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Tuesday, November 11, 2014

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Hyper-Printing The $100 Federal Reserve Fiat Note vs Gold

Posted: 11 Nov 2014 12:00 PM PST

The amount of leverage in the U.S. Dollar fiat currency system reached an all time high in 2013.  Even though the growth in total U.S. currency more than doubled since the collapse of the Housing and Investment banking system in 2008, the majority of the increase was from just one bill in particular. U.S. Department […]

The post Hyper-Printing The $100 Federal Reserve Fiat Note vs Gold appeared first on Silver Doctors.

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Yesterday's Outside Reversal in Meal, Negated by Today's Outside Reversal

Posted: 11 Nov 2014 11:44 AM PST

Please see the comments and chart I posted yesterday asking the question whether the Meal has finally topped out. That price action was in response to a bearish USDA supply and demand report for the beans, especially the global supply numbers that they announced.

Today, that report was completely ignored. Instead, hedge fund computers began gorging themselves on the meal and the beans early in the session with the result  being an enormous reversal day on huge volume, this time to the upside.

In other words, today's OUTSIDE REVERSAL DAY exceeded the range of yesterday's reversal day, which had exceeded the range of Friday's.


Welcome to the idiocy of the modern futures markets, courtesy of both the hedge fund algorithms and the exchange officials who not only allow it, but love it.

I should note that the volume in the contracts that I was tracking actually exceeded the volume of the USDA report day. In all my years of trading, I cannot recall seeing anything remotely like this. Report days generate massive amounts of trading and produce huge surges in volume as the markets react to what is the new demand/supply numbers provided by the USDA.

This is the reason I have to constantly take the gold permabulls to task for their erroneous, breathtaking comments and articles detailing what they naively refer to as "Flash Crashes". I have no problem with anyone noting huge swings in price but those who propose the Flash Crash theory when it comes to GOLD, use it as evidence that the price of gold is being manipulated by the bullion banks, acting as agents of the Fed, to suppress the price of the metal.

As I have written in response to this nonsense more times than I can remember at this point, "Flash CRashes" or "REVERSE FLASH CRASHES" are now the NEW NORMAL in many of our futures markets, thanks to these pestilential computer algorithms and the fact that there is such an enormous amount of hot money that has been throw into the futures markets, markets which are simply too small to handle either the ingress or egress of such huge sums of money.

This is where I fault not any supposed "evil bullion banks" but rather those who are charged with enforcing strict limits on the number of futures positions that any one entity should be allowed to place in any one market.

Many years ago, when we had transparent, honest and "normal" open outcry pits in which business was being conducted, larger positions were okay because everyone on the floor could see who was doing what and figure out the why eventually. Scale up selling and scale down buying was also a regular feature of most professional traders.

Not any more - these enormous hedge funds ( way too large) swamp everything in sight whether they are coming into a market or exiting a market. They know nothing of finesse or skill - they simply rapid fire huge blocks of buys or sells into a market, regardless of its size in relation to the number of positions they either have on or wish to add, and obliterate anything that happens to be on the other side. That also includes COMMERICIALS, a growing number of which have had enough of the kind of carnage produced by these mindless machines and their owners and are moving more and more of their business to OTC markets, where they do not have to put up with this sort of thing.

Just keep in mind this chart whenever you hear some gold perma bull start yakking about Flash Crashes once again. You will realize that they have not the faintest idea of what they are even talking about and you can safely ignore them and whatever strange and exotic conclusions that they manage to draw from it.

Hedge funds computers have NOW BECOME THE MARKETS. That is the sad truth and based on the inaction and blasé attitude of exchange officials, it is never going to change. Maybe, in a few more years, after the computers have run all of the commercial interests and small specs out of the market, and all that is left is computers trading against other computers, some enterprising group of individuals will construct an exchange in which transparency and actual price discovery once again becomes the main focus of the exchange. Wouldn't that be something?

Controversial post: These events show central banks are panicking

Posted: 11 Nov 2014 11:38 AM PST

From Chris Martenson at PeakProsperity:

The central planners are in a state of fear and panic.  They are trying everything and anything to create market validation for their policies, watching with trepidation as their favored economic metrics fail to respond to all of their frenzied efforts.

They are so far over the tips of their skis right now that there’s nothing they won’t do. They’ve summarily thrown granny under the bus because they have this idea that negative real interest rates are the cure.  The cure for what?  The massive amounts of debts and imbalances their prior policies caused.  So savers are punished in the pursuit of policy.  You know, ‘for the greater good’ and all that.

They’ve spurred the greatest wealth gap ever in U.S. history, greater even than at the extremes of the Great Depression, apparently without the slightest concerns for Plutarch’s ancient admonition that “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.”

They’ve even gone so far in Europe as to now force negative nominal interest rates on savers, dispensing with their usual slight-of-hand of letting inflation steal from each unit of currency in their system.  When you’re panicking, there’s no time for subtlety.

They look the other way as “someone” dumps huge amounts of gold contracts into the wee hours of the night, seeking one thing and one thing only: lower prices.  But that’s okay because the central banks destroyed price discovery a long, long time ago. First by invalidating the price of money itself (by driving interest rates to zero), and then in everything else — most importantly risk.

The Federal Reserve, the Bank of Japan (BOJ), and the ECB have decided that they want you to take your money out of your bank account and place it into the stock market.  Apparently they have models that say this is a good thing.  Or they just want you to spend it.  And to be sure that you follow their wishes, they don’t leave you any better options — and so virtually every hard asset has been targeted for price suppression.  Except real estate because, hey, you have to borrow a lot of money from the banks for that, so they encourage and cheer your participation there.

In short, everything the central planners have tried has failed to bring widespread prosperity and has instead concentrated it dangerously at the top.   Whether by coincidence or conspiracy, every possible escape hatch for 99.5% of the people has been welded shut.  We are all captives in a dysfunctional system of money, run by a few for the few, and it is headed for complete disaster.

To understand why, in all its terrible and fascinating glory, we need look no further than Japan.

A Black Swan Flaps Its Wings 

Back in 2012, Japan was my favorite candidate to be the black swan of the year — meaning it could shock everyone and flip our reality to a new state. Of course,  this has taken longer to play out than I initially thought.

However, here in November 2014, the world finally seems to be on the verge of waking up to the inevitable financial disaster that stalks Japan.

Japan is really in no better or worse shape than the rest of the developed world. But is a few chapters further along in the story, which means it holds both explanatory and predictive power for most of the developed nations.  This is why we should study it closely.

The mystery, as always, is how so many participants are willing to pretend all is normal with Japan; merrily buying and holding Japanese yen and government debt instruments.

In a nutshell, every single monetary, economic, fiscal and demographic trend is working against the very goals that the Bank of Japan, in cahoots with the Japanese government, is trying to attain.

To make this clear, first, we’re going to sketch the outlines of predicament and then, next, examine what will happen when it all finally breaks down.

The Halloween Massacre

On Friday, October 31 2014 the Bank of Japan (BOJ) made a surprise announcement of a major new policy move that was specifically targeted to have maximum impact on the markets.

But it wasn’t a unanimous or popular decision:

Split Vote Shows BOJ's Kuroda Walking on Tightrope

Nov 2, 2014

TOKYO—The Bank of Japan 's surprise move to flood the economy with more money boosted stock prices and gave a lift to its fight against deflation, but a rare split vote over the decision means further action will be difficult for Gov. Haruhiko Kuroda.

Those with knowledge of the maneuverings behind Friday's 5-4 decision to step up the central bank's yearly asset purchases point to growing skepticism among the BOJ's nine policy board members toward the radical policy rolled out by Mr. Kuroda a year-and-a-half ago.

(Source)

The announcement specifically was that the BOJ would increase its purchases of Japanese government bonds to 80 trillion yen (up from 60 – 70 trillion) and triple its purchases of stock funds to 3 trillion yen annually.

You have to love the coded phrase used in the above article − “gave a lift to its fight against deflation” − which decoded means “they partially wrecked the yen which makes import prices go up (and which is not the same thing as the inflation they seek).”  When you wreck your currency, all you do is steal purchasing power from savers and transfer it somewhere else, in this case to those most indebted and/or leveraged − the biggest of these beneficiaries being the Japanese government and large speculators.

Also the 5-4 decision is quite telling. It indicates that this bold − or reckless − policy (depending on your point of view), is already not very popular, suggesting that it’s more of a last, desperate move. Patience is wearing thin.

While some still question whether the U.S. Federal Reserve is monkeying about directly in U.S. equity markets, there is no such uncertainty with the BOJ: it openly buys equities under the pretense that a rising equity market is somehow good for the Japanese economy.  This is a rather indefensible view, because the relative elevation of the Nikkei has nothing to do with how the economy will perform, as it’s a derivative of the economy (or is supposed to be), not a driver of the economy.

After all, once a stock has been launched into the stock market, all that happens when a stock moves up and down is that money flows from one set of trading accounts to some others as people buy and sell.  By buying equities, the BOJ has effectively said it wishes transfer an even greater amount of money from its accounts to others.

It’s merely a gift to current holders of Japanese equities, which is a subset of the Japan population. Again not a terribly defensible, rational or fair policy. But there you have it.

