Gold & Silver Daily

Ed's Critical Reads

Jan 30, 2015

Janet Yellen Saves the Day: Stocks Soar After Fed Chairwoman Tells Democrats to BTFD

Because everyone knows you BTFD when Janet Yellen speaks (and Sell The F**king Shit, aka STFS, out of precious metals in the middle of surging currency volatility and monetary policy chaos...)

Thank The Market Gods for Janet Yellen... Stocks were rescued back above their 100DMAs to prove everything is fine...which dragged all stock indices back into the green post-QE3

The big news was Gold & Silver crushed... Crude new cycle lows... and Swiss Franc slapped hard and put away wet... (oh and stocks bounced)

This rant, with some excellent charts, showed up on the Zero Hedge Internet site at 4:06 p.m. EST yesterday afternoon---and the first person through the door with this story was Dan Lazicki.

View full GSD edition

David Stockman: Fed Statement: Not Dovish, Not Hawkish—Just Gibberish

Call it 529 words of gibberish and be done!

All of the FOMC’s platitudes about the economy “expanding at a solid pace”, labor market conditions which have “improved further”, household spending which is “rising moderately” and business fixed investment which is “expanding” are not simply untruthful nonsense; they are a smokescreen for the Fed’s actual intention. Namely, to keep the Wall Street gamblers in free money in the delusional hope that ever rising stock prices will generate a trickle down of “wealth effects” in the main street economy.

But in equivocating still another time about when they intend to get the Fed’s big fat ZIRP thumb off the money  market, the denizens of the Eccles Building have shown their true colors. The FOMC is not really comprised of economists or central bankers. It is simply a groupthink posse of spineless cowards who are petrified of a Wall Street hissy fit—–and are therefore willing to dispense whatever spurious word clouds they judge may be necessary to keep the gamblers hitting the “bid” until the next meeting.

David sounds miffed!  This rant appeared on his website yesterday sometime---and it's the second offering of the day from Dan Lazicki.

View full GSD edition

Caterpillar CEO: 'Rising Dollar Won't Be Good for U.S. Economy'

The surging dollar, which has reached multi-year highs against a range of currencies in recent weeks, is taking a hefty chunk out of many U.S. companies' earnings.

And that means pain for the economy as a whole, say Doug Oberhelman, CEO of Caterpillar, one of the companies affected.

"The rising dollar will not be good for U.S. manufacturing or the U.S. economy," he said in a conference call with analysts and investors Tuesday, The Wall Street Journal reports.

A strong dollar reduces the revenue earned by U.S. companies overseas, because that revenue is now worth less when converted from foreign currencies into dollars. An ascendant greenback also depresses U.S. companies' exports by making them more expensive in foreign currency terms.

This news story appeared on the moneynews.com Internet site at 7:20 a.m. EST on Thursday morning---and I thank West Virginia reader Elliot Simon for sending it along.

View full GSD edition

Almost half of U.S. households exhaust their salaries

The Federal Reserve has declared economic growth "solid." But several new reports show most Americans are treading along a dangerous financial tightrope, where one slip could be devastating.

Nearly half of U.S. households — 47 percent — say they spend all of their income, go into debt or dip into savings to meet their annual expenses, according to an analysis of Fed survey data released Thursday by the Pew Charitable Trusts.

"They could not withstand a serious financial emergency," said Diana Elliott, a Pew research manager who co-wrote the analysis. "That really is the contrast to the macroeconomic story" of a recovering economy.

"Macro indicators tell us a lot, but they don't tell us what is specifically happening within families," she said.

No surprises here.  This AP story showed up on the denverpost.com Internet site at 9:59 a.m. MST yesterday morning---and it's the first offering of the day from Manitoba reader U.M.

View full GSD edition

Baltic Dry Index: 666

Forget The Hindenburg Omen and The Hilsenrath Omen, today we have the real deal as The Baltic Dry Index hits the ominous 666 level - the lowest print for this time of year on record.

Of course, just like with oil - this is brushed off as over-supply (not under-demand) and we are sure someone will opine how positive this drastic deflation of shipping rates is for global business... but still - this is the lowest print since September 2012 (and practically the lowest since the recession).

This tiny article, with two excellent charts, put in an appearance on the Zero Hedge website at 9:33 a.m. on Wednesday morning EST.  It's courtesy of reader Brad Robertson.

View full GSD edition

Raul Castro: U.S. must return Guantanamo for normal relations

Cuban President Raul Castro demanded on Wednesday that the United States return the U.S. base at Guantanamo Bay, lift the half-century trade embargo on Cuba and compensate his country for damages before the two nations re-establish normal relations.

Castro told a summit of the Community of Latin American and Caribbean States that Cuba and the U.S. are working toward full diplomatic relations but "if these problems aren't resolved, this diplomatic rapprochement wouldn't make any sense."

Castro and U.S. President Barack Obama announced on Dec. 17 that they would move toward renewing full diplomatic relations by reopening embassies in each other's countries. The two governments held negotiations in Havana last week to discuss both the reopening of embassies and the broader agenda of re-establishing normal relations.

Obama has loosened the trade embargo with a range of measures designed to increase economic ties with Cuba and increase the number of Cubans who don't depend on the communist state for their livelihoods.

This AP story, filed from San Jose, Costa Rica, found a home on the Thailand Internet site thaivisa.com on Wednesday sometime---and I thank South African reader B.V. for finding it for us.  It's certainly worth skimming.

View full GSD edition

Bank of England chief 'delusional' to claim U.K. escaped debt trap - economist

U.K. economist and anti-austerity campaigner Michael Burke rejected Carney’s claim that Britain had escaped its debt trap. The former Citibank economist said Britons remain deep in debt, and that people are borrowing more than ever.

“Mark Carney is delusional if he thinks Britain and the U.S. have found a way out of the debt trap,” Burke told Russia Today.

“They have transferred debt, from companies to households. Household debt in both countries is among the highest in the world.”

Speaking in Dublin, Carney sharply criticized austerity policies common to the Eurozone states, warning the single-currency area was constrained by strangulating levels of debt that could plunge it into years of stagnation.

This article was posted on the Russia Today website at 2:44 p.m. Moscow time on their Thursday afternoon, which was 6:44 a.m. in New York---and it's the second story in a row from reader B.V.

View full GSD edition

U.K. banks rigging markets are like 'careless fighter pilots'

A senior Bank of England official has compared banks' failures to prevent Libor and foreign exchange rigging to a fighter pilot ignoring safety checks, saying it should be in the banks' own interests to stamp out bad behaviour.

Andrew Hauser, the BoE's director of markets strategy, said ensuring good conduct had become misaligned with profitability at banks, causing systematic failures that led to traders ripping off customers in an attempt to make money.

He said that despite an "enormous" focus on improving standards at many banks, promises to reform could become like a quickly-forgotten new year's resolution if rules are not put in place to make sure it is in a bank's best interests to do so.

This story was posted on the telegraph.co.uk Internet site at 1:42 p.m. GMT on their Thursday afternoon---and I found it embedded in a GATA release.

View full GSD edition

U.K. summons Russian ambassador after 'dangerous' bombers disrupt civil aircraft

Britain has summoned the Russian ambassador to explain why two Russian long-range bombers flew over the English Channel on Wednesday, dangerously close to passenger planes.

The Typhoon fighters were scrambled to escort the long-range Russian Bear planes – which are capable of carrying nuclear weapons – out of the U.K.'s “area of interest”.

Sources said the Russian planes were flying without their transponders turned on, making them invisible to civilian aircraft. A number of flights arriving in Britain had to be diverted to avoid potential disaster.

The unwelcome visit was part of an "increasing pattern of out-of-area operations by Russian aircraft", according to the Foreign Office.

This news item appeared on The Telegraph's website at 6:36 p.m. GMT yesterday---and I thank Casey Research's own Louis James for passing it around yesterday.

View full GSD edition

It Will Now Cost You 0.5% to Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time in Two Weeks

When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!

Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn't sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter of time at this point.

Yep, another euro peg about to bite the dust.  I'm taking bets as to what day in February it will be.
This story showed up on the Zero Hedge website at 10:13 a.m. EST on Thursday morning---and it's the second contribution of the day from reader U.M.

View full GSD edition

Germany succumbs to Europe’s deflationary crisis

Germany has succumbed to deflation for the first time in more than five years, and may not see inflation again before the year is out.

Inflation fell below zero for the first time since October 2009, according to preliminary estimates from statistics agency Destatis, as prices dropped by 0.3pc in the year to January.

Analysts had expected deflation - but not at this pace. A poll suggested that prices would fall by just 0.2pc in the period. Final results for January will be published on February 12.

There are fears that prices may continue to fall for some time. Michala Marcussen, of Societe Generale, said: "German inflation should not turn positive before the final quarter of 2015."

This article showed up on the telegraph.co.uk Internet site at 1:05 p.m. GMT on their Thursday afternoon---and my thanks go out to Roy Stephens for sending it.

View full GSD edition

Lessons from 1953: The debt write-off behind Germany's 'economic miracle'

Six decades ago, an agreement to cancel half of postwar Germany's debt helped foster a prolonged period of prosperity in the war-torn continent. The new government in Athens says Greece – and Europe – now need a similar deal.

When discussing Greece’s whopping $310 billion debt, the country's new Prime Minister Alexis Tsipras likes to recall a time when Europe's great debt offender was not Greece, but Germany, today's paragon of fiscal responsibility. The leader of the radical-left Syriza party refers in particular to an international conference held in London in 1953, during which West Germany secured a write-off of more than 50% of debt, accumulated after two world wars. Back then, with memories of Nazi atrocities still fresh, many countries were reluctant to offer such generous debt relief. But the US persuaded its European allies, including Greece, to relinquish debt repayments and reparations in order to build a stable and prosperous Western Europe that could contain the threat from Soviet Russia.

“Tsipras is right to remind Germans how well they were treated, with both debt relief and money from the Marshall Plan,” says Professor Stephany Griffith-Jones, an economist at Columbia University, referring to the US programme to help rebuild European economies after World War II. She believes Greece is justified in demanding a more generous approach from its creditors, despite obvious differences between its current plight and that of war-ravaged Germany. “In fact, Greece’s situation is perhaps more urgent because the pressure from markets and the financial sector is so much stronger than in the 1950s,” she says.

This very interesting article appeared on the france24.com Internet site yesterday Europe time---and it's worth reading.  I thank reader B.V. for digging it up on our behalf.

View full GSD edition

Alexis Tsipras' Open Letter to Germany: What You Were Never Told About Greece

Most of you, dear [German] readers, will have formed a preconception of what this article is about before you actually read it. I am imploring you not to succumb to such preconceptions. Prejudice was never a good guide, especially during periods when an economic crisis reinforces stereotypes and breeds biggotry, nationalism, even violence.

In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity.

In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

This absolute must read commentary appeared on the Zero Hedge website at 10:27 a.m. EST on Thursday morning---and the first reader through the door with it was our man in Greece, Harry Grant.

View full GSD edition

Investors have woken up to Greece's nuclear risk

Markets have woken up to Greek nuclear risk. Bank stocks on the Athens exchange have crashed 44pc since Alexis Tsipras swept into power this week with a mandate to defy the European power structure.

Greek bonds bought with such zest by investors last April - entranced by the mirage of recovery, and deaf to simmering revolution below - are signalling a rapid slide towards bankruptcy. Five year yields spiked to 13.5pc today.

Contrary to expectations, Mr Tsipras has not resiled from a long list of campaign pledges that breach the terms of Greece's EU-IMF Troika Memorandum, and therefore put the country on a collision course with the Brussels, Berlin, and Frankfurt.

He told his cabinet today that the government is willing to negotiate on its demands for debt relief but will not abandon its core promises to the Greek people. “We will not seek a catastrophic solution, but neither will we consent to a policy of submission. The country is holding up its head,” he said.

Ambrose Evans-Pritchard picks up the Greece story---and runs with it in this article that appeared in The Telegraph at 8:25 a.m. GMT yesterday morning.  It's definitely worth reading---and I thank Roy Stephens for sharing it with us.

View full GSD edition

Alexis Tsipras Most Outrageous Outburst Yet?

Speaking in May 2014 (ahead of Ukraine's elections) new Greek Prime Minister Alexis Tsipras made very clear why he is now against Germany's push for further sanctions against Russia.

[The SYRIZA] party believes that the new government in Ukraine came to power as a result of a coup, and call it a junta.

"We should not accept or recognize the government of neo-Nazis in Ukraine," the Athens News Agency quotes Tsipras who believes that the Ukrainian people should decide their future themselves.

Speaking about different peoples' movements for self-determination, Tsipras said that the European left respected the right to self-determination, but nationalism and clashes could not lead to positive results.

"We in the E.U. should not give preference to changing borders, but must respect the position of the peoples, who have decided to create a Federation within the state," said the SYRIZA leader.

This short, but interesting commentary appeared on the Zero Hedge website at 6:51 p.m. EST yesterday evening---and it's definitely worth reading as well, as is the embedded link to the original story from 2014.  It's another offering from reader B.V.

View full GSD edition

Greece agrees E.U.-Russia sanctions, defends its rights

The new Greek government has agreed to impose more EU sanctions on Russia, while defending its right to shape European foreign policy.

