Gold World News Flash |
- Gold and Silver Price To Rally Or Not To Rally
- China Acquired 2000 Tonnes of Gold In 2013, Almost Double World Gold Council Estimates
- Koos Jansen: “If the whole world knew about this, the price of gold would triple tomorrow.”
- Corrupt Paper Markets May Reverse Gold, Silver & Oil Higher
- Shanghai Exchange Chairman Admits China Gold Demand TOPPED 2,000 TONS In 2013
- Faber's likely last time on BNN: Gold and silver markets are manipulated
- Robert Fitzwilson: Will world reject the West's paper-manipulated markets?
- Asian market hubs move into gold
- Hussman Warns Beware ZIRP "Hot Potatoes": Examine All Risk Exposures
- Ripple Effects Begin: Dubai Crashes Over 6.5%, Most In 14 Months
- Why Everyone Should Be Watching PIMCO (In 2 Worrying Charts)
- King Dollar - Be Careful What You Wish For
- New Zero Bound Only Game In Town
- China gold market researcher Koos Jansen interviewed by TF Metals Report
- The 5–Year U.S. Treasury Bond is Emblematic of Careless Risk Taking in Bond Markets
- A New Age Of IMF Bailouts – Great Britain In The 1970s
- All Hail Obama : America, Prosperity is Here!
- Weekend Update October 10
- Draghi says growing ECB balance sheet is last stimulus tool left
| Gold and Silver Price To Rally Or Not To Rally Posted: 13 Oct 2014 01:12 AM PDT Both gold and silver rallied nicely off their lows the past week. So, is this the start of something bigger or just another blip in a doom and gloomy bear market? Let's have a look at the charts to find out. We'll begin with gold. |
| China Acquired 2000 Tonnes of Gold In 2013, Almost Double World Gold Council Estimates Posted: 12 Oct 2014 11:30 PM PDT from Jesse's Café Américain:
Dr. Rudi Dornbusch The lack of intelligent coverage by the media for this sea change in global asset allocations is remarkable. Koos Jansen has been doing some terrific work in this area. I have some suspicions about where the gold bullion that is leaving the Western funds and ETFs is going. Gold is moving steadily from West to East. When the reckoning comes, it may be terrific. |
| Koos Jansen: “If the whole world knew about this, the price of gold would triple tomorrow.” Posted: 12 Oct 2014 10:00 PM PDT from Koos Jansen: |
| Corrupt Paper Markets May Reverse Gold, Silver & Oil Higher Posted: 12 Oct 2014 09:01 PM PDT  As the world continues to move into uncharted territory, today a 40-year market veteran warned King World News that the corrupt paper markets may now be set to reverse the gold, silver & oil markets higher. He also discusses what investors should be doing in this dangerous environment. Below is what Robert Fitzwilson, founder of The Portola Group, had to say in this exclusive piece for King World News.This posting includes an audio/video/photo media file: Download Now |
| Shanghai Exchange Chairman Admits China Gold Demand TOPPED 2,000 TONS In 2013 Posted: 12 Oct 2014 08:20 PM PDT from ZeroHedge:
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| Faber's likely last time on BNN: Gold and silver markets are manipulated Posted: 12 Oct 2014 07:27 PM PDT 10:31p ET Sunday, October 12, 2014 Dear Friend of GATA and Gold: Financial letter writer Marc Faber made on Friday what likely will be his last appearance on Business News Network in Canada -- not because of failing health or retirement but because he declared that the monetary metals markets are manipulated. As soon as Faber made his declaration on BNN's "Business Day" program, moderator Frances Horodelski cut him off, asserting that time had run out. Horodelski asked Faber if gold would reverse upward with other commodities when the U.S. dollar falls. Faber replied: "Precious metals can still go lower, because, as some knowledgeable people have proven, the markets are manipulated. But I don't think they will stay low. I think they may go lower temporarily and then rebound strongly, and if I were a reader, I would no longer trust central banks, and [instead] say, 'I want to be my own central bank and have some gold and silver stored in a safe place, certainly not in the U.S." BNN's likely final interview with Faber is 9 minutes and 22 seconds long, with the comments about gold and silver market manipulation coming at the 8:15 mark. Until BNN takes it down, it can be watched at the network's Internet site here: http://www.bnn.ca/Video/player.aspx?vid=464264 CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Jim Sinclair's Next Market Seminar Will Be Held Nov. 15 in San Francisco Mining entrepreneur and gold advocate Jim Sinclair will hold his next market seminar from 10 a.m. to 3 p.m. on Saturday, November 15, at the Holiday Inn at San Francisco International Airport in South San Francisco, California. Admission will be $100. For more information and to register, please visit: http://www.jsmineset.com/2014/10/10/san-francisco-qa-session-announced/ Join GATA here: New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Robert Fitzwilson: Will world reject the West's paper-manipulated