Gold & Silver Daily

Ed's Critical Reads

Jul 30, 2014

More than a third of U.S. adults pursued by collection agencies

More than a third of U.S. adults have bad debt that has been handed over to a collection agency and their average debt in collections is $5,178, according to a study published on Tuesday by the Urban Institute.

The authors of the report by the Washington, D.C.-based think tank said vicious cycles of bad debt can hold back families and entire communities.

"Most people wouldn't blink if told that the majority of Americans carry some debt. But they would be shocked to learn that reported debt in collections is pervasive and threads through nearly all communities," said Caroline Ratcliffe, a senior fellow at the Urban Institute. "Delinquent debt can harm credit scores, which can tip employers' hiring decisions, restrict access to mortgages and even increase insurance costs."

This very interesting Reuters story, filed from Chicago, appeared on their Internet site at 1:43 p.m. EDT on Tuesday afternoon---and I thank reader Harry Grant for sliding today's first story into my in-box in the wee hours of this morning.

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U.S. home ownership at 18-year low in second quarter

Home ownership in the United States fell again in the second quarter to the lowest level since the third quarter of 1995, suggesting many Americans are becoming renters. The seasonally adjusted home ownership rate fell to a seasonally adjusted 64.8% from 65.0% in the first quarter, the Commerce Department said Tuesday.

The residential rental vacancy rate dropped to 7.5% in the second quarter, the lowest level since 1997 and well below the peak of 11.1% in 2009.The increased demand to rent is driving prices higher. In the second quarter, the median asking monthly rent was $756, up from $735 one year ago. In another closely-watched sector, the home ownership rate among those under 35 was 35.9% in the second quarter, down from 36.7% one year earlier. Many analysts say the housing sector will remain weak until first-time buyers return to the market.

That's all there is to this tiny news item that was posted on the marketwatch.com Internet site at 10:27 a.m. EDT on Tuesday morning---and I thank Washington state reader S.A. for sharing it with us.

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Don't Be Fooled by the Fed's Placid Facade: Mohamed A. El-Erian

One of the unwritten rules of modern central banking is that, unless compelled by events on the ground, officials should refrain from making big policy changes during the summer. With many traders on holiday, any sudden moves risk destabilizing markets.

Look for the Federal Reserve to abide by this rule when it meets Tuesday and Wednesday — and the European Central Bank to do the same in early August. Janet Yellen and her colleagues on the policy-making Federal Open Market Committee will maintain their well-telegraphed, gradualist approach, reducing monthly bond purchases by another $10 billion, signaling no urgency in raising interest rates, and reminding us of the importance of looking beyond the unemployment rate to understand what's happening in the job market.

Still, behind this comforting “steady as she goes” facade, Fed officials will be dealing with five complex and inter-related issues, the resolution of which will be months in the making:

This commentary appeared on the moneynews.com Internet site at 8:21 a.m. EDT on Tuesday morning---and it's courtesy of West Virginia reader Elliot Simon.

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Fed May Be Fooling All of Us With Its Exit Signs: Axel Merk

While we are busy arguing whether the Fed’s exit will consist of rising rates, reverse repos or the trimming of its massive portfolio, the Fed may well be fooling all of us. Investors must have been swallowing lots of blue pills not to see the illusion hiding in plain sight.

Let’s assume that we will indeed get a rate hike next year, and that the Fed will have figured out how to implement it. We may get our exit all right, but it’s not the sort of exit most appear to be expecting. That’s because in our humble view, an “exit” ought to reflect a path towards normalization, away from financial repression, back to an environment where pensioners might once again be able to live off income generated from their savings.

If anyone dares to take a red pill, you will learn that interest rates net of inflation, i.e. real interest rates, have not only continued to be negative, but become more negative of late, meaning inflation has started to inch upward. For normalization to occur, interest rates must move higher faster than the pace of inflation; and not only do real interest rates need to move higher, they ought to move into positive territory to suggest we might be exiting financial repression.

This longish commentary is the second one in a row from the moneynews.com Internet site---and the second in a row from Elliot Simon.  It was posted there at 10:54 a.m. EDT yesterday.

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Wall Street Journal Reporter: “The Entire United States Market Has Become One Vast Dark Pool”

In 2012, Wall Street Journal reporter, Scott Patterson, released his 354-page prescient overview of U.S. market structure titled, Dark Pools: High Speed Traders, A.I. Bandits, and the Threat to the Global Financial System. (For those whose computer prowess is limited to turning on a laptop, like millions of fellow Americans, “A.I.” means artificial intelligence – machines teaching themselves to think like humans, but faster.)

Patterson comes to an epiphany on page 339 of his book, writing in the notes section: “The title of this book doesn’t entirely refer to what is technically known in the financial industry as a ‘dark pool.’ Narrowly defined, dark pool refers to a trading venue that masks buy and sell orders from the public market. Rather, I argue in this book that the entire United States stock market has become one vast dark pool. Orders are hidden in every part of the market. And the complex algorithm AI-based trading systems that control the ebb and flow of the market are cloaked in secrecy. Investors – and our esteemed regulators – are entirely in the dark because the market is dark.”

This short essay was posted on the wallstreetonparade.com Internet site yesterday---and I thank reader U.D. for passing it around.

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JPMorgan Paying $650K to Settle CFTC Charges

JPMorgan Chase will pay $650,000 to settle charges by federal regulators that it filed inaccurate reports on the trading positions of some of its large customers.

The Commodity Futures Trading Commission announced the settlement Tuesday. The CFTC said that JPMorgan continued to submit inaccurate reports to the agency from 2012 through February of this year even though CFTC staff found errors in them and notified JPMorgan.

The New York bank neither admitted nor denied wrongdoing in the settlement. It agreed to certify in writing that it has improved and tested its procedures for filing reports. A company spokesman declined to comment.

Coffee money---and certainly not big enough to be a licensing fee.  Ted said that they were fined for misreporting large traders in the futures and options market on the Comex, but the commodities affected weren't mentioned.  This article showed up on The New York Times website on Tuesday sometime---and it's courtesy of reader Phil Barlett.

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UBS comes to €300 million deal with Germany

UBS has reached a settlement with the authorities in Germany over helping clients evade taxes. The Swiss bank will pay €300 million (CHF364.4 million) in the agreement marking another step in the bank’s resolving the problems of its past.

UBS revealed it had settled the investigation in July while reporting its second quarter earnings on Tuesday.

The bank said it had entered CHF120 million ($132 million) in provisions in connection with the German settlement in its second quarter results, where it posted a net profit of CHF792 million.

This article was posted on the swissinfo.ch Internet site at 10:50 a.m. Europe time on their Tuesday morning---and I thank South African reader B.V. for sharing it with us.

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British Petroleum's Faustian Pact with Russia goes horribly wrong with Yukos verdict

The Permanent Court of Arbitration in The Hague has thrown the book at the Russian state, or more specifically at Vladimir Putin and his Siloviki circle from the security services.

The $51.5bn ruling against on the Kremlin unveiled this morning has no precedent in international law. The damages are 20 times larger than any previous verdict.

Lawyers for the Yukos-MGL-Khodorkovsky team tell me that they cannot pursue the foreign bond holdings of the Russian central bank if the Kremlin refuses to pay up when the deadline expires on January 15, as seems likely. Moscow has already dismissed the case as “politically motivated”.

Nor can they go after embassies and other sovereign assets that enjoy diplomatic immunity, though they are eyeing a list of Russian state targets that slipped through the net.

This Ambrose Evans-Pritchard blog appeared on the telegraph.co.uk Internet site on Monday sometime---and my thanks go out to Roy Stephens for finding it for us.

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Dutch Prime Minister Urges Kiev to Stop Fighting Near MH17 Crash Site

Dutch Prime Minister Mark Rutte has called on Kiev authorities to stop its military operation against independence supporters around the Malaysia Airlines flight MH17 crash site in eastern Ukraine, Agence France-Presse reported Tuesday, citing a government representative.

"The prime minister this morning called the Ukrainian president with a request to halt hostilities around the crash site," Jean Fransman said.

Ukrainian President Petro Poroshenko told Rutte that he would take all measures “to allow investigators access” to the scene, according to the government spokesman.

"Rutte expressed his concern about the fact it appeared the investigators may today yet again not reach the site. This is important because we want to get to the crash site as quickly as possible to get the victims and bring them home," Fransman said.

This article, filed from Moscow, was posted on the RIA Novosti website at 5:07 p.m. Moscow time on their Tuesday afternoon, which was 9:07 a.m. in New York.

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Kiev forces fire ballistic missiles into E. Ukraine – CNN

In the past two days Kiev’s forces have launched several short-range ballistic missiles into areas in east Ukraine controlled by self-defense forces, CNN reports, citing U.S. government sources.

The move “marks a major escalation” in the Ukrainian crisis, CNN said.

Three U.S. officials confirmed to me a short time ago that U.S. intelligence over the last 48 hours has monitored the firing of several short-range ballistic missiles from territory controlled by Ukraine government forces into areas controlled by the pro-Russian separatists,” Barbara Starr, CNN’s Pentagon correspondent, said in a live report.

Short-range ballistic missiles can carry warheads of up to 1,000 pounds (450 kg) and are capable of killing dozens of people at a time, Starr said.

This news item put in an appearance on the Russia Today Internet site at 6:07 p.m. on Tuesday evening Moscow time---and once again I thank Roy Stephens for sending it.

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Over 30 civilians killed during two days of shelling in Gorlovka, East Ukraine

Two days of shelling in Gorlovka, in the Donetsk region of Eastern Ukraine, have resulted in 31 civilians being killed there, local authorities say. Ukrainian troops and anti-government forces are blaming each other for the bloodshed.

The town of Gorlovka witnessed more shelling Tuesday morning, RIA Novosti news agency reported.

“Over the past 24 hours 17 residents of Gorlovka, including three children, have been killed in the center of the town, which got under artillery fire. 43 civilians have been wounded,” Itar-Tass reported the press service of the Gorlovka city administration as saying.

This is another Russia Today news item---and it's also courtesy of Roy Stephens.  It appeared on their website at 2:09 p.m. Moscow time on their Tuesday afternoon.

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Over 48,000 Ukrainians Apply for Refugee Status in Russia

More than 48,000 Ukrainian citizens have already applied for refugee status in Russia, the Russian Emergencies Ministry press office said Tuesday.

“To date … over 48,000 Ukrainian citizens have asked for temporary accommodation and refugee status, over 27,000 [refugees] have applied for Russian citizenship,” the ministry reported.

Earlier on Tuesday, Russia's children's rights ombudsman Pavel Astakhov reported that more than 230,000 Ukrainians have been granted refugee status in Russia.

This is developing into a human tragedy of biblical proportions.  This RIA Novosti article was posted on their website at 11:49 p.m. Moscow time Tuesday evening---and it's worth reading.  I thank Roy Stephens for sending it.

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Putin Vows Assistance in Taking Ill Children Out of Crisis-Hit East Ukraine

Russian President Vladimir Putin promised Tuesday to help in evacuating children who require urgent medical assistance from violence-hit eastern Ukraine.

The head of the presidential human rights council, Mikhail Fedotov, told Putin at a meeting that the Kiev government keeps silent on Russia’s offer to evacuate the children.

“I expect that we will be able to agree with human rights activists and Ukrainian authorities,” Putin said. “We will try to help.”

The Russian leader added: “This is an important humanitarian sphere and I would ask you to seek the response of the Ukrainian colleagues in a non-conflict manner.”

This commentary appeared on the RIA Novosti Internet site at 5 p.m. Moscow time on their Tuesday afternoon.  It's another contribution from Roy Stephens.

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On Dominoes, WMDs and Putin’s “Aggression”: Imperial Washington is Intoxicated by Another Big Lie

Imperial Washington is truly running amuck in its insensible confrontation with Vladimir Putin. The pending round of new sanctions is a counter-productive joke. Apparently, more of Vlad’s posse will be put on double probation, thereby reducing demand for Harry Macklowe’s swell new $60 million apartment units on Park Avenue. Likewise, American exporters of high tech oilfield equipment will be shot in the foot with an embargo; and debt-saturated Russian state companies will be denied the opportunity to bury themselves even deeper in dollar debt by borrowing on the New York bond market. Some real wet noodles, these!