Immediately on the news of this next round of wealth transfers and money printing, the Nikkei index leapt 1700 points and the yen plunged:

(Source - ZH)

The virtual lockstep nature of the falling yen and rising Nikkei tell us that we are living in an age of massive and rampant speculation where financial markets react in concert to the newly-unleashed liquidity floods.

All that matters in today’s “markets” is how much more money the central banks are going to throw into the system.  That’s all the gigantic speculators care about, and fundamentals and long-range issues are not even remotely near the top of their list of important trading variables.

Unfortunately, like most market moves these days, the recent plunge in the yen and the rise in the Nikkei provide few useful clues as to Japan’s actual current and/or future economic prospects.

What This Really Means

Okay, it’s time to face some unpleasant facts.  Ignoring the market gyrations, because those have pretty much lost all of their true signaling capabilities, the most recent move by BOJ governor Kuroda smacks of sheer desperation.

It’s important for all of us frogs sitting in this nice pot to recall that even five years ago such a move by the BOJ would have been utterly shocking. It would have commanded our thoughts and actions for weeks to come. But today, like the rest of the world, I’ll bet you’ve already lost it into the din of other accelerating events barely a week later.

That Kuroda, just one man, can bet so much on an untested and radical experiment is mind-boggling. If he succeeds, he gets to claim honor and success.  If he fails he ruins the 3rd largest sovereign economy in the world, along with its inhabitants’ future dreams, for a very long time. How can such power be entrusted to a single person?

Unfortunately, this gamble cannot succeed over the long haul, and he has to know this. So perhaps he’s simply focused on keeping things hanging together until he leaves office.

Here’s how the ever-colorful David Stockman described the Halloween Massacre:

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters——Messrs. Morimoto, Ishida, Sato and Kiuchi—-are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year—-a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan's national income or more than double the already mind-boggling US ratio of 25%.

(Source)

Yes, my fellow frogs who share this increasingly warm bath with me, Kuroda’s move is pure madness.  The BOJ has jumped the monetary shark and we need to keep that firmly in view as we make our decisions about where all of this is headed, and how likely it is to create a future financial accident of global and unprecedented proportions.

Bloomberg’s Willaim Pesek described it this way, and I think quite accurately:

Japan Creates World’s Biggest Bond Bubble

Nov 4, 2014

In announcing that it will boost purchases of government bonds to a record annual pace of $709 billion, the central bank has just added further fuel to the most obvious bond bubble in modern history — and helped create a fresh one on stocks. Once the laws of finance, and gravity, reassert themselves, Japan’s debt market could crash in ways that make the 2008 collapse of Lehman Brothers look like a warm-up.

Worse, because Japan’s interest-rate environment is so warped, investors won’t have the usual warning signs of market distress. Even before Friday’s bond-buying move, Japan had lost its last honest tool of price discovery.

When a nation that needs 16 digits in yen terms to express its national debt (it reached 1,000,000,000,000,000 yen in August 2013) sees benchmark yields falling, you’ve entered the financial Twilight Zone.

Good luck fairly pricing corporate, asset-backed or mortgage-backed securities.

(Source)

If I lived in Japan, I would, under no circumstances, ever keep my money in yen. If you live there, get out of yen as much as you possibly can.  Your central bank has said it wants to destroy the yen and their actions confirm this, so they are apparently quite serious about doing exactly that.

Imagine if the Federal Reserve was monetizing $3 trillion a year, which pencils out to some $250 billion a month(!).  A proportional amount of money is being dumped into the Japanese financial system under the new policy.

And so naturally, stocks rose and the yen fell, which makes some (twisted) sense. But gold fell heavily on the news, which makes no sense at all from a fundamental standpoint. However, it makes all the sense in the world if you understand that extreme central bank policies cannot tolerate even the slightest whiff of challenge.

Rising gold prices would signal doubts about the central banks’ course of action. Conversely a falling gold price signals utter faith in the central planners. And so a falling gold price is what we get (but true demand for gold and silver demand another matter entirely).

The reason for all of this extreme central bank panicking and fear, we’re told, is because Kuroda has a white whale he seeks, which has ’2% inflation’ stenciled on its side.

But inflation is not what central banks actually seek, even though the press consistently tells us that’s what they want. Inflation is not a cure for anything and the banks know it (and our press really should know it by now, too).

Instead what the central banks desperately want, and know the banking system and over-extended governments need, is negative real interest rates.  That is, they want to force upon savers the condition where their saved money is getting a lower rate of interest than the rate of inflation, which is what we mean by a negative real return.

We wrote about this extensively as a process in this article about the Fed purposely attacking savers. But the mechanism and rationale is the very same for the BOJ as it is for the Fed.

Briefly, when running this program of financial repression the BOJ (and the Fed, et al.) do not care if inflation is 6% and bonds are 4%, or if inflation is 2% and bonds are 0%, as both offer negative real interest rates. Negative real rates serve to confiscate purchasing power from the general population and transfer it to other parties.  Those parties include the big banks. But perhaps that’s just another happy coincidence in the game that central banks and bankers like to play with us which they call ‘heads we win, tails you lose.’

But let’s not be fooled. By the time a central bank is behaving as recklessly as Japan, it’s time to edge towards the exit, because the chance of a flash fire in the building has grown uncomfortably high. That is, instead of providing comfort, these most recent moves should invoke greater worry for those of us alert enough to see them for what they are: acts of panic.

There’s just no other way to interpret the equivalent of $3 trillion of thin-air money besides an overt act of desperation.  No, things are not okay.  Yes, the risks for a disaster are growing.

Whether we call this the largest bond bubble in history, “reckless”, “mad” or “insane”, Japan has truly jumped the monetary shark. There’s no way back and no way forwards that will be pain-free and this terrifies the BOJ.  The best advice I have is that when you see your central bank panic, you should panic too and avoid the rush.

In Part 2: What Will Happen When Japan Breaks, we delve into the only questions that really matter: When will it happen? And how deeply painful will it be?

And last, but certainly not least: How much of the rest of the world’s financial system will come crashing down with Japan’s because they are all so interlinked now?

Click here to access Part 2 of this report (free executive summary; enrollment required for full access).

Recommended Links

Trader alert: We just saw a "bullish wick" in this hated sector

Posted: 11 Nov 2014 11:01 AM PST

From Chris Kimble at Kimble Charting Solutions:

CLICK ON CHART TO ENLARGE 

The Gold Miners ETF (GDX) broke below the lows of almost a year ago (Dec 2013), and promptly lost nearly 20% of its value in less than two weeks.

This decline took it down to its Fibonacci 161% extension level (based upon the lows of a year ago and the highs this past summer).

The inset chart above from SentimenTrader, reflects that only 39% of investors are bullish on GDX at this time.

We need this ratio to head higher…

CLICK ON CHART TO ENLARGE

Quality rallies in the mining sector take place when junior miners (GDXJ) are stronger than seniors. The ratio above reflects how weak the juniors have been the past couple of years, sending an overall bearish message to this sector.

Could a double bottom be taking place in this ratio right now? Humbly, it could be, yet I believe it’s too early to tell. I am watching the bullish wick in GDX and the level of this ratio very closely.

Premium & Metals Members took a position in this sector last week due to this ratio.

Recommended Links

Canada just became North America’s first offshore renminbi hub

Posted: 11 Nov 2014 10:30 AM PST

It's happening. With increasing speed and frequency. The People's Bank of China and the Canadian Prime Minister's office issued a statement on Saturday stating that Canada will establish North America's first offshore renminbi trading center in Toronto.   Submitted by Simon Black, Sovereign Man:  China and Canada agreed on a number of measures to increase […]

The post Canada just became North America's first offshore renminbi hub appeared first on Silver Doctors.

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Close to The Bottom But Not There Yet

Posted: 11 Nov 2014 10:18 AM PST

The Daily Gold

SILVER SQUELCHERS PART 5: And Their Interesting Associates

Posted: 11 Nov 2014 09:15 AM PST

"The SEC established by the Federal Securities Act is a device for tightening the monopoly of industries by control of financing. Its power to block new financing is absolute. But it offers stockholders absolutely no protection. Numerous securities that have been passed on by the SEC and marketed, have been wiped out within a period […]

The post SILVER SQUELCHERS PART 5: And Their Interesting Associates appeared first on Silver Doctors.

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Gold December 2013 Low Serves as Resistance (1178)

Posted: 11 Nov 2014 08:33 AM PST

Gold And Silver – Charts Show Power Of Elite’s Central Bankers

Posted: 11 Nov 2014 08:00 AM PST

When considering Precious Metals, fundamentals do not apply, and that is key to understanding how to relate your holdings of physical and/or interest in gold and silver. Nothing else matters. Precious metals are being driven by one thing only: survival of the elite's world-wide fiat system, aka paper debt foisted on the public and called "money."  Debt […]

The post Gold And Silver – Charts Show Power Of Elite's Central Bankers appeared first on Silver Doctors.

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Breakdown reveals weakness in gold

Posted: 11 Nov 2014 07:50 AM PST

Gold prices saw increasing selling pressure as the session went on Monday as key outside markets likely drove selling.

Gold miners feeling pinch

Posted: 11 Nov 2014 07:37 AM PST

AngloGold Ashanti Ltd. is offering miners voluntary severance packages as part of the third-biggest gold producer's plan to reduce costs.