markets? Posted: 12 Oct 2014 04:06 PM PDT 7p ET Sunday, October 12, 2014 Dear Friend of GATA and Gold: Money manager Robert Fitzwilson of the Portola Group, writing at King World News, notes that unbacked futures contracts control the price of oil as much as they control the price of gold and silver. He argues that the recent decline in oil prices is not supported by supply and demand fundamentals for the real thing. Fitzwilson speculates about "the end of worldwide acceptance of Western paper-manipulated markets." His commentary is posted at KWN here: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/10/13_C... CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy metals at GoldMoney and enjoy international storage GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit: http://www.goldmoney.com/?gmrefcode=gata Join GATA here: New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Asian market hubs move into gold Posted: 12 Oct 2014 03:32 PM PDT Asian Market Hubs Move Into Gold Demand From Region Is World's Largest but Most Trading Is in West By Biman Mukherji and Ese Erhereine Asians buy most of the world's gold, but nearly all of it trades in London. Now, with Western investors souring on the metal, the region is making a bid for some of the action. Three big financial hubs in Asia are separately launching trading in a gold contract, each backed with physical gold. If they draw enough investors, the contracts could influence the price of gold, which is set by a daily fix in London. ... China is now the world's largest producer and consumer of gold, and the biggest importer, as domestic demand has outstripped supply. India also is a major buyer and importer. Two-thirds of global gold purchases come from Asia, the World Gold Council says. Still, many observers say Asia is likely to find it a hard task to unseat London as the world's center for gold trading. A major reason: China bans the export of gold bullion, arguing its huge domestic production is needed to meet local demand. That means gold can flow into China when prices there are above those set in London, but cannot move the other way. Beijing's strict controls also limit movement of capital. ... "The greater prominence of prices out of Asia can only enhance the mix, but I doubt within the next couple of years that it will fundamentally change the way spot prices are derived," says Ross Norman, chief executive officer at Sharps Pixley, a London-based bullion broker. ... ... For the remainder of the report: http://world.einnews.com/article/228757932/JSFuQtFN1QPMeHZ7 ADVERTISEMENT Anglo Far-East is a global market leader and innovator that for more than two decades has provided private purchase, vaulting, security logistics, transport, and liquidation of allocated gold and silver bullion outside of the banking system. AFE clients include individuals, family offices, and institutions like banks and regulated funds. Anglo Far-East: Think Outside the Bank Here's what one of our generationally wealthy clients has to say about AFE: http://www.afeallocatedcustody.com/research/teleconferences/download-inf... To get started, please visit: https://secure.anglofareast.com/ Anglo Far-East: Think Outside the Bank Join GATA here: New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| Hussman Warns Beware ZIRP "Hot Potatoes": Examine All Risk Exposures Posted: 12 Oct 2014 01:16 PM PDT Excerpted from John Hussman's Weekly Market Comment, Present conditions create an urgency to examine all risk exposures. Once overvalued, overbought, overbullish extremes are joined by deterioration in market internals and trend-uniformity, one finds a narrow set comprising less than 5% of history that contains little but abrupt air-pockets, free-falls, and crashes. * * *
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* * * In recent weeks, the market has transitioned to the most hostile return/risk profile we identify: the pairing of overvalued, overbought, overbullish conditions with deterioration in market internals and price cointegration – what we call “trend uniformity” – across a wide range of stocks, sectors, and security types (see my September 29, 2014 comment Ingredients of a Market Crash). As in 2007 and 2000, we’re observing characteristic features of that shift. One of those features is that early selling from overvalued bull market peaks tends to be indiscriminate, as deterioration in market internals and the “average stock” often precedes substantial losses in the major indices. As of Friday, only 28% of NYSE stocks are above their respective 200-day moving averages. In the current cycle, both the Russell 2000 small-cap index, and the capitalization-weighted NYSE Composite set their recent highs on July 3, 2014, failing to confirm the later high in the S&P 500 on September 18, 2014. Through Friday, the NYSE Composite is down -7.3% from its July 3rd peak, and the Russell 2000 is down -12.8%, while the S&P 500 is down only -4.0% over the same period. What’s