But it is the larger narrative that is so blatantly offensive—that is, the notion that a sovereign state is being wantonly violated by an aggressive neighbor arming “terrorists” inside its borders. Obama’s deputy national security advisor, Tony Blanken, stated that specious meme in stark form yesterday:

Russia bears responsibility for everything that’s going on in Eastern Ukraine” and “has the ability to actually de-escalate this crisis,” Blinken said.

Puleese! The Kiev government is a dysfunctional, bankrupt usurper that is deploying western taxpayer money to wage a vicious war on several million Russian-speaking citizens in the Donbas—-the traditional center of greater Russia’s coal, steel and industrial infrastructure. It is geographically part of present day Ukraine by historical happenstance. For better or worse, it was Stalin who financed its forced draft industrialization during the 1930s; populated it with Russian speakers to insure political reliability; and expelled the Nazi occupiers at immeasurable cost in blood and treasure during WWII. Indeed, the Donbas and Russia have been Siamese twins economically and politically not merely for decades, but centuries.

This absolute must read essay by David Stockman was posted on his website yesterday---and as Roy Stephens said in his covering e-mail---"it is the most articulate and accurate summary of the Ukraine situation that I have read to date!"  I agree totally.

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Turkish PM happy to return American-Jewish ‘peace’ award

Turkish Prime Minister Tayyip Erdogan says he will gladly return an award given to him by a Jewish-American association a decade ago in a letter released by his office, which also called on the US group to condemn Israel’s government policies in Gaza.

The New York-based American Jewish Congress said in a letter to Erdogan last week that he had become the world's "most virulent anti-Israeli leader" and it demanded that he return the prize. He had been given the award partly for his efforts to broker peace between Israel and the Palestinians 10 years ago.

"Prime Minister Erdogan will be glad to return the award given back in 2004," Turkey's ambassador to Washington Serdar Kilic said in the letter addressed to American Jewish Congress President Jack Rosen.

This news item showed up on the Russia Today website at 3:24 p.m. Moscow time on Tuesday afternoon---and is another contribution from Roy Stephens.

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China Confirms Targeting Microsoft for Anti-Trust Scrutiny - Reports

A Chinese industry and commerce agency confirmed Tuesday it is probing US software giant Microsoft for allegedly operating a monopoly, according to The China Post.

“According to legal regulations, the SAIC (State Administration for Industry and Commerce) has set up a case to investigate Microsoft for alleged monopoly actions,” the Chinese paper quoted the regulator as saying in a statement.

The inquiry came two month after China banned the use of the company’s Windows 8 operating system on government computers, citing security concerns. Up to 95 percent of operating system software in the country stems from Microsoft.

This RIA Novosti story, filed from Moscow, showed up on their website at 10:0 p.m. yesterday evening local time.  I thank reader B.V. for his second contribution to today's column.

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How Argentina’s Default May Trigger $29 Billion in Claims

By defaulting today, Argentina may trigger bondholder claims of as much as $29 billion -- equal to all its foreign-currency reserves.

If the overdue interest on Argentina’s dollar-denominated securities due 2033 isn’t paid by July 30, provisions in bond indentures known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately. The amount corresponds to Argentina’s debt issued in foreign currencies and governed by international laws.

U.S. District Court Judge Thomas Griesa blocked Argentina’s attempt last month to transfer the $539 million in interest after the nation didn’t set aside money for holdout creditors, who won a ruling that entitled them to full repayment of obligations that Argentina repudiated in 2001. While Citigroup Inc. says there’s little chance investors will invoke the pay-back clauses in coming weeks, potential claims are large enough to exhaust the country’s reserves.

This news item appeared on the Bloomberg website at 11:24 a.m. Denver time on Tuesday---and I thank Roy Stephens for his final contribution to today's column.

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Three King World News Blogs

1. Dr. Stephen Leeb: "This Will End in Tears For the West as Gold and Silver Soar"  2. Rick Rule: "Silver is the Wild Card as Metals to Surge Higher"  3. Grant Williams: "Black Swan to Engulf the World in Catastrophe"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Goldman unit eyes foray into China amid metals financing scandal

Goldman Sachs Group Inc's metals warehousing unit is exploring its first foray into China, and privately held C Steinweg has expanded capacity there, sources said, as a financing scandal in a major Chinese port fuels a scramble for market share.

The alleged scam - in which a Chinese trading firm is suspected by local authorities of fraudulently using a single cargo of metal as collateral for multiple loans - has shaken the confidence of banks and merchants in Western metals storage firms that rely on local agents to oversee warehouse operations.

It has intensified a battle between new entrants and entrenched rivals in the multi-billion dollar business of securely storing the world's commodities in China, the world's biggest producer and user of base metals.

This longish Reuters article, co-filed from New York, Sydney and London, was posted on their Internet site at 1:52 p.m. EDT on Tuesday---and I thank Harry Grant for finding it for us.

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Lawrence Williams: China’s Hong Kong gold imports continue to dive

The conundrum that is the gold price continues to confound.  Last year the gold price dropped dramatically despite an enormous level of ongoing  gold flows from West to East – particularly into China.  Yet yesterday the reports of the lowest monthly level of net gold imports from Hong Kong into mainland China since January 2013 was followed by the gold price putting on something of a surge – it having been driven down to around the $1,290 level during the week, but then shooting up to comfortably above $1,300 in late trading Friday.

On the face of things the latest gold import figures via Hong Kong certainly suggest a sharp downturn in Chinese demand, which started to kick in after some exceedingly strong import figures around the Chinese New Year.  As the table above shows import figures for the four months from March to June are very substantially below those of a year earlier – and overall, for the first six months of the year net imports via Hong Kong are down by 12% - but the trend is rather worse than that figure might suggest with the March to June period net imports down a massive 42%.

The decline in imports via Hong Kong is indeed an indication of falling Chinese demand so far this year and is supported by other data – notably the Chinese Gold Association’s recent announcement stating that Chinese gold demand in the first half of the year was down 19.4% year on year to 569.45 tonnes, compared with 706.36 tonnes a year earlier.  Thus the latest Hong Kong figures may not be indicative of the true fall in demand any more.

This commentary by Lawrie was posted on the mineweb.com Internet site on Saturday---and it's worth reading.

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We’re Ready to Profit in the Coming Correction—Are You?

Sometimes I see an important economic or geopolitical event in screaming headlines and think: “That’s bullish for gold.” Or: “That’s bad news for copper.” But then metals prices move in the opposite direction from the one I was expecting. Doug Casey always tells us not to worry about the short-term fluctuations, but it’s still frustrating, and I find myself wondering why the price moved the way it did.

As investors we’re all affected by surges and sell-offs in the investments that we own, so I want to understand. Take gold, for example. Oftentimes we find that it seems to tease us with a nice run-up, only to give a big chunk of the gains back the next week. And so it goes, up and down…

The truth is—and it really is this simple, but so obvious that people forget—that there are always rallies and corrections. The timing is rarely predictable, but big market swings within the longer-term megatrends we’re speculating on are normal in our sector.

This commentary by Casey Research analyst Laurynas Vegys was posted on their website yesterday.

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Peter Schiff exclusive interview: On the dollar crisis, Federal Reserve and future for gold prices

BGG: Precious Metals. And I just wanted to sit down with you and ask you a little bit about the future of gold and the markets. You famously predicted the crash of 2008, 2009, and I loved watching your interviews on television where they would just laugh at you, and just ridicule you, but in the end you had the last laugh.

Peter Schiff: Not yet. Not even yet. Because the people that were ridiculing me back then are still ridiculing me, because I’m still warning that the real crisis hasn’t even happened yet. Because everything that the Federal Reserve has done, everything that the government has done since the financial crisis of ’08 has just made the problems that they were trying to solve worse. Problems that they caused.

BGG: They’ve learned nothing. They’ve learned absolutely nothing because they don’t understand what caused it.

Peter Schiff: No, they still don’t understand even after the fact. So we’re going to live through a worse financial crisis. Next time I think it’s going to be a dollar crisis, which is going to be much more painful than a banking crisis. And in that environment gold is going to shine a lot brighter than it did in the last crisis. And so the reasons to own it now are even more numerous than they were then.

There's a 13:11 minute audio interview, or you can read the transcript.  It was posted on the birchgold.com Internet site on Monday.

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Comex gold market data is likely corrupted, Sprott says

Comex gold market data is likely corrupted to facilitate the paper gold market's domination of the physical gold market, Sprott Asset Management CEO Eric Sprott remarks in his latest interview with Sprott Money News.

Sprott praises GATA's work exposing gold market manipulation, cites GATA consultant Dimitri Speck's book "The Gold Cartel," and says he sees no need for a daily silver price-fixing mechanism. The interview is 24 minutes long but if you can read faster than you can listen, a full transcript is posted with the audio at the Sprott Money Internet site.

I thank Chris Powell for providing the above paragraphs of introduction.

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London gold fixing set for new administrator by year-end

The banks that conduct the century-old gold fixing and the London Bullion Market Association will seek proposals next month for a new administrator to run a revamped process for the benchmark by year-end.

The London Gold Market Fixing Ltd., which manages the procedure, and the LBMA will open a market consultation in late August and plan to announce a third-party administrator by the end of September, the association said in a statement today. The process will be open and not restricted to firms who pitched to run a mechanism that will replace the silver fixing on August 15.

The gold fixing company said July 16 that the LBMA will help with a request-for-proposals exercise and that it’s seeking an independent chairman for the price-setting ritual that takes place twice a day by phone. A similar process for silver will be replaced by an electronic, auction-based mechanism run by CME Group Inc. and Thomson Reuters Corp. next month after Deutsche Bank AG’s planned withdrawal would leave just two banks to conduct fixings for that commodity.

This Bloomberg article, filed from London, was posted on their website at 12:09 p.m. MDT yesterday---and I found it embedded in a GATA release.

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Jim Grant: Gold is the inoculation against hare brained central bankers

"The central bank imposed interest rates are the source of global financial instability now and in the future," warns Grant's Interest Rate Observer's Jim Grant, adding that "The Fed... has manipulated us into a period of quite eerie stability and measured volatility."

Grant believes, given the values (and aware of the risks) that Russian "stocks stand to do very well," and also likes mining stocks as he warns credit markets are overvalued (especially sovereign debt). His conclusion, own gold as "it stands to benefit from the demonstrated, as opposed the theoretically likely, crack up of the [current] monetary arrangements."

Gold, he explains, "is the ultimate inoculation against the harebrained doctrine of modern central bankers."

This 2:34 minute video clip was embedded in a Zero Hedge piece from yesterday, but the video clip itself was M.I.A. inside the ZH piece, so I've posted it on its own.  I thank both Phil Barlett and Elliot Simon for bringing this story/video clip to our attention.

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Jul 29, 2014

Pending Home Sales Tumble From Recovery Highs, Biggest Miss in 2014

Following last week's collapse in new home sales (and last month's massive beat and surge in pending home sales), it was likely not a total surprise that pending home sales would slow, but the -1.1% MoM print is the worst in 2014 (and the biggest miss in 2014). The median existing home price continues to rise (up 4.3% year-over-year) but this is the slowest rate of gain since March 2012. NAR is quick with the excuses and this time.. no weather is to blame.

Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential. “Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved,” he said. “However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.”

Yun forecasts existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in 2015.

This worthwhile read, which includes a couple of excellent charts, was posted on the Zero Hedge website site at 10:06 a.m. EDT Monday morning---and I thank reader M.A. for today's first story.

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Sluggish New Housing Sales Threaten Economy

New home sales plunged 8.1 percent in June, putting the decline at 4.9 percent for the first half of the year, and that's not good news for the economy.

"Housing has clearly been a notable area of persistent sluggishness beyond early-year weather disruptions," Ted Wieseman, an economist at Morgan Stanley, told The Wall Street Journal.

The economy contracted 2.9 percent in the first quarter, though many analysts expect it to grow nearly 3 percent for the rest of the year.

Home sales have suffered from buyers' lingering fear after last decade's housing bust, the sharp rise of home prices last year and the surge of student-loan debt, John Burns, CEO of John Burns Real Estate Consulting, told The Journal.

I believe I posted a story about this on Friday or Saturday, but this moneynews.com story from Sunday courtesy of West Virginia reader Elliot Simon, sort of fit here, so you can read about now if you missed it last week.

