By Paul Ploumis 03 Jul 2015 Last updated at 02:10:02 GMT
(Kitco News) - As the second quarter came to an end, and metals prices remain range-bound, gold and silver coin sales have seen a surge this past month, up over 100% in June after dismal May sales, says one bank.
“Sales of gold coins by the U.S. Mint have now risen by 150% m/m for the four weeks of June,” said analysts from Barclays in the bank’s Gold Delta report released Monday.
“Total sales have now turned positive for a y/y basis, rising by 20%,” they added.
Based on sales data released by the U.S. Mint, 76,000 ounces of the gold 2015 American Eagle bullion coins were sold in June alone, compared to 21,500 ounces sold in May. This represents an increase in sales for the mint of over 253%.
As I noted yesterday, the Fuse on the Global Debt Bomb has been lit. We are now officially in the Crisis to which the 2008 Meltdown was just the warm up.
The process will take time to unfold. The Tech Bubble, arguably the single biggest stock market bubble of all time, was both obvious to investors AND isolated to a single asset class: stocks. In spite of this, it took two years for stocks to finally bottom.
How anyone could think a deal will be done before the referendum on Sunday, I don't know (then again, I am no expert on Greece, though I have tried to read everything that seems pertinent lately). Based on everything I've seen, there's no way anything could possibly be resolved before a vote, and my gut feeling is that the Greeks will vote no.
However, it would seem that most everyone is certain this is going to work out just fine. At the moment, this is more of a mental exercise for me, as I'm not making any investments predicated on the outcome in Greece, though obviously more hostility with the EU — and whatever fallout that creates — won't be good for anyone.
"He promises you illumination, he offers you knowledge, science, philosophy, enlargement of mind. He scoffs at times gone by; he scoffs at every institution which reveres them. He prompts you what to say, and then listens to you, and praises you, and encourages you. He bids you mount aloft. He shows you how to become as gods. Then he laughs and jokes with you, and gets intimate with you; he takes your hand, and gets his fingers between yours, and grasps them, and then you are his."
J. H. Newman
Click through for the full post on gold and silver yesterday. I really liked this quote and accompanying picture so I'm showing it here.
There is nothing in the June jobs numbers, released Thursday morning, that signals economic catastrophe. But the closer you look, the more reason there is to feel just a little glum.
The nation added 223,000 jobs last month, which is a perfectly good number. The unemployment rate fell to 5.3 percent, from 5.5 percent, the lowest since April 2008, when the Great Recession was a mere infant. If you look only at the big glaring headline numbers, in other words, these numbers are somewhere between good and great.
The disappointments come in the finer details. This report is the opposite of a dark cloud with a silver lining. It’s a billowy white cloud hiding some more ominous hints of where the economy stands, in particular reversing some hints of progress that had been evident in May numbers.
Richard Russell: "The world is deflating. But people don’t want to see their standard of living go down. As a result, they continue to borrow. In turn the politicians continue to spend, and the federal debt continues to rise. On top of all this, Greece is putting its exit plan to a vote. Greece is in depression and will almost surely leave the Eurozone and the euro currency. Now it turns out that Puerto Rico, a US possession, is bankrupt and will need loans.
Economist John Williams correctly predicted the first quarter GDP in 2015 would turn negative. What is his second quarter prediction for GDP? Williams says, “I am looking for an outright contraction in the second quarter as well. Two back to back negative quarters in the GDP (Gross Domestic Product) would be counted as a recession. GDP is very heavily bloated and inflated by all sorts of gimmicks. . . . In effect, we are seeing a weakening of the economy now that is dragging down these bloated numbers. I contend we never recovered from the collapse in 2008 and 2009. We have just been bottom bouncing. . . . It is beginning to turn down again. . . . Expectations for the second quarter will begin to sink.”
To back up Williams’ claim of a “sinking” economy, look no further than the Dow Transports which show a clear downtrend. There are many more signs of trouble as Williams contends, “. . . The better quality numbers show the economy is sinking. For example ...
By MICHAEL CORKERY and MARY WILLIAMS WALSH at The New York Times
Puerto Rico’s governor, saying he needs to pull the island out of a “death spiral,” has concluded that the commonwealth cannot pay its roughly $72 billion in debts, an admission that will probably have wide-reaching financial repercussions.
The governor, Alejandro García Padilla, and senior members of his staff said in an interview last week that they would probably seek significant concessions from as many as all of the island’s creditors, which could include deferring some debt payments for as long as five years or extending the timetable for repayment.
“The debt is not payable,” Mr. García Padilla said. “There is no other option. I would love to have an easier option. This is not politics, this is math.”
It is a startling admission from the governor of an island of 3.6 million people, which has piled on more municipal bond debt per capita than any American state.
Now you know why the Federal Reserve should have raised interest rates a long time ago — or even as recently as earlier this month. Greece, you might have heard, is in bad financial shape. We’ve been hearing about these problems for years, but it finally came to a head when Germany over the past few weeks said “genug!” — “enough!” — and demanded that Greece make cuts in its government pension system if it wanted another bailout. Negotiations have been exhaustive and exhausting. And for weeks, officials in Greece and in other EU countries — off the record, of course — have been spilling the beans that a bailout deal was just around the corner, was being worked on, was near completion or whatever other optimistic phrase that could have come out of the mouth of Pollyanna herself.
