Friday, February 3, 2017

Gold World News Flash

Gold World News Flash

China Suffers Largest Capital Outflow On Record In 2016 (And It's About To Get Worse)

Posted: 02 Feb 2017 11:45 PM PST

With the Yuan suffering its largest annual decline ever and avenues for capital flight surging in value (Vancouver homes and virtual currencies), it is perhaps not entirely shocking that, according to the Institute of International Finance, capital outflows from China surged last year to a record $725 billion. Furthermore, IIF warns, outflows could accelerate further if U.S. firms face political pressure to repatriate profits.

As Reuters reports, the Washington DC-based group, one of the most authoritative trackers of capital movements in and out of the developing world, estimates net Chinese outflows last year were $50 billion higher than in 2015, dwarfing the inflows other emerging economies received.

Net outflows in 2014 had been just $160 billion from China, which has seen capital flight pick up in the past couple of years from local businesses and households, partly on expectations that the yuan would weaken against the dollar.


The outflows, which caused a $320 billion decline last year in Chinese foreign exchange reserves, have prompted authorities to strengthen capital curbs.


The yuan fell 6.5 percent against the dollar last year, the biggest ever yearly fall, and with capital controls (or suggestions of them) being implemented almost weekly (here, here, and here most recently), it is perhaps no surprise than Bitcoin (one escape valve) has been resurgent in the last few days (amid Golden Week holiday celebrations).

As Reuters continues, The IIF estimated China outflows at a heavy $95 billion in December and noted that a rise in protectionism, especially in the United States after the election of President Donald Trump, could exacerbate the situation.

Trump and his top trade adviser this week criticised Germany, Japan and China, saying the three key U.S. trading partners were devaluing their currencies to the detriment of U.S. companies and consumers.


"If U.S.-based multinational corporates start to repatriate their profits from China, outflows could worsen further in 2017," the IIF said, referring to pledges of tax breaks to U.S. firms that bring overseas profits back to the country.


But excluding China, the picture for emerging markets appeared brighter, the IIF said, noting net capital inflows last year had amounted to $192 billion, versus $123 billion in 2015.


In January, inflows into the stocks and bonds of a group of big emerging economies stood at a five-month high of $12.3 billion, the group added.


"January was a much better month for emerging markets but it is too early to tell if this reflects hope for a better outlook – or this is just the eye of the storm," the IIF note added.

The capital exodus from China, however, dominates the picture - the IIF last November forecast the developing world would suffer net capital outflows of $206 billion in 2017, with the vast majority accounted for by China.

The US Dollar is About to Collapse

Posted: 02 Feb 2017 10:30 PM PST

The $USD is about to collapse. This is not fear mongering, nor is it just a bold statement. The $USD has peaked and is about to breakdown in a BIG way. See for yourself, the greenback has taken out critical support. The spike higher that occurred starting election night is looking more and more like a bullish headfake.

Economic Depression, Stagflation, Stag-Depress-Flation

Posted: 02 Feb 2017 10:16 PM PST

The United States suffered through a deflationary depression in the 1930s. Stock prices crashed, currency in circulation declined, commodity and real estate prices fell hard and human misery prevailed. President Roosevelt revalued gold from $20.67 to $35.00 per ounce in 1933 – a substantial devaluation of the dollar. Make-work and government spending programs were implemented. War followed the depression.

Irreversible Damage - The U.S. Economy Cannot Be Repaired

Posted: 02 Feb 2017 09:00 PM PST

Submitted by Brandon Smith via,

As I outlined in my article 'The False Economic Narrative Will Die In 2017', the mainstream media has been carefully crafting the propaganda meme that the Trump administration is inheriting a global economy in “ascension,” when in fact, the opposite is true. Trump enters office at a time of longstanding decline and will likely witness severe and accelerated decline over the course of the next year. The signs are already present, and this fits exactly with the basis for my prediction of the Trump election win - conservative movements are indeed being set up as scapegoats for a global economic crisis that international financiers actually created.

Plus, it doesn’t help that Trump keeps boasting about the farcical Dow hitting record highs after his entry into the White House. Talk about the perfect setup…

With the speed at which Trump is issuing executive orders, my concern is that people’s heads will be spinning so fast they will start to assume an appearance of economic progress. Here is the issue — some problems simply cannot be fixed, at least not in a top down fashion. Some disasters cannot be prevented. Sometimes, a crisis has to run its course before a nation or society or economy can return to stability. This is invariably true of the underlying crisis within the U.S. economy.

It is imperative that liberty activists and conservatives avoid false hope in fiscal recovery and remain vigilant and prepared for a breakdown within the system. Despite the sudden political sea change with Trump and the Republican party in majority control of the D.C. apparatus, there is nothing that can be done through government to ease fiscal tensions at this time. Here are some of the primary reasons why:

Government Does Not Create Wealth

Government is a wealth-devouring machine. The bigger the government, the more adept it is at snatching capital and misallocating it. Such a system is inherently unequipped to repair an economy in a stagflationary spiral.

I’m hearing a whole lot of talk lately on all the jobs that will be created through Trump’s infrastructure spending plans, which reminds me of the desperation at the onset of the Great Depression and the efforts by Herbert Hoover to reignite the U.S. economy through a series of public works programs. Reality does not support a successful outcome for this endeavor.

First off, Trump’s ideas for infrastructure spending to kick start a U.S. recovery are not new. The Obama administration and Congress passed the largest transportation spending bill in more than a decade in 2015 and pushed for a similar strategy to what is now being suggested by Trump. I should point out though that like Herbert Hoover, Obama’s efforts in this area were essentially fruitless. Obama was the first president since Hoover to see “official” annual U.S. GDP growth drop below 3 percent for the entirety of his presidency, with GDP in 2016 dropping to a dismal 1.6 percent.

Though projects like the Hoover Dam were epic in scope and electrifying to the public imagination during the Depression, they did little to fuel the overall long-term prospects of the American economy. This is because government is incapable of creating wealth; it can only steal wealth from the citizenry through taxation to pay debts conjured out of thin air, or, it can strike a devil’s bargain with central banks to print its way to fake prosperity.

Some might argue that Trump is more likely to redirect funds from poorly conceived Obama-era programs instead of increasing taxes or printing, but this does not change the bigger picture. Redirected funds are still taxpayer funds, and those funds would be far better spent if they were returned to taxpayers rather than wasted in a vain effort to increase GDP by a percentage point. Beyond this, the number of jobs generated through the process will be a drop in the bucket compared to the 100 million plus people no longer employed within the U.S. at this time.

Bottom line? Though new roads and a wall on the southern border are winners for many conservatives, infrastructure spending is a non-solution in preventing a long-term fiscal disaster.

Interdependency Is Hard To Break

Another prospect for raising funds to pay for job generating public works projects is the use of tariffs on foreign imports. Specifically, imports of goods from countries which have maintained unfair trade advantages through global agreements like NAFTA, CAFTA or the China Trade Bill. This is obviously a practical concept and it was always the intention of the founding father post-revolution for government to generate most of its funding through taxation of foreign imports and interstate commerce, rather than taxation of the hard earned incomes of the citizenry. However, the idea is not without consequences.

