Sunday, February 12, 2017

Gold World News Flash

Gold World News Flash


Gold is Pouring Into ETFs World-Wide This Month

Posted: 12 Feb 2017 08:03 AM PST

The gold price was under a bit of selling pressure in the first two hours and change after trading began at 6:00 p.m. EST in New York on Thursday evening. Then it traded pretty flat until about an hour before the London open. It then got knocked down to its low tick of the day. It rallied a titch into the COMEX open, but then was sold down until shortly after the equity markets opened in New York. The rally that developed at that point had a lot more legs to it, but it was more than obvious that it was running into 'resistance' from "all the usual suspects". Most of the gains that mattered were in by around 11:30 a.m. EST — and it didn't do much after that.

Russia notes that German gold in U.S. was just a mirage

Posted: 12 Feb 2017 07:09 AM PST

Today's report from Sputnik News, a division of the Russian government's international information agency, shows just how closely that government is watching not just the gold market but also, it seems, GATA's work. That is, the report addresses suspicions raised by GATA's friends in Germany's "Repatriate Our Gold" movement and reported almost exclusively by GATA that Germany's gold reserves vaulted with the United States were never more than gold credits until the Bundesbank sought to repatriate the gold in recent years.

THE GREAT PRECIOUS METALS MARKET DISCONNECT: A Ticking Time Bomb

Posted: 12 Feb 2017 07:07 AM PST

The Great Precious Metals Market Disconnect that took place four years ago is now a ticking TIME BOMB. While the Fed and Central Banks have been relatively successful in propping up the broader stock, bond and real estate markets, time is not on their side. The more the highly inflated markets continue higher, the more breath-taking will be the inevitable collapse.

Gold And Gold Stocks Hit Upside Targets. Now What?

Posted: 12 Feb 2017 07:05 AM PST

The precious metals sector has reached the upside targets we've written about since the start of 2017. Gold has touched almost $1250/oz ($1246/oz high) while GDXJ exceeded our $41 target and GDX nearly reached $26. The glass half empty case is the sector is now at strong resistance levels and any immediate upside will be difficult to sustain. On the other hand, the gold stocks are showing the internal (strong advance/decline line) and relative strength (leadership against Gold) that bodes for additional gains.

Supply, Demand, Propaganda And Manipulation

Posted: 12 Feb 2017 07:02 AM PST

I have lots to get to today, culminating in some good old-fashioned financial analysis. You know, what I was trained to do in college, the CFA program, and 16 years working on Wall Street – until economic collapse and unprecedented government "intervention" all but destroyed my vocation; forcing me into a "second career" in the mining business, which the government destroyed as well; and subsequently, my third – and hopefully, final – career in the bullion industry. Which despite relentless, draconian efforts, the government cannot, and will not, be able to destroy.

Good, But Not Great

Posted: 11 Feb 2017 11:04 PM PST

Gold did close the week out with a 1.24% gain. I'm not sure if we're moving lower near $1,200 to put in a lower high, which would be another notch in the trend is up bedpost, or of we will see a longer basing period. Miners are acting weaker for the most part so it's really quite a mixed message in the metals for now. There are many place to find easy money right now and I don't see the precious metals as that place, for now at least.

Jim Rogers: "We're About To Have The Worst Economic Problems Of A Lifetime, A Lot Of People Will Disappear"

Posted: 11 Feb 2017 06:50 PM PST

"Get prepared," warns billionaire commodity guru Jim Rogers, "because we're going to have the worst economic problems in your lifetime and a lot of people are going to disappear." In this wide-ranging interview with MacroVoices' Erik Townsend, the investing legend discusses everything from whether Russia is being scapegoated ("yes, ask Victoria Nuland"), the war against cash ("governments love it... they want to control everything"), to his views on gold and the demise of freedom.

Full podcast below:

Key Excerpts...

Are Russians the bad guys?

