in the economy that seemed to last forever.
In those halcyon days, geopolitics took over strategic discourses and pundits reveled in notions of India's joint responsibility with the United States, the sole superpower, to secure the global commons and the 'Indo-Pacific'.
This longish commentary falls into the must read category, especially for any serious student of the New Great Game. It was posted on the Asia Times website yesterday sometime---and it's courtesy of Roy Stephens.
China’s leaders have brushed aside warnings of an incipient credit crunch in the Chinese economy, determined to purge excesses from the financial system despite falling house prices and the deepest industrial slowdown since the Lehman crisis.
Industrial production dropped 0.4pc in August from a month earlier, a rare event that highlights how quickly China is coming off the boil. The growth of fixed asset investment fell to record lows.
“It is a shockingly sharp deceleration,” said Wei Yao, from Société Générale. “What is surprising is the calm response from Beijing. The new leadership’s tolerance for short-term pain seems to have jumped by another big notch.”
Electricity output has dropped 2.2pc over the past year as the authorities continue to force dinosaur industries into closure, chipping away at excess capacity.
This commentary by Ambrose Evans-Pritchard showed up on the telegraph.co.uk Internet site at 7:59 p.m. BST on Monday---and I thank Roy Stephens for sending it our way. It's worth reading.
1. John Embry: "War in Silver Rages as People’s Confidence in the West Fades". 2. Stephen Leeb: "China, Russia, Gold---and a New World Order Rising From the East" 3. Jeffrey Saut: "Warren Buffett, Charlie Munger, City Slickers---and Just One Thing"
Regarding Chinese gold demand, which we wrote about yesterday, it is open to debate and our old friend, Brien Lundin of the Jefferson Companies in New Orleans, wrote to share his insights. We've chosen to share them further with our readers, with his approval. Brien wrote:
* * *
In your letter this morning, you noted that Chinese gold demand was recently reported to be down about 50 percent year over year. This is erroneous information from the World Gold Council, as I've been noting in Gold Newsletter -- that there's a lot of misinformation on this topic. The mainstream financial media keeps parroting numbers from the World Gold Council and other sources, which typically rely on import statistics from Hong Kong.
However, China has recently opened up new ports of entry for gold, a move that has correspondingly reduced the import numbers from Hong Kong.
"Much more relevant are gold delivery statistics from the Shanghai Gold Exchange, which directly indicate wholesale gold demand in China. Koos Jansen is today's leading reporter of Chinese gold demand dynamics, and he relies on the Shanghai Gold Exchange numbers for his analyses. Using the SGE reports, Jansen notes that Chinese gold demand year to date is down about 17 percent from last year's torrid pace.
This commentary appeared in a GATA dispatch yesterday.
China will launch its international gold exchange 11 days ahead of schedule, sources said on Tuesday, racing ahead in the scramble to set up an Asian bullion benchmark as rival Singapore is forced to delay its gold contract due to technical issues.
Asia, home to the world's top two gold buyers - China and India, has been clamouring to gain pricing power over the metal and challenge the dominance of London and New York in trading.
The state-run Shanghai Gold Exchange (SGE) will launch the global gold bourse in the Shanghai free-trade zone on Thursday, two sources familiar with the matter told Reuters. The SGE had initially planned the launch for Sept. 29.
This gold-related article showed up on the Reuters website at 12:41 a.m. on Tuesday---and it's another story I found over at the gata.org Internet site.
China may join other emerging countries in boosting gold reserves as the precious metal makes up a smaller share of its foreign-exchange holdings compared with developed economies, said a London-based researcher.
The country hasn't announced any changes to state gold reserves since authorities in 2009 said holdings totaled 1,054.1 metric tons. While China holds the world's biggest foreign-exchange reserves, bullion accounts for 1.1 percent of the total, compared with about 70 percent for the U.S. and Germany, the biggest gold holders, World Gold Council data show.
"It is clear that Western central banks over time will be reducing their reserves and China and other Asian countries will be increasing," David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in a Sept. 11 interview in Beijing. "Gold will become more traded among central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves."
Central banks, net buyers of gold for 14 straight quarters, last year helped limit bullion's losses that were the most since 1981 and may increase purchases to as much as 500 tons this year after adding 409 tons last year, the London-based council said Aug. 14. The precious metal rose 3 percent this year as geopolitical tensions boosted demand for a haven.
I found this Bloomberg story embedded in a GATA release yesterday---and it's certainly worth reading.