Unfortunately, globalists have spent the better part of a half-century ensuring that individual nations are completely financially dependent on one another. The U.S. is at the very CENTER of this interdependency with our currency as the world reserve standard. In order to change the nature of the inderdependent system, we have to change the nature of our participation within that system. This means, in order to assert large tariffs on countries like China (which Trump has suggested), America would have to be willing to sacrifice the main advantage it enjoys within the interdependent model — we would have to sacrifice the dollar’s world reserve status.

Keep in mind, this is likely to be done for us in an aggressive manner by nations like China. China’s considerable dollar and treasury bond holds can be liquidated, and despite claims by mainstream shills, this WILL in fact have destructive effects on the U.S. economy.

Also keep in mind that with higher tariffs come higher prices on the shelf. The majority of goods consumed by Americans come from outside the country. Higher tariffs only work to our advantage when we have a manufacturing base capable of producing the goods we need at prices we can afford. The American manufacturing base within our own nation is essentially nonexistent compared to the Great Depression. In order to levy tariffs we would need a level of production support we simply do not have.

The point is, an unprecedented change in America's production dynamic would have to happen so that we do not face heavy fiscal consequences for the use of tariffs as an economic weapon.

Manufacturing Takes Time To Rebuild

Much excitement has been garnered by reports that certain U.S. corporations will be bringing some manufacturing back within our borders over the course of Trump’s first term as president. And certainly this is something that needs to happen. We should have never outsourced our manufacturing capability in the first place. But, is this too little too late? I believe so.

I remember back in 2008/2009 mainstream economists were applauding the Federal Reserve’s bailout efforts and the call for quantitative easing, because, they argued, this would diminish the dollar’s value on the global market, which would make American goods less expensive, and by extension inspire a manufacturing renaissance. Of course, this never happened, which only adds to the mountain of evidence proving that most mainstream economists are intellectual idiots.

It is important that we do not fall into the same false-hope trap in 2017. While Trump may or may not handle matters more aggressively, there is only so much that can be accomplished through politics. Rebuilding a manufacturing base after decades of outsourcing takes time. Many years, in fact. Factories have to be commissioned, money has to change many hands, wages have to be scouted for the best possible labor per-dollar spent and people have to be trained from the very ground up in how to produce goods again. In many cases, the skill sets required to maintain functioning factories in the U.S. (from engineers to machinists to assembly line labor to the people who know how to manage it all) just don’t exist anymore.  All we have left are millions of retail and food service workers forming mobs to demand $15 an hour, which is simply not going to encourage a return to manufacturing.

Beyond this, at least in the short term, America will have a much stronger dollar on the global market, rather than a weaker dollar, due to the fact that the Federal Reserve has initiated a renewed series of interest rate increases just as Trump entered office.  While the mainstream theorizes that the Fed will turn "dovish" and back away from rate hikes, I think this is a rather naive notion.  It serves the elites far better to create a battle between Trump and the Fed - therefore, I see no reason for the Fed to back away from its rate hike process.  Trump will demand a weaker dollar, the Fed won't give it to him, and ultimately, the global economy will start to see the dollar as a risky venture and dump it as the world reserve; which is what the globalist have wanted all along so that they can introduce the SDR as a bridge to a new world currency.

With a "strong" dollar (relative to other indexes) there is even LESS incentive for foreign nations to buy our goods now than there was after the credit crisis in 2008. If the dollar loses world reserve status (as I believe it will during Trump’s first term), then at that point we will have a swiftly falling currency — but too swift to fuel a manufacturing reboot.

Is there even enough internal wealth to support the rise of manufacturing within the U.S. for a period of time necessary for our economy to rebalance?  If there is I’m not seeing it.  We are a nation mired in debt.  So much so that even selling off our natural resources would not erase the problem.

Ultimately, the shift away from being tied to a globalized system towards a self-contained producer nation with a citizenry wealthy enough to sustain that production in light of limited exports to foreign buyers is a shift that requires incredible foresight, precision and ample time. It is not something that can be ramrodded into existence through force or by government decree. In fact, the act of trying to force the change haphazardly will only agitate an economy already on the verge of calamity.

Solutions Start With The Citizenry, Not Washington

I understand that conservatives in particular want to “make America great again,” and I fully agree with that goal. But, someone has to point out the inconsistencies in the current strategy and recognize that the situation is beyond repair. To make America great again would require decentralized efforts to maximize production and self reliance at a local level, not centralized federal tinkering with the economy. The globalists have been far too thorough in their programs of interdependency. The only way out now is for the system to crash and for the right people to be in place to rebuild.

Sadly, not only will a crash result in great tragedy for many Americans, but it is also an outcome the globalists prefer. They believe that THEY will be the men in the right place at the right time to rebuild the system in an even more centralized fashion. They hope to sacrifice the old world order to inspire the social desperation needed to convince the masses of the need for a “new world order.” Again, this crash cannot be avoided, it can only be mitigated. We can prepare and become self sufficient. We can fight to ensure that the globalists are not in a position to rebuild the system in their image once the dust settles. But, we should not place too much expectation that the Trump administration will be able to solve any of our economic problems, if that is even their intent.  The solution remains in our hands, not in the hands of the White House.

Silver-rigging anti-trust lawsuits against JPMorganChase reinstated

Posted: 02 Feb 2017 08:23 PM PST

11:25p ET Thursday, February 2, 2017

Dear Friend of GATA and Gold:

Market Slant reports tonight that the U.S. 2nd Circuit Court of Appeals in New York has reinstated the silver-market rigging lawsuits against JPMorganChase, finding that the district court judge who dismissed the lawsuits engaged in "impermissible fact finding." The case returns to the district court for more proceedings and presumably evidence discovery and deposition. Market Slant's report is posted here:

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


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Spot The Intervention (Bank Of Japan Edition)

Posted: 02 Feb 2017 07:56 PM PST

We warned earlier "the market would test the BoJ," and sure enough Kuroda and his 'lost boys' answered the market's question by intervening aggressively (offering to buy an unlimited amount of bonds) to rescue what was a rapidly escalating collapse in Japanese government bonds.

As Bloomberg reports, The Bank of Japan offered to buy an unlimited amount of bonds at a fixed rate in an unscheduled operation to reassert control over surging yields. The yen and yield for 10-year debt fell.

The central bank will buy five-to-10 year securities from the secondary market, it said in a statement Friday. It's offering to buy the benchmark 10-year notes at 0.110 percent, it said.


The move comes after an earlier attempt Friday morning to cap yields by expanding bond purchases in a regular operation failed. 


Governor Haruhiko Kuroda on Tuesday recommitted to his strategy to hold 10-year debt yield at around zero percent even as accelerating inflation and an improving outlook for some of the world's biggest economies push up bond yields globally.

The reaction is self-evident...


And USDJPY spiked...


It would appear Governor Kuroda has shown his hand one too many times (after November's first operation - which failed to garner any bids).

Canadian Mint Worker Sentenced To 30 Months For Smuggling $140,000 Of Gold In His Rectum

Posted: 02 Feb 2017 07:45 PM PST

In September we reported that an employee of the Royal Canadian Mint smuggled C$180,000 (USD $140,000) in gold from the fortress-like facility, evading multiple levels of detection with a time-honoured prison trick: hiding the precious metal up his butt.