Well I do know that during the last administration, Mr. Obama's administration as you probably remember we started, we tried to pull of an illegal coup in Ukraine, we got caught at it, what's her name, Victoria Nuland, whatever the woman’ name the State Department they have there several pieces of evidence where we know she tried to instigate an illegal coup then of course the Russians outsmarted us and so the State Department started blaming it on the Russians and the hype against the Russians has gotten bigger and bigger ever since after we started-- or tried to start, tried to instigate the illegal coup Crimea and Ukraine.

 

So yes we are certainly at fault to some extent and obviously you then, when you're caught you've got to keep the rhetoric up and keep throwing more and more accusations and so the State Department has done that.

 

I know that before the illegal coup Obama, Bush everybody was trying to be friends with the Russians rightly so, cold war had ended long ago, the Russians wanted to be friends with America. We didn’t need NATO anymore. Who needed the Cold War etc. all the money we were spending on some of these arms manufactures and soldiers so until the illegal coup took place we were all trying to be great friends you remember George Bush said I looked him in the eye and he's a man I can admire and work with etc.

 

So now of course the Democrats especially since they lost the election are trying to blame it on the Russians. It's unfathomable to me how the Russians could have determined the outcome of the elections. Maybe they planted a story a two but so what? It's inconceivable to me that the Russians could influence much less determine the election.

 

I think if we start having investigations of the illegal voting I'm afraid we're going to find more for the Democrats than for the Republicans places big cities in America won't name names but so far the few investigations that have taken place we find that the voting irregularities are in big cities which are Democratic strongholds.

On the Greater Depression...

...get prepared because we're going to have the worst economic problems we've had in your lifetime or my lifetime and when that happens a lot of people are going to disappear.

In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they've been through everything and yet they disappear.

So the next time around it's going to be worse than anything we've seen and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear. I hope you get very worried.

when you start having bear markets as you I’m sure well know one bad thing happens and another bad thing happens and these things snowball just like in bull markets good news comes out then more good news comes out the next thing you know you're five or six or seven years into a bull market.

Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven't even gotten to war. I haven't even gotten to trade war or anything like that but you know things do go wrong.

On Trump and the possibility of trade wars...and real wars

Mr. Trump has also said he's going to have trade war with China, Mexico, Japan, Korea a few other people that he has named. He swore that on his first day in office he would impose 45% tariffs against China. He's been there three weeks, two or three weeks and he hasn't done it yet but he still got it in his head I'm sure or maybe he's just another politician like all the rest of them. He says one thing and he doesn't mean it at all but he does have at least three people in high levels in his group who are very, very keen to have trade wars with China and other people.

 

If he does that Eric, it's all over. I mean history is very clear that trade wars always lead to problems, often to disaster, sometimes even to real war, a shooting war. So I don't know, I'm not sure Mr. Trump knows. He said so many things and many of the things are contradictory. Now if he's not going to have trade wars with various people then chances are for a while happy days are here...

 

[The dollar is] going to go too high, may turn into a bubble, at which point I hope I'm smart enough to sell it because at some point the market forces are going to cause the dollar to come back down because people are going to realize, oh my gosh, this is causing a lot of turmoil, economic problems in the world and it's damaging the American economy. At that point the smart guys will get out. I hope I'm one of them.

On governments continued war against cash...

Governments are always looking out for themselves first and it's the same old thing you know Eric this has been going on for hundreds of years. The Indians recently did the same thing they withdrew 86% percent of the currency in circulation and they have now made it illegal to spend more than, I think it's about $4000 in any cash transaction. In France you cannot use more than, I think it's a €1000.

 

Many countries are already doing this. Some states in the U.S. you cannot make cash transactions above a certain amount. Governments love it. Then they can control you. If you want to go and buy a cup of coffee they know how many you drink, where you buy them etc. if they can all put it into electronic formats and they will the world is all going electronic. My children will probably never go to a bank when they're adults, maybe never go to a post office maybe even never to a doctor or rarely to a doctor when they're adults.

