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Monday March  2, 2015
tableTable of Contents
From David's Desk:
The Holter Report: Truth "And" Consequences?
Andy Hoffman's Daily Thoughts: Temporary Suspension Of Disbelief
Featured Articles: 
Market Recap
About Miles Franklin 

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davidFrom David's Desk
David Schectman

March 2, 2015

 

It seems there are still many people who do not believe they are considered unsecured creditors in the "Bail-In" movement. I'd just like to remind people that it's accounting 101. Debits on the left, credits on the right.

 

Now look at your bank statement, and recognize which side your deposits are located.

 

Yes, it's that simple folks, your deposits are instantly converted to bank credit once you hand over your money to the bank. - CIGA Bosko

 

A few words regarding the news stories this week on the Justice Department and the CFTC investigating ten large banks in connection with precious metals manipulation. The stories seem to suggest some urgency or new development, but the investigation has been ongoing for some time and appears to be centered on the London Fix.

 

I suppose some wrongdoing could eventually be uncovered, as whenever big bankers convene in private, it is time to have a firm grasp on one's wallet. But any precious metals investigation not centered on the COMEX is a sideshow.

 

Needless to say, I hope I'm reading it all wrong, but there is very little chance the CFTC is about to do a turnabout and address the concentrated short position in COMEX silver. The same goes for the DoJ. Both agencies have looked at this matter, then looked away and aren't about to look again, much to their joint shame. Physical investment buying will break the back of the manipulation, not some wimpy and bought and paid for regulators. - Silver analyst Ted Butler

 

Gold jumped up today in spite of the stronger Dollar.  The $1200 level seems to be a developing support level.  The B decline is still underway, but the longer gold stays above or near the $1200 level, the more likely the end is nearing for the B decline.  A clear rise above the $1215-$1220 level will be a promising move toward an upcoming C rise.  That is, if the 5-week decline we've just had is all we get, then this B decline will be a bullish B decline, and a great sign in the overall bottoming process.  Silver is looking good and it's getting help from the rise in copper.  The $16 level is good support. - Aden Sisters

 

 

 There are a couple of interesting articles leading off the Zero Hedge section that explain why the stock market is soaring while the fundamentals say it should be otherwise. Check them out.

 

When the fundamentals say one thing and the price says something else, either the fundamentals are wrong or there is a manipulation taking place. You can decide for yourself which is happening here, in the price of stocks AND precious metals. Stocks should be heading south and the case for gold and silver rising is as strong as I can ever remember it being. What gives? Perhaps Mother Nature took a nap, but I assure you, she will wake up soon and then things will resort to "as the fundamentals say they should be."

 

MISS

  • Personal Spending
  • Construction Spending
  • ISM New York
  • Factory Orders
  • Ward's Domestic Vehicle Sales
  • ADP Employment
  • Challenger Job Cuts
  • Initial Jobless Claims
  • Nonfarm Productivity
  • Trade Balance
  • Unemployment Rate
  • Labor Market Conditions Index
  • NFIB Small Business Optimism
  • Wholesale Inventories
  • Wholesale Sales
  • IBD Economic Optimism
  • Mortgage Apps
  • Retail Sales
  • Bloomberg Consumer Comfort
  • Business Inventories
  • UMich Consumer Sentiment
  • Empire Manufacturing
  • NAHB Homebuilder Confidence
  • Housing Starts
  • Building Permits
  • PPI
  • Industrial Production
  • Capacity Utilization
  • Manufacturing Production
  • Dallas Fed
  • Chicago Fed NAI
  • Existing Home Sales
  • Consumer Confidence
  • Richmond Fed
  • Personal Consumption
  • ISM Milwaukee
  • Chicago PMI
  • Pending Home Sales

BEAT

  • Personal Income
  • Markit Services PMI
  • Nonfarm Payrolls
  • JOLTS
  • Case-Shiller Home Price
  • Q4 GDP Revision (but notably lower)

But apart from that... everything is awesome.

