If my radar is right, the coming European Central Bank QE program will be a concoction of asset-backed securities in an effort to remove non-performing loans from bank balance sheets. There have been a multitude of “conjectures” about how the ECB is going to pump liquidity into a very low growth economy. Previously it seemed that some at the ECB wished to install negative yields on bank reserves. This would be an experiment fraught with danger as it could cause great problems for the money funds that have recently returned to Europe. The problem for money market funds was epitomized in a statement from Bank of New York Mellon’s CFO Todd Gibbons after today’s earnings release and reported in tomorrow’s Financial Times:”If the eurozone were to go to negative rates that would actually present the opportunity for us to charge for deposits and we are giving that very serious consideration.” The idea of “negative interest rates on reserves” has been bandied about as some members of the ECB board have tried to stem the euro currency’s recent strength. It has been surmised that charging banks for parking excess reserves at theECB would force European banks to reverse course and put the funds out to lending rather than having to pay a fee for the safety of the ECB. ...
[As] the net open interest in gold is approaching historic lows---the net open interest in silver is blowing out almost to new highs, despite the fact that both gold and silver are either at, or within spitting distance of their low prices as this current rendition of the engineered price declines unfold.
Can gold still return to and beat its prior highs, absent a major political crisis or a full-blown military conflict?
Laurynas Vegys, Research Analyst
Today I want to talk about crises. Two of the most notable ones that have been in the public eye over the course of the past 6-8 months are obviously the conflicts in Ukraine and Syria. The two are very different, yet both seemed to cause rallies in the gold market.
I say “seemed” because, while there were days when the headlines from either country sure looked to kick gold up a notch, there were also relevant and alarming reports from Argentina and other emerging markets, as well as from China during many of the same time periods. Nevertheless, looking at the impressive gains during these periods, one has to wonder if it actually takes a calamity for gold to soar.
If so, can the yellow metal still return to and beat its prior highs, absent a major political crisis or a full-blown military conflict? My answer: Who needs a new crisis when we live in an ongoing one every day? ....
Eric King: “Victor, how will this all end? Because it has to end tragically, as you said.”
Sperandeo: “There are only two ways that empires or superpowers come to an end. One is through bankruptcy, but after Lehman Brothers they will never let anything fail again. So I can’t believe they will allow bankruptcy. When you have a printing press, you print the money.
“So it has to end in hyperinflation. A hyperinflation has nothing to do with inflation. It has to do with a run on the bank, the selling of bonds and the currency. That is much different than an increase in the money supply causing product prices to rise -- much different. Think of it as a run on the bank. ...
Absolute value resides primarily in the energy and precious metals sectors. We believe that energy is about to become much more costly. We believe that we are in the very early stages of a major repricing of energy assets. The emerging cycle is recognized by few, but is clearly visible in the recent price action of the companies within that sector. As global demand steadily grows and global supply struggles, “Mother Nature” is tapping on our shoulders. Things are about to change in an inescapable way. Conflict over energy is the underlying cause of most geopolitical events that are unfolding and could very well turn into a major conflagration. Alliances are being redrawn around energy assets.
We also believe that investors need to continue “stacking” precious metals and the mining shares. Other than energy, we cannot think of another sector embodying such tremendous intrinsic value. As precious metals continue to hemorrhage from the West to the East, the bulk of the inhabitants of the planet apparently agree with this assessment. ...
Richard Russell tells King World News: “For the benefit of new subscribers, I want to state my position. I think the bear market that started in 2007 was interrupted, BUT NOT ENDED, by the Fed. Somewhere ahead, I believe this bear market will run to conclusion. I also believe that the great recession never ended, but was masked by the “manufacture” rally in the stock market. Thus the reason that the Fed cannot produce its much-wanted 2% inflation is that the deflationary pressure of the great recession is still in force. The stock market continues to struggle higher, with the needed help of the Fed’s QE and zero interest rates.
The question of the year will be how the markets react when the Fed's QE starts to fade. Sensing the deflationary pressures, the Fed has backed off on the imminent end to its zero interest rates. The latest is that zero rates (ZIRP) will continue far into the future. My investment stance continues to be holding physical gold and silver with just enough cash to get me by on a daily basis. Incidentally, ...