 

So the Internet and the computers changing everything that we know, money can certainly be easily converted to computers not today because there are still, some people who don't have computers and the system is not ready it but it can be done and when it's done the governments are going to be very, very happy they going to say they're doing it for our own good Eric, this is not them, this is for our good. That they're doing this, but it’s coming and it's going to be a whole different world in which we live. Probably we are not going to have as many freedoms as we have now even though we are already losing our freedoms at a significant pace.

On the demise of freedom...

...history shows that people always would like a little more safety and a willing to “give up some things for more safety and security.” Benjamin Franklin said well anybody who would give up some freedoms for security is going to wind up with neither security nor freedom and they deserve to lose both and of course that's the way it is.

 

I’m not the first to realize that people who are rising to become dictators start taking away freedoms first in Germany they took away the guns, they wouldn’t let people have guns in Germany and lots of places have done that or things like that.

 

In America now you and I probably remember when we were kids, you had to have a search warrant, now they can just break your door down if they have what they consider enough good reasons, they don't even have to go to the court and get a search warrant anymore.

 

So it's already happening and if you said to somebody that you know they could break your door down they say they’re not going to break my door down I’m not a terrorist or a drug dealer, well that's how it all starts people say it's OK but then the next thing you know they're breaking your door down too.

 

So it's already happening do I like it? No I don't like it but I'm not the first-- what was his name Goebbels the German who said if you say something to people enough times they believe it no matter how absurd it is and you and I have certainly seen it in the news in America you say something enough times people believe it and it becomes politically correct and then you can’t even say something that's not politically correct in America any more.

Full Transcript available here.

Ed Steer's Gold & Silver Daily letter for Saturday posted at GoldSeek

Posted: 11 Feb 2017 06:42 PM PST

9:45p ET Saturday, February 11, 2017

Dear Friend of GATA and Gold:

The Saturday edition of Ed Steer's Gold & Silver Daily letter, published by GATA Board of Directors member Ed Steer, is headlined "Gold Is Pouring into ETFs Worldwide This Month" and has been posted in the clear at GoldSeek here:

http://news.goldseek.com/GoldSeek/1486915380.php

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org



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What Form Will The Great Confiscation Take - And How Can We Prepare?

Posted: 11 Feb 2017 06:20 PM PST

Submitted by John Rubino via DollarCollapse.com,

For what seems like decades, people have been warning that the next time some over-leveraged corner of the financial system implodes, bank and brokerage accounts will be either confiscated by desperate governments or lost during the resulting chaos.

Here, from 2012, is a representative warning from gold mining eminence grise Jim Sinclair:

My Dear Extended Family,

 

In bankruptcy of your bank, broker or fund, you can find your assets in the majority of cases are backing the liabilities of the entity in front of yourselves. This is why you must act to protect yourself.

 

No one in this financial world is going to do it for you, and few will have the courage to recommend you escape Street Name. You can wake up one day and find out that your investments are gone.

 

The insurance programs will function as long as the incidents of bankruptcy are isolated events.

 

In a systemic collapse the insurance funds are not capitalized to meet the potential obligations. The guarantor you are relying on will have to be bailed out.

 

For securities there are only three ways to hold them:

 

1. Street name.
2. Direct registration.
3. Certificate form.

 

Anyone advising you to stay with the Street Name option is a babbling idiot not interested at all in your welfare.

 

In street name the inferred ownership is the broker or bank, not you. In Direct Registrationand Certificate form, the distinct ownership is you.

 

In 99.9% of the cases of retirement accounts the answer is you are in Street Name.

 

How are your securities held? Do you even know? I dare you to ask!

 

Do you know what your broker’s capital ratio is? Find out as that number is the order of magnitude at which your broker is gambling on with primarily your money. I dare you to ask.

 

This time around those investors that are too lazy to consider protecting themselves will be demolished.

