Wednesday, January 11, 2017

Gold World News Flash

Gold World News Flash

Could The Miners Have Provided The Ultimate Fake Out?

Posted: 11 Jan 2017 07:09 AM PST

So, for now, I will continue to watch the silver and GDX charts quite intently, since they respectively present the most bullish and potentially bearish patterns in the complex. Should silver be able to make a higher high early in the coming week before breaking back below 15.85, then it will add to the bullish potential in the overall complex. And, if the GDX is able to rally over 23.35, with follow through over 24, that would put an even more bullish spin on the complex, and you can move your stops on longs to just under 23 at that time. A further move through the 1.00 extension off the lows of 24.50 should have us on target to head to the 28-30 region for wave 1 of iii.

Market Intervention Crushed Profit Margins At Largest Primary Silver Mining Producer

Posted: 11 Jan 2017 07:03 AM PST

The profit margin trend at the world's largest primary silver mining company has experienced a rapid decline over the past several years. Fresnillo PLC in Mexico, is the largest primary silver mining company in the world. Last year, Fresnillo PLC produced 47 million of silver and 762,000 oz of gold. For all their hard work, Fresnillo's profit margin versus its cost of sales fell to an all-time low of 7% in 2015. This can most certainly be blamed on market intervention, which I will discuss in more detail in upcoming articles.

A Bullish Play in GDX

Posted: 11 Jan 2017 07:00 AM PST

Subscribers are long 400 shares from 22.61, stop 22.01, based on a real-time guidance for a 'mechanical' entry that was posted to chat room Scoreboard at 11:21 a.m. GDX, an ETF proxy for the gold mining sector, is having trouble getting airborne, but if the buying should catch fire, it has the potential to reach 24.58 (see inset) over the near term. For now, I'd suggest entering an order to sell half the position at p=23.30, the pattern's 'midpoint Hidden Pivot' resistance.

The Well-Reasoned Basis Of Populism

Posted: 11 Jan 2017 02:00 AM PST

Submitted by Jeffrey Snider via Alhambra Investment Partners,

At the start of this new year, a new law took effect in Illinois which required hairdressers to obtain training in domestic abuse prevention. Hairdressers. The seeds of the idea were where any stylist in the state would take advantage of what is presumed a very close relationship between a woman and the person, presumed also to be a woman, using a hairdryer on her to spot possible abuse or even violence and know how to direct the victim toward help. Though protected, for now, from reporting requirements and shielded in untested fashion from liability, this is now part of the credentialing process for anyone seeking to enter the profession or stay within its ranks, at least in Illinois (and whichever states ultimately follow, as you probably have a good idea already those that will).

Thus, without one hour of training every two years a formerly credentialed hairstylist will transition simply to being a former hairstylist. Her (presumably) ability to wield objects of beautification being fully undisturbed, the loss of ability to perform with them as an economic service is clearly, in this case, not about those abilities.

You see occasionally statistics bandied about the internet where in the 1950’s fewer than one in twenty jobs required some government body’s expressed, explicit approval, but sixty years later the imposition of government credentials is somewhere between one and three or four. The world has become enthralled by them to the point of these kinds of extremes. Some of it is surely the desire for reduced liability, to retain or hire the credentialed expert so that if something goes wrong you are less likely to be sued for it. But what happens when in the real world “credentialed expert” makes that disastrous outcome more likely? Would that be the case where credentials themselves aren’t what they are supposed to be?

In August 2013, Paul Krugman was writing favorably about Milton Friedman. The context of that discourse was the period immediately following the “fiscal cliff” which was supposed to bring about immediate disaster, as Krugman himself predicted on several occasions. The favorable light under which Friedman was being remembered in this one specific instance boiled down to what Krugman called him being a “realist.”

One way to think about Friedman is that he was the man who tried to save free-market ideology from itself, by offering an answer to the obvious question: “If free markets are so great, how come we have depressions?”

In Krugman’s view, Friedman was acceptable in the narrowest sense because he opened the door for government intervention among the so-called right. I doubt Krugman was unaware that it was this same door that caused Friedman to apologize for it in the 1990’s given what it became. Ironically, it was in Friedman’s Nobel lecture in 1976 which describes Krugman’s brief positivity about him:

I well recall a dinner at a Cambridge University college when I was sitting between a fellow economist and R. A. Fisher, the great mathematical statistician and geneticist. My fellow economist told me about a student he had been tutoring on labor economics, who, in connection with an analysis of the effect of trade unions, remarked, “Well surely, Mr. X (another economist of a different political persuasion) would not agree with that.” My colleague regarded this experience as a terrible indictment of economics because it illustrated the impossibility of a value-free positive economic science. I turned to Sir Ronald and asked whether such an experience was indeed unique to social science. His answer was an impassioned “no”, and he proceeded to tell one story after another about how accurately he could infer views in genetics from political views.