Foreign ministers in Brussels on Thursday (29 January) extended the Russia blacklist for six months, promised to add extra names, and began preparations for a fresh round of economic sanctions.

The new names - individuals and entities - are to be added by 9 February at the latest.

Leaders will decide whether to move ahead on economic sanctions most likely at a summit in mid-March.

This was a surprise!  I wonder what Moscow thinks now?  This article appeared on the euobserver.com Internet site just after midnight Europe time this morning---and I thank Roy Stephens for sliding it into my in-box just after midnight Denver time.

View full GSD edition

Putin Pivots Back: Russia Confirms Willingness to Provide Financial Aid to Greece

We suggested the Greek pivot from Europe to Russia was building previously, and now, we get confirmation from Russia's finance minister Anton Siluanov that the pivot could be mutual, who told CNBC in the interview below:

  • RUSSIA WOULD WEIGH FINANCE FOR GREECE IF ASKED, SILUANOV: CNBC

With fire and brimstone spewing from Germany over the potential for Greece to veto any and everything, it seems Russia may just have stymied Europe's leverage over the newly democratic nation.

It appears, in Russia, Greece has found another possible friend...

Siluanov: "if such a petition [for financial aid] is submitted to The Russian Government, we will definitely consider it."

You need a program to keep up to the changes---and I get the feeling that we ain't seen nothing yet.   He reminds of JFK back in the 60s---and we should hope and pray that they don't have a "grassy knoll" incident in Athens. This Zero Hedge piece appeared on their website at 1:43 p.m. on Thursday---and it's another contribution from reader U.M.

View full GSD edition

One Wrong Word From Lukashenko Sends Belarus Bonds Into Tailspin

In less than three hours, Belarus President Aleksandr Lukashenko learned a painful lesson in the language of bond markets.

After sparking a record sell-off in the former Soviet republic’s bonds by raising the prospect of “restrukturizatsiya” -- Russian for restructuring -- of debt, Lukashenko attempted to restore investor calm by saying the word he really meant to use was “refinansirovanie,” or refinancing. While the clarification helped pare the size of the rout, the nation’s $1 billion of bonds due this August still lost 12.4 cents on the dollar, leaving the yield at 47.53 percent, three times higher than it ended Wednesday.

“The mounting uncertainty about the fallout from Russia’s financial crisis across the entire CIS region naturally increases investors’ sensitivity to negative news flow,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said by e-mail. “Volatility has returned with a vengeance.”

This Bloomberg news story showed up on their website at 3:09 a.m. Denver time yesterday morning---and it's courtesy of Elliot Simon.

View full GSD edition

Russia In the Cross Hairs — Paul Craig Roberts

Washington’s attack on Russia has moved beyond the boundary of the absurd into the realm of insanity.

The New Chief of the U.S. Broadcasting Board of Governors, Andrew Lack, has declared the Russian news service, Russia Today, which broadcasts in multiple languages, to be a terrorist organization equivalent to Boko Haram and the Islamic State, and Standard and Poor’s just downgraded Russia’s credit rating to junk status.

Today Russia Today International interviewed me about these insane developments.

In prior days when America was still a sane country, Lack’s charge would have led to him being laughed out of office. He would have had to resign and disappear from public life. Today in the make-believe world that Western propaganda has created, Lack’s statement is taken seriously.

This longish, but absolute must read commentary by Paul showed up on his website on Monday---and I thank reader M.A. for sending it along.

View full GSD edition

Russia, Turkey announce new gas route with hub in Greece borders

Six hundred and sixty kilometers of the new Turkish Stream pipeline will go through the old South Stream corridor and a further 250 kilometers will head in the direction of the European part of Turkey.

The four threads which make up the pipeline will have a capacity of 63 billion cubic meters, Gazprom said in a statement following Tuesday’s meeting between CEO Aleksey Miller and the Turkish Minister of Energy and Natural Resources Taner Yildiz.

The company will apply to carry out design and exploration work in Turkish territorial waters on Wednesday, January 28.

This article was posted on thetoc.gr website on Tuesday---and it's courtesy of Brad Robertson.

View full GSD edition

Turkey's Vanishing $8 Billion

Something bizarre is happening on Turkey’s accounting books, and nobody’s quite sure why.

Turkey attracted $7.9 billion of income from unexplained sources during the first eight months of 2014, compared to an outflow of $90 million during the same period a year ago, according to the central bank data. In the three months that followed, $5.6 billion of that left the country.

Unexplained flows of foreign funds into and out of the economy -- marked as “net errors and omissions” in Turkey’s Balance of Payments report -- showed violent swings during the first 11 months of 2014. Outflows in November were estimated to be $3.46 billion, the biggest monthly exodus in more than 16 years, according to central bank data.

This interesting article put in an appearance on the Bloomberg Internet site at 10:18 p.m. MST on Wednesday evening---and it's the final offering of the day from Elliot Simon.

View full GSD edition

Pilots Disabled Critical Computers Moments Before AirAsia Crash

The pilots of AirAsia Bhd. Flight 8501 cut power to a critical computer system that normally prevents planes from going out of control shortly before it plunged into the Java Sea, two people with knowledge of the investigation said.

The action appears to have helped trigger the events of Dec. 28, when the Airbus Group NV A320 climbed so abruptly that it lost lift and it began falling with warnings blaring in the cockpit, the people said. All 162 aboard were killed.

The pilots had been attempting to deal with alerts about the flight augmentation computers, which control the A320’s rudder and also automatically prevent it from going too slow. After initial attempts to address the alerts, the flight crew cut power to the entire system, which is comprised of two separate computers that back up each other, the people said.

While the information helps show how a normally functioning A320’s flight-protection system could have been bypassed, it doesn’t explain why the pilots pulled the plane into a steep climb, the people said. Even with the computers shut off, the pilots should have been able to fly the plane manually, they said.

This news item was posted on the Bloomberg website at 11:20 p.m. MST on Wednesday evening---and I thank Dan Lazicki for finding it for us.  The original headline read "Indonesia won't publish preliminary report on Airasia jet probe".

View full GSD edition

Lawrence Williams: U.S. 10-month gold mine output falls 7% y/y

Latest USGS figures show that production of gold by U.S. mines was 540,000 ounces (16.8 tonnes) in October, a 6% decrease compared with September output and an 11% decrease compared with that of October 2013 (See table below). Year on year U.S. gold output is down by 7.4%, continuing the decline seen a year earlier. The U.S. is the world’s fourth largest gold producer, after China, Australia and Russia, but is not in danger of losing its place as South Africa, the world’s fifth largest producer in 2013, is some way behind, and production there will also probably be down on a year earlier. However the gap is widening between the U.S. and the three countries above it which are all likely to show increases in gold output in 2014 compared with 2013 when the final 2014 figures are all collated. On the basis of the USGS figures to date, U.S. total gold production for the year is likely to be in the order of 211 tonnes as compared with 230 tonnes a year earlier.

The USGS also produces some interesting data on the destinations of U.S. gold exports. The top four recipients of U.S.-produced gold in October were: Switzerland with 17.6 tonnes, Hong Kong with 12.9 tonnes, mainland China with 7.4 tonnes and India which took in 6.1 tonnes. Other significant recipients were Thailand (2 tonnes), the U.K. (2 tonnes), the UAE (1.36 tonnes) and Singapore with 1 tonne.

This latest USGS data are thus also particularly interesting for China watchers as they would seem to confirm that a significant amount of gold is being imported directly via the Chinese mainland ports of entry rather than just by the old primary route through Hong Kong, although the latter still remains the larger destination. For comparison, in October 2013 only 0.36 tonnes were shipped direct to China and 17.8 tonnes to Hong Kong. This year’s figures thus represent a substantial change which we have commented on in other articles on Chinese total gold demand and the lower Hong Kong export figures seen last year. The gold exported to Switzerland will have mostly been destined to be remelted into kilo bars and shipped onwards – primarily again to China both via Hong Kong and directly.

This very interesting commentary by Lawrie appeared on the mineweb.com Internet site yesterday---and is certainly worth reading.  I thank reader U.M. for bringing it to our attention.

View full GSD edition

At the New York Fed, gold can leave discreetly by the back door

With his meticulously documented report yesterday about the close connection between the auxiliary gold vault of the Federal Reserve Bank of New York and the vault area of the adjacent JPMorgan Chase & Co. building, GATA consultant Ronan Manly was pretty cautious:

Manly noted the claim made by the CME Group, operator of the New York Commodity Exchange, that documents about the vault in possession of the U.S. Commodity Futures Trading Commission should be exempt from federal disclosure law, and he speculated that the only statutory provisions for such exemption might be for national defense and foreign policy issues.

Manly was probably understating the situation. That is, it seems fair to conclude that the New York Fed has set up its gold vaults this way so that gold leaving its custody for sensitive market intervention or embarrassing repatriation can depart by the back door rather than by the front door, can depart disguised as the business of a commercial bank rather than be exposed as official business.

I found this brief gold-related story on the gata.org Internet site yesterday.

View full GSD edition

CME Hikes Silver Margins By 11%

In a day in which silver was pounded the most since September 2013 without any fundamental reason to explain this weakness (aside for the extensively discussed Precious Metals-USDJPY funding pair trade, so favored by the central banks to punish gold/silver while pushing risk higher), many are wondering: what was the reason for this crash?

Well, in a day in which Yellen now openly advised Democrats in a non-public setting about Fed policy, is it that ludicrous to assume that someone leaked the following announcement made after the close by the CME, namely that silver margins were just hiked by 11%?

I would guess that this margin increase was further pressure on the leveraged longs to cover their positions and get out of the market so that JPMorgan et al could buy them.  This brief Zero Hedge article appeared on their website at 4:48 p.m. EST yesterday afternoon---and it's the last offering of the day from Dan Lazicki.

View full GSD edition

Gold: The Early Warning Signs

If, as Kyle Bass so eloquently noted previously, "buying gold is just buying a put against the idiocy of the political cycle. It's That Simple," then recent (post-QE3) activity suggests the narrative is changing fast...

Perhaps Larry Summers was right last week in Davos, "we have to recognize that the era when central bank improvisation can be the world’s growth strategy is coming to an end."

That's all there is to this tiny Zero Hedge piece that appeared on their website at 9:27 a.m. EST yesterday---and the embedded chart is worth a look.  It's another offering from Manitoba reader U.M.

View full GSD edition

Physical gold demand likely positive for price in 2015: GFMS

Underlying physical demand is starting to pick up in 2015 and will "give the market longer-term ballast" although more headwinds remain before a return to a bull market, analytical company GFMS said Thursday.

In conjunction with Thomson Reuters, GFMS said in its Gold Update 2 report that professional investors are absent as the dollar "remains king. Fresh professional investment is unlikely much before there is clarity on the Fed's timing over rate hikes."

Continued monetary easing in Europe, Japan and China will support the dollar in the medium term, pointing away from gold investment, "especially as US equities, on an historical multiple at least, are not over-extended."

I'm no fan of anything that GFMS says, but in the interest of fairness I thought I should post it.  This article, filed from London, showed up on the platts.com Internet site at 2:43 p.m. GMT yesterday---and I thank reader U.M. once again for sending it along.

View full GSD edition

Global gold output rises, but demand remains muted

Despite the lower gold price, global mine production continued to grow last year, increasing 2% to an all-time high of 3,109 t, the latest survey by GFMS showed.

However, total physical demand fell 19% in 2014 as all areas, with the exception of official sector purchases, registered declines.

GFMS attributed the growth in output to production strategies aimed at reducing unit costs and production growth from large projects – the “legacy of investments” made during high-price periods – brought online or ramped up.

Global scrap supply declined almost 11% last year to an estimated 1,122 t – in line with the 10.3% fall in the dollar gold price – with East Asia bucking the trend with growth of 4%.

One has to wonder if this story is referring to the same GFMS story in the previous posting above, as at no point do they even sound similar or mention the same things.  I'll leave it to you to sort out, dear reader.  This article, filed from Johannesburg, put in an appearance on the miningweekly.com Internet site yesterday---and I thank South African reader B.V. for his final offering in today's column.

View full GSD edition

Dubai's shopping festival adds sparkle to gold sales

Whether it is investing, taking advantage of the biggest gold and jewellery promotion, or getting one’s hands on designed products imported from over 30 countries, gold and jewellery has proven to be one of Dubai Shopping Festival’s (DSF) major attractions.

After an overwhelming response received by gold and jewellery shoppers this DSF, Dubai Gold and Jewellery Group (DGJG) said the 20th edition of DSF has greatly contributed to the drastic push in the gold sector raising average gold sales 25-30 per cent at all the participating outlets.

The enormity of prizes, giving people a chance to win up to 100kg of gold and 40 carats of diamonds, including the chance to buy a link in a world breaking longest chain could be one of the main reasons why many shoppers have been flocking to gold shops and to the Gold Souq to purchase gold and jewellery.

Overall demand for jewellery in Dubai has been steadily increasing, but since it is home to the largest Indian expat population, who values gold and considers it as the best way to invest their savings, this has also played a significant role in boosting gold jewellery sales on a larger scale during festive seasons like DSF.

This very interesting story, filed from Dubai, appeared on the gulfnews.com Internet site at 7 p.m. Gulf Standard Time yesterday evening, which was 10 a.m. EST.  Once again it's courtesy of reader U.M.