Technology, like Nature itself, has no emotional stake in what is creatively destroyed.
We all know the Federal Reserve is terrified of deflation, because they keep telling us that deflation is the equivalent of death and inflation is the equivalent of oxygen. What they fail to mention is that inflation is only oxygen for debtors barely able to service their debt and those who profit from debt, i.e. bankers and financiers.
For everyone earning a wage or salary, inflation is the equivalent of death by a thousand cuts and deflation is the elixir of life. When prices decline, our money goes further, i.e. our purchasing power increases.
Only bankers, governments and other parasites that live off the carrion of debt fear deflation and try to destroy the purchasing power of wages with everything in their power. The irony of all the parasites pushing inflation as the cure-all is the only ...
Bonus deal: In case you missed it yesterday, check out HitBliss. This free service awards you credit for watching commercials, credit you can exchange for movie and TV rentals or a Pandora One subscription. And thanks to new HitBliss apps, you can earn on the go.
Here's proof at how much we have become consumer cattle. Paying people to watch commercials? Good grief.
They won't realize the geopolitical winds which are now blowing. Off in their own lala land, the average American will be focused on sports, celebrities, what the right amount of stealing (taxes) in society is, gay rights, which foreign countries "we" should bomb next, the first woman president, and so on and so forth, while their livelihoods are sacrificed in the name of the US government.
They will wake up one morning, and their prospects will be gloomier than they are now. Don't think such a thing happens? This exact thing just happened in the Ukraine. Devastation. People wake up one morning and all the sudden everything they had worked so hard for is gone. "Oh, but that's Ukraine!" you might say. "Not here in the US."
Well, when you realize that a lot of the policies now being instituted in Ukraine were supported by the US government and the International Monetary Fund, which is largely funded by the US government, then maybe, just maybe you will start to see things differently. If not, I understand. Public schools are not kind institutions to reason. If that's not reason enough just consider the growing police state. ...
Critics of price charting charge that charts only show for certain where a market has been. I completely agree. These charges are valid. Yet, understanding where market has been can provide historical context — and this historical context can be useful in anticipating the future.
Thank God for the manipulation. Could be collateral stress? We get to buy at lower prices. I just wish they manipulated the price of food, clothing and shelter lower as well. – Comment from a reader
There’s no question about it – the Fed and the Government’s taxpayer-funded Exchange Stabilization Fund have all of the markets under “lock-down” control right now. The real economic data plus the geopolitical risk becomes worse by the day. And yet, just when it looks like the stock market is going to drop off a cliff, out of nowhere the S&P 500 futures take off straight up as if launched from an anti-aircraft missile launcher. Similary, every time the precious metals start to make a serious move higher, HFT-driven mini-flash crashes start to occur repetitively during the least active periods of overnight trading and always after the Shanghai Gold Exchange closes. ...
"Today’s news and yesterday’s news, with gold declining, is very interesting. The most important reason put out by the bullion banks and the mainstream media had to do with the study released by the World Gold Council that suggested that not all of the gold that’s been imported into China has been used for central bank reserves or has gone into retail safekeeping.
“They suggested that a substantial amount of gold was imported into China to be used as security for lending transactions. And the supposition of the study, of course, is that this is somehow other than a good thing for the gold market.
I would point out that what that means is that a whole class ...
Click over for the full interview. It is the kind of news that makes you scratch your head.
I still owe you guys un update on withdrawal numbers from the SGE, published last friday April 18. SGE withdrawals, which equal Chinese wholesale demand, in week 15 (08-04-2014/11-04-2014) accounted for 21 metric tonnes. A lot of gold but the lowest numbers since March 2013 – also due to the fact the SGE was closed on April 7, leaving only four days of trading in week 15. Nonetheless, demand has been in a downtrend for six weeks in Shanghai and premiums are negative, which doesn’t hint at a supply shortage on the SGE. At the same time we saw GOFO rates being negative over this period in western markets, which does hint at supply shortages. This situation illustrates the PBOC’s gold policy; gold is allowed to be imported but not exported. ...
