Gold & Silver Daily

Ed's Critical Reads

May 05, 2015

Bill Gross: The Bull Market 'Super-Cycle' Is Nearing Its End

Bill Gross said the bull market “supercycle” for stocks and bonds is approaching its end, as the unconventional monetary policies that have kept it alive since the financial crisis are running out.

The attempt by global central banks to cure a debt crisis with more debt doesn’t have much further to run, which will end a rally that’s lasted three and a half decades, the 71-year-old manager wrote in an investment outlook for Janus Capital Group Inc. Investors should stop focusing on price appreciation and instead look to “mildly levered income,” such as his recommendation to short German government debt, he said.

“Credit-based oxygen is running out,” Gross wrote in the outlook, titled “A Sense of an Ending,” in which he compared the final stages of the market cycle with his own mortality. “I merely have a sense of an ending, a secular bull market ending with a whimper, not a bang.”

This Bloomberg commentary appeared on their Internet site at 5:51 a.m. Denver time yesterday morning---and today's first story is courtesy of Roy Stephens.

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Stephen Roach: Fed Is Laboring Under a 'Dangerous Delusion'

The easy money antics of the Federal Reserve and other central banks are delusional and bound to lead to a global crack-up, according to Yale University economist Stephen Roach.

Roach, former chairman of Morgan Stanley Asia, suggested the "big bazooka" of quantitative easing has led to inflation of assets like stocks and encouragement of currency depreciation — ingredients for disaster.

"The world economy is in the grips of a dangerous delusion," he declared in a column for Project Syndicate.

"Not only have wealth and currency effects failed to spur meaningful recovery in post-crisis economies, they have also spawned new destabilizing influences that threaten to keep the global economy trapped in a continuous series of crises."

This article was posted on the Internet site at 7:00 a.m. EDT yesterday morning---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Bad sign? Retail investors all in: TD Ameritrade

A broad look at the 6.5 million customer accounts at TD Ameritrade indicates that retail investors are "pretty fully invested" in stocks, the online brokerage's CEO said Thursday.

Fred Tomczyk cited several signs of this: margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently. "It's usually a good indication that people are very engaged in the markets and watching their investments closely," he said on CNBC's "Squawk Box."

But Tomczyk acknowledged the potential pitfalls of these trends and what they may portend for stocks. "I wouldn't be surprised if we have a correction here. We've had six [or] 6½ years of up markets here."

Well, dear reader, as you already know, if there is a correction, it will be interesting to see how low the powers-that-be allow it to fall before they step in with "gentle hands".  This news item appeared on the Internet site last Thursday---and it's the first of two stories that I 'borrowed' from yesterday's edition of the King Report.  It's worth reading.

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Auto Sales Drop, Miss For 5th Month in a Row; Worst Year-to-Date Performance Since 2009

This is the biggest miss for domestic auto sales since September (and weakest total print since last April)... This is the longest streak of missed expectations since 2008.

This very brief 2-chart commentary showed up on the Zero Hedge website last Friday---and it's another little something I found in yesterday's edition of the King Report.  It's worth a quick look.

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Lake Mead water level falls to a landmark low, and is likely to get worse

For Western states enduring a debilitating drought, the news is bone-dry bad: Anemic Lake Mead has hit a historic low level.

The surface of the sprawling reservoir outside Las Vegas late Tuesday afternoon fell to 1,079.76 feet above sea level — nearly 140 feet below capacity — as the prolonged drought continues to evaporate the beleaguered Colorado River system.

Mead's chalky white shoreline is advancing as the waters quickly recede.

For California, Arizona and Nevada, which draw water from Mead, a grim situation is about to get worse: Officials estimate that Mead will drop to the unprecedented low elevation of 1,073 feet as the hottest summer months bear down, with less snow pack in the Rocky Mountains to recharge the Colorado River.

"We're only at 38% full. Lake Mead hasn't been this low since we were filling it in the 1930s," said Rose Davis, a spokeswoman for the U.S. Bureau of Reclamation in Las Vegas. "All the way around, this is bad news. There's not much good to say about 15 years of drought, no matter how you look at it."

This very interesting article put in an appearance on the Internet site [via the L.A. Times] back on April 29---but it's worth reading.  And if you don't want to read it, you should at least look at the pictures, plus the chart at the end.  I thank Brad Robertson for passing it around yesterday.

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Presenting the Most Overvalued Housing Market [Canada] in the World in One Chart

In every inflating bubble, there’s usually two camps. The first group points out various metrics suggesting something is inherently unsustainable, while the second reiterates that this time, it is different.

After all, if everyone always agreed on these things, then no one would do the buying to perpetuate the bubble’s expansion. The Canadian housing bubble has been no exception to this, and the war of words is starting to heat up.

On one side of the ring, we have The Economist, that came out last week saying Canada has the most overvalued housing market in the world. After crunching the data in housing markets in 26 nations, The Economist has determined that Canada’s property market is the most overvalued in terms of rent prices (+89%), and the third most overvalued in terms of incomes (+35%). They have mentioned in the past that the market has looked bubbly for some time, but finally Canada is officially at the top of their list.

Of course, The Economist is not the only fighter on this side of the ring.

This very interesting story, complete with chart, is a must read for all my Canadian subscribers.  It appeared on the Zero Hedge Internet site on Sunday---and it's courtesy of reader M.A.

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Internet 'rationing' needed as U.K. cannot keep up with demand

Internet access may soon need to be rationed or restricted because the U.K.’s power supply and communications network cannot cope with consumers’ appetite for online video, the Royal Society will hear this week.

The Internet is already consuming at least 8 per cent of Britain’s power output, with the energy demand from data transmission and storage as well as smartphones, laptops and televisions. Demand doubles every four years, according to one estimate.

At the same time optical cables and switches are set to reach their capacity to carry data by the end of the decade.

The Royal Society will hear this week that the country’s communications networks face a “potentially disastrous capacity crunch”, as academics meet to discuss the problem.

This very interesting story was posted on the Internet site on Sunday afternoon---and it's the first of two stories in a row from reader B.V.

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German opposition demands probe into BND/NSA surveillance and industrial espionage

The German opposition is threatening legal action against the government unless it shares detailed information on the extent of ties between the German BND and the NSA. Meanwhile Germany’s top prosecutor has launched an investigation into the latest leaks

“Merkel has to show now whether she wants to explain it or cover it up,” Konstantin von Notz, MP of the Green party told DPA. Meanwhile Green leader Martina Renner warned of a possible lawsuit if the government fails to investigate the issue.

Another member of the opposition Left Party also requested more information from Merkel’s government, in particular Interior Minister Thomas de Maiziere and Foreign Minister Frank-Walter Steinmeier about the BND’s “assistance” to the NSA.

“This appears to be reaching a criminal dimension,” Christian Stroebele, a senior Greens member of parliament, told the Rheinische Post newspaper.

This news item showed up on the Russia Today website late Sunday evening Moscow time---and I thank reader B.V. for finding it for us.

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Moscow rattles Germany’s Merkel

The Germans themselves speak in hushed tone with a furtive glance of the eye when the topic of conversation grazes Chancellor Angela Merkel’s adult life in the German Democratic Republic (“East Germany”). The well-informed German would tell you that the files relating to the East German spy agency Stasi have been spirited away to the CIA’s vaults in Virginia no sooner than the Berlin Wall collapsed, and Merkel’s past association with the communist party organs lies buried there.

For argument’s sake, the only “third party” privy to the privileged information would probably be the Russian intelligence, which inherited the Soviet era KGB’s archives. Indeed, President Vladimir Putin had served in Dresden as a young KGB officer.

But, although the Germans have been eager to dig up Putin’s life and times in Dresden, they show little curiosity about Merkel’s. Now that may be about to change. The Russian official media organ Sputnik has just featured a sensational piece titled Is Merkel a CIA Asset?

Given Russia’s media culture, such a frank disclosure on a highly respected world leader by an official media agency in Moscow is unthinkable without state approval. The issue is not the veracity of the contents of the Sputnik’s feature article. Frankly, it may not even be earthshaking content, and the German leadership is neither the first to act as the CIA’s “asset” abroad nor is going to be the last. But what matters is the Kremlin’s imprimatur, despite whatever denials of plausible culpability.

This essay by career Indian diplomat M.K. Bhadrakumar was posted on the Asia Times website on Saturday---and as far I'm concerned, it definitely falls in the must read category.  I thank Roy Stephens for bringing it to our attention.

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Russian Foreign Ministry: Austria Interested in an Early Normalization of Relations with Russia

Austria is opposed to the long confrontation with Russia and increasing sanctions pressure.  The statement was made by the Russian Foreign Ministry, in connection with the forthcoming May 4-5 visit to Moscow by the Minister for Foreign Affairs of Austria, Sebastian Kurz.

"In the wake of the overall EU led policy on Ukraine, Austria is nevertheless among the opponents of a long confrontation with Russia and increasing sanctions pressure. This position is shared by many Austrian politicians, public figures, and the vast majority of entrepreneurs. Banking structures, the industrial sector, service industries and tourism are not going to fold their business in Russia and do not hide their interest of an early normalization of relations between Russia and the EU ", - reported at the Foreign Ministry.

The ministry noted that "relations between Russia and Austria are developing in a positive manner, characterized by a high degree of mutual trust, stability and the absence of serious problems."

"Leaders of the two countries focus their interest in the development of political dialogue, the expansion of trade, economic, investment and innovation cooperation, cultural, scientific and technical contacts", - said in a statement.

The above four paragraphs are all this is to this article that showed up on the Internet site on Sunday---and it's another contribution from Roy Stephens.

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Czech president says anti-Russian sanctions are counter-productive and whip up tension

The West should abandon its sanctions against Russia as they only whip up tensions and in no way promote de-escalation, Czech President Milos Zeman told TASS on Sunday.

"The sanctions are not merely inefficient, on the contrary, they are counterproductive. They only whip up tensions instead of promoting de-escalation. This opinion is shared by Austrian Chancellor Werner Faymann, who said they were stupid things, This opinion is shared by Slovak Prime Minister Robert Fico and Hungarian Prime Minister Viktor Orban," the Czech president said and called for the soonest abandonment of the anti-Russian sanctions. He said trying to press Russia was an unproductive effort only enhancing strains in the relations between Russia and the West.

Zeman said he was sorry the aggravation of the situation in Ukraine had delayed plans of visa-free travel regime between Russia and the European Union. "During European Union-Russia summits, this issue was already gelled but, regrettably, talks on that matter have been frozen over the Ukrainian crisis," he said. "But I am absolutely confident they will be finally resumed."

This news item, filed from Prague, appeared on the Internet site on Sunday---and once again I thank Roy Stephens for sending it our way.

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'Warning lights' flash over Greece and France as manufacturing stumbles

Warning lights are flashing over the Greek and French economies, analysts said on Monday, after a closely-watched manufacturing survey showed both nations remained "mired in contraction" in April.

Turmoil in Greece, and concerns that the country could default on its debt and be forced out of the eurozone pushed Greek activity to a 22-month low, according to Markit's latest manufacturing barometer.

The figures also suggested that the European Central Bank's €1.1 trillion bond-buying programme, which has helped to weaken the euro, has so far failed to lift France out of its chronic malaise.

French manufacturing activity contracted for the 11th consecutive month in April, with the rate of decline the fastest so far this year. Markit also said employment levels fell for a thirteenth successive month in April.

This news was posted on The Telegraph's website at 11:02 a.m. BST yesterday, which was 6:02 a.m. in New York.  It's also courtesy of Roy Stephens.

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Ukraine: humanitarian disaster as fighting continues

Thirty-five year old Alexandr Ortinsky moved into a 24 square-metre container on the outskirts of Kharkiv, Ukraine’s second largest city, earlier this year.

“As soon as they started shelling we moved,” he says, after fleeing an area held by separatists in Luhansk last summer.

His wife and six children, including one disabled son, are with him.