happening here is that selling is being partitioned in secondary stocks, and more recently high-beta stocks (those with greatest sensitivity to market fluctuations). Market action is narrowing in a classic pattern that reflects the effort of investors to reduce risk around the edges of their portfolios, in what typically proves an ill-founded belief that a falling tide will not lower all ships. Abrupt market losses are typically not responses to obvious “catalysts” but instead reflect a shift in investor preferences toward risk aversion, at a point where risk premiums are quite thin and prone to an upward spike to normalize them. That’s essentially what’s captured by the combination of overvalued, overbought, overbullish coupled with deteriorating internals. Another characteristic of these shifts is increasing volatility at short intervals – what I described at the 2007 peak and in early-2008 by analogy to “phase transitions” in particle physics. The extreme daily and intra-day market volatility in recent sessions is typical of that dynamic. ... No doubt – this pile of zero-interest hot potatoes has helped to compress risk premiums across the entire range of risky assets toward zero (and we estimate, in some cases, below zero). But understand that the bulk of the advance in financial assets in recent years has not been a reasonable response to the level of interest rates, but instead reflects a dangerous compression of risk premiums. ... In short, every 3-month period of additional zero-interest rate policy promised by the Fed is worth about a 1% premium over historical valuation norms. Another year would be worth a premium about 4% over historical norms. But with the market more than double historical norms on reliable measures, the Fed would have to promise a quarter of a century of zero interest rate policy before current stock valuations would reflect a “reasonable” response to interest rates. No – stocks are not elevated because low interest rates “justify” these prices. They are elevated because the risk premium for holding stocks has been driven to zero. We presently estimate negative total returns for the S&P 500 on every horizon shorter than 8 years. ... Though we should allow for a potential improvement in market conditions, I do believe that now is a particularly bad time to rely on the idea that “this time is different” with money you cannot afford to lose. This does not require forecasts about market direction – only proper consideration of market risk. Make sure that the portfolio of risks you do hold is the portfolio that you want to hold over the completion of the market cycle, understand the risk profile and actual losses that various asset classes have experienced over prior market cycles, take account of the prospective returns that are embedded into current valuations, and insist on historically reliable measures of valuation that demonstrate a strong association with actual subsequent returns over numerous market cycles across history. ... Investors should understand that “prices and valuations are high” is another way of saying “future returns have already been realized, leaving little to be gained for quite some time.” |
| Ripple Effects Begin: Dubai Crashes Over 6.5%, Most In 14 Months Posted: 12 Oct 2014 12:00 PM PDT It appears the weakness in US equity markets (the last of the hot money flow darlings to be hit) is now rippling back down the bubble-complex of world equity markets. Dubai, infamous for its huge surge in the last 2 years and 36x over-subscribed IPO of a company with no actual operations - which marked the top before a 30% collapse - was open for business today and crashed 6.5%. This the Dubai Financial Markets General Index biggest daily drop in 14 months... the ripple effect is beginning.
It appears the hot money trades are slowly being unwound... commodities, EM FX, HY credit, and now US equities...
And are now blowing-back to the rest of the world's most bubblicious markets...
Charts: Bloomberg |
| Why Everyone Should Be Watching PIMCO (In 2 Worrying Charts) Posted: 12 Oct 2014 11:29 AM PDT By now it is clear to everyone that the force-feeding of free-money into financial markets by The Fed et al. has led to a scale of financial repression never before witnessed as bond yields for even the riskiest of risky names collapse to record lows and cheap-financed share buybacks raise leverage to record highs and support an ever more fragile equity wealth creation machine. As Blackrock (and many others) have recently proclaimed, the corporate bond market is "broken" and the risk posed by investors trying to dump bonds is"percolating right under" the noses of regulators; so it is with grave concern we suggest the following two charts - showing the massive out-sized holdings of PIMCO's funds in the high-yield and emerging market debt markets leave a bond marketplace in fear that forced sales via redemptions are the straw that breaks the 'central bank omnipotence' narrative's back...
