By Teresa Matich+ - Exclusive to Palladium Investing News
The term “price manipulation” is usually applied to the silver and gold markets, but this month it’s being used elsewhere. On Tuesday, a class-action lawsuit was filed that accuses BASF Metals, Goldman Sachs (NYSE:GS), HSBC Bank USA and Standard Bank of rigging platinum and palladium prices for their own benefit.
The complaint, filed on behalf of Florida-based jewelry company Modern Settings, claims that the companies’ participation in twice-a-day teleconferences used to “fix” prices for platinum and palladium “allowed them to glean information about the direction of platinum and palladium prices” ahead of the rest of the market.
In the past century nations form across the globe stored their gold at the Federal Reserve Bank of New York (FRBNY) for numerous reasons; (i) during World War II Germany was confiscating as much gold as they could from nations they occupied, surrounding nations anticipated by shipping their gold to the US; (ii) after World War II there was the threat of the USSR to seize sovereign gold reserves in the Cold War; (iii) under the Bretton Woods System (1944 -1971) it was agreed the US dollar was the world reserve currency, backed by gold. Here for it was convenient to store gold in New York for trade settlement, additionally dollars which were converted into gold were credited to FRBNY foreign gold accounts; (iiii) after the Bretton Woods system, when gold was officially removed from the monetary system, gold was often sold or leased by central banks, facilitated from their FRBNY accounts.
The purpose of central bank financial repression and ZIRP is to distort and inflate asset prices. Our monetary politburo even admits that it is in the monetary scam business via its self-serving doctrine called “wealth effects”.
The game here is to drive the stock market averages ever higher through massive liquidity injections into the Wall Street dealer markets. This purportedly causes people to feel richer and to spend and invest more, creating a virtuous circle of prosperity, world without end.
We know by now, however, that “wealth effects” money printing does not help the main street economy. And while it does produce awesome financial market gains—–these turn out to be unsustainable bubbles that inexorably crash. Since the turn of the century, most central banks have participated in this scam—either because they have embraced the Keynesian gospel or have joined the money printing party out of defensive necessity to protect against inflation of their own exchange rates. So the resulting financial bubbles have been global in scope
Author: Willem Middelkoop Posted: Wednesday , 26 Nov 2014 THE BIG RESET -
Gold is making a remarkable come back into our financial system. Russia and China are openly accumulating gold in an aggressive way, while India has been confronted with huge gold demand, even leading to large trade deficits.
In Europe Germany, Switzerland, France and the Netherlands are in the process of repatriating gold or discussing it. On top of this even the ECB stated they could buy gold, probably in an effort to fight deflation.
You could say a new gold standard is being born without any formal decision.
The gold/silver ratio ended the week near 74, the highest since January of 2009, highlighting just how cheap silver is right now relative to other assets. Silver looks particularly attractive relative to Gold
The fundamental problem facing the global economy is not slow economic growth but political inequality.
It's striking: as economies stagnate, the top tier is living even larger while the low-income masses sink further into marginalized poverty. I call this widening divide between the vested interests/wealthy and the rest of society prosperity amidst the ruins.
How can the top slice prosper while the rest of the populace suffers from higher taxes, stagnant wages and a collapse of employment/enterprise opportunities?
The homebuilders have had near-parabolic run-up in their stock prices. This is not atypical of the sector, which is twice as volatile as the overall stock market because of the extreme amount of debt embedded in homebuilder balance sheets and the relatively high short-interest in the shares. Incredibly, the homebuilder stocks can’t even get back to within 50% of their peak prices in 2005 at a time when the S&P 500 sets a new record every day. That fact alone in and of itself reflects to relatively poor fundamentals underlying the housing market.
Of course, the homebuilders continue to pile on debt and inventory just as the slightly reflated housing bubble is popping. I’ve updated the Q3 results for one of the homebuilder reports I published in October.
The BRICS Bank marks a major step to de-dollarization, and a new monetary system. It should replace the Western-dominated “predatory casino scheme” that has contributed to world wars and “economic terrorism,” says former World Bank economist Peter Koenig.