Together, they share a space that includes a small kitchen, a bathroom, and toilet. The German built-unit is part of larger modular city for nearly 400 refugees.

This article appeared on the website at 9:25 a.m. Europe time on their Monday morning---and the stories from Roy just keep on coming.

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Red Phones: NATO Initiates Hotline to Russia's Defense Ministry

The North Atlantic Treaty Organization (NATO) and Russia's Ministry of Defense have set up a direct military-to-military communication link to deal with any issues they might face amid mounting tensions, according to Frankfurter Allgemeine Zeitung.

"NATO and Russia's military command maintain communications links. NATO's Supreme Allied Commander Europe and the chairman of the NATO Military Committee have received permission to get in contact with their Russian colleagues," Frankfurter Allgemeine Zeitung said, citing sources in the North Atlantic Alliance.

NATO declined to clarify when the telephone line was set up but said that communications channels would always remain open, the media outlet noted. Russia has reportedly already received the telephone numbers.

This story appeared on the Internet site on Sunday afternoon Moscow time---and it's also courtesy of Roy Stephens.

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Robert Fisk: Who is bombing whom in the Middle East?

Let me try to get this right. The Saudis are bombing Yemen because they fear the Shia Houthis are working for the Iranians. The Saudis are also bombing Isis in Iraq and the Isis in Syria. So are the United Arab Emirates. The Syrian government is bombing its enemies in Syria and the Iraqi government is also bombing its enemies in Iraq. America, France, Britain, Denmark, Holland, Australia and – believe it or not – Canada are bombing Isis in Syria and Isis in Iraq, partly on behalf of the Iraqi government (for which read Shia militias) but absolutely not on behalf of the Syrian government.

The Jordanians and Saudis and Bahrainis are also bombing Isis in Syria and Iraq because they don’t like them, but the Jordanians are bombing Isis even more than the Saudis after their pilot-prisoner was burned to death in a cage. The Egyptians are bombing parts of Libya because a group of Christian Egyptians had their heads chopped off by what might – notionally – be the same so-called Islamic State, as Isis refers to itself. The Iranians have acknowledged bombing Isis in Iraq – of which the Americans (but not the Iraqi government) take a rather dim view. And of course the Israelis have several times bombed Syrian government forces in Syria but not Isis (an interesting choice, we’d all agree). Chocks away!

It amazes me that all these warriors of the air don’t regularly crash into each other as they go on bombing and bombing. And since Lebanon’s Middle East Airlines is the only international carrier still flying over Syria – but not, thank heavens, over Isis’s Syrian capital of Raqqa – I’m even more amazed that my flights from Beirut to the Gulf have gone untouched by the blitz boys of so many Arab and Western states as they career around the skies of Mesopotamia and the Levant.

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

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The Maersk Tigris Incident: Are we on the road to war with Iran? -- Justin Raimondo

Ron Paul, as usual, was prescient when he warned – in 2007 – of a Gulf of Tonkin type incident in the Persian Gulf that could bring us to the brink of war with Iran. The seizure by the Iranians of a commercial vessel flying under the Marshall Islands flag in the Gulf in order to collect a debt – the result of a legal judgment in a complaint which had wound its way through courts for 14 years – is being blown up out of all proportion by Washington, which has sent warships to the area in order to “guard” shipping and ensure “freedom of the seas.”

Here‘s a Washington Post piece claiming the Iranians violated international law when they seized the vessel, but apparently the same rules don’t apply to the Americans. No one raised much of a fuss, back in 1991, when the U.S. seized a Panamanian-flagged ship accused of defrauding the U.S. military: there was no court case, and yet the U.S. claimed its civil forfeiture rules gave it the right to “arrest” the ship. And then there’s this 1987 case where the U.S. seized a Liberian-flagged ship because the crew hadn’t been paid. This is the typical pattern where Washington is concerned: the rules, such as they are, can be bent according to the U.S. government’s convenience.

The U.S. State Department is claiming that they have a treaty obligation to defend Marshall Islands shipping “under the terms of an amended compact entered into force in 2004,” i.e., because the islands are, in effect, a U.S. protectorate. However, initially, the Pentagon was singing a far different tune, saying no such obligation existed.

This shortish essay by Justin was posted on the Internet site yesterday---and once again I thank Roy Stephens for sending it along.

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In Rush to Help Nepal, India’s Modi Ends Up Annoying Its Leaders

It took just about four hours after an earthquake ripped across Nepal on Saturday for India to get a C-130J Super Hercules cargo airplane and its roaring propellers headed toward the disaster zone, with relief workers aboard.

Almost 100 disaster personnel soon came in a C-17 Globemaster III. An Ilyushin IL-76 went next, with additional people and five sniffer dogs to find survivors.

More followed in what amounted to an airborne armada from Indian Prime Minister Narendra Modi. For the people of Nepal, the second-poorest nation in Asia now living in a landscape pocked with flattened homes and ruptured roads, it was a godsend. Thousands were dead and millions homeless.

But less than a week later, the efficiency of Modi’s response -- part of a wider effort to improve ties with the region since he took office -- is having an unintended consequence: It’s made clear just how underequipped and dysfunctional Nepal’s own government has been in the aftermath of the earthquake.

No good deed goes unpunished, I suppose.  This Bloomberg news item put in an appearance on their website at 3:25 a.m. Denver time yesterday morning---and I thank Nitin Agrawal for sending it our way.

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Jim Rickards: Speech to the National Center for Policy Analysis

This speech is in two parts---and in transcript form.  There's no audio or video track.  The link to Part 1 is here---and Part 2 here.  The Q&A answer session is the only part worth reading in my opinion and, for whatever reason, it's stuck on the end of Part 1.  It has to do with China, SDRs, IMF and gold.  I thank Harold Jacobsen for finding both of these for us.

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Why Central Banks Hate Physical, Love "Earmarked" Gold, and What is the Difference

Several days ago we showed the dramatic conclusion of what happened to Czechoslovakia's gold which had been placed at the Bank of England for safekeeping days after Germany annexed the central European republic ahead of the start of World War II. We hate to spoil the punchline for those who haven't read the post yet, but the her it is: it was gone; it was all gone.

And all of this happened with the explicit assistance of the Bank of International Settlements which was formed in 1930 to promote the free flow of capital and global economic growth. Instead, time and again, what the BIS has proven its only mission to be, is to facilitate the spread of intangible assets and fiat currencies while it quietly confiscates, sequesters and aggregates (for a select group of individuals) he world's physical assets. Mostly gold.

In fact, until the advent of the BIS, gold held by central banks came in one version. Physical.

It was only after the BIS arrived on the scene did gold's macabre doppelganger, so-called paper, registered or "earmarked", gold emerge for the first time.

Courtesy of Adam LeBor's book exposing the history and inner workings of the BIS, "The Shadowy History of the Secret Bank that Runs the World", below is a brief story of how earmarked gold came into being.

This commentary showed up on the Zero Hedge Internet site on Sunday afternoon EDT---and it's the third and final offering of the day from South African reader B.V.  It's definitely worth reading.

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LBMA adviser, former Barclays executive will help central banks rig the gold market

Confidentiality in business is often a given, and in relation to precious metals, if the "additional sensitivity" in precious metals transaction was related to physical security and security of transport and vaulting, this would fall under normal "additional security." But the context of Spall's comment suggests that this "additional sensitivity" means market sensitivity. This is supported by the Spall's next observation, which clarifies that, yes, indeed, there is a need for "additional sensitivity" particularly "when it involves the official sector, such as governments, central banks, and sovereign wealth funds."

Spall therefore concedes that the London gold market and the LBMA will not provide transparency when dealing with the "official sector" because the "official sector" requires this lack of transparency. Spall's statements thus also indicate that the commercial sector will gladly give the official sector this "additional sensitivity" -- that is, this lack of transparency.

So the question becomes: What transactions in gold are being undertaken by the "official sector" that require such secrecy and sensitivity?

Most likely these official transactions involve the surreptitious rigging of the gold and currency markets, transactions that, in 1999, the staff of the International Monetary Fund found member central banks so determined to conceal.

Spall's advertisement for his new company is more evidence supporting the frequent assertion by GATA Secretary/Treasurer Chris Powell that "the location and disposition of national gold reserves are secrets far more sensitive than the location and disposition of nuclear weapons."

This longish commentary by Chris Powell, with several embedded links, showed up on the Internet site on Sunday---and it's worth your while.

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Gold paperization in India won't be happening any time soon

Writing today in The Hindu, the second-largest English-language newspaper in India, published in Chennai (formerly Madras), former Indian government official Sutanu Behuria explains why the sort of monetization -- paperization, actually -- recently proposed by the country's government for the vast amount of gold held by the Indian public is not going to happen any time soon.

It's not just because of the centrality of gold in Indian culture and religion, Behuria writes. It's because the country lacks the infrastructure that would be necessary to standardize and evaluate any gold submitted for monetization.

"It is likely that it will take considerable time to put the architecture in place."

Behuria's commentary is rather misleadingly headlined "All That Glitters Is Not Gold" and it's posted at The Hindu's Internet site on Sunday IST---and I found it in a GATA release---and it's certainly worth reading.

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Indian gold jewellery industry demand to grow 8-10%: ICRA

The ICRA report notes that India’s gold jewellery industry could record a growth of of about 8-10% in the medium to long-term, driven by growing penetration of the organised sector and improving consumer sentiments, the report stated, reports say.

Also, the long term, gold jewellery demand in India is being driven by the growing lifestyle of disposable income, especially in Tier 2, Tier 3 and rural markets, which would influence the demand in a significant way, reports add.

Import over medium term would reach levels as were prior to the restrictions imposed, largely replacing sourcing of gold through the unofficial channels / recycled gold. The report said large retailers could clock 10%+ growth over the short-to-medium term and retailers overall would record a notable growth.

The above three paragraphs are all there is to this tiny gold-related article that was posted on the Internet site on Saturday---and I found it on the Sharps Pixley website.

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China’s SGE gold flows still at high level – 51 tonnes last week

For the second week in a row, gold withdrawals from China’s Shanghai Gold Exchange (SGE) have been at around 50 tonnes – a high level for the post Chinese New Year period. Withdrawals from the exchange for the first 16 weeks of the year have already reached around 780 tonnes suggesting that if flows out of the SGE are maintained we could be in for a new record year with withdrawals well in excess of those of 2013, which totalled almost 2,200 tonnes. As we have said in these pages before, whether one considers SGE withdrawal figures to equate to Chinese gold demand, which the Peoples Bank of China would seem to suggest, or whether the true consumption figure is actually quite a bit lower as the mainstream gold analysts reckon, they still remain an excellent indicator of demand growth or fall in the world’s biggest market for the yellow metal.

Time was when Chinese mainland net imports from Hong Kong were considered the best proxy for Chinese demand and up until just over a year ago this was very much the case with the majority of Chinese gold imports coming in by this route. But since then the Chinese have opened up the routes by which gold can be imported and we suspect that now at least 40% of gold imports, probably even more so far this year, go directly into the Chinese mainland via ports such as Shanghai and Beijing, thus bypassing Hong Kong altogether.

I had the chart for this in my Saturday column, but Lawrie writes it up very well---and it's worth the read.  It was posted on the Internet site yesterday---and it's the final offering of the day from Roy Stephens, for which I thank him.

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China's True Gold Holdings to Remain a Secret After All

What caught our attention is what the IMF spokesman said almost at the very end of his press conference. To wit:

QUESTIONER: Just a few questions about other countries. A quick clarification on SDR, in January the managing director mentioned there would be an informal board briefing in May. Is that still happening, or has it been pushed back?

MR. RICE: On the -- sorry, I didn't catch the first part on the --


MR. RICE: Yes.

QUESTIONER: Is May still the -- this month is still the timeline? Or has it been pushed back?

MR. RICE: .... the board meeting has been deferred because the work is underway and we'll let you know as soon as that board meeting is scheduled again....