 

Here is a broad overview of "the horrible fundamentals," courtesy of John Williams (Shadowstats)


- First-Quarter Economic Contraction Indicated by Retail Sales and Durable Goods Orders

- Headline January Real-Retail Sales Still Fell by 0.1% (-0.1%), On Top of the Monthly Plunge of 0.7% (-0.7%) in the CPI-U

- Home Sales Activity Remained Heavily Stressed

- Unchanged before Inflation, Real Average Weekly Earnings Gain Was Due to Headline Plunge in CPI-W Inflation

- January Year-to-Year Inflation: -0.1% (CPI-U), -0.8% (CPI-W), 7.5% (ShadowStats)

- Average Oil and Gasoline Prices Increased in February


"No. 699: January CPI, Real-Retail Sales and Earnings, Durable Goods, Home Sales" Web-page: http://www.shadowstats.com


Even the Fed's former Maestro sees the problems with the economy. As a "leading indicator," the stock market is seeing something else - or, as I maintain, is missing the boat.

 

******** 

 

Obama is wrong, the US economy is "extraordinary weak" says former Fed chair Alan Greenspan

The US economy is 'not strong' says former Federal Reserve chair Alan Greespan contradicting the recent pronouncements by President Barack Obama. He spoke to Kelly Evans on CNBC ahead of today's GDP number.

 

Yields on the 10- and 30-year treasurys are falling is 'an indication of how weak the overall global economy is', he said, 'effective demand is extraordinarily weak... The way I measure it, it's probably tantamount to what we saw in the later stages of the Great Depression... it's not anywhere near what the problems were back then but we haven't seen anything like that since then.'

 

  ********

 

Are banks rigging the gold and silver price?

26 February, 2015 Lawrence Williams

 


 

  • Are banks rigging the gold and silver price?

  • For many years most of the perennially bullish precious metals commentators, led in terms of continuing vehemency on the matter by the Gold Anti Trust Action Committee (GATA), have been claiming that precious metals prices are being heavily manipulated by the big commercial banks in collusion with the U.S. Fed and other central banks.
  • And they cite as evidence various documentation, mostly quite old, obtained under freedom of information requests, together with some seemingly very strange volume and price movements on the COMEX markets at potentially key inflection points for precious metals prices, as well as the huge short positions held in all four major precious metals by a small group of major banks in particular.

 

It has always been the gold bulls' gripe that the evidence they have come up with has been totally ignored by the mainstream media, but is this all changing?

In a key article published on Monday this week, perhaps arguably the most prestigious mainstream financial newspaper of all, the Wall Street Journal, reported that at least 10 major global banks are being investigated for precious metals market rigging by the U.S. authorities.

 

The paper notes specifically that it has received reliable information that prosecutors in the Justice Department's antitrust division are scrutinizing the benchmark price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation, presumably into activities on the major commodities markets.

The newspaper reports that the mega banks under investigation include HSBC from the UK, which confirmed as much in the bank's latest annual report also issued on Monday, JP Morgan Chase and Goldman Sachs from the U.S., Bank of Nova Scotia from Canada, Barclays and Standard Bank from the UK, Credit Suisse and UBS from Switzerland and Soci�t� G�n�rale from France.

It seems likely that others may be drawn into the investigations as well.

 

While some of the investigations revolve around the rather archaic London Gold Fixing system, which is being replaced from next month by a new electronic process, it is worth pointing out that a recent investigation into this by the U.K. and German authorities found no evidence of wrongdoing.

 

There does seem to be a fair amount of circumstantial evidence that there is at least a degree of price rigging on the major commodity markets by the big money.

 

This is both in terms of the short positions held, and the need to protect them, and also in the futures markets, particularly for gold and silver, where enormous paper trades are put in place which would seem to have no other purpose than an attempt to influence physical pricing.

 

However the scope and focus of any official enquiry may be key in whether these specifics are duly investigated or not. Some previous CFTC investigations appear to have fallen short in this respect (the manipulation theorists again suspect collusion) and there's no guarantee that any new investigation will be any different. But at least the possibility that the big money managers (the mega banks) might actually try to manipulate markets to their advantage has at last reached the attention of the mainstream media. It's a start!

  

 

Featured Articles

 

Mike Savage (Debt-Mageddon)

 

LeMetropole Caf� (One reason why silver was leaned on by those guys was that it has run up against a pronounced February downtrend line...) (Kitco's policy to ban LeMetropole Caf� contributors)

 

Zero Hedge (4 interesting articles)

 

Ed Steer (I've always thought that the day would come when, in pure self defense, Russia and/or China might be forced to play the gold card whether they wanted to or not.)

 

Jim Sinclair (Why Does Maryland Have The Most Millionaires Per Capita? The Answer Might Make You Angry)


Sincerely,
David Schectman
holterThe Holter Report
bill holter
Bill Holter

TRUTH "and" CONSEQUENCES?