 

How would you like your gold shares at $3500 gold, outperforming gold, and one morning you wake up to having nothing anymore? You now are behind the back burner in a bankruptcy situation with any fiduciary.

 

The system and their minions will do everything to keep you trapped in Street Name. Articles will be published trying to put you back to sleep on this issue.

 

Wake up, please.

The fact that this mass confiscation hasn’t yet happened doesn’t mean it won’t, says Jim Rickards, whose previous bestsellers Currency Wars and The Death of Money were already pretty apocalyptic. He believes that a coordinated closure/restructuring/confiscation of the banking/brokerage industry is imminent. Here’s an excerpt from a recent column:

In that interim period between the crisis and the time the IMF can react, central banks will be paralyzed. They’re likely going to lock down the system.

 

When I say lock down, they’ll start with money market funds. I can’t think of a greater misnomer than the money market funds. People think that money market funds are money. They’re not money; they’re mutual funds regulated by the SEC. People think they can just call up their broker, sell to the money market fund and the money’s in my bank the next day.

 

That will not be true in this crisis because everyone will be doing the same thing. That is what happened in 2008 when Ben Bernanke and Hank Paulson went to the White House and said to the President that the system’s melting down and he must act.

 

That was such a shock then, that when it happens again they’re not going to give you your money. They’re going to lock it down. The problem is that when it is spreading you can’t just lock down part of the system.

 

If you lock down money market funds, people are just going to take their money out of the banks. Then you’re going to have to close the banks. Then people are going to sell their stocks, then you’re going to have to close the stock market. Every time you shut one path to liquidity, people are going to turn to another path.

 

It happened in part in 1914, 1931, 1933 and to gold in 1971. There’s no precedent for a total freeze but we’re getting closer to that point.

 

The question is, how do you protect yourself against that? There’s only so much you can do.

 

I don’t recommend running down and pulling all your money out of the bank. I would not have more than the insured amount, which in the U.S. is $250,000. You can spread it between your selected banks so that each is backed and insured up to the limit.

Rickard’s solution is right out of the stacker playbook:

In the world described, the dollar price of gold will approach the $10,000-level if not much higher. But when all of this begins to play out, you’re not going to be able to get gold.

 

Because of this, gold and silver need to be in physical form, in safe storage, and a non-bank. Putting it in a safety deposit box in a bank is troublesome because by the time you want it the most, that will be when the banks are going to be closed.

Charles Hugh Smith offers some other possible responses:

So what’s difficult to expropriate? It’s impossible to expropriate one’s skills, experience and social capital. These are intangible forms of capital and so they cannot be confiscated like gold, currency, land, etc.

 

Land and homes are difficult to expropriate for two reasons: private property is the backbone of capitalism and democracy, and the state confiscating private property would very likely spark a political insurrection that would diminish or threaten the power and wealth of the privileged Elites.

 

Secondly, it’s very costly for the state to maintain the productive output of real property it has confiscated. Guards must be posted, sabotage repaired, and the immense difficulties of coercing a rebellious populace to continue working what they once owned for the benefit of the state and its privileged Elites must be solved and paid for.

 

The state can expropriate farms, orchards and workshops for back taxes (or some similar extra-legal methodology), but how do you force people to work these properties productively?

 

As a general rule, whatever the super-wealthy own will be protected from expropriation. Private real property is the foundation of the Elites’ wealth, and while the land of debt-serfs may well be confiscated for back taxes (the wealthy will buy exemptions from rising taxes), those who own land and buildings free and clear constitute a political force to be reckoned with.

 

The state will also have difficulty confiscating assets that are outside its reach.This explains the popularity of owning assets in other nations, and the debate over cryptocurrencies: will states be able to confiscate all cryptocurrencies at will, or is that technically unfeasible?

 

The main takeaway is this: your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Land and real property you own free and clear (no debt) is likely to remain in your possession, as long as you can pay soaring taxes/junk fees during the crisis phase. Your financial assets held in centrally controlled institutions will not make it through unscathed; they are simply too easy for central authorities to expropriate.