Having been found guilty in November ("wait, what gold coins, where?"), 35-year-old Leston Lawrence was sentenced to 30 months in prison today, by a judge whose name was 'Doody'.

As we detailed previously, a suspicious bank teller raised the alarm in 2015. Lawrence sold 18 gold pucks — each a circular 7.4-ounce nugget worth about $6,800 — to an Ottawa Gold Buyers store between Nov. 27, 2014, and March 12, 2015, according to court records obtained by the Toronto Sun. Three observations tipped off the bank teller: Lawrence was a mint employee, he had an unusual number of deposits and he frequently requested overseas transactions.

Furthermore, as the OC reports, the case is "an illuminating look at security measures inside the Mint, the building on Sussex Drive that produces hundreds of millions of gold coins annually for the federal Crown corporation." Or rather lack thereof.


The defense was not happy: “Appalling,” was the conclusion of defence lawyer Gary Barnes, who described the Crown’s case as an underwhelming collection of circumstantial evidence. “This is the Royal Canadian Mint, your Honour, and one would think they should have the highest security measures imaginable,” Barnes said in his closing submission. “And here the gold is left sitting around in open buckets.”


He is right, and perhaps anyone who keeps their gold at the mint may want to reconsider the venue of storage.


Court was further told that, on multiple occasions, Lawrence took small circular chunks of gold - or “pucks” - to Ottawa Gold Buyers in the Westgate Shopping Centre on Carling Avenue. Typically, the pucks weighed about 210 grams, or 7.4 ounces, for which he was given cheques in the $6,800 range, depending on fluctuating gold prices, court heard. He then deposited the cheques at the Royal Bank in the same mall.


One day a teller became suspicious at the size and number of Ottawa Gold Buyers cheques being deposited and Lawrence’s request to wire money out of the country. She then noticed on his account profile that he worked at the Mint. The first red flag was up. Bank security was alerted, then the RCMP, which began to investigate. Eventually, a search warrant was obtained and four Mint-style pucks were found in Lawrence’s safety deposit box, court heard.


Records revealed 18 pucks had been sold between Nov. 27, 2014 and March 12, 2015. Together with dozens of gold coins that were redeemed, the total value of the suspected theft was conservatively estimated at C$179,015.


That said, the defence countered with a couple of important points. The Crown was not able to prove conclusively that the gold in Lawrence’s possession actually came from inside the Mint. It had no markings nor, apparently, had any gold been reported missing internally. The Crown was able to show the pucks precisely fit the Mint’s custom “dipping spoon” made in-house — not available commercially — that is used to scoop molten gold during the production process.


Still, one question remained unanswered at the trial: how did the gold get out of the Mint?


The court was told Lawrence set off the metal detector at an exit from the “secure area” with more frequency than any other employee — save those with metal medical implants. When that happened, the procedure was to do a manual search with a hand-held wand, a search that he always passed. (It was not uncommon for employees to set off the detector, court heard.)



Investigators also found a container of vaseline in his locker and the trial was presented with the prospect that a puck could be concealed in an anal cavity and not be detected by the wand. In preparation for these proceedings, in fact, a security employee actually tested the idea, Barnes said.


As a result, prosecutors alleged that Lawrence smuggled out gold nuggets inside his rectum.

And now, almost 2 years later, as AP reports, the former Royal Canadian Mint employee who stole 22 cookie-sized pieces of refined gold by hiding them in his rectum has been sentenced to 30 months in prison.


Thirty-five-year-old Leston Lawrence was found guilty last November of stealing the pieces from the mint and selling 17 of them through Ottawa Gold Buyers.


Ontario Court judge Peter Doody on Thursday sentenced Lawrence and ordered him to pay a fine of US$145,900 (CA$190,000).


Doody says the stolen gold was worth US$127,116.11 (CA$165,451.14) which Lawrence sent abroad to build a house in Jamaica and buy a boat in Florida, among other transactions.


Court testimony indicated that Lawrence was involved in purifying recently procured gold and sometimes worked alone, out of sight of security cameras.

The Royal Canadian Mint has announced intentions to improve their security in the wake of the crime:

"upgrades to our facility's security checkpoint and screening process; upgrades to our camera system to high definition which provides real-time monitoring capability in all areas of the mint; and working closely with CATSA [Canadian Air Transport Security Authority] to establish more robust scanning training of our employees."


"The mint is one of the most secure facilities in Canada and we are confident that we have the right security measures in place to effectively operate our business,"

The mint did not comment as to whether or not employees will now face rectal-cavity searches.

Maybe those cryptocurrency types are right - hording gold is a pain in the ass.

Gold Price Closed at $1216.70 Up $11.10 or 0.92%

Posted: 02 Feb 2017 05:44 PM PST

2-Feb-17PriceChange% Change
Gold Price, $/oz1,216.7011.100.92%
Silver Price, $/oz17.40-0.02-0.10%
Gold/Silver Ratio69.9170.7091.03%
Silver/Gold Ratio0.0143-0.0001-1.01%
S&P 5002,280.851.300.06%
Dow in GOLD $s337.83-3.18-0.93%
Dow in GOLD oz16.34-0.15-0.93%
Dow in SILVER oz1,142.630.830.07%
US Dollar Index99.790.180.18%
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:1,215.20

American Eagle1.001,244.361,255.301,255.30
1/2 AE0.50625.31639.801,279.61
1/4 AE0.25318.73326.591,306.34
1/10 AE0.10127.49133.061,330.64
Aust. 100 corona0.981,182.211,191.211,215.27
British sovereign0.24288.20301.201,279.54
French 20 franc0.19226.88232.881,247.34
Maple Leaf1.001,225.201,239.201,239.20
1/2 Maple Leaf0.50698.74637.981,275.96
1/4 Maple Leaf0.25309.88325.071,300.26
1/10 Maple Leaf0.10128.81132.461,324.57
Mexican 50 peso1.211,451.861,462.861,213.29
.9999 bar1.001,215.201,227.201,227.20

VG+ Morgan $B4 19050.7723.0027.000.04
VG+ Peace dollar0.7717.0020.000.03
90% silver coin bags0.7212,226.5012,512.5017.50
US 40% silver 1/2s0.304,956.005,106.0017.31
100 oz .999 bar100.001,735.001,760.0017.60
10 oz .999 bar10.00176.00181.0018.10
1 oz .999 round1.0017.7018.0018.00
Am Eagle, 200 oz Min1.0018.9520.4520.45

Plat. Platypus1.001,011.101,041.101,041.10

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Markets Are Experiencing Cognitive Dissonance

Posted: 02 Feb 2017 01:34 PM PST

This post Markets Are Experiencing Cognitive Dissonance appeared first on Daily Reckoning.

[Ed. Note: Jim Rickards latest New York Times best seller, The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis (claim your free copy here) transcends politics and media to prepare you for the next crisis in the ice-nine lockdown.] 

Cognitive dissonance is a psychological term to describe a situation where perception and reality are out of sync.

It's similar to what most people refer to as "denial." The patient sees things one way, but the reality is different. Of course, it's just a matter of time before reality prevails and the patient is jolted back to reality. This process can be fast or slow, easy or painful, but the important thing to bear in mind is reality always wins.

