Gold & Silver Daily

Ed's Critical Reads

Oct 01, 2014

First diagnosed case of Ebola in the U.S.

A patient being treated at a Dallas hospital is the first person diagnosed with Ebola in the United States, health officials announced Tuesday.

The unidentified man left Liberia on September 19 and arrived in the United States on September 20, said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

At that time, the individual did not have symptoms. "But four or five days later," he began to exhibit them, Frieden said. The individual was hospitalized and isolated Sunday at Texas Health Presbyterian Hospital.

Citing privacy concerns, health officials declined to release any details about how the patient contracted the virus, what he was doing in Liberia or how he was being treated.

This story broke yesterday afternoon---and here's the CNN version of things.  I thank reader David Caron for today's first story.  The folks over at Russia Today also posted an article about this.  It's headlined "Ebola diagnosed in U.S. for first time – Center for Disease Control"---and the link to that is here.  I thank Harry Grant for sending it.

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Shiller: 'There Is a Sign of Some Weakening' in Housing Market

The S&P/Case Shiller 20-city composite home price index fell a seasonally adjusted 0.5 percent in July, the third straight month of declines.

When you combine that with recent decreases in existing and pending home sales, "there is a sign of some weakening" in the housing market, though it's "not dramatic," Nobel laureate economist Robert Shiller, whom the index is named after, told CNBC.

Existing home sales dropped 1.8 percent in August, and pending home sales slid 1 percent.

The above three paragraphs are all that's worth reading in this story that showed up on their Internet site at 10:58 a.m. EDT on Tuesday morning---and I thank West Virginia reader Elliot Simon for sending it.

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JPMorgan to face U.S. class action in $10 billion MBS case

A federal judge on Tuesday said JPMorgan Chase & Co must face a class action lawsuit by investors who claimed the largest U.S. bank misled them about the safety of $10 billion of mortgage-backed securities it sold before the financial crisis.

U.S. District Judge Paul Oetken in Manhattan certified a class action as to JPMorgan's liability but not as to damages, saying it was unclear how investors could value the certificates they bought, given how the market was "not particularly liquid." He said the plaintiffs could try again to certify a class on damages.

Oetken ruled 10 months after JPMorgan reached a $13 billion settlement to resolve U.S. and state probes into the New York-based bank's sale of mortgage securities.

The class consists of investors before March 23, 2009 in certificates issued from nine of 11 trusts created by JPMorgan for the April 2007 offering. The other two trusts attracted only a handful of investors, and are the subject of other lawsuits.

This Reuters article, filed from New York, appeared on their Internet site at 7:09 p.m. EDT on Tuesday evening---and I thank reader 'h c' for sending it our way.

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Morningstar strips Pimco Total Return Fund of its gold rating

Morningstar downgraded its analyst rating on the Pimco Total Return Fund to "bronze" from "gold", citing uncertainty about outflows and the reshuffling of management responsibilities after the exit of co-founder Bill Gross.

Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc. on Friday, a day before he was expected to be fired from the huge investment firm he helped found more than 40 years ago.

Dan Ivascyn, one of Pimco's deputy chief investment officers, was named Group Chief Investment Officer to replace Gross. With Bill Gross' abrupt departure, Pimco's $222 billion flagship Total Return Fund has been taken over by Scott Mather, Mark Kiesel and Mihir Worah.

This Reuters article appeared on their website at 5:15 a.m. EDT yesterday morning---and I thank Orlando, Florida reader Dennis Mong for sharing it with us.

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Europe's €500bn money funds risk AAA downgrade if they 'break the buck'

Europe’s giant money market funds are struggling to stay afloat as negative interest rates drain the industry’s lifeblood, with many at risk of crippling downgrades by the rating agencies.

Standard & Poor’s said the €500bn nexus of funds in the eurozone is facing serious stress, increasingly unable to generate profits since the European Central Bank cut its deposit rate to -0.02pc and pulled down short-term rates across the spectrum of maturities.

“Pressure is building for these funds,” said Andrew Paranthoiene, the agency’s credit director. “We’re observing portfolios on a weekly basis. If there is any deviation from our credit metrics, a rating committee would determine if rating action was appropriate. In our view, any loss of capital means that the 'safety of principal’ has been breached,” he said.

Standard & Poor’s rates all its European money market funds at AAA(m). Industry experts say it is unclear whether the funds could function for long at a lower rating, given the nature of their business as ultra-safe depositories of corporate cash.

This Ambrose Evans-Pritchard offering appeared on the Internet site at 7:08 p.m. BST yesterday evening---and I thank South African reader B.V. for bringing it to our attention.

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Germany Fights on Two Fronts to Preserve the Eurozone

The European Court of Justice announced Sept. 22 that hearings in the case against the European Central Bank's (ECB) bond-buying scheme known as Outright Monetary Transactions (OMT) will begin Oct. 14. Though the process is likely to be lengthy, with a judgment not due until mid-2015, the ruling will have serious implications for Germany's relationship with the rest of the eurozone. The timing could hardly be worse, coming as an anti-euro party has recently been making strides in the German political scene, steadily undermining the government's room for maneuver.

All of the measures the ECB has announced so far, however, are mere appetizers. Financial markets have been demanding quantitative easing, a broad-based program of buying sovereign bonds in order to inject a large quantity of money into the market. Up to this stage, three major impediments have existed to such a policy: the German government's ideological aversion to spending taxpayers' money on peripheral economies; the political conception that quantitative easing would ease the pressure on peripheral economies to reform; and the court case that has been hanging over OMT (the only existing mechanism available to the ECB for undertaking sovereign bond purchases). Notably, the OMT in its original guise and quantitative easing are not precisely the same thing. In the original conception of OMT, the ECB would offset any purchases in full by taking an equivalent amount of money out of circulation, (i.e., not increasing the money supply itself). Nonetheless, any declaration that OMT is illegal would severely inhibit Draghi's room for maneuver should he wish to undertake full quantitative easing.

This confluence of events leaves Merkel nervously awaiting the decision of the European Court of Justice. In truth, she is in a no-win situation. If the Luxembourg court holds OMT illegal, Draghi's promise would be weakened, removing the force that has kept many sovereign bond yields at artificially low levels and permitting the desperate days of 2011-2012 to surge back. If the European Court of Justice takes up the German court's three suggestions and undercuts OMT to the extent that the market deems it to be of little consequence, the same outcome could occur. And if the European Court of Justice rules that OMT is legal, a sizable inhibitor to quantitative easing will have been removed, and the possibility of a fully fledged bond-buying campaign will loom ever closer, much to the chagrin of the German voter and to the political gain of the Alternative for Germany.

This very interesting and well written essay showed up on the Internet site early yesterday morning---and I thank Dan Lazicki for sending it our way.  It's worth reading.

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Recovery? 60% of Greeks Live at or Below Poverty Levels

While Greek government yields (and political leaders) proclaim the troubled peripheral European nation is 'recovering', the risk of major political upheaval in Greece has not gone away ahead of next year's presidential vote next year. As Reuters notes, under growing pressure from anti-bailout leftists, Greek Prime Minister Antonis Samaras desperately needs a new narrative to get the backing of lawmakers and rally Greeks fed up with four years of austerity.

We wish him luck as Keep Talking Greece notes, it is high time that the real data of the economic situation of the Greek society come to the surface and so it did this week. A report from Greece's State Budget Office found that three in every five Greeks, or some 6.3 million people, were living in poverty or under the threat of poverty in 2013 due to material deprivation and unemployment.

This news item was posted on the Zero Hedge website at 10:05 p.m. EDT last night---and I thank Harry Grant for his second contribution to today's column.  It's worth your time.

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Mass default looms as world sinks beneath a sea of debt

As if the fast degenerating geopolitical situation isn’t bad enough, here’s another lorry load of concerns to add to the pile.

The U.K. and U.S. economies may be on the mend at last, but that’s not the pattern elsewhere. On a global level, growth is being steadily drowned under a rising tide of debt, threatening renewed financial crisis, a continued squeeze to living standards, and eventual mass default.

I exaggerate only a little in depicting this apocalyptic view of the future as the conclusion of the latest “Geneva Report”, an annual assessment informed by a top drawer conference of leading decision makers and economic thinkers of the big challenges facing the global economy.

Aptly titled “Deleveraging? What Deleveraging?”, the report points out that, far from paying down debt since the financial crisis of 2008/9, the world economy as a whole has in fact geared up even further. The raw numbers make explosive reading.

This commentary by Jeremy Warner appeared on The Telegraph's website at 6:36 p.m. BST on Sunday evening---and I found it on their Internet site yesterday morning.

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E.U. Failed Again to Break 'Vicious' Sanctions Circle: Russia's E.U. Envoy

The European Union has failed again to break the vicious circle of sanction mentality by refusing to lift the current sanctions against Russia over Ukraine, Russia's Ambassador to the European Union Vladimir Chizhov said Tuesday.

The European Union on Tuesday decided keep in place economic sanctions on Russia over its alleged backing of independence supporters in eastern Ukraine despite some "encouraging developments" in the situation.

"Unfortunately, it is still not happening, despite mounting signals indicating EU's attempts to look at the prospects and review the strategy of development of relations with Russia," Chizhov said, commenting on the EU decision.

"Let's see how our partners will act in the future, but at present we are not really 'inspired' by their behavior," the diplomat said, adding that the E.U. would most likely return to the discussion of the issue at the end of October.

This RIA Novosti article put in an appearance on their website at 9:34 p.m. Moscow time on their Tuesday evening, which was 1:34 p.m. in New York.  It's the first offering of the day from Roy Stephens.

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Ukrainian Energy Ministry Not Satisfied With Berlin ‘Winter Plan’ on Gas

The Ukrainian Energy Ministry said Tuesday it had three reasons to object the “Winter Plan” on gas, endorsed by Russia and the European Commission during the ministerial gas meeting in Berlin last Friday.

The plan envisages that Kiev repays of $3.1 billion of its gas debt to Russia and pays in advance to Gazprom for the delivery of five billion cubic meters of gas at the price of $385 per 1,000 cubic meters, with a discount of $100. The plan, intended to reduce risks for transit of Europe-bound Russian gas via Ukraine, is to be in place until late March.