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The Typical Household, Now Worth a Third Less

Economic inequality in the United States has been receiving a lot of attention. But it’s not merely an issue of the rich getting richer. The typical American household has been getting poorer, too.

The inflation-adjusted net worth for the typical household was $87,992 in 2003. Ten years later, it was only $56,335, or a 36 percent decline, according to a study financed by the Russell Sage Foundation. Those are the figures for a household at the median point in the wealth distribution — the level at which there are an equal number of households whose worth is higher and lower. But during the same period, the net worth of wealthy households increased substantially.

The Russell Sage study also examined net worth at the 95th percentile. (For households at that level, 95 percent of the population had less wealth.) It found that for this well-do-do slice of the population, household net worth increased 14 percent over the same 10 years. Other research, by economists like Edward Wolff at New York University, has shown even greater gains in wealth for the richest 1 percent of households.

This article appeared on The New York Times website on Saturday sometime---and it's the second contribution in a row from Elliot Simon.

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This stock bubble is ‘beyond 1929 and 2007,’ says John Hussman

John Hussman can generally be counted on for a bearish take on the stock market. But his latest weekly commentary letter is a doozy, with some particularly pointed remarks aimed at investors who continue to believe valuations are fair in stocks.

The economist runs Hussman Funds, and since the financial crisis he’s been a prominent critic of Federal Reserve policy. His investment choices are concentrated in “defensive” positions in stocks and U.S. Treasurys. And if you take a look at his writing, it’s no secret why. Here’s the money quote from the latest commentary:

Make no mistake – this is an equity bubble, and a highly advanced one. On the most historically reliable measures, it is easily beyond 1972 and 1987, beyond 1929 and 2007, and is now within about 15% of the 2000 extreme. The main difference between the current episode and that of 2000 is that the 2000 bubble was strikingly obvious in technology, whereas the present one is diffused across all sectors in a way that makes valuations for most stocks actually worse than in 2000.

This news item showed up on the marketwatch.com Internet site at 3:58 p.m. EDT on Sunday afternoon---and it's the first offering of the day from Roy Stephens.

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Marc Faber predicts 20% to 30% drop in stocks

Permabear Marc Faber said Monday he expects stocks to drop 20 percent 30 percent by October.

"Don't forget many stocks are already down 10 percent. The home builders are down roughly 15 percent. Airlines have just dropped around 10 percent," he said on CNBC's "Halftime Report."

Faber, publisher of the "Gloom, Boom & Doom Report," also noted that several large-cap stocks were down by double-digit percentages.

"So, we're not exactly in a uniformly strong market," he said. "The Russell 2000, which represents 2,000 companies, is down 2 percent for the year. And big deal, the S&P is up 6 percent, whereas the Philippines, Indonesia, India, Thailand, Vietnam are all up between 15 percent and 25 percent."

This 2:55 minute CNBC video clip showed up on their website around 11 a.m. EDT on Monday---and I thank reader Ken Hurt for sending it our way.

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Banks Cash in on Mergers Intended to Elude Taxes

Jamie Dimon, the chief executive of JPMorgan Chase, recently said, “I love America.” Lloyd Blankfein, the chief executive of Goldman Sachs, wrote an opinion article saying, “Investing in America still produces the best return.”

Yet guess who’s behind the recent spate of merger deals in which major United States corporations have renounced their citizenship in search of a lower tax bill? Wall Street banks, led by JPMorgan Chase and Goldman Sachs.

Investment banks are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad (without actually moving). With seven- and eight-figure fees up for grabs, Wall Street bankers — and lawyers, consultants and accountants — have been promoting such deals, known as inversions, to some of the biggest companies in the country, including the American drug giant Pfizer.

This article appeared on The New York Times website at 9:02 p.m. EDT last night---and I thank Phil Barlett for sharing it with us.

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Moody's cuts bank outlook to 'negative' on Ottawa's bail-in rule

Investor ratings service Moody’s has changed its outlook for Canada’s biggest banks to negative from stable, citing concerns over the Canadian government’s plan to implement a “bail-in” system in the event of a bank failure.

The “bail-in” rule, included as part of the 2013 omnibus budget bill, asserts that the federal government would not necessarily bail out a bank on the brink of failure with taxpayer money.

Instead bank bondholders would be expected to assume the risk, though there is no guarantee that deposit-holders would not be hurt if they had more money in the bank than the $100,000 guaranteed by CDIC.

Canada has yet to set parameters for how a bail-in might work. Mark Carney, who was Bank of Canada governor at the time, said last April it was 'hard to fathom' a scenario where Canadians' deposits would be touched, as happened in the Cyprus bank failure.

This news item appeared on the cbc.ca Internet site way back on July 8, but for all Canadian citizens, it's still worth reading.  I thank reader Dave Malek for bringing it to our attention.

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U.S. Pollack confirms meeting with Argentine delegation tomorrow, without holdouts

Argentina will send a negotiation team to New York today for further talks with a US court-appointed mediator Daniel Pollack in its debt dispute with "holdout" investors, Cabinet Chief Jorge Capitanich said earlier, with just three days left to avert a default. In a statement released today, Pollack confirmed he will be receiving the Argentine delegation at his office tomorrow at 12 pm (Argentina time) and he "urged direct, face-to-face conversations with the Bondholders, but that will not happen tomorrow."

Argentina has until Wednesday to either pay the New York hedge funds suing for full repayment on their bonds or reach a deal.

Otherwise, barring a suspension of the court-ordered July 30 deadline, Argentina will default for the second time in 12 years.

Here's an update on Argentina's bond situation.  This article was posted on the Buenos Aires Herald website yesterday sometime---and I thank reader M.A. for sending it our way.

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U.K.'s Lloyds Bank fined total of $370 million for rigging Libor

That will teach them!

Having received full credit for for co-operation and suspending some individuals, Lloyds Bank has been fined by the CFTC the staggeringly wrist-slap-like sum of $105 million for the "manipulation, attempted manipulation, and false reporting of Libor."

Total fines will amount to around $370 million across all UK and US regulators and all Lloyds divisions.

As the WSJ reports, the British bank becomes the seventh financial institution to strike a deal with U.S. and U.K. authorities who are conducting a long running probe into allegations of widespread attempts to manipulate Libor. With no less than the head of the Bank of England calling the bank's actions (manipulating JPY Libor for at least 2 years) "reprehensible," and the CFTC adds individuals behavior was a "gross breach of trust." Well we are sure after this they will never manipulate another market ever again.

Another licensing fee---and nobody is going to jail.  This Zero Hedge news item appeared on their website at 9:04 a.m. EDT on Monday morning---and I stole the headline from a GATA release, but the story itself is courtesy of reader M.A.  There's also a Reuters story about this linked here.

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The pound is overvalued, warns the IMF

The IMF has warned that the pound is overvalued by 5pc-10p, in an update of its wide-ranging annual assessment of Britain's economy.

After depreciating by 23pc between 2007 and 2009, the real exchange rate has gradually appreciated, and this trend accelerated from the middle of 2013, the fund said, as it praised the Bank of England for keeping interest rates low and welcomed signs that Britain's surprisingly strong economic recovery is broadening.

A high pound could affect the rebalancing of the economy, according to the staff report. A strong currency depresses domestic demand and encourages spending on imports.

"Further demand rebalancing is needed: net trade has made only a modest contribution to the recovery, and the real exchange rate is moderately overvalued," the report said on Monday.

This news item was posted on The Telegraph's website at 4:58 p.m. BST on their Monday afternoon---and I thank South African reader B.V. for sharing it with us.

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Keep U.K. interest rate low for now, IMF tells Bank of England

The International Monetary Fund has said U.K. interest rates should stay low for now, but the Bank of England policymakers must be ready to raise them should other measures fail to keep the housing market in check.

The IMF said that so-called macro-prudential measures should be the "first line of defence" against financial stability risks from the housing market. But ultimately more must be done to raise the supply of housing to meet demand, it said, echoing warnings from economists and the Bank of England's governor, Mark Carney.

The Washington-based IMF also warned of a check to George Osborne's ambitions to rebalance the economy towards manufacturing, as it warned that sterling was "moderately overvalued", while net trade has not been a strong factor in the economic recovery.

This article appeared on theguardian.com Internet site at 5:50 p.m. BST yesterday---and in some respects is similar to the story from The Telegraph that precedes it.  This is the second offering of the day from Roy Stephens.

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Russia Says West Taking No Action to Settle Ukraine Conflict

Russian Foreign Minister Sergei Lavrov reproached western countries Monday for their lack of political proposals to resolve the crisis in Ukraine, saying they are merely making demands of Russia and threatening sanctions.

“I have neither seen nor heard of any political initiatives from our western colleagues,” Lavrov told journalists.

“There were the Berlin agreements, now there are the agreements promoted within the OSCE. I want to ask our Western colleagues what their contribution to a political resolution is,” Lavrov said, criticizing the leaders for refusing to support the agreements made in the UN Security Council and the Organization for Security and Co-operation in Europe.

Lavrov said Russia’s western partners only say that Moscow needs to change its policy toward Ukraine.

This RIA Novosti news item, filed from Moscow, appeared on their website at 2:15 p.m. Moscow time on Monday, which is 6:15 a.m. EDT.  It's another offering from Roy Stephens.

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'Fake': Russian Defence Ministry rebuffs U.S. satellite image claims

Russia’s Defense Ministry has stated that “fake” satellite images of alleged shelling of Ukraine from Russian territory were created by U.S. counselors “with close links to Ukraine’s Security Council.”

The authenticity of the images is impossible to prove, the ministry added.

The Defense Ministry stated that the images posted by the U.S. ambassador Geoffrey Pyatt on his Twitter account, allegedly proving the shelling of Ukraine from Russian territory, are “fake,” ITAR-TASS reports.

“These materials were posted to Twitter not by accident, as their authenticity is impossible to prove – due to the absence of the attribution to the exact area, and an extremely low resolution. Let alone using them as ‘photographic evidence’,” Igor Konashenkov, the official representative of the ministry, stated.

This Russia Today story appeared on their website at 11:29 a.m. Moscow time yesterday morning---and it's also courtesy of Roy Stephens.

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‘Refusing to kill their own’: Over 40 Ukrainian soldiers flee to Russia

More than 40 Ukrainian soldiers have abandoned their military posts and crossed into Russian territory, stating that they refuse to fight against their own people, a Russian Federal Security Service spokesperson said.

At least 41 Ukrainian soldiers have made it to Russian territory after asking self-defense forces for help, the spokesperson from the Federal Security Service’s Rostov region border patrol unit, Vasily Malaev, told Itar-Tass.

"At around 20:30 Moscow time, 41 Ukrainian soldiers left their military bases and arrived at the Ukrainian border crossing checkpoint Izvarino. They appealed to the militia there for help to with cross into the Russian territory, in connection with the fact that they do not want to fight against their own people,” Malaev said.

All of the soldiers were able to cross into Russia at the Donetsk checkpoint, the spokesperson added.

This story appeared on the Russia Today Internet site at 2:00 a.m. Moscow time on their Sunday morning, which was 6 p.m. in New York on Saturday evening.  I thank Roy Stephens for sending it.

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Canadian Prime Minister Stephen Harper pens editorial about Russia for Globe and Mail

Prime Minister Stephen Harper says the western world can’t soften its tough stand toward Russia over the crisis in Ukraine, even at the expense of the economy.

In an unusual move, Harper has written an editorial on the situation in Ukraine that was published in Saturday’s Globe and Mail.

He writes that although militants in eastern Ukraine are referred to as ‘pro-Russian separatists,’ there is no doubt they are “an extension of the “Russian state.”

Harper accuses Russia of “aggressive militarism” that he says is a threat to not only Ukraine, but Europe and the values that bind Western nations.

As a Canadian, I'm totally embarrassed---and this shows you just how much this government has sold itself out to the Americans.  Harper can lie his ass off just as well as the rest of the leaders in the West.  This short CP article, filed from Toronto, was posted on the vancouversun.com Internet site on Saturday---and it's also courtesy of Roy Stephens.

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Court orders Russia to pay $50 billion for seizing Yukos assets

An international arbitration court ruled on Monday that Russia must pay $50 billion for expropriating the assets of Yukos, the former oil giant whose ex-owner Mikhail Khodorkovsky fell foul of the Kremlin.