“Gold has worked down from Alexander's time. When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.”
Bernard M. Baruch
I thought this was interesting, particularly given the source of the interview at Bloomberg News.
It is short and so a little bit of a light touch perhaps, but a nice overview nonetheless.
One little point of fact I would raise is that the comparison of China M2 and the US M2 is not the whole story. Since China is not a particularly international currency their M2 is probably a significant subset of their overall issuance.
But in the case of the US, M2 does not account for 'eurodollars', which the Fed intentionally stopped tracking some years ago 'to save money' and thereby stopped issuing M3 figures. This is a significant factor for the world's reserve currency as you might imagine, and a glaring omission in the validityof the comparison.
A key factor would be their price peg mechanism vis a vis the dollar, and any redeemability features.
They must approach this carefully, because the Anglo-American Banks and Funds will be ...
The debt crisis in Puerto Rico could potentially cost financial institutions in the United States tens of billions of dollars in losses. This week, Puerto Rico Governor Alejandro Garcia Padilla publicly announced that Puerto Rico’s 73 billion dollar debt is “not payable,” and a special adviser that was recently appointed to help straighten out the island’s finances said that it is “insolvent” and will totally run out of cash very shortly. At this point, Puerto Rico’s debt is approximately 15 times larger than the per capita median debt of the 50 U.S. states. Yes, the Greek debt crisis is larger, as Greece currently owes about $350 billion to the rest of the planet. But only about $14 billion of that total is owed to U.S. financial institutions. But with Puerto Rico, things are very different. Just about the entire 73 billion dollar debt is owed to U.S. financial institutions, and this could potentially cause massive problems for some extremely leveraged Wall Street firms.
There is a reason why Puerto Rico is called “America’s Greece”. In Puerto Rico today, more than 40 percent of the population is living in poverty, the unemployment rate is over 12 percent, and the economy of the small island nation has continually been in recession since 2006.
You’ve probably heard this phrase: “There are lies, damned lies and there are statistics.” Let’s look at the latest statistics from the Labor Department and you decide whether we are being told the truth, lied to or simply misled by faulty numbers. On Thursday, Labor, in the first sentence of its June jobs report statement, said that “payroll employment increased by 223,000 and the unemployment rate declined to 5.3 percent. Thanks, but I’d like to focus instead on the fifth paragraph and the very last paragraph. First, the unemployment rate. It was down from 5.5 percent in May, so instinctively people would say “hooray” and move on.
The Dream Of The Gambler And The Death Of Fiat Currencies
Richard Russell: "One of man’s dreams has been to get something for nothing. The alchemists were dreamers who sought to turn base metals into gold. They never succeeded. Gold is only accumulated by man’s labor. The dream of the gambler in Las Vegas is to put a coin in the slot machine and with a mere pull of the handle, hit the jackpot.
In the same way, the operators at the central banks create money out of thin air. Through acts of manipulation, they create new money. They force people to accept their new currency by fiat. Fiat currency gains its legitimacy through government threat and the muzzle of a gun. Ironically, despite government threat, no fiat currency has ever survived. In the end, reality trumps government threats. The reality is that the great trend of the economy is in a correction mode. The great leveraging and inflation since World War II hit its peak in the year 2000, and since then the forces of deleveraging and deflation have dominated.
Click through for the rest of the piece by Russell.
Assuming "growth" will fund all promised pensions and entitlements is magical thinking.
The core problem with pension plans is that the promises were issued without regard for the revenues needed to pay the promises. Lulled by 60 years of global growth since 1945, those in charge of entitlements and publicly funded pensions assumed that "growth"--of GDP, tax revenues, employment and everything else--would always rise faster than the costs of the promised pensions and entitlements.
But due to demographics and a structurally stagnant economy, entitlements and pension costs are rising at a much faster rate than the revenues needed to pay the promised benefits. ...
MUMBAI (Bullion Street): The government has reduced marginally the import tariff value of gold to $382 per 10 grams and of silver to $516 per kg considering weak global price trend in the wake of Greece crisis, the Central Board of Excise and Customs said in its latest notification on Wednesday.
For last fortnight, the tariff value of gold was fixed at $385 per 10 grams and silver at $519 per kg.
Keep an eye on the shadow banking system – it is about to be shaken to the core. According to the Financial Stability Board, the size of the global shadow banking system has reached an astounding 75 trillion dollars. It has approximately tripled in size since 2002. In the U.S. alone, the size of the shadow banking system is approximately 24 trillion dollars. At this point, shadow banking assets in the United States are even greater than those of conventional banks. These shadow banks are largely unregulated, but governments around the world have been extremely hesitant to crack down on them because these nonbank lenders have helped fuel economic growth. But in the end, we will all likely pay a very great price for allowing these exceedingly reckless financial institutions to run wild.
If you are not familiar with the “shadow banking system”, the following is a pretty good definition ...