The headline to this Zero Hedge story from Sunday afternoon EDT would be more accurate if it read "China's True Gold Holdings to Remain a Secret For a While Longer".  It's also worth reading---and I thank 'David in California' for passing it around.

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May 02, 2015

US Manufacturing Weakest in Two Years as Construction Spending Plunges; Mfg Employment Lowest Since 2009

April's Manufacturing PMI printed a minimally disappointing 54.1 (against 54.2 prior and expectations) - its lowest since January and hardly the post-weather Q2 surge everyone was hoping for. New Orders and Production were the weakest since December and export business fell for the first time in 5 months and input prices dropped for the 4th month in a row; all leading Markit to demand The Fed remain patient.

ISM Manufacturing missed expectations and has not risen for 5 months (its longest streak since the recession) with a contraction in the employment index to lowest since Sept 2009. And then Construction Spending plunged 0.6% (against a +0.5% exp.) - the 7th miss in 10 months and worst April print since 2009.

This chart-filled commentary appeared on the Zero Hedge Web site at 10:11 a.m. EDT on Friday morning---and today's first story is courtesy of reader M.A.

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Atlanta Fed Cuts Q2 GDP Forecast to +0.8% After Construction Spending Crunch

Just as we warned earlier, the April data are not suggesting the kind of post-weather Q2 bounce in economic growth that everyone is praying for  (or not if you're long stocks). On the heels of this morning's tumble in construction spending, The Atlanta Fed forecasts second-quarter real nonresidential structures investment to collapse 20%, leading to a mere 0.8% Q2 GDP growth estimate (dramatically below consensus hope expectations of 3.3% growth).

This two-chart commentary appeared on the Zero Hedge Web site at 12:33 p.m.  yesterday afternoon EDT---and I thank Dan Lazicki for sending it along.

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US Jobs Relapse Raises Fresh Doubts on Fed Tightening

A key indicator of manufacturing jobs in the US has dropped to its lowest level since the financial crisis as industry remains stuck in the doldrums, dashing hopes for a swift rebound after the economy ground to a halt in the first quarter.

The surprisingly weak data greatly reduce any likelihood the US Federal Reserve will raise rates in June for the first time in eight years, once again putting off the long-feared turning point in the global monetary cycle and perhaps offering another reprieve for dollar debtors across the world.

The closely watched index of the Institute for Supply Management (ISM) remained anaemic in April, confirming fears that the strong US dollar and energy crash in the once-booming shale states are taking a serious toll.

The employment component dropped sharply to 48.3, below the “boom-bust line” of 50 and the lowest in almost six years. The relapse is likely to set off alarm bells at the Fed, where chairman Janet Yellen pays very close attention to the labour market.

This commentary by Ambrose Evans-Pritchard put in an appearance on the Internet site at 7:38 p.m. BST yesterday evening, which was 2:38 p.m. EDT.  I thank Roy Stephens for sliding it into my inbox at 3:18 a.m. EDT this morning.

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Gartman Is Bullishly Bearish on Stocks in Confused Terms

Once again proving "you get what you pay for," world-renowned Dennis Gartman unleashes his own brand of indecipherable nonsense advice to stock traders this morning...

If stocks open higher this morning - and please remember that today is a holiday in so many places around the world beginning in Asia and continuing into Europe, although the markets in North America are open for we do not celebrate May Day here in the US or Canada, despite the left-ward lean in recent year in the Administration - we would expect that strength to perhaps hold and perhaps even to increase as the day progresses---and perhaps even more certainly if we were long we’d be using any strength to reduce that size of that long position.

For the next few days and perhaps even for the next few weeks, strength is to be sold into; weakness is not to be bought.

Got it straight now, dear reader?  This is a man who should have done the investing world a favour by putting himself out to pasture years ago.  It's another Zero Hedge piece---and it's the second one of the day from Dan Lazicki.

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Doug Noland: Quasi-Capitalism and Crowded Trades

Treasury yields rose this week in the face of unstable equity markets. The dollar was under pressure. Biotech stocks were slammed. Higher-yielding stocks were being sold. So-called “defensive” stocks were underperforming. Small caps were underperforming. Meanwhile, many heavily shorted stocks and sectors were outperforming. Copper surged 6.4%, as an almost 2% gain in the Goldman Sachs Commodities Index boosted 2015 gains to 6.1%. In short, Crowded Trades were causing a bit of angst. I’m not so sure Friday’s equity rally rectified the situation.

Global bond markets have been priced for QE and disinflation forever. This historic Bubble – with all the unknown leverage and unappreciated risks to sophisticated and unsophisticated alike – now confronts a major risk: China.

Chinese officials were too slow and timid in efforts to rein in their runaway Bubble. “Terminal Phase” excesses have been accommodated to the point where massive fiscal and monetary stimulus will surely be forthcoming. This creates major uncertainty for the global pricing backdrop – for commodities, for things and for bonds. And with even signs of life in Europe, there’s now a catalyst for a potential upside surprise in inflation “psychology”. As such, the risk vs. reward calculus for the Crowded global deflation bond trade is turning unattractive. Moreover, Treasuries - and government bonds generally – are losing their appeal as a reliable hedge against market risk.

Government finance has made such a mess of things. Global bonds have become a historic Crowded Trade. Long dollar (short euro, yen, commodity currencies, EM, etc.) is a huge Crowded Trade. If a Chinese move toward massive stimulus (in concert with ultra-loose policies everywhere) does begin to weigh on global bond markets, what might this mean for the currencies Crowd? How vulnerable is the dollar to a self-reinforcing decline, the mirror image of the king dollar melt-up. What would this mean to the Crowded commodities short trade? Commodities and commodity currencies have been trading more bullishly.

Doug's weekly Credit Bubble Bulletin is always worth reading---and I thank reader U.D. for bringing it to our attention.

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G. Edward Griffin Revisits "The Creature From Jekyll Island" After 20 years

This 22:41-minute audio interview with Ed appeared on the Internet site on Tuesday---and for length reasons had to wait for today's column.

It's in MP3 format---and it takes a few seconds for it to load up, even on a faster computer, so be patient, because it's worth your while if you have the time.  I thank Dennis Meridith for bringing it to our attention.

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Jon Stewart Tears into ex-NY Times Reporter Judith Miller over Iraq Reporting

Former New York Times journalist Judith Miller found herself in the hot seat on “The Daily Show” as Jon Stewart ripped apart her reporting of Iraq’s alleged weapons of mass destruction, a narrative that would help fuel momentum for war.

“I believe that you helped the administration take us to the most devastating mistake in foreign policy that we’ve made in, like, 100 years,” Stewart said Wednesday evening, adding, “but you seem lovely.”

Stewart fired back during the heated back-and-forth exchange:

“I think it was a concerted effort to take us into war in Iraq. You had to shift, with energy, the focus of America from Afghanistan and al Qaeda to Iraq. That took effort. Somebody pointed the light at Iraq, and that somebody is the White House, and the Defense Department, and Rumsfeld. He said right after 9/11, ‘Find me a pretext to go to war with Iraq.’ That’s from the 9/11 papers and the study.”

When asked whether she felt she had been manipulated, Miller responded, “all journalists are manipulated and all politicians lie.”

This item appeared on the Internet site at 3:10 p.m. EST on Thursday afternoon---and unfortunately the two embedded Jon Stewart videos won't be watchable outside the USA, but you'll get the drift from the text, as Jon carves Judith and the NYT a new one.  It's the first offering of the day from Roy Stephens.

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The 100th Anniversary of a False Flag at Sea: The Sinking of the Lusitania

This is a long article. But World War I – which was the first global war, and claimed as many as 65 million lives – has nearly been forgotten about. This article contains many suppressed facts, and I hope you come away from it with a better understanding of how the present connects to the past.

As discussions crop up of a Third World War possibly arising from tensions in the Middle East or Ukraine, it is apt to examine the First World War, whose 100th anniversary falls this year. America’s entanglement in that war, like so many others, was engineered through a false flag.

In 1915, Britain was at war with Germany. The United States was still neutral. On May 7, the Lusitania, a British ocean liner en route from America to England, was sunk by a German submarine some 12 miles off Ireland’s southern coast. There were 764 survivors, but nearly 1,200 people, including 128 Americans, lost their lives. The Lusitania – which had been the world’s largest ship when launched in 1906 – went down in just 18 minutes after a single torpedo hit. Survivors reported there had been two explosions – a smaller one followed moments later by an enormous one. This was affirmed by the log of the U-20, the submarine which sank her.

The tragedy was portrayed to the public as the wanton slaughter of women and children. It became the subject of a relentless propaganda campaign, including a fabricated claim that German children were given a holiday from school to celebrate the sinking. The Lusitania was the most important in a series of pretexts used to generate the eventual U.S. declaration of war on Germany.

There isn't a thing in here that surprises me, as I read the Reader's Digest version of these events in G. Edward Griffin's book "The Creature From Jekyll Island".  It's a long read, but it's an absolute must read---and probably the most important non-gold story in today's column, even though it happened a century ago.  If you don't know the true story, you'll be shocked by what you read here.  It was written by author James Perloff---and my thanks go out to him for bringing it to my attention, and now to yours.

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How Margaret Thatcher and Robert Murdoch Made Their Secret Deal

In 1981, Mrs Thatcher needed a boost from the press. By supporting Rupert Murdoch’s bid for the Times and Sunday Times, she made sure she got it. Harold Evans, who led an unsuccessful staff takeover bid, reveals a historic carve-up.

The coup that transformed the relationship between British politics and journalism began at a quiet Sunday lunch at Chequers, the official country retreat of the prime minister, Margaret Thatcher. She was trailing in the polls, caught in a recession she had inherited, eager for an assured cheerleader at a difficult time. Her guest had an agenda too. He was Rupert Murdoch, eager to secure her help in acquiring control of nearly 40% of the British press.

Both parties got what they wanted.

The fact that they met at all on 4 January 1981 was vehemently denied for 30 years. Since their lie was revealed, it has been possible to uncover how the greatest extension of monopoly power in modern press history was planned and executed with such furtive brilliance.

This essay was posted on The Guardian Web site on Tuesday---and had to wait for today's column as well.  They call it "The Long Read"---and that, dear reader, is precisely what it is---although it's certainly not as long as the story about the Lusitania.  If you have the interest, it's worth reading.  I thank reader Jon Wallace for sharing it with us.

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Weaponizing Information: Cranking Up the Rhetoric

In mid-April, hundreds of U.S. paratroopers from the 173rd Airborne Brigade arrived in western Ukraine to provide training for government troops. The U.K. had already started its troop-training mission there, sending 75 troops to Kiev in March.  On April 14, the Canadian government announced that Canada will send 200 soldiers to Kiev, contributing to a military build-up on Russia’s doorstep while a fragile truce is in place in eastern Ukraine.

The Russian Embassy in Ottawa called the decision “counterproductive and deplorable,” stating that the foreign ministers of France, Germany, Russia and Ukraine have “called for enhanced intra-Ukrainian political dialogue,” as agreed upon in the Minsk-2 accords in February, and that it would be “much more reasonable to concentrate on diplomacy…”

That viewpoint is shared by many, especially in Europe where few are eager for a “hot” war in the region. Nor are most people enamoured of the fact that more billions are being spent on a new arms-race, while “austerity” is preached by the 1 Per Cent.

But in the Anglo-American corridors of power (also called the Atlantic Alliance), such views are seen to be the result of diabolical propaganda spread through the Internet by Russia’s “secret army.” On April 15, the U.S. House Foreign Affairs Committee, chaired by Ed Royce, held a hearing entitled “Confronting Russia’s Weaponization of Information,” with Royce claiming that Russian propaganda threatens “to destabilize NATO members, impacting our security commitments.”

Here's another rather longish essay.  It's an interesting commentary---and it appeared on the Internet site back on April 23---and it's another story that had to wait for my Saturday column.

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Is Merkel a CIA Asset?

