The ‘people’s currency’ of China is redefining the global economic monetary system. The closed-capital pariah is blossoming into a reserve standard and is hedging appeal against the indebted dollar and the untested euro, piquing foreign interest.
Degenerating credit quality across the board has prompted asset managers to shy away from the dollar, euro, Japanese yen, British pound, and Swiss franc. And some are turning to the yuan, a currency that 10 years ago was completely off limits to foreign investors.
An HSBC forecast projected that by 2015, the yuan will become one of the three most used currencies in global trade, in league with the dollar and euro. The report, issued in April, also foresees a third of China’s cross-border transactions being carried out in yuan.
China has been making a concerted effort to establish itself as an international currency reserve. China already has agreements with Russia, Vietnam, Thailand, and Japan allowing trade to be settled in yuan instead of dollars ...
... physical gold continues to leave London with 2.14 tonnes of gold departing the GLD for the shores of China/and or Russia.
We had good commentaries today from Mark Grant, Ambrose Evans Pritchard, Jim Sinclair, Rosie Murray West of the UK Telegraph, Michael Kreiger on CME President Duffy, Bill Murphy and James Turk on Barrick and Pascua Lama and Glenys Sim of Bloomberg on gold's huge demand.
In the last eight calendar days there has been 4.3 million ounces of silver added to SLV...and during that same period 600,000 troy ounces of gold have been withdrawnfrom GLD. Something does not compute here...and that story about "investor liquidation" in GLD is getting a little tired. It appears that there is something else going on that we aren't privy to, at least for the moment.
The good folks over at Switzerland's Zürcher Kantonalbank...for the week ending at the close of trading on Monday...reported that 33,111 troy ounces of gold were withdrawn from their gold ETF but, for the second week in a row, more silver was added to their silver ETF. This time it was 169,402 troy ounces. Where the heck is all the silver coming from that's disappearing into all these silver funds? ...
The highlights from Bill Gross' monthly outlook letter: "The past decade has proved that houses were merely homes and not ATM machines. They were not “good as money.” Likewise, the Fed’s modern day liquid wealth creations such as bonds and stocks may suffer a similar fate at a future bubbled price whether it be 1.50% for a 10-year Treasury or Dow 16,000.... if there are no spending cuts or asset price write-offs, then it’s hard to see how deficits and outstanding debt as a percentage of GDP can ever be reduced.... Current policies come with a cost even as they act to magically float asset prices higher, making many of them to appear “good as money”.
And the take away: "PIMCO’s advice is to continue to participate in an obviously central-bank-generated bubble but to gradually reduce risk positions in 2013 and perhaps beyond. While this Outlook has indeed claimed that Treasuries are ...
Today John Embry asked the question, why should gold and silver investors worry? He then told King World News about a key situation which may create a massive upside breakout in gold. Embry also commented on the massive global physical demand for the metals. Below is what Embry, who is chief investment strategist at Sprott Asset Management, had to say in his tremendous interview:
Embry: “What I am focused on right now is this whole paper gold market and the fact that the gold in the banking system has been hypothecated and rehypothecated so many times that nobody knows who owns what.
We’re seeing more and more evidence that the market is getting tighter and tighter, and I believe there will be a run on physical gold because of this. When these various people and entities find out they don’t really own the gold they think they do, there is going to be an amazing reaction....
Click over for the full interview. Paper gold has long been a thorn in a lot of our flesh... well those who would rather own physical anyway.
When people build wealth, they can become myopic. As they acquire more money, their vision can narrow and they can lose sight of everything else, especially the bigger picture. They can become so involved in getting rich that all they think about is making money and it’s all they want to do.
So they devote their time to building fortunes, which take away from other aspects of their lives. They become obsessive and spend less time at home with their families. When they’re home, they’re disconnected — their minds are somewhere else. Financially, they prosper, but their families suffer. Their children often have problems, become resentful and act out.
Although they work tirelessly and earn lots of money, many never truly enjoy the fruits of their success. Sooner or later, something crashes and they can’t understand why it happened to them.
It’s easy to get diverted. You can be moving smoothly on course, when something suddenly intervenes and before you know it you’re headed in a new and different direction, not where you intended to go. Money frequently has that affect. When it enters the picture, it can throw everything off track.
Passion can also be a problem. When you want something deeply, you may go after it with all your heart. You focus on your objective ...
