Gold World News Flash |
- Senior Gold Producer Goldcorp Takes Large Stake in Nevada's Gold Standard Ventures
- McDonalds Teetering On The Brink Of Financial Collapse
- CrushTheStreet.com – Protecting and Profiting from Coming Collapse and Moving to a Freer World
- It Has Begun! The Gold Bull Market Awakens
- Alasdair Macleod: Shorting the yuan is dangerous
- Hyperinflating Venezuela Used 36 Boeing 747 Cargo Planes To Deliver Its Worthless Bank Notes
- Inflation-wracked Venezuela orders bank notes by the planeload
- Beijing Vs DC: The Battle for Southeast Asia
- Kyle Bass Asks If China Is Fine, Why Are They So Worried About "Some Hedge Fund Manager In Texas"
- Hyperinflating Venezuela Used 36 Boeing 747 Cargo Planes To Deliver Its Worthless Bank Notes
- The Cozy Relationship Between The Treasury And The Fed
- Closing In: Russia, Iran, Assad "Encircle" Syria's Largest City As Peace Talks Collapse In Geneva
- What Happens Next?
- Ambrose Evans-Pritchard: Dollar tumbles as Fed rescues China in the nick of time
- Gold in the Year of Fear Feb. 4, 2016 (Video)
- All Systems are Go for Silver and Gold Prices
- The War On Savers And The 200 Rulers Of World Finance
- U.S. Debt $19 Trillion, Gold & WAR On Cash
- Protecting and Profiting from Coming Collapse and Moving to a Freer World
- Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Tomorrow
- Boomers Are Being Led Like Lambs To The Slaughter
- Savers Are About to Get Railed…
- Jim’s Mailbox
- The Opaque Process of Collapse
- Retail Investors Heading For The Slaughter One More Time
- Dollar tumbles as Fed rescues China in the nick of time
- Gold Prices Rise To 3 Month High As Investors Sell Risky Assets
- Bad Numbers And Dark Prophecies: Almost Everybody’s Cutting Something
- About Resuscitation and Reinstatement
- Peter Schiff : This is Going to be a Greater Recession Than 2008
- Currencies Play Catchup With Treasuries
- Forget FANG. 2016’s Gains Will Come From BARF…
- London gold market wrestles over future: 'People want the physical, not paper'
- Gold and Stock Markets Inflection Points Galore
- Store Closings On The Rise! The Shut Down Is Here!!!
- Gold Price Golden Bottom? Video
- Economic Collapse : FED Testing Negative interest Rates
- HUI Now Confirming Gold Price Move Higher
- A Giga Breakout In A Mid-Sized Gold Miner
- Lakshman on US Slowdown, Shocks, and China
| Senior Gold Producer Goldcorp Takes Large Stake in Nevada's Gold Standard Ventures Posted: 05 Feb 2016 12:50 AM PST When Gold Standard Ventures announced on February 1 that Goldcorp would be investing CA$16.1 million for 9.9% of the junior's shares, industry watchers took notice. In this analysis written exclusively for Streetwise Reports, Thibaut Lepouttre, editor of Caesars Report, speculates on why the major acted when and where it did, and what it might mean for the future. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| McDonalds Teetering On The Brink Of Financial Collapse Posted: 05 Feb 2016 12:30 AM PST by Baxter Dmitry, InvestmentWatch:
McDonalds Corporation, the world's leading dealer of GMOs and Frankenfoods, is teetering on the brink of financial collapse thanks to a global awakening regarding the dangers of toxic, commercially processed "food." "People around the world are waking up to the fact they have been conned by McDonalds," said John Grits, a restaurant industry consultant with Food Consultants Group. "The Golden Arches are rotten to the core and now they have started crumbling." According to an Associated Press review of the corporation's regulatory filings, McDonalds closed over 700 stores last year and suffered an 11 percent decrease in revenue and 30 percent drop in profit. For corporations the size of McDonalds, falls in profit of 2 to 3 percent can have enormous ramifications. 30 percent? We are talking irreversible terminal decline, according to industry experts. John Gordon, an industry analyst with Pacific Management Consultancy Group, says that McDonalds are simply out of step with what consumers want these days. "McDonalds is such an internally focused organisation, it's a situation where you don't have a fresh perspective coming in." Following the mass closures last year, thousands more restaurants are expected to shut their doors and drive-thru windows this year as diners continue to choose not to eat items such as French Fries – comprised of 19 shocking ingredients, French Fries are more like a lab experiment in creating an item that looks and tastes like a potato product but is actually a chemically engineered concoction of GMOs, trans fats, chemical stabilisers, preservatives, wheat, milk, and beef derivatives, as well as poisonous additives derived from petroleum and silicone. Future generations will look back at McDonalds with horror. They will be astonished that the behemoth corporation was allowed by the FDA to perform what is essentially a sick and twisted science experiment on the world's population, making millions of people sick in the process, aiming their advertising squarely at children and adolescents, trying to hook them when they are young and vulnerable – and all in the name of profit over all else. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CrushTheStreet.com – Protecting and Profiting from Coming Collapse and Moving to a Freer World Posted: 05 Feb 2016 12:00 AM PST from TheDollarVigilante: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| It Has Begun! The Gold Bull Market Awakens Posted: 04 Feb 2016 09:20 PM PST from FutureMoneyTrends: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alasdair Macleod: Shorting the yuan is dangerous Posted: 04 Feb 2016 09:16 PM PST 12:16a ET Friday, February 5, 2016 Dear Friend of GATA and Gold: China doesn't need to devalue its currency, the yuan, GoldMoney research director Alasdair Macleod writes this week. Rather, Macleod writes, China's objective is to weaken the yuan's primary competitor, the U.S. dollar. "With dollar reserves accumulating at a record rate because of the trade surplus, China should have no problem maintaining a yuan rate of her choosing," Macleod argues. "If anything she will seek to dispose of dollars on the basis they are overvalued relative to the commodities she needs for the future. China will sell her dollars not to protect the yuan but to dispose of an overvalued currency." Macleod's analysis is headlined "Shorting the Yuan Is Dangerous" and it's posted at GoldMoney here: https://www.goldmoney.com/shorting-the-yuan-is-dangerous?gmrefcode=gata CHRIS POWELL, Secretary/Treasurer ADVERTISEMENT Silver Coins and Rounds with Employee Pricing and Free Shipping Grab your Silver Starter Kit at cost from Money Metals Exchange, the company named "Precious Metals Dealer of the Year" by industry ratings group Bullion Directory. Simply go to MoneyMetals.com and type "GATA" in the radio box at the top of the page. This special silver offer contains 4 ounces of silver coins and rounds in the most popular 1-ounce, half-ounce, and 10th-ounce forms. Claim yours now, because GATA readers get employee pricing and free shipping. So go to -- -- and type "GATA" in the radio box at the top of the page. Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference: https://jeffersoncompanies.com/landing/2014-av-powell Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hyperinflating Venezuela Used 36 Boeing 747 Cargo Planes To Deliver Its Worthless Bank Notes Posted: 04 Feb 2016 09:16 PM PST from Zero Hedge:
The weeks ago, when we showed “What The Death Of A Nation Looks Like: Venezuela Prepares For 720% Hyperinflation“, we said that after looking at a chart of Venezuela’s upcoming hyperinflation…
… a hyperinflation in which the soaring stock market has failed to keep pace with the collapsing currency, thereby mocking all erroneous thought experiments that under hyperinflation being long the stock market is a sure hedge to currency destruction…
… we joked that it is unclear just where the country will find all the paper banknotes it needs for all its new currency. After all, central-bank data shows Venezuela more than doubled the supply of 100-, 50- and 2-bolivar notes in 2015 as it doubled monetary liquidity including bank deposits. Supply has grown even as Venezuela has fewer U.S. dollars to support new bolivars, a result of falling oil prices. This question, as morbidly amusing as it may have been to us if not the local population, became particularly poginant yesterday, when for the first time, one US Dollar could purchase more than 1000 Venezuela Bolivars on the black market.
And, as if on cue, the WSJ answered. As it turns out we were not the only ones wondering how the devastated “socialist paradise” gets its exponentially collapsing paper currency, which in just the past month has lost 17% of its value. The answer: 36 Boeing 747s. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inflation-wracked Venezuela orders bank notes by the planeload Posted: 04 Feb 2016 09:05 PM PST By Kejal Vyas CARACAS, Venezuela -- Millions of pounds of provisions, stuffed into three-dozen 747 cargo planes, arrived here from countries around the world in recent months to service Venezuela's crippled economy. But instead of food and medicine, the planes carried another resource that often runs scarce here: bills of Venezuela's currency, the bolivar. The shipments were part of a massive import of at least five billion bank notes that President Nicolas Maduro's administration authorized over the latter half of 2015 as the government boosts the supply of the country's increasingly worthless currency, according to seven people familiar with the deals. ... Dispatch continues below ... ADVERTISEMENT Free Storage with BullionStar in Singapore Until 2016 Bullion Star is a Singapore-registered company with a one-stop bullion shop, showroom, and vault at 45 New Bridge Road in Singapore. Bullion Star's solution for storing bullion in Singapore is called My Vault Storage. With My Vault Storage you can store bullion in Bullion Star's bullion vault, which is integrated with Bullion Star'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: And the Venezuelan government isn't finished. In December the central bank began secret negotiations to order 10 billion more bills, five of these people said, which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually -- dollars and euros that unlike bolivars are used worldwide. Four spokesmen from Venezuela's central bank didn't respond to calls and emails seeking comment. Economists say the purchases could exacerbate Venezuela's economic meltdown: injecting large numbers of freshly printed notes is likely to stoke inflation, which the International Monetary Fund estimates will this year hit 720 percent, the world's highest rate. Central-bank data show Venezuela in 2015 more than doubled monetary liquidity, a measure used to gauge all money in the economy, including bank deposits. Printing more bolivars is weakening the currency further. This week, the bolivar broke the psychologically important level of 1,000 per dollar for the first time on the country's thriving black market. The country has several official exchange rates, including 6.3 bolivars to the dollar. Venezuela's 30 million people can't seem to get cash fast enough, said Steve H. Hanke, an expert on troubled currencies at Johns Hopkins University. "People want cash because they want to get rid of it as fast as they can," he said. ... ... For the remainder of the report: http://www.morningstar.com/news/dow-jones/TDJNDN_2016020314349/inflation... Support GATA by purchasing DVDs of GATA's London conference in August 2011 or GATA's 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beijing Vs DC: The Battle for Southeast Asia Posted: 04 Feb 2016 08:20 PM PST by Tony Cartalucci, Activist Post:
Lost on Edens appears to be the fact that physical infrastructure built beyond China's borders becomes a long-term asset for those who cooperate in its construction, while Western "free trade" is in all reality submission to foreign economic hegemony. Many aspects of "free trade" agreements are, in fact, stripped verbatim from treaties that defined Colonial Europe and its subjugation of Southeast Asia. Edens seems to believe that "free trade" is a viable incentive to lure Southeast Asia away from China. However, upon historical examination, it is more a means to coerce it away. Thailand in the 1800s, then the Kingdom of Siam, was surrounded on all sides by colonized nations. Gunboats would eventually turn up off the coast of Siam's capital and the Kingdom made to concede to the British 1855 Bowring Treaty. Upon examining these terms imposed via "gunboat policy," how many of them echo verbatim the terms found among modern "free trade" economic liberalization?