March 2, 2015

 

Two pieces of news broke last week, if the first turns out to be true, there will certainly be far ranging consequences.  The second revelation was that of the truth being told, now we will await the far ranging consequences. 

 

News last Wednesday regarding Apple's new proposed smart watch is a head scratcher.  The headline was astonishing, "Apple to buy 30% of global gold production".  We should look at this from several different angles because several things do not add up.  If this article is true and Apple does plan to purchase 30% of global gold production, this is THE biggest game changer in the gold market since 1849!

   

One million watches per month using two gold ounces for each watch?  It sounds like an aggressive goal but Apple does have an impressive track record with new products.  The other side of the equation is the use of two ounces of gold for each watch, if true then the math becomes mind boggling and Apple will require 24 million ounces.  This represents 30% of the 80 million ounces the world produces.  My guess is you'd probably be looking at a price of close to $4,000 per watch, $2,500 for the gold content alone. 

   

Can Apple really do this?  Is it even true?  The "math" may add up but something else really does not.  First, there was absolutely zero reaction in the gold market.  Can you imagine if some builder announced they were going to build 300,000 houses per year on top of what is already being built?  What would the price of lumber, gypsum and other building products do?  They would explode and there would be front running actions of hoarding product.  Did we see anything at all like this on Thursday and Friday with gold?  Not even a whiff!

   

Next, how exactly would Apple be able to procure this amount of gold?  We are talking about 746 tons of it.  Let's compare this to what the Germans told us one year ago.  They were saying they couldn't get anymore than five tons from the Federal Reserve because of the "logistics" problems ...just too much weight I guess?  We of course now know this was false because Germany has received more than 10 times this amount and the Belgians 122 tons (which fits nicely into a Boeing 747 cargo plane). 

   

The real question to the procurement question is this, in a market that only produces 80 million ounces per year while demand has been far in excess of 150 million ounces, where would another 24 million ounces fit in?  If this Apple story is true and they really do want to market luxury I watches, they will have a serious production problem!  Namely, I think they will have a very hard time putting a "shine" on shares of GLD or COMEX contracts.  Steel cannot be delivered, construction cannot be completed nor can a vehicle run on derivatives contracts.  Though these contracts are wonderful in "pricing" product (for a while), they cannot and will not create real supply.  In fact, when they are used to suppress price, they inevitably will create excess demand and reduce available supply.  The only thing I can say about this Apple news is if true, it will blow the physical gold market wide open and expose the reality of just how rare gold truly is.

   

The next bombshell came out on Friday.  The Chinese ambassador to Belgium threw a card or two down on the table .  Qu Xing apparently made clear what we were all thinking in the first place.  He chided the U.S. for their actions within Ukraine.  What he said was not really Earth shattering stuff, but, what he said was blunt and to the point which is highly unusual for diplomats who usually try to say very little while doing it "nicely".  Mr. Xing stated the obvious when he brought up the fact that Ukraine borders Russia and of course Russia would have concerns both geographically and ethnically.  This alone was a big step because China in fact has now publicly chosen a side albeit the obvious one. 

   

The truly giant step and one I have waited for, for quite some time, was his warning if you will of U.S. external intervention.  Even stronger and more shocking was his quote "The U.S. is unwilling to see its presence in any part of the world being weakened, but the fact its resources are limited, and it will be to some extent hard work to sustain its influence in external affairs".  In case you need this broken down, China just said the U.S. is losing power and control all over the world.  A starkly blunt statement from the very polite Chinese, a long time in coming but brutally true.  Now, what if any response will come from the U.S.?  Sad to say I have seen bar fights start over more gentle words than these.

   

Before finishing I want to add one other piece of news from Friday afternoon.  Russian opposition leader Boris Nemtsov was murdered in Moscow.  Zerohedge reports and asks "who" did it? and speculates the Western press will again come down on Mr. Putin "like a ton of bricks".  They also speculate there will surely be another round of sanctions against Russia.  Several points here, if this was "official action" and sanctioned by Mr. Putin to silence Nemtsov, wouldn't it have been done in a manner other than a sloppy drive by shooting?  If done by the KGB would there even been a body to be found?  Also, with the previous news the Chinese have publicly declared sides, what good will sanctions be?  Can't Russia in essence funnel finance via and be helped by China?  Have they both signed long term trade, financial and energy deals only to see Russia hung out to dry by what obviously looks fishy (or false flaggy)? 