Kiev, however, rejects Russia’s offer of the $100 gas-price discount in the form of an export-duty exemption and wants the contract price to be reduced instead.

This is the second story in a row from the RIA Novosti Internet site.  It was posted there at 7:31 p.m. Moscow time yesterday evening.  It's also the second article in a row from Roy Stephens.

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Russia Says Arctic Well Drilled With Exxon Strikes Oil

Russia, viewed by the Obama administration as hostile to U.S. interests, has discovered what may prove to be a vast pool of oil in one of the world’s most remote places with the help of America’s largest energy company.

Russia’s state-run OAO Rosneft said a well drilled in the Kara Sea region of the Arctic Ocean with Exxon Mobil Corp. struck oil, showing the region has the potential to become one of the world’s most important crude-producing areas.

The announcement was made by Igor Sechin, Rosneft’s chief executive officer, who spent two days sailing on a Russian research ship to the drilling rig where the find was unveiled today. The well found about 1 billion barrels of oil and similar geology nearby means the surrounding area may hold more than the U.S. part of the Gulf or Mexico, he said.

“It exceeded our expectations,” Sechin said in an interview. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

This Bloomberg story, co-filed from Moscow and London, appeared on their Internet site at 1:02 p.m. Denver time on Saturday---and it's another contribution from Roy Stephens.

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Is Turkey on the verge of joining IS battle?

Turkey’s government could seek parliament’s approval for military action against the Islamic State (IS) organisation within the next 24 hours, officials said Monday, in the latest sign of the country’s changing stance on combating the jihadist group.

"The motions have not yet been sent to parliament. They may come tomorrow," parliamentary speaker Cemil Cicek was quoted as saying by Turkey’s NTV television.

The motions for military mandates in Iraq and Syria could be debated as soon as Thursday, according to Turkish newspaper Hurriyet.

It would represent the most concrete step in a string of recent indications that Turkey is moving away from its previous reluctance to engage in an armed conflict with IS, as the militant group continues to occupy vast swaths of Iraqi and Syrian territory.

This news item was posted on the Internet site yesterday sometime---and it's another Roy Stephens offering.

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Afghan, U.S. officials sign long-awaited pact to ensure troops stay past 2014

The new President of Afghanistan Ghani Ahmadzai has paved the way for U.S. troops to stay in the country. He has signed a security deal with the U.S., which will see just under 10,000 American soldiers present, to help train and assist Afghan forces.

National security adviser Hanif Atmar and U.S. Ambassador James Cunningham signed the bilateral security agreement in a televised ceremony at the presidential palace, a day after Ghani was inaugurated as the new Afghan president.

"As an independent country, based on our national interests, we signed this agreement for stability, goodwill, and prosperity of the our people, stability of the region and the world," Ghani said in a speech after the signing, according to Reuters.

Aside from the 10,000 US soldiers, another 2,000 NATO troops will also boost numbers. They will stay on after the U.S. and its allies formally end their combat mission at the end of 2012.

This story appeared on the Russia Today website at 10:46 a.m. Moscow time on their Tuesday morning---and I thank Roy Stephens for sending it our way.

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Tens of thousands up all night: Massive protests light up Hong Kong skyline

Hong Kong is witnessing one of the city's largest rallies in decades, with tens of thousands of people taking to the streets to join a protest movement, widely known as #OccupyCentral, demanding election reform.

Although the movement's hash tag mentions only one of Hong Kong's districts, by Tuesday protesters had gathered in at least four of the city's busiest areas – including Admiralty, the Central business district, the popular shopping district of Causeway Bay, and Mong Kok in Kowloon.

This photo essay appeared on the Russia Today Internet site at 7:33 p.m. Moscow time on their Tuesday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.

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What Hong Kong Means for the Global Economy

Will the tensions in Hong Kong be the straw that breaks the global economy’s back? That question is on many investors’ minds as they watch the Chinese government's response to one of the biggest sociopolitical challenges it has faced in recent years. The answer is far from straightforward.

It is already a tentative time for the world economy. Growth is faltering in Europe and Japan. The U.S. economy, while doing better, has yet to lift off. Emerging economies have slowed, and are unlikely to return to higher growth anytime soon.

Meanwhile, pockets of excessive risk-taking have multiplied in financial markets, adding to concerns about future volatility. And the central banks in advanced countries have already ventured deep into the terrain of experimentation; the effectiveness of their policies is far from assured. The world cannot afford a politically induced slowdown in China.

This commentary by Mohamed El-Erian appeared on the Internet site at 8:57 a.m. EDT on Tuesday morning---and I thank Elliot Simon for finding it for us.

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Alasdair MacLeod: Gold's Role as a Safety Net for the Economic Tightrope Ahead

WindRock interviews Alasdair MacLeod, well-known monetary expert and Director of Research at GoldMoney.  Mr. MacLeod addresses such issues as: global money supplies which are now levered to 180 times pre-2008 levels; currency risk throughout the world as central bankers accelerate monetary expansion in light of continued economic weakness; inflation's impoverishing effect upon the very people policy makers hope to help through money printing; and reasons to own physical gold outside of the banking system, including the necessity of avoiding safety deposit boxes.

This 31:23 minute audio interview was posted on the Internet site this week sometime---and it's worth your while.  The audio quality is not the best, so you have to pay close attention. [Note: When I checked the link on this website at 4:59 a.m. EDT, the link didn't work, although it worked fine earlier.  I hope it's working by the time you get around to clicking on it. - Ed]

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U.S. gold output declines on back of Newmont, Barrick

Production of gold by U.S. mines was 17,700 kilograms (569,068 troy ounces) in June, down 10% from 19,600 kg (630,154 oz) in June 2013, the U.S. Geological Survey recently reported.

Domestic gold production for the first six months of this year was down 8% than that of the first half of last year due to lower production from Barrick Gold’s Cortez Mine and Newmont Mining’s Nevada operations.

For the first half of this year, U.S. mines produced 103,000 kg (3,311,526 oz) of gold. Nevada led production with 74,100 kg (2,382,370 oz), followed by Alaska with 15,100 kg (485,476 oz), and other states combined at 14,000 kg.

The Cortez Mine in Northern Nevada produced only 13,800 kg (443,680 oz) of gold during the first half of this year, down 42% from the first six months of last year “owing to a drastic decline in grade in ore from the Cortez Hill open pit,” said the USGS.

This gold-related news item appeared on their Internet site yesterday sometime---and my thanks go out to Manitoba reader U.M.  It's definitely worth reading.

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Swiss Gold Referendum Attracting Attention Two Months Ahead of Vote

A referendum on Switzerland’s gold reserves is starting to attract some attention outside of the country as a yes vote would have significant implications for the gold market, said one market analyst.

On November 30, Swiss citizens will go to the polls to vote on three areas; whether or not the Swiss National Bank should increase its gold reserves to 20%, that the central bank should stop selling its precious metals and that all its gold should be held within the country.

Ole Hansen, head commodity strategist at Saxo Bank in Denmark, said it is still early in the campaign, but he has started monitoring the public sentiment in Switzerland as the next two months will be a critical time.

He added that the Scottish referendum, held on September 18, is a strong reminder that sentiment can shift dramatically in a very short period. With all the geopolitical instability throughout the globe and concerns about European growth, it might not take much to convince people that the central bank needs to hold more gold in its reserve, he said.

This very interesting news item showed up on the Internet site at 1:05 p.m. EDT yesterday afternoon---and I thank reader M.A. for sharing it with us.

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Golden Rule---Why Beijing is Buying: Alan Greenspan

If China were to convert a relatively modest part of its $4 trillion foreign exchange reserves into gold, the country’s currency could take on unexpected strength in today’s international financial system. It would be a gamble, of course, for China to use part of its reserves to buy enough gold bullion to displace the United States from its position as the world’s largest holder of monetary gold. (As of spring 2014, U.S. holdings amounted to $328 billion.) But the penalty for being wrong, in terms of lost interest and the cost of storage, would be modest. For the rest of the world, gold prices would certainly rise, but only during the period of accumulation. They would likely fall back once China reached its goal. 

The broader issue -- a return to the gold standard in any form -- is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money -- currency not backed by an asset of intrinsic value -- rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.

This article was posted on the Council on Foreign Relations Internet site on Monday sometime---and it went viral the moment it appeared.  It's an absolute must read, of course---and the first time I saw it, it was posted on the Internet site yesterday morning.  If you can't view it at this website, it's posted in the clear here.

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Koos Jansen: China aims to exceed U.S. in gold reserves

The president of the China Gold Association, gold researcher and GATA consultant Koos Jansen discloses today, argues that China should accumulate gold reserves greater than those of the United States because gold is a strategic asset, money without counterparty risk.

The association's president, Song Xin, adds that a "gold bank" should be established by China "to break the barrier between the commodity and monetary world. It can further help us acquire reserves and give us more say and control in the gold market."

Jansen's report is headlined "China Aims for Official Gold Reserves at 8,500 Tonnes"---and it's posted at the Singapore Internet site  I found this in a GATA release yesterday---and I thank Chris Powell for wordsmithing the above paragraphs of introduction.  It's on the longish side, but a must read.

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Mike Kosares: Why China thinks gold is the buy of the century

China's foreign-exchange surplus is so much larger than the nominal value of all the official gold in the world that a mightily upward revaluation of the monetary metal is inevitable, Mike Kosares of Centennial Precious Metals in Denver writes; "China," Kosares writes, "through its staunch advocacy of gold, might already be in the process of forcing the issue."

Kosares' commentary is headlined "Why China Thinks Gold Is the Buy of the Century" and it's posted at Centennial's Internet site,  Once again I thank Chris Powell for doing all the heavy lifting here.

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Sep 30, 2014

Ford Gets Crushed

Ford closed down almost 7.5% on Monday. 

The bloodletting was swift: the company basically fell off a cliff at about 3 p.m.

The stock closed at $15, after ending Friday at $16.