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| Kyle Bass Asks If China Is Fine, Why Are They So Worried About "Some Hedge Fund Manager In Texas" Posted: 04 Feb 2016 07:25 PM PST If there's one thing China hates, it's a nefarious "manipulator" spreading innuendo, and fear in an already nervous market. When these evildoers are Chinese citizens, the problem is easily solved. Beijing simply arrests them and beats a confession out them or else simply locks them away in the bowels of the Politburo for the remainder of their days. This is what we saw late last summer when Xi moved to crackdown on what the government claimed were multiple bad actors creating volatility and exacerbating the stock market rout. However, when the "manipulators" aren't Chinese citizens and don't reside within the country's borders, officials have fewer options. Now that a bevy of well known fund managers have the yuan in their crosshairs, China is using the only tool is has to combat foreign "speculators" intent on spreading "information that does not conform to the facts": the captive press. China is particularly keen on using the Party's various media mouthpieces to counter perceived threats to the country and to calm the masses whose nerves are increasingly frayed amid the equity market collapse and the decelerating economy. Last month for instance, a hilariously absurd "op-ed" appeared in People's Daily carrying the title "Declaring war on China's currency? Ha ha." In it, Beijing calls George Soros - who said at Davos that he's betting against Asian currencies and that China is experiencing a hard landing - a "financial crocodile" whose "war on the renminbi cannot possibly succeed." Of course Soros isn't the only one waging "war" on the yuan. Kyle Bass is also betting against the currency. China's banking system, Bass told CNBC on Wednesday, is a $34 trillion ticking time bomb, and when it explodes, Beijing will need to plug the holes. $3.3 trillion in FX reserves will be woefully inadequate, he contends. "Very few people have looked at what the cause of the problem is," Bass begins. "They've let their banking system grow 1000% in 10 years. It's now $34.5 trillion." Bass then goes on to note that special mention loans (which we've discussed on any number of occasions) are around 3% of total assets. "If they lose 3%, that's a trillion dollars," Bass exclaims. Ultimately, Bass's argument is that when China is forced to rescue the banking system by expanding the PBoC's balance sheet, the yuan will for all intents and purposes collapse. This is of course exacerbated by persistent capital flight. Below, find some other soundbites from the interview. Notably, towards the end, Bass says that if China is right and speculation around a much larger devaluation is indeed unfounded, then it's curious why China seems to care so much about what "one fund manager in Texas thinks." From Kyle Bass:
Lest you should be inclined to believe Bass, we close with yet another amusing "Op-Ed" from Chinese media, this time courtesy of Xinhua, who will patiently explain why the "doom predictors" always get it wrong on China. * * * The first month of 2016 witnessed the Chinese stock market in panic selling mode and the RMB depreciating unexpectedly against the greenback. China's GDP growth in 2015 also hit a 25-year low. There seems to be a new surge of predictions about the "coming collapse of the Chinese economy and the end of the Chinese model". However, looking back at China's development journey from the late 1970s up to today, many pessimistic predictions, especially forecasting the "China breakdown", have been proved wrong. In 1996, Lester Brown, an American agricultural economist predicted that China would not be able to feed its large and fast-growing population and economic reforms would lead to malnutrition and hunger. In the late 1980s and early 1990s, many Chinese pessimists predicted that economic reform without political reform would lead to a total collapse of China. In the Asian Financial Crisis of 1997-98 and the World Financial Crisis of 2007-08, many Chinese pessimists predicted that the Chinese model would not be able to sustain those drastic external shocks. All those predictions were wrong. Since 2012, China has changed its economic development strategy from export and foreign direct investment driven to endogenous growth which emphasizes internal structural change, innovation and industrial upgrading to escape the so-called middle income trap. In doing so, China has to eliminate excess industrial production capacity of steel, coal and other environmentally polluting products, and to promote high-end manufacturing, services, urbanization and rural modernization. Economic slowdown is an inevitable outcome of the new development strategy, but given the tough external economic environment and surging domestic factor costs, China's growth of 6.9% in 2015 was still the best among the world's 10 largest economies except India. In particular, while the Russian and Brazilian economies are contracting sharply, and while many other developed economies are still struggling to move out of their own crisis, China continues to be a potent engine of growth for the global economy. So why do doom predictors always get it wrong when it comes to China? Firstly, some pessimists always look at China's short term challenges and ignore its long term development capability and potential. Short term challenges and difficulties are temporal, they can be overcome if the government and the people have a strong will for success. Secondly, some pessimists do not understand that the Chinese government is far better than they thought, and that political stability is the basic foundation of China's success. Thirdly, doom predictors of China underestimate the ability and determination of the Chinese people who are not only hard working and intelligent, but also resilient to all kinds of challenges and shocks. China today is different from its past. The economy is well above 10 trillion US dollars, second only to the US, twice as large as Japan, and four times as large as India. A 6.9% growth is more than one-quarter of India's annual GDP, and bigger than a medium-sized economy in the world. China's richest city, Shenzhen, erected from a small fishing village in 1980, now has a population of over 10 million people. Its per capita GDP is higher than that of Taiwan and is still growing at nearly 8% per year. China's biggest city by population, Chongqing, has over 30 million people. The city's GDP expanded by 11% in 2015 and the government's plan is to achieve 10% growth in 2016. The Chinese economic fundamentals are sound and robust: unemployment rate is low, people's incomes are growing faster than GDP, income inequality is narrowing and energy intensity is declining. If those pessimists were in China, they would see that all the Chinese regions are still ambitious in making their 13th Five Year Plan, which is to sustain China's economic growth at a much higher rate than many other economies in the world. The policy objective is to build an all-round well-off society and to eliminate absolute poverty by 2020. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hyperinflating Venezuela Used 36 Boeing 747 Cargo Planes To Deliver Its Worthless Bank Notes Posted: 04 Feb 2016 07:17 PM PST The weeks ago, when we showed "What The Death Of A Nation Looks Like: Venezuela Prepares For 720% Hyperinflation", we said that after looking at a chart of Venezuela's upcoming hyperinflation...
... a hyperinflation in which the soaring stock market has failed to keep pace with the collapsing currency, thereby mocking all erroneous thought experiments that under hyperinflation being long the stock market is a sure hedge to currency destruction...
... we joked that it is unclear just where the country will find all the paper banknotes it needs for all its new currency. After all, central-bank data shows Venezuela more than doubled the supply of 100-, 50- and 2-bolivar notes in 2015 as it doubled monetary liquidity including bank deposits. Supply has grown even as Venezuela has fewer U.S. dollars to support new bolivars, a result of falling oil prices. This question, as morbidly amusing as it may have been to us if not the local population, became particularly poginant yesterday, when for the first time, one US Dollar could purchase more than 1000 Venezuela Bolivars on the black market.
And, as if on cue, the WSJ answered. As it turns out we were not the only ones wondering how the devastated "socialist paradise" gets its exponentially collapsing paper currency, which in just the past month has lost 17% of its value. The answer: 36 Boeing 747s. From the WSJ:
More planes are coming: in December, the central bank began secret negotiations to order 10 billion more bills, five of these people said, which would effectively double the amount of cash in circulation. That order alone is well above the eight billion notes the U.S. Federal Reserve and the European Central Bank each print annually—dollars and euros that unlike bolivars are used world-wide. This means that Venezuela's hyperinflation, already tentatively estimated at 720%, will likely add on a few (hundred) zeroes by this time next year. It is also quite likely that Venezuela the country, as we know it now, will no longer exist because once any country is swept up in hyperinflationary rapids two things occur like clockwork: social uprisings and political coups. But before it gets there, Venezuela's president Maduro will be busy liquidating the nation's roughly $12 billion in gold reserves, which his late predecessor fought hard in 2011 to repatriate back to Caracas. Sadly that gold was never meant to stay in Venezuela after all. Meanwhile, life in Venezuela is disturbingly comparably to that under Weimar Germany, wheelbarrows of cash and all:
Adding insult to injury the very process of printing the almost instantly worthless currency costs Venezuela hundreds of millions of dollars.
But it gets even more ridiculous for the government where the largest bill in denomination is 100 Bolivars:
Venezuela's misery means a hefty pay day for those who end up printing its worthless currency, among them, the same company which printed Weimar's own currency:
Wait a minute, why not just print a single 100,000,000 Bolivar note instead of one million 100 bolivar bills? After all the savings on the printing, let along the air freight, to the already insolvent country will be tremendous and allow it to pretend it is not a failed nation for at least a few more days? It is here that the sheer brilliance of the rulers of this socialist paradise shines through:
Well, no, but at this point one may as well sit back and be amused by the idiocy of it all. But at least we will give Maduro one thing: he has done away with the pretense that when push comes to shove, the state and the central bank (and thus commercial banks) are two different things: "the president in late December changed a law to give himself full control over the central bank, stripping congressional oversight just as his political opponents took control of the National Assembly for the first time in 17 years." Finally, while the rest of the world is wrapped up in such deflationary monetary madness as negative interest rates, Venezuela is subject to monetary lunacy too, only of a far more familiar, hyperinflationary kinds:
And before we close this latest chapter on our ongoing chronicle of Venezuela's complete economic disintegration, we are delighted to find that Kyle Bass's "nickel" idea has made its way even in this Latin American socialist paradise:
Now if only Venezuela had a way of exporting some of its hyperinflation to the rest of the world, drowning in "deflation" the result of a few hundred trillion in debt. Actually, fear not: ultimately hyperinflation is easy to achieve - Venezuela is a good example of this; what is difficult is to admit when the current system has failed and when importing 36 Jumbo Jets full of cash is the only solution. With every passing day, the rest of the "Developed Word" gets one step closer to recreating Venezuela's experience. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Cozy Relationship Between The Treasury And The Fed Posted: 04 Feb 2016 06:05 PM PST Submitted by David Howden via The Mises Institute, Last year was a tough one for investors. Gold was down 10 percent. The Dow Industrials fell 2.5 percent, and most bond indexes finished down by at least that much. One institution that performed remarkably well in 2015 was the Federal Reserve. It just finished its most profitable year on record. The $100 billion in net income earned last year was a slight improvement over the previous year. That total was also roughly three times higher than the Fed’s income from 2007, the last year before it initiated its Quantitative Easing programs in the wake of the financial crisis. Since the Fed does not exist to generate profits, some may be confused as to how it could have such a great year at doing so. Here’s how it works. Every time the Fed expands the money supply it buys an asset. Typically the asset is a financial security, like a US Treasury bond, and the counterparties are typically large banks. Figure 1 gives a simplified look at the Fed’s balance sheet at the end of 2015 and how it evolved over the year:  Figure 1: Simplified Federal Reserve Balance Sheet (in millions of dollars)Compared to previous years, 2015 was relatively uneventful at the Fed. Having completed the tapering of its Quantitative Easing programs in October 2014, the Fed’s asset holdings held constant over the year. This was in stark contrast to the previous six years, during which the Fed purchased $3.5 trillion of assets. The Fed earns interest on its assets but most of its liabilities are non-interest bearing, like the $1.4 trillion worth of Federal Reserve notes crumpled in people’s pockets or buried under our mattresses. The Fed does pay interest on Reserve Bank balances, but at the current rate of 0.5 percent, this figure was a drop in the bucket relative to its total income. (Almost all of the Fed’s assets earn interest, while it incurs an interest expense on less than half of its liabilities. What Does the Fed Do With All That Income?The question that arises is what the Fed does with its profits. Each year, the Fed remits to the US Treasury its net income, and thus provides the federal government with an important source of funding. Figure 2 shows how this figure has evolved since 2001.  Figure 2: Treasury Interest and Fed Remittances (in billions of dollars)A decade ago, back when the Fed was a smaller size, Fed remittances were fairly steady, in the neighborhood of $20 billion a year. This all changed after 2008 as the Fed’s Quantitative Easing programs increased the amount of interest-earning assets that would generate funds to transfer back to the Treasury. This year’s figure of $97.7 billion is more than four times the amount transferred just ten years ago, an annual growth rate of more than 16 percent. (At least something is growing quickly in this economy.) Big Bucks for the US TreasuryFor the US Treasury, Fed remittances are something of a free lunch. When someone buys a Treasury bond, the government must pay them interest. This applies to the Fed as well, but then at year-end the Fed remits the interest back to the Treasury. The federal government paid out $223 billion in interest payments last year. The Fed remitted almost $100 billion back, leaving the net interest expense at around $125 billion. It’s not just historically low interest rates that are making it easier for the Treasury to borrow in a way that, if it were done by anyone else, would classify them as subprime. The Fed is also chipping in and helping out where it can. Also shown in figure 2 is the percentage of the federal interest expense that is remitted back by the Fed. For 2015, this figure neared 45 percent. That figure is a good way to think about the free lunch that the Fed gives to the Treasury. In more “normal” times (i.e., prior to 2008) around 10 to 15 percent of the Treasury’s interest payments were paid back to it by the Fed. This figure has grown to almost four times that amount over the past seven years and it doesn’t look likr this trend will abate anytime soon. Implications for Fed “Independence”As much as economists talk about the independence that the Fed holds from Congress, these remittances represent a strong link. In fact, since they enable federal spending they create a form of quasi-fiscal policy for the Fed to use, in addition to its more common monetary policy options. Consider that since Treasury debt is almost never repaid in net terms (old issues are retired but replaced with new debt issuances), the true cost of financing the US government’s borrowing is not the gross amount of debt outstanding but the annual interest expense it faces. Viewed this way, nearly half of the Treasury’s borrowing was financed by the Fed last year. Absent these Fed remittances, Congress would need to look at either an alternative funding source (though I am not sure how many takers there are for the Fed’s $2.5 trillion Treasury holdings) or make some serious cuts. How serious? NASA’s operating budget was roughly $18 billion last year, so a lack of Fed remittances would cause the Treasury to cut around five NASA-sized programs. Alternatively, the governments Supplemental Nutrition Assistance Program (previously known as “food stamps”) cost $70 billion in 2014. Without the Fed’s remittances, Congress would have to stop paying out all food stamp recipients plus it would be forced to defund almost two NASAs. More important in many Americans’ hearts is their monthly social security check. In 2014, $830 billion of social security checks were mailed out. Without Fed remittances, retirees might see their monthly check cut by about 12 percent. For those concerned with the burgeoning size of the federal government, putting a stop to Fed remittances would put a serious dent in public finances and force some serious thought as to what programs need to be cut. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Closing In: Russia, Iran, Assad "Encircle" Syria's Largest City As Peace Talks Collapse In Geneva Posted: 04 Feb 2016 05:40 PM PST Back in October, we previewed the "promised" battle for Aleppo, Syria's largest city prior to the war. By the time Russia began constructing an air base at Latakia, the city - which is immensely important both from a strategic and psychological perspective - was controlled by a hodgepodge of rebels and militants including al-Qaeda, the Free Syrian Army, and ISIS. As we noted four months ago, if Russia and Hezbollah manage to recapture the city, it would effectively restore the Assad government in Syria even if the east of the country is still controlled by Islamic State. In many ways, the city is emblematic of the wider conflict. Here are a few visuals which underscore the extent of the desolation and utter sorrow that plague this once thriving urban center.