   

The above was written Saturday, then HUGE news broke on Sunday. 

 Hypo  Alpe-Adria bank the 6th largest bank in Austria looks to have a 9 billion euro smoking hole in its balance sheet.  Austrian officials as recently as last week claimed there was no problem ...they were either wrong or lied.  The first thing you need to understand is Hypo was originally packaged with assets from "bad banks".  The funding came from the wealthy province of Carenthina (10.7 billion euros) and Austria herself (1 billion euros).  Until now, this bank was rated "AAA" because of the provincial and national backing.  ...So much for feeling safe in a AAA rated bank eh?  Bail ins are now expected to follow.  Notice I did not say "bailout"?  Depositors accounts will now be targeted to re "fund" the bank.

 

   

What does this mean exactly?  My take is there will now be depositors in other banks doing some "math" and making some withdrawals.  Remember, interest rates are non existent and may very well be negative for depositors, why would anyone want any risk whatsoever if they are getting no return?  The question will arise "what bank" is really safe if Hypo was rated AAA and supposedly backed provincially and federally?  In my opinion, this could very well be a "rhyme" with CreditAnstalt which failed in 1931 and ushered in bank runs all over the world.

   

Is "this it"?  Is this the trigger or the "big one"?  We cannot know for sure yet but it would be foolish and very dangerous to bet it is not.  This situation arose as a result of the Swiss actions, the bank had lent in terms of Swiss francs which became harder to pay off as the franc rose in value.  People borrowed in francs because of the low yield and are now burned ...as is this bank ...and it was not the only one lending heavily in francs, others will surely surface shortly.  As I have been pounding the table over the last few weeks, I believe we will see "gaps", market closures and re set action.  Hypo could very well kick it all off as investors come to understand there are no more government or central bank "white horses" to ride in and save them.  We live in a computerized world, what used to take days or even weeks ...now only takes seconds.

   

One last tidbit, Singapore and China are racing against each other to create a cash gold market and to have their very own "fix" price.  A new Asian fix will begin March 12, this will obviously strike at the hearts of both COMEX and LBMA, not to mention London itself which is where the "fix" price has been quoted from for over 100 years.  Ask yourself "why" does China want a cash market and to set the fix each day?  This is simple, China is THE largest producer of gold and they are also THE biggest consumer, if you own the car, why wouldn't you want to drive it?  "Times they are a changing"!

   

We live in a world where truth is a scarce commodity, consequences are a different duck.  Consequences are many and becoming more plentiful with each passing day.  God forbid the potential consequences of this banking situation.  The old saying goes "sometimes the truth hurts", I tend to disagree.  It is not the truth that hurts ...it is the consequences!   

 

Regards,  Bill Holter


hoffmanAndy Hoffman's Daily Thoughts
Audioblog #81 Temporary Suspension Of Disbelief


Featured Articles

Mike Savage

"Debt-mageddon"

 

It occurs to me that debt is the act of moving future purchases into the present moment. In its purest form debt is an agreement between two parties that allows the borrower to take possession of a good or service today and pay the principal and interest back over time.

 

Both parties should win in this transaction because the borrower gets the use of a product or service he or she may not otherwise be able to afford and the lender has access to an income stream and can look forward to the retirement of that debt over time. Hopefully before the useful life of the product or service is finished.

 

What I would call "good debt" is a debt that actually produces something so that the debt would be retired by a productive enterprise that produces profits. Think of a small business loan.

 

A debt that I would call a "push debt" is a debt that would allow you to take possession of an asset and pay it off over time like a home mortgage. This is a debt that, while doesn't produce the profits to pay off the mortgage in and of itself, it is somewhat productive because at the end of the term you own an asset.

 

Non-productive debt is debt that is accrued and not only has no means of being paid off in and of itself but what is purchased is actually consumed. This type of debt is dangerous because it is actually spending for current consumption. This type of debt makes it imperative that new debt is created all of the time to pay off old debt that cannot be paid off and to continue with current consumption. Think of paying off a credit card with a credit card that has a higher balance.

 

This non-productive debt is what is issued when people pay for gas, food, medicine, etc. with a credit card because they can't pay with current income or assets. At the end of the day the product is consumed and the borrower is just left with more debt. Unless there is a substantial pay raise there is trouble in the near future as the debts keep piling up. At some point if this type of financial management continues it will likely end in bankruptcy.