At one time, there was a difference between Friedman and Krugman, meaning Keynes. In 1980, for example, Keynes was so thoroughly debunked that there was enormous bipartisan support against it. Yet it didn’t go away, it simply found itself wriggling through Friedman’s open door and into the central bank monetarism that replaced it. Not long after 1980, Keynes and Friedman became fused, the activist central bank, rather than Treasury Department or Finance Ministry, the result. On the inside, economists think themselves arguing a world of difference among themselves; from the outside, they are all the same as none of them can actually produce scientific results and predictions.

The reason is that they are all working from the same general theories. The concept of “free trade” was as close to untouchable in “acceptable” economic discourse as anything. The politics of it was no longer “right” or “left”, but rather within or without. If you argue for “free trade”, you are welcomed by economists (really Economists); if you argue against it, you are a krank, a kook, or any other epithet that may be applied to show the world you have none of the right “credentials.” It is about conformity, not fact let alone truth.

The sudden rush in the mainstream of Economics to defend globalism isn’t specifically about globalism and its version of “free trade.” It is about Economics and the bigger questions that are being asked more often now outside of it. The voters in 2016 are following the questions, for even if there isn’t yet widespread awareness of the answers there is at the very least robust and open discussion taking place where over the past decade the application of argumentum ad verecundiam has been used ruthlessly to shut it down. If Janet Yellen or more so Ben Bernanke declared that there was recovery, nobody possessed the credentials to say otherwise.

The Wall Street Journal published an article this past Sunday that in just its headline perfectly sums up the current wedge, writing up the recent conference in Chicago where Top Economists Grapple With Public Disdain for Initiatives They Championed.

The nation’s leading economists are suffering an identity crisis as many of the institutions they helped build and causes they advanced have come in for public scorn and rejection at the ballot box.


The angst was on display this weekend at the annual conference of the American Economic Association, the profession’s largest gathering. The conference is a showcase for agenda-setting research, a giant job fair for the nation’s most promising young economists and, this year, the site of endless discussion about how to rebuild trust in the discipline.

What is never really asked is why are these particular people the “nation’s leading economists?” They are surely some of the brightest minds, possessing great intellectual capacity, displaying impressive educational attainments and industry-given awards, but by and large because of all that they are all the same. And none of it displays comprehension of economics, but instead Economics. They have all been required to say the same things, speak in a common language (statistics), and to not deviate too far lest it trigger implicit excommunication from among the wider group. It’s how Paul Krugman can spend eight years screaming for fiscal “stimulus” of any type, including the stimulus effects of preparing for an alien invasion that won’t happen, but the moment just the bland talk of fiscal spending being introduced by President-Elect Trump he declares it all wrong and absolutely certain to deliver the worst of the worst long run consequences. People tend to notice, from the outside, these non-trivial inconsistencies and at the very least start to wonder just how robust a “discipline” it all might be.

The chart included with the WSJ article is the most damning, by survey history showing that in early 2014 faith in “free trade” took a decided turn, at least for many. Among R’s, those who said free-trade agreements were good was about 55%; 60% for D’s. Those suggesting it is bad were only 35% or so for R’s, and just 30% for D’s. It swung to only 25% of R’s now feeling positive about “free trade”, with an astonishing 68% now against. The shift among D’s was sharper to the middle of 2015, but has mostly reverted to the 2014 levels.

One quoted economist explains quite well the dilemma, though more subconsciously than he seems aware.

“The economic elite did many things to undermine their credibility while people’s economic fortunes were taking a turn for the worse,” said Steven Davis, an economist at the University of Chicago. But a road map for regaining trust is elusive. “I used to think facts and analysis will ultimately carry the day but now I’m not quite sure.”

The incongruence (in arrogance) of that statement is striking, and for Economics it should be alarming. For a narrow segment of the “discipline”, it clearly is and has been. Economist Edmund Phelps, who along with Milton Friedman did great work in debunking the (exploitable) Phillips Curve infatuation in the 1960’s, was also there in Chicago presenting on “How the Right And Left Are Failing The West.” Joseph Stiglitz, for once, was more succinct (though still far short of an explanation about why).

“The promise was that globalization, together with liberalization, lowering tax rates, and advances in technology, would make everyone better off,” said Mr. Stiglitz. It was economists, not the economics, that over-promised, he said.