And for anyone who might have missed it, here's a look at nighttime light emissions in the city along with a few visuals from "a night in Aleppo":
Despite the fact that the city - like many others across the country - has been reduced to a smoldering pile of rubble, it's key to Russia and Iran's plans to consolidate Assad's power in the west of the country. As noted above, if the SAA can retake Aleppo, Assad will have control of most of the country's major urban centers, effectively restoring his grip on power. So critical is the city, that when the SAA, Hezbollah, and a variety of Shiite militas were gearing up for the push north, Quds commander Qassem Soleimani himself showed up to rally the troops (he was later injured on the frontlines).
Fast forward four months and it appears that after a protracted fight, Russia and Hezbollah are indeed poised to recapture the city where militants are now surrounded. Critically, Russia and Iran have now cut off supply lines from Turkey. "Backed by Russian firepower and Hezbollah militants, Syrian government troops have cut off rebel supply lines between the northern city of Aleppo and Turkey," Bloomberg writes. "Taking Aleppo, Syria's former commercial hub, would give Russia, Iran and Assad more bargaining power at any future settlement talks and more say in how the region will be redefined." Speaking of settlement talks, negotiations in Geneva brokered in part by John Kerry were suspended on Wednesday as a Saudi-backed rebel coalition voiced anger over Russia's airstrikes near Aleppo. On Thursday, Kerry demanded that Moscow halt the offensive so peace talks could resume. Although America's top diplomat swears his phone call with his Russian counterpart Sergei Lavrov was "robust" Lavrov said on Wednesday The Kremlin doesn't see why the campaign against "the terrorists" should stop. "I can't see any reason why we should halt our aerial operations until the terrorists shall be defeated'', Lavrov said, flatly. "On the ground, nearly 40,000 people have fled an offensive this week by President Bashar al-Assad's regime north of the city of Aleppo," AFP said on Thursday, citing the Syrian Observatory for Human Rights (or in other words, "citing one guy in London"). "Assad's forces also entered two Shiite villages that were under siege by rebels, prompting what state news agency SANA called 'mass celebrations' in the streets of Nubol and Zahraa."
For their part, the Turks are of course blaming the Russians for the stalled peace talks. "Russia continues to kill people in Syria. Could there be such a peace gathering? Could there be such peace talks?" President Tayyip Erdogan asked in a speech in Peru."In an environment where children are still being killed, such attempts do not have any function apart from making things easier for the tyrant," he said. And trust us, Erdogan knows something about what makes "things easier for a tyrant." In any event, the urgency expressed by the US, Saudi Arabia, and Turkey shouldn't be mistaken for some kind of benevolent regard for the lives are lost each and every day the war drags on. Rather, Washington, Riyadh, and Ankara know that if Aleppo falls, that's it for the "moderate" opposition. Sure there will still be elements of the FSA and other groups explicitly backed by the West and its regional allies, and they'll undoubtedly wage a long war of attrition against the SAA. But once the urban centers are secured, Assad can begin the slow process of rebuilding his security apparatus and restablishing some semblance of normalcy in the country's west. As for eastern Syria, the fate of Raqqa and Der al-Zour still hangs in the balance. Once the west is solidified, the question will be: can the US, France, and Britian swallow their pride and coordinate with Russia and Iran to oust Islamic State? Or perhaps the more important question is this: what will Russia and Iran discover if they manage to liberate Raqqa before the West has time to bury the bodies (figuratively speaking) and burn all the evidence? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 04 Feb 2016 05:40 PM PST Excerpted from Stephanie Pomboy's MacroMavens.com, Putting it all together, the chart below overlays the simplest barometers of economic and financial duress (gold/copper) and risk appetite (stocks/bonds). It would be hard to find better proof that the canary in the coalmine is singing and that his song is landing on ears deafened by 6 years of BTFD behavior than this.
If it isn’t already, this image should sit framed on the desks of Ben Bernanke, Mario Draghi and Haruhiko Kuroda as a shining testament to their success in training investors to buy risk on any and every sign of weakness. It is a success made all the more impressive by the fact that, unlike dogs, sentient human beings are supposed to be above this kind of psychological manipulation. Of course, central banks can’t take ALL the credit. The institutional investor framework provided a major assist. The positive reinforcement central banks provided to be ‘long’ risk was matched in equal measure by eviscerating professional punishment for failing to do so. The penalty for refusing to BTFD, after all, wasn’t simply a loss in short-term performance, but quite often a loss of career. The unsurprisingly upshot of all this is that we sit here today with institutional investors their most disinclined to take risk off the table while those risks are already higher than they were on the eve of the financial crisis … and rising fast. Should the portents offered by the charts herein begin to bear fruit, 2008 would begin to look more and more relevant. As harrowing as the similarities to that episode may be, the DIFFERENCES are what will really shake Wall Street to the core. One difference particularly. With global policy rates at, near, or in some cases BELOW 0% and QE already well in progress in the major global economies, there’s precious little monetary ammunition left to fight whatever economic and financial foe awaits. Of course, one might reasonably wonder why that matters if it hasn’t accomplished anything in the first place! ‘One’ might. But central bankers won’t. Convinced of their own omnipotence they will do the only thing left—print, print, print. As global central banks take turns clanging that bell, the BTFD impulse will eventually be sublimated to concerns that all of this naked currency debasement is accomplishing nothing… save perhaps the destruction of the entire fiat money regime. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ambrose Evans-Pritchard: Dollar tumbles as Fed rescues China in the nick of time Posted: 04 Feb 2016 05:33 PM PST By Ambrose Evans-Pritchard The US dollar has suffered one of the sharpest drops in 20 years as the Federal Reserve signals a retreat from monetary tightening, igniting a powerful rally for commodities and easing a ferocious squeeze on dollar debtors in China and emerging markets. The closely-watched dollar index (DXY) has fallen 3 percent this week to 96.44 and given up all its gains since late October. This has instant effects on the world's inter-connected financial system, today more geared to the US exchange rate and Fed policy than at any time in modern history. David Bloom from HSBC said the blistering dollar rally of the past three years is largely over and may go into reverse as weak economic figures in the US force the Fed to pare back four rate rises loosely planned for this year. A more dovish Fed and a weaker dollar is a bittersweet turn for the Bank of Japan and the European Central Bank as they try to push down their currencies to stave off deflation. Their task has become even harder. ... ... For the remainder of the report: http://www.telegraph.co.uk/finance/economics/12141369/Dollar-tumbles-as-... ADVERTISEMENT We Are Amid the Biggest Financial Bubble in History; With GoldCore you can own allocated -- and most importantly -- segregated coins and bars in Switzerland, Singapore, and Hong Kong. Switzerland, Singapore, and Hong Kong remain extremely safe jurisdictions for storing bullion. Avoid exchange-traded funds and digital gold providers where you are a price taker. Ensure that you are outright legal owner of your bullion. If you do not own segregated bullion that you can visit, inspect, and take delivery of, you are exposed. Crucial guides to storage in Singapore and Switzerland can be read here: http://info.goldcore.com/essential-guide-to-storing-gold-in-singapore http://info.goldcore.com/essential-guide-to-storing-gold-in-switzerland GoldCore does not report transactions to any authority. Safety, privacy, and confidentiality are paramount when we are entrusted with storage of our clients' precious metals. Email the GoldCore team at info@goldcore.com or call our trading desk: UK: +44(0)203-086-9200. U.S.: +1-302-635-1160. International: +353(0)1-632-5010. Visit us at: http://www.goldcore.com Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference: https://jeffersoncompanies.com/landing/2014-av-powell Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold in the Year of Fear Feb. 4, 2016 (Video) Posted: 04 Feb 2016 05:31 PM PST
By EconMatters The Gold Market has had a nice run in 2016 so far, and may have considerable more upside to go before encountering serious resistance. This year has been the year of Fear in financial markets so far in 2016, and Gold has benefitted immensely as a result of the 'scared rabbits' effect by investors.
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| All Systems are Go for Silver and Gold Prices Posted: 04 Feb 2016 05:04 PM PST
Markets are very jumpy, all of 'em. At 10 a.m. Eastern time the gold price gapped from $1,150 to $1,155, a gap I find no explanation for. Gapped again from $1,155 to $1,157 about 2:45. Silver gapped, too, but not as strongly. First jumped from $14.85 to $14.90, second from $14.88 to $14.90. Nervous, very nervous.
Other inflation markets are also rising. WTIC oil rose nearly 2% to $33.38, but needs to cross $34.82 to prove a reversal, even short term. Copper rose 1.525 to $1.23, and has climbed back into the channel it fell from in January. Also completing a widening wedge that usually resolves skyward. All systems are go for silver and gold prices, I am just watching on the porch, looking for more rally confirmations.