The claims that Merkel’s government knew about German state intelligence spying on behalf of the Americans against the country’s own industrial interests raise disturbing questions about the integrity of German government leaders.

The apparent betrayal of German national interests by Chancellor Angela Merkel is not only evident over the recent industrial spying scandal on behalf of America, the slavish pursuit by Merkel of Washington’s anti-Russian policy over Ukraine — in contradistinction to her country’s national interests — also cogently suggests that the chancellor is serving a foreign master.

Recent reports that German state intelligence was spying on behalf of the Americans against the country’s own industrial interests are bad enough, but then added to that are claims that the government of Chancellor Angela Merkel knew about the espionage — and turned a blind eye.

I've always wondered about Merkel myself---and the more time that passes, the more I wonder about her---and that's the reason why I'm posting this article that appeared on the Internet site yesterday.  I thank Roy Stephens for sending it.

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Greek Pensioners Crash Pension Fund Board Meeting, Form Lines at Bank

On Thursday we noted that no matter how tempting it may be to tune out the almost hourly warnings from various sources claiming Greece is finally set to run out of cash, one can’t just assume the government will yet again find another couch cushion to reach into in order to scrape up a few more euros to pay government employees and creditors and thereby forestall the inevitable for another few weeks. Eventually, there simply will be no more money and the first signs that Greece has entered the final, terminal phase in the long and painful road to complete insolvency showed up last month in the form of a sweeping decree which required municipalities to transfer excess cash to the central bank. 

That mandate was greeted with incredulity and with the country’s local governments less than willing to turn over their funds, Athens finally ran out of money (if only for 8 or so hours) on Tuesday when pensioners showed up at ATMs only to discover that their money simply was not there. Amusingly, the government blamed the delay on a “technical glitch”, and while we suppose it’s not exactly a lie to call running out of money a “technical glitch”, it was abundantly clear that the country’s socialist saviors were making a feeble attempt to avert a pensioner mutiny. Today, we get more details about the situation and sure enough, the retirees are restless.

This news item is from the Zero Hedge Internet site once again.  It put in an appearance there at 8:25 a.m. EDT yesterday---and I thank reader 'David in California' for passing it around.

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John Batchelor Interviews Stephen F. Cohen About the Ukraine

With the Ukraine Civil War in a semi-holding pattern with Minsk2 more or less intact, Batchelor and Cohen step back from the details of the conflict to discuss the geopolitical aspects of the major players in regards to the principles of the Westphalian Sovereignty of International Law. This is defined in International Law where every nation has a basic right of sovereignty of its borders and internal policies against outside interference by other nations.  Russia is accused of abusing this aspect of International Law by the major players in the West because of its “support” of the Donbass rebels, and, of course, there are western troops present on the Kiev side “advising and training” Ukrainian army units – and others. The West warns that this is preparation for a larger war, and Russia “responds that this talk is simply means Kiev is going to attack the Donbass again. They are probably correct - so far.

Specifically the West is accusing Putin of destroying the post Soviet Order by its annexing of the Crimea Peninsula and arming the fighters in the East – ignoring, however, Washington's history of trespass globally and regionally (Serbia), and also ignoring Russia’s appeal to involve itself in the security of Europe while NATO proceeded to encroach on Russia. This is clearly a double standard. And the transformations in Europe, Russia, and China over the destabilizations of Ukraine are huge historical geopolitical changes.

Cohen goes on to explain what Moscow’s goals are in the Ukraine. It ONLY wants peace and trade with the world while it rebuilds from the Soviet Union failure. However, Cohen maintains that Russia legitimately needs a zone of security (as does the USA in the West), and a hostile and bankrupted Ukraine does not meet this criteria. NATO is, however, moving east and for Russia, from a security point of view, this is becoming intolerable. Therefore Russia has its “red line” in this regard; we should hope that the West is paying attention.  Russia is pushing back now.

This 39:45-minute audio interview was posted on the Internet site on Tuesday sometime---and it's another item that had to wait for my Saturday column.  I thank Larry Galearis for finding it for us.

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House Committee Approves $200 Million for Arming Ukraine

Citing an anti-Russia policy brief, US lawmakers approved $200 million for providing “lethal weapons of a defensive nature” to the Ukrainian government as part of the $600 billion Pentagon budget proposal for the fiscal year 2016.

The House Armed Services Committee passed its proposal for the 2016 National Defense Authorization Act (NDAA) with a bipartisan vote of 60 to 2, in what Defense News described as a “marathon” session that ended around 4:30am on Thursday.

Section 1532 of the 498-page document calls for the US to provide assistance, “including training, equipment, lethal weapons of a defensive nature, logistics support, supplies and services, and sustainment to the military and national security forces of Ukraine” through the end of September 2016.

This story was posted on the Russia Today Web site at 2:47 a.m. Moscow time on their Friday morning, which was 7:47 p.m. EDT in Washington on their Thursday evening.  I thank Jim Skinner for that article.  There was a follow-up story to this headlined " Russia warns U.S. against supplying ‘lethal defensive aid’ to Ukraine"---and I found it in the right sidebar of the first RT story.

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Return of the Crimea to Russia Was Inevitable: Jimmy Carter

Former US President Jimmy Carter, in an interview with radio station Voice of America, said that the reunification of Russia and the Crimea was an inevitable event.

Carter also says he is pleased with Russia's commitment to implement the Minsk agreement.  He added that the Elders were also pleased with Russia's allegiance to the Minsk agreement.  “There's not any doubt in our mind that the Russians genuinely want to see all the aspects of that concluded.  I think that's the only ballgame in town,” said Carter, “really as far as resolving the problems with Ukraine, is to get the Minsk agreement implemented.”

Carter and other former global leaders met with Russian President Vladimir Putin for 2.5 hours Wednesday in Moscow.  The group, called the Elders, visited at a time when Russia's relations with the West are severely strained over Moscow's seizure of Crimea and the deadly conflict in eastern Ukraine.

This news item showed up on the Internet site yesterday sometime---and it's another offering from Roy Stephens.

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Pepe Escobar: Why NATO Is Terrified of Russia

The twin-pronged attack – oil price war/raid on the ruble – aimed at destroying the Russian economy and place it into a form of Western natural resource vassalage has failed.

Natural resources were also essentially the reason for reducing Iran to a Western vassalage. That never had anything to do with Tehran developing a nuclear weapon, which was banned by both the leader of the Islamic revolution, Ayatollah Khomeini, and Supreme Leader Ayatollah Khamenei.

The ‘New Great Game’ in Eurasia was always about control of the Eurasian land mass. Minor setbacks to the American elite project do not mean the game will be restricted to a mere “war of attrition”. Rather the contrary.

In Ukraine, the Kremlin has been more than explicit there are two definitive red lines. Ukraine won’t join NATO. And Moscow won’t allow the popular republics of Donetsk and Lugansk to be crushed.

This very worthwhile commentary by Pepe was posted on the Russia Today Web site at 6:07 a.m. Moscow time on May 1---and I thank South African reader B.V. for sending it our way.

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Pepe Escobar: Why the US “War on Terra” Is a Fraud

A new scathing report by the Nobel prize-winning Physicians for Social Responsibility has revealed that more than 1.3 million people were killed only during the first ten years of the Global War on Terror (GWOT) in Iraq, Afghanistan and Pakistan alone. What was formerly known as GWOT — or, in Dubya-speak, “war on terra” — was Orwellianized by the Obama administration into “Overseas Contingency Operations” (OCO).

Crucially, the report does not even cover OCO’s trail in Libya, Syria, Somalia and Yemen (one war “won” by NATO/AFRICOM; one ongoing civil war; and two targets of Obama’s nefarious “kill list”.) Moreover, the figures on AfPak and Iraq are far from being the latest. And the total estimate of lethal casualties is considered “conservative”.

The record shows that this OCO killing machine ran amok for almost 15 years against whole swathes of the planet — not to mention burning trillions of dollars in U.S. taxpayer funds — and had absolutely zero effect in containing terrorism. Rather the contrary; Asia Times readers are aware of how I’ve defined GWOT as the gift that keeps on giving.

And it all started way before 9/11 — and the official Dubya enshrinement of GWOT.

This commentary by Pepe was posted on the Asia Times Web site on Thursday---and the stories from Roy Stephens just keep on coming.

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Pepe Escobar: The Pentagon's "Long War" Pits NATO Against China, Russia, and Iran

Whatever happens with the nuclear negotiations this summer, and as much as Tehran wants cooperation and not confrontation, Iran is bound to remain — alongside Russia — a key U.S. geostrategic target.

As much as US President Barack Obama tried to dismiss it, the Russian sale of the S-300 missile system to Iran is a monumental game-changer. Even with the added gambit of the Iranian military assuring the made in Iran Bavar 373 may be even more efficient than the S-300.

This explains why Jane's Defense Weekly was already saying years ago that Israel could not penetrate Iranian airspace even if it managed to get there. And after the S-300s Iran inevitably will be offered the even more sophisticated S-400s, which are to be delivered to China as well.

The unspoken secret behind these game-changing proceedings actually terrifies Washington warmongers; it spells out a further front line of Eurasian integration, in the form of an evolving Eurasian missile shield deployed against Pentagon/NATO ballistic plans.

This is the third commentary in a row from Pepe.  This one appeared on the Internet site on Tuesday afternoon Moscow time---and another story that had to wait for today's column.  My thanks go out to Roy Stephens once again.  I haven't had the time to read this or the previous commentary by Pepe, but it's on my "to do" list for this weekend.

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Robert Fisk in Abu Dhabi: The Acceptable Face of the Emirates

While Dubai is a byword for excess, vulgarity and human rights abuses, the UAE's capital affects a higher calling. So, alongside the Emirates Palace Hotel (1,022 crystal chandeliers), the Grand Mosque (capacity: 40,000) and four million foreign workers, there are galleries, museums, seats of learning – and the stated aim of being a 'role model' for its neighbours. Has Abu Dhabi found a way to blend petrodollars with principles?

The Abu Dhabi Louvre looks like the top of a giant, primordial eggshell pushing its way out of the sand. Its giant dome already glisters under the sun, its construction workers moving like spiders over five layers of cladding, steel and aluminium which will give this extraordinary museum a combined weight of 7,000 tons, just a little less than the Eiffel Tower. Already the concrete base of a man-made lake spreads around the construction, for architect Jean Nouvel's Louvre will be on a miniature island, its works of art transported to its gallery through an underground tunnel, light sprinkled into its interior as if through the fronds of palm trees.

Very romantic. Very French orientalist, I say to myself. Very Arab too, perhaps. The idea is that art will move chronologically through centuries inside the new Louvre, oriental and Western paintings next to each other.

But won't Abu Dhabi have a few problems with nudes, with Gauguin or Picasso or Poussin? No, says my companion, as he explains the double insulation and the cladding which will, we all hope, prevent water spewing on to the Louvre's greatest masterpieces. "All that is accepted. This is art. This is for education." Contemporary art will be inside the Abu Dhabi Guggenheim a few hundred yards away, still just a sand-pile of dumper trucks and bobbing labourers' hats.

This very interesting inside look at the UAE showed up on the Internet site on Wednesday---and for content reasons, had to wait for Saturday's column.  I thank reader B.V. for his second contribution of the day.

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Glenn Greenwald: Cowardly Firing of Australian State-Funded TV Journalist Highlights the West’s Real Religion

A TV sports commentator in Australia, Scott McIntyre, was summarily fired on Sunday by his public broadcasting employer, Special Broadcasting Services (SBS), due to a series of tweets he posted about the violence committed historically by the Australian military. McIntyre published his tweets on “Anzac Day,” a national holiday — similar to Memorial Day in the U.S. — which the Australian government hails as “one of Australia’s most important national occasions. It marks the anniversary of the first major military action fought by Australian and New Zealand forces during the First World War.”