View full GSD edition

Kazakhstan’s Central Bank buying out all gold produced

For the recent two years Kazakhstan’s Central Bank has been buying all the fine gold produced in the country, Tengrinews.kz reported, citing Albert Rau, Minister for Investments.

“Given the turbulent global economy condition, the National Bank has been buying out all the fine gold produced (…) annual production output stands at 22 tons a year”, Mr. Rau said, when presenting a draft law on precious metals and gems in the country’s Majilis (lower chamber).

“As a rule, prices for gold grow amidst growing demand (…) the latter is normally driven by volatility of major currencies. Currently, the keen interest to gold is assigned to the weakening Euro. Gold is seen as a stable harbor”, he elaborated.

This very interesting gold-related article appeared on the linkis.com Internet site on Wednesday sometime---and it's worth reading, as we don't get too much gold news from this area of the world.  Once again I thank reader U.M. for finding this story for us.

View full GSD edition

India Customs seizes 365 kg gold worth Rs 1 billion at Chennai airport in 2014

India customs seized 365kg gold worth Rs 1 billion at Chennai airport till December 2014 as against 113kg worth Rs 350 million in 2013.

The increase in seizure is due to high surveillance. We seized gold from passengers, from planes and airport building. More personnel will be inducted into customs at airport and cargo soon. Additional manpower has been sanctioned,” said S Ramesh, chief commissioner of customs, Chennai, after inaugurating a sensitization programme for customs personnel and staff of other agencies organized to mark International Customs Day on Tuesday.

The airport is popular among gold smugglers because of the good connectivity to Singapore, Kuala Lumpur, Colombo and Dubai from where majority of the smuggled gold is sourced.

This short item was posted on the customstoday.com.pk Internet site yesterday---and it's the final story of the day from Manitoba reader U.M.---and I thank her on your behalf.

View full GSD edition

India overtakes China as world's top gold consumer

India overtook China as the world's biggest gold consumer in 2014 as global physical demand fell, an industry report showed on Thursday, forecasting that prices that have declined for the last two years would bottom out this year. 

Chinese gold demand slid by more than a third last year to a four-year low of 866 tonnes, while the country's scrap gold supply rose 21 percent to an unprecedented 182 tonnes, the report by GFMS analysts at Thomson Reuters showed. 

Slower economic growth and a crackdown on corruption helped knock Chinese jewellery demand to 608 tonnes, 33 percent below the previous year's "extraordinary" levels, it said. Physical bar demand fell 53 percent to 171 tonnes, a five-year low. 

"We do expect an increase in Chinese demand this year. However, without a dramatic course of events we would not expect it to come close to matching the level in 2013," GFMS analyst Ross Strachan said.

Another story---and another reference to that GFMS report.  This one, a Reuters piece filed from New Delhi, appeared on the rediff.com Internet site at 8:05 p.m. IST---and it's courtesy of reader M.A.

View full GSD edition

Lawrence Williams: 36% of October U.S. gold exports to China went direct rather than via Hong Kong

Latest statistics from the USGS make for interesting reading – not because they show U.S. gold output has been continuing to fall – it’s down 7.4% year on year to date – but for the country by country export data.  We have been commenting on Mineweb.com for much of this year that imports to mainland China via Hong Kong remain significant, but by no means as significant as in the past.  We have come up with this viewpoint through extrapolation of Chinese Shanghai Gold Exchange data  which has been high – particularly in the  final quarter of the year – even while net gold imports from Hong Kong have slipped sharply.  That's an anomaly that is hard to explain unless substantial gold imports are coming in by other routes.

But I’ve just received some interesting statistical data from the USGS which shows that a substantial proportion of U.S. gold exports to Hong Kong and China in October went directly to the mainland.  The figures were 12.9 tonnes to Hong Kong and 7.4 tonnes directly to the mainland – or 36%.  This ties in remarkably well with our opinions on the breakdown of Chinese gold imports and that while Hong Kong remains a significant import route it is not nearly so important in the overall picture as it used to be.  By contrast, in October 2013, only 0.36 tonnes were shipped direct to the mainland and 17.8 tonnes to Hong Kong.  A very substantial change indeed.

This short article by Lawrie dovetails nicely with the first gold-related story of the day---and he posted it on his own website lawrieongold.com yesterday.

View full GSD edition

Jan 29, 2015

National Weather Service apologizes for blizzard forecast miss

Some are calling the blizzard a likely bust, and National Weather Service's meteorologist Gary Szatkowski apologized on Twitter, saying they didn't get it right.

This 1:42 minute video clip appeared on the cbsnews.com Internet site at 8:32 a.m. EST on Tuesday morning---and today's first news item is courtesy of West Virginia reader Elliot Simon.

View full GSD edition

David Stockman: The Wreck of the Monetary Hesperus

For 73 months running the Fed has lashed the money markets to the gross financial anomaly of ZIRP. Never before in the history of the world has any central bank or other monetary authority decreed that overnight money shall be indefinitely free to gamblers or that liquid savers should have their hard earned wealth chronically confiscated by negative returns after inflation and taxes. And, needless to say, never have savers and borrowers in a free market struck a bargain night after night after  night at 0% for six years running, either.

Yet now comes another Fed meeting and announcement that our monetary overlords will be “patient” with zero cost money for several more meetings. Indeed, there are even hints that the era of ZIRP could extend beyond mid-summer—that is, for more than 80 months.

So an urgent question screams out. Don’t these obstinate zealots realize that zero cost overnight money has only one use, and that is to fund the carry trades of Wall Street gamblers?

Accordingly, are they not even more culpable than Longfellow’s skipper, who perished along with the fair daughter he lashed to his ship’s mast because he insouciantly belittled a ferocious storm made by nature?  By contrast, these benighted folks at the Fed are actually fueling their own hellish financial storm, thereby leaving in mortal danger the main street economy which they, too,  have foolishly nailed to the mast of ZIRP.

This commentary by David appeared on his website yesterday sometime---and I thank Roy Stephens for sending it.  It's worth reading.

View full GSD edition

Yale's Roach: Global 'Monetary Policy Has Lost Discipline and Coherence'

Many economists have expressed enthusiasm about the European Central Bank (ECB)'s 1.1 trillion euro quantitative easing (QE) program announced last week. Stephen Roach, a senior lecturer at Yale's School of Management, wasn't one of them.

"In the QE era, monetary policy has lost any semblance of discipline and coherence," Roach, former chairman of Morgan Stanley Asia and the firm's chief economist, writes in an article for Project Syndicate.

"As [ECB President Mario] Draghi attempts to deliver on his commitment [to protect the euro], the limits of his promise — like comparable assurances by the Fed and the Bank of Japan — could become glaringly apparent. Like lemmings at the cliff’s edge, central banks seem steeped in denial of the risks they face," he notes.

Lemmings?  I like the way this guy thinks.  It was an article that appeared on the newsmax.com Internet site at 6:00 a.m. EST yesterday morning---and it's the second offering of the day from Elliot Simon.

View full GSD edition

Senator Rand Paul re-introduces 'audit the Fed' bill

Republican U.S. Sen. Rand Paul, a potential 2016 presidential candidate, on Wednesday re-introduced a bill that would expose the Federal Reserve's monetary policy discussions and decisions to a congressional audit.

The Kentucky senator's move to re-introduce the bill, along with 30 co-sponsors, comes as Republican lawmakers and some Democrats increase their efforts to rein in the U.S. central bank and make it more transparent.

The Fed gained broad regulatory powers and implemented massive stimulus measures after the 2007-2009 financial crisis, expanding its balance sheet to $4.5 trillion.

Republican U.S. Rep. Thomas Massie of Kentucky introduced a similar bill in the House of Representatives this month.

This Reuters article put in an appearance on their Internet site at 4:28 p.m. EST on Wednesday---and I found it embedded in a GATA release.

View full GSD edition

Canada Just "Revised" All of Its 2014 Job Gains 35% Lower

Who can forget the farce conducted by Canada's labor statistics office back in August when, as we reported, "Canada Releases Atrocious Jobs Data; Then Revises It Above The Highest Estimate Following Public Outcry." It was then that we got our first hint that when it comes to massaging data, Canada is on par with China and even the US.

Well, Statistics Canada just outdid itself moments ago when it reported that those 185,700 jobs gains it had previously reported for all of 2014... well, it was only kidding, and after a second look, the number has been revised a whopping 35% (!) lower to only 121,300. How long until a light bulb goes over the BLS' head and the US department of seasonal adjustments decides to do the same?

This Zero Hedge article appeared on their website at 8:47 a.m. EST yesterday---and I thank Dan Lazicki for sending it our way.

View full GSD edition

Draghi's Dangerous Bet: The Perils of a Weak Euro

The recent decision by the European Central Bank to open the monetary floodgates has weakened the euro and is boosting the German economy. But the move increases the threat of turbulence on the financial markets and could trigger a currency war.

The concern could be felt everywhere at this year's World Economic Forum in Davis, the annual meeting of the rich and powerful. Would the major central banks in the United States, Europe and Asia succeed in stabilizing the wobbling global economy? Or have the central bankers long since become risk factors themselves? The question was everywhere at the forum, being addressed by experts at the lecturns and by participants in the hallways.

Central banks, said Harvard University economics professor Kenneth Rogoff, are surely the greatest source of uncertainty in the eyes of the financial markets, a statement that was not disputed by others on the panel. The fact that monetary policies at central banks in the US, Europe, Japan and elsewhere are drifting apart poses a major risk for the stability of financial markets, he said.

"It's important for the international community to work together to avoid currency wars which no one can win," Min Zhu, deputy managing director of the IMF, told the conference.

This longish commentary is worth reading if you have the time.  It was posted on the German website spiegel.de at 11:08 a.m. Europe time on their Wednesday morning---5:08 a.m. EST.  It's the contribution of the day from Roy Stephens.

View full GSD edition

Greek Credit Risk Spikes, Default Probability Tops 70%

Greek default risk has surged in recent days and today as it becomes clear what Syriza expects from Europe, short-term CDS are at post-crisis highs with 5Y CDS implying a 76% probability of default (based on standard recovery assumptions - which may be a little high in this case). Given the domestic bank dominance in the buying of domestic government debt, Greek banks are getting hammered as everyone's favorite hedge fund trade is an utter bloodbath. Greek stocks overall are down and GGBs are tumbling once again - back at 16 month lows (given back all the ECBQE hope bounce). Perhaps not surprising moves, given new Greek Finance Minister Yanis Varoufakis reality-exposing comments yesterday, "the problem with the bailout is that it wasn’t really a bailout... it was an extend and pretend, it was a vicious cycle, a debt-deflationary trap, which destroyed our social economy."

This short article, chock full of charts, is definitely worth your time---and it was posted on the Zero Hedge Internet site at 10:14 a.m. EST yesterday---and it's another contribution from Dan Lazicki.

View full GSD edition

Germans in shock as new Greek leader starts with a bang

In his first act as prime minister on Monday, Alexis Tsipras visited the war memorial in Kaisariani where 200 Greek resistance fighters were slaughtered by the Nazis in 1944.

The move did not go unnoticed in Berlin. Nor did Tsipras's decision hours later to receive the Russian ambassador before meeting any other foreign official.

Then came the announcement that radical academic Yanis Varoufakis, who once likened German austerity policies to "fiscal waterboarding", would be taking over as Greek finance minister. A short while later, Tsipras delivered another blow, criticising an E.U. statement that warned Moscow of new sanctions.

The assumption in German Chancellor Angela Merkel's entourage before Sunday's Greek election was that Tsipras, the charismatic leader of the far-left Syriza party, would eke out a narrow victory, struggle to form a coalition, and if he managed to do so, shift quickly from confrontation to compromise mode.

No surprises here.  This absolute must read Reuters article, filed from Berlin, appeared on their website at 1:29 p.m. EST yesterday afternoon---and I thank Harry Grant, our man in Greece, for bringing it to my attention---and now to yours.

View full GSD edition

PACE strips Russia of voting rights until April over Ukraine, Russia quits for 1 year

The Parliamentary Assembly of the Council of Europe (PACE) has decided not to restore Russia’s voting rights until April. Moscow was first stripped of its rights in PACE after Crimea joined Russia last year.

In turn, Aleksey Pushkov, the chief of Russia’s PACE delegation and chairman of the State Duma's Foreign Affairs Committee, said: “We are exiting PACE until the end of the year.”

As PACE stripped Russia of the right to vote in its governing bodies, we can no longer speak of any contacts with the organization,” he explained.

This news item, also from Russia Today, was posted on their Internet site at 7:23 p.m. Moscow time on their Thursday evening---and was edited early this morning Moscow time.  Once again I thank Roy Stephens for sharing it with us.

View full GSD edition

PACE 'ceases to be a forum' for solving Ukraine crisis following Russia's exclusion

The Ukraine conflict can only be solved with Moscow at the table, but the West has taken away one of the few forums where the issue could be discussed, political analyst Martin McCauley told Russia Today, speaking on PACE’s decision to strip Russia's voting rights.

RT: Did you expect PACE to uphold the suspension of Russia’s voting rights?

Martin McCauley: I was rather surprised because it was a very split decision – 35 to 34. The assembly was obviously split right down the middle with the majority of one, so it could have gone either way. And as one of the delegates said, this is a negative move because if you want to enter dialogue with Ukraine, you must have Russia there as a partner.