PIMCO - simply put - dominates the market for high-yield and emerging market debt...
Source: IMF And if you are under some mistaken belief that they can fund redemptions from cash or more liquid assets... think again...
In other words, the massive (and likely levered) positions The Fed has forced the world to take on by its repression face a dramatic liquidity risk cost if they are ever to 'realize' any gains from the Fed's handouts (by actually selling). That's what every bond manager 'knows'... * * *
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| King Dollar - Be Careful What You Wish For Posted: 12 Oct 2014 10:32 AM PDT It's so good to be the cleanest dirty shirt, right? Wrong...
As the dollar has strengthened in recent weeks, so the performance of stocks in the S&P 500 most dependent on overseas revenue has collapsed... and furthermore, a strong dollar implies (all else being equal) a weaker oil price and as is already evident from Energy stocks, likely means significant capital-spending cutbacks among E&P firms... Not exactly the escape velocity, rates will rise, Fed is only leaving coz things are so awesome, King Dollar meme now is it... * * * As Barclays previously warned... it is the root cause of dollar strength that is most important While the S&P 500 may not be correlated to the dollar and translation may be dismissed as accounting, dollar strength is important, in our opinion, because it is a symptom of decelerating international economic growth. This is particularly true for Europe, which is the second largest market for S&P 500 companies. European growth has continued to slow and our 2014 GDP estimate is now just 0.7%. In addition, deflation remains a concern, with recent inflation readings of just 0.5% and long-term expectations falling below 2%. Outside of Europe, China has slowed, Japan is growing at just 1.1%, and Brazil is grappling with recession.
For the S&P 500, which derives upwards of 30% of sales from outside the U.S., decelerating international growth is surely a risk.
Source: Bloomberg |
| New Zero Bound Only Game In Town Posted: 12 Oct 2014 09:43 AM PDT The Federal Reserve tried to fix the U.S. economy by Quantifornication - stimulus measures. Investors reacted to the Fed's unconventional efforts. Since the U.S. dollar is the world's reserve currency and precious metals are priced in dollars they bought gold and silver to protect their wealth against currency devaluation and inflation. Gold catapulted to a record in 2011 as investors wagered on higher inflation and a weakening dollar. |
| China gold market researcher Koos Jansen interviewed by TF Metals Report Posted: 12 Oct 2014 09:05 AM PDT 12:02p ET Sunday, October 12, 2014 Dear Friend of GATA and Gold: Gold researcher and GATA consultant Koos Jansen, market analyst for Bullion Star in Singapore, was interviewed last week by the TF Metals Report's Turd Ferguson, discussing Jansen's groundbreaking work on China's gold and silver markets, including the increasingly crucial question of when China will reach the total of gold reserves claimed by the United States. The interview is 58 minutes long and can be heard at the TF Metals Report here -- http://www.tfmetalsreport.com/podcast/6214/chinese-gold-demand-expert-ko... -- and at Bullion Star here: https://www.bullionstar.com/article/koos%20jansen%20interview CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Buy precious metals free of value-added tax throughout Europe Europe Silver Bullion is a fast-growing dealer sourcing its products from renowned mints, refiners, and distributors. Because of a legal loophole that will close soon, you can acquire the world's most popular bullion coins free of value-added tax throughout the European Union. You can collect your order in person at our headquarters in Tallinn, Estonia, or have it delivered in any of the 28 EU countries. Europe Silver Bullion is owned and operated by North American and European experts in selling, storing, and transporting precious metals. We have an extensive product inventory of silver, gold, platinum, and palladium, and our network spans the world. Visit us at www.europesilverbullion.com. Join GATA here: New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
| The 5–Year U.S. Treasury Bond is Emblematic of Careless Risk Taking in Bond Markets Posted: 12 Oct 2014 08:58 AM PDT Dovishness Begets Excessive Risk Taking by Speculators The Fed minutes came out this past week and they mentioned the strong dollar and less than stellar growth out of Europe, basically more over the top dovishness which just encouraged more unwise risk taking in the bond markets. This week Dallas Fed's Fisher said that they have identified areas of risk in markets, and James Bullard has said on several occasions that the markets are even behind the most dovish participants at the Federal Reserve regarding the forecasts for rate hikes, and the actual market actions of participants. |
| A New Age Of IMF Bailouts – Great Britain In The 1970s Posted: 12 Oct 2014 08:40 AM PDT Submitted by Erico Tavares of Sinclair & Co A New Age Of IMF Bailouts – Great Britain In The 1970s Hearing of IMF interventions generally conjures up images of developing nations (and the occasional Eurozone peripheral economy of late) facing some kind of financial difficulty. But it was actually Great Britain, the cradle of the industrialized world, which in 1976 became one of the first countries ever to be "bailed out" by the IMF in the modern sense of the term.