The end of the recovery in 2016 was not as one that had happened but as an actual, realistic idea that has had dire effects including among the credentialed “experts.” It is unsurprising to find those survey results about “free trade” breaking sharply where they do; the introduction of the “rising dollar” in the middle of 2014 and the broad, global consequences it unleashed was the evidence that the “science” of Economics refuses to consider, let alone comprehend. Despite the backlash from the inside, The People have been more than patient the past ten years, giving Economists chance after chance after chance (after chance, in the fashion of QE’s) to produce. The “rising dollar” was the last straw. Rejection of Economics is not irrational nor is it free of “facts and analysis” as (presumably Dr.) Davis is suggesting.

The past two years require no regressions. Economists said in late 2014 that the economy would take off; it did the opposite. They kept relying on mostly the unemployment rate to deny what was happening though in the US, like Europe and elsewhere, regular people had and have an intuitive, basic sense of why that was and still is just stupid. Very quietly, without too much disturbance, central bankers at least now agree, if still for now on their own terms. Is it really “too far” that people are now branching out, wondering what else Economists might be so wrong about? In terms of “free trade”, it’s not as if it is unrelated to the past decade.  

The rise of populism isn’t the politics of rejecting experts, it is the rejection of these “experts” – who quite frankly deserve more than voter disdain. Credentials have come to be seen by a very large and growing proportion of the global population to declare incompetence, having nothing at all to do with intellectual capacity apart from objectivity. It isn’t the denial of reasoned argument but rather the logical end of it.

Bill Blain: "Throughout My Career, Years Ending In 7 Haven’t Been Good"

Posted: 10 Jan 2017 09:04 PM PST

While we wish one of our favorite market commentators', Mint's Bill Blain, all the best as he recovers from his recent heart attack, we would like to share with readers his inaugural for 2017 note, which lays out his current concerns about the state of the markets, and the global economy.

From the January 10 edition of Blain's Mid-Morning Porridge

Let me start by stating the issues causing me some worry:

Throughout my career, years ending in 7 haven't been good.

1987 saw a massive stock market crash, in 1997 we got the Asian Financial Crisis, and 2007 saw the start of the Global Financial Crisis and consequences we're still struggling with today. In the case of year 7s, the trend is not our friend.

I'm told by my stock picking chartists there is a 10-yr stock cycle that looks to have peaked. Many factors about this succession of market turnaround moments worry me – firstly, the scale of crisis seems to be multiplying as each 10-yrs event. A simple stock market rout in 1987 became near global catastrophe in 2007.

Thankfully we haven't ever had the kind of absolute global market meltdown doomsters say will happen, but it does strike me that market moves – whether caused by an evil conjunction of rogue algorithims and Hi-Speed-Trading, or simple human foolishness – are becoming increasingly chaotic, thus raising the scale of crashes.

The second aspect is how financial crisis are solved. Each is new – but it worries me the efforts made to ensure the last crisis doesn't happen again may contribute to the causes the next one. I certainly don't believe the deluge of regulatory tat since 2008 has made the world safer. It has not… it has made it more.. difficult. It's a game of consequences…

And change is definitely coming…

I've been looking at the dismal science of Economics. It's proper name is political economy and its not a proper science. It's a language for understanding complex events and responding to them,rather than mathematical rules. Over the past 10-years we've seen a massive economic experiment in monetary economics. It's hasn't gone well. It strikes me the legions of central bank economists are akin to the ancient alchemists looking to change base metal into gold….

The piper will soon want paid. The next phase – underway already - will be a reversal back to fiscal economics. That one potentially positive reality for the US and UK, but yet another minefield for Europe. It's a big if to see whether Trump delivers the fiscal boost the market expects, or whether the continued weakness of sterling continues to push the FTSE into the stratosphere. I have my doubts…!
In Europe a swing towards Fiscal policy spells crisis.

The fact that France and Italy could be steaming towards fiscal stimuli will break the current ECB monetary consensus, while Germans become increasing strident about the need for higher rates and an end to QE. Add to that a hefty dose of European politics. Dutch Elections, French Elections and the Germans.. its all much to worry about. 

The Market Has Become One Giant Lopsided Trade

Posted: 10 Jan 2017 06:55 PM PST

The market has become one giant trade. That trade is: Long US stocks Long the $USD Short Treasuries Short Gold

GATA Chairman Murphy to speak at Dollar Vigilante conference in Acapulco

Posted: 10 Jan 2017 05:33 PM PST

8:38p ET Tuesday, January 10, 2017

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy will speak at The Dollar Vigilante's second annual internationalization and investment summit in sunny Acapulco, Mexico, on Friday, February 24, a day ahead of the four-day "anarcho-capitalist" Anarchapulco conference there.