The Ukrainian crisis cannot be solved without Russia. And therefore the Parliamentary Assembly of the Council of Europe is one of the forums for that. And this now ceases, and therefore there is one forum less. And one can look forward, hopefully, that Russia would come back to the debating chamber and present its point of view. But it does not look like that, because Russia may, in fact, give up on the Council of Europe for this year.

This short interview showed up on the Russia Today website at 2:47 a.m. Moscow time on their Thursday morning---and it's also courtesy of Roy Stephens.  It's worth reading.

View full GSD edition

Corruption is greatest threat to Ukraine sovereignty

When Aleksandr Lapko received his drafting notice from the Ukrainian defence ministry, he was faced with a dilemma: either spend $2000 of his own money (the equivalent of 10 average monthly wages in the military) to buy the military equipment needed to serve, or pay a $2000 bribe to be declared medically unfit for service.

He chose the first option and is now working with the NATO liaison office in Ukraine.

This story, published by Transparency International, captures in a nutshell the challenges faced by Ukrainians in their daily struggles: either pay from their own money to cover for the endemic corruption of officialdom, or bribe their way out of a rut.

This malaise has become so prevalent that Ukrainians barely shrugged when Prime Minister Yatsenuk said earlier this year that 40 percent of all state procurements are lost each year to graft.

This very interesting---and sadly true opinion piece appeared on the euobserver.com Internet site at 5:36 p.m. Europe time on their Wednesday afternoon---and it's another article that Roy dug up for us.

View full GSD edition

Russia extends term of sojourn for Ukrainian citizens of recruitment age

Russia’s Federal Migration Service said on Wednesday it has extended the period of sojourn in Russia for Ukrainian citizens of the recruitment age for more than 90 days.

"Under the current rules, Ukrainian citizens of this category are allowed to stay in Russia less than 90 days. In case of overstaying, they are to face administrative charges. Being guided by humanitarian considerations, Russia’s Federal Migration Service has taken a decision to extend terms of sojourn for the above mentioned categories of Ukrainian citizens," the press service of the Federal Migration Service said.

According to the service’s statistics, more than 2.430 million Ukrainian citizens are currently staying in Russia, of whom 1.172 million are men of recruitment age. Apart from that, more than 800,000 forced migrants from eastern Ukraine have found shelter in Russia.

This is another very interesting article---and it was filed from Moscow---and posted on the itar-tass.com Internet site at 9:38 p.m. yesterday evening local time.  The stories from Roy just keep on coming.

View full GSD edition

Kremlin: Ukraine gas networks idled by 2019

European natural gas consumers need to prepare the infrastructure needed to avoid Ukrainian territory by 2019, an official from Russia's Gazprom said Wednesday.

Europe gets about a quarter of its natural gas needs met by Russian suppliers, though the majority of that runs through a Soviet-era transit network in Ukraine. Simmering conflict, and gas contract issues reaching back to at least 2006, exposes that artery to risk.

The Kremlin has worked to advance transit networks that avoid Ukrainian territory, most recently with Turkish Stream, a revamped project that replaces the now-scrapped South Stream pipeline. By 2019, Ukrainian networks will be idle and Gazprom Chairman Viktor Zubkov said Europe needs to be ready.

"Considering the decision made on re-directing supplies from 2019, European partners do not have so much time [for infrastructure preparation]," he said from a European gas conference in Vienna.

This UPI news item, filed from Vienna, appeared on their Internet site at 6:19 a.m. EST Wednesday morning---and once again it's courtesy of Roy Stephens.

View full GSD edition

Russia’s PM signs multi-billion dollar anti-crisis plan

Russian Prime Minister Dmitry Medvedev has signed a one-year anti-crisis plan designed to stabilize the economy. The document includes 60 measures and will cost at least $35 billion (2.3 trillion rubles).

The final cost hasn’t yet been calculated but the official statement published Wednesday shows that as for now the Government is going to spend about $35 billion, which also includes the $15 billion (one trillion rubles) bailout for Russian banks agreed last year.

Last Friday, Russia’s Agency for Deposit Insurance approved a list of 27 lenders that will get the bailout money including VTB Group ($4.5 billion, which is around 310 billion rubles), Otkrytie group ($1 billion or 65.1 billion rubles) and Vnesheconombank (VEB) ($300 million or 20.4 billion rubles).

As part of the plan, Russia will also create a bank for ‘bad debt’ that will collect corporate debt and problematic company assets.

This news items appeared on the Russia Today website at 11:38 a.m. yesterday morning Moscow time---and once again I thank Roy Stephens for digging it up for us.

View full GSD edition

Russian Sanctions Might Be Obama’s Greatest Blunder

One of the greatest foreign policy blunders of the Obama Administration was the push by the U.S. for economic sanctions against Russia. That led to Russia fleeing into the arms of China for refuge. In response, Russia, Europe’s largest and most populated country, is now intent on moving its vast storehouse of resources eastward, strengthening America’s largest emerging rival.

Over the last two years, the two countries have completed a $700 billion agreement for Russia to deliver energy to China, amounting to about 17% of Chinese annual supply, for a period covering twenty years, with China financing much of the initial costs of pipeline construction.

What Russia has done, in that one move, is to help repair a major hole in China’s military armor, making it invulnerable to a U.S. cut-off of sea-born energy supplies, which until now was one of the greatest fears of Chinese military strategists.

From the Chinese perspective, this is a gift that fulfills its wildest dreams. It’s also a gift that could severely undermine the West's plans to deliver expensive Liquified Natural Gas (LNG) to China and Asia, while already facing competition from Qatar and Australia LNG, will now also run up against Russian pipeline gas through China.

This must read essay appeared on the oilprice.com Internet site this past Sunday---and I thank Casey Research's own Bud Conrad for passing it around early yesterday morning.

View full GSD edition

Chinese yuan now top 5 major international payment currency

The Chinese currency is the 5th most-used currency in international payments, according to the SWIFT network responsible for international financial transactions. Breaking into the top 5 is symbolic to balance dollar-denominated payments.

In 2014, yuan payments doubled by 102 percent, and increased by 20.3 percent in December alone, compared to the same time period last year, SWIFT said Wednesday. The yuan, or renminbi, surpassed the Canadian and Australian dollars.

"It is a great testimony to the internationalization of the renminbi and confirms its transition from an 'emerging' to a 'business as usual' payment currency," Wim Raymaekers, Head of Banking Markets at SWIFT said in a statement.

2.2 percent of all SWIFT payments made in December were yuan-denominated, according to the Brussels-based payment operator. Ahead of the yuan are the US dollar, euro, British pound, and Japanese yen, which has a 2.7 percent share.

This brief article was posted on the Russia Today website at 3:20 p.m. Moscow time yesterday afternoon---and is worth skimming.  It's the second-last offering of the day from Roy Stephens.

View full GSD edition

Singapore becomes ninth country to weaken currency this month

Singapore unexpectedly eased monetary policy, sending the currency to the weakest since 2010 against the U.S. dollar as the country joined global central banks in shoring up growth amid dwindling inflation.

The Monetary Authority of Singapore, which uses the exchange rate as its main policy tool, said in an unscheduled statement Wednesday it will seek a slower pace of appreciation against a basket of currencies. It cut the inflation forecast for 2015, predicting prices may fall as much as 0.5 percent.

The move was the first emergency policy change since one following the Sept. 11, 2001 attacks for the MAS -- which only has two scheduled policy announcements a year -- reflecting how the plunge in oil has changed the outlook in recent months. Singapore becomes at least the ninth nation to ease policy this month, as officials from Europe to Canada and India contend with escalating disinflation and faltering global growth.

This Bloomberg article, filed from Singapore, appeared on their Internet site at 5:28 p.m. Tuesday afternoon Denver time---and it's a story I found on the gata.org Internet site.

View full GSD edition

Petrobras Stock Plummets After Releasing Unaudited Third-Quarter Financial Results

Shares of Brazilian state-run energy company Petrobras plunged 11.26% to $6.97 in morning trading Wednesday after it published its unaudited third-quarter results after a more than two-month delay but failed to include a dollar amount for a write-down tied to its ongoing and wide-reaching corruption scandal.

Petrobras reported net profit of 3.09 billion reais, or $1.18 billion, down from 3.39 billion reais in the same quarter last year. Revenue totaled 88.37 billion reais in the quarter, up from 77.7 billion reais. EBITDA fell 10% year-over-year to 11.7 billion reais.

"The company understands that it will be necessary to make adjustments at the financial statements to correct the values of fixed assets," said Petrobras, which added it would be "impracticable to correctly quantify these "improperly recognized values" related to the scandal "since the payments were made by external suppliers and cannot be traced back to the company's accounting records."

This news item appeared on thestreet.com website at 9:48 a.m. yesterday morning EST---and I thank Dan Lazicki for bringing it to our attention.

View full GSD edition

Lawrence Williams: Goldman Sachs stays ultra-bearish on gold long term

Given that gold ended 2014 nearly $200 higher than Goldman Sachs’ extremely bearish forecasts in 2014 – a forecast repeated several times during the year – and has since risen by nearly a further $100 since, the investment bank’s analysts have been forced to revise upwards their predictions for gold’s performance this year. But far from seeing much of an upturn, they have revised nearer term forecasts to take account of the current level as a matter of reality, but see gold turning down in Q3 – and falling back to $1,000/oz by end 2016. Thus its revised forecasts are for 3-, 6- and 12-month average gold prices at $1,290/oz, $1,270/oz and $1,175/oz but with a continuing downturn throughout 2016 down to the predicted $1,000 level by the end of that year. That’s even lower than the $1,050 year-end price initially predicted for 2014. Gold investors will surely hope the bank is way out yet again, but as we have pointed out before such forecasts from the world’s top investment bank tend to colour big money investor views accordingly.

Goldman’s reasoning is that their expectation of a continuing improvement in the U.S. economy will thus support general equities and make gold less attractive to investors as a result – indeed this is very much a continuation of the bank’s reasoning behind its bearish forecast for last year. The bank also notes that it expects cost of production to fall for the major miners as a result of lower oil prices across the board and local currency weakness against the U.S. dollar, in which gold sales are priced, along with deflationary wage pressures, all of which should improve margins. This, the analysts feel, should arrest the anticipated decline in gold production which may thus now even rise going forward.

This commentary by Lawrie, filed from London, showed up on the mineweb.com Internet site at 2:14 p.m. yesterday afternoon---and it's definitely worth reading.

View full GSD edition

N.Y. Fed's auxiliary gold vault may be JPMorgan's...and a device of foreign policy

In the second installment of his series about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly compiles documentation indicating that the bank's auxiliary vault is operated jointly with JPMorgan Chase, whose own gold-vaulting facilities, regulated by the Commodity Futures Trading Commission, are adjacent and apparently being exempted from ordinary disclosure under federal freedom-of-information law because they implicate national defense or foreign policy.

Manly's analysis is headlined "The Keys to the Gold Vaults at the New York Fed -- Part 2: The Auxiliary Vault" and it was posted at the Singapore website bullionstar.com yesterday.  I found this gold-related news item in another GATA release and, after having read it, it certainly falls into the absolute must read category.

View full GSD edition

Jan 28, 2015

David Stockman: Today’s “Dip” is a Warning—-Get Out of the Casino!

Shortly after today’s open, the S&P 500 was down nearly 2% and off its recent all-time high by 3.5%. But soon the robo-machines and day traders were buying the “dip” having apparently once again gotten the “all-clear” signal.

Don’t believe it for a second! The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.

Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.

What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because  central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.

This commentary by David showed up on his Internet site yesterday sometime---and today's first offering is courtesy of Roy Stephens.  It's worth skimming.

View full GSD edition

Seven Consecutive Downward Revisions to New Home Sales Data Place Serious Doubts on Report Accuracy

You will pardon us if we don't "buy" the latest attempt by the Census Department to telegraph housing euphoria with the just reported number of 481K new December home sales, a surge of 11.6% compared to November, an increase which was expected by the consensus to be only  2.7%. In fact, the 481K print is now the "highest" since June of 2008.

The reason for our disbelief? Because as we have been tracking for the past 6, and now 7 months, every single such euphoric print since May of 2014 has been revised substantially lower after the fact (and after the headline-scanning algos promptly gobbled up stocks on the initial "beat"), and sure enough, the November print of 438K, was also just "revised" downward to 431K.

Putting today's "highest in 7 years" new home sales print in context: consider that in May 2014 the same data series was originally reported at 504K... only to be revised to 458K!

This real estate-related article put in an appearance on the Zero Hedge website at 10:17 a.m. EST on Tuesday morning---and I thank Manitoba reader U.M. for her first contribution to today's column.

View full GSD edition

Anatomy Of A Layoff: How IBM Is Likely to Spin This Week's Force Reduction

IBM doesn’t like me. After my column last week predicting massive cuts at the giant computer company, IBM now says I’m wrong, and that there will be nowhere near 110,000 IBM employees laid off. But like my young sons who never hit each other but instead push, slap, graze, or brush, I think IBM is dissembling, fixating on the term 110,000 layoffs which, by the way, I never used. Whatever the word, what counts is how many fewer people will be paid by IBM on March 1 compared to today.

The company has a bad year, so what do you do? Throw a large number of employees under the bus. By any measure this will be a big staff reduction.  