Click through for the charts and rest of the post.
New evidence suggests the involvement of Chinese mafia in smuggling gold into India.
Author: Shivom Seth Posted: Tuesday , 22 Apr 2014
MUMBAI (MINEWEB) -
A Dubai based Chinese mafia appears to be playing a key role in gold smuggling incidents, especially in South India, customs officials in India say.
Over the last few months, customs officials at the Rajiv Gandhi international Airport in Hyderabad, have detained more than 50 passengers and recovered approximately 80 kilograms of gold. On April 1, about 7.70 kilogram of gold was seized from two passengers by the Directorate of revenue intelliegence sleuths, which was the first instance to alert the investigating team about the role of the neighbouring nation.
"Though it sounds incredulous, investigators have come across enough evidence to indicate that Chinese gangs are hiring operators in other countries and smuggling gold into Hyderabad, Kerala and other Indian cities," said Kalyan Revella, Assistant Commissioner, Customs and Central Excise, at Hyderabad. ...
There's a Chinese mafia? Isn't typically the police in China?
How bankers use HFT algorithms to impede life, liberty and the pursuit of happiness
Because unscrupulous bankers have turned gold and silver futures markets into a fractional reserve gold and silver market in which they fraudulently trade hundreds of more paper ounces of gold and silver than are produced in the physical world every year, I argue that it is the notional daily trading volume of gold and silver futures contracts that truly matters, and not the actual contractual dollars that trade. Why? Because bankers use the notional amounts, and not the actual contractual amounts, represented by gold and silver futures contracts, to suppress gold and silver prices. For example, in this article I wrote in April, 2013, I illustrated how the banking cartel sold 6,000,000+ ounces of gold in less than half an hour, represented by 60,000 gold futures contracts to spark a sell-down in gold prices. The banking cartel likely did not even sell one physical ounce of gold to affect this rout on the price of gold and the 6,000,000 gold ounces they sold were notional and imaginary ounces of gold that the bankers never owned nor sold. However, it was the imaginary 6,000,000+ ounces of imaginary paper gold ...
Gold will trade in a narrow range throughout the second quarter of this year but is poised to break higher later in 2014
Posted on April 22, 2014 by Tom Jennemann
Orlando, Florida 22/04/2014 – Gold will trade in a narrow range throughout the second quarter of this year but is poised to break higher later in 2014 when cracks start to appear in the US economic recovery, Lear Capital CEO Scott Carter told FastMarkets.
“We’re likely to see better second-quarter US GDP numbers because of pent-up demand from the winter storms. So for the next couple months, I don’t expect gold to move up or down dramatically, unless of course the situation in Ukraine blows up,” Carter said.
“I’m confident that we hit the bottom at $1,180 but, with that said, it will be hard to move out of this $1,280-1,350 area until the second half. However, everything will change when the Fed comes out to slow tapering or sends guidance that economy is weaker than previously thought. That’s when gold will take off,” said Carter, who sees a peak of $1,450 later this year.
The Fed is currently buying agency mortgage-backed securities at a pace of $25 billion per month and longer-term Treasury securities at a pace of $30 billion per month, totalling $55 billion per month. It has cut QE by $10 billion per month at each of the three most recent Federal Open Market Committee meetings. ...
Click through for the full interview. Hat to to @ScottCarter
Once vested interests take control, the only possible "solution" left is collapse. I have long identified diminishing returns as a key dynamic in the current unraveling of the Status Quo. Why is this so? We can summarize diminishing returns as dumping more money, capital, energy and effort into a system just to keep the output from falling to zero.
But as the costs of keeping the system from imploding rise, they soon consume all the oxygen in the system, and the system implodes anyway ...
Debt is going to be a key driver of gold's price. And indeed, has already been. Once the reality of a failed fiat currency hits debt is going to revalue gold much higher. Silver, too.