Concerns about Ford's losses in Europe and South America drove the sell off.  Bloomberg reported that Ford expects to lose a combined $2.2 billion in both markets this year.

This article appeared on the Internet site at 4:10 p.m. EDT on Monday afternoon---and today's first story is courtesy of Roy Stephens.

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The Illogical Trade — Buy the U.S. Dollar as the Economy Flounders

The U.S. dollar has seen an impressive strengthening in the past three months. That is a fact that has many analysts, including me, scratching their heads.

We have seen the U.S. dollar strengthen across the board against nearly all currencies of the world. The worst of the currencies in the last month has been the Japanese yen. Just a few weeks ago I wrote to you about the insanity that Prime Minister Shinzo Abe has unleashed upon Japan.

The United States is following in Japan's footsteps and yet we see the U.S. dollar soar.

Manipulation in gold prices along with weak demand for commodities has crushed the Canadian dollar. The temporary weakness in China's growth has pushed the Australian dollar down.

This news item was posted on the Internet site at 8:04 a.m. EDT last Wednesday---and I thank Brad Robertson for sharing it with us.

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Rates on short-term Treasuries go negative

Investors are scrambling for safe assets ahead of the end of the financial quarter, with the scrum for securities exacerbated by the Federal Reserve's testing of a key financing tool for an eventual tightening of policy.

Yields on short-term Treasury bills, viewed as ultra-safe securities, have dipped below zero as the assets attracted heavy buying in the run-up to the end of the third quarter.

Negative yields on the securities mean that money market funds and other big investors are effectively willing to pay the US government for holding their cash over the end of the financial period.

These above three paragraphs are all there is that's posted in the clear in this story that appeared in The Financial Times of London yesterday---and it showed up in a GATA release yesterday.  The FT headline reads "Fed 'Repo' Tests Drive Scramble for Safety".

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U.S. senators demand probe into leaked Goldman Sachs tapes

U.S. Senate Banking Committee members are calling for hearings and full investigation into alleged ties between Federal Reserve supervisors and officials at Goldman Sachs, a bank the Fed was supposed to be policing.

Congress must hold “oversight hearings on the disturbing issues” raised by the secretly recorded conversations between the Fed and Goldman officials, Senator Elizabeth Warren (Mass, D) said on Friday. Portions of recordings from 2011 and 2012 were recently made public, apparently showing unwillingness by some Fed supervisors to both demand information from Goldman Sachs and criticize its conflict-of-interest policy.

“When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy,” Warren said in an emailed statement to Reuters, adding that the issues raised by the whistleblower should be addressed when Congress returns in November.

This story showed up on the Russia Today website at 7:37 p.m. Moscow time on their Saturday evening, which was 11:37 a.m. EDT---and I thank Harry Grant for sharing it with us.

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New York Fed Denies Allegations of Bank-Supervision Lapses

The Federal Reserve Bank of New York said it “categorically rejects” allegations made by a former examiner at the Fed bank that her colleagues there were too deferential to the institutions they regulated.

“The New York Fed works diligently to execute its supervisory authority in a manner that is most effective in promoting the safety and soundness of the financial institutions it is charged with supervising,” the regional Fed bank said in a statement posted on its website Friday.

The radio program “This American Life” today released the transcript of a broadcast that includes excerpts of conversations it said were secretly recorded by Carmen Segarra, the former bank examiner, with some of her colleagues and her supervisor.

The transcript includes excerpts of discussions between Segarra and another official, Michael Silva, who was then a senior Fed supervisor with oversight responsibilities for Goldman Sachs Group Inc.

This story appeared on the Internet site at 1:26 p.m. EDT on Friday---and it's courtesy of West Virginia reader Elliot Simon.

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New York Sun: Audit the New York Fed

With Massachusetts' freshman liberal Democratic senator, Elizabeth Warren, calling for hearings on the Federal Reserve's subservience to big investment banks, The New York Sun muses that Kentucky's libertarian-leading freshman Republican senator, Rand Paul, could join her in a coalition to pass legislation to audit the central bank, and particularly its New York office.

The Sun's editorial is headlined "Audit the New York Fed"---and it was posted on their Internet site on Saturday.  I found this item on the website---and I thank Chris Powell for wordsmithing the above paragraph of introduction.

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The Plunge Protection Team is Opening an HFT-Focused Chicago Office

For several days we had heard a persistent rumor, that one of the most famous members of the New York Fed's Markets Group, also known as the Plunge Protection Team, Kevin Henry was moving to the HFT capital of the world, Chicago. We refused to believe it because, let's face it, when the trading desk on the 9th floor of Liberty 33 needs to get its hands dirty in stocks, it simply delegates said task using just a little more than arms length negotiation, with the world's most levered HFT hedge fund: Ken Griffin's Citadel. Why change the status quo.

And then, it turned out to be true because as the Chicago Fed announced just a few short days ago:

The Markets Group at the Federal Reserve Bank of New York manages the size and composition of the Federal Reserve System’s balance sheet consistent with the directives and the authorization of the Federal Open Market Committee (FOMC), supports debt issuance and debt management on behalf of the U.S. Treasury, provides foreign exchange services to the U.S. Treasury and provides account services to foreign central banks, international agencies and U.S. government agencies.

Markets Group is establishing a presence at the Federal Reserve Bank of Chicago and has openings for both experienced professionals and recent graduates.

So instead of interacting with the HFT momentum ignition algos using the microwave line of sight towers from NY all the way to Chicago, the NY Fed has decided it needs to be present on location in the windy city to buy up every ES contract and reverse the selling momentum when the day of reckoning finally hits.

This long article appeared on the Zero Hedge website at 11:48 a.m. EDT on Sunday morning---and I thank reader M.A. for sending it along.  You don't have to read it all to get the point being made.

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Washington’s Secret Agendas — Paul Craig Roberts

One might think that by now even Americans would have caught on to the constant stream of false alarms that Washington sounds in order to deceive the people into supporting its hidden agendas.

The public fell for the lie that the Taliban in Afghanistan are terrorists allied with al Qaeda. Americans fought a war for 13 years that enriched Dick Cheney’s firm, Halliburton, and other private interests only to end in another Washington failure.

The public fell for the lie that Saddam Hussein in Iraq had “weapons of mass destruction” that were a threat to America and that if the US did not invade Iraq Americans risked a “mushroom cloud going up over an American city.” With the rise of ISIS, this long war apparently is far from over. Billions of dollars more in profits will pour into the coffers of the US military security complex as Washington fights those who are redrawing the false Middle East boundaries created by the British and French after WW I when the British and French seized territories of the former Ottoman Empire.

The American public fell for the lies told about Gaddafi in Libya. The formerly stable and prosperous country is now in chaos.

Always controversial, but never far off the mark, this essay by Paul showed up on his Internet site on Sunday sometime---and it's the first offering of the day from Roy Stephens.  It's worth reading.

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Lloyds fires eight over rate manipulation claims

Lloyds Banking Group said it had dismissed eight people and recouped L3 million in bonuses after finding they had attempted to manipulate benchmark interest rates, as the long-running probe into rate-rigging continues to claim scalps.

The bank was criticised for "highly reprehensible" behaviour by the Bank of England in July after it became the first lender to be fined for rigging rates to cut the cost of a UK financial crisis rescue scheme, in effect costing the taxpayer millions of pounds.

It said on Monday that eight employees had been dismissed, pending their right to appeal, after an internal disciplinary process. Four other members of staff who had been suspended were cleared of wrongdoing and have returned to work.

The rest of this Financial Times story from Monday is subscriber protected---and I found it embedded in a GATA release yesterday.  It's worth skimming.

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'I’m joining UKIP!' Tory MP defects to join Farage’s anti-EU crusade

A UK Conservative MP has defected to the UK Independence Party, formally resigning from the main ruling coalition party and prompting a by-election in his home constituency.

“I’m joining UKIP!” MP Mark Reckless announced to a standing ovation at the UKIP party conference, which took place in Doncaster on Saturday.

The 43-year-old Rochester and Strood MP, a former investment banker elected to the Commons in 2010, had previously denied rumours that he was going to “jump ship” and the announcement was sprung on the audience as an apparent surprise.

“These decisions are never easy. Mine certainly has not been. Many have been the sleepless nights when I have talked it over with my wife and have thought about the future of our children,” Reckless said.

This Russia Today story put in an appearance on their Internet site at 5:12 p.m. on Saturday afternoon Moscow time---and it's the second contribution of the day from Roy Stephens.

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One is not amused: Queen faces £1million bill every year if proposed Labour 'mansion tax' comes into force

The Duke and Duchess of Cambridge, Princess Anne and the Duchess of Cornwall could also be hit by hefty bills by the tax, which would target everyone with a home worth more than £2million.

The likes of Buckingham Palace would not be taxed - as it is technically owned by the state - but Balmoral castle and Sandringham House would still leave the Queen with huge amounts to pay.

Tatler reported that Balmoral had been estimated to be worth up to £50million earlier this year, and if Sandringham were to fetch a similar fee, the Queen could be made to pay nearly £1million for the two homes - if they were both taxed at a rate of one per cent of their value over £2million, the Daily Express reports. 

Labour has not yet released full details of the tax on the wealthy, which they say could raise an extra £1.3billion for the NHS.

This very interesting story showed up on the Internet site at 1:00 a.m. BST on Sunday morning---and I thank reader 'h c' for finding it for us.

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French public debt over €2.0 trillion for first time

France's public debt topped the symbolic level of €2.0 trillion for the first time, in the second quarter of the year, the national statistics agency INSEE said Tuesday.

The total national debt amounted to €2.023 trillion ($2.57 trillion), INSEE said, which represents 95.1 percent of gross domestic product (GDP). European Union rules limit debt to 60 percent of GDP.

Yep, the money printing will never stop.  It either gets devalued to nothing, or is defaulted on.  There is no other way.  The above two paragraphs are all there is to this very brief AFP story that appeared on the Internet site at 9:05 a.m. Europe time this morning---and I thank South African reader B.V. for sending it my way in the wee hours of this morning.  It's only three sentences long, so you should read it.