“A ‘BRICS system’ would offer a healthy alternative to the highly indebted and defunct dollar system, where money is printed at will,” Koenig said in an interview with Asam Ismi of the Canadian Centre for Policy Alternatives.
A 'BRICS system' should be based on a new currency, which Koenig called 'Bricso.'
Author: Lawrence Williams Posted: Tuesday , 25 Nov 2014 LONDON (MINEWEB) -
In a previous article we have already shown that Indian and Chinese gold demand between them currently account for annual gold consumption levels of perhaps as much as 3,100 tonnes, roughly equivalent to global new mined gold production as recorded by the World Gold Council (3,115 tonnes over the 12 months to end September).
The Chinese and Indian figures we have recorded are probably themselves understated – with Indian consumption swelled by smuggled gold imports to avoid the 10% import duty and take advantage of the gold premiums on the Indian markets. China’s figures are also understated in that they are mainland China figures and do not include Hong Kong net gold imports which probably should add another 40-50 tonnes to the figure given that Hong Kong is technically part of China, but in terms of economic statistics, including gold net imports, it is treated as an independent state.
But what we haven’t detailed is the real level of gold consumption elsewhere in the world, for which we will go back to World Gold Council (WGC) figures to detail.
First Germany, then the Netherlands, perhaps Switzerland this weekend, and now the French right-wing Front National, which shockingly came first in May's European parliament elections, and whose leader Marine Le Pen is currently polling in first place in a hypothetical presidential election (in both a first and run off round), ahead of president Hollande, has sent a letter to the governor of the French Central Bank, the Banque de France, demanding that France join the list of nations which have repatriated, or at least tried to, their gold.
Playing monetary games has done nothing to eliminate moral hazard.
If we step back and look at the past six years since the global financial meltdown of 2008, we see that in terms of financial and political power, nothing has changed--and that's the problem. If nothing has changed structurally, then none of the problems that caused the meltdown have truly been addressed.
All that's changed is the vast expansion of monetary games has masked the dysfunctional reality that the same old vested interests that had a death-grip on wealth and power in 2008 have tightened their death-grip in the past six years.
The Daily Treasury Statement that was released Wednesday afternoon as Americans were preparing to celebrate Thanksgiving revealed that the U.S. Treasury has been forced to issue $1,040,965,000,000 in new debt since fiscal 2015 started just eight weeks ago in order to raise the money to pay off Treasury securities that were maturing and to cover new deficit spending by the government.
During those eight weeks, Treasury took in $341,591,000,000 in revenues. That was a record for the period between Oct. 1 and Nov. 25. But that record $341,591,000,000 in revenues was not enough to finance ongoing government spending let alone pay off old debt that matured.
Russell: “As you know, the central banks of the world are fighting deflationary forces through degrading their various currencies. Nobody, it seems, can escape the damaging forces of world deleveraging and deflating. According to reports put out by the labor department and the Fed, the US economy is the lone success in a world being fragmented by deflation. As all currencies decline, the world’s investors turn to the US and its dollar as safe havens
Why is it taking so long? No, not the turkey cooking in the oven, but the collapse of the economy. Perhaps it is the smell of turkey that gets my brain thinking, as it did at our 1st thanksgiving dinner last Saturday when I wrote about canaries. Divorce is a bitch! So as we await our 2nd dinner, my fingers started typing...
When the subprime mortgage climaxed with the Lehman crash as I was learning how to trade, I was ignorant, thinking that politics still mattered, worried about how I would retire, wondering how to trade the markets, which I no longer trusted to be bullish. (Looks like I picked the wrong year to learn how to trade.) I did not understand QE as it came out and especially did not see metals as a safe haven. Once I noticed that metals prices were rising, I simply bought some to get in on the bullishness and make some fiat. The rest is history and somewhere along the way, I became persuaded that our markets were irreparable, held together with coordinated central bank intervention and would eventually collapse.
After two years of insane money printing designed to rescue its failing economy, Japan has now been rewarded with… another recession.