Also speaking at the Dollar Vigilante conference will be the financial letter's co-founders, Jeff Berwick and Ed Bugos; David Morgan of The Morgan Report and; Bix Weir of the Road to Roota letter; and mining industry broker Ben Johnson.

... Dispatch continues below ...


Sandspring Resources Commences 2016 Exploration Campaign

Company Announcement
August 17, 2016

Sandspring Resources Ltd. (TSX VENTURE:SSP, US OTC: SSPXF) is pleased to announce commencement of the 2016 exploration campaign at its Toroparu Gold Project in Guyana, South America.

In 2015 the company completed a 3,700-meter diamond drilling program on the promising Sona Hill Prospect, located 5 kilometers southeast of the main Toroparu deposit. Sona Hill is the easternmost gold anomaly in a cluster of 10 gold features located within a 20-by-7-kilometer hydrothermal alteration halo around Toroparu. Drilling at Sona Hill in 2012 and in 2015 intercepted high-grade mineralization in both saprolite and bedrock, and confirmed the continuity and grade potential of the Sona Hill mineralization.

For the remainder of the announcement and highlights of the 2015 drill program:

Speakers at the Anarchapulco conference will include G. Edward Griffin, author of the classic polemical history of the Federal Reserve System, "The Creature from Jekyll Island"; bitcoin proponent Trace Mayer; and a dozen even freer spirits.

Topics at the conferences will include:

-- The world's economic and financial outlook.

-- Monetary metals investing and strategies.

-- Investing in gold and silver mining stocks.

-- Cryptocurrency storage, trading, and investing.

-- Austrian School economics.

-- "Perpetual traveler/prior taxpayer" theory.

-- Expatriation and international opportunities.

The conferences will be held at the conference center at the spectacular Resort Mundo Imperial.

Admission to the TDV conference alone costs $395 and you'll get a $10 discount if you use "GATA" as a coupon code.

Admission to the Anarchapulco conference costs $245 for the first 300 registrants. A student discount is available.

To learn more about the conferences and hotel options as well as to register, please visit:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 22 and 23, 2017
Vancouver Convention Centre West
Vancouver, British Columbia, Canada

Dollar Vigilante Internationalization and Investment Summit
Friday, February 24, 2017
Resort Mundo Imperial
Acapulco, Mexico

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:

Economic Collapse Imminent says Ron Paul

Posted: 10 Jan 2017 05:00 PM PST

Paper money was designed to transfer wealth from the poor and middle class to the wealthy by using inflation.. they took your wealth, used it to create monopolies(duo-octo) in every sector of our lives(energy, entertainment, communications, manufacturing of everyday items), and now have no reason...

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Hugo Salinas Price: Dollar's reserve currency status destroys U.S. manufacturing

Posted: 10 Jan 2017 04:04 PM PST

7:02p ET January 10, 2017

Dear Friend of GATA and Gold:

Hugo Salinas Price, president of the Mexican Civic Association for Silver, explains tonight how the U.S. dollar's role as the world reserve currency has destroyed so much manufacturing in the United States. The only way countries can obtain dollars, Salinas Price writes, is to export to the United States, and they can do that only if they price their products below the prices charged by U.S. manufacturers. An alternative system, Salinas Price writes, would require a different reserve currency, the contrivance created by the International Monetary Fund -- Special Drawing Rights -- or a certain rather scarce yellow metal that used to do the job well and impartially. Salinas Price's commentary is headlined "Trump's Ignorance" and it's posted at the Mexican Civic Association for Silver's internet site,, here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Canadian Government Issues Key Water License
for Seabridge Gold's KSM Project in British Columbia

Company Announcement
Monday, November 21, 2016

TORONTO -- Seabridge Gold Inc. (TSX: SEA) (NYSE:SA) announced today it has received a license from the Government of Canada required for the construction, operation, and maintenance of the water storage facility and associated ancillary water works at its 100 percent-owned KSM Project in northwestern British Columbia.

The license, as authorized within the International Rivers Improvement Act, regulates all structures and activities situated on transboundary waters shared with the United States that have the potential to affect water quality and quantity. The Water storage facility and its ancillary water works (water diversion ditches and tunnels) are the primary water management control systems for the KSM Project. These facilities separate water that has not contacted mined material from so-called contact water originating from disturbed areas of the mine site and then contain the contact water prior to treatment and eventual release to the receiving environment.

These facilities are situated on Mitchell and Sulphurets creeks, tributaries of the transboundary Unuk River system that flows into Alaska. The license was granted for a term of 25 years under the International Rivers Improvements Regulations as administered by Environment and Climate Change Canada. ...

