There's been a lot of talk about this today, highlighted by a dedicated post at ZeroHedge this evening. In the hope of minimizing the confusion, I thought we should give this topic its own thread.
Basically, here's the deal.
Indian citizens have long recognized the value of owning and saving in gold...and for good reason. As the Reserve Bank of India has aggressively devalued the rupee over the past 5 decades, the value of gold in rupees has skyrocketed!
UBS Group AG won immunity from criminal fraud charges in a Justice Department investigation into misconduct in the trading of precious metals .
The Swiss bank’s main UBS AG unit won’t be charged by the department’s criminal division for information the firm disclosed to prosecutors about precious-metals transactions, according to the company’s plea agreement released on Wednesday to resolve a probe into interest-rate manipulation.
Prosecutors have been investigating whether at least 10 banks, including Barclays Plc, JPMorgan Chase & Co. and Deutsche Bank AG, manipulated prices of precious metals such as silver and gold , Bloomberg reported in February. The scrutiny follows international probes into the rigging of financial benchmarks for rates and currencies, which have yielded billions of dollars in fines.
The Justice Department on Wednesday announced that JPMorgan, Barclays and units of Citigroup Inc. and Royal Bank of Scotland Group Plc agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros.
Did you know that there is more than $28,000 of debt for every man, woman and child on the entire planet? And since close to 3 billion of those people survive on less than 2 dollars a day, your share of that debt is going to be much larger than that. If we took everything that the global economy produced this year and everything that the global economy produced next year and used it to pay all of this debt, it still would not be enough. According to a recent report put out by the McKinsey Global Institute entitled “Debt and (not much) deleveraging“, the total amount of debt on our planet has grown from 142 trillion dollars at the end of 2007 to 199 trillion dollars today. This is the largest mountain of debt in the history of the world, and those numbers mean that we are in substantially worse condition than we were just prior to the last financial crisis.
The stock of gold held by individuals - which is 'neither traded nor monetised' - is estimated to be over 20,000 tons, which would be worth about Rs 60 lakh crore at the current market price.
MUMBAI (Bullion Street): Seeking to mobilise idle gold worth up to Rs 60 lakh crore held by households and institutions, the government of India has unveiled the details of its proposed gold monetisation scheme.
Under this scheme, individuals will be able to deposit the yellow metal with banks in return for interest payable after 30/60 days of opening an account. More important, the interest earned on the gold would be exempt from income tax as well as capital gains tax, the Press Trust of India (PTI) said in its report on Tuesday.
I'm going out on a limb: I think the next bull phase in the gold market gets underway before October.
But not due to runaway demand...
At an International Monetary Fund (IMF) forum last month, China's central bank governor, Zhou Xiaochuan, made it clear he believes the renminbi is "ready for reserve status." It would be a huge step for the Chinese currency, starting with the fact that it would be added to the basket of currencies IMF member countries can include in their official reserves. Billions would be invested in it. ...
"The Real Reason China Is Buying Up The World's Gold"
by, Avery Goodman
Summary China's central bank is buying huge quantities of gold. China wants the yuan to become a reserve currency, but does not want a "strong yuan". China wants the leverage to control all currency values, which requires control of the gold market. China has spent the last 6 years importing thousands of tons of gold and buying all of its own domestic production. According to Koos Jansen, the China Gold Association (CGA) Yearbook listed net imports in 2013 at 1,524 tonnes, with an additional 428 tonnes from domestic production, a sum total of 1,952 tonnes. In 2014, China imported at least 1,250 tonnes and domestically mined 452 tonnes, for a sum total of 1,702 tonnes. Total imports amounted to more than 410 tonnes in the first two months of 2015 alone, which is a big jump from 2014 demand. On April 20, 2015, Bloomberg Intelligence estimated that The People's Bank of China tripled its holdings of gold bullion, since April 2009, to 3,510 metric tons. That means, more or less, the Chinese government has purchased virtually all of its domestic gold production over the last 6 years. The estimate is based on trade data, domestic output and the figures published by the China Gold Association. That means that the Chinese government is the second largest gold-holder in the world, outmatched only by the USA, which claims an alleged hoard of 8,133.5 tons of the yellow metal.
Fascinating read. click through for the full post.
As you may have noticed from my postings of the Comex Warehouse Gold inventories, lately there has been a significant drop in the level of 'registered' or deliverable gold held there. And since the open interest or number of contract held by punters and investors is not dropping commensurately, the number of claims per deliverable ounce has risen. Quite a bit actually.
As a snarky observer pointed out, somewhat presumptuously I thought, there is quite a bit of other gold stored in these warehouses. It is called 'eligible' gold meaning that it is in the proper format for Comex trading.
By Marcia Christoff-Kurapovna from the Mises Daily
The world that disappeared in 1914 appeared, in retrospect, something like our picture of Paradise,” wrote the economist Cecil Hirsch in his June 1934 review of R.W. Hawtrey’s classic, The Art of Central Banking (1933). Hirsch bemoaned the loss of the far-sighted restraint that had once prevailed among the “bankers’ banks” of the West, concluding that modern times “had failed to attain the standard of wisdom and foresight that prevailed in the 19th century.”