Indian government introduces 20% gold reservation scheme

Posted: 11 Nov 2014 07:22 AM PST

The Indian government plans to introduce a new scheme to reserve 20% of the gold sold in market by importing agencies to small players.

Metals market update for November 11

Posted: 11 Nov 2014 07:18 AM PST

Gold fell $25.90 or 1.14% to $1,149.40 per ounce yesterday and silver slipped $0.18 or 2.2% at $15.56 per ounce.

Investment banks caution investors on gold

Posted: 11 Nov 2014 06:33 AM PST

The gold price that rebounded strongly on Friday failed to sustain its rally as bearish sentiments started showing signs of dominance.

Frank Holmes' advice to investors. Chill.

Posted: 11 Nov 2014 05:39 AM PST

The commodities investor shares some strategies that help him "sit back and stay balanced." A Gold Report Interview.

The Dow Jones To Gold Ratio: Will 2015 Be The Turning Point?

Posted: 11 Nov 2014 05:33 AM PST

This article is based on the charts from Sharelynx, courtesy of Nick Laird:

We have discussed the Dow Jones to Gold ratio many times before. The first chart below shows the history of the ratio until 2013 (courtesy of Incrementum Liechtenstein). As readers can easily observe, the historical moves have been quite similar and very cyclical in nature.

historical dow gold ratio 1900 2013 price

 

 

Is the ratio ready to resume its downtrend? To answer that question, we should look at the charts on a smaller timeframe.

Interestingly, by zooming in on the charts, it appears that the comparison between the ongoing period and the 70ies is truly striking. The Dow Jones to Gold ratio experienced a countercyclical period between 1975 & 1976 where it went from a low of approximately 3:1 up to a high of approximately 10:1 before heading down to its final lows of almost 1:1.

dow gold ratio 2002 2014 price

 

 

Today, we see a similar situation, at least so far. The Dow Jones to Gold ratio had moved to a low of 6:1 in 2011. Since then, the stock market has been going north relentlessly while gold started a downtrend which is lasting 3 years meantime. The current Dow Jones to Gold ratio stands at 15:1, its highest level in since 2007.

As the Dow is now at all time highs and gold looks to be looking for a bottom, there is a real chance that the ratio is about to turn in the coming months. If history is about to repeat, the Dow to Gold ratio should continue its downward trend to its lows similar to the 1:1 ratio as in 1980.

dow gold ratio 1970 1980 price

 

Mind that this is not a timing indicator. Even if history will repeat itself, it could be that the turning point is still one year ahead of us. Do not make any timing decision for your investment(s) based on these ratios; they are outstanding in understanding relative value of assets but are no timing indicators.

 

Marshall Swing: Gold & Silver’s Day of Reckoning to Begin 9/23/15!

Posted: 11 Nov 2014 05:19 AM PST

I believe what is coming is far bigger than a mere significant economic collapse.
I believe the coming financial collapse will be a worldwide economic collapse, and the institution of a one world government with a one world currency, in the 6-9 months following these events.

Click here for more from Marshall Swing on the coming worldwide economic collapse in 2015:

AngloGold Ashanti to cut jobs

Posted: 11 Nov 2014 05:04 AM PST

AngloGold plans to cut staff through voluntary severance packages as it feels the pinch of lower gold prices.

New Currency Wars Cometh - Gold To Be “Last Man Standing”

Posted: 11 Nov 2014 05:01 AM PST

gold.ie

Central Rand Gold surges on $150m mine sale

Posted: 11 Nov 2014 05:00 AM PST

The stock more than tripled to R4.80 a share.

New Currency Wars Cometh – Gold To Be “Last Man Standing”

Posted: 11 Nov 2014 04:56 AM PST

New Currency Wars Cometh – Gold To Be "Last Man Standing"

Currency wars are set to warm up again, after Japan’s radical decision to further debase its currency through an intensification of already significant monetary easing. There was a palpable coldness from China’s Premier Xi Jinping as he greeted Japan’s President Abe at the APEC summit in Beijing.

Volatility in the currency markets is likely to increase greatly. If the competitive devaluation of currencies accelerate, fiat currencies risk losing value versus gold. Indeed, in worst case scenarios some may revert to their intrinsic value – zero. When the dust settles gold will be the last man standing as it cannot be created or destroyed by governments. It remains the best form of financial insurance.

 

 


h/t Brian via Zero Hedge

Tensions are normally high between the two countries but are even more so in recent months.

War grievances run deep and are never far below the surface. Along with South Korea, these are the big industrial powers of Asia who are competing for a share of the shrinking export market.

China’s economy is slowing. Official figures suggest that growth has slowed to around 7%. Some analysts say it is as low as 5%. While Western countries would rejoice at such figures it must be remembered that in 2012 China’s growth in GDP was over 10%.

The decline has affected employment in China which is causing social tensions. The U.S. has put diplomatic pressure on China to not devalue its currency in recent years. So the Chinese resent Japan’s unsignaled and unilateral debasement of their currency, especially if it comes with the blessing of the U.S.

It would appear as though Japan’s actions were not taken at the behest of Japan’s financial elites, even though they stand to gain the most from QE in the short term – especially if the U.S. experience is anything to go by.

How China will respond remains to be seen. Recent renminbi currency swap deals with Canada and Qatar show the increasing risk posed to the dollar's status as sole global reserve currency.

If and when the dollar falls out of favour as the preeminent reserve currency it’s ability to run large deficits for months on end will be greatly compromised.

The symbolism of the official photograph of the APEC summit could not be more clear. Symbolism is important to the Chinese.

In the photograph (see above) are Xi Jinping along with the leaders of Brunei, the Philippines, and Russian President Putin on the left hand side. Far to the right is Barack Obama. President Putin is at President Xi Jinping right hand.

China is emphasising it’s influence in East Asia and it’s good relations with Russia. The U.S. is presented as insignificant and ineffectual, at least in the affairs of East Asia.

Currency wars are set to intensify again. Indeed, Saxobank has warned of a new "full scale" currency war. We are in a full-blown currency war and the ECB will feel under pressure to take part in that," said Nick Beecroft, non-executive chairman and senior markets consultant at Saxo Capital last week.

Chief Economist and CIO of Saxobank, Steen Jakobsen warned yesterday that there’s an increasing risk we will soon see a “significant paradigm shift” from China in its attitude to the strength of its currency. He says we’re about to see a full-scale currency war, notably between China and Japan, two of the world’s greatest exporting countries.

Whatever action China chooses with regard to positioning the yuan as reserve currency and using its gold reserves, it seems sure that the U.S. will not be consulted. It is likely that China has enough gold bullion to dethrone the dollar in the event of a dollar crisis or a wider international monetary crisis.

Volatility in the currency markets is likely to increase greatly. If the competitive devaluation of currencies accelerate, fiat currencies risk losing value versus gold. Indeed, in worst case scenarios some may revert to their intrinsic value – zero.

When the dust settles gold will be the last man standing as it cannot be created or destroyed by governments. It remains the best form of financial insurance.

Get Breaking News and Updates on the Gold Market Here 

MARKET UPDATE

Today's AM fix was USD 1,151.25, EUR 927.90 and GBP 726.43 per ounce.
Yesterday's AM fix was USD 1,172.00, EUR 938.20 and GBP 737.25 per ounce.

Gold fell $25.90 or 1.14% to $1,149.40 per ounce yesterday and silver slipped $0.18 or 2.2% at $15.56 per ounce.


Silver in U.S. Dollars – 10 Years (Thomson Reuters)

Gold remained firm near $1,150 an ounce as physical demand for gold bullion coins and bars especially from Chinese store of value buyers increased after yesterday’s weakness.

Spot gold was flat at $1,150.45 an ounce at 1021 GMT, while Comex U.S. gold futures for December delivery fell $9.90 an ounce to $1,149.90.

Silver slipped 0.3% at $15.51 an ounce. Spot platinum was down 0.2% at $1,190.24 an ounce, while spot palladium was down 0.2 percent at $757.35 an ounce. Spot palladium was down 0.2% at $757.35 an ounce.
Access 7 Key Bullion Storage Must Haves Here

 

Banks Continue Their Criminal Activities, Make Sure You Own Physical Metals

Posted: 11 Nov 2014 02:40 AM PST

Gold prices began this week on a softer note after surging on Friday. The price of the yellow metal snapped a seven-day loss to end sharply higher on Friday, as the price of spot gold rallied by 2.6% or $37 an ounce to close out the week at $1178.50 an ounce. The yellow metal scored its biggest one-day gain in nearly five months, as a retreat in the U.S. dollar and heavy short-covering lifted prices from a 4-1/2-year low. However, at the time of writing, gold prices have given back about half of Friday's gains.

Last Friday, a report from the Labour Department showed weaker than expected U.S. job growth in October, although unemployment rate dropped to a new six-year low. The non-farm payroll employment rose by 214,000 jobs in October and the unemployment rate was 5.9%.

The dollar slipped after the jobs report was released as investors took profits on the greenback’s months-long rally, which has seen it reach multi-year highs in anticipation of tighter U.S. monetary policy next year. The report also boosted speculation that the Federal Reserve may hold interest rates low amid sluggish global economic growth. Before the report, gold fell to the lowest since 2010 and the dollar touched a five-year high amid expectations for improvements in the labour market.