... For the remainder of the announcement:

Join GATA here:

Vancouver Resource Investment Conference
Sunday-Monday, January 22 and 23, 2017
Vancouver Convention Centre West
Vancouver, British Columbia, Canada

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 Price Closed at $1160.40 Up $10.40 Or 0.90%

Posted: 10 Jan 2017 03:03 PM PST

3-Jan-17PriceChange% Change
Gold Price, $/oz1,160.4010.400.90%
Silver Price, $/oz16.360.422.64%
Gold/Silver Ratio70.946-1.217-1.69%
Silver/Gold Ratio0.01410.00021.72%
Platinum Price939.3037.704.18%
Palladium Price709.3026.653.90%
S&P 5002,257.8319.000.85%
Dow in GOLD $s33.521.845.80%
Dow in GOLD oz1.620.095.80%
Dow in SILVER oz115.054.454.02%
US Dollar Index103.250.960.94%
IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure our retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.
SPOT GOLD:1,158.00

American Eagle1.001,195.061,196.791,196.79
1/2 AE0.50600.19610.851,221.69
1/4 AE0.25305.88311.211,244.85
1/10 AE0.10125.82126.801,268.01
Aust. 100 corona0.981,129.401,138.401,161.39
British sovereign0.24274.64287.641,221.91
French 20 franc0.19216.20222.201,190.14
Maple Leaf1.001,168.001,182.001,182.00
1/2 Maple Leaf0.50665.85607.951,215.90
1/4 Maple Leaf0.25295.29309.771,239.06
1/10 Maple Leaf0.10122.75126.221,262.22
Mexican 50 peso1.211,387.711,398.711,160.08
.9999 bar1.001,162.631,168.001,168.00
Get Franklin Sanders Daily Gold Price Reports and Market Commentaries:

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Gold Price Closed $1184.20 Up 0.70 or 0.06%

Posted: 10 Jan 2017 03:01 PM PST

10-Jan-17PriceChange% Change
Gold Price, $/oz1,184.200.700.06%
Silver Price, $/oz16.800.171.04%
Gold/Silver Ratio70.476-0.691-0.97%
Silver/Gold Ratio0.01420.00010.98%
Platinum Price978.400.100.01%
Palladium Price764.658.101.07%
S&P 5002,272.583.680.16%
Dow in GOLD $s347.21-0.16-0.05%
Dow in GOLD oz16.80-0.01-0.05%
Dow in SILVER oz1,183.71-12.16-1.02%
US Dollar Index102.030.190.19%

IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure our retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.

SPOT GOLD:1,185.20

American Eagle1.001,221.941,224.901,224.90
1/2 AE0.50614.30625.191,250.39
1/4 AE0.25313.07318.521,274.09
1/10 AE0.10128.78129.781,297.79
Aust. 100 corona0.981,155.921,164.921,188.46
British sovereign0.24281.09294.091,249.31
French 20 franc0.19221.28227.281,217.34
Maple Leaf1.001,195.201,209.201,209.20
1/2 Maple Leaf0.50681.49622.231,244.46
1/4 Maple Leaf0.25302.23317.041,268.16
1/10 Maple Leaf0.10125.63129.191,291.87
Mexican 50 peso1.211,420.301,431.301,187.11
.9999 bar1.001,189.941,195.201,195.20

VG+ Morgan $B4 19050.7723.0027.0035.29
VG+ Peace dollar0.7717.0020.0026.14
90% silver coin bags0.7212,180.0312,466.0317.44
US 40% silver 1/2s0.304,759.834,909.8316.64
100 oz .999 bar100.001,668.501,693.5016.94
10 oz .999 bar10.00169.35174.3517.44
1 oz .999 round1.0017.0417.3417.34
Am Eagle, 200 oz Min1.0018.2919.7919.79

Plat. Platypus1.00993.401,023.401,023.40
Get Franklin Sanders Daily Gold Price Reports and Market Commentaries:

If the form above does not display in your iPhone or android app, please use this link to visit the website signup form:

China Barreling Toward Major Economic Crisis

Posted: 10 Jan 2017 02:06 PM PST

This post China Barreling Toward Major Economic Crisis appeared first on Daily Reckoning.

China is now facing the reality of a major slowdown in economic growth.  The Asian superpower was once hitting accelerating speeds not seen in the modern era.  Now it must brace for the real possibility of going broke.