Another source told me the plan was to give the people notice before January 28th so they  would be off the books by the end of February — one month.  That implies a lot of firings, offshore staff reductions, contractors released or strongly motivated early retirements. None of those are layoffs.  There will probably be lots of normal layoffs, too, with the required notice. I’m told that senior managers throughout IBM have been pleading for the last few months with higher-up executives not to go through with this because of the risk of consequences such as IBM “breaking” accounts or failing to meet contract obligations. IBM’s customers are going to be the biggest casualty to this week’s staff reductions. That is the message IBM is likely trying to avoid.

This article appeared on the forbes.com Internet site late on Monday afternoon EST---and I found it in yesterday's edition of the King Report.  It's not overly long, but certainly worth your while.

View full GSD edition

Middle Class Shrinks Further as More Fall Out, Instead of Climbing Up

The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.

In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.

But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.

This social upheaval helps explain why the president focused on reviving the middle class, offering a raft of proposals squarely aimed at concerns like paying for a college education, taking parental leave, affording child care and buying a home.

This longish commentary put in an appearance on The New York Times website on Sunday---and it's another article I found in yesterday's edition of the King Report.

View full GSD edition

JPMorgan said to reap up to $300 million amid Swiss turmoil

JPMorgan Chase & Co.’s foreign-exchange traders reaped a gain of as much as $300 million after the Swiss central bank roiled markets by abolishing its cap on the franc, according to two people with knowledge of the matter.

The bank netted $250 million to $300 million on the day of the Swiss National Bank’s surprise decision to scrap the franc ceiling of 1.20 against the euro, said the people, who asked not to be identified because they weren’t authorized to speak publicly. A JPMorgan spokesman declined to comment.

The SNB’s surprise decision on Jan. 15 to remove the three-year-old cap sent the franc soaring as much as 41 percent against the euro that day. JPMorgan is one of the few to emerge from the turmoil with a profit. Citigroup Inc., Deutsche Bank AG and Barclays Plc suffered about $400 million in cumulative trading losses, people with knowledge of the matter have said.

This Bloomberg news item, filed from London, appeared on their website at 1:28 p.m. Denver time yesterday afternoon---and I found it embedded in a GATA release.

View full GSD edition

Source Code Similarities: Experts Unmask 'Regin' Trojan as NSA Tool

Just weeks ago, SPIEGEL published the source code of an NSA malware program known internally as QWERTY. Now, experts have found that it is none other than the notorious trojan Regin, used in dozens of cyber attacks around the world.

Earlier this month, SPIEGEL International published an article based on the trove of documents made available by whistleblower Edward Snowden describing the increasingly complex digital weapons being developed by intelligence services in the US and elsewhere. Concurrently, several documents were published as well as the source code of a sample malware program called QWERTY found in the Snowden archive.

For most readers, that source code was little more than 11 pages of impenetrable columns of seemingly random characters. But experts with the Russian IT security company Kaspersky compared the code with malware programs they have on file. What they found were clear similarities with an elaborate cyber-weapon that has been making international headlines since November of last year.

Last fall, Kaspersky and the U.S. security company Symantec both reported for the first time the discovery of a cyber-weapon system which they christened "Regin". According to Kaspersky, the malware had already been in circulation for 10 years and had been deployed against targets in at least 14 countries, including Germany, Belgium and Brazil but also India and Indonesia.

This short but interesting essay appeared on the German website spiegel.de at 1:21 p.m. Europe time on their Tuesday afternoon---and it's the second contribution of the day from Roy Stephens.

View full GSD edition

A Drone, Too Small for Radar to Detect, Rattles the White House

A White House radar system designed to detect flying objects like planes, missiles and large drones failed to pick up a small drone that crashed into a tree on the South Lawn early Monday morning, according to law enforcement officials. The crash raised questions about whether the Secret Service could bring down a similar object if it endangered President Obama.

The drone, which was about two feet in diameter and weighed about two pounds, was operated by a government employee whom the Secret Service did not identify. The agency said the employee was flying the object near the White House around 3 a.m. for recreational purposes when he lost control of it. Officials did not explain why the man, who does not work at the White House and who has not been charged with a crime, was flying the drone at that hour.

The crash was the latest security breach showing the difficulties the Secret Service has had protecting the White House in recent years. In September, a man with a knife climbed over the White House fence and made it deep inside the building before officers tackled him. In 2011, a gunman fired shots that hit the White House while one of the Obama daughters was home.

These drones are going to revolutionize everything---bad and good.  This story found a home over at The New York Times website on Monday sometime---and once again I thank Roy Stephens for sending it our way.

View full GSD edition

Damning report on banking collapse stalled until after U.K. election

The Financial Conduct Authority (FCA) has come under fire for delaying the release of a report into the crisis rescue of Halifax Bank of Scotland (HBOS) until after the general election in May.

Senior Labour politicians, bankers and financial regulators are expected to receive damning criticism for their role in the bank’s near-crash in 2008.

Originally scheduled for publication in April 2013, the deadline was pushed back to the end of 2013 last summer and is now unlikely to be published until September at the earliest.

Business Secretary Vince Cable attacked the delay, saying the employees who lost their jobs as a result of irresponsible management at HBOS deserve better.

This Russia Today news item appeared on their website at 3:41 p.m. Moscow time on their Tuesday afternoon, which was 7:41 a.m. in New York---Moscow time minus 8 hours.  It's the second story in a row from Roy Stephens.  It's worth reading.

View full GSD edition

Mike Maloney: Central Banks Start to Swindle Each Other, Not Just the Public

Central banks around the world have teamed up to fleece the public for centuries. Last week, the Swiss National Bank broke rank by not only lying to the public - but by lying to their Central Banking cohorts.

This bite-sized video clip from Mike only lasts for 1:06 minutes, but it's a must watch.  It was posted on the youtube.com Internet site early yesterday morning in North America.

View full GSD edition

The Bonds of the Third Largest Austrian Bank Are Crashing

Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine write downs) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today).

Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, the Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...

As Bloomberg reports, Raiffeisen had a total of €4.3 billion of Swiss franc loans outstanding as of September 2014, according to estimates by Moody’s Investors Service.

The plunge appears focused on the potential capital shortfalls and talk of the bank selling its Russian unit - both have been denied...

This worthwhile read appeared on the Zero Hedge website at 11:29 a.m. EST on Tuesday morning---and my thanks got out to reader U.M. for sharing it with us.

View full GSD edition

Poland’s Government to Reset Swiss Franc Mortgages

Last week we wrote in the context of Swiss franc denominated loans to consumers in Europe:

Another problem is that governments may react to the situation by shifting the losses suffered by mortgage debtors back to the banks – this has e.g. already happened in Hungary. Not surprisingly, this policy has been hugely popular with the country’s population, but very costly for the banks. Since the necessary write-downs have already been taken, no further damage is to be expected from CHF mortgages outstanding in Hungary – the main danger for the banks is rather that the governments of other countries may consider adopting similar policies.”

It didn’t take long for a government to get in on the act. Poland’s government faces elections this year (both presidential and parliamentary), which is likely a major motivation for considering going down Hungary’s path with respect to CHF denominated consumer loans. It presumably hasn’t escaped the attention of Poland’s government that Viktor Orban’s Fidesz party has been faring rather well in Hungarian elections. Hence Polish prime minister Ewa Kopacz informed a throng of potential voters up to their eyeballs in CFH denominated debt that she would seek to move their losses to the banks.

This very interesting article showed up on the acting-man.com Internet site yesterday sometime---and I thank Roy for sliding it into my in-box late yesterday evening Mountain Standard Time.

View full GSD edition

Fall Out in and Over Greece: Seven Stories

1. Greece’s New Finance Minister Says Euro Is Like Hotel California: Bloomberg  2. Greek coalition braces for debt showdown as Germany rattles sabre: The Telegraph  3. Greek PM Alexis Tsipras appoints radical economist to new government: The Guardian  4. Greece's New FinMin Explains "This is What Happens When You Humiliate a Nation and Give It No Hope": Zero Hedge  5. E.U. hints at more time, but no Greek write-offs : EU Observer  6. Greece at the Crossroads: The Oligarchs Blew It: Zero Hedge  7. Germany's top institutes push 'Grexit' plans as showdown escalates: The Telegraph

Note:  The 'thought police' at Bloomberg have given us a new title to story #1.  It's now headlined "New Greek Finance Minister Takes His Default Show on the Road".

[The above stories are courtesy of Roy Stephens, South African reader B.V., reader M.A.---and Casey Research's own Marin Katusa]

View full GSD edition

Greece says NO to E.U. statement on Russia

The new far-left government in Greece dropped a bombshell on its first day in office by abjuring an E.U. statement on Russia.

It said in a press communique on Tuesday (27 January): “the aforementioned statement was released without the prescribed procedure to obtain consent by the member states and particularly without ensuring the consent of Greece”.

“In this context, it is underlined that Greece does not consent to this statement”.

It added that its new PM, Alexis Tsipras, expressed “discontent” in a phone call to E.U. foreign relations chief Federica Mogherini.

This news item, filed from Brussels, was posted on the euobserver.com Internet site at 6:52 p.m. Europe time on their Tuesday evening---and it's another contribution from Roy Stephens.  It's worth reading.

View full GSD edition

"No Money For War"--IMF to Ukraine

The International Monetary Fund will assist Ukraine only after the situation inside the country is stabilized. The IMF Executive Director Christine Lagarde made this announcement in a Monday interview with Le Monde.

In her words, IMF experts assumed that the conflict would be over by the winter when determining the financial support plan. “Now we are developing new variants, including giving Ukraine four years to implement reforms”, clarified Lagarde.

She also said that the level of financing will “probably be somewhat higher than anticipated,” but that will depend on military-political factors. Lagarde underscored that all IMF plans assume the stabilization of situation in Ukraine. “That is the priority. The linkage between economic and military situation is self-evident,” said Lagarde.

To translate into human language, THEY WILL NOT GIVE KIEV ANY MONEY (as if there were any doubts). That means the situation will develop rapidly and toward the rapid deterioration of the internal situation and toward an COUP D’ETAT  of one sort or another. It’s only a matter of time (give or take a month). But this time it won’t be the usual standing around on a square, but a swift and short clash of armed men or  a CAPITULATION without a fight (which cannot be ruled out, since it would be preferable to Poroshenko, but I’m sure the Kremlin would not like that, therefore we’re still waiting).

This brief, but absolute must read commentary, especially for all serious students of the New Great Game, put in an appearance on the fortruss.blogspot.ca website yesterday---and it is, of course, courtesy of Roy Stephens once again.

View full GSD edition

Putin blames politics for Russian ratings downgrade

The decision to cut the status of Russian government debt to “junk” on Monday was politically motivated, Vladimir Putin has said.

Standard and Poor’s (S&P), a ratings agency, slashed the rating it holds on Russian sovereign debt from BBB- to BB+, taking it below investment grade status for the first time in a decade.

A prolonged oil price slump and heavy sanctions over tensions in Ukraine have weighed heavily on the Russian economy. The rouble has slid by close to 49pc against the dollar since the beginning of 2014 as a result. More sanctions may soon be deployed, making things harder still.

S&P said: “The reason for the deviation is a significant change in our perception of Russia’s monetary flexibility.” The downgrade in part reflected “the effect we expect Russia’s weakening economy to have on its financial system,” the agency continued.

Putin is right.  Politics is the only reason.  This item showed up on the telegraph.co.uk Internet site at 3:53 p.m. GMT yesterday afternoon---and it was in my in-box six minutes later at 8:59 a.m. MST, courtesy of Roy Stephens.

View full GSD edition

Putin: Those who rewrite history attempt to hide own disgrace

The Russian president has blasted attempts to rewrite the history of WWII and hide the crimes of Nazism as inadmissible and immoral, adding that people who do this often try to distract attention from their nations’ collaboration with Hitler.

It is hard to imagine that real ‘death factories,’ mass executions and deportations have become a terrible reality of the 20th century, that they were cold-bloodedly and thriftily organized in Europe that seemed to be civilized back then,” Vladimir Putin said as he spoke in the Jewish Museum and Tolerance Center in Moscow at the event dedicated to the 70th anniversary of Auschwitz’s liberation.

Direct attempts to silence history, to distort and rewrite history are inadmissible and immoral. Behind these attempts often lies the desire to hide one’s own disgrace, the disgrace of cowardice, hypocrisy and treachery, the intent to justify the direct or indirect collaboration with Nazism,” the Russian leader stated.

This very interesting article was posted on the Russia Today website at 2:51 p.m. Moscow time on their Tuesday afternoon---and the stories from Roy just keep on coming.

View full GSD edition

Russian PM vows ‘unrestricted’ response if banned from SWIFT payment system

Russia’s response to a possible cut-off from the SWIFT international banking payment system will be “unrestricted,” Prime Minister Dmitry Medvedev vowed. The West is pushing for hitting Moscow with more sanctions as the Ukraine crisis deteriorates.

"We will see what happens, but of course if such decisions are made, I want to note that our economic reaction and generally any other reaction will be unrestricted," the Russian prime minister said on Tuesday, calling on the government to “work out concrete decisions which would help our economy in those conditions.”

Calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West, and the introduction of sanctions in response to Moscow’s alleged role in the Ukraine conflict.