On Thursday, gold prices ended lower for a seventh straight session, on growing speculation about U.S. interest rate hikes on the back of some upbeat economic data, including a report showing a more than expected drop in initial jobless claims. Then, on Friday, prices surged!

On Thursday, gold prices ended lower for a seventh straight session, on growing speculation about U.S. interest rate hikes on the back of some upbeat economic data, including a report showing a more than expected drop in initial jobless claims. Then, on Friday, prices surged!

This on-going volatility in prices shows the impact traders have on the gold market. By using the paper contracts on Comex, traders can buy and sell huge volumes of gold without ever having to deliver or take delivery. The volumes that they trade do not represent the true quantity in the physical market place. It is simply a speculative play on price, and thus it is important for investors to ignore this volatility or "noise" because it has nothing to do with the real driving factors behind price.

Gold came under some selling pressure on Thursday as the dollar extended its gains after the European Central Bank (ECB) President Mario Draghi said the ECB policymakers might use outright quantitative easing if deemed necessary. The ECB Chief offered a downbeat assessment of the Eurozone economy, with risks to the outlook skewed to the downside. He also highlighted geopolitical risks that could dampen confidence.

The euro plunged to its lowest in more than two years against the dollar on Thursday after Draghi affirmed his pledge to use unconventional measures to stimulate a sluggish Euro zone economy.

He added that the impact of the ECB’s asset-buying program on its balance sheet would be sizable. His remarks, which came after the ECB kept interest rates at a record low of 0.05%, were a green light for investors to sell the euro.

When asked if the ECB had an official balance sheet target Draghi replied. "Together with a series of targeted longer-term refinancing operations to be conducted until June 2016, these asset purchases will have a sizeable impact on our balance sheet, which is expected to move toward the dimensions it had at the beginning of 2012."

In the press briefing, Draghi said ECB members are all prepared to take more policy action if necessary and the bank’s staff will prepare the groundwork. He reiterated that the risks to the Eurozone’s recovery remained tilted to the downside.

JP Morgan Chase & Co made the headlines once again. The bank said it faces a U.S. criminal probe into foreign-exchange dealings and boosted its maximum estimate for "reasonably possible" losses on legal cases to the highest in more than a year.

The largest U.S bank reported that it might need as much as $5.9 billion to cover losses beyond reserves for legal matters, up $1.3 billion from the end of June, and the most since since mid-2013.

Last year, the bank spent some $23 billion in settlements yet not one banker was prosecuted!

Both Citigroup Inc., and Zurich-based UBS AG disclosed last week they also face criminal inquiries by the Justice Department into their foreign-exchange dealings. Citigroup cut third-quarter results to include a $600 million legal charge.

Meanwhile, Swiss bank giant UBS (NYSE:UBS), the world's largest private lender, is about to reach a settlement in the year-long global probe into allegations of misconduct at its precious metals trading business, as well as supposed collusion and manipulation in the foreign exchange market.

A report by FT.com revealed that the UBS, is just one of the six financial institutions expected to announce an agreement of at least $2.37 billion (£1.5bn) in fines on Wednesday to settle accusations of foreign exchange market rigging with the U.K.'s Financial Conduct Authority (FCA).

The other five banks working on the settlement are U.S. banks JP Morgan, Citigroup, Britain’s HSBC, Barclays and Royal Bank of Scotland.

So far, close to 35 traders have been suspended or fired by their banks. No individual or institution has so far been accused of any wrongdoing. The precious metals market has come under heavy regulatory scrutiny and allegations of price rigging. BaFin, Germany’s financial regulator has launched a formal investigation into the gold market and is probing Deutsche Bank, one of the former members of a tarnished gold-fix panel that will soon be replaced by an electronic fixing. hat I find astonishing is that while banks are fined for their criminal activities, no one in top management has been prosecuted. And, if an individual wants to deposit cash, he/she is regarded as a criminal. But even worse, these banks are still obliged to conduct Know Your Customer (KYC) when it should be the other way around. It should be customers demanding to know more about the banks activities.

But, these banks are not alone. Central bank manipulation of prices and risk taking has become the norm over the last six years. And at the same time, these polices have allowed governments to provide false financial stability and false economic growth.

Much of the economic and jobs growth in the United States is artificial growth, with little chance of being sustainable. It is based on the excess money printing of the US Fed which is used to buy assets at fake prices. It will be interesting to see what happens when interest rates are normalized and QE stops. The financial system is fragile, heavily leveraged and reliant upon a continuation of low interest rates. Thus, the appearance of stability and low volatility is also illusory. And, the liars and deceit will continue until a politician or banker is prosecuted. Thus while these banks continue with their criminal activities, make sure you own physical gold and silver stored out of the financial system.

While it is impossible to function without a bank account, it is imperative for individuals to do whatever it takes to preserve their wealth. If there is a financial collapse coming, your bank and your government are not going to do a darn thing to save you. And, instead they will destroy your wealth and leave you destitute. This is why it is important to hold both physical gold and silver.

Technical picture

The strong rebound in prices on high volume on Friday has been negated by a move to the downside. Recent lows may be re-tested again, but it is impossible to forecast.

gold price daily 10 November 2014 investing

 

For more information go to: www.lakeshoretrading.co.za

 

How best to invest in gold right now

Posted: 11 Nov 2014 01:17 AM PST

Gold is so unpopular with commentators right now it just has to be close to a bottom. If so where is the best value to be had for investors?

Invest in gold firms with large reserves as they’ll be able to withstand the decline in gold prices, says Simon Mawhinney, portfolio manager and director at Allan Gray….


Video link click here!

If gold in a forest is withdrawn by a wholesaler and no one is around to buy it, does it make the pr

Posted: 11 Nov 2014 01:16 AM PST

Perth Mint

Russian central bank buys up domestic gold output

Posted: 11 Nov 2014 01:14 AM PST

Foreign banks are holding off buying Russian gold after Western powers implemented sanctions against the country.

If gold in a forest is withdrawn by a wholesaler and no one is around to buy it, does it make the price move?

Posted: 11 Nov 2014 01:12 AM PST

One project I'm currently working on at the Perth Mint is the replacement of our website. This involves topics like SEO, "authority", page rank etc and how to achieve such. It's hard not to get cynical about it, particularly when you come across tips for "Ultimate Headlines" like:
  • Maximum character count is 65 before being cut off in search results
  • Numbers + Adjective + Target Keyword + Rationale + Promise; Ex. 10 Simple Steps You Can Take Today That Will Make You Happier
  • [Adjective] & [Adjective] [SEO Keyword Phrase] That Will [Highly Desirable Promise of Results]; Ex. New and Useful Content Marketing Trends That Will Drive You More Traffic
I probably should have chosen "The Shocking Truth About Gold Demand That Will Explain Gold's Price Action" for the title of this blog post, but I decided to go with something cryptic (based off If A Tree Falls) that ignores the rules as part of my ongoing policy on this blog of writing stuff that most people don't want to read.
 
As has happened every time gold has experienced a large fall in the past, most of the gold blogosphere was out with their reassuring talk because that is what sells – confirmation you made the right decision. Central to a lot of that was the idea that "real" demand was shockingly high. Before I address that, some off-topic ramblings to get out of the way:
 
Ramble #1: To answer my own question, no, Comex kilobar withdrawals don't "works as an indicator of a bottom" in the medium term :P Whilst I did note a lack of "any positive narrative developing around gold that would drive big fund money" and that "the strong dollar story is the biggest risk to gold breaking $1180" the fact is I didn't call the drop, primarily because Perth Mint was still seeing good kilobar demand and premiums and I thought that the Chinese would be enough to support the market (kilobar premiums have increased on this drop BTW, so recent Chinese demand stories are not just permabull BS). It seems my advice on the 18th of September that "you might want to trade against" my call, was the right trade. Anyway, I'll continue on with my "predictions" not because I'm trying to be a guru, but to provide an alternative view using data points (eg kilobar premiums, market narratives) that others don't which you can factor into your own decision making process.
 
Ramble #2: If you're not seeking reassurance, which probably means you bought gold for insurance and it is only has a modest weighting in your portfolio, these posts are worth reading for an alternative to the current permabull memes:
Ramble #3: Steven Saville of The Speculative Investor has started a blog which includes debunking like this and this. Added to my RSS feed list and recommend including in you reading list.
 
Ramble Ends
 
One of the most enduring permabull memes is the physical-paper disconnect. I'd suggest what the permabulls are now experiencing with their declining sales/subscriptions and need to turn off comments on their blogs/forums is a permabull-price disconnect. The gold price has disconnected from their constant stories that "demand" for gold is strong. The readers are asking questions and thinking heretical thoughts.
 
The problem stems from a simplistic idea of what demand is, as well as selective focus on positive demand reports and ignoring negative reports. The game of internet marketing requires dumbing issues down into 65 character headline stories easily understood by lay readers. Taking a nuanced approach by delving into the detail is counterproductive because it introduces ambiguity and requires the reader to think, hard, when what they want is comforting reassurance. It just leads down a path with lots of unanswerable questions and denies the writer the ability to craft dramatic self-assured headlines.
 