 

Picture a person who has an income of $30,000.00 but has loans outstanding of $180,000.00 and no surplus to make payments. It won't be long until trouble arrives.

 

I gave you that illustration because we can understand those numbers. They are troubling and we all know why. That amount of income cannot carry that amount of debt for long.

 

These are the same numbers that the US Federal government is playing with right now-MINUS 8 zeros of course. In addition, if anyone were counting on Social Security, Medicare, prescription drug coverage, etc. the number in our hypothetical situation would go to an outstanding loan balance of 1.8 million dollars with a $30,000.00 income. OUCH!

 

Of course, our central bank has a printing press. We the people do not.

I believe we have long passed our ability to service the enormous amounts of debt and promises that we have made and are now reduced to "printing up" money to retire debt that is maturing and to pay interest on our current outstanding debt. This was illustrated when the treasury department issued a trillion dollars of new bonds in the first four weeks of the USA's fiscal 2015 year. The reason- to pay off maturing bonds. We issued an additional trillion dollars and have NOTHING to show for it - but the debt!

 

Another form of non-productive debt would be the issuance of debt to repurchase a company's stock. The debt is obtained to do some financial engineering and enrich the shareholders and the management team. Short term it is great. However, the debt remains long after the bonuses are paid out and that will be a drag on future earnings at some point. This doesn't even take into account what innovations and profits may have been earned if these assets were deployed in R&D or strategic acquisitions. Or how many jobs may have been created to retire the debt over time.

 

I am picking on the USA because we live here and I believe we will feel the greatest impact when this debt bubble, which dwarfs any other previous bubble of any kind, implodes under its own weight. (my opinion).

 

The problem is that this type of "debt-mageddon" is taking place in virtually all of the developed countries of the world. Think Greece (who, as far as I know, has the only government to officially declare, "We are bankrupt." We were bankrupt in 2010 and we took money to extend and pretend.

 

Think about Italy, Spain, Portugal, Ireland, France, even Russia and China have gone down the same path. And of course the leader on the way to the cliff has to be Japan. Their central bank obviously has no shame.

 

They are actively trying to devalue the Yen as they sell government bonds from government pensions to the central bank (which "prints" the money up as needed to buy them) and purchase stocks (foreign and domestic) and foreign bonds with the proceeds. (Conjuring up "money" with no effort and buying assets). Basically, they are making life more expensive for their citizens while exporting deflation to the rest of the world. They have admitted these actions officially. It is my opinion that most central banks are doing the same types of manipulations around the globe. That is why Ms. Yellen probably opposes the "audit the Fed" legislation.

Does anyone else see how absurd this is?

 

These are just a few of the shenanigans going on to keep the game going a little longer and make it someone else's problem. In my opinion, stocks, bonds and real estate are being artificially held higher by these games that enrich the few and other assets are being held down.

 

Just like when the Swiss allowed the Swiss Franc's artificial peg to the Euro to expire it increased the value of the Franc by 40% in 15 minutes. This is what happens when there is an artificial price and price discovery is allowed. The Franc was being held artificially low to protect the country's exporters.

I am expecting a lot more volatility as we move forward in 2015 because of the massive imbalances built up between economic reality and the underlying economy. This could be the year when many will realize that this debt (Over 200 Trillion dollars owed by governments - not including social spending) is not getting paid back in any traditional manner.

 

This debt underpins all of the financial assets. A lack of cheap money (higher rates) could implode the mortgage and stock markets in short order. Even drastic moves in currency markets could cause some serious price discovery in stock and bond markets.

 

Finally, as I woke up this morning I saw on CNBC that the government and the CFTC are investigating 10 major banks for manipulating the precious metals markets (gold, silver, platinum and palladium).

 

My guess is that a few mid-tier managers will be offered up as a sacrifice and we will move on. However, this game is almost up. I am surprised it went on this long but when there is true price discovery in these assets look out. These are the only assets that I am aware of that are not someone else's liability. This will be an extremely important point in the near future if greed turns to fear.

 

I cannot think of another asset other than gold and silver where the demand is high, supply is limited and the price is going down while trillions of currency units (what we would buy these assets with) are being conjured up by the tens to hundreds of trillions of dollars, yen, yuan, euro, etc.