Now, previously the IMF had already provided financial assistance plenty of times, including to several advanced countries. Out of the 22 countries which were part of the OECD in the 1960s, no less than 8 negotiated new IMF programs during that decade, including France (1969), Japan (1962, 1964), Great Britain (1961-64, 1967, 1969) and even the US (1963-64). But these had been mostly to address short-term balance of payment issues. Britain's bailout in 1976, on the other hand, had strict conditionality elements with deep repercussions on the prevailing political ideology, sparking an intense private and public debate at the time as to whether the country should actually accept it. This episode inaugurated a much more interventionist approach by the IMF, anticipating many features of modern assistance programs. The bailout arguably marked the culmination of a secular decline which had begun decades earlier. With the emergence of America and the Soviet Union as the global ideological and de facto superpowers at the end of World War II, the sun was setting fast upon the British Empire, which would fade away not long after. Still, in the postwar decades Great Britain offered plenty of prosperity, along with a free and vibrant society (who can ever forget the swinging sixties?), world-class music bands, abundant energy supplies and a respectable manufacturing sector. Then came the 1970s. And things got bad pretty quickly. Some Historical Context The Labor Party was elected with a landslide majority in 1945 against the iconic wartime leader Sir Winston Churchill of the Conservative Party. Sweeping economic reforms were promptly introduced: the creation of a welfare state with national health, pensions and social security; industries were nationalized, seeking to broaden the state-planned manufacturing vitality during the war years; and taxes were raised to pay for the whole thing. As Britain emerged from the wartime devastation, the economy got better and better, and accelerated in earnest after Churchill's return to power in 1951. However, things were beginning to heat up abroad, with war raging in Korea, waves of Arab nationalism following the creation of the State of Israel and an increasingly belligerent Soviet Union. The Suez crisis of 1956 weakened Britain's global standing and the government's reputation, leading to the resignation of Anthony Eden, the Conservative Prime Minister who had succeeded Churchill. But the economy managed to remain fairly robust with low unemployment into the 1960s, aided by tax cuts and other stimulative policies. Nevertheless, this was a time of change. Harold Wilson, the Labor party leader, ended 13 years of Conservative rule with a narrow victory in 1964 before increasing his majority in 1966. But despite the traditionally "euroskeptic" Conservatives losing their grip on power, Britain's second attempt to join the European Economic Community ("EEC") was once again vetoed by France's President, Charles de Gaulle, in 1967. At the same time, Britain's increasing lack of competitiveness internationally was starting to become very apparent. The government eventually devalued the pound in 1967 to stem the continuous outflow of gold and dollar reserves. By the end of the decade, the swinging sixties were no longer swinging all that much. And Wilson was surprisingly voted out of power in 1970. In came a new Conservative government led by Edward Heath. And that's when things started to get interesting. Unlucky Heath Ushers In the Unlucky 1970s Heath came in through the liberal wing of the Conservatives, which means that he was a bit of a rare bird in relation to the party's traditional free market values. A proponent of the "third way", he was pro-union, favored devolution of power to Scotland and Wales, launched the Department of the Environment and nationalized Rolls-Royce Aircraft Engines as it was about to go bankrupt. His manifesto was to modernize Britain and reverse its economic decline through better management, efficiency and above all by joining the EEC, which it finally did in the early part of the decade. Unfortunately, things started to go wrong right after Heath took over. Council workers went on strike in October 1970, an opening salvo in workers action that would become endemic over the rest of his mandate. His Industrial Relations Act of 1971 was bitterly opposed by the trade unions it sought to court. A global financial crisis was slowly unfolding as Bretton Woods collapsed. There was massive unrest in Northern Ireland, complete with assorted terrorist attacks. And then the first oil shock hit in 1973. Economic policy was also becoming volatile. In a bid to contain a rising unemployment, the new government had decided to pump up demand. Large tax cuts were implemented, along with policies to boost salaries and credit growth. While the economy responded favorably initially, a period known as the "Barber