Reuters first reported in December 2016 that Chinese reserves had plunged to a five-year low, hitting just over $3 trillion, while also recording a massive drop in its amount of gold reserve in October.  This reserve problem only compounds when under the threat of failing banks.

The country faces an insolvent banking problem brought on by the "off-balance sheet" issues caused by its wealth management products (WMPs).  These WMPs, or what has been described as shadow banking, could turn into a considerable problem for The People's bank of China.

Chinese leadership has already said that the $3.5 trillion WMP industry has been a source of risk, but maintains that the industry will stay "stable and orderly" in the event of a shock.  One survey found that delinquency rates in China's less stable banking institutions to be at a whopping 30%, while still receiving injections from the Chinese central bank.

The risk combination of low reserve numbers and the need for a possible government bailout of banks maintaining WMPs adds considerable vulnerability in a Chinese government that is perceived by many foreign powers as an economic threat.

Many in the financial and political media reference the "Thucydides Trap" in which a rising power, out of fear of an already established global power, escalates toward war.  While this war drum between the U.S may have credibility, the truth is China could very well be hitting considerable economic walls – and simply not keep up.

China might be seeking to diversify its involvement in the U.S economy but is hitting considerable backlash by doing so.

As economist Nomi Prins indicated regarding China, "It established a stronger relationship and side agreements with Russia, the BRICS community and increasingly with Europe and the United Kingdom post the Brexit vote. That was no accident, but part of a strategy to be distanced from the risk the US and its central and private banking system poses."

While this strategy of distancing from the U.S continues China experiencing an economic slowdown and a weakening outlook.

One Chinese central bank advisor, Huang Yiping, who is a member of the central bank monetary policy committee indicated that as Chinese residents diversify their investment portfolio, capital outflow will “last only for a certain period” in future.

This optimism from the central bank might be a fitting policy narrative, but the reality shows a different picture in China.

The yuan continues to weaken and money has started to flow outwards from the once booming Asian giant.  The outflow of money has forced the yuan down a record 6.5% against the U.S dollar.  That is the largest currency drop from the Chinese currency since 1994.

A Stratfor report on the economic slowdown in China notes that, "By spending $1 trillion in foreign exchange reserves, Beijing has been able to buoy the yuan somewhat as it slowly depreciates, putting a sizable chunk of its spare cash toward reassuring the markets of its currency’s reliability."

In 2015 alone China had an estimated $1 trillion leave the country through capital outflows.  While that number might have decreased in 2016 to just over $762 billion, it also met considerable government pushback that otherwise could have produced similar figures.

The government since 2015 has stepped in to control money exiting the country at record amounts.

As of January 2017 the administration responsible for Chinese foreign exchange regulation is now requiring its citizens to provide added information and sworn pledges that their personal funds will not be directed toward property investments.

One obvious threat to a banking crisis, weakening yuan and massive flight of capital from China is the negative impact on trade.  The not so obvious problem is that all of these could go off at once on a greater scale, causing economic tremors.

The actions from the Chinese government was meant to act as a floodgate in order to keep money domestically based and slow down the economic slump, but the history of preservation of wealth tends to extend beyond the rule of law.  Clampdowns and financial controls can only extend so far, confidence can only be regulated so much.

Jim Rickards offers his analysis that, "History shows that weak capital controls may be worse than no controls because they send a message of "no confidence" while not really stopping the outflows."

"The mother of all liquidity crises is coming to China sooner than most realize."


Craig Wilson, @craig_wilson7
for the Daily Reckoning

The post China Barreling Toward Major Economic Crisis appeared first on Daily Reckoning.

BREAKING: Ivanka Trump Quits, Cut All Ties to Trump Enterprises as Husband Prepares for W.H. Job.

Posted: 10 Jan 2017 02:00 PM PST

President-Elect Trump Names Jared Kushner as Senior White House Adviser The pick raises new ethical questions to go along with other controversial cabinet picks. The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative...

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Gold Seeker Closing Report: Gold and Silver Gain Again

Posted: 10 Jan 2017 01:24 PM PST

Gold gained $5.05 to $1187.55 in Asia before it fell to see a slight loss at $1181.07 in London, but it then jumped to as high as $1190.45 in New York and ended with a gain of 0.4%. Silver rose as high as $16.904 and ended with a gain of 1.33%.

CASHLESS SOCIETY Coming to India and Sweden! Financial Slavery to Central Banks!

Posted: 10 Jan 2017 09:30 AM PST

Digital currency is much easier for banks to manipulate. No more printing. The cashless society is not about ease of payment but really taking away "all our wealth"!!! This includes gold & silver & platinum which will also become illegal for any common middle-class or millionaire to...