It’s easy, as the world’s zombie economies just keep shuffling along, to start assuming that the current system will endure forever. That would be wrong, and almost certainly the above warnings will someday seem prescient. All the more reason to forget about timing, and keep buying real assets.

There Are 66,719 Empty Mansions In Vancouver

Posted: 11 Feb 2017 05:55 PM PST

One year ago, when we first started discussing the Vancouver housing bubble, which as we first speculated - and was later confirmed - was the result of Chinese oligarch money-launderers parking "hot cash" in this offshore housing market (at least until a 15% property tax on foreign purchases made Seattle the new Vancouver), we said that Vancouver houses had become the de facto new Swiss bank account, and because of that the houses - once purchased - would remain a highly overprized, if vacant tribute to China's soaring capital outflows.

Now, courtesy of data by urban planner Andy Yan of Simon Fraser University's City Program, this has been confirmed because according to the latest census numbers, as of 2016 there were 25,502 unoccupied or empty housing units in the City of Vancouver. Expanding to include the entire metro area, Yan found that vacant or temporarily occupied dwellings have more than doubled since 2001 to 66,719 last year as neighborhoods have hollowed out.


A home sits empty, and awaiting demolition, at the corner of Parker Street

and Victoria Drive in Vancouver on Wednesday

Yan compared census data for Vancouver over several decades to see how the percentage of "unoccupied" units or ones "occupied solely by foreign residents and/or temporary present residents on Census Day" has doubled during that time the Vancouver Sun reported. In 1986, it was 4%. By 2016, it had doubled to 8.2%.

"Exact definitions and measures have changed slightly over 30 years and patterns should be interpreted as directional," Yan writes in a report released Wednesday. 

The number of Vancouver's prized, if vacant, mansions far outstrips other municipalities with 25,502 units that are either unoccupied or owned by temporary or foreign residents.

Yan said most of these were concentrated in three areas: Coal Harbour, Marine Gateway and Joyce-Collingwood. Surrey came in second at 11,195, Burnaby at 5,829 and Richmond at 4,021. The focus has clearly been on the most expensive neighborhoods: the number of unoccupied units increased 25% in Richmond between the 2011 and 2016 census and by 28 per cent in Burnaby.

To take advantage of this multi-million mansion ghost town, in November 2016 the Vancouver city council voted to approve a tax on empty homes, the first in Canada. Based on self-reporting owners, the tax is a one-per-cent charge on homes that are not principal residences or are not rented out for at least six months of the year. The goal was to improve Vancouver's tight rental vacancy rate of 0.6 per cent by encouraging owners of thousands of empty units to offer them up for renting.

Last Thursday, Vancouver Mayor Gregor Robertson said that "it's unacceptable for so much housing to be treated as a commodity," even if, ironically, it was the government's own actions which allowed the city's houses to become an offshore piggybank for wealthy Chinese. "Housing is for homes first, and as investments second. Vancouver will continue to do all it can to maintain and protect affordable homes, and pursue all tools available to ensure the best use of all our housing."

As Bloomberg adds, concerns are growing that the Pacific Coast city is turning into a playground for the rich as luxury real estate squeezes industry and prices out the middle class. The provincial economy leads Canadian growth and job creation, yet its public schools are suffering from declining enrollment and households earn below the national median. Businesses using Canada's largest port struggle to carve out space, while low-wage service sector jobs cater to wealthy retirees and tourists.

While policymakers and real estate experts are calling for more housing supply and greater density near the city center to boost productivity and temper prices, the latest census figures show the opposite may be happening.

Meanwhile, as a result of the influx of Chinese money, the number of residents on Vancouver's west side, long favored by families and an easy commute to downtown, has fallen 3% since 2001, in contrast to 5% growth in population across the whole city, Yan said. The reason: median single-family house can cost as much as C$4.9 million in that area - about 65 times Vancouver's median household income. And while the local population can no longer afford houses in the area, last year David Eby, a member of British Columbia's legislative assembly, identified C$57.1 million worth of residences bought by students reporting no income in his west-side district of Point Grey.