Something like cognitive dissonance is going on in markets right now. Markets have been temporarily euphoric over Trump's tax, regulatory and spending policies. Those policies are important to business and credit cycles and economic growth.

The perception is that happy days are here again. The new Trump administration is expected to pour trillions of dollars of stimulus spending and tax cuts into the economy. Immediately after the Nov. 8 election, investors took a quick look at Trump's policies and decided they liked what they saw.

Trump wants lower taxes, less regulation and higher infrastructure spending. Corporate profits and consumer spending benefit from lower taxes. Banks and pharmaceutical companies benefit from less regulation. Construction firms and defense contractors benefit from infrastructure spending. There seemed to be something for everyone, and the stock market took off like a Roman candle.

And indeed, the major stock indexes hit one record closing after another. The Dow topped 20,000 this week before pulling back. The dollar has been trading near a 14-year high, although it's slipped in recent days. Gold was moving mostly sideways until it broke out again over the past few days.

Bank stocks went vertical in expectations of wider net interest margins (from Fed rate hikes) and less regulation (from Dodd-Frank reform). Happy days, indeed.

Reality is another matter. I've been warning my readers lately that the Trump trade is levitating in thin air and is ready for a fall. Now that reality could be beginning to sink in.

It's far from clear how much of the Trump economic agenda will see the light of day. Congress wants to offset tax cuts in one area with tax increases in another so they are "revenue neutral." That takes away the stimulus. Less regulation for banks won't help the economy if bankers lead us into another financial meltdown like 2008.

Infrastructure spending will increase the debt-to-GDP ratio past the already high level of 105%, putting the U.S. closer to a sovereign debt crisis like Greece. As I wrote Tuesday, many believe a 60% debt-to-GDP ratio retards growth. That's the standard the ECB uses for members of the Eurozone. Scholars Ken Rogoff and Carmen Reinhart put the figure at 90%.

The U.S. debt-to-GDP ratio is currently at 105%, and heading higher. Under any standard, the U.S. is at the point where more debt produces less growth rather than more. This is one more reason why the Trump infrastructure spending plan will not produce the hoped for growth.

And if infrastructure is funded privately, you'll need tools and user fees to pay the bondholders, which is just another form of tax increase.

There's almost no way Trump's policies can supply the stimulus the market is pricing in. The Dow Jones index peaked on Jan. 26, 2017, one day after cracking the mythical 20,000 mark. It's now trading around 19,900. The downhill trend may continue and get steeper soon.

Productivity has stalled out in recent months. Economists are not sure why. It could be due to lack of investment by business, or that workers are not being trained in useful skills, or that everyone is spending too much time on social media. Whatever the cause, productivity is flat.

Fourth-quarter GDP came in at 1.9%, below expectations — the final chapter on the worst year of U.S. growth since 2011 when the economy was still healing from the global financial crisis. The strong dollar is a major headwind to growth, along with flat labor force participation and weak productivity growth.

Growth in a major economy is simply the sum of increases in the labor force plus increases in productivity. Think about it. How many people are working and what is the output per worker? That's it; that's all there is. The reality is that the workforce is not growing.

Labor force participation is near 40-year lows and is expected to decline further for demographic reasons. Birthrates have never been this low since the Great Depression. The U.S. used to get a labor force lift from immigration, but that might dry up because of Trump's policies. We'll have to wait and see.

A flat labor force plus flat productivity equals a flat economy, or almost zero nominal growth. That's reality.

How will this situation be resolved?

Either growth will rebound based on "animal spirits" and the Trump stimulus working better than expected or markets will collapse once they realize the growth is not coming. By "collapse," I mean a violent stock market correction, a falling dollar and major rallies in bonds and gold. We expect the latter.

Financial crises are not mainly about the business cycle. They're about investor psychology, sudden shocks and the instability of the financial system. Right now investors are skittish, numerous shocks are waiting to happen and the system is highly unstable due to overleverage and nontransparency.

Despite Trump's best efforts and positive policies, a collapse could happen any day unless radical steps are taken to prevent it — such as breaking up big banks and banning derivatives. I've been warning about this for a while, but now mainstream economists see the danger too. Nobel Prize winner Robert Shiller, for example, sees a stock market crash coming that could be worse than 1929 or 2000. I hope he's wrong.

The problem with a financial panic is that panicked investors don't care if the president is a Democrat or a Republican; they just want their money back. The same dynamic applies to natural disasters like tsunamis and earthquakes.

Once the disaster starts, the dynamics have a life of their own and don't care if the victims are liberals or conservatives. Everyone gets hurt just the same. I'm not hoping for it, but this is a lesson Trump may learn the hard way.

Above I said collapse means a violent stock market correction, a falling dollar and major rallies in bonds and gold. I expect the latter. The long-term trends favor gold if U.S. growth continues disappoint.

The strong dollar story can't last, so it won't. The Trump administration has clearly signaled that the day of the strong dollar is over. When you see a coordinated attack on the dollar from the White House, the Treasury and the Fed, you can bet the dollar will weaken. That means a higher dollar price for gold.

The dollar may get one last boost from a Fed rate hike in March, but after that, even the Fed will acknowledge that they got it wrong again and start another easing cycle with happy talk and forward guidance.

For now, investors should not stand in front of a moving train. Keep cash ready and be prepared to move into gold, bonds and the euro. In fact, it's not too soon to leg into those positions now.

I'll be watching and be sure to let you know in advance when the change comes.

Instead of watching the tape or short-term trends, my advice is to stay focused on the long-term trends. That's how you'll make the most money and preserve wealth in adversity.Regards,

Jim Rickards
for The Daily Reckoning

The post Markets Are Experiencing Cognitive Dissonance appeared first on Daily Reckoning.

Gold Seeker Closing Report: Gold Gains While Silver Slips Before Jobs Day

Posted: 02 Feb 2017 01:22 PM PST

Gold gained $16.24 to $1225.34 by a little before 9AM EST before it drifted back lower for most of the rest of trade, but it still ended with a gain of 0.51%. Silver climbed up to $17.727 before it fell all of the way back to $17.411 and then bounced back higher in late trade, but it still ended with a loss of 0.34%.

Justice Department tries to stall discovery in silver price-fixing case

Posted: 02 Feb 2017 12:11 PM PST

Silver Investors Slam Justice Department Discovery Halt in Silver Price-Fixing Case

By Kelcee Griffis, New York
Wednesday, February 1, 2017

NEW YORK -- Silver investors accusing major banks of price-fixing urged a New York federal court in a document posted Tuesday to forgo the U.S. Department of Justice's proposed one-year discovery stay, asking the court to strike a compromise to "better balance the governmental and private interests at stake."

In a heavily redacted document dated Jan. 19 but posted Tuesday, the investors asked to keep open the broader discovery in their consolidated proposed class action against banks including HSBC and The Bank of Nova Scotia, saying the Justice Department's timeline to accommodate its criminal investigation would severely hamper the present multidistrict litigation.

... Dispatch continues below ...


K92 Mining Drills Multiple High-Grade Gold Intersections

Company Announcement
Friday, January 27, 2017

K92 Mining Inc. (TSXV–KNT) announces the latest results from the ongoing grade control drilling program at its high-grade Kainantu Gold Mine in Papua New Guinea. K92 is ramping up the Kainantu gold mine toward commercial production, with its longest continuous production run to date now commenced.