Not that almost any and all news today is enough to make you scratch your head, two pieces of news yesterday were bombshells! I am talking about Greece’s stance of staying IN the Eurozone and the Zerohedge article regarding JPM "cornering" the global commodity markets.
Let’s first start with Greece, who could have seen this one coming? They are taking the stance "Greece and ONLY Greece" can decide if they leave the EU. Greece Threatens ‘Unprecedented’ Injunction Against EU To Block Grexit I believe this is correct, there is no law allowing the EU to kick someone out. The only way an exit can occur is if a nation decides to leave. This is incredibly interesting because Greece can default and put a moratorium on payments yet remain as a Euronation. I guess you might call it "squatter’s rights", they stay …but don’t pay. Before going any further, I do understand Greece originally entered the EU "fraudulently" and with well cooked numbers. As I understand it, "too bad so sad" it is water under the bridge, was not caught upon their entrance and cannot be used to negate their inclusion now. ...
Submitted by John Whitehead via The Rutherford Institute,
“If you don’t want a man unhappy politically, don’t give him two sides to a question to worry him; give him one. Better yet, give him none. Let him forget there is such a thing as war. If the government is inefficient, top-heavy, and tax-mad, better it be all those than that people worry over it…. Give the people contests they win by remembering the words to more popular songs or the names of state capitals or how much corn Iowa grew last year. Cram them full of noncombustible data, chock them so damned full of ‘facts’ they feel stuffed, but absolutely ‘brilliant’ with information. Then they’ll feel they’re thinking, they’ll get a sense of motion without moving. And they’ll be happy, because facts of that sort don’t change.” ? Ray Bradbury, Fahrenheit 451 How do you change the way people think? You start by changing the words they use.
In totalitarian regimes—a.k.a. police states—where conformity and compliance are enforced at the end of a loaded gun, the government dictates what words can and cannot be used. In countries where the police state hides behind a benevolent mask and disguises itself as tolerance, the citizens censor themselves, policing their words and thoughts to conform to the dictates of the mass mind.
Cheap, easy credit has created moral hazard and nurtured magical thinking throughout the global economy. According to polls, the majority of Greek citizens want the benefits of membership in the euro/EU and the end of EU-imposed austerity. The idea that these are mutually exclusive doesn't seem to register. This is the discreet charm of magical thinking: it promises an escape from the difficulties of hard choices, tough trade-offs, the disruption of vested interests and most painfully, the breakdown of the debt machine that has enabled the distribution of swag to virtually everyone in the system (a torrent to those at the top, a trickle to the majority at the bottom, but swag nonetheless).
By Bill Fleckenstein President Of Fleckenstein Capital
June 29 (King World News) – As everyone now knows, the weekend saw a trifecta of major news. Obviously, the first piece of news was the calling of the Greek referendum, which basically will lead to a lose/lose choice between chaos and more chaos (more about that below).
Then there was the rate cut and reserve requirement reduction on the part of the Chinese, and lastly, the move on the part of the governor of Puerto Rico, who said the country needed to get out of its "death spiral" and would make creditors take a haircut — something "authorities" and central bankers have been loath to see occur, as they continually try to protect lenders and bond holders worldwide from having to pay for their bad decisions. Besides generalized central bank bad policy and incompetence, not forcing creditors to take a hit has only increased moral hazards….
How is this even legal? That's a serious question and I'd like a serious answer after the you read what is presented below.
Immediately following the short squeeze in mid-May that resulted in a 10% price move in just five days, the "Large Specs" in silver set out to rebuild (or were tricked into rebuilding) a massive naked short position in Comex silver. As you can see on the chart below, over the past five weeks, these Large Specs have added 41,806 gross naked short contracts to their accumulated position. This drove their total reported position up from 16,891 contracts on May 19 to last Tuesday's 58,697 and is the sole, primary reason for silver falling by $2 over the same time period.
Click through for the full post. Worth a read. It's mind blowing what is going on in silver on the Comex.
June 27 – (King World News) – Investors are obsessed over predicting the timing of the Fed’s first interest rate hike. Will the Fed raise the Fed funds rate in September, or wait until next year? But it is far more important to get a grasp on the pace of rate hikes. Will it be a one and done move, or does this mark the beginning of an incremental tightening cycle? Those of us who are not in the inner circle are forced to speculate….
This coming week could be very telling. China just ended a disastrous week and finished just whiskers away from entering bear market (-20%) territory http://www.zerohedge.com/news/2015-06-27/chinas-370-billion-margin-call. Credit markets all over the world are weakening and yields are rising. Greece will not make their June 30 payment(s) and probably go through a referendum to decide whether or not to flip their creditors the bird in a meaningless vote. In fact, Greece will probably "go boom" this week. Their banks and stock markets may not open Monday morning http://www.zerohedge.com/news/2015-06-27/greek-stock-market-may-not-open-monday-greek-officials-warn. Two days later, some sort of plan will need to be concocted to classify their bankruptcy as not a "DEFAULT", otherwise a $3 trillion fuse to a $1.4 quadrillion bomb will be lit! These and more will be very important "mid-term exams", any failure will bleed over into derivatives and become "final and terminal exams" with zero chance of a passing grade! ..
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