Rather than dutifully waving the flag and singing mindless paeans to The Troops and The Glories of War, McIntyre took the opportunity on Anzac Day to do what a journalist should do: present uncomfortable facts, question orthodoxies, highlight oft-suppressed views.

Well, dear reader, anyone who has read David Fromkin's classic tome A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East will certainly support the views of Scott McIntyre.  This news item appeared on the Internet site on Thursday---and my thanks go out to Roy Stephens for passing it along yesterday.  It's definitely worth reading.

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Sprott Money Weekly Wrap-Up

Listen to Eric Sprott share his thoughts on stagnant economic numbers, Greek banks and pensioners, continual spoofing with no proper policing, and the movement of physical gold this week.

This interview with Eric was conducted by Sprott Money's Geoff Rutherford---and it was posted on the Internet site yesterday.

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Finding the "Lost" 1913 $3-Million Nickel

Heartland Precious Metals President Paul Montgomery on the discovery of a 1913 ‘lost’ nickel worth $3 million.

This very interesting 3:35-minute video clip showed up on the Internet site yesterday---and it's another offering from Dan Lazicki.

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Gold Manipulators Busted After Zero Hedge Report on Flagrant Gold Spoofing

In the aftermath of the Nav Sarao scapegoating farce, one week ago Zero Hedge decided to give the confused CFTC a helping hand and launched a daily series highlighting the constant spoofing and "manipulation" (in the CFTC and DOJ's own words) that takes place in every asset class, but mostly in the E-mini futures. Virtually every day since then we presented the "regulators" at the commodity trading commission a clear example of stock market manipulation, with the exception of Tuesday, when with the exclusive help of Nanex, we showed a clear case of gold spoofing.

Much to our dismay, overnight we learned that while the CFTC continues to be very, very confused and challenged by all those lobby payments by the world's "liquidity providing" HFTs and ignores all documented evidence of manipulation, the Chicago Mercantile Exchange - owner of the futures exchange where the bulk of modern manipulation takes place - did read this evidence of manipulation, and decided to immediately take action, suspending two traders for placing the manipulative "spoofing and layering" trades profiled here three days ago which were virtually identical to the ones that got Navinder Singh Sarao into headlines around the world last week. Except, of course, the asset class manipulated was gold. And, perhaps what's far worse, the manipulation sent the price of gold briefly higher.

The names of the perpetrators: perhaps not surprisingly, Heet Khara and Nasim Salim. Extend to Navinder Sarao and a pattern emerges...

This is the Zero Hedge spin on a story that appeared in my column very early on Friday morning.  Their story showed up at 10:27 p.m. EDT yesterday evening---and it's worth reading.  The first person through the door with this story was reader M.A. who sent it to me at 10:27 a.m. EDT yesterday morning, so it's obviously been edited since it was first posted yesterday morning.

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These Three Developments Say New Mine Supply Is Peaking

Our curiosity was piqued as we reviewed the year-end reports of the primary gold producers. When we tallied the results, even we were surprised.

The upshot of what you’ll see is that at its current pace, new supply will be unable to keep up with demand. It may look like a story that doesn’t have much immediate impact, but this emerging new reality is staring us right in the face.

Specifically, there are three developments underway that paint an ominous picture for new gold supply…

Most of what's in here isn't new news, as a higher gold price will change a lot of things.  But, having said that, it's still very much worth reading, as we're definitely past "Peak Gold" no matter what the price is now, or in the futureBIG GOLD editor Jeff Clark posted this on the Casey Research Web site yesterday.

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Positives and Negatives in CPM Silver Report -- Lawrence Williams

We have already seen the major specialist consultancies’ reports on the gold sector in 2014 with price predictions for the current year and beyond – indeed one of these, GFMS, has already issued a Q1 update See: GFMS Q1 update confirms China as world No. 1 gold consumer  and now it is the turn for silver with the U.S. CPM Group putting out its 230 page 2015 Silver Yearbook with its wealth of  data on last year’s global supply and demand and some thoughts on how the silver price will perform  this year.

Given that silver appears to be inextricably linked to gold as an investment, despite the prime demand for it as an industrial metal rather than a monetary one, it is hardly surprising that CPM views the path of the silver price this year as being somewhat similar to its predictions for gold See: Further downside on gold prices limited – CPM .  Thus it sees some weakness in the months ahead, but with the silver price consolidating later in the year.  However silver is more volatile than gold so we could see larger percentage falls on the downside, but a bigger rise once a recovery does begin to set in.

The report does take a little time to discuss the relevance of the Gold:Silver ratio and concludes that reliance on this is not particularly valuable.  The so-called historic 16:1 ratio, set by Isaac Newton in the early 1700s when silver was very much a monetary metal alongside gold may no longer be of any import, although some investors do believe that it should be.  CPM sees no scientific or quantitatively supportable basis for such a belief that the 16:1, or any other specific ratio, should be of particular relevance, although it recognises that there are many who believe strongly that they should.  But with the ratio varying from around 17 to 97 over the past few decades this would seem to make it a poor indicator of what prices for the two metals should be.

Of course, dear reader, nowhere in this report, or any other CPM report on silver, is there a word about the big short-side corners in the Comex futures market in silver that are held by JPMorgan and Canada's Scotiabank, or the other six short holders that make up the 'Big 8' shown in Nick Laird's chart further up.  Nor is there anything about JPMorgan's huge stockpile of Comex silver good delivery bars, U.S. silver eagles, or Canadian silver maple leafs.  As I said about GFMS and the World Gold Council yesterday, you can hardly believe a word they say---and CPM Group falls into that category as well.  So when measured against that, this report is mostly smoke, mirrors, and bulls hit.  However, having said all that, there is some useful information in here---and since Lawrie put a lot of writing effort into picking up this turd by its clean end, please do him a favour and read it.  It's the final offering of the day from Roy Stephens---and I thank him on your behalf.

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What Happens When You Hand Over Your Gold to the BIS and Bank of England for "Safekeeping"

When Nazi Germany annexed the Czechoslovak border province of the Sudetenland in September 1938, it immediately absorbed a good part of the country’s banking system as well as most of Czechoslovakia’s strategic defenses. By then the country’s national bank had prudently transferred most of its gold abroad to two accounts at the Bank of England: one in the name of the BIS, and one in the name of the National Bank of Czechoslovakia itself. (Countries had deposited some of their gold reserves in a sub-account at the BIS account in London to ease gold sales and purchases.) Of the 94,772 kilograms of gold, only 6,337 kilograms remained in Prague. The security of the national gold was more than a monetary issue. The Czechoslovak reserves, like those of Republican Spain, were an expression of nationhood. Carved out of the remains of the Austro-Hungarian Empire in 1918, the Czechoslovak Republic was a new and fragile nation. A good part of the gold had been donated by the public in the country’s early years.

Josef Malik, the governor of the national bank, and his fellow Czechs believed that, even as the Nazis dismembered their homeland, if the national gold was safe, then something of the country’s independence would endure.

They were wrong. The Czechoslovaks’ faith in the probity of the BIS and the Bank of England was tragically misplaced. The gold was sacrificed, with barely a second thought, to the needs of transnational finance and the Third Reich.

The Nazis’ first demand came in February 1939 when Berlin ordered Prague to transfer just over 14.5 metric tons of gold, supposedly to back the German currency now circulating in the Sudetenland. This was certainly an innovative idea— first invade a neighboring country, annex part of it, and then demand that the newly truncated state supply the gold to pay for the loss of its territory.

This absolute must-read essay appeared on the Zero Hedge website at 3:49 p.m. Friday afternoon EDT---and is an excerpt from the book TOWER OF BASEL: The Shadowy History of the Secret Bank that Runs the World by Adam LeBorIt's right up there with that absolute must-read story about the Lusitania posted further up---and if you didn't read it, it's not too late to make amends.  Dan Lazicki was the first reader through the door with this---and I thank him.

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May 01, 2015

The Last Time Initial Jobless Claims Were This Low Was The Peak of the Dot-Com Bubble

Initial jobless claims have been worse than expected for the last 2 weeks but remained below the magical 300k level, so it was only appropriate that this week all the great economic news of late - record plunge in U.S. macro disappointments and a dismal 0.2% GDP print - would be met with the lowest claims print in 15 years. At 262k (against a 290k expectation), initial claims has only been lower once - the week of April 14th 2000 - which just happened to mark the top of the Dot-Com bubble. While this is great news, we do note that a rolling average of Texas Jobless claims shows the improving trend has stalled.

This short Zero Hedge article, complete with three worthwhile charts, appeared on their website at 8:43 a.m. EDT on Thursday morning.  I thank Dan Lazicki for today's first story.

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Despite alarms about global warming, Obama blames cold winter for stalled economy

President Obama often raises the alarm about global warming, but his top economic adviser said Wednesday that an especially cold winter was to blame for slow growth in the U.S. in the first quarter.

“As measured by heating degree days, this quarter was the third coldest in twenty years,” said White House economic adviser Jason Furman. “Indeed, winter weather likely reduced both consumption and investment, contributing to this quarter’s below-trend output growth.”

The Bureau of Economic Analysis said first-quarter growth in gross domestic product contracted to an annual rate of 0.2 percent, far below projections and much slower than the previous three quarters.

Mr. Furman the first quarter “was only the fourth in 60 years on record with three or more snowstorms sufficiently severe to be rated by the National Climatic Data Center’s northeast snowfall impact scale.” He said the winter was “especially harsh” and may have lowered growth by a full percentage point.

It's always something other than the real reason, isn't it, dear reader?  This article appeared on the Washington Times website on Wednesday---and I found it in yesterday's edition of the King Report.

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Gold Dumped, Dollar Pumped as Algos Focus on Claims, Ignore Spending

Because what really matters is not spending or incomes for the average American (which both missed dismally), the market appears convinced that the 2nd lowest jobless claims print in history is what matters and the "rate hike is coming" trade is on. Bond yields are higher, dollar is jumping, and gold (and silver) and dumping...

Another short 3-chart Zero Hedge article from 09:03 a.m. yesterday---and it's also courtesy of Dan Lazicki.

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Guess Who Predicted the Failure of Q.E.

Janet Yellen -- FOMC minutes from December 2008

"As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.

I think my views on this mirror those that you expressed in your opening comments, Mr. Chairman."

However, today we get more total hypocrisy from the newly found bond guru and hedge fund adviser via his blog...

Responding to The Wall Street Journal's questioning the efficacy of monetary policy (specifically ZIRP and QE), Bernanke scoffs:

This is another Zero Hedge article from 7:30 p.m. EDT on Thursday evening that's also courtesy of Dan Lazicki.

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When The Herd Turns -- Charles Hugh-Smith

When the leaders realize that further market gains are increasingly unlikely and fraught with risk, they will exit. The herd following them will also exit, as the selling of the leaders will eventually push markets down despite central bank purchases.

To the leaders who are selling, central banks are simply large-scale chumps, snapping up shares right when those buying stocks are about to stampede over the cliff. Central banks buying equities give sellers more opportunities to distribute to greater fools; they can't change the direction of the herd.

The ultimate hubris of central banks was their supreme belief in their own powers to direct the herd. As long as the herd was stampeding in one direction, the central banks could imagine that their shouted orders were directing the herd.

But once the herd turns, the futility of those orders will be revealed.

This very interesting commentary was posted on the Zero Hedge website yesterday as well---and the articles from Dan L. just keep on coming. This one is certainly worth reading.

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Goldman Sachs Jumps on the Bitcoin Bandwagon Investing $50 Million in Circle

The Wall Street investment bank Goldman Sachs on Wednesday became the first major financial institution to invest in bitcoin, after leading the latest funding round for digital currency company Circle Internet Financial, worth $50 million in investment for the start-up. 

Goldman Sachs is joined by China-based IDG Capital Partners in investing in the company, announced Jeremy Allaire, CEO and founder of the digital currency company on Wednesday:

"We could not be happier with our new strategic investors. They bring unique, powerful capabilities and capital that will help us continue building a new kind of global consumer finance company, one based on open platforms, open source software, and ubiquitous mobile devices."