In September 2016 K92 began a campaign of close-spaced underground diamond drilling as part of a comprehensive grade-control strategy. The current grade-control drilling program is focused on the areas of Irumafimpa and is designed to bring a high degree of confidence to the production planning and scheduling. K92 plans to mine this area in the coming six months. The closed-space drilling pattern of approximately 15 metres by 15 meters has significantly increased the confidence in this sparsely drilled area, with most holes recording high-grade intersections. Approximately 80 percent of the holes completed to date have recorded multiple high-grade intersections indicating the presence of multiple parallel to sub parallel high-grade veins. ...

... For the remainder of the announcement:

"The department does not proffer any time frame for when it might file charges against any of its targets. Thus, the department's proposal will result in a lengthy stay of this action," the investors wrote.

The government asked to join the suit in early January and requested a partial yearlong stay of civil discovery while it conducts criminal investigations, saying the move would actually make way for the civil suit to forge ahead.

"In any event -- and far from grinding to a halt -- the proposed partial stay will allow significant aspects of the civil litigation and civil discovery to continue," the department contended in a Jan. 9 memorandum.

The silver investors in the multidistrict litigation made clear on Tuesday they don't oppose the government's joining the suit, but they do take issue with it potentially slowing down their discovery.

The investors said they already made concessions involving depositions and proposed a type of three-month embargo that the department could renew periodically.

The plaintiffs said that if the court balances the department's interests with their own, the agency could agree to produce certain documents "on an attorneys' eyes-only basis."

"This would allow plaintiffs to review documents and be ready to take depositions when the embargo is lifted, but also protect the department's investigation by preventing public disclosure of the materials until the embargo ends," the opposition brief said.

But the department already flatly rejected that proposal, the investors said.

Still, it would not be fair to force the proposed class to move for certification without the benefit of sufficient discovery, according to the filing.

In November a judge signed off on Deutsche Bank's $38 million settlement with the class of investors who participated in U.S.-related trades of silver or silver derivatives dating back to January 1999.

In a December motion to file a third consolidated amended class-action complaint, the investors urged the court to add as defendants Barclays Bank and affiliates, BNP Paribas Fortis, Standard Chartered Bank, and Bank of America Merrill Lynch. The investors also asked the court to revive their previously dismissed claims against UBS.

The suit had alleged Deutsche Bank, HSBC, and Bank of Nova Scotia colluded to fix the price of silver futures to ensure the banks received high returns as part of The London Silver Market Fixing Ltd., which has set the price of physical silver since 1897.

Counsel for the parties could not be immediately reached for comment Wednesday.

The plaintiffs are represented by Barbara J. Hart, Vincent Briganti, Geoffrey M. Horn, Raymond Girnys, Christian P. Levis, and Michelle E. Conston of Lowey Dannenberg Cohen & Hart, and James J. Sabella, Robert G. Eisler, and Charles G. Caliendo of Grant & Eisenhofer PA.

Deutsche Bank is represented by Rob Khuzami, Joseph Serino and Kuan Huang of Kirkland & Ellis and Peter J. Isajiw of King & Spalding.

UBS AG is represented by David J. Arp, Melanie L. Katsur, Joel S. Sanders, Peter Sullivan, Indraneel Sur, and Lawrence J. Zweifach of Gibson Dunn.

The case is In re: London Silver Fixing Ltd. Antitrust Litigation, case number 1:14-md-02573, in the U.S. District Court for the Southern District of New York.

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Alasdair Macleod: Price controls and propaganda

Posted: 02 Feb 2017 11:36 AM PST

2:35p ET Thursday, February 2, 2017

Dear Friend of GATA and Gold:

In his new commentary, "Price Controls and Propaganda," GoldMoney research director Alasdair Macleod explains why, despite the recent experience of Venezuela and Zimbabwe, governments are increasingly likely to resort to price controls to try to compensate their debasement of their currencies. Macleod's commentary is posted at GoldMoney here:

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


USAGold: Coins and bullion since 1973

USAGold, well known for its Internet site,, offers contemporary bullion coins and bullion-related historic gold coins for delivery to private investors in the United States, Europe, Canada, Australia, and New Zealand. It is one of the oldest and most respected names in the gold industry, with thousands of clients and an approach to investment that emphasizes guidance and individual needs over high-pressure sales tactics. The firm's zero-complaint record at the Better Business Bureau makes it an ideal match for the conservative, long-term investor looking for a reliable contact in the gold business.

Please call 1-800-869-5115x100 and ask for the trading desk, or visit:

USAGold: Great prices, quick delivery -- all the time.

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Whom will Trump blast next over their currencies?

Posted: 02 Feb 2017 11:26 AM PST

By Lananh Nguyen
Bloomberg News
Thursday, February 2, 2017

With all the Trump administration's jawboning about countries devaluing their currencies to gain an unfair trade advantage, financial markets are left wondering: Who's next?

Canada, Mexico, and even South Korea are potential candidates for exchange-rate criticism, according to William Cline, a senior fellow at the Peterson Institute for International Economics in Washington. That's because those nations are some of the U.S.'s biggest trading partners, and in the case of South Korea, its currency is also 6 percent undervalued, according to a PIIE study.

"Who else would be on the list -- in the first instance, the larger countries that matter more to our trade," Cline said Wednesday. "I don't think most economists would agree that they're cheating, but that's the conclusion that these kinds of attacks would imply." ...

... For the remainder of the report:


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Mike Kosares: A Trump devaluation and global currency war?

Posted: 02 Feb 2017 11:13 AM PST

2:15p ET Thursday, February 2, 2017

Dear Friend of GATA and Gold:

USAGold's Mike Kosares today takes note of the growing impression that the Trump administration wants to devalue the U.S. dollar and speculates about how the devaluation might come about. Kosares' commentary is headlined "A Trump Devaluation and Global Currency War?" and it's posted at USAGold here:

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


At 3 Aces Project, Golden Predator Finds 7.5 Meters of 33 Grams-Per-Tonne Gold

Company Announcement
Thursday, January 19, 2017

VANCOUVER, British Columbia, Canada -- Golden Predator Mining Corp. (TSX.V: GPY; OTCQX: NTGSF) is pleased to report assay results for the first 13 holes of a total of 54 holes completed in the winter 2016 drill program at the 3 Aces Project in southeastern Yukon Territory.

Drilling has demonstrated an extension of high-grade gold at the Ace of Spades zone, as well as the exciting discovery of a blind vein and the occurrence of significant assay values in stockwork zones.

Significant results reported at true width include:

-- Hole 3A16-RC-032 intersected 7.54 meters of 32.86 grams per tonne gold from a depth of 16.76 meters, including 0.54 meters of 252 grams per tonne gold; and a new blind vein at a depth of 71.63 meters returned 3.23 meters of 10.04 grams per tonne gold. (The hole ended in mineralization. ...

For the remainder of the announcement:

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A Trump devaluation and global currency war?