As an example, consider the difference between wholesale market withdrawals versus end consumer demand. The point of the headline to this post is that withdrawals by a wholesale participant (eg jeweller) may or may not be reflective of demand that will actually affect the price. If the purchase by the wholesale user is offsetting sales to consumers, then the wholesale movements are reflective of price-affecting demand. However, if the wholesale user is stocking (or destocking), then they would hedge that acquisition and the impact on the price would be zero. How much of the Comex or SGE movements are price responsive or price neutral? We don't know for sure.
 
For an example of this issue, consider the World Gold Council's quarterly Gold Demand Trends report. This has two jewellery demand figures – fabrication and consumption (which "is equal to fabrication plus/minus jewellery imports/exports plus/minus stocking/de-stocking"). It is worth also looking at page 16 of the 2014 Q2 report where they discuss the difficulties of estimating supply and demand figures, highlighting the difference in Chinese jewellery fabrication demand between CPM Group, Metals Focus and GFMS.
 
Then you have the issue of manipulation, where someone could move stock between visible exchanges/warehouses and OTC opaque vaults to give the impression of strong demand or excess supply. Then add in the use of gold in speculative cross-border arbitrage or commodity financing deals and we have some uncertainty as to what "real" demand is.
 
The above is the reason I don't look at total Comex movements and instead focus on kilobar movements only, as it is a highly specific product in demand in a specific region. Even so, it is not an entirely reliable metric, although I suppose I should follow the fashion of the day and instead of blaming myself, blame the bullion banks who found out I had shone a light on their otherwise secretive activities and when their dis-info agents failed to convince people that my kilobar theory was wrong and the suspiciously rounded figures were just fraudulent, they purposefully moved kilobars out of Comex into their unseen OTC vaults to discredit me and stop people from paying attention to the numbers.
 
Finally, even if we could get accurate figures, as Robert Blumen explains in this excellent article, quantities demanded (and therefore supplied) have "no causal connection with the gold price". The problem with Robert's analysis for our permabull writers is that his true drivers of the gold price - supply and demand schedules – "are not scalar quantities and cannot be measured; they can only be observed indirectly through the gold price itself". Ouch, that won't do, the price fell and they need analysis that proves the falling gold price was "wrong".
 
I would take issue with Robert's statement that investor schedules can't be measured – on exchange traded products the depth of bids and offers, and how they change over time, give some limited insight into these preferences. Unfortunately such data in the gold market is limited, but highly important. Consider if you heard that a quantity of one home was bought in your street for $100,000 during the last month. That is useful, but it would be more useful to know that only one home was up for auction during that period and there were five people bidding for it. However, your view of that one $100,000 sale would change if you were told instead that three homes were auctioned and there were only one or two bidders per home.
 
Robert's article also addresses the flow/stock issue, which I covered in this post noting that "what drives the gold price I would therefore argue, is not so much demand, but to what extent existing holders of the 170,000t will withhold it from the market". Even so, the price as set by the marginal buyer and marginal seller affect, in sort of feedback loop, the behaviour of the existing holders. For example, everyone in the street sees that one $100,000 sale and thinks their home is worth around $100,000, but should a fair proportion of them attempt to sell their homes, the chance of them all getting $100,000 will be slim and the price would fall. That might not happen if they had information that the number of homes auctioned was three and the number of bidders was poor.
 
I also think that while Robert is logically correct that quantities have no causal connection, he is underplaying the fact that people believe they do, or probably more accurately, people believe everyone else believes they do. Robert also notes that "trading continues because people are always changing their minds about what they want to own" but his article doesn't consider what influences people to change their minds.
 
The conclusion is that the relationship between price and demand is complex and ambiguous, subject to feedback loops and human interpretation. That is why I've taken to Ben Hunt's game/narrative theory approach.
 
So where are we now? While we have seen reports of retail demand surges, mostly silver, and the Perth Mint's kilobars premiums have moved up from previous strong levels, the fact is that Western professional market selling has overwhelmed China and other sources of demand. Perth Mint has seen a little selling from Depository clients, but nothing of note but not any surge in buying. We are not getting the same retail reaction we did on the April 2013 drop. From a technical point of view I get much confidence in drawing lines from chart levels over 5 years old – investor circumstances/perceptions have changed. Until we see Western money move back into gold we won't get any sustained and meaningful price move. On that front the pro market narrative is all negative:
 
Bloomberg: "There's just not one typical investment idea that's supportive to gold right now," George Zivic, a New York-based portfolio manager at Oppenheimer Funds Inc., which oversees $245 billion, said by phone Nov. 5. "With the potential of rates increasing, dollar appreciation, it becomes synthetically expensive to hold gold as some sort of a portfolio hedge. And then you have the reality of no real concerns of inflation."
 
Mineweb: Half of the 27 respondents surveyed on Wednesday and Thursday predicted gold prices will breach a critical support at $1,100 per ounce by the end of this year. ... "U.S. dollar strength should impact gold on a short-term basis," said John Meyer, analyst at brokerage SP Angel. ... "The drivers of a sustained rally in gold are ephemeral at best," said Tai Wong, director, metals trading at BMO Capital Markets in New York. ... "The mood of investors could not be more bearish for precious metals," said Thorsten Proettel, commodity analyst at LBBW.
 
I quote these guys not because I think they know what they are talking about, but because this is what similar pro investors are reading and what they think everyone else thinks about gold. On that basis the outlook is poor and in uncharted territory. Sorry. We'll just have to sit and watch how this plays out over the next few months.

Swiss gold referendum has already boosted the Swiss franc is the gold price next?

Posted: 11 Nov 2014 01:11 AM PST

The Swiss gold referendum coming up on November 30th has already boosted demand for the Swiss franc, and if it does not pass the impact will be to the downside. The same may well be true for the price of gold though it has not benefited much from the referendum so far.

Geoffrey Yu, FX strategist at UBS, says the Swiss National Bank will step in to defend the 1.20-per-euro ceiling for the Swiss franc…


Video link click here!

U.S. Mint plans to restart silver coin sales on Nov 17

Posted: 11 Nov 2014 01:08 AM PST

The Mint suspended sales on Nov. 5 after running out of coins after a market rout pushed prices to 4-1/2-year lows.

IAMGold to shrink executive ranks by nearly half

Posted: 11 Nov 2014 01:03 AM PST

Struggling gold miners around the world are planning increasingly tough measures to survive the latest price plunge.

$690m IPO launched for Meraas start-up Dubai Parks and Resorts to develop three Dubai theme parks

Posted: 10 Nov 2014 10:51 PM PST

Meraas Holding, the real estate company controlled by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai has launched a $690 million initial public offering for its start-up subsidiary Dubai Parks and Resorts that will develop three theme parks in the emirate. Dubai has not attempted to develop theme parks since the collapse of the Dubailand project in the real estate crash of 2009.

It’s a sign of the strength of the economic recovery since then and the boom in the local stock market that the government now thinks it will be able to raise funds for such ambitious start-up projects. This will be a test for the local IPO market that has recieved two recent start-up IPOs with large oversubscriptions.

Three theme parks

The three theme parks will comprise: Motiongate, a Hollywood inspired theme park concept based on major DreamWorks and Sony Pictures movies; the first Legoland theme park in the Middle East; and Bollywood Parks, a previously untried entertainment destination that will showcase the Bollywood movie experience.

Meraas has partnered with leading international operators with extensive experience in theme park operations: Parques Reunidos Servicios Centrales which will operate Motiongate and Bollywood Parks, is the second largest operator of leisure parks in Europe; Merlin Entertainments Group, Europe’s leading and the world’s second largest visitor attraction operator, will operate Legoland Dubai; and Marriott will operate an associated hotel resort.

The company's previous funding of development costs, land contribution and initial capital injection prior to IPO, together with the net proceeds from the offering, will constitute the equity component required to finance the $1.7 billion project. In addition, Meraas has secured debt financing and will fund any potential cost overruns via interest free shareholder loans.

IPO coordinators

For the IPO joint global coordinators are: Emirates Financial Services, Goldman Sachs International and HSBC. The government will be restricted from selling any of its shares until the publication of the company's audited financial statements for the second year following listing.

A timeline for the IPO was not given but will presumably be announced shortly. Investors will have to weigh whether the obvious benefits to the Dubai Government of building three large theme parks to boost tourism numbers are also going to be in their financial interests, if they are thinking beyond a quick profit.

Theme parks around the world have a very mixed record of success, even in the best locations and few investors have really done well. There is a high upfront capital investment and returns can be disappointing if visitor numbers are less than forecast.

GoldCore: UBS Shows Gold-Rigging Conspiracies Aren’t Mere Theory

Posted: 10 Nov 2014 10:41 PM PST

"We weren't given much time to enjoy the big Friday rally"

¤ Yesterday In Gold & Silver

Not surprisingly, the gold price got sold down the moment that trading began in New York on Sunday evening.  It was down eight or so dollars right up until 11 a.m. GMT in London---and then the HFT boyz showed up.  There was a tiny rally between noon and 1 p.m. EST---and then it was down hill some more until 4 p.m. EST in electronic trading.  From that point it rallied a few dollars into the 5:15 p.m. close of electronic trading.