Finding that Russian authorities had subjected Yukos to politically-motivated attacks, the panel made an award to a group of former Yukos shareholders that equates to more than half the entire fund Moscow has set aside to cover budget holes.

Russia, whose economy is on the brink of recession, said it would appeal the ruling by the Dutch-based panel, which judges private business disputes. It also said the "politically biased decision" was based on "current events" - an apparent reference to Moscow's dispute with the West over Ukraine.

Independent lawyers said it would be difficult to enforce the award to shareholders in the GML group, who had claimed $114 billion to recover money they lost when the Kremlin seized Yukos a decade ago.

This Reuters article, co-filed from Moscow, London and Amsterdam showed up on their Internet site at 4:38 p.m. EDT on Monday evening---and I thank Elliot Simon for bringing it to our attention.

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U.S. Says Russia Tested Cruise Missile in Violation of Treaty

The United States has concluded that Russia violated a landmark arms control treaty by testing a prohibited ground-launched cruise missile, according to senior American officials, a finding that was conveyed by President Obama to Russian President Vladimir V. Putin in a letter on Monday.

It is the most serious allegation of an arms control treaty violation that the Obama administration has leveled against Russia and adds another dispute to a relationship already burdened by tensions over the Kremlin’s support for separatists in Ukraine and its decision to grant asylum to Edward J. Snowden, the former National Security Agency contractor.

At the heart of the issue is the 1987 treaty that bans medium-range missiles, which are defined as ground-launched ballistic or cruise missiles capable of flying 300 to 3,400 miles. That accord, which was signed by President Ronald Reagan and Mikhail S. Gorbachev, who was then the Soviet leader, helped seal the end of the Cold War and has been regarded as a cornerstone of American and Russian arms control efforts. Obama administration officials concluded by the end of 2011 that the cruise missile test was a compliance concern, officials have said. Rose Gottemoeller, the State Department’s senior arms control official, first raised the violation concern with Russian officials in May 2013.

Surely they jest?  Someone's hands must have been shaking when they posted this piece of garbage on The New York Times website on Monday.  If this isn't a perfect example of the pot calling the kettle black, I don't know what is.  It's also courtesy of Roy Stephens.

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Bulgaria's Prime Minister resigns as banking crisis unfolds

The Prime Minister of Bulgaria Plamen Oresharski has resigned his post. His decision came after accusations by opponents of failing to cope with the worst banking crisis in 17 years.

The decision was supported by 180 lawmakers in the parliament, only 8 voted against, and 8 abstained, reports Bloomberg.

The Oresharski government lasted for only 16 months of the 4 years it was elected for. New elections on October 5 will see the country’s fifth prime minister since Bulgaria joined the European Union in 2007.

“My cabinet worked in unprecedented conditions of hostility…Despite that we achieved good results. All business indicators improved in the year we ruled,” Reuters quotes Oresharski’s speech just before the vote.

This story put in an appearance on the Russia Today website at 3:06 p.m. last Friday afternoon Moscow time---and I thank Harry Grant for sending it.

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Facing Escalating Violence, U.S. Evacuates Staff From Its Embassy in Libya

The United States closed its embassy in Libya on Saturday and evacuated the embassy’s staff under military guard, in what the State Department said was a response to escalating violence in the Libyan capital, Tripoli.

Officials called the evacuation “temporary” and said they were looking for ways to reopen the embassy, even as the State Department issued a new travel warning on Saturday, advising United States citizens to leave Libya “immediately.”

Weeks of heavy fighting between rival Libyan militias for control of Tripoli’s international airport had in recent days edged closer to the heavily fortified embassy, which is on the main road to the airport. The clashes have all but destroyed the airport, severely limiting air travel to Libya.

This article appeared on The New York Times website on Saturday sometime---and I think it's worth reading.  Once again I thank Roy Stephens for sending it along.

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Israel says Gaza campaign will continue 'until mission is accomplished'

The war in Gaza erupted afresh on Monday as Israel warned of a protracted military campaign to destroy cross-border tunnels and disarm Hamas and other militant groups.

"We need to be prepared for a long operation until our mission is accomplished," Israeli prime minister Binyamin Netanyahu said in a televised press conference, rejecting mounting international calls for an immediate and unconditional ceasefire.

Netanyahu – who described the conflict as a "just war" - spoke after a series of dramatic events following a lull in fighting on Sunday and early Monday. Eight children playing in a park in a Gaza refugee camp were killed, the main public hospital was struck, four Israeli soldiers were killed in a mortar attack and militants from Gaza infiltrated Israel through a tunnel.

This story showed up on theguardian.com Internet site at 7:48 BST on their Monday evening---and it's the final offering of the day from Roy Stephens, for which I thank him.

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Singapore expresses intent to join China-led regional bank

The Republic has expressed its intention to accept China’s invitation to become a founding member of a new regional bank to fund infrastructure projects in Asia, said Singapore’s Ministry of Foreign Affairs (MFA).

Singapore’s intention was conveyed by Deputy Prime Minister Teo Chee Hean at a meeting in Beijing on Monday (July 28) with Chinese Vice-Premier Zhang Gaoli, who had invited Singapore to be part of the Asian Infrastructure Investment Bank (AIIB).

“Mr Teo and Mr Zhang discussed how the AIIB can complement existing multilateral development banks (MDBs), stay open and inclusive and draw upon the best practices of existing MDBs in terms of governance and operations,” said the MFA in a statement.

This article put in an appearance on the channelnewsasia.com Internet site at 9:54 a.m. Singapore time on their Tuesday morning---and I thank reader M.A. for sliding it into my in-box late last night.

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'Corruption and elitism' fueling inequality in China: Jim Rickards

The top one percent of households in China control more than a third of the country's wealth, a study found. As analyst James Rickards tells DW, inequality is becoming so extreme it threatens to cause social disorder.

The findings published in a Peking University report released on July 25, reveal the extent of China's social inequality. "One percent of households at the top level nationwide control more than one third of the country's wealth. Twenty-five percent of families at the bottom level only own one percent of the country's wealth," the website of the People's Daily newspaper reported on the university's statistics. The main reason behind the disparity is said to be the difference between wages in the cities and the rural areas.

The report also included the Gini coefficient, a measure of income distribution with 0 representing total equality and 1 representing total inequality. Government statistics claim the figure stood at 0.47 in 2012, which would put it close to the US, which had an index figure of 0.56 in 2009, according to the World Bank.

James Rickards, a U.S. writer, lawyer and economist, says in a DW interview that China has now surpassed the U.S. in terms of income inequality, adding that both countries are approaching the point where this disparity becomes so extreme that it threatens to cause social disorder.

This very interesting interview was posted on the dw.de Internet site yesterday---and I thank reader Harold Jacobsen for finding it for us.

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Eight King World News Blogs/Audio Interviews

1. Michael Pento: "Forget the Propaganda, This is What's Really Happening"  2. John Embry: "The Shocking Reason Why Gold May Quickly Hit $2,000"  3. Robert Fitzwilson: "Investors Must Prepare Now For Chaos and Wealth Destruction"  4. Andrew Maguire: "Hundreds of Tons of Gold Bought By East in 14 Days"  5. James Turk: "Expect a Wild Trading Week in the Gold and Silver Markets"  6. Richard Russell: "I'm Afraid We Will See Blood in the Streets"  7. The first audio interview is with Andrew Maguire---and the second audio interview is with Art Cashin

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Technical analysis of markets begins to suspect its obsolescence

Acknowledging that the usefulness of technical analysis is increasingly doubted as market manipulation intensifies, newsletter writer and technical analyst Tim W. Wood notes today that manipulation is as old as markets themselves and quotes various authorities to the effect that manipulation cannot long defeat any market's "primary trend."

But Wood's authorities all precede the seizure of absolute economic power by the U.S. government, implemented by the Federal Reserve and Treasury Department and Treasury's Exchange Stabilization Fund -- the power to create infinite amounts of money and to trade secretly in any market, power that even former central bankers now acknowledge as "financial repression."

Wood argues that "the very basis of technical analysis is that everything is discounted into price."

Really? So on April 11, 2013, did technical analysis forecast the coordinated and overwhelming attack on the gold market by central banks that would begin on the following day? Does the foresight of technical analysis today really extend into government chancelleries as policies are decided privately and then implemented by intermediaries through various instruments and mechanisms, from derivatives to high-frequency trading?

As you are well aware, dear reader, I have always trashed technical analysis of the precious metal markets for all the reasons given in this story---and that can now be said about the equities market.  This longish commentary by Chris Powell was embedded in this GATA release from late last night EDT---and it's definitely worth reading.  As Chris said back in April 2008---"There are no markets anymore, only interventions."

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"London Fix" Gold Rigging By Bullion Bank Exposed In Class Action Lawsuit: The Complete Charts

Some interesting news crossed the tape late afternoon yesterday when it was reported that the silver bullion banks (Deutsche Bank, Bank of Nova Scotia and HSBC) were sued for manipulating the silver fix in a class-action lawsuit. However, a closer look reveals that the plaintiff in the lawsuit, J. Scott Nicholson, has a recurring bone to pick with the banks as this is certainly not his first lawsuit alleging precious metals rigging, and as such we are convinced it will be tossed out shortly, along with every other lawsuit alleging a manipulated precious metals market since discovery could lead to some very unpleasant revelations about the primary source of gold and silver rigging: the central banks themselves, alongside the BIS.

Instead, we uncovered something that was missed several few weeks earlier: a far more informative and detailed class action lawsuit filed by Edward Derksen on July 9, 2014 against the London gold fix member banks: Bank of Nova Scotia, Barclays, Deutsche, HSBC and SocGen (profiled here in From Rothschild To Koch Industries: Meet The People Who "Fix" The Price Of Gold).

Recall from "How Gold Price Is Manipulated During The "London Fix"" that this was one of the first conspiracy theories about gold manipulation to end with a bank, and following the official revelation (as opposed to merely on the pages of fringe blogs) that over 100 years the price of gold was consistently manipulated during the London fix (and during every other period as well but that is a revelation for a different time) the very process of the Gold and Silver Fix itself was finally ended (only to be replaced with a comparable process run by the very same people who manipulated gold and silver from Rothschild's London office on St. Swithin’s Lane for decades.

This very long article was posted on the Zero Hedge website at 6 p.m. EDT on Sunday evening---and it's worth your time if you have any left.  If you find the charts familiar, it's because they're all the work of Dimitri Speck and Nick Laird---and a decade in the making.  You've seen most of them in my column many times over the years.

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Possible discrepancy in GLD's gold bar accounting

The Perth Mint's Bron Suchecki calls attention to what seems like a serious discrepancy in the gold exchange-traded fund GLD's accounting of its gold bars.

The discrepancy is headlined "GLD Trade Spreadsheet vs. GLD Bar List" and is detailed at the Screwtape Files  Internet site.  I found this gold-related story embedded in a GATA release yesterday.

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Is There Gold in Fort Knox?

"Is there any gold in Fort Knox?" was one of the most frequently asked questions I got when I was the director of the U.S. Mint.

The answer is yes.

The U.S. Bullion Depository, commonly known as Fort Knox, was built to accommodate the dramatic increase in gold reserves resulting from President Franklin D. Roosevelt's controversial executive order in 1933. The gold reserves of the United States from 1933 to 1937 increased threefold to approximately $12 billion because Americans were forced to sell their gold coins to the Federal Reserve and accept bank notes instead.

Completed in 1936 on land transferred from the U.S. Army, it took more than 500 train cars to deliver the existing gold bullion, newly made bullion bars from the melted coins and some gold coins. They came mostly from Philadelphia and the New York Assay Office.

This is all very interesting, especially what he has to say in the last paragraph.  One has to wonder who has title to all this gold---and what the purity is?  Does part of this belong to Germany---and is it coin melt?  Questions with no answers---and this commentary doesn't help.  It was posted on the moneynews.com Internet site way back on June 6---and I thank Michael Cheverton for sliding it into my in-box just after midnight.

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Gold Bugs Meet Bitcoin Believers to Supplant the Dollar

Call it bitgold.