Such neighborhoods "have become just luxury items like Ferraris," said Yan. "They're not affordable for most local incomes."

The bad news for wealthy Americans, if only in Seattle for the time being, is that they will be next to feel the wrath of China's billionaire "students" gobbling up any and every multi-million dollar house, unless of course the PBOC is successful in halting China's unprecedented capital outflow.

It also remains unclear if home sellers in the US Pacific coast accept bitcoin as payment.

Russia notes that German gold in U.S. was just a mirage

Posted: 11 Feb 2017 12:18 PM PST

3:23p ET Saturday, February 11, 2017

Dear Friend of GATA and Gold:

Today's report from Sputnik News, a division of the Russian government's international information agency, shows just how closely that government is watching not just the gold market but also, it seems, GATA's work. That is, the report addresses suspicions raised by GATA's friends in Germany's "Repatriate Our Gold" movement and reported almost exclusively by GATA that Germany's gold reserves vaulted with the United States were never more than gold credits until the Bundesbank sought to repatriate the gold in recent years.

Russia's special interest in gold and GATA's work appears to date from June 2004, when the deputy chairman of Russia's central bank, Oleg Mozhaiskov, spoke to the summer meeting of the London Bullion Market Association at the Baltschug Kempinsky Hotel in Moscow and used only four English words in his address: "Gold Anti-Trust Action Committee":

http://www.gata.org/node/4235

While surreptitious intervention in the gold market remains a prohibited subject in the government-controlled Western financial news media, it is a subject of great interest in the government-controlled Russian news media, and GATA will continue its efforts to make the issue of interest everywhere.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

* * *

Germany Gets the 'Wrong Suitcase' While Repatriating Its Gold Reserves from U.S.

From Sputnik News
(Rossiya Segodnya, Moscow)
Saturday, February 11, 2017

https://sputniknews.com/business/201702111050571970-us-germany-gold-repa...

Germany has completed repatriation of 300 tons of gold bars from the United States. According to Russian economist Vladimir Katasonov, initially the American side was not ready to give the bullion back but finally came up with a plan.

Germany's central bank has established the return of its gold reserves to domestic vaults by the end of 2017, three years ahead of schedule.

Earlier this week the Associated Press reported that the Bundesbank had completed relocation of 300 tons of gold from the Federal Reserve Bank of New York.

... Dispatch continues below...



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"The transfers were carried out without any disruptions or irregularities," Carl-Ludwig Thiele, a member of the Bundesbank's Executive Board, was quoted as saying by Bloomberg.

According to the bank, 111 tons of gold were repatriated from the US in 2013. It also returned 105 tons from Paris.

According to data from Marketwatch, by the end of 2016 47.9 percent of Germany's gold reserves had already been stashed in vaults in Frankfurt, with 36.6 percent remaining in New York, 12.8 percent at the Bank of England in London, and 2.7 percent at the Banque de France in Paris.

In January 2013 Berlin announced that it was planning to store half of Germany's 3,378 tons of gold reserves in its own vaults, with the other half remaining in New York and London. According to the original plan, the Bundesbank would transfer 300 tons of the precious metal from New York and 374 tons from Paris to a facility in Frankfurt by 2020.

Katasonov, a professor at the International Finance Department at the Moscow State Institute of International Relations, suggested that the United States disposed of Germany's gold bars at its own discretion.

"There are a lot of signs that the gold was not physically present in the New York vaults when Germany called it back. Of course, the U.S. began to return it to Germany but there is one interesting detail. When you leave your suitcase in the luggage storage, you expect to get back the same suitcase. But Germany took the wrong 'suitcase,'" Katasonov told Radio Sputnik.