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How the Yellen – Trump Relationship Could Play Out

Posted: 10 Jan 2017 08:25 AM PST

This post How the Yellen – Trump Relationship Could Play Out appeared first on Daily Reckoning.

A review of the Fed's toolkit consisting of interest rate hikes to fight inflation, and a litany of tools to fight deflation (helicopter money, financial repression, negative real rates, rate cuts, negative nominal rates, QE, forward guidance, currency wars, and gold), shows that the Fed will be fully engaged in manipulating the U.S. economy for an indefinite period of time.

Even the simple act of normalizing the Fed's balance sheet by allowing its Treasury securities to run-off at maturity without selling those securities would take at least five years.

The odds of the U.S. avoiding both a recession and inflation for five years are small and the Fed will intervene in markets again if either of those outcomes emerges. Fed intervention and manipulation of markets seems to be a permanent feature of the U.S. economy.

This raises the question of potential cooperation or conflict between the Fed and the White House, or more specifically between Janet Yellen and Donald Trump in the coming year. Initial indications are that this relationship is more likely to be one of conflict than cooperation. This is a danger sign for markets and investors.

The Yellen-Trump relationship got off to a rocky start during the presidential campaign when Trump proclaimed he would fire Yellen as Fed Chair if elected president. Of course, Trump has no power to fire Yellen but his disfavor with her policies was clear nonetheless.

Trump claimed that Yellen was keeping interest rates artificially low in order to pump up the stock market and help elect Hillary Clinton. Trump also called for the adoption of "rule-based" Fed policy making.

The leading rule is the Taylor Rule named after economist John Taylor of Stanford University. Current application of the Taylor Rule would result in a Fed funds rate of about 2.5% versus the current rate of 0.5%. The objective nature of the Taylor Rule lent credence to Trump's claim that Yellen was keeping rates low to help Democrats.

At her press conference on Wednesday, Dec. 14 following the FOMC meeting, Yellen struck back. She was implicitly critical of Trump's indicated fiscal policy proposals.

Yellen said she favors use of fiscal policy, basically tax cuts and increased government spending that expands productive capacity and productivity in general. This includes expenditures or tax credits for education, worker training and certain infrastructure.

Yellen implicitly disfavored Trump's across-the-board tax cuts that benefit the wealthy who have a low marginal propensity to consume without doing much to expand output. Yellen said she would reserve judgment on Trump's infrastructure spending plans until details are announced.

Yellen also threw down the gauntlet at Trump by indicating she might remain on the Board of Governors even if she is not reappointed as Chairman. This is possible because a Chair has a four-year term, while a governor has a 14-year term. Yellen's term as Chairman expires in January 2018, but her term as governor does not expire until 2028.

Even if Trump announces a replacement for Yellen as Chair this time next year, she could stay on the board and be a thorn in Trump's side for the remainder of Trump's term as president. That would also deprive Trump of the ability to fill her seat with a more friendly appointment.

This combination of Yellen's implicit willingness to remain on the board after 2018, and her disfavor of Trump's tax cuts for the rich sets up a confrontation between the Fed Chair and the president-elect that could prove unsettling to markets in the months ahead.

The clearest signal of a coming confrontation between Yellen and Trump was revealed in the "dot plots" of the Fed governors and regional reserve bank presidents shown in the charts below.

FOMC Chart 2017

FOMC 2018 Chart

The vertical axis is the level of the Fed funds rate. The horizontal axis is the date of the forecast. The green dots are the forecasts of individual Fed governors and regional presidents. The blue line is the median of these estimates.

The most striking feature of the separate forecasts for 2017 and 2018 is the upward bend in the curve as a result of the Dec. 14, 2016 FOMC meeting. For the first time in years, the forecast indicated an increase relative to prior meetings rather than a decrease.

In particular, the "dot plots" showed a median forecast of three interest rate hikes in 2017 versus the prior expectation of two hikes. Fed officials expect Trump's reflation policies to produce higher nominal growth, which requires higher nominal rates to avoid inflation.

The significance of this expectation cannot be overstated. It means the Fed has low tolerance for being behind the curve on inflation. It also means that the Fed will not accommodate fiscal policy with helicopter money. In short, the Fed expects to "lean in" against the Trump stimulus and to avoid letting the economy run hot.

The problem with the Fed's assessment is that the Trump policies may not be nearly as stimulative as the Fed expects. Congressional leaders such as Paul Ryan and Mitch McConnell have already said they expect Trump tax cuts to be "revenue neutral."

This means that for every cut in tax rates there must be an offsetting revenue increase from some other source, such as the elimination of tax deductions and credits, conversion of capital gains into ordinary income, repeal of Obamacare, or reductions in entitlements. Trump has already said entitlement cuts are off the table.