Thus, last August the UK proposed to exclude Russia from the SWIFT system as a part of sanctions imposed on the country due to the situation in eastern Ukraine.

This article, also courtesy of the Russia Today Internet site, showed up there at 8:31 p.m. yesterday evening Moscow time, which was 12:31 p.m. EST.

View full GSD edition

Iran, Russia to create joint bank for national currency trade

Iran and Russia plan to create a joint account for national currency trade, Iranian Ambassador to Russia Mehdi Sanaei told RIA Novosti in an interview on Tuesday.

“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Sanaei said.

The Iranian ambassador added that relations between Moscow and Tehran “are actively developing” and that 2014 was “a very fruitful year” for both countries.

He also said that Tehran expects to sign a contract or memorandum of mutual understanding in 2015 with the Eurasian Economic Union to begin exports to Russia.

This story from the sputniknews.com Internet site, found a home over at the Tehran Times early yesterday evening local time---and I thank Roy Stephens for sending it.

View full GSD edition

Pepe Escobar: ‘Empire of Chaos’ in the House of Saud

No one in Western corporate media will tell you why U.S. President Barack Obama is hitting Riyadh with a high-powered delegation to “pay his respects” to the new House of Saud potentate, King Salman.

Talk about a who’s who – including CIA head John Brennan; General Lloyd Austin, head of U.S. Centcom; Secretary of State John Kerry; leading House Democrat Nancy Pelosi; and even senile Senator John “Bomb Iran” McCain.

It must have been heart wrenching for most in this crowd to skip a visit to the Taj Mahal in India so they would be part of the last-minute, “unscheduled” stop in Riyadh.

This is how the astonishing mediocrity that doubles as U.S. Deputy National Security Adviser Ben Rhodes, spun it; “Principally, I think this is to mark this transition in leadership and to pay respects to the family and to the people of Saudi Arabia, but I’m sure that while we’re there they’ll touch on some of the leading issues where we cooperate very closely with Saudi Arabia.”

The White House and the Pentagon did not bother to “pay their respects” in person to the people of France after the Charlie Hebdo massacre. The House of Saud – “our” top bastards in the Persian Gulf – is of course much more valuable.

Pepe pulls no punches in this essay posted over at the Russia Today website at 3:45 p.m. Moscow time yesterday afternoon---and it falls into the absolute must read category.  It's also the final offering of the day from Roy Stephens---and I thank him on your behalf.

View full GSD edition

IMF was wrong about purchase by the Netherlands

Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed today.

The global financial institution later confirmed that the Netherlands did not increase its bullion holdings in December, contrary to the IMF's earlier report that the bank had raised gold holdings for the first time in 16 years.

The Dutch central bank, the world's ninth-biggest official sector gold holder, has kept its holdings unchanged since late 2008. The bank earlier on Tuesday denied that it bought more gold last year.

This corrected Reuters story, filed from Singapore, appeared on their website at 11:48 a.m. EST yesterday morning---and I borrowed it from the gata.org Internet site, but the first reader through the door with this news on Tuesday morning was reader U.M.

View full GSD edition

German Probe Finds No Signs of Manipulation in Gold Market

Germany’s financial regulator BaFin has found no evidence to support allegations of manipulation in the gold market or that currency exchange rates were systematically rigged, according to its head of banking supervision.

Raimund Roeseler also said the watchdog is close to concluding a probe into alleged attempts to rig the London Interbank Offered Rate, a benchmark for borrowing costs. He didn’t comment on the results of that investigation.

The probe into currency markets is still under way, he said. Roeseler spoke to Handelsblatt newspaper in an interview published in Frankfurt Monday. Oliver Struck, a spokesman for BaFin, confirmed the comments in an e-mail to Bloomberg News.

Banks worldwide have paid billions of dollars in fines as regulators probe allegations traders sought to profit by manipulating currency and commodity markets as well as benchmark interest rates.

As I've been saying for years---and nobody is paying attention---it's not and has never been the London p.m. gold fix that's the issue, it's the London bias between the London open and the London p.m. fix that's been the root of all evil since January 1, 1975.  I explained all this at the Casey conference in San Antonio last September---charts and all.  This Bloomberg gold-related news item, filed from Frankfurt, appeared on their Internet site at 12:34 p.m. MST yesterday.  I thank reader U.M. for digging this story up on our behalf.

View full GSD edition

China’s 2014 Gold Imports From Hong Kong Tumble 32% From Record

Gold shipments to China from Hong Kong fell 32 percent in 2014 from a record a year earlier as lower prices failed to boost the purchases of bars, coins and jewelry amid a clampdown on corruption and an economic slowdown.

Net imports by mainland China were 750 metric tons last year, down from 2013 when shipments more than doubled to 1,108.8 tons, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department. Imports in December fell 36 percent from the same month last year, according to the figures, which deduct flows from China into Hong Kong.

Demand for luxury goods including bullion has been hurt by an anti-graft drive in China, while volatility that sank to a four-year low and a rally in stock markets damped interest in the metal as an investment. The buying frenzy that helped push China’s consumption above India’s after prices dropped into a bear market in 2013 hasn’t been sustained, leading banks including Goldman Sachs Group Inc. to predict further declines.

Well, if you're looking for anti-gold propaganda, this bulls hit piece fills the bill nicely.  Of course gold imports to China through Hong Kong are declining, as they really cut back on their imports through that portal earlier in the year, as they're now doing most if without publicity through Shanghai and Beijing.  That started changing several months back---but imports through Hong Kong to China are nowhere near back to normal---and most eyes are now focused on the weekly withdrawals from the Shanghai Gold Exchange.  This gold-related news item, if you wish to dignify it with that name, was filed from Singapore---and appeared on the Bloomberg website at 3:08 a.m. Denver time yesterday morning---and it's also courtesy of reader U.M.

View full GSD edition

Dr. Dave Janda interviews your humble scribe

This 25-minute audio interview with the "good doctor" was conducted on Sunday afternoon on all-talk radio WAAM 1600 out of Ann Arbor, Michigan.  It was posted on the davejanda.com Internet site on Monday, but I decided to save it for today's column, as it would have got lost in Tuesday's missive.

View full GSD edition

Jeff Gundlach: Why negative bond yields are good news for gold

With government bond yields negative in Switzerland and parts of Europe, gold looks attractive by comparison, bond trader Jeffrey Gundlach of Doubleline Capital said in a television interview Tuesday.

The yield on 10-year Swiss debt turned negative earlier this month, and yields on a number of shorter-dated eurozone government bonds have also been in negative territory, meaning investors are effectively paying governments for the privilege of holding their paper.

Amazingly, people are paying Switzerland to warehouse their money for 10 years...That makes gold a high-yielder, because it yields zero,” Gundlach quipped in an interview with CNBC. “So you’re in a world that is being incrementally favorable for gold.

And with volatility in the currency market rising, gold is likely to continue rising “in the months to come,” he said.

This story appeared on the marketwatch.com Internet site at 1:13 p.m. EST yesterday afternoon---and the 3:10 minute CNBC video clip is linked in the article.  I thank Manitoba reader U.M. for her final contribution in today's column---and it's worth your while.

View full GSD edition

Jan 27, 2015

16 firms worth billions despite losing money

Thanks to a new round of funding, the music app is now part of a growing list of technology companies that investors believe are worth at least $1 billion even though they're unprofitable.

While making money may not be the most important factor for young companies, the lofty price tag placed on businesses stuck in the red is raising some eyebrows.

"Markets are not necessarily rationale. This may almost be like a fever," said Roger Kay, a tech analyst at Endpoint Technologies.

It's yet another consequence of extremely easy money from central banks: Investors have little choice but to make riskier and riskier bets.

That's exactly right, dear reader. This article appeared on the cnn.com Internet site on Friday morning EST---and I thank reader U.D. for passing it around on Saturday.

View full GSD edition

U.S. Housing-Market Headwinds Are Impeding Recovery: Gary Shilling

U.S. housing activity remains weak despite six years of federal government aid, strong interest from overseas buyers, rock-bottom interest rates and massive purchases of mortgage bonds by the Federal Reserve.

Does this mean housing may never spring back to its pre-recession levels? Many signs point to yes. 

Don't blame the Chinese, who are showing an abundance of interest. Their share of foreign purchases leaped to 16 percent in the year ending March 2014, from 5 percent in 2007.

They paid a median price of $523,148, higher than any other nationality and more than double the $199,575 median price of all houses sold.

This item showed up on the newsmax.com Internet site last Friday as well---and it's courtesy of West Virginia reader Elliot Simon.

View full GSD edition

Marc Faber Says He Likes Gold, `Some Emerging Economies'

This 2:40 minute Bloomberg video clip appeared on their website yesterday I guess, as there's no dateline on the web page.  I thank reader Ken Hurt for sending it along.

View full GSD edition

Mark Carney warns of liquidity storm as global currency system turns upside down

The Governor of the Bank of England has warned markets to brace for possible trouble in 2015 as the US Federal Reserve tightens monetary policy and liquidity evaporates, fearing that the new financial order has yet to face its first real test.

Mark Carney said diverging monetary policies in the US, Britain, Europe, and Japan may set off further currency turbulence and "test capital flows across the global economy, including to emerging markets."

It is the latest sign that officials at Threadneedle Street are worried about the global fall-out from the rising dollar, which poses a mounting threat to companies in the developing world that have borrowed up to $9 trillion in US dollars.

Mr Carney said regulators have cleaned up the banks and tried to prepare for the tectonic shift taking place in the international currency structure but major risks remain.

This story put in an appearance on the telegraph.co.uk Internet site late on Saturday afternoon GMT---and it's the first contribution of the day from South African reader B.V.

View full GSD edition

Germans united in the conviction ECB has gone rogue

While Saudi Arabia lamented the passing of King Abdullah yesterday, Germany was busy burying its last illusions about the European Central Bank.

After a long and valiant struggle, German hopes were finally extinguished that the ECB would change its monetary mind and come back to the Bundesbank way of thinking.

The majority decision by the ECB governing council to buy €1.14 trillion in sovereign bonds has been a a slap in the face for the German establishment.

Lead by the Bundesbank, Germany’s political, media and business leaders had insisted they saw no looming deflationary threat to justify bond-buying. When the ECB proceeded anyway, they dismissed it as “Draghi doping” of weak euro economies.

This right-on-the-money story showed up on the irishtimes.com Internet site in the wee hours of Saturday morning GMT---and it's the second article in a row from reader B.V.

View full GSD edition

Europe’s Saddest Day in 50 Years: Another Trillion For the Banks, More Trauma For the People

I was going to start out saying yesterday was the saddest day in Europe in 50 years, or something like that, because of the insane and completely nonsensical largesse the ECB permits itself to launch, aimed at once again saving a banking system, but which will not only not help the European people, it will make things even much worse than they already are. Which is also, lest we overlook that ‘detail’, entirely thanks to the ECB/EU/IMF Troika,

I’ve said many times that the EU in its present form should be dismantled tomorrow morning (even though it’s not the same tomorrow morning anymore), and if Draghi’s $1.1 million x million ‘stimulus’ should make anything clear, it’s that the dismantling gets more urgent by the day.

But calling it the saddest day in Europe in 50 years would show far too little respect for the people who died in former Yugoslavia, and in eastern Ukraine. It’s still a very sad day, though. And I was already thinking about that even before I read Theopi Skarlatos’ article for the BBC; that really made me want to cry.

This interesting guest commentary appeared on David Stockman's website on Sunday---and it's the first offering of the day from Roy Stephens.

View full GSD edition

Doug Noland: Draghi's Do Whatever it Takes Beats Estimates

As always, the CBB is expression of my own views. It is in no way intended as investment advice. My objective is to chronicle history's greatest Credit Bubble and hopefully add some insight along the way.

Let’s return to where we left off in late-December: “Bubble On, Bubble Off.” The thesis remains that the “global government finance Bubble” was pierced in 2014. However, in a world of unprecedented liquidity excess, deflating Bubbles at the “Periphery” further inflate Bubbles at the “Core.” Last year saw faltering Bubbles in the Emerging Markets (EM) and commodities usher in a new King Dollar reign. While the Fed wound down QE, extraordinary measures by the likes of Draghi and Kuroda safeguard the historic boom in global leveraged speculation. Hot money flooded into U.S. securities markets. These trends run unabated in early-2015.

I’m also not backing away from the view that a prolonged experiment in global monetary inflation is “failing spectacularly”. The stakes are just incredibly high – financial, economic, social, geopolitical… Global policymakers refuse to admit their failings. They will not accept the obvious: printing “money” – creating perceived wealth through electronic debit and Credit entries – will not rectify the world’s ills. Indeed, runaway financial Bubbles lie at the heart of an extraordinary array of worsening global maladies. Disastrously, key central banks have coalesced into the stand that monetary measures have not been aggressive enough.

After being M.I.A. for a month, Doug is back in the saddle, but now on his own website creditbubblebulletin.blogspot.ca.  As always, his commentaries are must reads---and this one is no exception.  I thank Dan Lazicki for tracking Doug down for us.

View full GSD edition

E.U. Fears TTIF Free Trade Agreement Could Spur Litigation

When Bernd Lange talks about the advantages of a free trade agreement with the U.S., he often cites the example of the VW bus. The hippy favorite has been the target of a 25 percent tariff since 1964, a punitive move after the European Economic Community raised levies on imported chicken, shutting the Americans out of the market. Sales have been hampered for decades as a result. But if the levy were significantly reduced, its price tag would plunge.