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ECB to unveil details of new liquidity programmes

The European Central Bank will this week unveil details of its plans to inject cash into the moribund eurozone economy, even as analysts express doubt about the effectiveness of the measures.

Following its surprise rate cut last month, the ECB is not expected to announce any new policy moves at its regular monthly meeting on Thursday, held this time in the Italian city of Naples instead of its usual home venue in Frankfurt.

But financial markets are hoping that ECB president Mario Draghi will provide more details about the bank's contested liquidity programmes, notably its plans to buy asset-backed securities as a way of kick-starting lending in the 18 countries that share the euro.

And some ECB watchers will be listening out for any hints that the bank may embark on a much wider programme of so-called quantitative easing (QE) or the purchase of unlimited amounts of bonds, a policy already practiced by other central banks such as the US Federal Reserve and the Bank of England.

This AFP story showed up on the Internet site at 8:25 a.m. Europe time on Sunday morning---and I seem to remember posting a similar story from another source in my Saturday column.  I thank South African reader B.V. for sharing it with us.

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Draghi Devaluing Euro Cheers ECB as Inflation Seen Fading

While the European Central Bank president says the exchange rate isn't a policy target, officials aren't secretive about their approval of the currency's almost 10 percent slide. The depreciation increases the cost of imports and boosts exporters' competitiveness, aiding the effort to revive inflation that data tomorrow will probably show is the weakest since 2009. A gauge of economic confidence published today slipped to the lowest since November.

The euro dropped from a 2 1/2-year high in May as officials unveiled a medley of stimulus measures, and consolidated below $1.30 when Draghi cut rates this month and signaled a desire to grow the ECB's balance sheet by as much 1 trillion euros ($1.3 trillion). Details of a plan to buy assets will probably come this week after the Governing Council meets in Naples, Italy.

"When Draghi mentioned expanding the size of the balance sheet, I think he was secretly thinking of the exchange rate," said Martin Van Vliet, senior euro-area economist at ING Groep NV in Amsterdam. "I'm sure he's happy to see that the euro has been going down. He's well aware that one important channel of policy transmission is the exchange rate."

This Bloomberg story, filed from Frankfurt, put in an appearance on their Internet site at 6:13 a.m. Denver time yesterday morning---and once again I found this article posted on the Internet site.

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Geneva group's report predicts low interest rates forever

A "poisonous combination" of record debt and slowing growth suggest the global economy could be heading for another crisis, a hard-hitting report will warn on Monday.

The 16th annual Geneva Report, commissioned by the International Centre for Monetary and Banking Studies and written by a panel of senior economists including three former senior central bankers, predicts interest rates across the world will have to stay low for a "very, very long" time to enable households, companies, and governments to service their debts and avoid another crash.

The warning, before the International Monetary Fund's annual meeting in Washington next week, comes amid growing concern that a weakening global recovery is coinciding with the possibility that the US Federal Reserve will begin to raise interest rates within a year.

One of the Geneva Report's main contributions is to document the continued rise of debt at a time when most talk is about how the global economy is deleveraging, reducing the burden of debts.

This Financial Times story showed up on their website on Sunday---and it's posted in the clear in its entirety---and this is another item from the Internet site.  The actual FT headline reads "Geneva Report Warns Record Debt and Slow Growth Point to Crisis".  It, too, is worth reading.

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Morgan Stanley warns on Asian debt shock as dollar soars

Debt ratios in developing Asia have surpassed extremes seen just before the East Asian financial crisis blew up in the late 1990s and companies have borrowed unprecedented sums in dollars, leaving the region highly vulnerable to US monetary tightening.

Morgan Stanley said foreign debt in emerging Asia has soared from $300bn to $2.5 trillion over the last decade, creating the risk of a currency shock as the dollar surges to a four-year high and threatens to smash through key technical resistance.

"High dollar liabilities do not bode well for emerging markets. In Asia (excluding Japan), the credit-to-GDP gap has reached levels higher than 1997," it said.

The US bank warned clients that local lenders in Asia have relied increasingly on the wholesale capital markets - a little like Northern Rock before 2007 - allowing them to expand credit faster than deposit growth. This leaves them exposed if liquidity dries up.

This Ambrose Evans-Pritchard commentary appeared on the Internet site on Monday morning at 5:10 a.m. BST---and my thanks to Roy Stephens for sending it.

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Yuan to Start Direct Trading With Euro as China Pushes Usage

China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency.

The move will lower transaction costs and so make yuan and euros more attractive to conduct bilateral trade and investment, the People’s Bank of China said today in a statement on its website. HSBC Holdings Plc said separately it has received regulatory approval to be one of the first market makers when trading begins in China’s domestic market.

The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world’s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.

“It’s a fresh step forward in China’s yuan internationalization,” said Liu Dongliang, an analyst with China Merchants Bank Co. in Shenzhen. “However, the real impact on foreign exchange rates and companies may be limited as onshore trading volumes between yuan and non-dollars are still too small to gain real pricing power.”

This short Bloomberg article, co-filed from Hong Kong and Beijing, showed up on their website at 5:06 a.m. MDT yesterday morning---and I thank reader 'h c' for his second offering in today's column.

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Hong Kong protesters remain defiant as riot police withdraw

Pro-democracy protesters in Hong Kong defied volleys of tear gas fired by police, blocking streets and forcing some banks to close on Monday as they stood firm in the centre of the global financial hub on Monday.

Hong Kong’s government later said it had withdrawn riot police from the city’s streets as demonstrators apparently began to calm down.

The unrest, the worst in Hong Kong since China resumed its rule over the former British colony in 1997, sent white clouds of gas wafting among the world’s most valuable office towers and shopping malls as the city prepared to open for business.

Televised scenes of the chaos also made a deep impression on viewers outside Hong Kong, especially in Taiwan, which has full democracy but is considered by China as a renegade province which must one day be reunited with the Communist-run mainland.

This news story appeared on their website on Monday sometime---and it's also courtesy of Roy Stephens.  Then there's this amazing piece on this issue headlined "Stunning Drone Footage Shows Just How Enormous The Hong Kong Protests Really Are".  This 3-minute video clip is even more impressive than than the article.  It's definitely worth watching. It's also the final contribution of the day from Roy Stephens, for which I thank him.

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Jim Rickards: Abenomics Will Fail --- An interview with Erkan Öz

Rickards attended the Forex World Istanbul---and delivered a presentation on currency wars at the event last Friday. I found the opportunity to ask him a couple of questions following his book signing event. I am sharing this short interview and Rickards’ exclusive comments here.

- My first question is, what do you think about ‘Abenomics’ this historical money printing experiment taking place in Japan?

JR - Japan has been in depression since 1990 so it's a 25 year depression. Depressions cannot be solved with liquidity or monetary solutions. Depressions can be solved with structural solutions. You have structural problems so you need structural solutions. Through all this time Japan tried monetary solutions. They tried money printing, they tried lower interest rates, they tried stimulus but they could not make fundamental structural reforms for their economy. So that’s why they were not able to get out of the depression.

Abenomics will fail. It will fail unless they make structural solutions. But since they haven't, I expect their depression to continue and spread throughout the world.

This interview by Erkan Öz was posted on the Turkish website on Saturday---and it's definitely worth reading.  Jim also has something to say about the BIS and the ongoing price management situation in gold as well.  English is obviously not Erkan's first language, but you should be able to figure it out nonetheless.  I thank Harold Jacobsen for bringing this to my attention---and now to yours.

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Three King World News Blogs

1. John Embry: "Silver is the Cheapest Asset in the World Today"  2. James Turk: "Total Corruption in Global Markets---and Silver in Backwardation"  3. Richard Russell: "Financial Meltdown and Once in 600-Year Event"

[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]

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Steve Lonegan: There are no free markets when markets don't set money's value

Well-meaning conservative and libertarian groups beat the drum for something called "free markets." Liberal groups blame these "free markets" for many of the world's evils.

Here's the harsh reality neither side will tell you. There ain't no such thing as a "free market."

The free market ceased to exist more than 40 years ago. Nixon drove a stake through its heart by shutting down the Bretton Woods world monetary system, without which free markets cannot exist.

It cannot exist in its true form because the very money that is the foundation of our economy now is just pieces of paper: "legal tender for all debts public and private." Money's value is controlled not by the markets but by a federal agency, the Federal Reserve.

This right-on-the-money opinion piece put in an appearance on the Internet site back on September 10---and it's another item that showed up in a GATA release late last night.

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For one New Jersey candidate, the issue is gold

Republican Jeff Bell spent three decades in Washington working on policy and wrote a book promoting all aspects of social conservatism. But so far his campaign for the U.S. Senate has centered on just one issue: returning the United States to the gold standard.

It's an idea that his opponent, Democratic incumbent Cory Booker, dismisses as "defunct and debunked," which is pretty much how most economists seem to see it.

But a group of conservative thinkers pushing for the change is undaunted.

Bell and other supporters of the gold standard say it would be a way to keep prices stable. He says the current means of controlling prices -- near-zero interest rates from the Federal Reserve -- is making it hard for small businesses to get loans and expand. Bell says that's a major reason that the economy is growing slowly years after the Great Recession.

This ABC News story, filed from New Brunswick, N.J., was posted on their website at 7:23 p.m. EDT on Sunday evening---and it's another offering I found on the Internet site.

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The Mexican Libertad: The Currency Solution?

The Libertad is a Mexican coin that was first issued in 1981 in .999 fine gold and then in silver in 1982. Beginning in 1991, the Libertads became the only coins in the world that were issued in the convenient sizes of 1/20, 1/10, 1/4, 1/2, and 1 ounce—again, in both gold and silver. This made them very practical if they were to be used as currency.

But of course, gold and silver coinage has traditionally had a bit of a problem when either inflation or deflation is the norm in the world: a denominated face value. A century ago, a one-ounce U.S. Liberty gold coin had a face value of twenty dollars. Today, its scrap value alone is nearly 65 times that amount. So, as the value of precious metals changes from day to day, the face value of the coin becomes meaningless.