This interesting news item put in an appearance on the Internet site at 6:21 p.m. Moscow time on their Thursday afternoon, which was 11:21 a.m. EDT in New York.  It's the first contribution of the day from Roy Stephens.

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Canadian Partnership Shielded Identities of Donors to Clinton Foundation

Aides to former President Bill Clinton helped start a Canadian charity that effectively shielded the identities of donors who gave more than $33 million that went to his foundation, despite a pledge of transparency when Hillary Rodham Clinton became secretary of state.

The nonprofit, the Clinton Giustra Enterprise Partnership (Canada), operates in parallel to a Clinton Foundation project called the Clinton Giustra Enterprise Partnership, which is expressly covered by an agreement Mrs. Clinton signed to make all donors public while she led the State Department. However, the foundation maintains that the Canadian partnership is not bound by that agreement and that under Canadian law contributors’ names cannot be made public.

The foundation cited that restriction last weekend in explaining why it did not disclose $2.35 million in donations from the chairman of Uranium One, the subject of an article in The New York Times last week. The article examined how company executives and shareholders had sold a majority stake in the company — and with it a significant portion of American uranium reserves — to an arm of the Russian government in a deal that required the approval of the United States government.

Well, Frank Giustra's association with the Clinton's should tell you all you need to know about Mr. Giustra himself.  This interesting article appeared on The New York Times website on Wednesday---and it's the second offering in a row from Roy Stephens.

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Germany spied on France and E.U. commission: Report

German Chancellor Angela Merkel’s government has been embarrassed by reports that the country's intelligence service was spying on France and the European Commission for the US National security agency (NSA).

According to the Sueddeutsche Zeitung newspaper on Thursday (30 April), the BND, the German intelligence service, listened in on officials from the French presidency and foreign affairs ministry, as well as the E.U. Commission.

Phone tapping was done from the BND’s Bad Aibling spying station in Bavaria and information was transmitted to the NSA under an agreement signed in 2002, writes the Sueddeutsche Zeitung.

The newspaper does not specify when and for how long spying on France and the E.U. occurred.

This news item showed up on the Internet site at 9:23 a.m. Europe time yesterday morning---and I thank Roy Stephens for sending it along.

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Airbus to sue in U.S., German spying row

Aviation giant Airbus says it will file a criminal complaint over allegations that German intelligence helped the US carry out industrial espionage.

German media reports suggest the country's spy agency BND collected data on European firms at the behest of the US National Security Agency.

An Airbus statement quoted by AFP news agency said it was "alarmed" by the reports but did not want to speculate.

The company said it had asked for more information from the German government.

This story was posted on the Internet site yesterday sometime---and it's also courtesy of Roy Stephens.

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Greece "Scrambles"To Make Full Monthly Pension Payments: "Still Missing Several Hundred Million Euros"

According to Bloomberg, the Greek government is €400 million short of the amount needed for payment of pensions and salaries this month, citing a Kathimerini report.

Surprisingly, this takes place even as Greece’s IKA, OGA pension funds have been informed by the government that amount needed for payment of pensions will be deposited today, while the Greece’s OAEE pension fund has said payment of pensions won’t be a problem.

In other words, someone is not telling the truth: either there is enough money or there isn't. And if the latter case is valid, then either the government or the pensions are now openly lying to the population.

This interesting article appeared on the Zero Hedge Internet site at 8:48 a.m. EDT yesterday morning---and I thank reader M.A. for sending it our way.

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World Bank: Ukraine needs deep reform

Deep reforms in sectors ranging from budget management to energy are needed to stimulate the Ukrainian economy, the World Bank Group said.

The Ukrainian government that took power in the wake of political upheaval in November 2013 said the ousted administration of President Viktor Yanukovych left the economy in shambles. In its latest assessment, the World Bank said it expects real gross domestic product in Ukraine will drop 7.5 percent this year, compared with a 6.8 percent drop in 2014.

"Exogenous shocks undermined the efforts of authorities to stabilize the economy and jump start growth in 2014," Qimiao Fan, World Bank country director, said in a statement. "Faster and deeper reforms are the best antidote to these exogenous shocks confronting Ukraine."

As long as the U.S. has its nose stuck in the Ukraine---and continues to prop up the current 'government', these so-called 'reforms' ain't going to happen.  This UPI story, filed from Kiev, was posted on their Internet site at 7:52 a.m. EDT on Thursday morning---and I thank Roy Stephens for sharing it with us.

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Visa and MasterCard resume operations in Crimea

Visa and MasterCard payment cards issued by Russian banks are working again in Crimea after transactions have been transferred to the new Russian National Payment Card System.

Cash withdrawals by Visa and MasterCard holders will be possible through ATMs belonging to the region’s largest bank the Russian National Commercial Bank (RNCB), TASS reported on Wednesday. Russian domestic transactions using Visa and MasterCard were transferred to processing through Russia’s newly created National Payment Card System (NPCS) on April 1. The system has been started to ensure the continued operation of Visa and MasterCard after the two companies refused to work with a number of Russian banks due to Western sanctions last year.

Visa and MasterCard suspended services to Crimean banks in December after US President Barack Obama authorized individual and sectoral sanctions against the peninsula. Later, PayPal, Google and Apple also cut off their products and services from Crimea. Russia’s Bank Rossiya, SMP Bank, InvestCapitalBank and Sobinbank also fell under Western sanctions.

Money talks!  This short news item put in an appearance on the Russia Today website at 10:11 a.m. Moscow time on their Thursday morning, which was 3:11 a.m. EDT in New York.  I thank reader M.A. for sharing it with us.

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Russia to limit apple imports from Serbia

Russian imports of apples from Serbia will be limited, said Russia’s food watchdog Rosselkhoznadzor, citing quality concerns. Moscow has suspected the sharp rise of supplies from Serbia could hide the re-export of banned apples from Poland.

"We have to introduce a prior notice procedure in respect of apple deliveries from Serbia. Products will not be authorized to cross the border without inspection," the head of Rosselkhoznadzor Sergei Dankvert said on Thursday, TASS reports. The tougher measures are related to a “large-scale falsification of Serbian quality certificates”. “We checked 33 Serbian apple certificates and only one of them was authentic,” Dankvert said. The limit on apple supplies will come into force on Friday.

Russia became concerned last month after a significant increase in apples coming from Serbia, and suspected the fruit could have been re-exported from Poland, which is currently under a food embargo.

This brief article was posted on the Russia Today website at 12:50 p.m. yesterday afternoon Moscow time---and the stories from Roy S. just keep on coming.

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Russia Central Bank Cuts Key Rate by 150 bps to 12.50% Citing Risk of "Considerable Economy Cooling"

The days when Russia scrambled to prevent the plunge in its currency in December of 2014, pushing its interest rate to an eye watering 17%, are now a distant memory: moments ago, the CBR announced that following the most recent cut from 15% to 14% on March 13, it once again cut rates by a greater than consensus 150 bps, to 12.50%. The majority of analysts, or 25 of 40, had expected a cut to only 13.00%.

The reason for the bigger than expected cut: "lower inflation risks and persistent risks of considerable economy cooling. Amid ruble appreciation and significant contraction in consumer demand in February-April 2015, monthly consumer price growth declines and annual inflation tends to stabilise."

The immediate reaction has seen the USD/RUB retrace some of its losses suffered earlier today.

This news story is another Zero Hedge offering.  This one appeared on their website at 6:43 a.m. yesterday morning---and it's the second contribution of the day from reader M.A.

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Russia Outplays the West

Regular readers of Russia Insider will know that since we began publication we have consistently made two claims:

The first is that in the Ukrainian conflict Russia holds all the cards.  

Ukraine’s economy is so interconnected with Russia’s that Ukraine cannot function economically without Russia, while the exceptionally tight links between Ukraine and Russia mean that any attempt to distance Ukraine from Russia is certain to fail.

Our second claim is that the West misunderstands and has gravely underestimated Russian society and Russia’s economy.  

We refused to buy the crisis talk so widely current at the end of last year. On the contrary we said the ruble was being oversold, that claims Russia would default or that its economy was in meltdown were nonsense, and that the devaluation of the ruble was ultimately good for Russia.

More and more people are gradually coming round to these views.  The latest article by Leonid Bershidsky for Bloomberg (“Putin Needs Neither War Nor Peace in Ukraine”, Bloomberg, 29th April 2015) is a case in point.

This story falls into the absolute must read category for any serious student of the New Great Game.  It showed up there at around 2 p.m. Moscow time on their Thursday afternoon---and it's the third and final offering of the day from reader M.A.

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Saudi Arabia Is Burning Through Its Foreign Reserves at a Record Pace

Saudi Arabia is burning through foreign reserves at a record pace as the largesse of the new king and regional turmoil ratchet up pressure on public finances already hurt by the oil price slump.

The kingdom spent $36 billion of the central bank’s net foreign assets -- about 5 percent of the total -- in February and March, the biggest two-month drop on record, data released this week show. The fall was in part due to King Salman’s order to give government employees and pensioners a two-month bonus after he ascended to the throne of the world’s biggest oil exporter in January.

The early months of Salman’s rule also saw a sharpening of the country’s rivalry with Iran -- most strikingly over the Saudi-led air offensive in Yemen -- and mounting security threats at home, challenges that had already led to a surge in military spending in 2014. The 48 percent drop in oil prices last year has prompted the government to use reserves and borrow from domestic banks to maintain spending on wages and investments.

“This is going to be an exceptional year in terms of the drop in reserves,” Monica Malik, chief economist at Abu Dhabi Commercial Bank PSJC, said in an interview in Dubai on Thursday. “Even if oil stabilizes between $70 to $80 a barrel next year, there has to be some rationalization of spending objectives to limit a further deterioration in the fiscal position.”

This worthwhile article appeared on the Bloomberg Internet site at 6:41 a.m. Denver time Wednesday morning---and once again I thank Roy Stephens for sending it along.

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With Saudi Arabia Faltering in Yemen, Power in the Region Has Begun To Swing East

Saudi Arabia has announced the end to its campaign in Yemen, but nevertheless air attacks against Ansar Allah and former President Saleh-allied components of the Yemeni army still continue -- albeit on a lesser scale. A Saudi newspaper (without any trace of irony) has announced "mission accomplished." So what is afoot, here?

We do not know the full story, but already it is plain that a major diplomatic effort has induced Saudi Arabia to cut its immediate losses in Yemen. These immediate losses include the images of civilian bomb casualties widely broadcast in the region and the erosion of any residual support for former President Hadi in Yemen, the failure to put together the much-touted Sunni intervention force and the glaring evidence that while Saudi Arabia may have had an objective (restoration to power of the former President), it had no plan for accomplishing it.

As a consequence, Saudi Arabia has found itself isolated. While Iran, Oman and Russia have been busy working on a political initiative (while also seeking to restrain Ansar Allah on the ground), the U.S. has been quietly discouraging the Saudis from continuing the Saudi aerial campaign. The campaign has had little impact on the Ansar Allah-Saleh military effectiveness but has made life hell for most urban Yemenis, with estimates of 1,000+ dead and thousands more injured.

This article, filed from Beirut, showed up on the Internet site very early Wednesday afternoon EDT---and is definitely worth reading if you have the interest.  I thank International Man senior editor Nick Giambruno for bringing it to my attention---and now to yours.

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Taliban Gains Pull U.S. Units Back Into Fight in Afghanistan

Months after President Obama formally declared that the United States’ long war against the Taliban was over in Afghanistan, the American military is regularly conducting airstrikes against low-level insurgent forces and sending Special Operations troops directly into harm’s way under the guise of “training and advising.”

In justifying the continued presence of the American forces in Afghanistan, administration officials have insisted that the troops’ role is relegated to counter-terrorism, defined as tracking down the remnants of Al Qaeda and other global terrorist groups, and training and advising the Afghan security forces who have assumed the bulk of the fight.