Like it or not (I’m in the “NOT” camp), gold is locked in a broad trading range of $1,200 - $1,400. I think one should refrain from being a buyer unless it’s near the bottom of the range or has clearly broken above the top of the range. That may mean weeks or months of doing nothing, but when I look back over my 30 years in this game, doing nothing versus something would have been the better choice more times than not....
China has begun allowing gold imports through its capital city, sources familiar with the matter said, in a move that would help keep purchases by the world’s top bullion buyer discreet at a time when it might be boosting official reserves.
The opening of Beijing as a third import point after Shenzhen and Shanghai could threaten Hong Kong’s pole position in China’s gold trade, as the mainland can get more of the metal it wants directly rather than through a route that discloses how much it is buying.
China does not release any trade data on gold. The only way bullion markets can ...
(CNSNews.com) - In the budget proposal he presented to Congress last month, President Barack Obama called for what would be the highest level of sustained taxation ever imposed on the American people, according to the analysis published last week by the Congressional Budget Office.
Under Obama’s proposal, taxes would rise from 17.6 percent of Gross Domestic Product in 2014 to 19.2 percent in 2024. During the ten years from 2015 to 2024, federal taxation would average 18.7 percent GDP ...
HardAssetsInvestor: How would you characterize the gold market right now?
Joe Foster: I'd characterize it as it's forming a base. I think we've established the lows around $1,200 an ounce and it's in a bottoming process. We’ll spend most of the year in a range, but the likelihood is for prices to go higher, not lower.
HAI: Inflation hasn't been a notable factor for many years now. Do you see that changing any time in the not-too-distant future?
Foster: Possibly, yes. The unemployment rate is coming down. The main driver of inflation is labor and wages. As the economy continues to pick up and more people find work, there is a shortage of qualified people out there. We could see some wage inflation sometime in the next couple of years that may concern people.
HAI: Will that inflation drive gold higher?
Foster: Gold's driven by financial stress. The source of the stress doesn't matter. You could have bad levels of ...
Here's something you don't see very often: For a day and a half this week, the Japanese government's benchmark 10-year bonds attracted not a single successful private sector bid. At today's artificially-depressed yields ...
Today one of the legends in the business spoke with King World News about what the elites fear is going to crash the American economy and the global financial system. Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also discussed the massive demand for gold from China as well as what to expect from the gold market in the future.
Barron: “The flow of gold into China is massive and it hasn’t abated. If anything, it has picked up speed. If you look at the growth in Chinese gold demand over the past few years, it won’t be long before we see almost the entire annual gold production in the world going to China....
Today one of the legends in the business warned that for the first time banks are beginning to push what could be a staggering amount of reserves into the financial system. 50-year veteran Art Cashin, who is Director of Floor Operations at UBS ($650 billion under management), also warned the implications of this are “huge” because it will have a massive impact on major markets, Fed policy, inflation, and may possibly lead to hyperinflation.
By Art Cashin Director of Floor Operations at UBS
April 17 (King World News) - “On this day (+2) in 1536, there began one of those ventures that remind us cynics of the hope and promise that once was America. To hear today's citizens tell it, there's something in America that brings out a "dog eat dog", survival of the fittest attitude. When did all this happen??
Well, anyway back in 1536, America was new, pristine, an innocent wonderland. Columbus had found it just 44 years earlier. Cabot and Verrazano claimed to have seen wondrous shores teeming with lobster just a few years earlier. It would be nearly a century however until there were pilgrims, Henry Hudson, John Smith or Pocahontas.
But rumors of this new and glorious virgin land inspired curiosity - a kind of Jurassic Park of its day. And as Michael Eisner might say when folks are curious, or seek adventure and hope to see something new - there is money to be made. (Okay! Okay! Skip Euro Disney.)
So a man named Richard Hoar (or Hore) offered (for a fee) a fantastic cruise to this wondrous new land and back. He was an experienced sea-captain and also knew how to advertise. Soon, 25 well-to-do young men (and their servants) as well as a small group of the aspiring middle class signed on. Capt. Hoar rented two boats and with 120 adventurers sailed west. ...
I rather enjoyed this read. Click through for the full post and to see how the story ends.