However, the Libertad, unlike most gold and silver coinage in the world, does not show a face value; it shows only a weight. It can therefore change in value daily, assuming that the Mexican government were to also create a standard by which the Libertad prices could be calculated each day as the prices of gold and silver fluctuate.

This very interesting commentary showed up on the Internet site yesterday---and parallels the decades worth of work that Mexican billionaire Hugo Salinas Price has been doing in this area.  It's certainly worth reading.

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Conspiracy fact: The European Central Bank Gold Agreement is renewed

Bullion Vault research director Adrian Ash notes that the fourth European Central Bank Gold Agreement takes effect today, extends for five years, and removes any limits on gold sales by the 21 signatories while acknowledging that "they do not have any plans to sell significant amounts of gold," because the limits contained in predecessor agreements had come to look silly, such sales having ended long ago.

Ash's commentary, along with a link to another story, is headlined "End of the Central Bank Gold Agreement"---and both of these article were embedded in a GATA release from yesterday---and both are very much worth reading.

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Russia’s Gokhran Buying Gold Bullion in 2014 and Will Buy Palladium in 2015

Gokhran’s palladium reserves are a state secret and analysts try to guess the level each year but they are widely believed to have been depleted according to Reuters.

Gokhran was influential on global platinum group metals (PGMs) markets in the 1990s and 2000s, when its palladium stocks, accumulated during the 1970s and 1980s, came to the market, depressing prices.

Gokhran is the State Precious Metals and Gems Repository which is a state institution under the Russian Ministry of Finance. It is responsible for the State Fund of Precious Metals and Precious Stones of the Russian Federation. It is responsible for the purchase, storage, sale and use of precious metals, precious stones, jewellery, rocks, and minerals by the State Fund.

These are the only four paragraphs on this subject that appeared on the Internet site yesterday.  However, some of Mark O'Byrne's other commentary is worth reading as well.

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Singapore bourse to start kilobar gold trading to lure investors

Singapore Exchange Ltd., Southeast Asia's biggest bourse operator, will start trading a kilobar gold contract next month as it joins other nations in the biggest consuming region in a push for new price benchmarks.

The wholesale contract for 25 kilograms of 99.99 percent purity will start trading at 8:15 a.m. on Oct. 13, according to a joint statement from the exchange, IE Singapore, the World Gold Council, and the Singapore Bullion Market Association. The group said in June that trading may begin as soon as September.

The Shanghai Gold Exchange started bullion trading in the city's free-trade zone on Sept. 18, while CME Group Inc. is planning a physically-delivered futures contract in Hong Kong in the fourth quarter as global demand shifts from the West to the East. Asia accounted for 63 percent of total consumption of gold jewelry, bars, and coins last year, with China overtaking India as the biggest buyer, according to the council.

This brief gold-related Bloomberg news item, filed from Singapore, appeared on their website at 3:00 a.m. MDT on Monday morning---and it's the second-last story of the day from that Internet site.  Chris was a busy boy yesterday.

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Koos Jansen: Chinese gold demand 'extremely strong,' even 'astonishing'

While Western financial news organizations and the World Gold Council keep reporting a decline in Chinese gold demand, gold researcher, but GATA consultant Koos Jansen writes that demand remains "extremely strong" and, as measured by withdrawals from the Shanghai Gold Exchange for the week ending September 19, even "astonishing."

This gold commentary appeared on the Singapore Internet site at 4:50 p.m. local time on Saturday afternoon---and it's the last story of the day from the Internet site.  I thank Chris Powell for wordsmithing the above paragraph of introduction. It's definitely worth reading---at least up until the point where your eyes start to glaze over.

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Lawrence Williams: China gold demand surging again

We cannot emphasise more strongly that gold followers should ignore the mainstream media reports, based on Hong Kong gold export figures to mainland China, that Chinese gold demand has plummeted by anything between 30% and 50% this year.  As we pointed out in an article last week, Hong Kong is now no longer the principal port of entry for gold into the Chinese mainland.  When it was still so, gold exports into China were extremely high at the beginning of the year, but since then the Hong Kong figures have tailed off as China effectively opened up gold import routes through other entry points---notably Shanghai and Beijing---resulting in the Hong Kong net gold exports falling back month by month from a peak of 111 tonnes in February to a mere 21 tonnes in August.  This is thus no longer an indicator of overall Chinese gold demand.

That this does not represent the overall Chinese picture is apparent from the withdrawals of physical gold from the Shanghai Gold Exchange (SGE).  True these withdrawals are also down this year suggesting a more gradual slowdown in Chinese demand, NOT a precipitous fall as suggested by the mainstream media.  However, recently SGE gold withdrawal figures have been particularly strong again – a fact apparently ignored by most gold commentators.  Indeed the past four weeks’ withdrawals from the SGE have totalled over 170 tonnes – this suggests an annual rate of over 2,200 tonnes although weaker figures from March up until August will mean this level will not be reached for the 2014 calendar year, but it may well get much closer to last year’s 2,197 tonnes withdrawn from the SGE than previously estimated.  We would suggest that this year’s figure may well get close to 2,000 tonnes given the lower gold price has been stimulating demand at a time of year when it is traditionally strong anyway.  We can thus anticipate continuing demand at high levels and China maintaining its place as the world’s largest gold importer – even disregarding the assumed-probable additional gold imports to swell the country’s gold reserves.

This commentary by Lawrie is a follow-on to the Koos Jansen piece posted above it.  This article was posted on the Internet site yesterday.  It's also worth your while.

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Sep 27, 2014

Macy's CEO Offers an Ominous Insight About American Consumers

Macy's CEO Terry Lundgren said he was expecting a rebound this year. 

It didn't happen. 

"The consumer has not bounced back with the confidence that we were all looking for," Lundgren said at the Goldman Sachs Annual Retail Conference earlier this month, weeks after the company reported sluggish second-quarter sales. 

Lundgren also said he doesn't expect things to get better in time for the holiday season. 

Why would anyone be surprised by this news, I wonder?  It was posted on the Internet site at 1:25 p.m. EDT on Friday---and I thank Harry Grant for today's first story.

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'Bond King' Bill Gross quits Pimco for Janus

Bill Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc on Friday, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago.

Gross, 70, had been clashing with the firm's executive committee and had threatened to resign multiple times, a source familiar with the situation said. The committee had planned to accept his latest resignation from the post of chief investment officer on Saturday.

The surprise development, which rattled the U.S. bond market, came the day before Pimco and its parent, German insurer Allianz SE, planned to dismiss Gross, the source said.

Gross will manage the Janus Global Unconstrained Bond Fund beginning on Monday, Janus said in a statement. The fund, started in May, has just $13 million in assets.

This Reuters article appeared on the Internet site yesterday sometime---and I thank Dr. Dave Janda for bringing it to my attention.

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David Stockman: Peak Debt—-Why the Keynesian Money Printers are Done

Bloomberg has a story today on the faltering of Draghi’s latest scheme to levitate Europe’s somnolent socialist economies by means of a new round of monetary juice called TLTRO—–$1.3 trillion in essentially zero cost four-year funding to European banks on the condition that they expand their business loan books. Using anecdotes from Spain, the piece perhaps inadvertently highlights all that is wrong with the entire central bank money printing regime that is now extirpating honest finance nearly everywhere in the world.

On the one hand, the initial round of TLTRO takedowns came in at only $100 billion compared to the $200 billion widely expected. It seems that Spanish banks, like their counterparts elsewhere in Europe, are finding virtually no demand among small and medium businesses for new loans.

Many small and medium-sized businesses are wary of the offers from banks as European Central Bank President Draghi prepares to pump more cash into the financial system to boost prices and spur growth. The reticence in Spain suggests demand for credit may be as much of a problem as the supply.

The monthly flow of new loans of as much as 1 million euros for as much as a year — a type of credit typically used by small and medium-sized companies — is still down by two-thirds in Spain from a 2007 peak, according to Bank of Spain data.

On the other hand, Spain’s sovereign debt has rallied to what are truly stupid heights—with the 10-year bond hitting a 2.11% yield yesterday (compared to 7% + just 24 months ago). The explanation for these parallel developments is that the hedge fund speculators in peripheral sovereign debt do not care about actual expansion of the Spanish or euro area economies that is implicit in Draghi’s targeted promotion of business lending (whether healthy and sustainable, or not). They are simply braying that  “T” for targeted LTRO is not enough; they demand outright sovereign debt purchases by the ECB—-that is, Bernanke style QE and are quite sure they will get it. That’s why they are front-running the ECB and buying the Spanish bond. It is a patented formula and hedge fund speculators have been riding it to fabulous riches for many years now.

This commentary, with some excellent charts, showed up on David's website on Friday someday---and it's the first offering of the day from Roy Stephens.

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Doug Noland: What We Know

Heightened global market instability has began to be transmitted to U.S. securities markets.

There’s much that we simply don’t know. There is as well a lot we know with an important degree of confidence.

Some months back I highlighted an exceptional Bank of America Merrill Lynch research report, “Pig in the Python – the EM Carry Trade Unwind” (Ajay Singh Kapur, Ritesh Samadhiya and Umesha de Silva). Especially in light of recent market developments, it’s a good time to revisit this thesis and highlight some of their data.

From “Pig in the Python,” February 2014: “Since 3Q2008, the US Federal Reserve QE has unleashed a massive $2 TN debt-driven carry trade into emerging markets, disproportionately increasing their forex reserves (by $2.7 TN from end-3Q 2008), their monetary bases (by $3.2 TN), their credit and monetary aggregates (M2 up by $14.9 TN), consequently boosting economic growth and asset prices (mainly property and bonds). As the Fed continues to taper its heterodox policy, we believe these large carry trades are likely to diminish, or be unwound.”

Doug's must read commentary showed up on the Internet site on Friday evening---and it's courtesy of reader U.D.

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Whoodathunkit: Secret tapes show New York Fed is the tool of the big banks

Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.

The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.

New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.

After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation's biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.

This story went viral the moment it got posted on the Internet yesterday.  This version, which is a must read, appeared on the Internet site at 5 a.m. EDT on Friday morning---and I found it in a GATA release.