Lange is a classic car enthusiast -- and the chair of the European Parliament Committee on International Trade, which focuses on the Transatlantic Trade and Investment Partnership (TTIP) treaty. But despite the possible benefits for Volkswagen, the Social Democrat has had little choice but to emphasize the negative aspects of TTIP during his public appearances. In Europe's leading exporting nation, broad swathes of the population are opposed to the free trade agreement. You can even find anti-TTIP flyers in many churches.

The main sticking point is special rights given to investors, who would be able to challenge countries in special international dispute settlement panels that bypass national courts. It's a pill that even those who believe in the deal are having difficulty swallowing. Some 145,000 European citizens voiced their disapproval in a "public consultation" undertaken by the European Commission, with many expressing fear that U.S. companies might seek to overturn E.U. laws on genetic engineering, environmental protection and food quality.

This news story was posted on the German website spiegel.de at 4:22 p.m. Europe time on their Monday afternoon---and it's definitely worth reading.  I thank Roy Stephens for sending it.  By the way, the thought police over at the spiegel.de website changed the headline to read "Free Trade Faults: Europeans Fear Wave of Litigation from U.S. Firms".

View full GSD edition

The Elections in Greece---and the Fall Out: Nine stories

1. Greek radical left wins election, threatening market turmoil: yahoo.com  2. Alexis Tsipras - Troika Belongs in the Past: greekreporter.com  3. Greece's New FinMin Warns "We Are Going To Destroy The Greek Oligarchy System" : Zero Hedge  4. Yanis Varoufakis: Greece's future finance minister is no extremist: The Telegraph  5. Greece elections: Merkel has lost, hope has won: Russia Today  6. Far-Left Syriza Victory in Greece - Bruises European Markets: Reuters  7. IMF's Lagarde rules out special treatment for Greece: Reuters/Yahoo  8. Greek vote could be only the beginning for debtor states seeking a euro-exit: The Telegraph  9. Syriza’s victory: this is what the politics of hope looks like: The Guardian

Note: There's been a headline change and rewrite of story #6.  It now reads "Euro bounces back, global stocks up after Greek vote".

[The above stories are courtesy of Brian Farmer, our man in Greece---Harry Grant, South African reader B.V., Roy Stephens---and Dennis Mong]

View full GSD edition

Red Alert: Rocket Fire Could Signal New Offensive on Mariupol

Reports of heavy rocket artillery firing on the eastern parts of the city of Mariupol, Ukraine, as well as a statement made by a separatist leader, indicate the potential preparation of an offensive on the city. While this would be a significant escalation and an indicator of Russian intent to push further into Ukraine, potentially forming a much-rumored land connection to the northern border of Crimea, there are also several indicators required for such an offensive that are currently still missing.

The heavy rocket artillery firing has been widely reported, and the death toll has risen to 27. Mariupol has been shelled in the past, notably in early September, but as the cease-fire took effect, separatist forces generally conducted attacks only outside of the city. It is not clear whether this is simply an intensification of relatively static fighting along the front between Russian and pro-Russian forces on the one side, and Ukrainians, or the beginning of a Russian-led offensive to widen the pocket, or the opening move in a broader strategic offensive to link up with Crimea, 200 miles to the west of the pocket.

The widespread use of Grad Multiple Launch Rocket Systems indicates that this is a planned action with significant logistical support that involves extensive use of Russian troops, though Grad fire has been widely used throughout the conflict. There have been indications that Russian forces, including Russian Marines, have moved into the eastern Ukraine pocket controlled by pro-Russian forces, giving the Russians offensive options. Heavy artillery preparations frequently precede Russian attacks, particularly by concentrated MLRS attack. Given the amount of munitions needed to supply concentrated fire, the Russians tend not to use them casually. The presence of Grad missiles indicates the possibility of artillery preparation for a broader offensive.

I'm sure the attacks are real, but I'm always suspicious of anything that comes off the strafor.com Internet site---and you should be as well.  This news item appeared there on Saturday.  It's courtesy of Roy Stephens.

View full GSD edition

Kiev introduces state of emergency in Donbass, high alert across Ukraine

The Ukrainian government has introduced the state of emergency in the war-torn south-eastern Donetsk and Lugansk Regions, and put all other territories on high alert, Prime Minister Arseny Yatsenyuk announced.

"In accordance with the Ukrainian Code of Civil Protection, the Cabinet of Ministers has adopted a decision to recognize an emergency situation at a state level. The Ukrainian government has decided to impose the state of emergency in the Donetsk and Lugansk Regions," Yatsenyuk is cited as saying by Interfax-Ukraine.

According to the PM, the move is aimed at providing the most efficient coordination of all government agencies in order to ensure civil protection and the safety of the population.

The statement was made after the field meeting of the Cabinet of Ministers, which took place at the headquarters of the State Emergency Service of Ukraine in Kiev on Monday.

This story showed up on the Russia Today Internet site at 1:03 p.m. Moscow time on their Monday afternoon, which was 5:03 a.m. EST.  It's also courtesy of Roy Stephens.

View full GSD edition

Ukraine crisis: Angela Merkel 'offers Russia free trade deal for peace'

Angela Merkel has reportedly offered Russia negotiations on a free trade agreement with the E.U. in exchange for a peace deal in Ukraine.

The German chancellor made the offer at the World Economic Forum in Davos, where she spoke of a free trade area “from Lisbon to Vladivostok”, according to a report in Süddeutsche Zeitung newspaper.

Mrs Merkel said Germany was “ready” to discuss “possibilities of cooperation in a common trade areas”. But she made it clear talks could not start until Russia abides by the Minsk Agreement, the ceasefire agreed in September, which it has so far failed to honour.

Mrs Merkel's vice-chancellor, Sigmar Gabriel, who was also in Davos, spelt out the offer more clearly. “The next step is to discuss a free trade zone,” he said. “We should offer Russia a way out.”

This story appeared on The Telegraph's website on Friday afternoon GMT---and Bill Busser sent it our way on Sunday morning.

View full GSD edition

S&P downgrades Russia's sovereign credit rating to below investment grade

Ratings agency S&P said on Monday it had cut Russia's sovereign credit rating to BB+ or below investment grade.

S&P warned in late December that it could deprive Russia of its investment-grade credit rating as soon as mid-January, following a rapid deterioration of the country's monetary flexibility and a weakening economy.

This Reuters piece, filed from Moscow, showed up on their website [via yahoo.com] late on Monday morning EST---and I thank Elliot Simon for sharing it with us.

View full GSD edition

Outdoing Dr. Goebbels: The propaganda war against Russia Today

Propaganda. At its best – a wonderful German pop group of the 1980s who had their biggest hit with a track named ‘Duel’. At its worst – the comments of the new BBG chief Andrew Lack, which put RT in the same category of ‘challenges’ as ISIS.

“We are extremely outraged that the new head of the BBG [U.S. Broadcasting Board of Governors] mentions RT in the same breath as world’s number one terrorist army. We see this as an international scandal and demand an explanation,” says Margarita Simonyan, RT’s editor-in-chief. Anyone who supports genuine pluralism in the international media should be demanding an explanation too.

It would be easy to say that Dr. Joseph Goebbels, the infamous Nazi Minister of Propaganda would be proud of Lack’s comments. But in fact the propaganda war against RT – of which Lack’s comments are only the latest example, actually – ‘out-Goebbels’ Dr Goebbels’.

The reason for these attacks is fear. What is clear is that the success of RT has caused real panic in the ranks of the west’s neo-con/‘liberal interventionist’ elite.

This must read op-edge piece appeared on the Russia Today website early Sunday afternoon Moscow time---and it's another offering from Roy Stephens.

View full GSD edition

Iran moves away from U.S. dollar in foreign trade

Iran is stopping mutual settlements in dollars with foreign countries and agreements on bilateral swap in new currencies will be signed in the near future, the Central Bank of Iran (CBI) has said.

“In trade exchanges with foreign countries, Iran uses other currencies, including Chinese yuan, euro, Turkish lira, Russian ruble and South Korean won,” Gholamali Kamyab, CBI deputy head, told the Tasnim state news agency.

He added that Iran is considering the possibility of signing bilateral monetary agreements with several countries on the use of other currencies.

This Russia Today article put in an appearance on their Internet site on Saturday afternoon Moscow time---and I thank International Man's senior editor Nick Giambruno for passing it around.

View full GSD edition

Germany halts arms exports to Saudi Arabia

Germany has decided to stop arms exports to Saudi Arabia because of "instability in the region," German daily Bild reported on Sunday.

Weapons orders from Saudi Arabia have either been "rejected, pure and simple," or deferred for further consideration, the newspaper said, adding that the information has not been officially confirmed.

The decision was taken on Wednesday by the national security council, a government body that includes Chancellor Angela Merkel, Vice Chancellor Sigmar Gabriel and seven other ministers, it said.

"According to government sources, the situation in the region is too unstable to ship arms there," added the daily.

This AFP story, filed from Berlin, showed up on the france24.com Internet site on Saturday Europe time---and I thank South African reader B.V. for his final contribution to today's column.

View full GSD edition

A Saudi Palace Coup

King Abdullah's writ lasted all of 12 hours. Within that period the Sudairis, a rich and politically powerful clan within the House of Saud, which had been weakened by the late king, burst back into prominence. They produced a palace coup in all but name.

Salman moved swiftly to undo the work of his half-brother. He decided not to change his crown prince Megren, who was picked by King Abdullah for him, but he may choose to deal with him later. However, he swiftly appointed another leading figure from the Sudairi clan. Mohammed Bin Nayef, the interior minister is to be his deputy crown prince. It is no secret that Abdullah wanted his son Meteb for that position, but now he is out.

More significantly, Salman, himself a Sudairi, attempted to secure the second generation by giving his 35- year old son Mohammed the powerful fiefdom of the defense ministry. The second post Mohammed got was arguably more important. He is now general secretary of the Royal Court. All these changes were announced before Abdullah was even buried.

The general secretaryship was the position held by the Cardinal Richelieu of Abdullah's royal court, Khalid al-Tuwaijri. It was a lucrative business handed down from father to son and started by Abdul Aziz al Tuwaijri. The Tuwaijris became the king's gatekeepers and no royal audience could be held without their permission, involvement, or knowledge. Tuwaijri was the key player in foreign intrigues -- to subvert the Egyptian revolution, to send in the troops to crush the uprising in Bahrain, to finance ISIL in Syria in the early stages of the civil war along his previous ally Prince Bandar bin Sultan.

This short essay, which is worth reading, appeared on the huffingtonpost.com Internet site on Friday morning EST---and I thank reader Vince Koloski for finding it for us.

View full GSD edition

King Abdullah: Medieval Reactionary, Brutal Despot, Incessant Warmonger

After nearly 20 years as de facto ruler of the Kingdom of Saudi Arabia, King Abdullah ibn-Abdulaziz al-Saud died last night at the age of 90. Abdullah, who took power after his predecessor King Fahd suffered a stroke in 1995, ruled as absolute monarch of a country which protected American interests but also sowed strife and extremism throughout the Middle East and the world.

In a statement last night Senator John McCain eulogized Abdullah as “a vocal advocate for peace, speaking out against violence in the Middle East”. John Kerry described the late monarch as “a brave partner in fighting violent extremism” and “a proponent of peace”. Not to be outdone, Vice President Joe Biden released a statement mourning Abdullah and announced that he would be personally leading a presidential delegation to offer condolences on his passing.

It’s not often that the unelected leader of a country which publicly flogs dissidents and beheads people for sorcery wins such glowing praise from American officials. Even more perplexing, perhaps, have been the fawning obituaries in the mainstream press which have faithfully echoed this characterization of Abdullah as a benign and well-intentioned man of peace.

I would bet that this story is pretty close to the mark.  It was a guest contribution on David Stockman's website on Saturday---and I thank Roy Stephens for sending it.  It's also worth reading if the topic interests you.

View full GSD edition

ECB's QE move adds pressure on China's policy easing

The European Central Bank's announcement on Thursday to switch on the money tap shed light on the deflation risk stalking the euro zone and reminded the elites, who are gathering here for the World Economic Forum's (WEF) annual meeting, of the divergence among policies from different central banks.

The European Central Bank (ECB) on Thursday decided to purchase over 1 trillion euros in public and private sector bonds by the fall of 2016 to counter the deflationary risk and possible stagnation.

ECB President Mario Draghi said the purchasing would start in March 2015 with a monthly amount of 60 billion euros (about 69.48 billion U.S. dollars), and was intended to last until the end of September 2016, but would in any case be conducted until the ECB saw a sustained adjustment in the path of inflation which is consistent with its medium-term inflation maintenance target of below, but close to, 2 percent.

Draghi said the decision to kick off the rescue program was made against a backdrop that inflation dynamics continued to be weaker than expected.

This article, which appeared on the news.xinhauanet.com Internet site on Friday, has had headline change since it was posted.  It now reads "Policy divergence talked regarding ECB's QE at WEF".  It's the second contribution of the day from Bill Busser.