Dollar index kept on cascading today, tumbling another 74 basis points (0.76%) over the rocks to 96.56. That teaseth the 96.50 support/resistance, plus plunges the Dollar Index below its 200 day moving average, and not by a little: 200 now stands at 96.90. Second day of decline implies the Nice Government Men are holding back, i.e., this may be a deliberate move by the Fed. A falling dollar is, of course, the best fuel for a gold and silver rally, so this nat'ral born durned fool from Tennessee is not complaining. Thanks to all y'all who prayed for Susan. She has improved today but her eye is still hurting. For Miss High Pain Tolerance to say that, it must be smarting, but she is some kind of brave. Thanks in advance for continuing to pray for her. Aurum et argentum comparenda sunt -- -- Gold and silver must be bought. - Franklin Sanders, The Moneychanger The-MoneyChanger.com © 2016, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down. WARNING AND DISCLAIMER. Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures. NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps. NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced. NOR do I recommend buying gold and silver on margin or with debt. What DO I recommend? Physical gold and silver coins and bars in your own hands. One final warning: NEVER insert a 747 Jumbo Jet up your nose. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The War On Savers And The 200 Rulers Of World Finance Posted: 04 Feb 2016 03:45 PM PST This post The War On Savers And The 200 Rulers Of World Finance appeared first on Daily Reckoning. There has been an economic coup d'état in America and most of the world. We are now ruled by about 200 unelected central bankers, monetary apparatchiks and their minions and megaphones on Wall Street and other financial centers. Unlike Senator Joseph McCarthy, I actually do have a list of their names. They need to be exposed, denounced, ridiculed, rebuked and removed. The first 30 includes Janet Yellen, William Dudley, the other governors of the Fed and its senior staff. The next 10 includes Jan Hatzius, chief economist of Goldman Sachs, and his counterparts at the other major Wall Street banking houses. Then there is the dreadful Draghi and the 25-member governing council of the ECB and still more senior staff. Ditto for the BOJ, BOE, Bank of Canada, Reserve Bank of Australia and even the People's Printing Press of China. Also, throw in Christine Lagarde and the principals of the IMF and some scribblers at think tanks like Brookings. The names are all on Google! Have you ever heard of Lael Brainard? She's one of them at the Fed and very typical. That is, she's never held an honest capitalist job in her life; she's been a policy apparatchik at the Treasury, Brookings and the Fed ever since moving out of her college dorm room. Now she's doing her bit to prosecute the war on savers. She wants to keep them lashed to the zero bound—-that is, in penury and humiliation—–because of the madness happening to the Red Ponzi in China. Its potential repercussions, apparently, don't sit so well with her:
In the name of a crude Keynesian economic model that is an insult to even the slow-witted, Brainard and her ilk are conducting a rogue regime of financial repression, manipulation and unspeakable injustice that will destroy both political democracy and capitalist prosperity as we have known it. They are driving the economic lot of the planet into a black hole of deflation, mal-distribution and financial entropy. The evil of it is vivified by an old man standing at any one of Starbucks' 24,000 barista counters on any given morning. He can afford one cappuccino. He pays for it with the entire daily return from his savings account where he prudently stores his wealth. After a working lifetime of thrift and frugality his certificates of deposit now total $250,000. Yes, the interest at 30 bps on a quarter million dollar nest egg buys a daily double shot of espresso and cup of milk foam. What kind of crank economics contends that brutally punishing two of the great, historically-proven economic virtues——-thrift and prudence—-is the key to economic growth and true wealth creation? In this age of relentless consumption and 140 character tweets, what kind of insult to common sense argues that human nature is prone to save too much, defer gratification too long, shop too sparingly and consume too little? Forget all of their mathematical economics and DSGE model regressions. Our 200 unelected rulers are enthrall to a dogma of debt that is so primitive that it's just plain dumb. By purchasing existing debt with digital credit conjured from the "send" key on central bank computers, they make room for more and more of it. And they do so without the inconvenience of deferred consumption or an upward climb of interest rates owing to an imbalance of borrowings versus savings. Likewise, by pegging the money market rate at zero or negative, they enable even more debt creation via daisy chains of re-hypothecation. That is, the hocking of any and all financial assets that trade at virtually zero cost of carry in order to buy more of the same and then to hock more of them, still. The truth is, the world is up to its eyeballs in debt. Since the mid-1990s, the 200 rulers have ignited a veritable tsunami of credit expansion. Worldwide public and private debt combined is up from $40 trillion to $225 trillion or 5.5X; it has grown four times more than global GDP. Whatever has caused the growth curve of the global economy to bend toward the flat-line, it surely is not the want of cheap debt. Likewise, the recurring financial crises of this century didn't betray an outbreak of unprecedented human greed; they were rooted in theretofore unimagined excesses of leveraged speculation. That's what margined CDS wraps on the supersenior tranches of portfolios of CDOs squared was all about. That's how it happened that upwards of 10% of disposable personal income in 2007 consisted of MEW ((mortgage equity withdrawal). It's also how the US shale patch flushed $200 billion of junk debt down drill boreholes that required $50 per barrel oil to breakeven on the return trip.
Likewise, you don't need any fancy econometrics to read this chart, either. Since 1994 US debt outstanding is up by $45 trillion compared to a $11 trillion gain in GDP. If debt were the elixir, why has real final sales growth averaged just 1.0% per annum since Q4 2007—–a level barely one-third of the peak-to-peak rates of growth historically? If the $10 trillion of US debt growth since the eve of the Great Recession was not enough to trigger "escape velocity", just exactly how much more would have done the job?
Our 200 financial rulers have no answer to these questions for an absolutely obvious reason. To wit, they are monetary carpenters armed with only a hammer. Their continued rule depends upon pounding more and more debt into the economy because that's all a central bank can do; it can only monetize existing financial claims and falsify the price of financial assets by driving interest rates to the zero bound or now, outrageously, through it. But debt is done. We are long past the peak of it. After 84 months of ZIRP, Ms. Brainard's call for "watchful waiting" at 25bps is downright sadistic. Where does she, Janet and the rest of their posse get the right to confiscate the wealth of savers in their tens of millions? From the Humphrey-Hawkins Act and its dual mandate? Puleese!. It's a content-free enabling act etched on rubber bands; it memorializes Congress' fond hope that the people enjoy an environment of price stability, fulsome employment and kindness to pets. This elastic language hasn't changed since 1978, meaning that it mandates nothing. In fact, it enabled both Paul Volcker's 21% prime rate and Yellen's 84 months of free money to the Wall Street casino with nary a legal quibble either way. So what is at loose on the land is not public servants carrying out the law; its a posse of Keynesian ideologues carrying out a vendetta against savers; and doing so on the preposterous paint-by-the-numbers theory that when people save too much we get too little GDP, and when we don't have enough GDP, we have too few jobs. That's essentially rubbish. Jobs are a function of the price and supply of labor and the real level of business output, not the amount of nominal expenditure or GDP. And most certainly not that arbitrarily measured GDP clustered inside the open borders of the US of A, cris-crossed as they are by a monumental flow of global trade, capital and finance. Likewise, "savings" fund the investment component of GDP today and the growth and productivity capacity of tomorrow, not a hoarder's knapsack of bullion. Besides, the claim that a nation experiencing 10,000 baby boom retirements per day has too little savings is not only ludicrous; its empirically wrong. Household savings at the recession bottom in 2009 amounted to $670 billion according to the GDP accounts. In 2014 it was nearly $50 billion or 7% lower. During that same five year "recovery" period, consumption expenditures for owner occupied housing rose by $150 billion or 12%, and personal spending for new autos increased by $400 billion or 58%. So "savers" didn't get in the way of spenders, nor do these figures prove that ZIRP had anything to do with it anyway. The $1.35 trillion spending for owner-occupied rent shown below, for example, is not a real number in the first place. Its an "imputed" estimate pulled out of BEA's nostrils based on a half-assed survey which asks a few thousand homeowners what they would rent their castle for if they were in the landlord business. They don't have a clue, of course. Nor does the 7.5% of GDP accounted for in this manner actually exist anywhere in the known universe outside of the BEA's charts of accounts and the Keynesian DSGE models which simulate them. And the same is true for personal savings. It's a measure of nothing real on main street—– in part because 60% of US households have zero liquid savings beyond rounding error amounts. Actually, the "personal savings" account might better be designated as the Errors and Omissions account.
That's because the above "savings" rate is a statistical residual that falls out when the $18 trillion +/- of spending side accounts are stacked up next to a nearly equivalent pile of income side accounts. As Jeff Snider documented the other day, the numbers in both stacks are revised so much that this 3.5% crack in the GDP wall amounts to little more than noise. Likewise, ZIRP didn't have much to do with the fact that auto lenders—especially the legions of subprime nonbank operations that have sprung up with junk bond financing——have been extending credit to anyone who can fog a rear view mirror. Indeed, since mid-2010 when the auto recovery incepted, auto credit outstanding is up by $350 billion or by nearly 90% of the $400 billion gain in auto sales.
Needless to say, virtually 100% debt financing of an auto sales boom is no more sustainable than was the MEW financing of household consumption last time around. Like then, the pool of credit worthy borrowers has been depleted, meaning that it is only a matter if time before the debt fueled auto boom of recent years goes pear-shaped. Even then, what will bring on this calamity is the inexorable collapse of the used car prices, not an end to "watchful waiting" on the money market rate. At present upwards of 80% of all new car sales are either leased or loan financed. But the economics of leasing depend heavily on the "residual" or resale value of the vehicle; and loan financing late in the sales recovery cycle depends on the ability of the marginal buyer to generate enough trade-in value to qualify for a new loan–—-even at today's 120% LTV ratios. And that's where the skunk in the woodpile is hiding. During the next 5 years a veritable tsunami of used vehicles will come off lease and loan and flood the used car market, thereby reversing the virtuous cycle of debt fueled new car sales that may well have peaked last fall. Thus, in 2009 nearly 2.5 million vehicles came off lease, but by 2012 that number was down to 1.56 million owing to the 2007-2009 auto sales collapse. By contrast, an estimated 3.1 million vehicles will come of lease in 2016, 3.4 million in 2017 and upwards of 15 million in the next four years. In short, ZIRP didn't trigger the auto debtathon, even as it punished savers for 7 years running. What happened, instead, is that the Wall Street junk financed boom in auto lending fueled a run-up in used car prices, thereby temporarily goosing the loan/lease residuals upon which an increasing share of US households rent their rides between visits of the repo man. Indeed, banging the interest rate lever hard on the zero bound for so long has now taken our 200 financial rulers into truly Orwellian precincts. In the quote reproduced above, and echoed by B-Dud, Goldman's plenipotentiary at the New York Fed, it is claimed that "tightening credits spreads" are a reason to keep the policy rate unchanged. That is, the market is doing the Fed's job voluntarily and preemptively! No it isn't. Credit spreads have been wantonly and dangerously compressed by massive central bank intrusion in the financial markets. Yet now that they are twitching with the ethers of normality, the monetary politburo takes that as a sign to keep their boot on the savers' neck. But shown below is the lunatic extent of their misfeasance in real time. From a cold start in 2015, the assembled central banks of the world have driven nearly $6 trillion of sovereign debt into the nether world of negative yields, and with each passing day it gets more absurd. Now well-rated corporate debt like that of Nestle is passing through the zero bound and practically all of Japan's 10-year or under maturities are there. These fools think this is owing to such nonsense as Brainard's blather about "stresses in emerging markets including China" and that "slow growth in developed economies could spill over to the U.S…….(translating) into weaker exports, business investment, and manufacturing in the United States, slower progress on hitting the inflation target……etc." The implication, of course, is that stalling world growth requires more central bank stimulus, and even a scramble toward NIRP by central banks which have not yet joined the loony toons brigade of the ECB, Sweden, Denmark, Switzerland and Japan.
Not even close. The amount of debt pouring into the negative yield basket is owing to speculators buying bonds on NIRP enabled repo. Their cost of carry is nothing, and the prices of NIRP bonds keep on rising. Until they don't. Then look out below. The mother of all bubbles—-that of the $100 billion global bond market—-will blow sky high. At length, savers will get their relief and our 200 financial rulers will be lucky to merely end up in the stockades at a monetary version of the Hague. Meanwhile, the War On Savers continues to transfer hundreds of billions from savers to the casino in the US alone—–even as the global economy careens towards a deflationary collapse. Regards, David Stockman The post The War On Savers And The 200 Rulers Of World Finance appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Debt $19 Trillion, Gold & WAR On Cash Posted: 04 Feb 2016 03:00 PM PST There is a War on drugs, a War on Terror, a War on Climate Change and a War on Cash. YOU CITIZEN, PEASANT, PLEBE, NAIVE, SERF, YOU ARE THE ENEMY! Join the Junius Maltby Channel if you dare. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists ,... [[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Protecting and Profiting from Coming Collapse and Moving to a Freer World Posted: 04 Feb 2016 02:39 PM PST The ideal society, self organization, government monopoly on violence, US was initially set up without a federal government, working towards a one world government, an anarchic city in China, police steal more than criminals in the US, $40,000 to open a lemonade stand, the federal reserve is a... [[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Daily and Silver Weekly Charts - Non-Farm Payrolls Tomorrow Posted: 04 Feb 2016 02:00 PM PST | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Boomers Are Being Led Like Lambs To The Slaughter Posted: 04 Feb 2016 01:34 PM PST This post Boomers Are Being Led Like Lambs To The Slaughter appeared first on Daily Reckoning. "Not a bad view. That's the mayor's house right beneath us."