According to the economist, the gold bars that Bundesbank repatriated have different labels. He suggested that the U.S. might have replaced the German bullion with different gold bars bought from the market.

Katasonov explained that the U.S. managed to return the yellow metal thanks to favorable conditions in the precious metal market.

"I think there was a favorable environment in the market and the Americans managed to quickly buy the gold and give it back to Germany. They were not ready for this, but finally managed this replacement," he concluded.

* * *

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Uptrend in Silver (XAG/USD) Continues to Strengthen

Posted: 11 Feb 2017 08:58 AM PST

Spot silver (XAG/USD) closed strong last week (17.93), near the high of the week (18.00), as it continues to push up against the top trend line of a relatively well constructed ascending channel. It has been in a rising trend channel for the past seven weeks, ever since hitting a bottom at 15.64 in December. As of last week’s high, silver was up 15.1% off that December low.

What Form Will The Great Confiscation Take — And How Can We Prepare?

Posted: 11 Feb 2017 08:52 AM PST

For what seems like decades, people have been warning that the next time some over-leveraged corner of the financial system implodes, bank and brokerage accounts will be either confiscated by desperate governments or lost during the resulting chaos. Here, from 2012, is a representative warning from gold mining eminence grise Jim Sinclair: My Dear Extended […]

The post What Form Will The Great Confiscation Take — And How Can We Prepare? appeared first on DollarCollapse.com.

​The New Retirement – Big Pill To Swallow!

Posted: 11 Feb 2017 07:48 AM PST

President Donald J. Trump was elected the 45th President of the United States to preside over the largest debt collapse ever in U.S. history.  During this four-year term, he and his administration will be most feared and hated president there ever was. The odds are stacked high against his ideology of “Making America Great Again” during his term in office.

Which Assets Are Most Likely to Survive the Inevitable “System Reset”?

Posted: 11 Feb 2017 07:00 AM PST

This post Which Assets Are Most Likely to Survive the Inevitable “System Reset”? appeared first on Daily Reckoning.

Your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole. Your financial assets held in centrally controlled institutions will not.

A reader of mine recently asked a question every American household should be asking: which assets are most likely to survive the “system re-set” that is now inevitable?

It’s a question of great import because not all assets are equal in terms of survivability in crisis, when the rules change without advance notice.

The reality is that America is now dependent on multiple asset bubbles never popping — something history suggests is not possible.

It isn’t just a financial re-set that’s inevitable — it’s a political and social re-set as well.

Several key dynamics are driving a system reset. Earned income (wages) as a share of GDP has been falling for decades: this means labor is receiving a diminishing share of economic growth. Since costs and debt continue rising while incomes are declining or stagnating, this asymmetry eventually leads to insolvency.

The “fix” for insolvency has been higher debt and debt-based spending—in essence, borrowing from future income to fund more consumption today. But each unit of new debt is generating less economic activity/growth. This is called diminishing returns: eventually the costs of servicing the additional debt exceed the increasingly trivial gains.

What happens when the bubbles pop, despite massive central bank/state interventions?

The entire socio-political/financial system goes through a “system reset” in which all the fantasy-based valuations, political denials, false promises and fraudulent claims collapse in a heap.

In a crisis, the privileged Elites will change the rules in a desperate attempt to expropriate the income and wealth of the bottom 99.5% to preserve their own power.

The trick is to do so in ways that won’t spark an immediate political insurrection.

We can better understand their policy choices by asking: What’s easy to expropriate, what’s difficult to expropriate?

Those assets that are easy to expropriate will be expropriated first. Those that are difficult to expropriate are far less likely to be grabbed, due to the high costs of expropriation and the high risks of sparking a political insurrection.

History suggests the privileged Elites will pursue two basic strategies to expropriate the income and wealth of non-elites:

  1. They will expropriate what is easy to expropriate: financial assets in centralized institutions the state controls: banks, brokerage accounts, insurance policies, etc.
  1. They will use the time-honored “stealth expropriation” methods: inflation and taxes.