It’s what you get when you combine bitcoin, one of the world’s newest would-be currencies, and gold, one of the oldest. Add mistrust of centralized authority, a dash of rebelliousness and a dollop of profit motive and you might have the Independence Coin, the first gold-backed crypto-money, unveiled this month at FreedomFest, a libertarian convention in -- where else? -- Las Vegas.

“A staunch person who believes in the gold standard says bitcoin is valueless and ultimately a Ponzi scheme, and people who didn’t dig gold but really got bitcoin would say that this is ridiculous, it’s just a dumb metal,” Anthem Hayek Blanchard, chief executive officer of Anthem Vault Inc., the company behind the Independence Coin, said in an interview. “We don’t need to fight. We can coalesce.”

This very interesting Bloomberg story appeared on their Internet site at 10 p.m. Denver time on Sunday evening---and I thank Casey Research's own Laurynas Vegys for passing it around yesterday.  It's worth reading.

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Gold and bitcoin fuel demand for each other in India

In a fresh possible headache for regulators, including in India, "gold for bitcoin" trades are emerging as a new fad in the world of anonymous transactions, fueling further the appetite for virtual currencies.

This comes at a time when the count of virtual currencies available in the market is fast moving closer to the 500 mark, although the price of top-ranked bitcoin has begun showing signs of stability at around $500-$600 level after remaining highly volatile for most part of its half a decade existence.

According to bitcoin traders, the stabilisation in bitcoin rates is making the case stronger for exchanging them for gold, which currently trades at less than $1,300 per ounce or about Rs28,000 per 10 grams in India.

This is another very interesting story about gold and bitcoin---and it's worth reading as well.  It was posted on the business-standard.com Internet site on Sunday IST---and was filed from New Delhi.  I found it on the gata.org Internet site yesterday.

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GoldCore's O'Byrne discusses market manipulation with Jan Skoyles on 'Get Real'

Interviewed on "Get Real," the television program of The Real Asset Co.'s Jan Skoyles, GoldCore's Mark O'Byrne discusses silver's prospects, its effective greater practical rarity than gold, and manipulation of the gold and silver markets and GATA's work exposing it.

The program is 27:51 minutes long and  was posted on the youtube.com Internet site last Friday.  I've only had time to listen to the first half---and up to that point I'd give it a miss.  It does improve markedly in the second half, which starts just before the 14-minute mark---and even GATA gets a mention there.  Ted Butler's name didn't come up, but just about everything silver-related in the second half of the interview has his name written all over it.  If you start watching at the 14-minute mark, you won't have missed much---and the second half is worth your time.  This silver-related story is something I found in another GATA release from yesterday.

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Financial Times deleted gold manipulation story because it was too 'sensitive'

With great persistence and a little encouragement from GATA our friend R.B. in Britain has more or less solved the mystery of the Financial Times' quick deletion from its Internet site of its February 24 report about gold market manipulation, "Fears Over Gold Price Rigging Put Investors on Alert; German and U.K. Regulators Investigate."

The explanation is pretty much what one might expect: For the Financial Times, one of the many news organizations to which GATA repeatedly has provided its full documentation of gold price suppression by Western central banks---the issue is simply too "sensitive."

In fairness to the FT, please note that the issue seems to have been too "sensitive" for all those other news organizations as well.

R.B.'s account of his repeated inquiries to the Financial Times is appended.

This must read commentary was posted on the gata.org Internet site yesterday.

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Jul 26, 2014

Q2 Closes With A Durable Goods Whimper And 1.6% Y/Y Drop; Core Capex Orders Revised Much Lower; Shipments Tumble

After tumbling in May by 1.0% which was the biggest drop since the dreaded "polar vortex", Durable goods in June posted a modest pick up in June rising 0.7%, driven by yet another surge in aircraft and parts which rose by 8.2% for Non-defense aircraft and 15.3% for defense (thank you Russia). And while this beat expectations of a 0.5% increase, it was the first Y/Y drop in Durable goods since February (and since 2013 if one uses unrevised data).

Excluding volatile transportation, Durable Goods rose by 0.8%, also beating the expected 0.5% print, and higher than last month's 0.1%. Still, the Y/Y change in the category is hardly indicative of sustainable growth in manufacturing production, and certainly smashes any of the ISM and Markit PMI manufacturing surveys indicating an epic renaissance in U.S. production.

This interesting Zero Hedge commentary, with some excellent charts, was posted on their website at 8:57 a.m. EDT Friday morning---and I thank reader M.A. for sending it along.

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Money Manager Sanford: 'Stay Out of Money Market Funds' After SEC Rules

The Securities and Exchange Commission approved rule changes for money-market funds this week — some good and some bad, says James Sanford, a portfolio manager for Sag Harbor Advisors.

On the good side, the SEC now requires a floating net asset value rather than a fixed $1.00 par value for the funds, he writes on CNBC.com.

"However, the other proposed change, which would allow money managers to suspend redemptions by investors or charge them fees to redeem during volatile periods, is a travesty."

This short article was posted on the moneynews.com Internet site at 10:22 a.m. EDT yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Record Student-Loan Debt Prompts Treasury Push to Stem Defaults

The U.S. Treasury, which finances more than 90 percent of new student loans, is exploring ways to make repayment more affordable as defaults by almost 7 million Americans and other strapped borrowers restrain economic growth.

Leading the effort is Deputy Secretary Sarah Bloom Raskin, who became the department’s No. 2 official in March after more than three years as a Federal Reserve governor. As higher-education debt swells to a record $1.2 trillion, Raskin, 53, is alert to parallels to the mortgage crisis.

Raskin has reason to worry: Most of those loans are backed by the federal government. In addition to trying to facilitate stronger growth, she’s focusing on the impact such debt has on government’s financing needs and ways to improve servicing and collection.

This news item was posted on the Bloomberg website at 10:00 p.m. Denver time on Wednesday evening---and it's the second offering in a row from Elliot Simon.

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In a Subprime Bubble for Used Cars, Borrowers Pay Sky-High Rates

Rodney Durham stopped working in 1991, declared bankruptcy and lives on Social Security. Nonetheless, Wells Fargo lent him $15,197 to buy a used Mitsubishi sedan.

“I am not sure how I got the loan,” Mr. Durham, age 60, said.

Mr. Durham’s application said that he made $35,000 as a technician at Lourdes Hospital in Binghamton, N.Y., according to a copy of the loan document. But he says he told the dealer he hadn’t worked at the hospital for more than three decades. Now, after months of Wells Fargo pressing him over missed payments, the bank has repossessed his car.

Where have we seen this picture before, dear reader?  This article appeared on The New York Times website a week ago, but for length reasons---and it is a looong read---it had to wait for my Saturday column.  It's the first offering of many from Roy Stephens.

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Don’t Tell Anybody About This Story on HFT Power Jump Trading

Far from Wall Street in a Chicago neighborhood once synonymous with urban blight, two futures industry veterans are using secrecy and speed to mint fortunes.

Their firm, Jump Trading LLC, was all but invisible until it was among six companies subpoenaed in April by New York prosecutors. Jump has ascended the ranks of high-frequency traders during the past 15 years to become one of the top firms on the Chicago Mercantile Exchange, where $925 trillion of derivatives changed hands last year. Its annual revenue has exceeded half a billion dollars.

The company was founded by traders Bill DiSomma and Paul Gurinas, whose level heads caused them to stand out in the cacophony of a Chicago trading floor. Today, the pair parcel money among 20 or so teams, each guarding its computer models from the others to trade stocks, bonds and commodities with strategies that go almost as fast as light.

This longish Bloomberg article showed up on their Internet site at 5:01 p.m. MDT on Wednesday---and also for length reasons, had to wait for today's column.  It's the third contribution of the day from Elliot Simon.

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Sprott Money Weekly Wrap Up

Eric's weekly commentary also contains a lot of gold-related information as well.  This audio interview runs for 6:05 minutes---and was posted on the sprottmoney.com Internet site on Friday afternoon.

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Doug Noland: Bubbles and Schemes

Perhaps it’s coincidence that the ECB is commencing a major new liquidity operation just as the Fed’s QE winds down. Clearly, the “Draghi plan” to bolster fragile European peripheral debt markets should be viewed as a sophisticated financial scheme. Thus far, the Bank of Japan (BoJ) shows no indication that its “money” printing scheme is ending anytime soon. And despite all the talk that the Chinese were serious about financial and economic reform, they apparently took one alarming look at rapidly unfolding systemic fragilities and opted to let their historic Bubble run. The Chinese Bubble is a government-dictated financial scheme of epic proportions.

So it’s become an equally fascinating and alarming global dynamic: a multifaceted global scheme to support inflated securities markets and a grossly maladjusted global economic structure. Worse yet, it’s a global scheme held together by various governments that are increasingly engaged in heated geopolitical strife. In the end, “Ponzi Finance” financial schemes boil down to games of confidence.

Doug's weekly Credit Bubble Bulletin is always a must read for me---and his Friday evening missive over at the prudentbear.com Internet site is no exception.

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Fourteen YEAR drought leaves Lake Mead at all-time low

Drought in the southwestern U.S. will deplete the vast Lake Mead this week to levels not seen since Hoover Dam was completed and the reservoir on the Colorado River was filled in the 1930s, federal water managers said Tuesday.

The projected lake level of about 1,080 feet above sea level will be below the level of about 1,082 feet recorded in November 2010 and the 1,083-foot mark measured in April 1956 during another sustained drought.

But U.S. Bureau of Reclamation regional chief Terry Fulp said water obligations will be met at least through next year without a key shortage declaration. The result will be full deliveries to cities, states, farms and Indian tribes in an area that's home to some 40 million people and the cities of Las Vegas, Phoenix and Los Angeles.

I posted a story about this more than a week ago, but this photo essay that showed up on the dailymail.co.uk Internet site on July 15 is first rate---and is worth your time.  I thank William Gebhardt for sending it our way last Sunday.

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IMF fears ultra-low rates are fuelling asset bubbles

Ultra-low interest rates around the world are fuelling financial bubbles and pushing investors into overvalued assets, the International Monetary Fund has warned in a marked shift of policy.

“Financial markets have been very optimistic in recent months. Frankly, we’re seeing some prices that are very high compared with what is happening the real economy,” said Gian Maria Milesi-Ferretti, the fund’s deputy director.

“We don’t think there is a generalised bubble but this is something we have to watch closely. In a world of very low interest rates there is an incentive to take on risk and hunt for yield, and that can lead to excesses,” he said.

Olivier Blanchard, the IMF’s chief economist, said the fund is now watching financial markets “like a hawk” but said the world economy is still too fragile to withstand the introduction of tighter monetary policy. “The first line of defence should be macro-prudential tools; slowing down the housing market for example. The recovery is not very strong and really needs to be nurtured,” he said.

The IMF, ECB, BoJ---and the Fed are powerless to do anything.  After having painted Planet Earth into an economic, financial and monetary corner for the last couple of generations they, like us, can only stand by and wait for the whole thing to implode---which it will.  This Ambrose Evans-Pritchard commentary appeared on The Telegraph's website at 6:07 a.m. BST on Thursday morning---and it's the second story of the day from Roy Stephens.

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Number of French Jobless Rises to New Record

The number of people without a job in France rose in June to yet another record in the latest blow to President Francois Hollande's efforts to get unemployment falling.

The Labour Ministry said the jobless total in mainland France rose by 9,400 last month to 3,398,300, up 0.3 percent over one month and 4.0 percent over one year.

Hollande has seen his popularity collapse to record lows for a French president as he failed to live up to promises to get unemployment declining.

The Socialist leader is counting on plans to phase out 30 billion euros ($40.29 billion) in payroll tax on companies to get them investing and hiring.

This Zero Hedge piece, based on a Reuters story, showed up on their Internet site at 12:25 p.m. EDT on Friday afternoon---and I thank reader M.A. for his second offering in today's column.

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Europe Unveils Preliminary Sanctions Against Russia

While the preliminary terms of Europe's Russian sanctions were leaked on Thursday, moments ago it was reported that E.U. ambassadors have reached an agreement on what the "hard-hitting" economic sanctions against Russia would look like even as details remain to still be ironed out ahead of a formal announcement of the final terms next week. According to Reuters, key measures suggested by the Commission include: 1] closing EU capital markets to state-owned Russian banks,2] an embargo on arms sales to Moscow, 3] restrictions on the supply of energy and dual-use technologies, and 4] a list of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

Of course, since France would blow a gasket if its Mistral ship was impacted by the sanctions, and since this really is just another populist measure not intended to really punish Russia (as that would mean a prompt shut off of European gas and an even prompter slide into a triple dip recession if not outright depression), Europe promptly "detoothed" the sanctions by announcing that they would not affect current supplies of oil, gas and other commodities from Russia, diplomats said.