The high and low tick were reported as $1,177.50 and $1,146.70 in the December contract.

Gold finished the Monday session at $1,151.60 spot, down $26.90 from Friday's close in New York.  Volume was heavy, but a lot of it was rollovers out of the December contract, so it only netted out around 164,000 contracts, which is still very decent.

Silver also got bashed at the New York open on Sunday evening, but managed to recover to unchanged---and stayed that way until shortly after 1 p.m. Hong Kong time before the selling pressure began.  The London low came around 1 p.m. GMT, which was about 20 minutes before the COMEX open---and every rally attempt after that wasn't allowed to get too far.

The high and low tick were reported by the CME Group as $15.88 and $15.48 in the December contract.

The silver price closed on Monday afternoon in New York at $16.61 spot, down 22 cents from Friday.  Net volume was 35,000 contracts.

Although platinum and palladium rallied a bit in early morning trading in the Far East on their Monday, both ran into selling pressure the same as gold and silver, with the lows in both these metals coming very late in electronic trading in New York.  Platinum was closed down 9 bucks---and palladium by 6 dollars.

The gold shares gapped down almost 2 percent at the open---and never looked back, closing just off their low tick of day day, as the HUI closed down 6.11%.

Even though silver closed down only 22 cents, the silver equities got clubbed even harder than their golden brethren, as Nick Laird's Intraday Silver Sentiment Index closed down 6.68%.

That the second time in six trading days that after a big gain, the precious metal equities gave back most of, or all, their gains from the previous day.  One wonders how that happens in a free market...if it's a free market, that is.

Once again the CME Daily Delivery Report showed no activity in gold or silver within the Comex-approved depositories for Thursday.

The CME Preliminary Report for the Monday trading session was a 'no show.'  I checked their website at 3:25 a.m. EST this morning---and it still showed Friday's final numbers.  The website should have been updated with Monday's data hours ago.

Another day---and another withdrawal from GLD.  This time an authorized participant withdrew 57,666 troy ounces.  And as of 7:30 p.m. EST yesterday evening, there were no reported changes in SLV.

I was expecting an update on the short positions of both GLD and SLV either Friday or yesterday---and as of 3:29 a.m. EST this morning, there have been no changes posted at the shortsqueeze.com Internet site.

There was a small sales report from the U.S. Mint yesterday.  They sold 3,500 troy ounces of gold eagles---and 500 one-ounce 24K gold buffaloes.  There have been no silver eagles sales since the big announcement a week ago that they were all sold out---and one has to wonder, despite what the mint said, if there will be another 2014 silver eagle minted or sold this year or not?

There wasn't a lot of in/out movement in both gold and silver at the Comex-approved depositories on Friday.  In gold, 16,075 troy ounces were reported received---and 2 kilobars were shipped out.  The 'in' activity was at Canada's Scotiabank.  The link to that activity is here.

In silver, nothing was reported received, and 99,396 troy ounces were shipped out---all from the CNT Depository.  The link to that activity is here.

I note that Endeavour Silver Corp. reported its financial results for the third quarter yesterday---and they were anything but stellar.  That's 100 percent due to the JPMorgan price management scheme in the precious metals.  I did note that at the end of the quarter they were holding 523,526 troy ounces of silver and 937 ounces of gold in their bullion inventory.  Maybe they're finally wising up as well.  I hope that this idea spreads to other primary silver producers---and the sooner the better.

I have a lot of stories for you today---and I'll happily leave the final edit up to you.

¤ Critical Reads

David Stockman to Bill Gross: Take the Gold Watch Now, Please

Bill Gross should stick to the shuffleboard courts because his call for bigger deficits is illogical, according to David Stockman, the still-outspoken U.S. budget chief during the Reagan White House years.

Writing on his Contra Corner blog, Stockman said Gross, perhaps the nation's most prominent bond guru during his years at the helm of Pimco, has apparently "lost it" since taking up residence at Janus Capital.

That's because Gross, in his November investment letter at Janus, called for more money printing and more spending from the debt-ridden federal government to boost the economy.

Those are fighting words for Stockman, a reliable foe of the Federal Reserve's ultra-loose monetary policies and the Beltway wastrels of Washington, D.C.

This story appeared on the moneynews.com Internet site at 6 a.m. EST on Monday morning---and today's first story is courtesy of West Virginia reader Elliot Simon.

Matt Taibbi and Bank Whistleblower on How JPMorgan Chase Helped Wreck the Economy, Avoid Prosecution

A year ago this month the U.S. Department of Justice announced that the banking giant JPMorgan Chase would avoid criminal charges by agreeing to pay $13 billion to settle claims that it had routinely overstated the quality of mortgages it was selling to investors.

But how did the bank avoid prosecution for committing fraud that helped cause the 2008 financial crisis?

Today we speak to JPMorgan Chase whistleblower Alayne Fleischmann in her first televised interview discussing how she witnessed "massive criminal securities fraud" in the bank’s mortgage operations. She is profiled in Matt Taibbi’s new Rolling Stone investigation, "The $9 Billion Witness: Meet the woman JPMorgan Chase paid one of the largest fines in American history to keep from talking."

This first class video interview runs for 59 minutes.  Normally I would wait for the weekend, but this falls hard on the heels of the Matt Taibbi peace in Rolling Stone last week---and I just didn't want to wait.  It was posted on the democracynow.org Internet site last Friday---and I thank Toronto reader 'Michael G' for sending it our way.

IMF reforms threatened by Republican electoral sweep

International Monetary Fund chief Christine Lagarde might need to get to work perfecting her belly-dance.

The normally reserved head of the global crisis lender promised in October to perform for the US Congress if that would get it to endorse crucial, much-delayed reforms for the Fund.

"I will do belly-dancing if that's what it takes to get the US to ratify," she said.

But now the Republican victory in Tuesday's U.S. elections has likely placed ratification further away -- and she will have to work harder to convince the IMF's largest shareholder.

This AFP article, filed from Washington, appeared on the france24.com Internet site at 7:45 a.m. Europe time on Sunday morning---and I thank South African reader B.V. for sharing it with us.

Chinese and Canadian central banks agree to $30 billion currency swap

The central banks of China and Canada have agreed to a currency swap worth 200 billion yuan ($32.67 billion) or C$30 billion, according to a Canadian government statement issued at a meeting of Asia Pacific nations on Saturday.

The swap will be effective for three years, according to a separate statement from China's central bank. The agreement was announced after Canadian Prime Minister Stephen Harper met Chinese Premier Li Keqiang.

China's central bank, the People's Bank of China, will also appoint a clearing bank in Canada for yuan -- or renminbi, as the currency is also called -- as part of a memorandum of understanding, the statement said. It did not say which bank would be appointed as the clearing bank, but it is likely to be one of China's four largest banks.

This Reuters article, filed from Beijing, appeared on their website at 7:31 a.m. EST on Saturday morning---and I found it embedded in a GATA release.  China apparently signed a similar agreement with Qatar, as this Zero Hedge piece points out.  It's headlined "Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada"---and I thank reader 'David in California' for sending it around late last night.

No more bailouts: BoE chief says banks won't be saved by taxpayers

New rules are being proposed that will force creditors, not taxpayers, to carry the losses of banks deemed “too big to fail.” The plans come after Western taxpayers were asked to pay trillions of dollars to bail out banks in the 2008 financial crisis.

The new global rules will force creditors to bear banks’ losses, ensuring that taxpayers’ money should never be used again to bail out banks.

The proposal was unveiled by Mark Carney, chairman of the Switzerland-based Financial Stability Board (FSB) and governor of the Bank of England.

The new rules would require big banks to hold much more money against losses, which Carney called a “watershed” moment, adding that the bailout by the taxpayers in 2008 and 2009 was “totally unfair.”

What a unique idea!  And better late, than never, I suppose.  This news item showed up on the Russia Today website a 8:22 p.m. Moscow time on their Monday evening---and it's the first offering of the day from Roy Stephens.

Europe braced for some dismal figures

After European Central Bank chief Mario Draghi got his colleagues to sign up to a target for pumping money into the ailing euro zone economy, a raft of GDP reports are likely to show just why more help may be needed.

The ECB did not add to its arsenal of measures last week and is expected to wait and see the take-up of a second round of cheap loans being offered to banks in December before considering anything further.

But after signs of discord, Draghi did secure unanimous agreement that the ECB balance sheet would "move towards the dimensions it had at the beginning of 2012" when it was about 1 trillion euros higher than now.

Economists seized on the word "towards", which casts some doubt over whether it amounts to a hard target. And the ability of the ECB to swallow its objections to full quantitative easing remains in question.

This Reuters article, filed from London, was posted on their website at 4:23 a.m. EST on Sunday morning---and I thank Harry Grant for sending it.

Mr. Europe? The Ghosts of Juncker's Past Come Back to Haunt Him

He only recently took office as European Commission president, but now, Jean-Claude Juncker is under pressure due to potentially illegal tax deals forged in Luxembourg during his stint as the country's prime minister. Some believe he may have to resign.