We were on the 16th floor of a new apartment building, looking out over the East River. With us was President Reagan's former budget advisor and Wall Street veteran David Stockman — a man who has been closer to the Bubble Epoch than almost anyone. The Dow rose 183 points yesterday — or just over 1% — after starting the day in the red. "I was there at the creation," said David. "After leaving government, I went to Salomon Brothers in the late 1980s. We were just starting to put together packages of mortgage-backed debt." Bubble finance has taken many shapes and sizes. Mortgage-backed derivatives. Private equity. Junk bonds. Student debt. Subprime auto loans. Stock buybacks. This debt was a curse to most Americans. But it blessed Manhattan. The weekend's Financial Times included real estate listings from New York City. There was a penthouse apartment for sale on the Upper East Side for $60 million. Luxury digs on the West Side were going for $30 million… another for $16 million. You don't make that kind of money parking cars… or making them. So, if you want to buy one of these places, you almost have to work in finance. Most people have no idea how the financial world works. They think investments go up or down and you make money depending on your luck or your skill — just like any other game. They don't know the game is rigged. Central banks make credit available to the big banks at preferential rates. The banks then earn a fat "spread" by making loans to government, industry, and households. They make money lending… and then, they make money again by packaging and selling the debt to investors, pension funds, and insurance companies. Everything is fine until the credit cycle turns down. Then marginal debtors can't pay and marginal (subprime or junk) debt loses value. Stocks and real estate go down, too. Everybody loses money. And everyone wants the Fed to "do something." What can it do? Make credit even cheaper! Here's David: Bubble finance began under Greenspan in the late 1980s. Since then, it's blown up three times. But each time, the central bankers were able to put it back together. And the bubble got even bigger. But now they've used up all their powder. Interest rates are already at zero. And the Japanese, the Europeans, the Swedes, and the Swiss are all operating with NIRP — negative interest rate policy. It is really a War on Savers. They're depriving savers of any return on their money. The typical return on savings is 0.2%. So, if you have saved up $250,000 over a lifetime of thrift, you can earn enough to buy one cappuccino a day. I don't think they can get away with this much longer. And I don't think they can drop rates below zero. The Fed has lost credibility. Cutting rates below zero shows everybody that they don't know what they're doing. And the poor retail investor is being led like a lamb to the slaughter… again. Baby Boomers are retiring at the rate of 10,000 a day. I don't know what they're going to do if another crash wipes them out. Stockman was present at the creation of the whole Bubble Epoch. In 1981, President Reagan appointed him to be his first budget director. Four years later, he quit in disgust. "Funny, isn't it? I was alarmed by a national debt of $900 billion. Yesterday, it went over $19 trillion. And nobody cared." President Nixon made the Bubble Epoch possible by going off the gold standard in 1971. No "golden anchor": no limit on how much money and credit you could create. But the Bubble Epoch didn't really begin until 10 years later under "The Gipper." Stockman battled the big spenders in the Republican Party — and lost. After he was out of the way, Reagan ran some of the biggest deficits ever. Soon, debt was out of control everywhere — in government, industry, and private consumption. "We must be nearing the end of this," said Stockman. "I expect the whole world economy to plunge into deflation and recession." Regards, Bill Bonner The post Boomers Are Being Led Like Lambs To The Slaughter appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savers Are About to Get Railed… Posted: 04 Feb 2016 01:20 PM PST This post Savers Are About to Get Railed… appeared first on Daily Reckoning. We were sitting in a small parlor in his Manhattan penthouse yesterday… "Everyday savers are getting a raw deal," explained colleague David Stockman. "But it's about to get even worse…" Addison and I met with David to discuss the landscape for investors like you… and how he could be of further help to you. Bill Bonner joined us. (That's Bill with David in the featured image atop today's issue. They’re reminiscing over a cartoon lampooning David's efforts in the '80s to slash defense spending.) Over $1 trillion in paper wealth has been lost since we popped the cork on 2016. Forty stock markets around the globe are in a bear market. The other major three stock markets — the U.S., Australia and Germany — are in 10% correction territory. The mother of all financial bubbles is deflating, just as David said it would during the free live training event we hosted on the eve of December's rate hike. At writing, all three stock indexes have rolled into the red again. But look out below — the "Big Drop" has yet to happen. The market sowed way more in the last seven years than the small correction it’s reaped during the last 28 trading days. This is why we've worked with David to create his Bubble Finance Trader. Investing in this new era of deflating asset prices will be a different ballgame than has been played since 2009. Four months into publishing, he's three for three on closed-out positions. "When Nixon broke the link to gold in '71," Stockman continued later over lunch, "he and his 'estimable free market advisers' did not in their wildest imaginations foresee that this would unhinge the monetary and financial nervous system of capitalism. They had no premonitions at all that it would pave the way for a 40-year storm of financialization and a debt-besotted symbiosis between central bankers possessed by delusions of grandeur and private gamblers intoxicated with visions of delirious wealth." That process has left the globe on life support for nine years. Despite trillions in QE, we never got the full recovery we expected. Now we're coming full circle. "U.S. CEOs Unleash Recession Fears in Earnings Calls," reports Reuters. If those recession fears become reality — something our own Jim Rickards says is likely — expect the Fed to reverse course and perhaps even impose "negative nominal interest rates." These are the latest fads emanating from central bank boardrooms. And a danger for U.S. savers that David Stockman was concerned about during our meeting yesterday. "There will be a political uprising if the Fed institutes a negative interest rate policy (NIRP)," explained David. It isn't hard to see why… Under today's system, a negative interest rate is a simple and absurd idea: You pay the bank to hold your money. At first glance, this harkens back to the days when banks' basic function was warehousing money. You would pay the bank to keep your pile of gold safe, and they’d give you a paper receipt that let you demand it back anytime you wanted. Sort of like the fee you might pay for a storage unit to keep your belongings safe if you're renovating your house. But back then…
That system benefited savers, who knew where and what their money would be one day or 20 years in the future. Today's fiat money system is different, though. In 2016, negative interest rates could be a means of stealing your money. They’d be yet another subsidy to the big banks and a way to force you to spend instead of save. And they could be coming to a bank branch near you soon… "The madness of NIRP," explains David, "is probably no longer containable since it already infects the eurozone, Sweden, Switzerland, Denmark, Japan — and, soon, South Korea. "The world's being choked by the $225 trillion credit bubble that's deflating. It was created by the Fed and global central banks over the last two decades." Desperate times call for desperate measures. "Now they are going to make matters worse by doubling-down on a failed experiment in crank economics. They’ve already driven nearly $6 trillion of sovereign debt below the zero bound. Even a decade ago, every student of Economics 101 knew that is a recipe for calamity. "Just a few dozen monetary apparatchiks in the world's major central banks and their shills in the world's financial casinos are driving the system straight toward the monetary abyss…" If you're a boomer who's worked and saved your whole life, you're being led to the slaughter. Bill Bonner sounds the warning… Regards, Peter Coyne P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you're missing. The post Savers Are About to Get Railed… appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Posted: 04 Feb 2016 01:05 PM PST Jim, If low interest rates are positive for gold, then negative interest rates ought to be explosive for gold! It’s always been thought that yields on financial instruments are the major competition for gold. Now it will be a no brainer to keep your money where they don’t charge you an interest fee for the... Read more » The post Jim’s Mailbox appeared first on Jim Sinclair's Mineset. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Opaque Process of Collapse Posted: 04 Feb 2016 12:58 PM PST This post The Opaque Process of Collapse appeared first on Daily Reckoning. When I write about the demise of unsustainable systems, readers often ask me to describe the collapse I see as inevitable. This is a tough assignment, as there are as many kinds of collapse as there are systems: fragile ones can collapse suddenly, and resilient ones can decay for years or even decades before finally imploding or withering away. Another way of describing collapse is: complex systems become much less complex. Certain features of modern life could collapse without affecting everyday life much–for example, the derivatives markets could stop working and the impact would be enormous on those playing financial games and those who entrusted money to the gamblers, but the consequences would be extremely concentrated in the gambler/speculator class. Despite the usual cries that financial losses in the gambler/speculator class will destroy civilization, the disruptions and losses would be widely dispersed for the economy as a whole. Other collapses–in food or energy distribution, digital communications, etc.–would have immediate and severe impacts on daily life. My three primary models of decay and collapse are: 1. Historian David Hackett Fischer’s masterwork The Great Wave: Price Revolutions and the Rhythm of History (given to me by longtime correspondent Cheryl A.) 2. Thomas Homer-Dixon’s The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization 3. The decline of the Western Roman Empire (the process, not Edward Gibbon’s epic 6-volume history). My recommended book on the topic (a short read): The Fall of the Roman Empire Fischer’s primary thesis is that society and the economy expand in times of plentiful resources and credit, and this increased demand eventually consumes all available resources. When demand exceeds supply and excesses of credit reach extremes, inflation and social disorder arise together. Though we have yet to see inflation on a global scale, it is inescapable that demand will soon outstrip supply of essential resources and that the global credit bubble will pop, depriving the economy of the means to buy resources regardless of cost. The Upside of Down describes the process of increasing complexity adding fixed costs to the system, and the way in which this diminishes returns: more and more labor, capital and resources must be devoted to maintain production. At some point, the yield is negative–costs are higher than the output. At that point, systems start unraveling, and people simply abandon costly complex systems because the means to support them no are no longer readily available. This is similar to John Michael Greer’s process of catabolic collapse, in which costly complex systems go through a re-set to a much lower energy consumption and less complexity. The system stabilizes at that level for a time, and then as costs rise and resources dwindle, it goes through another downsizing. The Western Roman Empire (along with the Tang Dynasty in China) is the premier historical template for slow decline/decay leading to an eventual collapse. (Recall that the Eastern Roman Empire, the Byzantine Empire, endured for another 1,000 years.) Depending on how you slice it, Western Rome’s Imperial decline took a few hundred years to play out. Unusually competent and energetic leaders arose at critical junctures in the early stages, and these leaders managed to stem the encroachment of other empires and “barbarian” forces and effectively re-order Rome’s dwindling resources. By the end, The Western Roman Empire was still issuing a flood of edicts to the various regions, but there was no one left to follow the edicts or enforce them: the Roman legions existed only on parchment. The legion had a name and a structure, but there were no longer any soldiers in the field. A number of real-world examples of decline/collapse are playing out in real time. Venezuela is one; Greece is another. Both demonstrate the opacity of the process of collapse; it is not as clear as we might imagine. A recent first-hand account of a sympathetic visitor to Venzuela captures the flavor and despair of slow-moving, uneven collapse: Venezuela: Is There A Driver At The Wheel? (via Arshad A.) “A dollar traded in the bank officially, or pulled out of an ATM machine, however, is worth about six bolivars only. This is how big the gap is between the black market rate (600-700 to the USD) and the official rate. Despite the fact that the price of petrol is incredibly cheap, the government has not raised the prices even a slight amount, although this would create revenue for the state and despite the health risks of pollution.This suggests that the government is engaging in populism by refusing to take a step demanded by common sense due to its need to get reelected in December when parliamentary elections will take place. One can easily get assassinated, as Venezuela has one of the highest homicide rates in Latin America and there are enough people who would not mind killing someone for the fee of $200. However, when there is massive violence in the streets and many in the government seem to be corrupt, while a sense of anarchy prevails and it seems that the government turns a blind eye to violence when it takes place by local bandits, preferring to continuously blame outsiders, then there is indeed a source for concern.” Reports out of Greece demonstrate the dynamics of decline and collapse:medicines are unavailable, pensions have been slashed and many households are now below the EU poverty level in income. But we also hear that life goes on; the social order does not appear to have broken down into anarchy. Clearly, the Greek economy has contracted, and millions of households have less income than they did before. But has daily life broken down? Have the institutions of public order collapsed? Perhaps not, but what is collapsing is public trust in these institutions’ ability and willingness to manage the financial crisis and the political disorder that follows. There is no good solution to the multiple crises in Greece, and the small circle of financial and political elites that benefited from Greece’s entry into the Eurozone remains largely untouched by the crisis. When the status quo is rigid and unbending, the odds of sudden collapse rise: what doesn’t bend will snap. The process of collapse is thus heavily dependent on how the financial and political elites respond to the decline of resources and credit. If they manage the contraction skillfully and absorb their share of the inevitable losses, then the re-set will likely be successful and the pain short-lived. If however the ruling elites cling to every scrap of their power and wealth, and begin fighting over the spoils while forcing the underclasses to absorb the losses of the re-set, then the fragility of the system rises in direct proportion to the policy extremes being pursued by vested interests focused on protecting their privileges regardless of cost. The ultimate cost of protecting the privileges of the few at the expense of the many is the dissolution of the social order that enabled the rule of the privileged few. Regards, Charles Hugh Smith P.S. Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible. And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career. You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck. Even the basic concept "getting a job" has changed so radically that jobs–getting and keeping them, and the perceived lack of them–is the number one financial topic among friends, family and for that matter, complete strangers. So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy. It details everything I've verified about employment and the economy, and lays out an action plan to get you employed. I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read. The post The Opaque Process of Collapse appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retail Investors Heading For The Slaughter One More Time Posted: 04 Feb 2016 12:57 PM PST This post Retail Investors Heading For The Slaughter One More Time appeared first on Daily Reckoning. Former Reagan White House Budget Director David Stockman says retail investors are going to take, yet, another very big hit. Stockman explains, "The retail investor waded in again. The sheep lined up and, unfortunately, are heading for the slaughter one more time. I think it is very hard to see how this Baby Boom generation, with 10,000 of them retiring a day, can afford one more devastating crash in their stock holdings. That is, unfortunately, what we are heading for. That's why I say it's dangerous. When the bubble breaks, it will spill and flow throughout the Main Street economy." Stockman warns the next crash will be bigger than any other in history. Stockman, the best-selling author of "The Great Deformation," says, "I think we have been building a bubble year by year since the early 1990's. The earlier crashes that we are so familiar with, Dot Com and the Housing Crash, were only interim corrections that were not allowed to work their way clear. The rot was not effectively purged from the system because central banks jumped back in within months of the corrections and doubled down in terms of the stimulus and liquidity that they pumped into the market." Stockman contends that "you simply cannot fake your way in this market any longer." Stockman explains, "I have pointed out that Wall Street continually tells you that the market is not that overvalued. . . . I have pointed out . . . actual earning are down 15%. The market is expensive, it is exceedingly expensive, and it's really . . . 21 times earnings. Therefore, the whole bubble vision on valuations of the market is terribly misleading. Even the Wall Street version of earnings is going to be hard to maintain when the global recession sets in, and then investors are going to suddenly discover that the market is drastically overvalued. They are going to want to get out, and they are all going to want to get out all at the same time. That creates the kind of selling panics that can take the market down. We have kind of been in no man's land for the last 700 days. The market is struggling to stay above 1870 on the S&P 500. It first crossed that level in late March 2014. It has had 35 efforts to rally and break to new highs. None of them have been sustained. My point about all that is that's the way bull markets die." Stockman contends, "We are nearing the end. I think the world economy is plunging into an unprecedented deflation recession period of shrinkage that will bring down all the markets around the world that have been vastly overvalued as a result of this massive money printing and liquidity flow into Wall Street and other financial markets." On gold, Stockman says, "I think it's more of an insurance policy and an option on the ultimate failure of today's form of central banking. When, finally, the Keynesians, who are running all the central banks, when they are totally repudiated, I think gold will soar in value." Join Greg Hunter as he goes One-on-One with financial expert and best-selling author of "The Great Deformation," David Stockman. (There is much more in the video interview.) Regards, David Stockman P.S. Be sure to sign up for David Stockman's Contra Corner —the only place where mainstream delusions about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Click here and subscribe to receive David Stockman's latest posts by email each day as well as his personally curated insights and analysis from leading contrarian thinkers. The post Retail Investors Heading For The Slaughter One More Time appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dollar tumbles as Fed rescues China in the nick of time Posted: 04 Feb 2016 12:35 PM PST The central banks of Europe and Japan discover that it is impossible to stave off deflation by debasing their currencies when everybody is playing the same game  This posting includes an audio/video/photo media file: Download Now | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Prices Rise To 3 Month High As Investors Sell Risky Assets Posted: 04 Feb 2016 11:58 AM PST Gold prices have continued to eke out further gains today. The very poor ISM data yesterday saw the dollar fall against all major currencies and particularly gold. Bullion is seeing safe haven flows and gains due to increased concerns about the economic outlook. The narrative that the US economy is in recovery is coming into doubt. The weaker than expected ISM data showed a sharp slowdown in the services sector in the U.S. in January. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bad Numbers And Dark Prophecies: Almost Everybody’s Cutting Something Posted: 04 Feb 2016 10:21 AM PST The drumbeat of bad (and sometimes just plain weird) news has risen lately — but today’s batch stands out. Here’s a small sampling: US jobless claims were higher than expected, and continue the rising trend of the past few weeks. US layoffs surged to a six month high, while asset write-downs are up worldwide. Among today’s related announcements: 6,000 layoffs from ConocoPhillips and 10,000 from Shell Oil, and a $5.75 billion write-down from Credit Suisse. These aren’t surprising given the bloodbath in oil and banks’ exposure to that industry. Many, many more shocks from these two sectors are coming. Q4 US worker productivity fell at a 3% annual rate. According to the linked article: “Economists blame softer productivity on a lack of investment, which they say has led to an unprecedented decline in capital intensity.” In other words, while corporations were borrowing trillions to buy back their shares they weren’t bothering to build new factories or upgrade old ones. US December factory orders posted their biggest drop in a year. Fewer people are working and those who are are either underpaid or insecure, so they’re apparently buying less stuff. And, again, companies are using all their free cash to buy back shares rather than build capacity. Truck orders in the US fell by 48%.This also fits the commodities bust/low capital spending theme. If we’re not moving as much stuff around, we don’t need so many trucks. Department store chain Kohl’s reported lower-than-expected same-store sales and its stock plunged. Combine anemic consumer spending with the ascendance of e-commerce, and bricks-and-mortar department stores are TOAST. Kohl’s, Macy’s, JC Penney, even Wal-Mart are on the wrong side of history and will soon go the way of newspapers and bookstores. Are the mall REITs the next Big Short? This being earnings season, the list of ominous numbers and downbeat forecasts should be longer by end of day and much longer by the end of the week. On a brighter note, the gold miners, after a brutal few years, are starting to generate stories that are the mirror image of the above. Here’s one from this morning to brighten an otherwise depressing day:
Royal Gold’s share price is up 14% on the day. (Full disclosure: DollarCollapse staffers are long this stock and are relieved to see it behaving better.) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| About Resuscitation and Reinstatement Posted: 04 Feb 2016 09:50 AM PST This post About Resuscitation and Reinstatement appeared first on Daily Reckoning. "Shock and awe" is not quite what it used to be. It still carries a punch, especially for traders long the Japanese yen or short EM and stocks. The yen surged 2% against the dollar (more vs. EM) Friday on the Bank of Japan's (BOJ) surprising move to negative interest rates. BOJ Governor Haruhiko Kuroda has a penchant for startling the markets. Less than two weeks ago he stated that the BOJ would not consider adopting negative rates. It wasn't all that long ago that central bankers treasured credibility. For seven years, I've viewed global rate policies akin to John Law's (1720 France) desperate move to hold his faltering paper money and Credit scheme (Mississippi Bubble period) together by devaluing competing hard currencies (zero and now negative rates devalue "money"). It somewhat delayed the devastating day of reckoning. Postponement made it better for a fortunate few and a lot worse for everyone else. Last week saw dovish crisis management vociferation from the ECB's Draghi. Now the BOJ adopts a crisis management stance. The week also had talk of some deal to reduce global crude supply. Meanwhile, the Bank of China injected a weekly record $105 billion of new liquidity. Nonetheless, the Shanghai Composite sank 6.1% to a 13-month low. There was desperation in the air – along with a heck of a short squeeze and general market mayhem. Markets these days have every reason to question the efficacy of global monetary management. It's certainly reasonable to be skeptical of OPEC – too many producers desperate for liquidity. The Chinese are flailing – conspicuously. As for the BOJ's move, it does confirm the gravity of global financial instability. It as well supports the view that, even within the central bank community, confidence in the benefits of QE has waned. After three years of unthinkable BOJ government debt purchases, Japanese inflation expectations have receded and the economy has weakened. Lowering rates slightly to negative 10 bps (for new reserve deposits) passed by a slim five to four vote margin. With the historic global QE experiment having badly strayed from expectations, there is today no consensus as to what to try next. Kuroda remains keenly focused on the yen. After orchestrating a major currency devaluation, there now seems little tolerance for even a modest rally. The popular consensus view sees BOJ policymaking through the perspective of competitive currency devaluation, with the objectives of bolstering exports and countering deflationary forces. I suspect Kuroda's (fresh from Davos) current yen fixation is more out of fear that a strengthening Japanese currency risks spurring unwinds of myriad variations of yen "carry trades" (short/borrowing in yen to finance higher-yielding securities globally) – de-leveraging that is in the process of wreaking havoc on global securities markets. Notable Bloomberg headlines: (Thursday) "S&P 1500 Short Interest Is at Its Highest Level in Three Years." (Friday): "Hedge Funds Boost Yen Bets to 4-Year High Days Before BOJ Shock." Bearish sentiment is elevated. Recent global tumult has spurred significant amounts of hedging across the financial markets. And, clearly, betting on "risk off" has of late proved rewarding (and gaining adherents). Draghi and Kuroda retain the power to incite short squeezes and the reversal of risk hedges. And central bankers can prod short-term traders to cover shorts and return to the long side. Yet the key issue is whether global central banks can propel another rally such as the 12% multi-week gains experienced off of August lows. Can policy measures resuscitate bull market psychology and reestablish the global Credit boom? Subtly perhaps, yet the world has changed meaningfully in the five short months since the August "flash crash". After exerting intense pressure and direct threats – not to mention the "national team's" hundreds of billions of market support – Chinese equities traded this week below August lows. It's worth noting that Hong Kong's Hang Seng China Financials Index now trades significantly below August lows. Bank stock weakness is anything but an Asian phenomenon. European bank stocks this week dropped to three-year lows. Even with Friday's 2.7% rally, U.S. bank stocks (BKX) declined 12.6% in January (broker/dealers down 15.3%). European banks were hit even harder. The STOXX Europe 600 Bank Index has a y-t-d loss of 14.6%. This index is 31% below August highs and about 11% below August lows. January 28 – Bloomberg (Sonia Sirletti and John Follain): "Banca Monte dei Paschi di Siena SpA led a slump in Italian banking shares after Italy's long-sought deal on bad debts with the European Union disappointed investors. Monte dei Paschi, bailed out twice since 2009, fell 10%… in Milan trading, bringing losses this year to 45%. The eight biggest decliners among the 46 members of the Stoxx Europe 600 Banks Index were Italian lenders on Thursday. The agreement struck with the EU, which allows banks to offload soured loans after buying a state guarantee, is unlikely to clean up the financial system as fast as some in the markets had hoped, investors said. The plan stops well short of the cleanups organized in Spain and Ireland during the financial crisis. 'The uncertainty in the Italian banking system will persist,' said Emanuele Vizzini, who manages 3.5 billion euros ($3.8bn) as chief investment officer at Investitori Sgr in Milan. 