Posted: 02 Feb 2017 11:02 AM PST

Markets move on sentiment and expectations. At the moment, the sentiment is confused as most are having a hard time getting a clear read, but those who understand the power of market expectations have begun to load up on gold. You see the evidence in revived ETF demand (up roughly 1.2 million ounces in January) as well as demand from Asia, particularly China. Much of the market action and movement over the past several days has occurred during Chinese and European market hours, including last night. Today's London morning benchmark was posted at $1224.05 – up about $12 from the trading level just before the posting.

Iran to Dump U.S. Dollar! THESE 2 Countries Tried This Before and U.S. Destroyed Them!

Posted: 02 Feb 2017 10:00 AM PST

bombshell news the Central Bank of Iran is announcing that they will be dumping the US dollar in all foreign exchange if they proceed with the fact it will hit a major blow to the US has yet another country engaging in trade without the reserve currency they wouldn't be the first country to...

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ANONYMOUS - Will Donald Trump Destroy America?

Posted: 02 Feb 2017 09:00 AM PST

 Anonymous Updates presents to you 'Will Donald Trump Destroy America?' The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more

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Gold Reveals Illusory Gains

Posted: 02 Feb 2017 08:08 AM PST

Gold Reveals Illusory Gains
By Egon von Greyerz

Investors in most countries make the mistake of measuring their returns based on their home market and their domestic currency. This might have worked when they only had access to their local investment market. But that time is long gone. Now we have a global economy and most Westerners have access to … Read the rest

China’s Demand for Gold Can’t be Met

Posted: 02 Feb 2017 07:32 AM PST

This post China's Demand for Gold Can't be Met appeared first on Daily Reckoning.

A couple of weeks ago, I was in Toronto meeting with gold industry experts. One night, I spoke with a man who has been in the gold business for over 45 years.

For over four decades, this man has bought and sold gold. He has bought and sold gold mining shares. He has bought and sold gold mines. During this time, he has also worked with the Chinese government, Chinese industry and Chinese investors. He knows a few things about gold, and about Chinese gold.

Here's what he said to me: "I've seen estimates out of China that over 375 million Chinese want to buy gold. But they can't. They live in the remote interior of the country, not the more open, coastal cities. These Chinese have little or no access to gold markets. And even if they did have access, there's not enough gold."

The man explained that any Chinese with means and access is buying gold. He told me that just the Shanghai Gold Exchange has over 10 million customers. 10 million separate, account-holding customers. Just for gold.

While we were talking, I did some quick math in my head. Suppose the average customer, a middle class Chinese worker, has about $2,500 socked into gold. At $1,250 per ounce, that's the equivalent of about two ounces of gold.

That's 10 million clients, each with an average of two ounces, for 20 million ounces of gold. That's the equivalent of adding up the annual production, in 2015, of the four largest gold mining companies on the stock market — Barrick Gold, plus Newmont Mining, plus AngloGold Ashanti, plus Goldcorp.

Top Gold Chart

There's immense, pent-up demand for gold in China, and it's already a massive pull on the world's gold resources.

Chinese gold demand — both at the state level, and the teeming millions of individuals — is part of a story that's not well-understood here in the West.

Gold Between the Lines

In the West, we've grown up in a world where the U.S. and the dollar reign supreme. Every currency moves up and down, here and there, from time to time. But it's difficult for us to imagine anything much different than a world in which the U.S. dollar sets the pace. It's hard for us to imagine a massive political upset that changes our way of life too much.

But if we look briefly at Chinese history, we'll see that they haven't had a chance to grow complacent with the status quo. We don't have to go back to ancient times to see political upsets, famine, and fear.

When you look at the other factors Jim Rickards has highlighted, like China's increasing debt, the problems with demographics, ghost cities… the Chinese people have picked up enough signals to start preparing for the next crisis.

That's why many Chinese are trying to preserve whatever wealth they've accumulated. The safest way to preserve wealth will always be gold. But as my gold expert told me in Toronto, there simply isn't enough gold being produced to meet this demand.

Right now, almost all of China's retail, investor-driven demand for gold is met by the Shanghai Gold Exchange. Established in 2002, the Shanghai Gold Exchange is wholly owned by the Chinese government. In recent years, the organization has become the largest facility in the world for bullion sales and trading, with money and metal passing through a network of 55 vaults.

One recent estimate is that, in 2016, Shanghai Gold Exchange moved over 2,000 tonnes (or 64,000,000 ounces) of gold into Chinese investors' hands. It's a mix of new production gold, and imports of gold from western inventories. All this demand and sale, even though recent gold price premiums on the Shanghai Gold Exchange have been as high as 25% above the global-posted spot price. This reflects the physical scarcity within Chinese gold trading channels.

Presently, Shanghai Gold Exchange has over 10 million customers, and it's just a beginning. As China continues to try to combat its economic, political and social issues, we must confront the idea that Shanghai Gold Exchange could become the source for explosive growth in customer numbers, and gold demand, in the years to come.

Meeting Chinese Gold Demand

The next logical question to ask is, where's the gold? Are there 20 or more Barrick-equivalent gold mining companies out there? It's a simple answer: No way.

Right now, the global gold industry is scarcely keeping production at steady levels. Since 2012, many marginal gold mines closed. Many mining companies shed assets and laid off skilled workers. (We discussed some of the production problems facing gold and gold miners in our September.)

Across the world, there's been a dearth of gold exploration, and very few significant discoveries. We don't expect to see any significant growth in gold output over the next three to five years, based simply on the lack of new mines under construction, and the absence of expansion work at existing facilities.

You can't mine what hasn't been discovered; you can't produce what hasn't been developed.

A collapse in China won't be contained within China. A shortage of gold to meet demand will soon in China affect U.S. investors. So you must begin now to prepare now, and position yourself to profit from increasing demand for gold.

Kind regards,

Byron King
for the Daily Reckoning

The post China's Demand for Gold Can't be Met appeared first on Daily Reckoning.

Depression, Stagflation, Stag-Depress-Flation

Posted: 02 Feb 2017 07:00 AM PST

Expect much more inflation, like the 1970s and worse, as government and the Fed "stimulate" the economy with currency printing, QE, war, and spending. Congress likes spending projects and wars. The Fed likes devaluation of the dollar and inflation of the currency. The dollar has lost, compared to gold, over 98% of its value since 1913. Expect further devaluation of the dollar. President Trump may be wonderful or the worst, but can he fix 100 years of mismanagement and corruption? Expect Stag-Depress-Flation in the coming years. Expect much higher gold and silver prices in upcoming years.

Weaker US$ Could Send Gold And Gold Stocks to Higher Targets

Posted: 02 Feb 2017 06:34 AM PST

Gold has underperformed both in nominal and real terms. Last week it formed a bearish reversal in nominal terms and against foreign currencies. However, the good news for bulls is the US Dollar Index lost support at 100, due to the Trump administration's tough talk against Germany (and the Euro). Couple that with no movement from the Fed and the greenback should continue its decline, thereby juicing the current rebound in Gold and especially gold stocks.

Gratuitous Pain in Gold

Posted: 02 Feb 2017 06:32 AM PST

Gold finished the day with a sharp upswing, but not before gratuitously inflicting pain on bulls with a $15 swoon early in the session. If the rally is ruled by the pattern shown as I expect it to be, the futures should hit 1219.10 overnight or early Thursday. With any luck the move will breeze past the target, giving us reason to expect more of the same over the near term. And if buyers can push just a little higher, surpassing the 1223.00 peak labeled in the chart, it would be bears for a change who are on the run.