Any “money” held in a centrally controlled institution can be expropriated overnight. The rules will change without warning, so there will be no opportunity to escape the system.

Direct expropriation takes many forms. Your funds could be “bailed-in” (transferred to the bank). Large currency bills could be declared worthless. IRA and 401K accounts could be transferred into government bonds, to “protect the account owners from risky investments.” (Naturally, any expropriation will be presented as “for your own good.”)

Or a new currency could be issued that strips away 90% of the purchasing power of the old currency. It could be a New Dollar, an SDR global currency, or a state-issued cryptocurrency. The point is to strip away 90% of the wealth held in the old currency.

Indirect “stealth” expropriation has several forms: slow currency devaluation, also known as inflation, or higher taxes and junk fees (not called taxes, but you receive no additional value for the higher fees).

The end result of these policies is you may receive the $2,000 monthly pension you were promised, but after inflation, currency devaluation and taxes, your real purchasing power is $100 in today’s currency.

So what’s difficult to expropriate?

I present some answers in my books An Unconventional Guide to Investing in Troubled Times and Get a Job, Build a Real Career and Defy a Bewildering Economy.

It’s impossible to expropriate one’s skills, experience and social capital. These are intangible forms of capital and so they cannot be confiscated like gold, currency, land, etc.

Land and homes are difficult to expropriate for two reasons: private property is the backbone of capitalism and democracy, and the state confiscating private property would very likely spark a political insurrection that would diminish or threaten the power and wealth of the privileged Elites.

Secondly, it’s very costly for the state to maintain the productive output of real property it has confiscated. Guards must be posted, sabotage repaired, and the immense difficulties of coercing a rebellious populace to continue working what they once owned for the benefit of the state and its privileged Elites must be solved and paid for.

The state can expropriate farms, orchards and workshops for back taxes (or some similar extra-legal methodology), but how do you force people to work these properties productively?

As a general rule, whatever the super-wealthy own will be protected from expropriation. Private real property is the foundation of the Elites’ wealth, and while the land of debt-serfs may well be confiscated for back taxes (the wealthy will buy exemptions from rising taxes), those who own land and buildings free and clear constitute a political force to be reckoned with.

But there’s one other asset the state and its ruling Elites cannot expropriate: community.

The state will also have difficulty confiscating assets that are outside its reach.This explains the popularity of owning assets in other nations, and the debate over cryptocurrencies: will states be able to confiscate all cryptocurrencies at will, or is that technically unfeasible?

The main takeaway is this: your skills, knowledge and social capital will emerge unscathed on the other side of the re-set wormhole.

Land and real property you own free and clear (no debt) is likely to remain in your possession, as long as you can pay soaring taxes/junk fees during the crisis phase.

Your financial assets held in centrally controlled institutions will not make it through unscathed; they are simply too easy for central authorities to expropriate.

Regards,

Charles Hugh Smith
for The Daily Reckoning

The post Which Assets Are Most Likely to Survive the Inevitable “System Reset”? appeared first on Daily Reckoning.

Breaking News And Best Of The Web

Posted: 11 Feb 2017 01:37 AM PST

US stocks at all-time highs on Trump tax-reform promise, gold and silver near multi-week highs. Trump immigration plan challenged in court, loses. Debate over Putin intensifies. French election uncertainty rocks euro bonds  Best Of The Web Bubbles, money and the VIX – Credit Bubble Bulletin Are you prepared for "unencumbered" interest rate policy? – Daily […]

The post Breaking News And Best Of The Web appeared first on DollarCollapse.com.

Top Ten Videos — February 11

Posted: 10 Feb 2017 04:01 PM PST

Max and Stacy in the middle of the road. Peter Schiff’s new beard and apocalyptic predictions. Bernie Sanders weighs in on authoritarianism. And of course the coming gold/silver boom.                    

The post Top Ten Videos — February 11 appeared first on DollarCollapse.com.

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