So what went wrong you ask? The same thing that always goes wrong when a central bank resorts to money printing to rescue an economy instead of allowing a cleansing period and a return to real productive growth. All they accomplished with their massive QE program was to spike inflation.
As I have pointed out many times in the past, any time the price of energy spikes 80-100% within a short period of time it will almost always cause a recession. As you can see on the chart below when Japan began their foolish money printing campaign it spiked the price of oil 83% as priced in yen. Add to that the increase in sales tax and ultimately this was just too much for the Japanese economy to withstand, and it has now turned back down into another recession.
Author: Lawrence Williams Posted: Wednesday , 26 Nov 2014 LONDON (MINEWEB) -
Demands for gold reserve accountability have been rising in Europe – is this something that could spread around the world for those nations who own gold in vaults in countries other than their own – or indeed supposedly held even in their own countries?
We have seen Germany requesting repatriation of around half of its gold reserves, mostly held in the US, the recent return of some of its foreign held gold to The Netherlands, the Swiss referendum on the return of much of the nations’s gold and the raising of its reserve levels to 20% of its foreign reserves, and now the latest is a request to M. Christian Noyer, the Governor of the Bank of France, for that nation’s gold reserves to be comprehensively audited.
The request has come in the form of an open letter from the French right wing Front National opposition leader, Marine Le Pen
Russia has announced that it is developing its own version of SWIFT, a network that enables financial institutions to communicate electronically in a secure fashion, which it expects to launch in 2015. The clear intent is to bypass Western financial institutions and conventions.
In our opinion, a world in which the dollar becomes increasingly marginalized as a reserve currency will look substantially different. As noted by Andrew Smithers in the Financial Times (11/12/14), the US is a massive hedge fund, “long equities and short debt,” with an international net debtor position equivalent to 31 percent of GDP. As long as dollar reserves have utility, dollar-denominated assets can thrive. Utility is in large part a matter of perception and confidence, in our view, and the fundamentals underlying the notion of a strong dollar are sliding in the wrong direction. At the moment the long dollar trade seems extremely crowded, with CFTC speculative long exposure near record highs (see chart below). In the short term the dollar may seem to be a lifeboat for unwanted yen and euros, but in the intermediate to longer term it is a lifeboat that suffers from the flaws inherent in all paper currencies. Today’s clamor for dollars will, in our opinion, become tomorrow’s dollar overhang.
Financial writer Bill Holter says the players in the gold markets are fearful. Why? Holter says, “The GOFO rates, or gold forward rates, in London are negative. They should never be negative, and they are more negative now than any time since 2001. That shows extreme tightness in the metals market. To me, it shows mistrust. It shows that people are saying I want my gold now. I don’t want gold in the future, I want it now. Negative GOFO rates should never happen.” Holter also says that the COMEX market is what he calls “corner-able.”
How much would it take to buy the entire deliverable gold and silver inventory? Holter says, “The way I would put it is it’s a ham sandwich without the ham or the cheese. You are talking about $1 billion would be enough to clean out COMEX gold registered category, and another billion dollars would clean out the silver inventory. It’s nothing. $2 billion dollars would clean the shelves dry.”
Russell: “I’m looking at a report from the World Gold Council, September 2014. I was shocked to see that according to the official world gold holdings, the US holds the largest amount of gold of any nation in the world. Even more astounding, the US leads the world in the percentage of its currency reserves in gold. According to the World Gold Council, the US holds 72% of its forex reserves in gold.
How can this be? Widespread rumors have it that the US has sold or leased all its gold and cannot even ship the gold that Germany has called in. Either the World Gold Council is presenting wrong figures or a mighty scandal is upon us. If the US has this amount of gold, which would be bullish, why haven’t we been told about it? Or why doesn’t the US run an honest audit on our gold?
Here’s what I’ve been thinking: the Fed despises gold and wants to make its own fiat currency the only legal currency. Therefore, if you really hold this tremendous amount of gold (8,133 tonnes), how would the Fed explain it? The other question: why doesn’t any publication pick up the story of the US government owning 8,133 tonnes of gold? Why isn’t any American told that gold represents 72% of our currency reserves?