Northern Vertex Moss Mine Procurement and Construction Update

Posted: 02 Feb 2017 06:21 AM PST

Northern Vertex Mining Corp. (TSX.V:NEE) (the "Company" or "Northern Vertex") is pleased to provide an update on mine procurement, construction, permitting and exploration activities at the company's 100 % owned Moss Mine gold-silver project, located in the historic Oatman Mining district in SW Arizona. The Moss Mine project, which is scheduled to commence commercial gold-silver production in Q4 2017, has a capital cost estimated at US$33m, and is expected to generate an average annual production of 42,000 oz gold Eqv. with an all-in sustaining costs of US$662/oz gold and an after-tax IRR of 48% (based on $1,250/oz gold and $20/oz silver).

The Vampire Squid Is Back: How Trump Got Goldmanized

Posted: 02 Feb 2017 06:08 AM PST

This post The Vampire Squid Is Back: How Trump Got Goldmanized appeared first on Daily Reckoning.

Irony isn't a concept with which President Donald J. Trump is familiar. In his Inaugural Address, having nominated the wealthiest cabinet in American history, he proclaimed, "For too long, a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost. Washington flourished — but the people did not share in its wealth."  Under Trump, an even smaller group will flourish — in particular, a cadre of former Goldman Sachs executives. To put the matter bluntly, two of them (along with the Federal Reserve) are likely to control our economy and financial system in the years to come.

Infusing Washington with Goldman alums isn't exactly an original idea. Three of the last four presidents, including The Donald, have handed the wheel of the U.S. economy to ex-Goldmanites. But in true Trumpian style, after attacking Hillary Clinton for her Goldman ties, he wasn't satisfied to do just that.  He had to do it bigger and better.  Unlike Bill Clinton and George W. Bush, just a sole Goldman figure lording it over economic policy wasn't enough for him. Only two would do.

The Great Vampire Squid Revisited

Whether you voted for or against Donald Trump, whether you're gearing up for the revolution or waiting for his next tweet to drop, rest assured that, in the years to come, the ideology that matters most won't be that of the "forgotten" Americans of his Inaugural Address. It will be that of Goldman Sachs and it will dominate the domestic economy and, by extension, the global one.

At the dawn of the twentieth century, when President Teddy Roosevelt governed the country on a platform of trust busting aimed at reducing corporate power, even he could not bring himself to bust up the banks.  That was a mistake born of his collaboration with the financier J.P. Morgan to mitigate the effects of the Bank Panic of 1907. Roosevelt feared that if he didn't enlist the influence of the country's major banker, the crisis would be even longer and more disastrous.  It's an error he might not have made had he foreseen the effect that one particular investment bank would have on America's economy and political system.

There have been hundreds of articles written about the "world's most powerful investment bank," or as journalist Matt Taibbi famously called it back in 2010, the "great vampire squid." That squid is now about to wrap its tentacles around our world in a way previously not imagined by Bill Clinton or George W. Bush.

No less than six Trump administration appointments already hail from that single banking outfit. Of those, two will impact your life strikingly: former Goldman partner and soon-to-be Treasury Secretary Steven Mnuchin and incoming top economic adviser and National Economic Council Chair Gary Cohn, former president and "number two" at Goldman.  (The Council he will head has been responsible for "policy-making for domestic and international economic issues.")

Now, let's take a step into history to get the full Monty on why this matters more than you might imagine.  In New York, circa 1932, then-Governor Franklin Delano Roosevelt announced his bid for the presidency. At the time, our nation was in the throes of the Great Depression.  Goldman Sachs had, in fact, been one of the banks at the core of the infamous crash of 1929 that crippled the financial system and nearly destroyed the economy. It was then run by a dynamic figure, Sidney Weinberg, dubbed "the Politician" by Roosevelt because of his smooth tongue and "Mr. Wall Street" by the New York Times because of his range of connections there. Weinberg quickly grasped that, to have a chance of redeeming his firm's reputation from the ashes of public opinion, he would need to aim high indeed. So he made himself indispensable to Roosevelt's campaign for the presidency, soon embedding himself on the Democratic National Campaign Executive Committee.

After victory, he was not forgotten. FDR named him to the Business Advisory Council of the Department of Commerce, even as he continued to run Goldman Sachs. He would, in fact, go on to serve as an advisor to five more presidents, while Goldman would be transformed from a boutique banking operation into a global leviathan with a direct phone line to whichever president held office and a permanent seat at the table in political and financial Washington.

Now, let's jump forward to the 1990s when Robert Rubin, co-chairman of Goldman Sachs, took a page from Weinberg's playbook.  He recognized the potential in a young, charismatic governor from Arkansas with a favorable attitude toward banks. Since Bill Clinton was far less well known than FDR had been, Rubin didn't actually cozy up to him from the get-go. It was another Goldman Sachs executive, Ken Brody, who introduced them, but Rubin would eventually help Clinton gain Wall Street cred and the kind of funding that would make his successful 1992 run for the presidency possible.  Those were favors that the new president wouldn't forget. As a reward, and because he felt comfortable with Rubin's economic philosophy, Clinton created a special post just for him: first chair of the new National Economic Council.

It was then only a matter of time until he was elevated to Treasury Secretary. In that position, he would accomplish something Ronald Reagan — the first president to appoint a Treasury Secretary directly from Wall Street (former CEO of Merrill Lynch Donald Regan) — and George H.W. Bush failed to do.  He would get the Glass-Steagall Act of 1933 repealed by hustling President Clinton into backing such a move. FDR had signed the act in order to separate investment banks from commercial banks, ensuring that risky and speculative banking practices would not be funded with the deposits of hard-working Americans. The act did what it was intended to do.  It inoculated the nation against the previously reckless behavior of its biggest banks.

Rubin, who had left government service six months earlier, wasn't even in Washington when, on November 12, 1999, Clinton signed the Gramm-Leach-Bliley Act that repealed Glass-Steagall. He had, however, become a board member of Citigroup, one of the key beneficiaries of that repeal, about two weeks earlier.

As Treasury Secretary, Rubin also helped craft the North American Free Trade Agreement (NAFTA). He subsequently convinced both President Clinton and Congress to raid U.S. taxpayer coffers to "help" Mexico when its banking system and peso crashed thanks to NAFTA.  In reality, of course, he was lending a hand to American banks with exposure in Mexico.  The subsequent $25 billion bailout would protect Goldman Sachs, as well as other big Wall Street banks, from losing boatloads of money. Think of it as a test run for the great bailout of 2008.

A World Made by and for Goldman Sachs

Moving on to more recent history, consider a moment when yet another Goldmanite was at the helm of the economy.  From 1970 to 1973, Henry ("Hank") Paulson had worked in various positions in the Nixon administration. In 1974, he joined Goldman Sachs, becoming its chairman and CEO in 1999.  I was at Goldman at the time.  (I left in 2002.)  I remember the constant internal chatter about whether an investment bank like Goldman could continue to compete against the super banks that the Glass-Steagall repeal had created. The buzz was that if Goldman and similar investment banks were allowed to borrow more against their assets ("leverage themselves" in banking-speak), they wouldn't need to use individual deposits as collateral for their riskier deals.