There are three other versions that were sent to me.  The original Bloomberg story headlined "The Secret Goldman Sachs Tapes" was written by Michael Lewis of "Flash Boys" fame---and it's a must read as well.  I thank Roy Stephens for sending that version.  Zero Hedge couldn't help themselves---and their take on it is headlined "How Goldman Controls the New York Fed: 47.5 Hours of "The Secret Goldman Sachs Tapes" Explain"---and this commentary is courtesy of reader 'David in California'.  The New York Post also jumped into the fray with an article entitled "Tapes showing meek oversight of Goldman are about to rock Wall Street"---and this one is courtesy of reader Brad Robertson.

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Alex Jones Interviews Doug Casey

Alex was the dinner speaker last Saturday night at the Casey Summit in San Antonio---and his speech, along with the zeal with which it was delivered, received decidedly mixed reviews.

But here he is in an interview with Doug Casey.  It was posted on the Internet site yesterday sometime.  It's a 2-part interview---and the first installment starts at the 2:35 minute mark and runs until the 17:30 minute mark.  Then, after a five minute break/commercial, the interview starts again at the 22:40 minute mark---and ends at 43:10.

I've had no time to watch it as of yet, but it will be in the pile of things I have to read/listen to, before the weekend is done.

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‘Extraordinary hypocrite’: U.K. whistleblower says HSBC chief Douglas Flint ignored fraud for years

A whistleblower of HSBC fraud has denounced the bank’s chairman, Douglas Flint, as “an extraordinary hypocrite” following the financier’s suggestion that those who expose crime in Britain’s financial services sector should be rewarded and celebrated.

Flint made the comment at the launch of Britain’s Chartered Institute for Securities & Investment’s (CISI) “Speak Up” initiative launched on Tuesday. The program was set up to encourage financial services firms to adopt a policy that assists staff in reporting legislative, regulatory and company policy violations.

Calling on U.K. financial firms to take a more proactive approach to tackling misconduct in the workplace, Flint said firms should “encourag[e] the calling out of both good and bad behaviour” and reward and praise “those who escalate their concerns even if they are sometimes wrong”.

But HSBC whistleblower and financial campaigner Nicholas Wilson condemned Flint’s comments, insisting they were disingenuous. In an exclusive interview, Wilson told RT he had attempted to expose fraud in HSBC for years, yet Flint had turned a blind eye.

This article appeared on the Russia Today website at 1:14 p.m. Moscow time on their Thursday afternoon---and I thank Harry Grant for sending it our way.

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Six banks in U.K. talks over forex manipulation fines

Six banks have entered settlement discussions with the U.K.'s main markets regulator over the alleged manipulation of foreign exchange in what could amount to record fines.

Each of the banks -- Barclays, Citigroup, HSBC, JPMorgan Chase, Royal Bank of Scotland, and UBS -- are facing fines in the hundreds of millions of pounds from the Financial Conduct Authority, according to people familiar with the situation.

The settlement talks, which typically last eight weeks, are only with the FCA and do not include the United States or any other domestic regulator.

This Financial Times story showed up on their website yesterday sometime---and it's posted in the clear in this GATA release.

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Interim deal reached in Ukrainian gas row

Trilateral natural gas talks Friday in Berlin have resulted in temporary relief for Ukraine, delegates at the conference confirmed.

Russian, Ukrainian and European officials met in Berlin in an effort to avert a gas crisis for the upcoming winter.

Russia meets about a quarter of the gas needs for Europe, though the bulk of that volume runs through the Soviet-era transit system in Ukraine. Contractual woes in 2006 and 2009 forced Russian gas company Gazprom to cut gas supplies through Ukraine and European leaders are worried about a repeat of the crisis given ongoing acrimony between Kiev and Moscow.

The original headline to this UPI story, filed from Berlin yesterday, read "Ukraine, Europe, Russia make progress in gas talks"---and it's another contribution from Roy Stephens.

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The Threat of War and the Russian Response

U.S. actions in Ukraine should be classified not only as hostile with regard to Russia, but also as targeting global destabilization. The U.S. is essentially provoking an international conflict to salvage its geopolitical, financial, and economic authority. The response must be systemic and comprehensive, aimed at exposing and ending U.S. political domination, and, most importantly, at undermining U.S. military-political power based on the printing of dollars as a global currency.   

The world needs a coalition of sound forces advocating stability —in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty.


This coalition could be comprised of large independent states (BRICS); the developing world (most of Asia, Africa, and Latin America), which has been discriminated against in the current global financial and economic system; CIS countries interested in balanced development without conflicts; and those European nations not prepared to obey the disparaging U.S. diktat. The coalition should take measures to eliminate the fundamental causes of the global crisis.

Sergei Glaziev is an Advisor to the President of the Russian Federation---and a Full Member of the Russian Academy of Sciences.  This commentary of his showed up on the Internet site on Tuesday---and it's certainly worth reading.  I thank Roy Stephens for sharing it with us.

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British parliament approves airstrikes against IS group in Iraq

The British parliament voted overwhelmingly on Friday to join a U.S.-led coalition against the Islamic State militant group. Belgium and Denmark also announced that they would join the international effort against the jihadists.

British lawmakers voted 524 to 43 in favour of military action, paving the way for the Royal Air Force to immediately join strikes targeting the Islamic State (IS) group, also known as ISIS or ISIL.

The vote came after Prime Minister David Cameron recalled parliament from recess to back military action following an official request from the Iraqi government.

This article appeared on the Internet site early this morning Europe time--and I thank Roy Stephens for his final offering in today's column.

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Three King World News Blogs

1.  Andrew Maguire [#1]: "Stunning 650 Tonnes of Gold Bought in Takedown"  2. Ronald-Peter Stoferle: "Concerned About the Gold and Silver Smash - Just Read This"  3. Andrew Maguire [#2]: "Final Stages of Historic Capitulation in Gold and Silver"

[Note:  Besides my usual disclaimer on our daily dose of hyperbole out of King World News that's posted below---I, and others, have some real issues with this 650 tonne figure---and here are just two of them.  This amount of gold represents almost 80 percent of the current contents of the GLD ETF---and 25 percent of yearly gold production.  Considering the fact that the goings-on inside the LBMA are totally opaque, I'd like to see some proof for what appears to be an outlandish claim. - Ed]

[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]

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8 Stunning Images That Show How Much Natural Resources Are Mined Each Year

The market for precious metals is not as big as you might think.

One year's worth of mined platinum is only the size of a car. But it's worth about $8 billion.

Visual Capitalist took one year's production of eight commodities, lumped each of them into a three-dimensional cubes, and put them next to landmarks around the world.

They also calculated the value of each cube.

Wow!  Talk about a reality check!  This short, but truly amazing photo essay showed up on the Internet site at 4:49 p.m. EDT on Thursday afternoon---and it's an absolute must read.  I was amazed---and you will be too!!!  I thank reader Harry Grant for his third offering in today's column.

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Cheapest way to buy Royal Mint gold? Not from the Royal Mint

For years the Royal Mint has sold collectible coins commemorating special events direct to the public.

But "bullion" coins made for investment purposes – such as Sovereigns, Britannias or Lunars (introduced last year) – have until now been available only through dealers.

Bullion coins are generally produced to a less perfect finish than special-edition coins made for collectors. This means their price tracks more precisely the value of the gold they contain. By comparison, collectable coins typically go on sale – initially at least – for substantially more than the value of the gold they contain.

From this week the Royal Mint offers a bullion-coin service through which individuals can buy as few as one coin at a time directly. Buyers create an online account and buy coins via the Mint’s website, where prices change constantly according to the gold market.

Once the transaction is complete the Mint dispatches the coins in insured mail which – for a "limited time" – is free within Britain.

This interesting essay appeared on the Internet site at 8:14 a.m. BST on their Friday morning---and it's an article I found on the Internet site.

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German Bullion Dealers Report Major Increase in Sales

Suppressed prices for gold and silver are obviously considered buying rates by German investors. The German precious metals trade reports a surge in sales.

“For about a week we record considerably increased turnover again, which is now on previous year’s level, so it doubled compared to the recent months.”, Rene Lehman from the internet dealer Münzland in Dresden told Goldreporter.

“We can confirm that customer demand has considerably increased in the recent days.“, said Dominik Kochmann, CEO of ESG Edelmetalle in Rheinstetten.

Daniel Marburger, Director of Coininvest GmbH in Frankfurt/Main also stated that "In the past seven working days we have seen an extreme surge in demand."

Well, dear reader, as I said further up in today's column, bullion demand here in Edmonton---especially silver---has really taken flight at our store this week as well.  And since JPMorgan et al have put it on sale below the cost of production---why the hell not!!!  And that is investment advice---and the buyers have figured that out all by themselves!  This news item was posted on the German website early yesterday evening Europe time---and I found it embedded in a GATA release.

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Mark O'Byrne: Death Of 'Safe Haven' Gold Greatly Exaggerated

It would appear to us that the factors that would make gold a safe-haven asset have not gone away. 

In fact these factors are strengthening, as described above. The only rational explanation appears to be that gold remains an investment safe-haven as it has always done, but that this is not yet being recognised by the price discovery process in the market.

Adding in the fact that there is a continued disconnect between, on the one hand, the global physical gold market primarily driven out of China and India, and on the other hand, the New York gold futures market and unallocated London bullion market on the other hand, then this disconnect should not be expected to persist over the medium term.

This is especially the case given the heightened geopolitical and macroeconomic risks. 

With the gold price not yet signalling the geopolitical and macroeconomic alarm bells that many would have expected it to, the question of gold price manipulation remains a valid question.

This must read commentary appeared on the Irish website on Friday.  It also showed up in a GATA release as well.

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Alasdair Macleod: Valuing gold and turkey farming

Defeating markets is the primary objective of central banking, GoldMoney research director Alasdair Macleod writes today, adding that it will come at the expense of hyperinflation, since debt is so overwhelming that interest rates, while already at zero, cannot be raised without collapsing the world economy.

Macleod's analysis is headlined "Valuing Gold and Turkey Farming" and it was posted on the Internet site on Friday.  I found it posted on the Internet site yesterday---and it's worth reading.