boom" (named after the Chancellor Anthony Barber), inflation began accelerating to levels not seen since the war. The oil crisis only made things worse, with price inflation reaching double digits by the end of 1973. As the Barber boom faded, the economy plunged into a deep recession, with output declines not seen since the depression in the 1930s. Britain was now stuck in "stagflation". In order to prevent inflation from spiraling out of control, the government responded by capping wages. Workers organizations responded immediately. In 1973, miners went on strike and were also joined by sympathetic trade unionists. Flying pickets successfully blocked coal and coke factories, which at the time produced the majority of the nation's power. With power in short supply, economic activity had to be curtailed. At the height of the strikes, Britain was on a mandatory 3-day workweek.
On Heath's watch, the country would go on to lose 9 million working days to strike action. His government was in constant turmoil, declaring a state of emergency in a peacetime record of five times. The last of these, in 1974, triggered an early election, bringing Harold Wilson back in power: a known face hoping to govern an increasingly ungovernable Britain. New Government, Same Problems
Figure 1: Annual CPI Inflation in Selected Countries, 1969-1979 Britain's inflation rate steadily outpaced that of its main trading partners for most of the decade. The peak was reached in 1975 at almost 25% annually, compared to a little over 9% for France and a remarkable 5.4% in Germany. Whatever ideas the new Labor government had, clearly they were not working. Primary among these was the "Social Contract", a grand plan to run Britain like Germany, with government ministers and union leaders meeting to discuss policy and the best course for the country. And like all grand plans, it did not take long to backfire. The unions decided that they were in charge of the country and that their members should always get the best deal at the expense of everybody else. At the same time, the balance of payments situation was getting serious. In December 1974, Energy Minister Lord Balogh, an economist, warned Wilson that the country was exposed to a violent withdrawal of short-term money if people took fright on the British pound. If inflation was not contained a deep constitutional crisis could follow. But the inflation rate remained stubbornly high, along with unemployment and budget deficits. As other advanced economies gradually recovered from the first oil shock, it did not take long for this increasingly unsolvable toxic trifecta to be noticed abroad.
Figure 2: British Pound vs US Dollar, Monthly, Jan 1971 – Dec 1979 In April 1975, the Wall Street Journal ran the headline "Goodbye, Great Britain", advising investors to get out of the pound. The advice was well taken. The steady decline initially turned into a rout by late 1975. And it got worse from there. The hesitation of British politicians in confronting the situation was being watched with trepidation across the Atlantic. In early 1976, Charles Robinson, the US Under-Secretary of State for Economic Affairs wrote: "The UK's persistent double-digit inflation and low productivity have forced abandonment of serious Bank of England efforts to defend the pound. Workers demanded and have been granted inflationary wage increases". As the situation got more and more desperate, Wilson decided he had enough and called it quits. In April 1976 a new government was formed with James Callaghan as the Prime Minister. Time was running out for Britain. And so was the money. The IMF Bailout The political landscape was becoming even more complex. Labor had already lost its small majority in the House of Commons by the time Callaghan was elected, and dealing with minor parties such as the Liberal party became a necessity to push through legislation. By September 1976 confidence in the pound had collapsed. The game was up. With no other alternatives and facing a massive external crisis, the government was forced to seek a bailout from the IMF, a highly unusual move for a developed western economy, worth £2.3bn (over £12bn in today's money). From the onset of the crisis, the US government had feared that Britain would turn into an ungovernable mess held hostage by leftist trade unions, endangering the NATO alliance at a sensitive period during the Cold War and the stability of the EEC. At the same time, US right wingers imbued in the monetarist tradition of Milton Friedman were becoming much more influential within the IMF. Help would be forthcoming alright, but at a steep political price. When the IMF mission arrived in London in November 1976, deep cuts in public expenditure were announced as part of the package. This shocked the British government and the public, and a fierce debate followed, eventually involving the country's entire political establishment, the