In public, officials have emphasized that the Taliban are not being targeted unless it is for “force protection” — where the insurgents were immediately threatening American forces.

But interviews with American and Western officials in Kabul and Washington offer a picture of a more aggressive range of military operations against the Taliban in recent months, as the insurgents have continued to make gains against struggling government forces.

This longish article, filed from Kabul, Afghanistan, was posted on The New York Times website on Wednesday sometime---and is another one of these news items that's definitely worth reading if you have the interest.  I thank Roy Stephens for sending it our way.

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CME Group suspends two gold traders for 60 days for spoofing

CME Group Inc. on Thursday barred two traders from its markets for allegedly colluding to enter orders repeatedly with no intention of trading, a strategy that has been fingered as a key contributor to the 2010 Wall Street flash crash.

Heet Khara and Nasim Salim, both traders of CME Group's gold and silver futures contracts on its Comex exchange in New York, are prohibited from trading for 60 days, according to a disciplinary notice released by the futures exchange giant.

Each trader, the notice said, "entered orders or layered multiple orders to encourage market participants to trade opposite his smaller orders resting on the opposite side of the book. ... After receiving a fill on his smaller orders," each trader "would then cancel the resting order or layered multiple orders that he had entered on the opposite side of the order book."

The CME's action is notable for its swiftness. The activity at issue began in February and last took place on Tuesday, CME Group said. Most CME disciplinary actions are carried out after years of investigations.

One has to wonder why the CME Group has any traders at all in any market.  But since they obviously do, you have to wonder what their real purpose is.  I'm sure there's more to this story than meets the eye.  This Reuters article, filed from San Francisco of all places, appeared on their website at 7:00 p.m. yesterday evening EDT---and I found it embedded in a GATA release.

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Central banks consider joining the LBMA -- So much for transparency

Central banks have expressed interest in joining the London Bullion Market Association, which pretty much runs the London gold market, according to a report by the LBMA's chief executive officer in the May edition of its newsletter, The Alchemist.

Summarizing developments with the association's membership committee, LBMA Chief Executive Ruth Crowell writes: "The committee continues to review a growing number of membership applications, which demonstrates the growing relevancy and diversity of the association. Two new mining companies have joined the ranks of the association. The LBMA welcomes other producers to join and have a voice in the London market. Another demonstration of the diverse reach of the association is the recent interest expressed by some central banks."

Just what we need.  This article, plus some associated links, is something that was posted on the Internet site yesterday---and it's definitely worth reading.

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Silver set for longest slump in 24 years – CPM Group

Silver prices on average will decline for a fourth straight year as supplies grow and investors continue moving their money away from commodities, according to CPM Group.

The metal averaged $16.93 an ounce since the end of December, compared with $19.09 in 2014, CPM said in its “Silver Yearbook 2015.” The price hasn’t declined for four straight years since 1991, according to data from CPM, which didn’t forecast an average price for 2015.

Investors soured on silver and other commodities last year, as production outstripped demand for many raw materials and the dollar rallied amid concern that the Federal Reserve will raise U.S. interest rates. Net investment demand in silver is forecast to drop to 102.9 million ounces this year, after declining 13 percent to 131.6 million ounces in 2014, CPM said in a statement. Mine output will climb 1.1%.

What a crock!  CPM Group, like GFMS and the World Gold Council, will do everything possible to keep the prices of the precious metals in check, including outright lying, which GFMS did on Wednesday---and CPM Group did on Thursday.  We all know why precious metal prices are in the dumpster---and it doesn't have anything to do with what these organizations espouse.  This Bloomberg article found a home over at the Internet site late yesterday morning London time.  Roy Stephens, who sent me this silver-related "story" said that "These guys should crawl back under their rock."  I agree.

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Yuan/Dollar unpegging to SDR to PBOC’s Gold: The relationships are becoming interesting -- Lawrence Williams

This brings us down to the question as to how important inclusion in the SDR is to China.  Is it sufficiently so for the Chinese to drop the dollar peg and probably allow the yuan to rise  accordingly (much as the Swiss Franc did against the Euro when it dropped its peg to the pan European unit)?  Remember the shock the Swiss decision had on the gold market, albeit a relatively short-lived one.  But the dropping of the Yuan peg to the US Dollar could have far greater ramifications in global financial markets.

This could be further exacerbated by a possible revisiting of the Chinese gold reserve figure.  there has been enormous speculation in the West that Chinese gold reserves are in fact far greater than the 1,054 tonnes it has reported to the IMF for the past six years and that it would further enhance the yuan’s standing if these were shown to be far greater than they appear to be officially now.  Even the more conservative estimates suggest China may announce that its gold reserves are in fact some 2,500 tonnes greater than the currently reported level would suggest, moving it up to second place in global gold holding rankings.  Others suggest the level could even be far higher.

Thus a twin announcement of the unpegging of the yuan to the dollar and a substantial uprating of Chinese gold reserves could give the gold price an enormous fillip – and one which those who appear to have been playing the futures market to keep the gold price under control could not counter – unless of course it is China itself which has been keeping the gold price subdued so it can continue to purchase the yellow metal at low prices!  These theories would seem to have no end!

This commentary by Lawrie appeared on his Internet site on Wednesday---and it too is worth reading.

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Apr 30, 2015

U.S. Economy Grinds to a Halt, Again: Q1 GDP Tumbles Below Expectations, Rises Paltry 0.2%

And so the Atlanta Fed, whose "shocking" Q1 GDP prediction Zero Hedge first laid out nearly 2 months ago, with its Q1 GDP 0.1% forecast was spot on. Moments ago the BEA reported that Q1 GDP was far worse than almost everyone had expected, and tumbled from a 2.2% annualized growth rate at the end of 2014 to just 0.2%, in a rerun of last year when it too "snowed" in the winter.  This was well below the Wall Street consensus of a print above 1.0%.

In other words, in the quarter in which the S&P rose to unseen highs, the economy ground to a near halt.

Only this time it wasn't the snow, as the main reason for the plunge in economic growth was not only personal consumption which was cut by more than 50% from last quarter, tumbling to just 1.31%, but fixed investment, i.e., CapEx, which subtracting 0.40% from the bottom line GDP number, was the lowest print since 2009!

This Zero Hedge piece from 8:42 a.m. EDT yesterday morning is definitely worth your while---and today's first story is courtesy of Dan Lazicki.

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The Mysterious U.S.-Session Bond-Seller is Back

After taking two days off last week, the mysterious but persistent U.S. Treasury bond seller is back. Like clockwork as the U.S. market awakes, no matter what the trend overnight, Treasuries are offered in size and yields snap higher...

Around 8 a.m. EDT each day, bonds become magically offered...

This tiny Zero Hedge article, complete with a must see graph, showed up on their Internet site at 9:19 a.m. EDT on Wednesday morning---and it's another story from Dan L.

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The Great Unwind Begins: U.S. Dollar Plunges to 2-Month Lows

Just when you thought it was safe to pile all your money (at maximum leverage) into USD-denominated assets, the greenback plunges... The last 4 days have seen the 2nd biggest drop in 6 years. This has very significant consequences for a world that has become entirely consensus-based across at least 5 major themes... This poses a problem for talking-heads: if USD strength as indicative of US economic strength... what does a plunging USD imply?

This tiny article, with an excellent chart, appeared on the Zero Hedge website at 11:17 a.m. EDT---and it's the third story in a row from Dan Lazicki.

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Fed's downgrade of economic outlook signals longer rate hike wait

The Federal Reserve downgraded its view of the U.S. labor market and economy on Wednesday in a policy statement that suggested the central bank may have to wait until at least the third quarter to begin raising interest rates.

The Fed's statement put in place a meeting-by-meeting approach on the timing of its first rate hike since June 2006, making such a decision solely dependent on incoming economic data.

The data, however, have been getting worse. Just hours before the Fed's statement, the U.S. government reported that first-quarter gross domestic product came in much weaker than expected.

The central bank acknowledged that growth had slowed in the winter months, a dimmer assessment of the economy than its view in March. And while it said the poor performance was in part due to transitory factors, it pointed to soft patches across the economy, in a sign it may have to hold off hiking rates until at least September.

This Reuters article, filed from Washington, showed up on their Internet site at 5:40 p.m. EDT Wednesday afternoon---and it's courtesy of Orlando, Florida reader Dennis Mong.

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Biggest Inventory Build in History Prevents Total Collapse of the U.S. Economy

While we already observed that in Q1, US GDP rose by an appalling 0.2%, far, far below the consensus Wall Street estimate (in case you missed it, here again is the one thing every Wall Street economist desperately needs) and precisely in line with the Atlanta Fed forecast which we brought attention to in early March, confirming yet again that US stocks no longer reflect any fundamentals but merely Fed and global liquidity injections, there is something far more disturbing under the surface of today's GDP report.


Specifically, the $121.9 billion increase in private, mostly non-farm, inventories in the first quarter.

If U.S. inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, U.S. Q1 GDP would not be 0.2%, but would be -2.6%.

This is another Zero Hedge story.  This one appeared on their Internet site at 12:55 p.m. EDT yesterday---and it's another contribution from Dan Lazicki.  It's worth a peek.

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Jim Grant: Fed statement awfully familiar

Jim Grant, Grant's Int. Rate Observer, discusses today's Fed statement and when they may begin to raise interest rates.

This 4:15 minute CNBC video clip appeared on their website at around 5:30 p.m. EDT yesterday afternoon---and it's worth watching.  It's another offering from Dan Lazicki.  Dan also sent along two more CNBC video clips about the Fed meeting.  They involve Marc Faber, stocks and the economy---and they're linked here and here.  The first one runs for 3:25 minutes---and the second for 2:49 minutes.

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Today investors weren't wearing bathing suits: Bill Gross

Bill Gross, Janus Global Unconstrained Bond Fund, predicts when he thinks the Fed will raise rates, and also shares his view on Ben Bernanke being named a senior advisor at Pimco.

This 6:49 minute CNBC video clip was appeared on the their website mid-afternoon on Wednesday EDT---and it's also courtesy of Dan Lazicki.

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Ignore the 'whiff of panic' as U.S. economy stalls

The economy contracted in the first quarter once inventories are stripped out. 'It is hard to put lipstick on that pig,' said UniCredit.

The U.S. economy has suddenly stalled. A blizzard of shockingly weak figures raise the awful possibility that America's six-year growth cycle since the Great Recession has already rolled over, with unsettling implications for the world.

Worse yet, this apparent exhaustion is taking hold even before the Federal Reserve has begun to raise interest rates or to drain any of its $3.7 trillion of quantitative easing and balance-sheet expansion.

Former U.S. Treasury Secretary Larry Summers warned in Davos earlier this year that the Fed typically needs to cut rates by three or four percentage points to combat each cyclical downturn. It is currently at zero. "Are we anywhere near the point when we have 3pc or 4pc running room to cut rates? This is why I am worried," he said.

"Nobody over the last 50 years, not the IMF, not the U.S. Treasury, has predicted any of the recessions a year in advance, never," he said.

They dare not predict a recession or a depression, or its curtains for the equity markets, the bond markets---and the U.S. dollar.  Ambrose Evans-Pritchard tries to put some lipstick on this particular pig anyway, but it rings hollow.  This commentary put in an appearance on The Telegraph's website at 9:17 p.m. BST yesterday evening, which was 4:17 p.m. EDT in New York.  I thank Roy Stephens for sliding it into my in-box just after midnight Denver time.

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The Dwindling U.S. Economy — Paul Craig Roberts

The announcement today (April 29) of a barely positive GDP first quarter 2015 growth rate of 0.2 percent (two-tenths of one percent) is an intentional exaggeration.

Today’s GDP report is the “advance estimate.” There will be two revisions, with the first occurring in one month on May 29.

Although the “consensus estimate,” which is Wall Street’s estimate, declined dramatically over the past month, the consensus estimate was for 1.0 percent.