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Koos Jansen: New Shanghai exchange discourages exporting gold from China

In the first installment of his review of the operations of the new Shanghai International Gold Exchange in Shanghai's free-trade zone, gold researcher and GATA consultant Koos Jansen writes, among other things, that the exchange seems designed to discourage export of gold from China.

Jansen's analysis is headlined "The Workings of the Shanghai International Gold Exchange, Part 1" and it's posted at the Singapore Internet site early Thursday evening local time.  I found this gold-related story on the Internet site yesterday.  It's long---and a bit thick, but worth your while.  I stole 'all of the above' from another GATA release.

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Lawrence Williams: Hong Kong-China gold exports weak again, but does it matter?

Reported Hong Kong net exports of gold to mainland China were again at an extremely low level in August at a mere 21.1 tonnes.  In previous years the Hong Kong figures have been taken by global gold analysts as something of a proxy for total Chinese gold imports, even though gold was known to have entered the Chinese mainland by other routes, but this had been assumed to be in relatively insignificant quantities.  This year, though, China has eased the path to passage of gold through other ports of entry – notably Shanghai and Beijing – for which no data is forthcoming and given that this easing coincides with the apparent downturn in the Hong Kong figures, it could well be the case that imports via these alternative routes have been replacing gold which had previously come in via Hong Kong.

On the face of things, if one takes the Hong Kong figures for net gold exports to China alone (see table below), Chinese demand appears to have fallen by a massive 33% this year from 725 tonnes to 485 tonnes.  But this is belied by figures for withdrawals from the Shanghai Gold Exchange which are only down by around half this percentage, and which have been particularly strong in the past few weeks.  This has also coincided with price premiums over the London gold price again appearing in Shanghai.

This commentary by Lawrie was posted on the Internet site yesterday sometime---and it's also worth reading.

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Sep 26, 2014

U of T's Auerbach: Fed Has Created a $2.7 Trillion Time Bomb

The Federal Reserve has built a $2.7 trillion time bomb that will cause economic mayhem if not carefully diffused, says Robert Auerbach, a professor of public affairs at the University of Texas at Austin.

Although the Fed has pumped trillions of dollars into the economy since 2008, most of it has remained idle in the form of private bank's excess reserves it continues to hold, he writes in an article for The Huffington Post.

Excess reserves exploded under the former Fed Chairman Ben Bernanke and have continued soaring under current Chair Janet Yellen, from $1.6 billion in August 2008 — almost nothing in central bank terms — to $2.7 trillion as of Sept. 4, notes Auerbach, a former economist with the House Financial Services Committee, the U.S. Treasury's Office of Domestic Monetary Affairs and the Fed.

There's nothing really new here, but it's nice to be reminded that this potential inflationary bombshell still hangs over the market.  I doubt very much that interest rates on these excess reserves will be removed, as the interest created out of thin air on the excess reserves created out of thin air, are being used to recapitalize the banking system.  This news item appeared on the Internet site at 8:04 a.m. EDT on Thursday---and today's first story is courtesy of West Virginia reader Elliot Simon.

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James Grant: Don't get hysterical over deflation

Looking ahead to GDP data on Friday, with Jim Grant, founder and editor of Grant's Interest Rate Observer.  Grant outlines the risks to the U.S. economy.

This 1:53 minute video clip appeared on the Internet site at 3 p.m. yesterday afternoon---and its courtesy of reader Ken Hurt.

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Survey: Three Out of Four Americans Feel Like Recession Continues

Americans have a bleak view of the economy and their own financial situations, according to a new study from the Public Religion Research Institute.

While the Great Recession officially ended in June 2009, only 21 percent of Americans believe it's really over, while 72 percent believe it continues.

Only 7 percent of Americans report they are in excellent shape financially, while 34 percent say they're in good shape, 37 percent say they're in fair shape, and 20 percent say they're in poor shape.

Just 30 percent believe the economy has improved during the past two years, while 35 percent say it has worsened, and 33 percent say it is about the same.

This article put in an appearance on the Internet site at 8:20 a.m. EDT on Thursday morning---and it's the first offering of the day from Elliot Simon.

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Eric Holder is Resigning

Eric Holder Jr., the nation's first black U.S. attorney general, is preparing to announce his resignation Thursday after a tumultuous tenure marked by civil rights advances, national security threats, reforms to the criminal justice system and five and a half years of fights with Republicans in Congress.

Two sources familiar with the decision tell NPR that Holder, 63, intends to leave the Justice Department as soon as his successor is confirmed, a process that could run through 2014 and even into next year. A former U.S. government official says Holder has been increasingly "adamant" about his desire to leave soon for fear he otherwise could be locked in to stay for much of the rest of President Obama's second term.

Holder already is one of the longest serving members of the Obama cabinet and ranks as the fourth longest tenured AG in history. Hundreds of employees waited in lines, stacked three rows deep, for his return in early February 2009 to the Justice Department, where he previously worked as a young corruption prosecutor and as deputy attorney general — the second in command — during the Clinton administration.

This NPR news item showed up on the Zero Hedge website yesterday---and it's courtesy of reader 'David in California'.

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N.Y. officials downplay subway attack reports

Iraq's prime minister said Thursday that captive militants for the Islamic State of Iraq and Syria (ISIS) told his intelligence agents of an alleged plot to attack subways in the United States and Paris.

U.S. law enforcement officials told CBS News they are investigating the threat, but as of overnight, there was still no intelligence on any credible specific plot against the U.S.  A half-dozen French officials contacted by The Associated Press said they knew of no plot.

FBI Director James Comey told reporters Thursday afternoon that he was unaware of any threat directed at U.S. subways.

Not that I have a suspicious mind, but currents events in the Middle East are the perfect cover for the powers-that-be to drop another 9/11 event [or more than one] on the world.   I found this CBS story from yesterday in a Zero Hedge piece---and it's the second article in a row from reader 'David in California'.

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G7 Urges to Continue Trilateral Talks Between EU, Ukraine, Russia

The foreign ministers of G7 countries stressed the importance of continuing trilateral talks between the European Union, Russia and Ukraine in a joint statement on Thursday.

"We welcome that the trilateral talks between Ukraine, Russia and the EU will continue. It is equally important to continue the discussions between Russia, Ukraine and the EU on resolving outstanding energy issues," reads the statement, released by the foreign ministers of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and High Representative of the European Union.

On September 12, Russia, Ukraine and the European Union held a trilateral meeting, which resulted in a compromise to put off the implementation of Kiev's free trade pact with the EU until December 2015.

This story is from the RIA Novosti website---and it was posted there just after midnight Moscow time on their Friday morning---and I thank Roy Stephens for his first of many contributions to today's column.

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E.U. to discuss lifting sanctions against Russia in October — diplomatic source

The European Union may begin discussions on lifting sanctions against Russia in October, and lifting the first block of sanctions is not probable before November, a European diplomatic source told ITAR-TASS on Friday.

The source said the de-sanctions' process may be organized only on the step-by-step basis depending on development of the situation in Ukraine.

The diplomat said about two possible ways of lifting sanctions, “where both are on the step-by-step basis, and lifting of the entire block at a time will not be possible.”

This story, filed from Brussels, showed up on the Internet site on Friday morning Moscow time---and it's another contribution from Roy Stephens.

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Kremlin ready for energy company bailout

Russian energy companies feeling the squeeze from Western economic sanctions can appeal for help from the government, the deputy energy minister said Thursday.

Russia relies heavily on oil and natural gas revenues to support its economy. When sanctions targeting Russian energy companies went into force earlier this year, Andrei Belousov, an economic adviser to the Kremlin, said the Central Bank of Russia may sell some of its foreign currencies to blacklisted companies in an effort to offset the punitive measures.

Deputy Energy Minister Kirill Molodtsov said Thursday the federal government was on standby should sanctions-strapped companies need support.

"In a situation when the companies came under sanctions, they can appeal to the government for support, if there is such a need," he said.

This UPI story, filed from Moscow, appeared on their Internet site at 9:03 a.m. EDT yesterday morning---and I thank Roy Stephens for bringing it to our attention.

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What is to be done about a world where everything is for sale?

Next time you read about an auctioneer’s gavel coming down on a $150 million painting bought by some flunkey representing the ruling family of Qatar, don’t ooh or aah, but think of those monsters in Iraq and Syria who have their children pose on video while holding up the severed heads of innocents. And no, it’s not a stretch — without Qatar’s gold Islamic State would not exist, not even in the movies.

Let me put it another way: had Calvin Coolidge or Herbert Hoover given White House dinners for Al Capone, the outcry would have been heard all the way down to Patagonia. Yet, as reported in these here pages by Charles Moore, not only did the head of the family lunch with the Queen at Windsor, a cousin and his mother also lunched the next day at Windsor and caused a stir because they were not included in the Queen’s carriage. They sponsored Ascot this year, and Elizabeth Anson was their PR person. She burst into tears after failing to include them in the lead carriage. All I can say is shame on Ascot, more shame on Anson, and eternal shame on the stuffed shirts who forced the Queen to break bread with these characters.

They say Brits will do anything for money, but the rest of the Western world is just as bad. Just look at how a tiny Gulf nation of 250,000 goatherds managed to land the World Cup in 2022. To call the bribes Qatar must have paid to Fifa delegates colossal would be an understatement. But forget the 50-degree-Celsius heat and that football is unplayable in that hellhole, the scandal of modern-day slavery as practised by the Qataris is a far bigger depravity, overlooked by the West. In fact, calling foreign workers indentured servants is a euphemism; they are modern-day slaves. Foreign workers do not enjoy a minimum wage in Qatar, nor do they have any rights. They are not allowed to change jobs, however feudal the conditions, get a driving licence, rent a room or open a checking account unless they have their employer’s permission. Thousands have died while working in appalling conditions (hundreds of Nepalese alone), which provoked an investigation by the Norway-based Global Network for Rights and Development, which sent a researcher and a photographer. Last week the Qatari government confirmed that the two have been arrested and are in prison. So much for European influence in that sweaty hellhole.