Bank of England, the US President, the US Treasury, the Federal Reserve, the German Chancellor and the Bundesbank. There was no consensus even within the government. Industry Secretary Tony Benn feared that the deflationary policies of the IMF would create persistently high unemployment. As an alternative, he advocated pursuing outright protectionism: high tariffs, import quotas, deeper cuts in defense spending and propping up industries. Still, somehow the government managed to ram through the cuts in spending. A renewed sense of hope provided some respite for the pound, which went on to recover some ground lost to the dollar over the rest of the decade. The economy started to improve, as did the balance of payments, helped by burgeoning oil revenues as North Sea production increased substantially. As a result, Britain did not even have to draw out the whole IMF loan. But these were the 1970s. And there were plenty of more "rotten days" ahead. The Winter of Discontent Any stabilization benefits on the domestic economy brought about by the IMF assistance slammed against the inescapable reality that politically speaking Britain was still a mess. Inflation continued to be a problem well into the late 1970s, fueled by higher energy costs and nominal wage growth. Once again the government tried to control wage inflation by imposing caps. And once again the unions were in no mood for stiff wage settlements. The all-powerful Transport and General Worker's Union decided to abandon the Social Contract and seek a better deal. They went on strike at Ford, which promptly gave them a 17% wage raise as opposed to the 5% pushed by the government. Callaghan tried to retaliate, to no avail. Seeing this, almost every other union began a program of random strikes for better pay, extending from the industrial heartlands to the public sector. And thus began the "Winter of Discontent" of 1978-79.
Many important private and public services were halted across the country. Unburied coffins in Liverpool piled up and there was no garbage collection in many cities. The strikes were having a highly disruptive effect on the lives of average British citizens. The country was now in gridlock. There was a general feeling of helplessness. The government seemed completely unable to control either inflation or the strike action. Was there any man who could fix the situation? And what about a woman? Maggie Steps In Into this mess strode Margaret Thatcher. In the mid-70s she had been regarded as another one of those Conservative rare birds, but now coming in from the deep right of the party. Thatcher had watched the unions, whom she regarded as the "enemy within", take down Heath and Callahan and was determined to break their grip on the economy. She campaigned strongly for the promotion of private enterprise. At a time of chronically high unemployment, she went on TV calling for an end to immigration to stop foreigners from taking British jobs, a highly controversial position. All of this resonated with a nation exhausted by strikes and power cuts. And the "Iron Lady" was elected to power in May 1979. The rest, as they say, is history. Out went the unions, as well as, according to Thatcher's critics, large chunks of British manufacturing and the coal industry, where many profitable mines ended up being shut down. But at long last Britain was governable again, and it marched on to regain its footing domestically and abroad. The chronic problems of the 1970s now look very remote, perhaps unimaginable even. Lessons Learned? This striking episode in British economic life brings out several aspects that are worthwhile keeping in mind. The current economic malaise engulfing much of the Western world is certainly not as severe as in the 1970s, but there are parallels. First of all, "it can happen here". Not even an advanced and resourceful economy, like Britain was at the end of the 1960s, is safe from bad economic policies. The oil shocks of course had a very detrimental effect, but they merely amplified what was already happening in the country. Other advanced economies like France and especially Germany fared much better over that period. The bailout also marked a decisive shift in how the IMF intervened in crisis situations, with increasingly stringent conditions. These were rolled out across many countries in the decades that followed: Greece (1978, 2010-), Mexico (1982, 1994), India, Russia (1996, 1998), South Korea (1997), Thailand (1997), Indonesia (1997), Brazil (1998, 2002), Argentina (2001), Seychelles (2008), Iceland (2008), Hungary (2008), Ukraine (2010, 2014-) and an assortment of peripheral Eurozone countries (2010-). Perhaps unsurprisingly, almost 40 years on the discussion on the heavy burden of economic adjustments and the possible loss of sovereignty remain just as current today. However, the British example showed that while bailouts can be a necessary