 

This also appears to be the only market I have ever seen when major sellers make their largest trades when the market for trading is at its thinnest level. If you were trying to actually get a good price rather than knock the price down I would think that the more people trading would give you the best chance at a good price. This happens far too often to be a coincidence.

 

I believe that when this price discovery begins it will surprise virtually everyone in size and scope.

 

This is truly a time to hold all asset classes because this situation is highly unstable and practically any outcome is possible. In this environment it does not pay to be complacent but it very well could pay to BE PREPARED!

 ********

LeMetropole Caf�

 

In addition to the gold rally being stopped in its tracks right below $1220, silver was barely allowed to breathe. Each time it managed to poke its head above $16.60, that same annoying level, the price was shoved back down. With gold moving up, JPM and friends wouldn't even allow silver to remain positive on the day.

 

One reason why silver was leaned on by those guys was that it has run up against a pronounced February downtrend line...



A special note on those charts:

 

*We have spoken for some time now about the bases in gold and silver building. Nothing has changed except they keep growing larger. The larger the base, the more it can support even higher prices once The Gold Cartel is forced to retreat. Because of what THEY have done for so long, and kept the precious metals prices artificially low for so long, the retreat is likely to be dramatic when it kicks in.

 

Bill,

 

While gold and silver are being squatted on by a 10-ton cartel elephant today I thought I would get a handle on why Kitco is so irritating. More specifically I started writing down all of the banned gold analysts and compared them to their "approved" analyst roster. They are as follows:

 

List of gold and silver analysts banned from Kitco's site:

* GATA

* Everybody who spoke at the GATA London conference

* Anybody interviewed by the King Report

* Anybody getting posted at Jim Sinclair's site

* Koos Jansen

* Ted Butler

* Paul Mylchrest

* Tyler Durden

* Richard Russell

* Daryl Robert Schoon

* Paul Craig Roberts

* Dave Kranzler

* Turd Ferguson

* Jessie

* Jim Willie

* Brien Lundin

* Mark O'Byrne

* Peter Grandich

* Peter Schiff

* Bill Holter

* Andy Hoffman

* At least 12 more gold analysts who believe in gold manipulation who I can't think of right now.

 

List of approved Kitco commentators:

* Reuters

* Bloomberg

* MarketWatch

* CNBC

* HSBC, Citi, JPM, and any other mega-gold short TBTF bank

* Dan Norcini (now that he has parted ways with Sinclair and renounced his manipulation ways)

* Keith Weiner

* Clive Maund

* Peter Hug

* At least 12 other contributors that collectively have contributed ZERO to the gold discussion over the past 15 years, ignore manipulation, and are about as interesting as boiled turnips.

 

Conclusion: Bart Kitner apparently doesn't own a lot of physical gold, and he doesn't really prefer to see gold freely traded. He gives a megaphone to gold's enemies, while silencing gold's true friends.

 

JMc

 ********

Zero Hedge

 

Here Is The Reason Why Stocks Just Had Their Best Month Since October 2011

Submitted by Tyler Durden

 

If not the economy or fundamentals, and if not the Fed, which as we know is still on sabbatical after its massive QE1-2-Twist-3 $3 trillion liquidity injection, just what has pushed stocks up to jaw dropping all time highs? Here, courtesy of Deutsche Bank, is the answer...

 

 ********

 

Greenspan: "The Stock Market Is Great", But The Economy Feels Like In "The Late Stages Of The Great Depression"

Submitted by Tyler Durden

 

While conflicting economic data leaves hope for both bulls and bears, Alan Greenspan warns that, unlike Yellen, "US economic growth is not strong." The maestro then breaks the golden rule of central bankers and explains how The Fed was, in fact, the main driver of the P/E multiple expansion in stocks; and when asked if this ends as badly as last time? He concludes, "It depends...When real interest rates start to move up, that's when the crisis could hit," concluding with a warning that global "effective demand is extraordinarily weak - tantamount to the late stages of the great depression."

 

******** 

 

ECB Warns UK: Excluding Russia From SWIFT "Could Undermine Confidence In The Whole System"

Submitted by Tyler Durden

 

As "isolated" Russia signs a military deal with Cyprus, agrees bilateral trade with Greece, ratifies the $100 billion BRICS Bank, and offers to trade advanced anti-aircraft missiles to Iran, it seems threats of more sanctions against Putin and his nation are finding resistance from an unexpected place. With British PM David Cameron re-demanding that Russia be excluded from the SWIFT global financial payments system, none other than ECB Governing Council member Ewald Nowotny has exclaimed, "one has to be very careful here, exclusion of Russia from Swift would be very problematic because it could potentially undermine confidence in this system as a whole."