This news item, also based on a Reuters story, appeared on the Zero Hedge website at 8:27 a.m. EDT on Friday---and I thank reader M.A. for sharing it with us as well.  There's also an Ambrose Evans-Pritchard take on the sanctions story---and it's courtesy of Roy Stephens.  The headline reads "Proposed E.U. sanctions threaten to shut Russia out of the world financial system".  The euobserver.com website had a story on this as well.  It bears the title "E.U. to hit Russia with economic sanctions next week".  This is also courtesy of Roy Stephens.

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Canada sanctions Russian energy sector

Canadian Prime Minister Stephen Harper announced new sanctions targeting the Russian energy sector in response to the Kremlin's pressure on Ukraine.

Harper announced sanctions against 10 separate Russian entities, including Russian independent gas company Novatek and Gazprombank, the financial arm of Russian gas giant Gazprom.

The prime minister said the sanctions were meant as a response to Russia's occupation of the Crimean region in Ukraine and its military action in eastern Ukraine.

Nothing proves that Canada [via Stephen Harper] has sold out to the U.S. lock, stock and barrel, more than this piece of rubbish/propaganda that showed up on the upi.com Internet site yesterday.  I'm embarrassed to call myself Canadian.  It's another article from Roy Stephens.

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Ukraine votes to keep Western companies out of gas industry

Ukraine’s parliament has rejected allowing E.U. and U.S. companies to buy up to 49 percent of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly.

Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe’s third energy package, which doesn’t allow one single company to both produce and transport oil and gas.

The bill proposed creating two new joint stock companies in order to conform to the package, “Ukraine's Main Gas Transmission” and “Ukraine's Underground Storages.”

This Russia Today article appeared on their Internet site at 12:11 p.m. Moscow time on Friday---and credit goes to Roy Stephens once again.

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Catastrophic Desertions and Losses in the Ukrainian Army - Official Ukrainian Reports, July 19, 2014

It is rare that we report on the workings of the aggressor across the battle lines. This item is different. Before you is a translation, kindly prepared by Valentina Lisitsa, of a report from the head of the Ukrainian Security Service, V.O. Nalyvaichenko, to the President of Ukraine, P.A. Poroshenko. It is an important document, which, we hope, you will distribute widely.

No further commentary is necessary, other than the following brief quotation. According to V.O. Nalyvaichenko, "2/3 of the active combat military units currently participating in the ATO will simply cease to exist in as little as 4 to 5 days" due to mass desertions and casualties. To provide context for this letter, provided below is another document recently publicized as an internal memorandum from the Ukrainian Ministry of Defence, which details recent casualties of the Ukrainian army, equally as catastrophic as its desertion rates.

This very interesting news item [if true] appeared on the vineyardsaker.blogspot.ca Internet site yesterday---and I thank reader Nick Ferris for bringing it to our attention.

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Russia transfer of rocket system to Ukraine rebels imminent - Pentagon

The Pentagon said on Friday the transfer of heavy-caliber multiple-launch rocket systems from Russia to Ukrainian separatists appeared to be imminent with the arms close enough to the border they could be handed over "potentially today."

"We have indications that the Russians intend to supply heavier and more sophisticated multiple-launch rocket systems in the very near future," said Army Colonel Steve Warren, a Pentagon spokesman, adding that the weapons were in the over-200mm range.

Warren indicated the weapons had been seen getting closer to the border and the Pentagon believed a transfer was imminent and could happen "potentially today."

"We believe that they are able to transfer this equipment at any time, at any moment," he said.

The western main stream media is sinking to a new low just about every day.  This breathless propaganda/warmongering piece, filed from Washington, showed up on the reuters.com Internet site at 2:01 p.m. EDT yesterday---and the stories from Roy just keep on coming.

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Over 40 mortar shells ‘fired to kill’ into Russia from Ukraine

At least 45 mortar shells fired at targets located inside the Rostov-on-Don region have been unleashed by Ukraine’s army, Russia’s border officials said. The barrage destroyed multiple houses and forced an evacuation of civilians.

Investigators say they were examining the site of a previous shelling near the Primiusskiy hamlet right on the southwestern edge of Russia on Wednesday, when a cannonade went off from the other side of the border.

“There is no doubt that those shooting from the Ukrainian side picked their target, and tried to kill Russian security officials,” said Investigative Committee representative Vladimir Markin.

This news item put in an appearance on the Russia Today website at 5:31 p.m. Moscow time on Friday---and it's another story from Roy S.

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Shell Leaves Business Strategy for Russia Unchanged Despite Sanctions

British oil giant is determined to continue its work in Russia and will not change its business strategy in the country, despite the sanctions imposed against Moscow by the United States and European Union, representative of Shell’s press service told RIA Novosti on Friday.

“Shell continues to run business in Russia both in the upstream and downstream without any changes. We monitor the situation regarding the sanctions. But so far there have been no changes in either the business itself or in the business strategy,” the source said.

This interesting article was posted on the RIA Novosti Internet site at 7:45 p.m. Moscow time on Friday evening---and it's another contribution from Roy Stephens.

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Russia takes aim at McDonald's burgers as U.S. ties worsen

McDonald's burgers and shakes may become the latest victims of worsening ties between Moscow and Washington after a Russian consumer watchdog agency accused the U.S. chain of sanitary violations.

McDonald's Corp, which opened its first Russian restaurant in Moscow in 1990, became an iconic symbol of flourishing American capitalism during the fall of the Soviet Union.

But its Golden Arches may be in the Kremlin's crosshairs as ties between Moscow and Washington have fallen to their lowest point since the end of the Cold War with consecutive rounds of U.S. sanctions over Russia's role in the Ukraine crisis.

"We have identified violations which put the product quality and safety of the entire McDonald's chain in doubt," Anna Popova, the watchdog's head and Russia's chief sanitary inspector, was quoted by Interfax news agency as saying.

This Reuters news item, filed from Moscow, showed up on their Internet site at 11:19 a.m. EDT on Friday---and once again I thank Roy Stephens for sending it.

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Washington is Escalating the Orchestrated Ukrainian “Crisis” to War — Paul Craig Roberts

Despite the conclusion by U.S. intelligence that there is no evidence of Russian involvement in the destruction of the Malaysian airliner and all lives on board, Washington is escalating the crisis and shepherding it toward war.

Twenty-two U.S. senators have introduced into the 113th Congress, Second Session, a bill, S.2277, “To prevent further Russian aggression toward Ukraine and other sovereign states in Europe and Eurasia, and for other purposes.” The bill is before the Committee on Foreign Relations.

Note that prior to any evidence of any Russian aggression, there are already 22 senators lined up in behalf of preventing further Russian aggression.

Accompanying this preparatory propaganda move to create a framework for war, hot or cold with Russia, NATO commander General Philip Breedlove announced his plan for a deployment of massive military means in Eastern Europe that would permit lightening responses against Russia in order to protect Europe from Russian aggression.---and there we have it again: Russian Aggression. Repeat it enough and it becomes real.

This must read commentary put in an appearance on Paul's website on Thursday---and my thank go out to reader M.A. for bringing it to my attention, and now to yours.

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An Unprecedented Look Inside Iran From a Getty Photographer

Ever since Getty photographer John Moore visited Iran 10 years ago to cover parliamentary elections in Tehran, he's had an itch to experience the country behind the headlines. He finally got his chance this past June when he was approved to tour the country on a one-week trip from Shiraz to Tehran.

Mostly free from the constraints of traditional news — he did happen to document the 25th anniversary of the death of Ayatollah Khomeini along the way — Moore visited Iran’s most prominent cities, monuments, and squares for a look at the everyday life of average Iranians.

Though he had been pleasantly surprised by Iranian hospitality on his trip 10 years ago, he was again struck by how friendly, open, and hospitable most Iranians were to him, an American photographer documenting their country.

Well, dear reader, I know a number of people that come from Iran---and I know this might shock you, but they're people like you and I.  Iran and Turkey are two places I'd love to spend some time.  This photo essay, which has had over 260,000 hits, was posted on the businessinsider.com Internet site on June 23---and it's the final offering of the day from Roy Stephens, for which I thank him.  Enjoy, because it's also worth your time.  The photo sequence on Afghanistan that follows is also worth looking at.  That photo sequence has had over 331,000 hits.

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Three King World News Interviews

1. Andrew Maguire: "Criminal" CME Colluded to Save Banks Short Gold"  2. Ronald-Peter Stoferle: "4 Astonishing Charts Show Gold May Finally Be Set to Soar"  3. Art Cashin: "Art Cashin Warns of Terrifying Black Swan and the Banking Crisis"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Gold price suppression elicits more notice

Evidence of gold price suppression ahead of futures contract options expiration abounds and is remarked upon in Friday's commentary by GoldCore's Mark O'Byrne.

I found this precious metal-related story in a GATA release yesterday.  It's definitely worth reading.

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London gold fix company appoints committee to oversee benchmark

The company operating the gold price 'fix' has appointed a supervisory committee to oversee the century-old system of benchmarking gold prices ahead of the implementation of stricter regulations, its website showed on Friday.

The London Gold Market Fixing Ltd's new board is made up of compliance officers at the four banks that currently set the twice-daily auction process over the telephone.

The appointment of the committee comes after the company said this month it was seeking a third party to take over administration of the process.

I thought this process was incestuous enough as it was, but this really takes it to a new level.  This Reuters story, filed from London, was posted on their Internet site at 6:40 a.m. EDT Friday morning---and it's the final offering of the day from reader M.A.

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The strange case of Germany's gold: An interview with Peter Boehringer

Interviewed by Andrew Schiff for the summer edition of Euro-Pacific Capital's Global Investor Newsletter, Peter Boehringer of the campaign to repatriate Germany's gold reserves explains how the recent Bloomberg News report on the issue was so misleading and elaborates on the fraud of the fractional-reserve gold banking system.

"One reason that the gold was unavailable for quick delivery," Boehringer says, "could be multiple ownerships of our bars at the Fed. Given today's global fractional gold banking scheme, an (allegedly physically existing) bar in a central bank vault could have more than 10 owners and could thereby show up in more than 10 central bank balance sheets as either 'physical gold' or 'gold claim.' These two completely different balance sheet items have not been properly differentiated for many decades now. We are potentially talking about non-existent physical bars at a magnitude of tens of thousands of tonnes."

The Euro-Pacific newsletter headlines the interview "The Strange Case of German Gold -- An Interview with Peter Boehringer" and it's posted about halfway down the newsletter.  It's definitely worth reading.  I found this gold-related news item on the gata.org Internet site yesterday---and I thank Chris Powell for wordsmithing "all of the above."

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Physical Gold Fund interviews Jim Rickards

July 2014 Interview with Jim Rickards on the June FOMC meeting, Yellen's July congressional testimony, Yellen is now stock picking, Efficient Markets theory is junk science, the bubble economy is headed for another crash, legal ramifications of USD transactions in non-US jurisdictions, in the next crisis you will be told you can not have your money when you ask for it, the term “Macro Prudential” means asset freeze or bail-in, new money market regulations allow for suspension of redemptions, the Fed is coming around to the view that a collapse is coming, regulators are exhibiting signs they expect another collapse, the Federal Reserve regional bank structure, FOMC driving policy, and the freezing or confiscation of 401k’s.

This 51-minute audio interview was posted on the physicalgoldfund.com Internet site very recently---and I thank Harold Jacobsen for finding it for us.  It's certainly worth listening to if you have the time.

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R1.2bn in gold ‘missing’ at Rand Refinery

Rand Refinery, processor of about a third of the world’s gold since 1920, found $113 million (R1.2 billion) less physical metal than the company had booked in its accounts after adopting a new computer system.

The refinery in Germiston, a town 20 kilometres east of Johannesburg, has 87,000 ounces of physical gold less than the amount present in its accounting records after “implementation difficulties” with the new system, the company said in a statement today.