condition to resolve a serious economic crisis, they are not sufficient. The "bailoutee" needs to have the political will as a whole to carry out the reforms (assuming that they are the right ones in the first place). This was not the case in Britain, and after an initial stabilization the economic rout promptly resumed. Food for thought in the context of the current political debates over "austerity". This underlines a really important point. It is true that the unions in Britain wielded a disproportionate control over the economy in the 1970s and that the strikes had a major impact on the economy and public morale. But this control had been more or less given over the years by politicians seeking to pander to their electoral bases. Well organized groups can and will continue to exploit this dynamic in any modern society, to the detriment of everybody else. It is not that hard to find examples today, albeit in different shapes and forms. And there might not be a Maggie to save the day next time. PS: Seen in this light, Britain in the 1970s looks appalling – gridlocked, decaying and out of ideas. But not all was bad. The decade produced plenty of large-scale visionary projects: the Channel Tunnel, the Advanced Passenger Train, the Thames Barrier, a new London airport, the creation of a vibrant oil economy up north and the beginnings of a thriving computer industry. And the hopes and societal changes brought about by the swinging sixties finally materialized then. Britain was down, but it certainly was not out. |
| All Hail Obama : America, Prosperity is Here! Posted: 12 Oct 2014 08:23 AM PDT I think president Obolo will save us with his Oboloness. Government already did collapse the moment the NWO thought they could run it with the Devil instead of with God. The NWO got too greedy. They wanted peoples free will,free choice as well as all the peoples data,information by illegal... [[ This is a content summary only. Visit http://www.GoldSilverNewsBlog.com or http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  |
| Posted: 12 Oct 2014 06:49 AM PDT By Everett Millman, head content writer at Gainesville Coins, a leading gold and silver distributor. ABSTRACT: After precious metals tracked with stocks into red territory last week, the... {This is a content summary only. Click on the blog title to continue reading this post, share your comments, browse the website, and more!} |
| Draghi says growing ECB balance sheet is last stimulus tool left Posted: 12 Oct 2014 06:35 AM PDT By Stefan Riecher and Scott Hamilton WASHINGTON -- European Central Bank President Mario Draghi said expanding the bank's balance sheet is the last monetary tool left to revive inflation, although there is no target for how much it might be increased. "It's very difficult for me to give you an exact figure at this time," Draghi told reporters in Washington today during the annual meeting of the International Monetary Fund. "I gave you a kind of ballpark figure -- say, about the size the balance sheet had at the start of 2012." ... For the remainder of the report: http://www.bloomberg.com/news/2014-10-11/draghi-says-growing-ecb-balance... ADVERTISEMENT Free Storage with BullionStar in Singapore Until 2016 BullionStar is a Singapore-registered company with a one-stop bullion shop, showroom, and vault at 45 New Bridge Road in Singapore. BullionStar's solution for storing bullion in Singapore is called My Vault Storage. With My Vault Storage you can store bullion in BullionStar's bullion vault, which is integrated with BullionStar's shop and showroom, making it a convenient one-stop-shop for precious metals in Singapore. Customers can buy, store, sell, or request physical withdrawal of their bullion through My Vault Storage® online around the clock. Storage is FREE until 2016 and will have the most competitive rates in the industry thereafter. For more information, please visit Bullion Star here: Join GATA here: New Orleans Investment Conference https://jeffersoncompanies.com/landing/noic2014?IDPromotion=614011014520... Mines and Money London http://www.minesandmoney.com/london/ * * * Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006: http://www.goldrush21.com/order.html Or by purchasing a colorful GATA T-shirt: Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009: http://gata.org/node/wallstreetjournal Help keep GATA going GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at: To contribute to GATA, please visit: |
This is the final blow for those who still couldn’t comprehend, after all evidence presented, the amount of Chinese non-government gold demand in 2013. At the LBMA forum in Singapore, one of the keynote speakers was chairman of the Shanghai Gold Exchange (SGE) Xu Luode. In his speech he made a few very candid statements about Chinese consumer gold demand, that according to Xu reached 2,000 tonnes in 2013.
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