 

********

 

Don't Show This To Warren Buffett (Gold vs. The Financial System)

Submitted by Tyler Durden

 

Warren Buffett once famously chided that all the gold in the world would form a cube of 67 feet (20 meters) on each side. In doing so, he was attempting to argue that there was no point in owning gold since all the gold in the world would be an unproductive, useless hunk of metal. What's ironic (and completely lost on the venerable Mr. Buffett) is that you could make the same argument about the paper-based financial system.

 

********
  

Ed Steer

 

You may feel that what happened to the precious metals occurred entirely in response to what was happening to the almighty dollar, but a fair and objective examination of the precious metal price charts---with the minor exception of platinum---compared to the dollar index itself, will not bear that out.

 

Please don't forget for one minute that we're up against all the money, power---and evil in the world.  The "evil" part came during a chat I had with Jim Rickards in San Antonio last September.

 

Well, the U.S. is not stopping or even slowing down much when it comes to the pressure they're putting on Russia vis-�-vis the Ukraine.  Push is really becoming shove now---and I'm sure that "the dogs of war" will be howling in the Western press in the days ahead about the event in Moscow yesterday.

 

Even China has put their marker down on the Russia/Ukraine imbroglio---and the reason is obvious, because they know that if Russia falls, they're next on the USA's list.

 

Sooner or later one would think that this war would show up in the gold price---notwithstanding any improvement in demand from Apple's new iWatch.

 

I've always thought that the day would come when, in pure self defense, Russia and/or China might be forced to play the gold card whether they wanted to or not.

If this, in fact, does happen, then the U.S. will be able to point a finger at Russia and/or China and say that it was all their fault.  How materially higher precious metal prices would affect the Western bullion and investment banks that currently hold massive COMEX short positions in all four of these metals, is something that remains to be seen.  At the same time one has to consider where the metal will come from to meet the demands of all the precious metal ETFs on Planet Earth if/when this event does occur.  Questions with no answers at the moment.

And notwithstanding anything I just said, I'm still amazed how the powers-that-be can keep this dog and pony show going across all markets.  For those of us who have been around the block a few times, the current economic, financial and monetary situation is beyond absurd---and there's no way that any part of it will be ever be brought under control successfully.  The whole scenario will blow up, or melt down---and you'll excuse me for thinking that may be the grand plan, as no attempt is being made in any quarter to put the brakes on any of this.

 

It will all end terribly---and in a heap.  But as to what will emerge from the rubble after that, I haven't a clue.

 

So we wait.

********

 

China plans yuan-denominated gold fix this year, sources tell Reuters

 

China plans to launch a yuan-denominated gold fix this year to be set through trading on an exchange, sources familiar with the matter said, as the world's second-biggest bullion consumer seeks to gain more say over the pricing of the precious metal.

 

The Chinese benchmark would be derived from a new 1-kilogram contract to be launched on the state-run Shanghai Gold Exchange, a senior source directly involved in the process told Reuters.

 

China, also the top producer of gold, feels that its market weight should entitle it to be a price-setter for bullion and it is asserting itself at a time when the established benchmark, the century-old London fix, is under scrutiny because of alleged price-manipulation.

 

This Reuters article, filed from Singapore, put in an appearance on their Internet site at 3:07 a.m. EST on Friday morning---and I found this gold-related story on the gata.org Internet site.

 

 ********

Mark O'Byrne: 12 reasons why Ritholtz and many experts are mistaken on gold

 

GoldCore's Mark O'Byrne has replied conscientiously to fund manager and financial writer Barry Ritholtz's ridicule of gold investment and gold investors, "12 Rules of Goldbuggery," which can be found at Rithotlz's Internet site.

 

O'Byrne's reply is headlined "12 Reasons Why Ritholtz and Many Experts Are Mistaken On Gold" and it was posted on the goldcore.com Internet site yesterday.

 

I'm grateful to Mark for riding to the defense of us "gold enthusiasts"---but I personally wouldn't have dignified Ritholz's commentary with a rebuttal of any kind.  No feedback at all is worse punishment that the reasoned and learned response of Mr. O'Byrne.  But I salute him, thank him---and owe him a beer if we ever meet.  The links to both are embedded in this GATA release.