That wisdom and foresight was once upon a time institutionalized throughout an international monetary culture — gold-based, wary of credit, and contemptuous of debt, public or private. This world included central banks including the Bank of England, the Bank of France, the Swiss National Bank, the early Federal Reserve, the Imperial Bank of Austria-Hungary, and the German Reichsbank. But the entrenched hard-money ideology of the time restrained all of them. The Bank of Russia, for example, which once required 50 percent to 100 percent gold backing of all notes issued, possessed the second largest gold reserves on the planet at the turn of the twentieth century.
“The countries that were tied together in the gold standard system represented to a not inconsiderable degree a community of interest in and responsibility for the maintenance of economic and financial stability throughout the world,” recounted Aldoph C. Miller, member of the Federal Reserve Board from 1914 to 1936, in The Proceedings of the Academy of Political Science, in May 1936. “The gold standard was the one outstanding symbol of unity and economic solidarity which the nineteenth century world had developed.”
Financial expert Egon von Greyerz says forget about making money in today’s global economy. The primary objective should be protection and wealth preservation, and von Greyerz goes on to explain, “It’s all about risk . . . what you are looking at now is a world where risk is unprecedented. We have bubble land. We have bubbles in stock markets. We have bubbles in bond markets. We have bubbles in assets markets, such as the art market, for example. On top of that, we have a banking system that is bankrupt. We have country risks that are enormous, but we also have geopolitical risks. It looks like we are in bubble land where bubbles can expand exponentially, but you cannot break the laws of science. At some point, bubbles will burst. You can’t buy fire insurance after the fire. Number one, from the point of investors, is to protect yourself.”
Did you know that 89 percent of all minimum wage workers in the United States are not teens? At this point, the average age of a minimum wage worker in this country is 36, and 56 percent of them are women. Millions upon millions of Americans are working as hard as they can (often that means two or three jobs), and yet despite all of their hard work they still find themselves mired in poverty. One of the big reasons for this is that we have created two classes of workers in the United States. “Full-time workers” are entitled to an array of benefits and protections by law that “part-time workers” do not get. And thanks to perverse incentives contained in Obamacare and other ridiculous laws, we have motivated employers to move as many workers from the “full-time” category to the “part-time” category as possible. It may be hard to believe, but right now only 44 percent of all U.S. adults are employed for 30 or more hours each week. But to get any kind of a job at all is a real challenge in many parts of the country today. As you read this article, there are more than 100 million working age Americans that are not employed in any capacity. And according to John Williams of shadowstats.com, if the federal government was actually using honest numbers the unemployment rate would be sitting at 23 percent. That is not an “employment recovery” – that is a national crisis.
It was about two years ago when we summarized all the known and confirmed rigged markets.
Libor - interest rates (link) ISDAfix - swaps (link) Platts - oil prices (link) WM/Reuters - FX (link) High-Frequency Trading - equities (link) Since then things have gone from bad to worse for believers in fair and efficient markets, with not only countless more banks now admitting they rigged Libor and FX, not to mention gold (yes gold too was manipulated as impossible as it sounds) and even the CFTC finally figured out just how spoofers manipulate the price of both stock indices and gold, but that biggest master manipulator of all, the world's central banks, unleashed a record liquidity blitz into world markets with 2015 set to be the year in which CBs are set to monetize all net issuance.
This thing really burns me. Click through for the full piece.
[If you really study the patterns] you can actually see the when they turn on and off the algorithm program used to manipulate the gold and silver markets. – Jeff Nielson, Shadow of Truth
Rule of Law has been completely abandoned by the Government and business elite. What remains is a citizenry in this country that has been largely dumbed-down and taught ignore or deny the reality unfolding right before its eyes.
Stephen Leeb: “Many people are concerned about what is happening in Europe. There is a lot of fear concerning whether or not Greece will drop out of the euro. What people are not watching is the kind of infrastructure spending that China is announcing….
This erosion of opportunities to complete life's stages and core dramas is rarely recognized, much less addressed.
The consequences of economic stagnation are not limited to finance: stagnation is causing a social depression. We can best understand this social depression by examining how the natural stages of human life are being disrupted.
Confucian thought views life as a developmental process with seven stages, each roughly corresponding to a decade: childhood, young adulthood (16-30), age of independence (30-39), age of mental independence (40-49), age of spiritual maturity (50-59), age of acceptance (60-69), and age of unification (70 - end of life).
Gold expert Rob Kirby arranges deliveries of the yellow metal to his clients measured by the ton. Kirby says news that China may disclose it has 30,000 tons of gold will be devastating for the West. Kirby contends, “We could be fast approaching the moment when the tide is going to turn and go out, and we are going to find out who’s wearing a bathing suit. I think that time is fast approaching, if it is not here already.” Kirby also says, “I think the implied message is we are going to show you how much we have, and then you are going to have to show us how much you have. . . . America, very likely doesn’t have, in my view, doesn’t have the gold they claim to have. They also probably spent a lot of other people’s gold in safe keeping.”