'The deal may help banks to offload part of their bad debt, but for sure doesn't solve the problem, in particular for the weakest banks, which may need recapitalization.'" Even with Friday's 3.3% rally, the FTSE Italia All-Shares Bank index lost 22.8% in January. UniCredit, Italy's largest bank, has a y-t-d decline of 31%. One is left to ponder where Italian sovereign yields would trade these days without Draghi. When market optimism prevails and the world is readily embracing risk and leverage, the greatest speculative returns are amassed playing "at the margin." "Risk on" ensures the perception of liquidity abundance, along with faith in the power of central banks and their monetary tools. In a world where liquidity is flowing, Credit is expanding and markets are bubbling, European securities markets provide attractive targets. And booming markets feed the perception that Europe's economic recovery is sound and sustainable. It all became powerfully self-reinforcing. But when cycles shift it's those operating "at the margin" – i.e. junk bonds and high-beta stocks; leveraged companies, industries, economies and regions; leveraged financial institutions – that have the rug is so abruptly yanked out from under stability. The thesis is that a momentous inflection point has been reached in a multi-decade global Credit cycle. A Monday Bloomberg headline: "So Yes, the Oil Crash Looks a Lot Like Subprime." Others have noted the recent tight correlations between crude and equities prices. Let me suggest that the oil market provides the best proxy for the global Credit cycle. And it's faltering global Credit that has been weighing harshly on commodities, equities and corporate Credit, while the bullish consensus bemoans that stocks have been way overreacting to modest economic slowdowns in the U.S. and throughout Europe. A few months back the global bull market still appeared largely intact. Markets remained confident in central bankers and their monetary tools. Debt issuance was booming and the Credit Cycle seemed to sustain an upward trajectory. The global banking industry enjoyed an outwardly robust appearance – and was even to benefit from rate normalization in the U.S. and elsewhere. "Risk on" was secure, or so it appeared. But it was the last (policy-induced) gasp of speculative excess, a "blow off" top that enticed more "money" into "developed world" stocks and corporate Credit. Meanwhile, finance was fleeing commodities, high-yield, China and EM even more aggressively. In reality, the Credit Cycle had turned – QE, negative rates, China "national team," "whatever it takes" Draghi and a dovish Fed notwithstanding. In newfound global Credit Cycle realities, highly leveraged China is an unfolding pileup. Vulnerability has precipitously emerged throughout the global banking system. European banks – luxuriating so popularly "at the margin" until recently – again appear acutely fragile. Recalling 2012, the European periphery is back in the crosshairs. A "bad bank" plan for the troubled Italian banking sector – that seemed doable back during "risk on" – seems less than workable with a backdrop of "risk off," speculative de-leveraging and faltering global Credit. Italy's financial institutions and economy are acutely susceptible to weak securities markets and tightened Credit conditions. Italy is not alone. Greek yields surged 180 bps this month. Portuguese 10-year yields jumped 34 bps. For more than three years, "whatever it takes" monetary management has inflated securities market Bubbles. In the process, Bubble Dynamics have work surreptitiously to inflate financial and economic vulnerabilities. It's worth noting that Italian equities dropped 2.0% this week. Friday from Bloomberg: "Eighth Week of Europe Corporate-Debt Outflows Shows Limits of QE." According to the article (Selcuk Gokoluk), $3.5 billion flowed out of investment-grade funds the past week. There is also heightened concern for the German economy's exposure to China, not to mention the pressing immigrant issue and attendant political instability. There is as well increased focus on European financial and economic exposure to EM. European bank stock performance has been telling. Of the behemoth European banks, Deutsche Bank lost almost 26% of its value in January. BNP Paribas was down 16%, Credit Agricole 15%, Barclays 18%, Societe Generale 17% and Royal Bank of Scotland 17%. This week saw 10-year bund yields sink to one-year lows. UK Gilt yields dropped to 10-month lows. It's also worth noting the equities markets benefitting the most from Kuroda's surprise and speculative dynamics. Brazilian equities gained 6.2% this week, with Mexico up 4.8%, Russia 3.9% and Turkey 4.6%. In the currencies, the beneficiaries were Brazil (up 2.3% this week), Mexico (2.8%), Russia (3.3%), South Africa (3.5%) and Malaysia (3.4%). It would appear that all the big gainers had oversized short positions. I have been programmed over the years to take every short squeeze seriously. They often take on a life of their own. But back to the pressing issue: Can policy measures resuscitate bull market psychology and reestablish the global Credit boom? I do not expect either a resurgent bull market or a reemerging Credit boom. In truth, negative rates are a feeble tool in the face of global de-risking/de-leveraging dynamics. They are not confidence inspiring. Dovish policy surprises do still afford a capable weapon to clobber those positioning for "risk off," in the process somewhat restraining the forces of market dislocation. However, inciting squeezes and administering market punishment are not conducive to market stability or confidence. There's a strong argument to be made that such a backdrop only compounds the challenge for the struggling global leveraged speculating community. Mainly, negative rates in theory are a tool to spur flows into risk assets and supposedly bolster securities markets. The irony is that negative rates are damaging to bank profitability. And as the Credit downturn gathers momentum, banking profits – and solvency – will be a pressing systemic issue. Regards, Doug Noland P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you're missing. The post About Resuscitation and Reinstatement appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Peter Schiff : This is Going to be a Greater Recession Than 2008 Posted: 04 Feb 2016 09:20 AM PST Peter Schiff is a well-known commentator appearing regularly on CNBC, TechTicker and FoxNews. He is often referred to as "Doctor Doom" because of his bearish outlook on the economy and the U.S. Dollar in particular. Peter was one of the first from within the professional investment field to call... [[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Currencies Play Catchup With Treasuries Posted: 04 Feb 2016 08:10 AM PST This post Currencies Play Catchup With Treasuries appeared first on Daily Reckoning. And now… today's Pfennig for your thoughts… Good day, and a tub thumpin’ Thursday to you! Front and center this morning, the dollar has had its biggest two-day drop in a year, and it appears that there’s nothing to stop the drop at this point, but you would have to think that the PPT would be lurking in the shadows. So, I bet your wondering what brought about this drop in the dollar that seemed to be going along nice and strong. Well, it’s about sentiment with a little fundamentals sprinkled in. But basically, we’ve seen the ten-year Treasury’s yield drop through 2% and was as low as 1.85% yesterday morning, but sits today at 1.90%… What this drop in bond yields is telling us is that bond traders have seen enough of the weak economic data prints, and are saying that the Fed can’t hike rates four times this year. It took a couple of days for the Currency Traders to “get the memo from Bond Traders” but the message was finally received, and when it was, the currencies soared, along with gold, and the dollar got pummeled. So, the Currencies are playing catchup with bonds, and I think they have some more catching up to do! Oh, and for those of you keeping score at home, Fed Funds Futures are seeing traders place traders that are signaling that the Fed will NOT hike rates in 2016. WOW! Nice that they’ve come around to Chuck’s way of thinking, eh? And leading the currencies in their charge against the dollar, is the Big Dog. Yes, just like in days of yore, when the Big Dog would get off the porch and chase the dollar down the street, all the little dogs would follow, and some would run faster than the Big Dog, but the little dogs wouldn’t dare run off the porch without the Big Dog getting them started. I remember when I would talk about the dogs on the porch just about every day back in the day before PIIGS, and GREXIT, a global slowdown, and global deflation. Recall last week I talked about the Plaza Accord, and how there had been some calls for a new Plaza Accord to take place to help the Russian ruble. I said last week that I didn’t see how a new Plaza Accord could happen these days, with just about every Central Bank in the world attempting to weaken their currency. But maybe, just maybe there was something going on. Maybe finance ministers around the world didn’t have to meet at the Plaza Hotel in NYC, to discuss the strong dollar like they did in 1985, maybe phone calls worked this time, to have a coordinated move to weaken the dollar? It all looks that way to me folks. Because this strong move in the currencies has been unabated, with no profit taking, no going back to fill gaps, it’s been a very strong move that could only come about if BIG Money was in the markets selling dollars. But in reality what probably started this snowball rolling down the hill, were comments by Fed N.Y. president, Dudley, who is also a voting member, was talking about the prospect of rate hikes this year, and said that, “said financial conditions are considerably tighter and a weakening outlook for the global economy would have to be taken into account.” And then add in the weaker than expected ISM Services print (more on that later) and the snowball was gaining size as it was sent rolling down the hill. Oh, and there’s another Fed member readying to speak today. Mester, who is normally a hawk, will speak, and it will be interesting to see if he has any dovish tones, for if he does, you can bet your bottom dollar that the Fed is greasing the tracks to not hike rates further. The Big Dog, euro, has seen a two-day rally that represents its biggest jump since 2009. I don’t think this move by the euro is going to allow European Central Bank (ECB) President, Mario Draghi, the ability to swallow his steak so easily. (does anyone in the room know the Heimlich move?) Remember, a month ago, Draghi could have come out and just ripped through the euro’s value, but using that economic stimulus bazooka he’s always talked about? But he didn’t, he used an air rifle with stimulus instead, and the euro hasn’t looked back. Yes, it has bounced around, up and down, but go back to that day the ECB met, and track the euro from there, I think you’ll see what I’m talking about. So, if Draghi, really wants the euro to weaken, he’s going to have to come out with both side arms blazing with dovish talk and stimulus. Barring that, the euro is free to move about the path used by rallying currencies. The euro isn’t the only good story today. The Russian ruble is the best performing currency overnight, and the Chinese renminbi was allowed to appreciate in the fixing. In fact, as I view the currency screen this morning, there’s not one currency or metal that is trading with a loss vs. the dollar this morning. The markets have proven that they have a short memory, for the Japanese yen, which at the end of last week, was getting tossed around like a salad, has put together a nice run in the past few days. Bank of Japan (BOJ) Gov. Kuroda, isn’t happy about this move in the yen, and came out with comments that were meant to stop the yen’s rally. Kuroda told the markets that the BOJ is not limited in their ability to move rates more into the negative territory, like the Riksbank or the Swiss National Bank. It was like he was saying, if going with negative rates wasn’t good enough to keep the yen weak, I can take rates deeper into negative territory, so stop buying yen! But his words are falling on deaf ears right now. In China overnight, the Chinese announced that they were loosening the rules on the limits of foreign investment into and out of the China. This is another baby step toward more capitalistic markets in China, which are going to be needed when the country decides to float their currency. I like this move by the Chinese, because basically what they are telling us is that despite the turmoil in their stock market and the depreciation in the renminbi, the Chinese are not going to stop, but continue on instead, on the path toward more open national markets. The price of oil jumped higher by nearly $3 in the last two days. I had a very nice lunch yesterday with a longtime oil man. He shared with me a report that he pulled that had information regarding oil supplies. The report that can be found on the Bloomberg, reflected a viewpoint that oil supplies will be falling this year, as the shale oil producers deal with the low price of oil. According to the Energy Information Agency (EIA), oil production will fall by 600,000 barrels a day in the U.S. this year. And it will all be from the Shale Oil Producers. In addition, it is believed that Russia wants to meet with Saudi Arabia about cutting production. Remember the Saudi’s have the only oil production costs that can deal with $30 oil, as their costs to get oil out of the ground are the cheapest in the world. So, Russia is going to have to be very compelling and have something that the Saudi’s might need to get them to cut production. But the Russians have been known to twist an arm or two in negotiations, so I wouldn’t put a cut in production out of the question at this point, which would add more girth to the price of oil. And the Bloomberg report forecasts that the price of oil will rise to $46 by year-end. I told this longtime oil man that I believed that the drop in the price of oil was brought about by two things: oversupply, and the strength of the dollar. Well, if you take away the oversupply and the strong dollar, I could very well see the price of oil rising again! The gold price is considerably higher this morning, and could have been even higher if not for some suspicious trading late yesterday afternoon. I saw a graph this morning in Ed Steer’s letter that showed the dollar index and it was in a free fall until 2 pm and suddenly it stopped on a dime and went higher a bit and then evened out the rest of the day. Was this the PPT in action? So I came across an article on Reuters yesterday, that caught my eye. The article talked about how Chinese production of gold last year was down 0.4%, but consumption of physical gold was up 3.7%… Hmmm… Ok, well, we all know that China is the number one producer of gold in the world, and their production was down, marginally I might add, but down in 2015. Was the drop due to the price of gold not rising? And by that same measure, was the rise in consumption due to the price of gold not rising? Yes, would be the answer to both questions. Strange, eh? Sort of like the price of oil for the shale oil producers here in the U.S. Their production of shale oil is dropping because of the loss of low price of oil, and the consumption of oil is stronger because of the price of oil. The U.S. Data Cupboard yesterday, had the ISM Services print, and unfortunately, the print was not very good, as the index number dropped from 55.8 to 53.5. and the important components of the index: Business Expectations and Employment both saw erosion. The ADP Employment Change showed an increase of jobs created in January of 205,000 (195,000 was expected). So mixed data, but the ISM far outweighs the ADP at this point. I think people/investors have grown tired of hearing about the “jobs recovery” when there are still not the same amount of people working than there were before the financial meltdown. Today’s Data Cupboard has some good stuff in it.. the December Factory Orders, along with Durable Goods Orders and Capital Goods Orders. These three data prints are part of what I call “real data that is important to an economy”. I expect all three of these to print negative for December. And that will close out the fourth QTR GDP, which will probably drop from the initial print of 0.7% to 0% (yesterday, I told you my GDP tracker had 4th QTR GDP at 0.5%, and that was before the trifecta of negative reports today). Well, longtime readers know my penchant for always attempting to find someone else to give his opinion on something I’ve beaten the dead horse over and over again about. So, it pleased me to see this report in my MarketWatch email yesterday. You can read it all here, or opt to read the snippet:
Chuck again. Yes, when an national media outlet like MarketWatch sees what’s going on with bonds, it’s almost too late, and that’s why I said above today that I thought the currency traders had more catching up to do with bonds. And with that, I’ll skedaddle, and leave you to working on making this a tub thumpin’ Thursday! Regards, Chuck Butler P.S. Be sure to sign up for The Daily Reckoning — a free and entertaining look at the world of finance and politics. The articles you find here on our website are only a snippet of what you receive in The Daily Reckoning email edition. Click here now to sign up for FREE to see what you're missing. The post Currencies Play Catchup With Treasuries appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Forget FANG. 2016’s Gains Will Come From BARF… Posted: 04 Feb 2016 06:55 AM PST This post Forget FANG. 2016’s Gains Will Come From BARF… appeared first on Daily Reckoning. No more FANGs. It's time to BARF… We've talked at length about the market's change in character so far this year. And if you haven't noticed the massive shifts taking place you haven't paid close enough attention… Today you're going to see exactly how to position your trading portfolio so that you can take advantage of the market's seismic shift. The ground is already rumbling under your feet—so the time to act is now. Exhibit A for the market's collective shift: FANG. For the uninitiated, that's Facebook, Amazon, Netflix and Google (ahem, I mean Alphabet). We successfully traded every single one of these stocks last year. If you wanted to generate double-and triple-digit returns, you had to hitch your star to at least one of these FANGs in 2015. "Buy strength" was the stock market's motto. Everything else was garbage. Not so in 2016. Sure – FANG's bookends (Facebook and Google) have managed to hold on tight near their highs. But Netflix and Amazon are tanking. Both of these stocks are sitting at year-to-date lows this morning. The market's been deFANGed. And the bulls want 'em back. Not to worry. We have a new group of market-driving stocks waiting in the wings. Enter BARF, the perfectly-named acronym for all your 2016 trading needs… "We at Extract Capital wanted to create a meaningless acronym ourselves, 'BARF,'" explains creator Darin Milmeister. "These are huge, or relatively huge, well…. they were huge mining houses. BHP Billiton, Anglo American, Rio Tinto, and Freeport-McMoRan. The four stocks declined an average of 51% and lost $101 billion in equity value in 2015. The four companies generated a combined $130 billion in revenue over the last 12 months. Year-to-date for 2016, these stocks have dropped another 22.9% on average through January 20." These BARF stocks would have made anyone want to hurl in 2015. The FANGs gained 82% on average last year while the BARFs lost 51%. But like I said, the market's different now… Check the charts and you'll see that these vomitous names could be bottoming out. Just look at Freeport-McMoRan over the past 10 trading days compared to the S&P 500:
BARF has the potential to become a powerful trading theme over the next few weeks as more evidence piles up in these orphaned stocks' favor. The U.S. Dollar Index took a huge hit yesterday as precious and base metals scampered higher. Gold futures are now at levels not seen since late October, and even Dr. Copper—the disgraced professor of world economic health—is jumping to 2016 highs. Mining stocks have been dead money walking for years now. Perhaps this run of horrifically bad performance is about to come to an end—at least temporarily. Just look at the Market Vectors Gold Miners ETF. After idling around breakdown levels for more than six months, this rickety ship has reversed course and is sailing hard in the opposite direction. Observe:
Want to make money this year? Two things – avoid FANGs – and get ready to BARF. It couldn't be simpler… Greg Guenthner P.S. Profit from the seismic market shift–sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE. The post Forget FANG. 2016’s Gains Will Come From BARF… appeared first on Daily Reckoning. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| London gold market wrestles over future: 'People want the physical, not paper' Posted: 04 Feb 2016 05:35 AM PST By Henry Sanderson http://www.ft.com/intl/cms/s/0/a4390aba-c9d4-11e5-a8ef-ea66e967dd44.html There aren't many places in the UK where you can walk in off the street and buy gold as a retail customer. A new store in London's St James's Street a stone's throw from the Ritz wants shoppers. "There is unquestionably a physical renaissance going on," says Ross Norman, of Sharps Pixley, flanked by cabinets showing gold roses and gold watches under a large chandelier. "People want the physical [gold], they don't want the paper. It's suggestive of an environment where trust is less than it used to be." ... Dispatch continues below ... 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 Guests drinking champagne at the opening party last week included some of the most influential names in London's gold market. But while retail demand for gold is surging, the market is wrestling with a bigger issue: how bankers and traders set the price they will pay. London's 250-year-old gold market faces a fundamental question: should the city remain a market where gold is traded between buyers and sellers directly, as it has been for decades, or move on to an electronic gold exchange. How that is resolved will ultimately affect the price for a customer when they walk in and buy a gold bar in the Sharps Pixley store. In a first step, on Thursday, the body that oversees the London gold market, the London Bullion Market Association, plans to issue a tender for proposals to build an electronic hub where all trades will be recorded. That's set to open the door to further ideas for changes to the market. A few companies are lobbying for gold to move towards a blockchain-based solution, based on the network behind the digital currency bitcoin. Other exchange operators are eyeing a London-based gold exchange. Garry Jones, head of the London Metal Exchange, who attended the party in St James's Street, wants to launch a gold futures contract that could be settled based on the delivery of physical gold bars. The LME is talking with five banks on a project backed by the World Gold Council, according to a person familiar with the matter. The banks involved are ICBC Standard Bank, Citigroup, Morgan Stanley, Goldman Sachs and Societe Generale SA, the person said. In a world where many areas of finance are being transformed by high-speed computerised trading, London gold transactions are mainly conducted via telephone or through banks' own individual systems. There is no data on how much gold is actually traded in the city every day, though it is estimated that roughly three-quarters of the world's bullion dealing takes place in London. The lack of a unified system has led to liquidity -- the amount of trading on any one venue -- becoming fractured, a point made by some banks to the LBMA, according to a person familiar with the process under way at the association. "The liquidity providers think there is enough liquidity and don't need to aggregate everything -- others think it could be more simplified," says the person. Currently the LBMA has 14 market maker banks which quote two-way or buy and sell prices in both gold and silver. But other banks have withdrawn from trading gold in recent years. The two largest bullion banks, HSBC and JPMorgan, are not currently involved in the LME project. Having a platform to collect trade data would make the London gold market more transparent. That in turn would provide a greater defence against regulators who are wary of any financial market where the price is set between banks, say market participants. It would also help in negotiations over proposed tighter capital requirements for banks. "There has been discussion about moving to a centrally cleared model but there isn't an example where any market has done that without a regulatory push -- because it levels the playing field in terms of pricing," says Seamus Donoghue, chief executive of Allocated Bullion Solutions in Singapore. The LME would not comment on any plans for a gold futures contract. The exchange's clearing house, LME Clear, is already approved to deal with gold. Analysts warn that any newly launched futures contract will need to receive the backing of all London bullion banks. It is also a competitive market: there are already popularly traded gold futures contracts on the Comex exchange in the US, the Shanghai Futures Exchange and the Tokyo Commodities Exchange. "People feel comfortable where they've already been and Comex has already got such a footfall in terms of people using those exchanges," says Sharps Pixley's Norman, who started off his career trading precious metals at Rothschild, at the sidelines of the opening party. "The question is whether you'll get participants. My personal view is they may struggle. I don't think there's unmet demand." Whatever format it takes, one thing is clear: London's gold market faces a change. * * * Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference: https://jeffersoncompanies.com/landing/2014-av-powell Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's 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: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold and Stock Markets Inflection Points Galore Posted: 04 Feb 2016 05:07 AM PST There is alot of action going on this week in all the different areas of the markets. The PM complex has been rallying, the US dollar tanking today and the stock markets trying to make up their mind which way they want to go in the short term. I have a ton of work to do on the side bar where all the trades are listed so I'm going to show you what I would like to see happen in regards to the HUI, gold and silver. If the PM complex is bottoming in here it has to show us its hand. There is no way around it. Usually when a bottom or top is formed the first move out of the reversal pattern, after a possible backtest, should be very strong or impulsive in nature. The bigger and stronger the move is the better. Below is a weekly chart for the HUI with few annotations on it so you can see the clean picture. Most of the time you will either see some type of H&S reversal pattern or double top or bottom reversal pattern. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Store Closings On The Rise! The Shut Down Is Here!!! Posted: 04 Feb 2016 05:00 AM PST How close are we? How close are we to the big collapse? It's already begun, and it's already here. As the year progresses, expect to see more store closings, more mall closings, more foreclosures, more liquidations, and more bankruptcies. Do not expect something huge -- the Collapse will start... [[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gold Price Golden Bottom? Video Posted: 04 Feb 2016 03:53 AM PST In today's video I’m going to cover stocks, currencies, oil and gold. This would normally be the nightly report on the premium website, but I’m going to make it public so everyone can get a taste for what is included in the premium reports. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Economic Collapse : FED Testing Negative interest Rates Posted: 04 Feb 2016 03:27 AM PST Fed Stress Test Negative Interest Rates and Global Recession Hint Future Crash! As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S.In its annual stress test for 2016, the Fed said it will assess the... [[ This is a content summary only. Visit http://www.newsbooze.com or http://www.figanews.com for full links, other content, and more! ]]  | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| HUI Now Confirming Gold Price Move Higher Posted: 04 Feb 2016 02:23 AM PST The comatose mining stocks finally came to life today and showed signs of some determined buying, something that has been missing in the recent leg higher in the gold market. From a technical analysis perspective, the fact that they were able not only to breach that stubborn band of resistance near 125 which has kept them in check, but also managed to soar through the mid-July 2015 low near 128 is very impressive. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A Giga Breakout In A Mid-Sized Gold Miner Posted: 04 Feb 2016 01:47 AM PST Gold has broken through its important resistance point at $1,130 USD/oz. That is an important price point, as it coincides with gold’s 200 day moving average and the midpoint in the trend channel that started in July of 2013 (see first chart). We have published our gold price chart several times, but it remains a spot-on chart. Below is the latest version. As clearly seen, major resistance kicks in around $1,210 USD/oz, which is 6.1% above today’s closing price. If gold manages to break through that level, we believe a major trend change would be underway. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lakshman on US Slowdown, Shocks, and China Posted: 03 Feb 2016 04:00 PM PST Wednesday's drop in the US service sector to the lowest level in two years took many economists by surprise, leading to a sell-off in the dollar and a temporary boost to gold and commodities, as expectations for further rate hikes this year diminished. Lakshman Achuthan... |
Future generations will look back at McDonalds with horror. They will be astonished at the sick and twisted science experiment on the world's population, making millions of people sick in the process.
Recently we joked that it is unclear just where Venezuela will find all the paper banknotes it needs for all its new currency. And, as if on cue, the 
The Straits Times published an opinion piece by the London-based Rob Edens. Wishfully titled, "
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