The BEA’s advance estimate bears the burden of impact on financial markets even though it is the least reliable estimate. Subsequent revisions receive much less attention. Because of its market impact, the advance estimate is fudged by the Bureau of Economic Affairs (BEA) in order not to upset financial markets keyed to the consensus forecast.

This commentary by Paul was posted on his website on Wednesday afternoon sometime---and I thank reader M.A. for sharing it with us.

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The War on Cash: Transparently Totalitarian

While the forces pushing for centralization of power have been prevailing for decades, they haven’t won a total victory yet. Technologies that empower the individual and that tend toward decentralization—including the Internet, encryption, 3D printing, and cryptocurrencies—offer a powerful ray of hope, reasons to be optimistic about the future.

So the tug of war between the collectivists and the rest of us continues.

One thing that would tip the scales heavily in favor of the collectivists would be victory in the War on Cash. Their goal is to eliminate the use of hand-to-hand currency, so that governments can document, control, and tax everything.

It’s exactly like what Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

This commentary by senior editor Nick Giambruno appeared on the Internet site yesterday.

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G20: fossil fuel fears could hammer global financial system

Top energy watchdog says two thirds of all assets booked by coal, oil and gas companies may be worthless under the 'two degree' climate deal.

The G20 powers have launched a joint probe into global financial risks posed by fossil fuel companies investing in costly ventures that clash with international climate goals and may never be viable.

World leaders are increasingly concerned that a $6 trillion wave of investment into the nexus of oil, gas, and coal since 2007 is based on false assumptions, leaving companies with an overhang of debt and "stranded assets" that cannot easily be burned under CO2 emission limits.

The G20 has asked the Financial Stability Board in Basel to convene a public-private inquiry into the fall-out faced by the financial sector as climate rules become much stricter. All member countries have agreed to co-operate or carry out internal probes, including the United States, China, India, Russia, Australia, and Saudi Arabia.

Diplomatic sources have told The Telegraph that the investigation is being pushed by France and is modelled on a review launched by the Bank of England last year.

Say what?  It must be a slow news day over at The Telegraph, but when you're one of the fair-haired boys for the powers-that-be, I suppose you write what you're told.  This Ambrose Evans-Pritchard commentary is worth reading, only because it's so preposterous.  I thank Roy Stephens for his second contribution of the day.  It was posted on the Internet site at 7:12 a.m. BST yesterday morning, which was 2:12 a.m. EDT.

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Negative interest rates put world on course for biggest mass default in history

Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate.

With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them.

On a country by country basis, the statistics are even more startling. According to investment bank Jefferies, some 70pc of all German bunds now trade on a negative yield. In France, it's 50pc, and even in Spain, which was widely thought insolvent only a few years ago, it's 17pc.

Not only has this never happened before on such a scale, but it marks a scarcely believable turnaround on the situation at the height of the eurozone crisis just a little while back, when some European bond markets traded on yields that reflected the very real possibility of default. Yet far from being a welcome sign of returning economic confidence, this almost surreal state of affairs actually signals the very reverse. How did we get here, and what does it mean for the future? Whichever way you come at it, the answer to this second question is not good, not good at all.

This longish commentary from Jeremy Warner showed up on the Internet site at 6:14 p.m. BST on Tuesday evening in London---and it's worth reading.  I plucked it from yesterday's edition of the King Report.

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To Commerzbank: German Bunds Are "Flash Crashing"

As first Bill Gross and then Jeff Gundlach suggest shorting German bonds, so it appears the message has sunk in that at 4.9bps 10 days ago, 10Y Bund yields were the short of a lifetime. Since then they have soared, with a dramatic doubling today from 14bps to over 29bps - the highest yield in 7 weeks. As Commerzbank warns, "a cascade of small events is creating a large splash in a structurally ever-thinner market," which has led to a plunge "similar to U.S. Treasury flash crash of Oct. 15."

Yields are crashing higher...Doubled in a day!

This is another story from the Zero Hedge Internet site that's courtesy of Dan Lazicki---and it was posted on their website at 11:36 a.m. EDT on Wednesday.  The charts are worth a look.

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Greek Banks Get More Funds as ECB Weighs Collateral Discount

The European Central Bank raised the amount of emergency liquidity available to Greek banks, while signaling that access to such funds may become more difficult if bailout talks remain deadlocked.

The Governing Council lifted the cap on Emergency Liquidity Assistance by 1.4 billion euros ($1.5 billion) to 76.9 billion euros on Wednesday, people familiar with the decision said. That follows an increase of about 1.5 billion euros last week. An ECB spokesman declined to comment.

With no speedy deal between Greece and its creditors in sight, the ECB is studying measures to rein in ELA funding to limit risks. Staff have proposed increasing the discounts imposed on the securities banks post as collateral when borrowing, and the Governing Council may discuss the issue at its May 6 meeting.

This Bloomberg article appeared on their Internet site at 2:24 A.M. Denver time on their Wednesday morning---and I thank West Virginia reader Elliot Simon for sending it our way.

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Kremlin Confirms Putin-Merkel Talks in Moscow on May 1

Russian President Vladimir Putin will hold talks with German Chancellor Angela Merkel in Moscow on May 10, Kremlin spokesman Dmitry Peskov confirmed Wednesday.

The German government made an announcement of the meeting between the two leaders earlier in the day.

"It's true, we are expecting the German chancellor in Moscow on May 10. Merkel and Putin will hold talks in the Kremlin in 'narrow' and 'expanded' formats," Peskov told reporters.

The leaders are also expected to hold a joint press conference on the result of the talks, Peskov added.

This story, which really isn't new 'news' appeared on the Internet site at 8:26 p.m. Moscow time on their Wednesday evening, which was 1:26 p.m. EDT in Washington.  It's courtesy of Roy Stephens.

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Putin Accuses 'Quasi-Partners' of Counting on Russia Collapse

President Vladimir Putin accused some of Russia’s “quasi-partners” on Monday of counting on the country’s collapse by cutting its banks off from the global financial system at a time when oil prices had plunged.

“After the fall in oil prices from $100 a barrel to 50, 160 billion out of 500 did not come into the economy,” he said, apparently counting in dollars.Speaking in Russia’s second city of St Petersburg, Putin said they had been proved wrong and the economy had easily weathered the crisis, deepened by Western sanctions imposed to punish Moscow over its policies in Ukraine.

“It’s a big figure. And at the same time our quasi-partners limited access of our banks to refinance on the European markets.”

Putin did not make clear what he included in his calculations. Russia has lost income because of a fall in export revenues in dollar terms, a sharp decline in foreign investment and capital flight.

This Reuters article was picked up by the Internet site around 8 p.m. Moscow time Wednesday evening---and it's another offering from Roy Stephens.

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Saudi royal reshuffle likely to ensure kingdom’s U.S. loyalty for decades

In a move that is likely to solidify ties with the US for decades to come, King Salman of Saudi Arabia has undertaken a major reshuffle, appointing Mohammed bin Nayef as his new successor and his son Mohammed bin Salman as second in line to the throne.

The decision by King Salman, who succeeded his late brother King Abdullah, who died on January 23, replaces his half-brother Prince Muqrin with Mohammed bin Nayef as crown prince and heir to the Saudi throne.

Mohammed bin Salman, who is 34 years-old, is King Salman’s son. In his position as defense minister, the new deputy crown prince has been overseeing the Saudi-led coalition’s bombing campaign against anti-government Houthi forces in Yemen.

Both princes are part of a generation of grandsons of Saudi Arabia’s founder, the late King Abdulaziz al-Saud, whose sons have passed power from brother to brother since his death in 1953.

The majority of the family’s Allegiance Council approved both appointments. The selections are seen as a shift away from the princes who had been favored by King Salman’s predecessor, King Abdullah.

This longish but very interesting commentary appeared on the Russia Today website at 12:45 p.m. Moscow time on their Wednesday afternoon---and once more my thanks goes out to Roy Stephens for finding it for us.

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Putin: Czar of Natural Gas, Crude Oil, Uranium and GOLD

Well-known Moscow journalist Dmitry Kalinichenko expressed it well:  “Very few people understand what Putin is doing at the moment. And almost no one understands what he will do in the future.  No matter how strange it may seem, but right now, Putin is selling Russian oil and gas only for physical gold.

Nonetheless, the above comments provide valuable insights into what President Putin’s plan is most likely to be…and how it will eventually and materially benefit the Russian economy.

Russia more than tripled its gold hoard since 2005 and holds the most since at least 1993, IMF data show. The country is boosting Central Bank reserves to diversify foreign reserves with a view to resolving issues related to ruble liquidity, central bank Governor Elvira Nabiullina said in February.

Additionally, Kazakhstan’s gold hoard jumped 33 percent in the past 12 months, data compiled by Bloomberg show.  Kazakhstan is an ally of Russia…and is a former member of the Soviet Union (U.S.S.R).

This begs the mind-boggling question:  What is shrewd Putin’s covert objective…and what does he stealthy have up his sleeve?

This commentary by Vronsky, the proprietor over at, was posted on his website on Tuesday sometime.  Most of what's in here about gold you've already seen in my column under different guises, but it is worth reading if you have the interest.  It's the second contribution of the day from Elliot Simon.

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Marc Faber talks about protection strategies---gold, and gold stocks

Marc Faber, the editor of the Gloom, Boom & Doom Report, tells CNBC's Dominic Chu why he still likes gold.

This 2:44 minute CNBC video clip appeared on their Internet site around 5:30 p.m. EDT yesterday afternoon---and I thank Dan Lazicki for his final contribution to today's column.  It's worth your while.

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India brushes off concerns over gold import spike - for now

Weak oil and commodity prices are offsetting concerns at India's central bank over the impact of a spike in gold imports on the broader economy, officials say, even as the industry forecasts another three months of strong buying.

A more sustained increase in bullion imports after June, however, could cause concern, a policymaker said.

"(While) we have the comfort from low oil prices, there is a large cushion and we don't need to be very concerned about the gold imports numbers," said one senior official involved in policy decisions, who declined to be named.

Concern would kick in if imports stay at or over 100 tonnes a month after June, he said.

This very interesting gold-related Reuters story was filed from Mumbai and posted on their Internet site at 2:14 p.m. IST yesterday afternoon---and it's worth reading.  I found it embedded in a GATA release.

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GFMS Q1 update confirms China as world No. 1 gold consumer

If one is happy to take GFMS figures as providing a consistent ranking on global gold demand figures (although some would dispute them) we should be able to rest the argument as to which country – China or India – was the world’s No. 1 gold consumer last year and, as we have said all along, China comes out on top. Unfortunately, not that it matters that much in the scheme of things, the world’s mainstream media keeps on insisting that India retook first place from China last year, and this is all down to the preliminary figures published by the World Gold Council (WGC) back in February in its first Gold Demand Trends report of the year (based on figures then also supplied by GFMS). It will be interesting to see if the WGC publishes a correction in its next Gold Demand Trends report due out in a couple of weeks’ time, and even if it does whether the mainstream media will even take notice but just continue to rely on the earlier figure. The February estimate seems to be set in stone by them.

As we have no doubt pointed out beforehand, Chinese consumption would have been streets ahead of that for India again last year if what is described as ‘bank activity’ was included – and also if Hong Kong’s consumption was lumped together with that of the Chinese mainland – after all Hong Kong is officially an integral part of China, although classed separately in trade figures as a Special Economic Region. GFMS does note that Chinese imports of gold, and deliveries from the Shanghai Gold Exchange (SGE) considerably exceeded the quoted consumption figure owing to growth in gold leasing, increased holdings by commercial banks to back paper products (a legal requirement) and perhaps some double counting of gold due to round-tripping to Hong Kong.

Lawrie is absolutely right to be skeptical of anything that comes out of GFMS, or their ilk---and I'm glad to see him point this out right up front.  This commentary was posted on the Internet site at 10:34 a.m. BST yesterday morning---and it too, is worth reading.

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