Whatever compromise is agreed will greatly reduce the stimulus effect from Trump's tax policies.

Likewise, Ryan and McConnell have spent years fighting President Obama on spending increases and have used resistance to increases in the U.S. debt ceiling to drive home their opposition.

It will be difficult for Republicans suddenly to become the party of big spending and higher debt ceilings without extensive criticism from the Democrats, the media, and parts of the Republican base. Increased spending is in the cards but it may be far smaller than both Trump and the markets expect.

In short, the Trump "stimulus" may turn out to be far smaller, and far less stimulative than markets currently anticipate. This gap between expected and actual stimulus will be apparent by the spring of 2017.


Jim Rickards
for The Daily Reckoning

The post How the Yellen – Trump Relationship Could Play Out appeared first on Daily Reckoning.

Gold Prices Are Being Hacked

Posted: 10 Jan 2017 08:05 AM PST

Major U.S. and international banks cheat their customers and rig markets. Revelations have been piling up since the 2008 financial crisis. Hundreds of billions have been paid in fines, penalties, and settlements. The fraud, price manipulation, lying, and theft – once considered conspiracy theories – are now incontrovertible conspiracy facts.

Gold: The Rate Hike Rally Continues

Posted: 10 Jan 2017 08:01 AM PST

Graceland Update

Gold: The Rate Hike Rally Continues

Posted: 10 Jan 2017 07:49 AM PST

The last two bear markets in US stocks were deflation-oriented. The next one is likely to be inflation-themed, and could feature the US dollar and gold soaring higher at the same time. Chinese producer price inflation is suddenly growing at the fastest pace in five years, and it will soon be exported to America.

FX 'cartel' traders said to face U.S. rigging charges

Posted: 10 Jan 2017 04:52 AM PST

By David McLaughlin, Suzi Ring, and Tom Schoenberg
Bloomberg News
Tuesday, January 10, 2017

Prosecutors are poised to charge the currency traders at the heart of one of the biggest U.S. market-rigging investigations, according to people familiar with the matter.

The imminent criminal charges are against members of "The Cartel" chat group, the people said. These traders used instant messages to coordinate the rigging of foreign-exchange benchmarks by sharing confidential customer information, prosecutors have said in antitrust cases that led to guilty pleas by five banks in 2015.

The senior dealers who participated in The Cartel were Richard Usher, formerly of JPMorgan Chase & Co.; Rohan Ramchandani, formerly of Citigroup Inc.; and Chris Ashton, formerly global head of spot trading at Barclays Plc. Another member, Matt Gardiner, formerly of UBS Group AG, has been helping prosecutors build cases against the traders, people familiar with the matter have told Bloomberg News. ...

... For the remainder of the report:


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Gold Prices Are Being Hacked

Posted: 10 Jan 2017 03:46 AM PST

By Clint Siegner : Major U.S. and international banks cheat their customers and rig markets. Revelations have been piling up since the 2008 financial crisis. Hundreds of billions have been paid in fines, penalties, and settlements. The fraud, price manipulation, lying, and theft – once considered conspiracy theories – are now incontrovertible conspiracy facts.

Gold Price In GBP Rises 4% On Brexit and UK Economy Risks

Posted: 10 Jan 2017 03:40 AM PST

– Pound fell 2% against gold yesterday after Theresa May created Brexit concerns  – May’s ‘Hard Brexit’ denial does not calm markets growing fears – Investors concerned about lack of government strategy and uncertainty

Frank Holmes: Gold Rally Extremely Likely in January and February

Posted: 09 Jan 2017 08:16 AM PST

Mike Gleason (Money Metals Exchange): We are fortunate today to be joined by Frank Holmes, CEO and Chief Investment Officer at U.S. Global Investors. Just recently Mr. Holmes received another award from the Mining Journal and was named America's Best Fund Manager for 2016, one of many awards he's received now in the mining industry for his fantastic track record. He is also the co-author of the book The Gold Watcher: Demystifying Gold Investing and is a regular guest on CNBC, Bloomberg, Fox Business, as well as right here on the Money Metals Podcast.

Gold Stocks - How Bull Markets Work

Posted: 09 Jan 2017 08:05 AM PST

Gold and Silver Index Folks, prepare to get schooled on how bull markets work.

A Time for Caution, Though Gold Stocks Look Like Good Buys

Posted: 09 Jan 2017 12:00 AM PST

While fund manager Adrian Day believes investors should tread cautiously in the market right now, he is upbeat on some gold stocks.

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