 

 ********

Gold 'Absolutely' a Safe Haven - BMO Analyst

 

Kitco News speaks with BMO's Jessica Fung to see how she sees gold and silver set up for the coming year.

 

Based on her research, Fung says she expects U.S. dollar strength, which has hindered upside potential for metals prices, to continue. "In this environment, where we expect the U.S. dollar to continue to strengthen, I think we're going to maintain a very high gold-to-silver ratio," she says, adding that this increasing ratio hasn't allowed silver to keep up with any gold price upswings.

 

Looking to global uncertainty, Fung says gold is 'absolutely' a safe-haven. "It always will be and that is what it will take to drive prices higher," she adds.

 

It's scary when they use the word 'analyst' to describe people like this.  She's just another mouthpiece spouting things about precious metals that she has no real understanding of.  This 4:08 minute video clip appeared on the kitco.com Internet site yesterday---and it's another contribution from Dan L.

 ********

Jim Sinclair

 

Why Does Maryland Have The Most Millionaires Per Capita? The Answer Might Make You Angry

 

Submitted by Michael Snyder via The Economic Collapse blog

 

The fat cats in Washington D.C. are living the high life, and they are doing it at your expense.  Over the past decade, there has been one area of the country, which has experienced a massive economic boom.  Thanks to wildly out of control government spending; the Washington D.C. region is absolutely swimming in cash.  In fact, at this point the state of Maryland has the most millionaires per capita in the entire nation and it isn't even close.  If you have never lived there, it is hard to describe what the D.C. area is like.

 

Every weekday morning, hordes of lawyers, lobbyists and government bureaucrats descend upon D.C. from the surrounding suburbs.  And at the end of the day, the process goes in reverse.  Everyone is just trying to get their piece of the pie, and it is a pie that just keeps on growing as government salaries, government contracts and government giveaways just get larger and larger.  Of course our founders never intended for this to happen.  They wanted a very small and simple federal government.  Sadly, today we have the most bloated central government in the history of the planet and it gets worse with each passing year.

If you were to ask most Americans, they would tell you that the wealthiest Americans probably live in cities such as New York or San Francisco.  But thanks to the Obama administration (and before that the Bush and Clinton administrations), the state of Maryland is packed with millionaires.  In particular, the Maryland suburbs immediately surrounding D.C. are absolutely overflowing with government fat cats that make a living at our expense.  Every weekday morning, huge numbers of them leave their mini-mansions in places such as Potomac and Rockville and drive their luxury vehicles to work in the city.  As the Washington Post has detailed, at this point approximately 8 percent of all households in the entire state of Maryland contain millionaires, and the rest of the area is not doing too shabby either...

 

In Maryland, nearly 8 out of every 100 households in 2014 had assets topping $1 million, giving the state more millionaires per capita than any other in the country, according to a new report from Phoenix Marketing International.

 

 

Hi Jim,

 

If the Indians implement this strategy will it succeed, or be attacked by the other central banks?

 

"Though stocks of gold in India are estimated to be over 20,000 tonnes, mostly this gold is neither traded, nor monetized, the Finance Minister said.

He also proposed to develop an alternate financial asset, a Sovereign Gold Bond, as an alternative to purchasing metal gold.

 

"The bonds will carry a fixed rate of interest and also be redeemable in cash in terms of the face value of the gold, at the time of redemption by the holder of the bond," he said. "

 

Cheers,

CIGA Gary

 

Gary,

 

Gold is deep in the heart and soul of India. They just might plow forward as Western Central Banks now have the Brics to contend with. The reset will start amongst the Brics.

 

Jim

******** 

 

Union Budget 2015-16 proposes steps to monetize gold, contain imports

 

To curb gold imports and monetize large idle stocks of the precious metal, Finance Minister Arun Jaitley on Saturday announced three schemes, including redeemable gold bonds, which will carry a fixed rate of interest.

 

The Minister proposes to introduce a gold monetization scheme, which will replace both the present gold deposit and gold metal loan schemes.

 

"The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold," Mr. Jaitley said in his Budget speech.

 

India is one of the largest consumers of gold in the world and imports as much as 800-1,000 tonnes of gold each year.

 

Though stocks of gold in India are estimated to be over 20,000 tonnes, mostly this gold is neither traded, nor monetized, the Finance Minister said.

 

Friday February 27, 2015




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