Last week, several media outlets, including the Munich-based Süddeutsche Zeitung, published the most detailed accounts yet of the tricks used -- and the eagerness brought to bear -- by Luxembourg officials to help companies avoid paying taxes. The strategies were often developed together with company leaders and served to entice multinationals to set up shop in Luxembourg. The tiny country on Germany's western border, for its part, benefited from tax revenues it wouldn't otherwise have seen. It was, in short, a reciprocal relationship.

But it was also a relationship that was disadvantageous for Luxembourg's E.U. partners -- and for European co-operation itself. Many of the companies that set up shop in Luxembourg, after all, no longer paid taxes in their home countries where they produced or sold the lion's share of their products.´

Jean-Claude Juncker served for 19 years as prime minister of Luxembourg, and his country's tax system was very much one of those "national interests" that he so often complained about. Still, his reputation as "Mr. Euro" did not suffer as a result.

This interesting article showed up on the German website spiegel.de at 5:34 p.m. Europe time yesterday and, not surprisingly, it's courtesy of Roy Stephens.  It was originally headlined "Juncker Faces Uncertain Future Amid Tax Loophole Investigations".

Germans Abandon Major News Sites in Anger Over Slanted Russia Coverage

What's going on in the German media is huge.  It is one of the most popular subjects on our site.  The U.S. and U.K. media have been hugely biased in their coverage of Russia, but German media has been far, far, worse, to the point which strains credulity.

They call it the Ulfkotte-effect. And it's beginning to resemble an avalanche.

Since the publication of Udo Ulfkotte's “Gekaufte Journalisten“ in September – now a #1 Amazon bestseller, in which he charges that the CIA regularly bribes top German journalists, himself included, – German readers' disaffection towards their mainstream media appears to have crossed a point of no return.

Granted, sales of newspapers and magazines have fallen everywhere, not just in Germany. But this is different. This is a boycott that is affecting web traffic. Germans are steering clear of mainstream media websites.

American networks such as CNBC fall into the same category.  People smell bulls hit---and after awhile start looking for their news elsewhere---and they don't have to go far.  This story appeared on the russia-insider.com Internet site last Thursday---and it's certainly worth reading.  It's the third offering of the day from Roy Stephens.

80% of Catalans say 'Yes' to independence in symbolic 'referendum'

An overwhelming majority of Catalans have said “yes” to independence and secession from the central Spanish government in Madrid in a highly-anticipated but symbolic referendum poll on Sunday.

Some 80.72 percent voted to form a state independent of Spain, Joana Ortega, vice president Catalonia said shortly after midnight, with over two million Catalans reportedly turning out for the unofficial referendum. Ortega could not immediately give an official turnout rate since there was no formal electoral roll for some 5.4 million registered Catalan voters.

Voters were given two questions to answer, “Do you want Catalonia to be a state?” was the first and in the case of a positive response, voters were asked: “Do you want Catalonia to be an independent state?”

“Yes-no” response obtained 10.11 percent; “no-no” 4.55 percent; and blank votes accounted for 0.56 percent, with 88.44 percent of the votes counted.

This Russia Today news item put in an appearance on their Internet site at 2:22 a.m. Moscow time on their Monday morning---and the first reader through the door was Harry Grant.

Kissinger warns of West's 'fatal mistake' that may lead to new Cold War

Former U.S. Secretary of State Henry Kissinger has given a chilling assessment of a new geopolitical situation taking shape amid the Ukrainian crisis, warning of a possible new Cold War and calling the West’s approach to the crisis a “fatal mistake.”

The 91-year-old diplomat characterized the tense relations as exhibiting the danger of “another Cold War.”

“This danger does exist and we can't ignore it,” Kissinger said. He warned that ignoring this danger any further may result in a “tragedy,” he told Germany’s Der Spiegel.

If the West wants to be “honest,” it should recognize, that it made a “mistake,” he said of the course of action the U.S. and the E.U. adopted in the Ukrainian conflict.

US economic recovery will be constrained by global slowdown warns ‘Dr. Realist’ Nouriel Roubini

Posted: 10 Nov 2014 07:03 PM PST

The US economy is on a recovery path but facing headwinds from an appreciating dollar and recessionary conditions in Japan and Europe. The slowdown in China and crisis in Russia over the Ukraine do nothing to help.

Insight into where the US economy is headed from Nouriel Roubini, Roubini Global Economics co-founder, and whether he thinks the Fed will raise rates sometime next year. He now sees himself as ‘Dr. Realist’ not ‘Dr. Doom’…


Video link click here!

Marshall Swing: Gold & Silver’s Day of Reckoning to Begin 9/23/15!

Posted: 10 Nov 2014 07:00 PM PST

I believe what is coming is far bigger than a mere significant economic collapse. I believe the coming financial collapse will be a worldwide economic collapse, and the institution of a one world government with a one world currency, in the 6-9 months following these events.   Submitted by Marshall Swing:  Rising open interest and declining price.  Those stats […]

The post Marshall Swing: Gold & Silver’s Day of Reckoning to Begin 9/23/15! appeared first on Silver Doctors.

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  2. Marshall Swing on Coming Collapse: TPTB Want it (Gold & Silver) All!
  3. Silver Analyst Who Predicted Silver’s Crash to $15 Three Years Ago Says Massive Rally to $1,000/oz Next!

Where Will Risk Erupt This Time?

Posted: 10 Nov 2014 05:07 PM PST

So where has all the risk pooled up in the system? In foreign exchange (FX) markets, that’s where.

One of the precepts of this blog is that risk cannot be disappeared, it can only be transferred or temporarily hidden from view. This runs counter to modern portfolio management, which holds that all risks can be hedged with counterparty-issued securities, i.e. options, futures contracts, derivatives, etc.

This also runs counter to the Central Banking Cargo Cult, which holds that any eruption of risk can be smothered by the unlimited liquidity spewed by omnipotent central banks.

There are several problems with the notion that risk can always be neutralized with counterparty securities and/or central bank liquidity. The first is fundamental. As mathematician Benoit Mandelbrot showed in his seminal book The (Mis)behavior of Markets, risk is a feature of all markets. As a result of their fractal nature, risk cannot be eliminated, and claims that risk has been eliminated will fail catastrophically.

In other words, precisely what happened in 2008-2009, when all the “low-risk” trades blew up and nearly took the global financial system down.

The second reason has to do with the failure of conventional models to assess tail risk. As former Federal Reserve chairman Alan Greenspan confessed in Foreign Affairs,Why I Didn’t See the Crisis Coming, the Fed’s models failed to accurately account for tail risk (otherwise known as things that supposedly happen only rarely but when they do happen, they’re a doozy), because guess what–they happen far more often than statistical models predict.

If Greenspan had read Mandelbrot’s book, he would have known that.

The third reason is human nature. As Greenspan observed, conventional models assume markets will remain liquid during crises. But in the real world, when panic takes hold, sellers/bids completely disappear and markets freeze up. Assets that cannot be sold are rendered worthless.

Risk, which has supposedly been disappeared by hedging, erupts and what is supposed to be permanent–liquidity–disappears.

This leads to the fourth problem, which is counterparty hedging is only as good as the liquidity of the market and the solvency of the counterparty.

It’s all well and good to hedge a position with a counterparty-issued security, but if the counterparty can’t pay off the hedge when things go south, the hedge disappears and the loss must be swallowed whole.

That leads to the fifth problem, which is in highly leveraged bets, a modest loss leads to insolvency. To quote Marx, “All that is solid melts into air.”

The sixth problem is systemic. Risk, by its very nature, flows to where it is least expected–into the parts of the system that are perceived as “safe.”

Thus risk in 2002 to 2007 flowed into home mortgages, the part of the financial system that was widely viewed as low-risk.

So where is all the systemic risk now? Like generals preparing to fight the last war, the Fed and other central banks are focused on protecting the mortgage market, Too Big to Fail/Jail (TBTF/J) banks and sovereign bonds, as those were the sectors where risk erupted last time.

(Note that the Fed has bought about $2 trillion of U.S. mortgages since 2009, about 20% of the entire market. That’s one way to soak up risk: just put a bid under the market and buy, buy, buy, burying it all in central bank balance sheets and government pension funds.)

But risk can’t be disappeared; it can only be transferred or temporarily cloaked. So where has all the risk pooled up in the system? In foreign exchange (FX) markets, that’s where. The $11 trillion in carry trades the central banks have funded are being deleveraged in a rapidly destabilizing environment of Japan devaluing its currency, the yen, by 40% since late 2012, and the withdrawal of the Fed’s $1 trillion-a-year QE programs.

I’ll give you two examples of risk piling up in the FX market. The consensus is that the Fed ending $1 trillion/year in QE money issuance is no big deal because the Bank of Japan (BoJ) and the European Central Bank (ECB) are printing more money, which is taking the place of the Fed’s QE issuance.

Not so fast, Slick. Roughly two-thirds of the emerging-market debt that must be liquidated or rolled over is denominated in dollars, which means the borrowers still need dollars, not yen or euros or yuan. So the strengthening dollar will still bite all these emerging-market borrowers with very sharp teeth.

Printing yen and euros is not a direct substitute for the dollars that have ceased flowing.

Then there’s all the high-fiving when trade deals are announced between China and whomever. Nice, but everyone crowing about a de-dollarized trade has forgotten that China’s RMB (yuan) is pegged to the U.S. dollar. That means that the rising dollar is dragging the RMB higher in relation to rubles, yen, euros, pesos, quatloos, etc.