That’s worth about $113 million at today’s price of $1,296 an ounce.

This article was all over the Internet yesterday.  This version appeared on the io.co.za Internet site at 4:30 p.m. South Africa time---and it's the final contribution of the day from Elliot Simon.

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India's gold import restrictions turn into political patronage for trading houses

A war is brewing in the gold market with traders led by the All-India Bullion and Jewellers Association complaining to the Reserve Bank of India that its May 21 decision to allow premier and star trading houses to import gold for local sales has given half a dozen export houses a dominant position in the market and raised imports of the metal.

The RBI claimed that one of the complainants from the trade is likely to initiate action shortly, considering that the sharp rise in imports has happened during the traditionally slack month of June.

The trading houses strongly contested the claims of traders. They say the RBI's action had improved supplies and reduced the premium on gold, and that the traders' claims of the surge in gold imports are exaggerated.

This article, filed from Mumbai, appeared on the Economic Times of India website at 5:11 a.m. IST yesterday---and I found this in a GATA release yesterday.

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Indian gold imports fell 25% year over year---not counting smuggling, of course

Gold imports in 2013-14 stood at 638 tonnes, a decline of 25 per cent over the previous fiscal, Parliament was informed today.

The quantity of gold imported in 2012-13 was 845 tonnes and in 2011-12 it was 919 tonnes, Minister of State for Finance, Nirmala Sitharaman said in a written reply in the Lok Sabha.

In the April-June period of current fiscal, the quantum of gold import stood at 221 tonnes while in value terms it was Rs 54,792 crore, she said.

This gold-related story, filed from New Delhi, appeared on The Financial Express Internet site at 2:54 p.m. India Standard Time on their Friday afternoon---and it's another item I found over at the gata.org website site.

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Deutsche Bank, HSBC Accused of Silver Fix Manipulation

Deutsche Bank AG, HSBC Holdings Plc and Bank of Nova Scotia were accused in a lawsuit of rigging the price of billions of dollars in silver, an allegation similar to earlier suits involving the London gold fix.

The banks unlawfully manipulated the price of the metal and its derivatives, an investor claims in a complaint filed yesterday in federal court in Manhattan. The banks abused their position of controlling the daily silver fix to reap illegitimate profit from trading, hurting other investors in the silver market who use the benchmark in billions of dollars of transactions, according to the suit.

“The extreme level of secrecy creates an environment that is ripe for manipulation,” according to the complaint. “Defendants have a strong financial incentive to establish positions in both physical silver and silver derivatives prior to the public release of silver fixing results, allowing them to reap large illegitimate profits.”

It beats the hell out of me why JPMorgan isn't named in this lawsuit, as they're the ringleaders in all this.  However, Canada's Scotiabank is probably #2 on the list.  I won't be the only person interested in how this all turns out.  This story was posted on the businessweek.com Internet site in the wee hours of Saturday morning---and I thank U.K. reader Nigel Bunting for sliding it into my in-box at 10:41 a.m. BST, which works out to 5:41 a.m. EDT this morning.

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Jul 25, 2014

U.S. new-home sales hit three-month low

The U.S. Commerce Department reported that sales of new single-family homes fell 8.1% in June to a seasonally adjusted annual rate of 406,000, with drops across the country.

June’s result missed expectations from economists polled by MarketWatch, who had forecast a rate of 475,000, compared with an originally estimated pace of 504,000 for May. On Thursday, the government reported a sizable downward revision to its May figure, estimating a pace of 442,000.

New-home sales in June were down 11.5% from a year earlier.

This martketwatch.com article appeared on their website at 11:20 a.m. EDT on Thursday---and it's worth reading---and the chart is worth the trip all by itself.  I thank Roy Stephens for his first contribution to today's column.

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Greenspan says bubbles can’t be stopped without ‘crunch’

Sitting in his office with a view of the Washington Monument in the distance, Greenspan is eager to share the insight distilled in his recent book, “The Map and the Territory,” due out in paperback this fall.

The interview has been edited for length and clarity.

MarketWatch: What is the biggest challenge facing the Fed?

Greenspan: How to unwind the huge increase in the size of its balance sheet with minimal impact. It is not going to be easy, and it is not obvious exactly how to do it.

MarketWatch: As the Fed is looking at the exit, do you think we can get through this without upsetting the economy?

Greenspan: I certainly hope so. I certainly think they will. But it is going to be difficult.

MarketWatch: Do you expect a sharp market reaction to the first hike?

Greenspan: Of course. Look what happened when the first indication of tapering occurred. Markets have always been sensitive. They reflect animal spirits.

I seem to remember Alan Greenspan saying that it was impossible to recognized a bubble when you were in one.  This 2-page interview showed up on the marketwatch.com Internet site at 8:44 a.m. EDT yesterday---and it's the second story in a row from Roy Stephens.

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David Stockman: C’mon Alan! Bubbles Are Caused By Central Bankers, Not “Human Nature”

Alan Greenspan just cannot give up the ghost. During his baleful 18-year reign, the Fed was turned into a serial bubble machine—and thereby became a clear and present danger to honest free market capitalism and an enemy of the 99% who do not benefit from the Wall Street casino and the vast inflation of financial assets which it has enabled.  His legacy is a toxically financialized economy that has extracted huge windfall rents from main street, and left it burdened with overwhelming debts and sharply reduced capacity for gains in real living standards and breadwinner jobs.

Yet after all this time Greenspan still insists on blaming the people for the economic and financial havoc that he engendered from his perch in the Eccles Building. Indeed, posturing himself as some kind of latter day monetary Calvinist, he made it crystal clear in yesterday’s interview that the blame cannot be placed at his feet where it belongs: "I have come to the conclusion that bubbles, as I noted, are a function of human nature."

Stockman rips Greenspan a new one, but Greenspan's legacy, if you wish to dignify it with that name, is a target-rich environment---and the interview in the previous story was like saying "sic 'em" to a dog---and David jumped right in.  This commentary showed up on his website yesterday---and it's the third contribution of the day from Roy Stephens.

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M&M's, Snickers maker to raise chocolate prices 7 percent

Mars Chocolate North America, the maker of M&M's and Snickers, said on Wednesday that it will raise its prices by an average of 7 percent "to offset rising costs," its first increase in three years.

The price hike by Mars, which did not provide an effective date, follows Hershey Co, the No. 1 candy maker in the United States, which on July 15 raised its chocolate prices about 8 percent due to soaring commodity costs.

"In the three years since our last price increase, in March 2011, we have invested significantly in the category and have experienced a dramatic increase in our costs of doing business," a spokesperson said in an email to Reuters.

The cost of cocoa, a key ingredient in chocolate, has seen a meteoric rise in the past year, having climbed nearly 50 percent to a three-year high on Wednesday at $3,204 per tonne on ICE Futures. U.S. Dairy prices have also soared.

This short article put in an appearance on the chicagotribune.com Internet site at 3:50 p.m. Central Daylight Time on Wednesday---and I found it embedded in yesterday's edition of the King Report.

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600 million Apple devices contain secret back doors, researcher claims

A security researcher considered to be among the foremost experts in his field says that more than a half-billion mobile devices running Apple’s latest iOS operating system contain secret backdoors.

Jonathan Zdziarski, also known by his online alias “NerveGas,” told the audience attending his Friday morning presentation at the Hackers on Planet Earth conference in New York City that around 600 million Apple devices, including iPhones and tablets, contain hidden features that allow data to be surreptitiously slurped from those devices.

During Zdziarski’s HOPE presentation, “Identifying Back doors, Attack Points and Surveillance Mechanisms in iOS Devices,” the researcher revealed that several undocumented forensic services are installed on every new iPhone and iPad, making it easier that ever for a third-party to pull data from those devices in order to compromise a target and take hold of their personal information, including pictures, text messages, voice recordings and more.

This Russia Today article showed up on their Internet site at 8:08 p.m. on Wednesday evening Moscow time---and it's another offering from Roy Stephens.

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Stalled recovery leaves Europe defenceless against economic shock from Russia

Europe's economic recovery has stalled. The EMU policy elites took a fateful gamble that global growth alone would lift the eurozone off the reefs, without the need for serious monetary stimulus or a reflation package to ensure take-off velocity.

Their strategy has failed. The Bundesbank says German growth may have slumped to zero in the second quarter. French industrial output has fallen for three months in a row. French business surveys point to an outright contraction of GDP, with a high risk of a triple-dip recession.

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc. The situation is doubly delicate since the European Central Bank is no longer able to serve as a lender-of last resort for Italy, Portugal and Spain.

This Ambrose Evans-Pritchard offering put in an appearance on the telegraph.co.uk Internet site at 8:59 p.m. on Wednesday evening---and it's definitely worth reading.  It's another contribution of the day from Roy Stephens.

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Cameron claims export licenses allowing U.K. arms sales to Russia don’t breach embargo

UK Prime Minister David Cameron says Britain has not breached an embargo by selling military equipment to Russia, following MP demands to clarify the government’s position on UK-Russian arms deals.

The embargo was enacted “with immediate effect” on March 18 by then-Foreign Secretary William Hague.

Heated criticism of British arms deals with Russia emerged after a group of MPs revealed over 200 licenses allowing the sale of British military equipment to the Russian Federation. These revelations surfaced in a report published on Wednesday, conducted by four separate House of Commons committees.

The Committee on Arms Export Controls’ hard-hitting review contradicted a public statement by David Cameron on July 21. The Prime Minister had indicated the government had enforced an absolute arms embargo against Russia.

The meaning of the word hypocrisy is here, dear reader.  This Russia Today story appeared on their website at 3:04 p.m. Moscow time on their Thursday afternoon---7:04 a.m. in New York.  I thank Roy Stephens for finding it for us.

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Putin cronies get a week to pull their cash out of Britain as E.U. drags its feet

Russian oligarchs who are close to Vladimir Putin have a week to get their cash out of Britain before sanctions are imposed, it has emerged.

European Union officials started on Tuesday to prepare the list of businessmen and Moscow officials who will be targeted by the sanctions.

Philip Hammond, the Foreign Secretary, has made clear the Britain’s desperation to take action at those close to Mr Putin’s regime, saying "the cronies of Mr Putin and his clique in the Kremlin are the people who have to bear the pressure".

However, British sources disclosed that it will not be until the end of the month that all EU countries will have prepared their lists of individuals to be hit with the sanctions.

This article appeared on The Telegraph's website at 7:14 p.m. BST on Wednesday afternoon---and it's another story I found in yesterday's edition of the King Report.

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Germany begins spying on Britain and America for the first time since 1945

Chancellor Angela Merkel has ordered her counter-espionage services to begin surveillance of British and American intelligence gathering in Germany for the first time since 1945 in response to a series of U.S. spy scandals which have badly soured relations between Berlin and Washington.

The Süddeutsche Zeitung and two-state funded German TV channels, WDR and NDR, quoted an unnamed Berlin government source who said Ms Merkel’s Chancellery and her interior and foreign ministries had agreed to launch counter-espionage measures against Britain and the U.S. for the first time.

“Right now we need to send a strong signal,” the Süddeutsche Zeitung quoted the source as saying. The extraordinary measures are a direct response to a series of embarrassing U.S. and British spying scandals in Germany which began last year with revelations that the US National Security Agency had bugged Ms Merkel’s mobile phone.

The Chancellor protested on several occasions that she was “not amused” by the disclosures.

This news item, filed from Berlin, was posted on the independent.co.uk Internet site on Thursday---and I thank South African reader B.V. for sending it our way.

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European rights court condemns Poland for hosting secret CIA prisons

The European Court of Human Rights (ECtHR) has ruled that Poland violated an international treaty to protect human rights by hosting secret CIA prisons on its territory.

The Strasbourg-based court ruled that Poland had contravened articles of the European Convention on Human Rights (ECHR) that cover torture, the right to liberty, and the right to an effective remedy for victims of crime.

The case was filed by two men, Saudi-born Abu Zubaydah, and Saudi national Abd al-Rahim al-Nashiri, who charge they were taken to a secret CIA black site in a Polish forest and subjected to treatment which amounted to torture. The men said at a hearing in December they had been brought to Poland in December 2002 with the knowledge of the Polish authorities. Both are now detainees at the U.S.-run Guantanamo Bay prison camp in Cuba.