In the latest edition of his newsletter, Strategic Intelligence, James G. Rickards elaborates on a point often made by your secretary/treasurer, as last week in an interview with Dave Kranzler and Rory Hall on their "Shadow of Truth" program:
That is, China is not acquiring gold because it wants to liberate the currency markets from rigging by Western central banks or because it wants to impose on itself the restraint of a gold standard but because it wants its own power to rig the currency markets.
Rickards writes: "China wants to do what the United States has done, which is to remain on a paper currency standard but make that currency important enough in world finance and trade to give China leverage over the behavior of other countries.
The US dollar continued to lose ground this week, contributing to a firmer trend for precious metals. Gold rose over $40 to $1223, and silver by $1.13 to $17.45, though prices initially opened a little lower in early European trading this morning, perhaps anticipating some pre-weekend profit-taking. Gold has now risen over 3% on the year, marginally beating the S&P 500 Index, which is up 2.5%, but far better than bonds, the US 10-year Treasury price being down about 4%.
On the Comex futures market there appears to be increasing demand for gold and silver, with both volumes and open interest rising with the price. The next chart is gold. ...
The costs and consequences of Greece exiting the Eurozone may well dwarf the financial losses triggered by Greece's default.
The term Jingle mail originated in the great popping of the housing bubble 2008-2011. It refers to defaulting homeowners mailing the keys to their house back to the lender, and it denotes the finality of default: it's over. The dream of ownership and easy wealth leveraged by vast debt: over. The dream that loans to marginal borrowers were as good as loans issued to qualified buyers: over.
And most importantly, the lender's dream that marginal borrowers could somehow make the payments if the terms were tweaked is also over.
Which brings us to the jingle mail Greece is about to send Europe.Greece is analogous to the marginal home buyer who took on way more debt than the household could afford. Europe is analogous to the lender, who faces a spectrum of unsavory options: 1. Accept the reality of default, write off the loans and accept the horrendous losses.
By Gerald Celente Founder Of Trends Research Institute
May 13 (King World News) – When the Panic of ’08 hit, the United States — the financial and military police of the world — led the charge to stop the spread of economic terror. Under the command of US Secretary of Treasury Hank Paulson, orders were given to save too-big-to-fail banks and over-leveraged financial institutions drowning in red ink. On Oct. 3, 2008, President George W. Bush signed into law the Troubled Asset Relief Program that allowed the government to purchase assets and equities institutions had accumulated from engaging in a spectrum of dirty deals — deals for which they would pay minimal fines before being allowed to grow even bigger….
Occam's Razor is the sharpest way to cut through tangled explanations for the epic rout in global bond markets. The simplest explanation is the best. "Frustra fit per plura quod potest fieri per pauciora." Bond yields are soaring because the world's central banks have demonstrably done enough for now to stop deflation taking hold. The short-term monetary cycle is turning. The reflation trade is on. The broad M3 money supply has been growing at a 7pc rate in the US over the past six months (annualized), and nearly 8pc in the eurozone. Fiscal austerity has run its course as well. Budget policy is no longer contractionary in either of the world's two biggest economic blocs.
Those who are confident the central banks can print unlimited money may find there are political and financial consequences to such extremes that cannot be foreseen.
The central problem with central banks is their mandate now includes propping up all asset markets globally. Back in the good old days before the Global Financial Meltdown of 2008-09, central bankers reckoned they could control the "animal spirits" released when the risk-on herd destabilized into a chaotic risk-off stampede.
As former Federal Reserve chairman Alan Greenspan noted in his 2014 Foreign Affairsarticle Why I Didn't See the Crisis Coming, the models used by central banks and private economists alike presumed the demand for risk-on assets would remain robust even in a downturn:
(CNSNews.com) - The number of jobs in manufacturing has declined by 7,231,000--or 37 percent--since employment in manufacturing peaked in the United States in 1979, according to data published by the Bureau of Labor Statistics.
The real median household income of Americans who have completed high school--but have not attained a higher degree--also peaked in the 1970s and has declined since then.
Click through for the rest.
This can only mean future pain: "In fact, according to the Census Bureau (Tables H-13 and H-14), the real median household income of an American householder who has completed four years of high school peaked in 1973 at $56,395 in constant 2013 dollars."
Most developed economies have such weak fundamentals that they are trying ever more desperate policies to get things going again. Japan’s latest efforts have been built around one central policy: currency devaluation. More recently the euro has re-joined the race to the bottom and it’s only a matter of time before other currencies follow suit. Gold provides an effective shield against the blows raining down on savers and investors in the ongoing currency wars. Here’s more on why, and how to go about it.
Despite a quarter of a century of economic funk, Japan is still the world’s third largest economy. It’s also the fourth largest exporting nation, as shown in the following chart of the top 10 exporters. ...
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