The risks unleashed by central bank funding of massive carry trades, policy-driven devaluations and currency crises have yet to manifest. When they do, we’ll rediscover why traders consider the FX market the 800-pound gorilla that stomps on the stock and bond markets without even noticing the squishing sound.

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Has Meal Topped Out?

Posted: 10 Nov 2014 05:00 PM PST

That has been the question on the minds of grain traders for some time now as it has been strength in the meal which has dragged the entirety of the grain floor higher. Funds are big, big longs in the meal and as also net long in the beans and in the corn based on last Friday's COT reports.

Today's USDA report generated a negative reaction in the beans, and especially in the meal, when the dust finally settled at the close of pit session trading. The report showed a slight increase in yield but that was fully priced into the market.

Essentially, the way I am reading the reaction to this report, is that it did not contain enough of a bullish surprise to justify beans levitating up at current levels. After all, we have seen them put on more than $1.50/bushel over the last few weeks. With a run like that, it would have taken a strong bullish surprise to generate much in the way of determined buying up at these levels. The beans did not get that in the report and it looks as if their inability to extend the bump higher after the first few seconds of the report, started some profit taking from some of those heavy speculative longs.

I do not want to count them out too soon however as those who have been buying them are looking more at demand issues rather than supply issues. they have been able to use a recent torrid export pace by China, coupled with logistical issues in the eastern portion of the belt, to obliterate a great deal of the shorts, not to mention pushing even harder on their profitable longs.

However, in watching the chart performance of the January meal, we may have, and I am not convinced just yet, seen a top in this complex. The meal led it up and the meal will lead it down, if indeed it is going to do so.

I am not focusing so much on the December meal because that particular month might still be impacted by the transportation bottlenecks and has seen some very wild buying and selling as it swings back and forth. However, most in the trade expect whatever remains of those issues to be cleared up sometime before the end of the year, and maybe by the end of this month. Thus we are looking past the December meal and focusing on the January meal.

That month missed a textbook outside reversal day lower by 10 cents today. The strict definition of such an occurrence is when a market that has been in an uptrend, makes a new high, exceeding that of the previous day, and then proceeds to move steadily lower throughout the session scoring a low EXCEEDING the previous day's low. Ideally it also CLOSES below that same previous day's low.

Look at the chart and you can see that the January meal exceeded the high from Friday, then moved lower throughout the session, taking out Friday's low in the process and then closing at $364.70 compared to Friday's low of $364.6.



So it did not quite make that close below the previous day's low. Yet the range it established was well outside of Friday and it occurred on extremely heavy volume.

I am also noting that the market ran up to the near the 75% Fibonacci retracement level where it failed. Also, today's high failed to reach the $384 level essentially establishing the potential for a double top with a weak right side.

All this gooblygook might not mean anything much to some but for those of us who study the charts, it does look like a serious chink in the armor of the meal bulls has been inflicted. Yet, as treacherous as this market has been of late, I am not getting too dogmatic about it just yet.

We'll have to watch subsequent price action and see what we get and then perhaps we can get some confirmation, one way or the other.

A quick note on gold.... the violent short covering rally of Friday reversed rather quickly today as soaring equities and sinking commodities, along with a resurgence in the Dollar, brought a large amount of selling back into the metal. Mining shares gave back nearly every single bit of the gains made that day as well.

We'll probably range for a while unless we get a stronger signal from another outside market to work with. Bears will try to take it back down to $1130, while bulls must get the price above $1180 to have a shot at doing something more than a one day wonder.

Harvey Organ: Gold & Silver Trashed Again as Cartel Caps Snap-Back Rally!

Posted: 10 Nov 2014 03:54 PM PST

Gold and silver had a terrible day today.   As I warned you on Friday, "Monday is a critical day.  Rarely do they ever let gold rise in a follow through." The bankers came to work early this morning at 6 am est and knocked gold and silver down badly and the kept the pressure […]

The post Harvey Organ: Gold & Silver Trashed Again as Cartel Caps Snap-Back Rally! appeared first on Silver Doctors.

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Silver to S&P 500 Ratio Suggests A Silver Price Rebound

Posted: 10 Nov 2014 02:33 PM PST

Take the price of silver, multiply by 100, divide by the S&P 500 Index and chart it for 30 plus years. What do we see?

Silver to SP500 1984 2014 investing

Now look at the 13 years since 9-11 when the gold, silver and commodities bull markets began.

Silver to SP500 2001 2014 investing

  1. Silver to S&P Ratio (Si/SP) is currently at an 8 plus year low.
  2. Si/SP is below its upward linear trend shown in red since 9-11.
  3. Over the long term the ratio shows the desirability of hard assets such as silver versus the desirability of paper assets such as the S&P.
  4. The ratio declined from 1980 to about 2001, increased to 2011, and crashed since then.
  5. QE started in late 2008 and stimulated the S&P off it March 2009 lows. Most of the $Trillions in newly created Fed dollars went into the stock and bond markets, and not into the silver and gold markets.
  6. Subsequent to 2011, the S&P has charged upward while silver has crashed to about 30% of its April 2011 high.

Now examine the difference between the ratio and the linear trend shown above in red.

Silver to SP500 trendlines 2014 investing

Comparisons

 

SP500 vs Silver Comparison investing

 

We could go on, but it is clear to me that the S&P is near all-time highs and is at risk from declining QE, excessive valuation, increasing wartime threats, Middle-East trauma, and US political turmoil. Silver is near a 5 year low, 70% off its highs, and likely to rise based on the same issues that could hurt the S&P.

The Si/SP ratio shows that silver is deeply oversold and far below its typical levels. The ratio is at an 8 year low, even below the 2008 silver crash lows, and not far above 30 plus year lows.

Based on Friday's upticks, last week may have been the turning point for silver prices and the silver to S&P ratio. Or perhaps the S&P will continue reaching for the sky even though QE is supposedly diminishing, while silver prices drop further below the cost of production. Both seem unlikely but we shall see.

What is clear is that silver and gold are currently selling at bargain prices and the S&P is selling at very high prices. If the silver market has finally found a bottom then silver is – right now – an excellent investment, financial insurance, and protection for your purchasing power and savings.

For those who bought silver (and gold) at higher prices, the long-term trend is up and will eventually express itself. Waiting for the turnaround is painful, but now is a lousy time to lose sight of the "big picture" and sell at a loss. Instead, now is a far better time to buy.

If you bought silver at lower prices, you probably feel good knowing that your investment is currently profitable even at these post-crash levels. Further, silver prices are highly likely to increase substantially in the next few years.

KISS! Keep Increasing Silver Stack! Keep It Simple – Silver!

 

More Reading:
Bill Holter $15 Silver? You can't have any!
Andrew Hoffman Silver Shortages Confirm Cartel Lunacy

 

Gary Christenson | The Deviant Investor | GEChristenson

 

Frank Holmes talks no-drama investment strategy

Posted: 10 Nov 2014 01:51 PM PST

Frank Holmes' advice to investors? Chill. In his interview with The Gold Report, the veteran commodities investor shared some strategies that help him "sit back and stay balanced," namely by diversifying and following the money.

Eric Dubin – They Could Conceivably Kill the COMEX

Posted: 10 Nov 2014 01:00 PM PST

SD Metals & Markets’ Eric Dubin joins The Daily Coin’s Rory Hall for an in-depth interview discussing the latest PM takedown and the possibility a long anticipated COMEX default is looming. Join us as we take a look at the silver market since the US Mint sold out of American Silver Eagles. We review what […]

The post Eric Dubin – They Could Conceivably Kill the COMEX appeared first on Silver Doctors.

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These forecasters predicted the housing meltdown. Here’s what they’re thinking now.

Posted: 10 Nov 2014 08:40 AM PST

From Bloomberg: 

In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession − the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.

That call runs counter to the forecasts of Morgan Stanley and Goldman Sachs Group Inc. The two banks posit an expansion that has plenty of room to run.

“Clearly the direction of most of the recent global economic news suggests movement toward a 2015 downturn,” chairman David Levy told clients in an Oct 23 edition of a monthly forecasting report, which at over 60 years purports to be the oldest of its kind.

Why the gloom? Levy argues the U.S. and many advanced economies still have balance-sheet excesses exposing them to renewed financial crisis. There is limited room for policy makers to reverse any slump, and low inflation risks tipping into deflation in many parts of the world.

U.S. Exposure

While the U.S. is doing relatively well, Levy is worried that at about 13 percent of gross domestic product, U.S. exports represent their largest share ever.

American companies also are getting a historically large proportion of earnings from abroad and households are vulnerable to any bear market because their ratio of stocks to disposable income is higher than at any point aside from the start of this century, he said.

Granted, there have been some misfires. In September 2010, Levy told Bloomberg Television that he saw a 60 percent chance of another U.S. recession. Instead the world’s largest economy has gained in strength.

The upshot of the latest forecast is that even if a slump is avoided, the Federal Reserve will keep interest rates near zero until the next decade, according to Levy.

“Without first strengthening substantially, we think it highly unlikely that global financial stability will hold together long enough for the Fed to signal and execute a rate increase,” he said.

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