In 2004, Paulson helped convince the Securities and Exchange Commission (SEC) to change its regulations so that investment banks could operate as if they had the kind of collateral or backing for their trades that goliaths like Citigroup and JPMorgan Chase had. As a result, Goldman Sachs, Lehman Brothers, and Bear Stearns, to name three that would become notorious in the economic meltdown only four years later (and all ones for which I once worked) promptly leveraged themselves to the hilt. As they were doing so, George W. Bush made Paulson his third and final Treasury Secretary.  In that capacity, Paulson managed to completely ignore the crisis brewing as a direct result of the repeal of Glass-Steagall, the one I predicted was coming in Other People's Money, the book I wrote when I left Goldman.

In 2006, Paulson was questioned on his obvious conflicts of interest and responded, "Conflicts are a fact of life in many, if not most, institutions, ranging from the political arena and government to media and industry. The key is how we manage them." At the time, I wrote, "The question isn't how it's a conflict of interest for Paulson to preside over our country's economy but how it's not?" For men like Paulson, after all, such conflicts don't just involve their business holdings.  They also involve the ideology associated with those holdings, which for him at that time came down to a deep belief in pursuing the full-scale deregulation of banking.

Paulson was, of course, Treasury Secretary for the period in which the 2008 financial crisis was brewing and then erupted. When it happened, he was the one who got to decide which banks survived and which died. Under his ministrations, Lehman Brothers died; Bear Stearns was given to JPMorgan Chase (along with plenty of government financial support); and you won't be surprised to learn that Goldman Sachs thrived.  While designing that outcome under the pressure of the moment, Paulson pled with Nancy Pelosi to press the Democrats in the House of Representatives to support a staggering $700 billion bailout.  All those taxpayer dollars went with the 2008 Emergency Financial Stability Act that would save the banking system (under the auspices of saving the economy) and leave it resplendently triumphant, bonuses included), even as foreclosures rose by 21% the following year.

Once again, it was a world made by and for Goldman Sachs.

Goldman Back in the (White) House

Running for office as an outsider is one thing. Instantly inviting Wall Street into that office once you arrive is another. Now, it seems that Donald Trump is bringing us the newest chapter in the long-running White House-Goldman Sachs saga. And count on Steven Mnuchin and Gary Cohn to offer a few fresh wrinkles on that old alliance.

Cohn was one of the partners who ran the Fixed Income, Currency and Commodity (FICC) division of Goldman. It was the one that benefited the most from leverage, trading, and the complexity of Wall Street's financial concoctions like collateralized debt obligations (CDOs) stuffed with derivatives attached to subprime mortgages. You could say, it was leverage that helped propel Cohn up the Goldman food chain.

Steven Mnuchin has proven particularly adept at understanding such concoctions. He left Goldman in 2002.  In 2004, with two other ex-Goldman partners, he formed the hedge fund Dune Capital Management.  In the wake of the 2008 financial crisis, Dune went shopping, as Wall Street likes to do, for cheap buys it could convert into big profits. Mnuchin and his pals found the perfect prey in a Pasadena-based bank, IndyMac, that had failed in July 2008 before the financial crisis kicked into high gear, and had been seized by the Federal Deposit Insurance Corporation (FDIC).  They would pick up its assets on the cheap.

At his confirmation hearings, Mnuchin downplayed his role in throwing homeowners (including members of the military) out of their heavily mortgaged homes as a result of that purchase. He cast himself instead as a genuine hero, the guy who convened a cadre of financial sharks to help, not harm, the bank's customers who, without their benevolence, would have fared so much worse. He looked deeply earnest as he spoke of his role as the savior of the common — or perhaps in the age of Trump "forgotten" — man and woman. Maybe he even believed it.

But the philosophy of swooping in, attacking an IndyMac-like target of opportunity and converting it into a fortune for himself (and problems for everyone else), has been a hallmark of his career. To transfer this version of over-amped 1% opportunism to the halls of political power is certainly a new definition of, in Trumpian terms, giving the government back to "the people." Perhaps what our new president meant was "the people at Goldman Sachs." Think of it, in any case, as the supercharging of a vulture mentality in a designer suit, the very attitude that once fueled the rise to power of Goldman Sachs.

Mnuchin repeatedly blamed the FDIC and other government agencies for not helping him help homeowners. "In the press it ha

Buy Gold Because of Uncertainty not Doomsday

Posted: 02 Feb 2017 06:00 AM PST

Doomsday Clock moves closer to midnight World not been as close to self-destruction since 1953 Threat of nuclear powers, climate change and technology all considered heightened risks First time the Bulletin of Atomic Scientists have singled out an individual – President Trump Doom-mongering is arguably distracting and uncertainties should be more considered Gold and silver perform well during times of uncertainty and provide a safe-haven Wall Street's largest fund managers have bet on gold in face of growing uncertainty

Buy Gold Because of Uncertainty Not Doomsday

Posted: 02 Feb 2017 05:53 AM PST

Doomsday Clock moves closer to midnight World not been as close to self-destruction since 1953 Threat of nuclear powers, climate change and technology all considered heightened risks First time the Bulletin of Atomic Scientists have singled out an individual – President Trump Doom-mongering is arguably distracting and uncertainties should be more considered Gold and silver perform well during times of uncertainty and provide a safe-haven Wall Street’s largest fund managers have bet on gold in face of growing uncertainty

The Oil War Is Only Just Getting Started

Posted: 02 Feb 2017 02:30 AM PST

It’s been a month now that investors and analysts have been closely watching two main drivers for oil prices: how OPEC is doing with the supply-cut deal, and how U.S. shale is responding to fifty-plus-dollar oil with rebounding drilling activity. Those two main factors are largely neutralizing each other, and are putting a floor and a cap to a price range of between $50 and $60.

Weaker US$ Could Send Gold & Gold Stocks to Higher Targets

Posted: 02 Feb 2017 02:23 AM PST

Gold has underperformed both in nominal and real terms. Last week it formed a bearish reversal in nominal terms and against foreign currencies. However, the good news for bulls is the US Dollar Index lost support at 100, due to the Trump administration’s tough talk against Germany (and the Euro). Couple that with no movement from the Fed and the greenback should continue its decline, thereby juicing the current rebound in Gold and especially gold stocks.

Breaking News And Best Of The Web

Posted: 02 Feb 2017 01:37 AM PST

Fed leaves rates unchanged, Yellen says optimistic things. US stocks turn volatile, gold and silver up on weakening dollar. President Trump bans immigration from several countries, fires acting attorney general for refusing to enforce ban, names supreme court nominee. Marine Le Pen catches another break.   Best Of The Web Great expectations – Real Investment […]

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Pershing Gold Is Laser-Focused on Restarting Relief Canyon

Posted: 02 Feb 2017 12:00 AM PST

Pershing Gold has been going full speed ahead to advance the Relief Canyon mine in Nevada, leading some analysts to speculate that production could begin by the end of the year.

BonTerra Hits Big Gold Numbers

Posted: 01 Feb 2017 12:00 AM PST

Bob Moriarty of 321 Gold provides an update on BonTerra Resources after the release of high-grade drill results.

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