View full GSD edition

Koos Jansen: Amazingly heavy withdrawals from Shanghai Gold Exchange

China's gold demand as measured by withdrawals from the Shanghai Gold Exchange for the week ending January 16 were "amazing" at 70 metric tonnes, Bullion Star market analyst and GATA consultant Koos Jansen writes. He adds that it was unusual for China to do so much buying as the gold price was rising.

Jansen's analysis is headlined "Booming SGE withdrawals In Week 2, 2015: 70 Tonnes" and it's posted at the Singapore website bullionstar.com Internet site on Saturday.  I found this gold-related story on the gata.org Internet site.

View full GSD edition

Mike Kosares: Gold spike in major currencies is a remarkable start to 2015

The new year has ushered in a remarkable and unexpected turn of events for gold. It is up significantly in four of the seven top currencies (the euro, British pound, and Australian and Canadian dollars), up respectably in two others (U.S. dollar and Japanese yen), and down slightly in the last (Swiss franc).

These charts and the significant gains in gold's value in a very short time demonstrate amply the value of gold as a hedge, not just against inflation but against sudden currency devaluation and systemic financial and economic risks as well. ...

... Though it appears that gold and quantitative easing might be directly correlated, what is really going on is that both simply are reacting to the same problem -- a bad economy with the potential systemic breakdown, not the prospect of inflation. Central banks respond by printing money. Investors respond by buying gold.

This commentary by Mike appeared on the usagold.com website on Saturday---and I thank Chris Powell for wordsmithing all of the above.

View full GSD edition

Al Korelin interviews your humble scribe

This is another interview I did at the Vancouver Resource Investment Conference last weekend---and if my memory serves me correctly, it runs for a bit over five minutes.  I thank Al for taking the time to interview me.  It was posted on the kereport.com Internet site on Saturday.

View full GSD edition

CME Starts Gold Futures in Hong Kong in Price-Benchmark Race

CME Group Inc. started physically delivered kilobar gold futures in Hong Kong as it joins other exchanges vying to establish new price benchmarks in the top user region.

The contract listed on the Comex is tied directly to the price of bullion of 99.99 percent purity in Hong Kong and will be physically delivered to vaults in the special administrative region. CME, owner of the largest futures exchange, said in September that trading may begin in the fourth quarter of 2014.

The Shanghai Gold Exchange started bullion trading in the city’s free-trade zone on Sept. 18 while Singapore Exchange Ltd. began a wholesale kilobar contract on Oct. 13 as more of the world’s gold is processed and used in the region and the 95-year-old fixing benchmark in London gets overhauled. Almost two-thirds of gold jewelry, bars and coins were consumed in Asia in 2013, according to data from the World Gold Council.

“The success of the contract depends if it can get the liquidity,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Hong Kong is as close to China as you can get without being onshore, so it might appeal to those that don’t have a license to trade onshore. People like to trade the China-London price differential.”

This Bloomberg story, filed from Singapore, appeared on their Internet site just before midnight on Sunday evening---and I thank Manitoba reader U.M. for sending it our way.

View full GSD edition

Thailand bourse gearing up for gold exchange

The Stock Exchange of Thailand is gearing up for the establishment of the country's first physical gold exchange after major gold dealers agreed to become members of the new spot gold exchange.

Further details about shareholding between the gold dealers and the stock exchange are being discussed, said SET chairman Sathit Limpongpan. The creation of the spot gold market recently hit a snag due to disputes over management and shareholding between the SET and gold dealers, while some traders at the time said that they would refuse to join the new exchange.

Mr Sathit said the Securities and Exchange Commission had also thrown support behind the idea of setting up the spot gold exchange, but its implementation is pending the approval of the Finance Ministry could enact an organic law to allow the market to be priced and settled in major currencies, the US dollar in particular.

This gold-related news item showed up in the business section of the Bangkok Post on Monday morning local time---and it's another item I found on the gata.org Internet site.

View full GSD edition

Koos Jansen: India's silver imports rose to record in 2014

India's silver imports in 2014 rose 15 percent from 2013, the most since at least 2009, Bullion Star market analyst and GATA consultant Koos Jansen reports, as investment and jewelry demand shifted from from gold. Jansen adds that Asia is draining Western supplies of silver as well as gold.

His analysis was posted on the bullionstar.com website yesterday---and it's certainly worth reading.  I found this silver-related story in a GATA release.

View full GSD edition

Moscow Update: Gold During the Crisis

Dmitriy Balkovskiy is a Russian coin dealer in Moscow we’ve interviewed before. Since the ruble’s crash, he’s witnessed some interesting developments in his country, so we asked him for an update.

I would like to expand on Jeff Clark’s piece “Gold Was Up 73% Last Year” with some real-life stories from inside Russia.

First, a small correction… Jeff describes an investor sitting in a Moscow café and reading about gold’s phenomenal rise in rubles in a Russian newspaper. In reality, gold-related info in a Russian newspaper would be buried on page 17 and very difficult to locate. “Serious” gentlemen deal in stocks or real estate; gold coins and bars are for the naïve. In this respect, Russia is no different from the USA, and even worse.

Now to my episodes…

  • Our small office is located about 200 meters from the Kremlin’s entrance, right across the street from it. So sometimes we get visitors from within those walls. In the early afternoon of December 16, a Ukrainian construction worker came in wishing to buy a one-ounce Austrian Philharmonic. He had just finished several months of work at the Kremlin reconstruction site and wanted to get rid of his rubles and take home a hard asset. (Note: December 16, 2014 has already been named the Russian Black Tuesday. On that day, the ruble fell from 58 to 72 per USD in several hours.)

    Now this guy must have been burnt a few times in his life, because he wanted to check the coin for authenticity in every possible way. When he first entered the door, the coin sold for about 86,000 rubles. It took us about 30 minutes to complete the checking procedure to his satisfaction—but when we looked at the price again it had soared above 100,000 rubles. Unfortunately all he had in his pocket was 90,000 rubles. The coin had literally slipped from his grasp.

Yesterday's edition of the Casey Daily Dispatch is one of the best ones that has ever crossed my desk---and easily falls into the absolute must read category.

View full GSD edition

Precious metals coveted once more as Draghi acts

Investors' desire for precious metals is deepening after Mario Draghi's $1.3 trillion pledge drove gold to a five-month high and silver to the brink of a bull market.

Their buying helped boost the value of exchange-traded products backed by gold and silver by $8.94 billion this month, the most since September 2012, data compiled by Bloomberg show. Hedge funds and other speculators in futures are the most bullish on gold in two years and have bet more on silver in all but two weeks since the start of November.

At a time when the price of almost every other commodity is sinking, silver and gold are having their best start to a year in more than three decades. The European Central Bank president's stimulus sent the euro to an 11-year low against the dollar, pushed government bond yields lower and raised the appeal of alternatives to currencies that are being revalued.

"Silver is tied to gold, and they move with trust," David Rosenberg, the Toronto-based chief economist at Gluskin Sheff & Associates, which oversees C$8 billion ($6.4 billion), said Jan. 22. "There's an increasing number of global investors who are starting to lose trust in the world's central banks."

This very interesting Bloomberg story, filed from New York, appeared on their website at 12:28 p.m. Denver time on their Monday afternoon---and the precious metal-related stories from GATA just keep on coming.

View full GSD edition

Netherlands Increases Gold Holdings for First Time Since ’98

The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.

Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show.

Central banks globally are adding gold to reserves after reducing holdings for about two decades from the late 1980s as they seek to diversify assets, according to Oversea-Chinese Banking Corp. Worldwide purchases would probably be 400 tons to 500 tons in 2014, the World Gold Council said in November. Gold rose for the first time in four months in December as signs of slowing economic growth spurred haven demand.

This short item, co-filed from Singapore and Melbourne, appeared on the businessweek.com Internet site on Tuesday in the Far East---and Manitoba reader U.M. slid it into my in-box just before 3 a.m. EST this morning.  It's definitely worth reading.

View full GSD edition

Scottish village of Tyndrum prepares for '£200m gold rush'

The picturesque village of Tyndrum in Scotland's Grampian Highlands is bracing itself for what could be a surge of prospectors after it was revealed around £200m of gold is located in local hills.

Gold was excavated from the local Cononish mine by Australian firm Scotgold Resources in the 1990s but the firm suffered financial difficulties when the price of gold plummeted and the mine never opened for business.

Now the price of gold has risen to £850 an ounce, potentially turning the gold mine into a literal lucrative goldmine for the company who estimate there could be 248,000 ounces of gold – twice as much as previously thought.

The purity of the gold has also taken the company by surprise – it is 9% purer than previously thought. That means there could be £200m of gold around the town.

This news item was posted n the ibtimes.co.uk Internet site on Sunday afternoon GMT---and I thank BIG GOLD editor Jeff Clark for digging it up for us.

View full GSD edition

New York Fed's gold vaults' depositors and metal have been declining steadily

In the first of a series of articles about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly reports that the bank's documents indicate a huge decline over recent decades in the number of central banks vaulting gold there as well as the amount of gold vaulted.

Further, Manly finds, the bank has gotten much more secretive about its gold vaulting over the years. Manly's study is titled "The Keys to the Gold Vaults at the New York Fed, Part 1" and it was posted on the bullionstar.com Internet site on Friday.

It's another article I found on the gata.org Internet site---and it's on the longish side, but it's definitely worth your while.

View full GSD edition

Buyers Take a Shine to Gold, Silver Again

Gold and silver are getting another turn in the spotlight, luring investors worried about slowing global growth and surprises by central banks.

On Thursday, the European Central Bank offered the latest reason to pile into precious metals by unleashing a bigger-than-expected bond-buying program amid continued worries about Europe’s economy. Gold futures ended above $1,300 a troy ounce for the first time since August, while silver neared bull-market territory, defined as a 20% increase from a recent low.

Gold and silver are drawing buyers of all stripes, a sign fears about a worsening economic outlook run deep in financial markets. The metals are popular havens for nervous investors but had fallen out of favor after setting price records in 2011 as the U.S. recovery gained speed. Now these metals are luring back some money managers, as collapsing oil prices, fears of a recession in Europe and volatility in currency markets shake their faith in stocks and other investments.

Both metals remain far below their peaks, and many investors are skeptical that economic conditions are dire enough to sustain recent gains. But others make the case that gold and silver look more promising than stocks, which are at or near record highs in many markets, or government bonds, where yields are near zero across the developed world. Some investors also are embracing metals as a store of value in case policies like those announced by the ECB spur inflation.

This gold-related story, posted in the clear, appeared on The Wall Street Journal's website last Thursday evening EST---and I thank Ken Hurt for bringing it to our attention.

View full GSD edition

Goldman: It's the Central Banks' Fault We Can't Be More Bearish on Gold

We've heard it all: snow, cold weather, hot weather, non one-time recurring, "one-time, non-recurring" charges, and even Bush. But when it comes to "excuses" for why one is wrong, this morning Goldman's note "Central banks stall a more bearish gold outlook" absolutely takes the cake.

That's right: Goldman just blamed central banks for being unable to be "more bearish" on gold.

While readers let that sink in for a bit, here is the gist of Damien Courvalin's note.

Even more monetary stimulus has helped support gold prices…

While gold prices have trended lower since mid-2013, the decline has been short of our expectations. Recently, the combined support of: (1) weaker-than-expected US economic data; (2) the run-up to the announcement of QE in Europe; and (3) the surprise SNB decision to remove the CHF/EUR cap, have seen prices rise to near $1,300/oz. While we believe that these catalysts are now mostly priced in, and that gold prices will decline in 2015-16, we are nonetheless raising our near-term forecast to current prices.

Wait, so infinitely diluting fiat money and paper claims on wealth, a process which inevitably ends up with the para-dropping of bales of cash, is favorable for hard, "traditional" stores of value? Do go on...

This incredible story showed up on the Zero Hedge website at 8:01 a.m. on Monday morning---and I thank Manitoba reader U.M. for her second offering in today's column.

View full GSD edition

Pinch Yourself: Financial Times begins to wonder if central banking is even crazier than gold

Lenin, the implacable Russian revolutionary, despised gold. He thought it should be used to build public lavatories. I was of much the same persuasion early in my career. The yellow metal's economic utility seemed to me minimal in the light of its declining industrial uses. As an investment it was and remains entirely speculative because it yields no income. And since the introduction of index-linked government bonds, any merits it might have as an inflation hedge have become less relevant.

Certainly gold has been a very erratic store of value in recent decades. Anyone who bought gold at the peak of the gold bull market in the early 1980s saw their investment lose 80 per cent of its value in real terms over the next 20 years. And as a protection against political and economic instability it has latterly become a less reliable bolt-hole, failing to rise in price consistently in response to each new geopolitical crisis.

Yet some years ago I changed my mind about the metal.

The first reason was that gold, over millennia, has never defaulted. Humanity thus harbours a psychological commitment to the yellow metal that would probably take not just decades but centuries of terrible investment returns to unravel. That means it is unlikely to lose all its value in our lifetimes even if its industrial uses finally disappear in their entirely and people lose all interest in gold as jewellery.

Heresy has been committed at the Financial Times!  Off with his head, I say!  When you see articles like this allowed to surface in the FT, you know it's time to circle the financial and monetary wagons on an international scale.  How things have changed in the fifteen years since I got involved with GATA.  This Financial Times story from Sunday is posted in the clear in another GATA release.  Needless to say, it's very much worth reading.

View full GSD edition