This very interesting article appeared on the Internet site on Sunday---and I thank South African reader B.V. for sharing it with us.

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Welcome to Barack Obama’s Syrian Gong Show

Folks, this war is only three days old and its already a gong show. Its become at least a four-front affair—with Obama’s “broad” coalition amounting to little more than a few stealth Arab nations renting back to Washington the equipment and American trained pilots it had earlier provided them.

The President’s shock-but-not-awe campaign apparently incepted not with bombs on the Islamic State’s capital of Raqqah but via a tomahawk barrage on some Nusra Front rebels in northwestern Syria. These were anti-regime fighters of the not-so-moderate persuasion who had been recently driven there after a bloody struggle with ISIS. As explained by the WSJ:

In July, the Islamic State routed its rivals including the Nusra Front and allied Islamist rebels from eastern Syria and they are now concentrated in the western half of the country, where they are fighting the regime along with other factions.

So these folks were fighting both of Washington’s declared enemies—–the Assad regime and ISIS—but it obliterated them anyway, and some of their women and children, too. That apparently makes for a three-front war, as the WSJ further explained---

This long commentary by David Stockman appeared on his website on Thursday sometime---and I thank reader U.D. for passing it around.

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Malaysian P.M. --- Kiev not naming concrete schedule for experts to enter Boeing crash site

The Ukrainian government could not provide a concrete schedule when international experts could enter the Boeing crash site in eastern Ukraine, Malaysian Prime Minister Najib Razak said after meeting with his Ukrainian counterpart Arseniy Yatsenyuk in New York.

“Kiev cannot give us any guarantees, including on the date of access, and we have to depend on them. According to Yatsenyuk, armed clashes still continue in the area, that’s why it is impossible to get to the crash site,” Mr. Najib said on Wednesday.

Asked whether Malaysia could initiate talks with self-defense militias to allow safe passage of the team, Najib said a “communication line” is still open but Kiev’s sensitivity should be taken into consideration.

The Malaysian prime minister stressed that international experts should get to the site ahead of the winter season that could affect the forensic evidence. He also expressed concerns over unclaimed remains of passengers and the crew of the crashed plane.

This RIA Novosti article appeared on their website at 10:40 a.m. Moscow time on their Thursday morning---and it's another story courtesy of Roy Stephens.

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Japan’s Abe Confirms Plans to Meet Russian President, Date to Be Fixed

Japanese Prime Minister Shinzo Abe confirmed early Friday he still hoped to meet with Russian President Vladimir Putin, although no date had been set for Putin's visit to the island nation yet.

"As for Vladimir Putin's visit to Japan, I do hope that it will take place, although his agenda is still to be set," Shinzo Abe said at a press conference.

"We had a phone talk [with Putin] on my birthday, September 21. We agreed to continue a dialogue between our nations," Abe told journalists.

This short article appeared on the RIA Novosti website at 4:16 a.m. Moscow time this morning, which was 8:16 p.m. Thursday evening in New York---and it's the final offering of the day from Roy Stephens.

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Three King World News Blogs

1. Bill Haynes: "Stunning Demand" One Individual Buying $40 Million of Gold  2. Egon von Greyerz: "Global Market Collapse and Wealth Destruction is Now Upon Us"  3. John Hathaway: "Absolutely Stunning Developments in 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]

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Gold Downside Risk Seen ‘Significant’ to Goldman Sachs

Goldman Sachs Group Inc.’s Jeffrey Currie says the worst isn’t over yet for gold after prices erased almost all of this year’s gain.

“Risks are significantly skewed to the downside,” said Currie, who told investors to sell last year before gold’s biggest collapse since 1980. “Much of the support was coming from political uncertainty in Ukraine and what was going on in Middle East,” and those concerns have faded, he said in a telephone interview yesterday.

After bullion’s rally in the first half of the year beat gains for commodities, equities and Treasuries, the metal is heading for its first quarterly decline in 2014. Demand for precious metals as a protection of wealth has been eroded by the outlook for a strengthening U.S. economy, which helped spark a rally in the dollar as the Standard & Poor’s 500 Index of equities surged to a record this month.

With bulls hit stories like this, you'd think that Currie's hand has to be shaking a little when he reaches for his paycheque/paycheck.  Like John Hathaway and many others, Jeffrey Currie will never talk about the real reason why precious metal prices are in the dumps, even though they all know better.  This Bloomberg story, filed from New York, was posted on their Internet site at 6:38 a.m. Denver time on Thursday morning---and I found it on the Sharps Pixley website.

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U.K. moves to extend Libor rigging laws to oil, gold and currency markets

Traders who manipulate key oil, gold and currency benchmarks will be handed the same huge fines or jail sentences as those who rig Libor under government proposals to tackle market abuse.

The Treasury launched a formal consultation on Thursday to extend the new legislation to cover the foreign exchange, fixed income and commodity markets. Under the proposals, the legislation would cover the London Gold Fixing and the LMBA Silver Price, which determine the price of the precious metals in the London market.

Also targeted is the ICE Brent futures contract, "which acts as the crude oil futures market's principal financial benchmark", the Treasury said.

“The integrity of the City matters to the economy of Britain. Ensuring that the key rates that underpin financial markets are robust, and that anyone who seeks to manipulate them is subject to the full force of the law is vital," said Andrea Leadsom, economic secretary to the Treasury.

That's all very cute, but as I've said before---and in my presentation at the Casey Summit on Sunday---it's not the fixes that matter, it's the bias between the morning and afternoon gold fix.  It has been negative every year since 1975.  I'll have a chart on this in The Wrap section.  This story appeared on the Internet site at 11:13 a.m. BST on their Thursday morning---and I thank reader "Roger in La La Land" for sending it along.  Phil Barlett sent us the Bloomberg take on this.  It's headlined "U.K. Seeks to Criminalize Manipulation of 7 Benchmarks".

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LBMA names Citigroup as gold and silver market maker

The London Bullion Market Association (LBMA) said on Thursday it appointed Citigroup as a market maker, underscoring the bank's ambitions to expand into the precious metals sector while others are exiting due to regulatory concerns.

LBMA said it named Citibank, a unit of Citigroup, as a spot market-making member effective Thursday. Currently, LBMA has 12 market makers that serve in either one, two, or all three of the spot, forwards, and options markets. They make markets by quoting two-way prices in both gold and silver products to other market makers.

This just exchanges one crook for another.  Exit Deutsche Bank---enter Citibank.  Please move along, nothing to see here.  This Reuters story, filed from New York, appeared on their Internet site at 3:40 p.m. EDT yesterday---and I found it on the Internet site.

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Silver, Gold and Currencies Revalued Overnight - Mike Maloney

In this video, Mike explains the mechanics behind what he sees coming: short term deflation followed by big or even hyperinflation as central banks try to print their way out of the mess they have created. The result is the same as it has always been throughout history, with gold delivering either a technical knockout or a complete decimation of currency.

No surprises here, as many analysts, including myself---have been discussing this for years.  It's just the timing that remains unknown.  This 9:02 minute video clip was posted on the Internet site on Wednesday---and it's certainly worth your time.

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Weak gold price has Dubai consumers clamoring for more

With local gold prices dipping below the 140 dirhams a gram (for 22-karat) level for the first time this year, it was enough to unleash a manic round of buying at jewellery stores in the United Arab Emirates and the Gulf over the weekend. If the current levels -- of around Dh140 -- can sustain itself, it could lead to a surge in buying ahead of the key festivals of Eid and Diwali next month, industry sources say.

Industry feedback suggests that on Friday itself nearly 1.5 tonnes of gold could have been bought at retail level transactions across the Gulf, with the UAE accounting for nearly half of that. On Monday, with the price at Dh139.25 a gram, the level of consumer interest was sustained.

"The month with Diwali" -- the Indian festival when buying jewellery is rated as auspicious -- "represents a peak buying period for the trade in the Gulf, and this year it's doubly so with Eid also falling in the same month," said Shamlal Ahmad, director of International Operations at Malabar Gold & Diamonds. "Shoppers are clearly bringing forward their purchases to make use of the soft prices."

This positive gold-related story, filed from Dubai, appeared on the Internet site at 5:31 p.m. local time on their Wednesday afternoon---and it's definitely worth reading.  I found it embedded in a GATA release yesterday.

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With 50 Tonnes of Gold Smuggled in 10 Days, India's Physical Gold Premiums Set to Double

As the price of precious metals that is eschewed daily by status-quo-hugging talking-heads on business media as indicative of the days of hard money being over continues to come under 'pressure', demand for physical gold remains extremely high. With India's festive season about to begin, The Hindustan Times reports a massive surge in gold smuggling in the last 10 days as heavy demand for gold during Dussehra (for which booking and supply starts today when Navratri begins) has dragged 50 tonnes of gold across the borders to avoid the government's capital controls. As Bloomberg adds, physical gold premiums may double by the end of October.

This is really two stories in one, so you can pick and chose, or read both of them---and they're both worth you while.  It was posted on the Zero Hedge Internet site at 9:11 a.m. EDT on Thursday morning---and I thank reader M.A. for finding it for us.

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Currency Wars Deepen - Russia, Kazakhstan Buy Very Large 30 Tons of Gold in August

Latest official gold reserve data from the International Monetary Fund (IMF) shows that Russia again added to its gold reserves in August, with the Central bank of the Russian Federation purchasing  232,510 ozs (7.23 tonnes) and bringing its total gold reserves to 35.769 million ozs or 1,112.5 tonnes. 

Likewise, the National Bank of Kazakhstan purchased a massive 795,213 ozs or 24.7 tonnes in August bringing its total gold reserves to 5.848 million ozs (181.9 tonnes).

Turkey was also a gold buyer in August and the Turkish central bank adding 96,783 ozs (3 tonnes) to bring its total official gold reserves to 16.45 million ozs (511.6 tonnes), which is the world's 12th largest official gold holding.

According to the IMF data, other countries which added to their gold reserves in August included the central banks of Azerbaijan and Ukraine.

This commentary was posted over at the Internet site yesterday---and its definitely worth reading.

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