This news item showed up on the Russia Today website at 8:29 a.m. Thursday morning Moscow time---and it's courtesy of Roy Stephens.

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Ukraine's Government Collapses, PM Yatsenyuk Resigns

As if Ukraine was not struggling through enough turmoil currently, Bloomberg reports that thefragile coalition government has collapsed after two parties quit. The UDAR and Svoboda parties said they’d leave the government and seek a snap parliamentary ballot. Tempers have been fraying recently as numerous brawls have broken out in parliament ahead of President Poroshenko's pledge to call elections this year. All we have to do now is find out who Washington would like to see in power?

The end result: Prime Minister Yatsenyuk just resigned. The big question now is what will the IMF do about the remaining tranches of its loans?

This story appeared on the Zero Hedge website at 3:36 p.m. EDT on Thursday---and I thank reader M.A. for finding it for us.  There was also a story about this on the RIA Novosti website.  It's headlined "Ukrainian Prime Minister Yatsenyuk Announces Resignation"---and it's from Roy Stephens.

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Ukrainian crisis will not split Russia and Europe - Medvedev

The Russian Prime Minister has acknowledged that relations with the E.U. have become more complicated, but assured foreign trade representatives that the situation in Ukraine would not become a barrier between Russia and Europe.

Despite the current crisis and the sanctions against Russian citizens and companies, Moscow is interested in further development of mutually beneficial relations with European nations, Dmitry Medvedev said in a speech on Wednesday.

This is true that the Ukrainian crisis has complicated our relations with the European Union. Sometimes these events are called a dividing ridge between Europe’s past and future. But this is not true for our country – the EU will remain our major trade partner for a long time and we value our reputation as a reliable supplier,” the Russian Prime Minister stated.

At the same time, Medvedev emphasized that Russia would use all lawful means to protect its business interests in the current complicated conditions.

This is another article from the Russia Today website.  This one was posted there at 1:44 p.m. Moscow time on their Wednesday afternoon---and the stories from Roy just keep on coming.

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State Dept. accuses Russia of firing artillery into Ukraine, refuses to provide any evidence

Government officials in the United States said Thursday that Russia is firing artillery across the border into Ukrainian territory, but refused to provide any evidence when grilled by an Associated Press reporter.

Matthew Lee, a veteran AP journalist known for his frequent showdowns with spokespeople during US State Department briefings, raised questions about the latest claims during Thursday’s scheduled press conference.

“We have new evidence that the Russians intend to deliver heavier and more powerful rocket launchers to the separatist forces in Ukraine, and have evidence that Russia is firing artillery from within Russia to attack Ukrainian military positions,” State Department spokeswoman Marie Harf told reporters during the Thursday afternoon briefing.

When asked by Lee for any evidence, however, Harf said the State Department is unwilling at this time to disclose further details because doing so could expose the secret intelligence operations involved in making such claims.

This Russia Today story showed up on their Internet site at 7:09 p.m Moscow time on Thursday evening---and I thank Roy Stephens once again.  It's worth reading.

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Russian Investigators Pledge to Hold Ukraine's Avakov, Kolomoyskyi Responsible for Crimes

Ukrainian Interior Minister Arsen Avakov and oligarch Ihor Kolomoyskyi will bear responsibility for their crimes, Russian Investigative Committee chief Alexander Bastrykin said Thursday.

“Avakov and Kolomoyskyi aren’t going anywhere. Sooner or later they will be held accountable for their criminal responsibility according to the norms of international law,” Bastrykin said.

As events in Ukraine continue to unravel, Russia is launching criminal cases against both individuals. The Russian Investigative Committee identified 2,700 victims in the criminal cases in the Ukrainian crisis, accusing Ukrainian Interior Minister Arsen Avakov and Dnipropetrovsk Region Governor Ihor Kolomoyskyi of organizing unlawful massacres.

This brief RIA Novosti news item, filed from St. Petersburg, was posted on their Internet site at 2:25 p.m. Moscow time on Thursday afternoon.  It's also courtesy of Roy Stephens.

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Sanctions 'wrong signal amid Kiev's punitive' military op - Ambassador

Russia’s ambassador to the UK hit out at planned sanctions on Moscow today, saying that they would be ‘illegal, unreasonable and counter productive’.

He said that sanctions would not serve the interests of he countries concerned, including the U.S., and would "trigger a long anticipated endgame of the present global crisis".

Speaking at a press conference in London on Friday, Alexander Yakovenko told the media that imposing sanctions would send the “wrong message to Kiev’s continued “punitive operation” in Eastern Ukraine.

He said there was ‘no evidence that Russia supplied weapons to separatists, adding that Ukraine and the West’s suggestions on who was responsible for the crash of flight MH17 ‘don’t hold water’.

This is another news item from the Russia Today website.  This one appeared on their Internet site at 2:30 p.m. Moscow time on Thursday---and is definitely worth reading, especially the contents of the second paragraph highlighted above.  One wonders what he meant by that?  I thank Richard Cashmore for bringing it to our attention.

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$200 per barrel oil if Russia sanctions escalate: Oxford Economics

If the standoff with Russia and the West reaches a point where the E.U. has to completely cut trade with Russia, oil prices could soar above $200 per barrel, sparking a global economic crisis, says Adam Slater, senior economist at Oxford Economics.

Cutting off trade with Russia, the world’s second largest oil exporter, would create a shortage in global energy supplies, which would have spillover effects into Europe, Slater told The Guardian.

The E.U. buys 84 percent of Russian oil exports, and 76 percent of natural gas exports. About a quarter of European countries completely rely on Russia for gas or oil supplies.

As of yet, Russia hasn’t halted European gas supplied through politically unstable Ukraine, but this event itself could trigger “stage three”, or trade-specific sanctions.

This commentary put in an appearance on the Russia Today Internet site at 10:16 a.m. Moscow time on Wednesday morning---and it's the final contribution of the day from Roy Stephens, for which I thank him.

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No One Wants Russia to Host the 2018 World Cup

Peter Beuth, interior minister of the German state of Hesse, has said, "If Putin doesn’t actively cooperate on clearing up the plane crash, the soccer World Cup in Russia in 2018 is unimaginable." Michael Fuchs, a senior leader in Angela Merkel's Christian Democrats party agreed, saying, "FIFA football association should think about whether Moscow is an appropriate host if it can’t even guarantee safe airways." 

This comes just days after six players of the Donetsk soccer team refused to leave France after a match and board a plane back to Ukraine.

The Netherlands Football Association is also suggesting the 2018 World Cup could be moved.

This is all getting rather childish---Russia guilty without a shred of evidence.  You'd think that grown men would know better, but obviously not.  This article appeared on thewire.com Internet site at 3:21 p.m. EDT on Wednesday---and I thank reader Victor George for sharing it with us.

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9 Things We Just Learned About Vladimir Putin's Life

A new article in Newsweek provides quite a bit of insight into Russian President Vladimir Putin's daily routine and private life.

The writer, Ben Judah, spent three years interviewing those close to Putin for his book "Fragile Empire: How Russia Fell In and Out of Love with Vladimir Putin."

Judah's insights into Putin's life come from former prime ministers, current ministers, regional governors, senior bureaucrats, close advisers, and personal aides to the president.

This very interesting commentary showed up on the businessinsider.com Internet site at 11:18 a.m. EDT on Wednesday morning---and I thank Harry Grant for sending it our way.

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Japan Trade Deficit Expands After Exports Unexpectedly Drop

Japan’s exports unexpectedly fell in June to swell the trade deficit more than forecast, dragging on an economy squeezed by a sales-tax increase in April.

Exports shrank 2 percent from a year earlier, the finance ministry said in Tokyo today, compared with a median forecast of a 1 percent rise in a Bloomberg News survey of 29 economists. Imports rose 8.4 percent to leave a shortfall of 822.2 billion yen ($8.1 billion), surpassing a 643 billion yen projection.

Exports fell 1.7 percent by volume, showing the yen’s 16 percent drop against the dollar since Prime Minister Shinzo Abe came to power in December 2012 has failed to boost outward shipments. They remain 23 percent lower by value than a peak in March 2008, in contrast to the U.S. where they grew 25 percent over the same period.

This short Bloomberg news item, filed from Tokyo, showed up on their website at 1:31 a.m. Denver time on Thursday morning---and it's the third and final story that I 'borrowed' from yesterday's edition of the King Report.

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Four King World News blogs/audio interviews

1. Egon von Greyerz: "Shocking Charts Show That Gold is Set to Skyrocket"  2. William Kaye: "Marc Faber, Gold, Silver---and the Horrific Endgame For Markets"  3. Hugo Salinas Price: "Elites Plan to Control Humanity"  4. The audio interview is with Michael Pento

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Lawsuit charges that half of Chicago futures are illegal 'wash' trades

Since March 30 of this year when bestselling author, Michael Lewis, appeared on 60 Minutes to explain the findings of his latest book, Flash Boys, as “stock market’s rigged,” America has been learning some very uncomfortable truths about the tilted playing field against the public stock investor.

Throughout this time, no one has been more adamant than Terrence (Terry) Duffy, the Executive Chairman and President of the CME Group, which operates the largest futures exchange in the world in Chicago, that the charges made by Lewis about the stock market have nothing to do with his market. The futures markets are pristine, according to testimony Duffy gave before the U.S. Senate Agriculture Committee on May 13.

On Tuesday of this week, Duffy’s credibility and the honesty of the futures exchanges he runs came into serious question when lawyers for three traders filed a Second Amended Complaint in Federal Court against Duffy, the Chicago Mercantile Exchange, the Chicago Board of Trade and other individuals involved in leadership roles at the CME Group.

From watching and listening to what Mr. Duffy has had to say over the years, it has convinced me that he's not the sort of person that you would want to leave your pet, or a small child with, for any length of time.  This commentary was showed up on the wallstreetonparade.com website yesterday---and falls into the must read category.  I found it posted on the gata.org Internet site yesterday.

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A Chinese Gold Standard?

While the 70th anniversary of D-Day last month received a lot of attention, another event, in July 1944 — the Bretton Woods conference, named for the mountain resort in New Hampshire where it was held — was perhaps even more significant in shaping the modern world. It not only led to the creation of what are now the International Monetary Fund and the World Bank, but it also confirmed the central position of the United States dollar in the international monetary system.

Why does this matter for us now? Just as America displaced Britain as the world’s pre-eminent economic power in the interwar period, so, too, the large debts and fiscal pressures confronting the West, and the rise of China and other economic powers, challenge us to think about the future of finance.

For most of the 19th century the British pound had been the world’s “reserve currency,” the currency in which trade and finance were denominated. “As sound as a pound” became a widely used expression. The pound was pegged to gold at a fixed rate of just under £4 per ounce.

At the outbreak of World War I, Britain abandoned the gold standard. You could no longer exchange pounds for gold. The gold standard was reintroduced in 1925, but this, as John Maynard Keynes observed, proved to be an economic mistake.

This opinion piece, filed from London, showed up on The New York Times website yesterday sometime---and I thank Phil Barlett for sending it our way.

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Zero Hedge pokes excellent fun at Peter Hambro

The ongoing transition of gold price manipulation from conspiracy theory to conspiracy fact just escalated as Bloomberg reports, Peter Hambro, chairman of Russia's 2nd largest gold producer Petropavlovsk Plc, said he was "horrified" by the manipulation of the London fix given its importance to the industry. One wonders just how many of these individuals, involved in the manipulation, Hambro is dinner-party friends with?

While we believe Hambro is right to be "horrified;" after 10 years of manipulation (downwards at least two-thirds of the time in six different years between 2004 and 2013. In 2010, large moves during the fix were negative 92 percent of the time), we suspect he knew something was going on...

I posted the Bloomberg story on which this ZH piece is based in my Wednesday column---and here is what I had to say about it then---"Hambro is more than aware of the price management scheme in gold and the other precious metals, so his comments are certainly disingenuous---and that's being kind."  He, like every other precious metal mining executive, is complicit by their silence.  But it's my opinion that he's more complicit than most.

This Zero Hedge item appeared on their website at 7:04 p.m. EDT yesterday evening---and it's a must read for sure.  I thank GATA's Chris Powell for the headline, but the first reader through the door with the story was Phil Barlett.

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