Federal Reserve Chairman Ben Bernanke has done it. He has succeeded in creating a new housing bubble. By driving mortgage rates down to the lowest level in 100 years and recklessly printing money with wild abandon, Bernanke has been able to get housing prices to rebound a bit. In fact, in some of the more prosperous areas of the country you would be tempted to think that it is 2005 all over again. If you can believe it, in some areas of the country builders are actually holding lotteries to see who will get the chance to buy their homes. Wow - that sounds great, right? Unfortunately, this "housing recovery" is not based on solid economic fundamentals. As you will see below, this is a recovery that is being led by investors. They are paying cash for cheap properties that they believe will appreciate rapidly in the coming years. Meanwhile, the homeownership rate in the United States continues to decline. It is now the lowest that it has been since 1995. There are a couple of reasons for this. Number one, there has not been a jobs recovery in the United States. The percentage of working age Americans with a job has not rebounded at all and is still about the exact same place where it was at the end of the last recession. Secondly, crippling levels of student loan debt continue to drive down the percentage of young people that are buying homes. So no, this is not a real housing recovery. It is an investor-led recovery that is mostly limited to the more prosperous areas of the country. For example, the median sale price of a home in Washington D.C. just hit a new all-time record high. But this bubble will not last, and when this new housing bubble does burst, will it end as badly as the last one did?
Federal Reserve Chairman Ben Bernanke has stated over and over that one of his main goals is to "support the housing market" (i.e. get housing prices to go up). It took a while, but it looks like he is finally getting ...
Today, physical gold continues to leave London with 2.41 tonnes of gold departing for the shores of China/and or Russia. Silver saw an advance of almost 1/2 million oz.
Cyprus announced that 90% of depositors over 100,000 euros will lose their hard earned cash: 37.5% will go for worthless Bank of Cyprus shares, 22.5% will be held as a buffer and 30% will be held "temporarily" as an additional buffer. Trust me, they will never get back that money.
If bubbles eventually revert to their starting level, Phase 3--capitulation and a return to pre-bubble prices--still lies ahead for the housing market.
Way back in 2006 at the height of the housing bubble, I prepared this chart proposing the housing bubble might exhibit symmetry, i.e. the decline would mirror the rise. I also proposed that the decline would be characterized by phase shifts that corresponded to the decay of whatever reason was being given for the "recovery" in housing, for example, "this must be the bottom." ...
I wrote last week that there was a scramble going on globally by entities seeking to take physical possession of the gold on which they have a legal claim, most of which is sitting either in alleged "allocated" big bank bullion vaults or in alleged "allocated" accounts in Comex custodial warehouse vaults.
I also demonstrated mathematically, using the reported numbers on the CME website for precious metals futures open interest and warehouse gold/silver stocks, that the amount of gold represented by Comex futures open interest far exceeds the amount of deliverable gold on the Comex (the analysis is even more extreme for silver). In fact, if less than just 10% of the buyers of June gold contracts demand delivery, the Comex won't have enough gold to cover the legal claims. For silver (July silver) it's even more extreme.
This is a global problem and not just endemic to the Comex. Globally, the legal claim of ownership on physical gold far exceeds the amount of gold represented by paper futures, LMBA forward contracts, leased gold and vault receipts. The latter - vault receipts - is where the big banks in London have the most severe problem, as gold this is supposed to be sitting in "allocated" accounts under the name of the legal owner who bought and paid for those bars has been largely leased out. I'll get to that in a minute.
First, I received this comment from John Brimelow's "Gold Jottings" report, which comes from Gerhard Schubert, head of Precious Metals at Emirates NBD, the largest banking group in the Middle East. Keep in mind that Middle Eastern buyers demand physical delivery of their gold. Here's the quote from his latest weekly report:
I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts…
Moscow Exchange is discussing possible alliances with international peers, including Germany's Deutsche Boerse AG and U.S.-based operators CME Group Inc and NYSE Euronext.
MOSCOW(BullionStreet): Russia's major exchange, the Moscow Exchange said it will speed up plans to develop markets in gold and will utilize its ownership in smaller local exchanges as the company seeks to become a regional trading power.
The commodities push places the company alongside foreign-based exchange rivals such as Canada's TMX Group Inc and ASX Ltd in Australia, both working to parlay those nations' commodity strengths into trading business.
Moscow's largest financial markets operate under one roof following the December 2011 merger of the country's two main exchange operators.
The enlarged Moscow Exchange has been revamping its stock markets in recent months, upgrading infrastructure for the settlement of trades and pushing for an overhaul of pension-plan rules that could drive more investment in Russian securities. ...
Author: Dorothy Kosich Posted: Wednesday , 01 May 2013
RENO (MINEWEB) -
U.S. Mint figures show American Eagle gold coin sales hit a three-year high of 209,500 ounces in April, the highest since December 2009 sales of 231,500 coins. These figures include 187,500 one-ounce American Eagle bullion coins.
Year-to-date total gold coin sales now stand at 502,000 ounces as of Tuesday, April 30th. American Eagle one-ounce bullion coins sales now stand at 434,000 ounces as of that date. U.S. Mint spokesman Michael White told Bloomberg that the one-ounce gold bullion coins are the most popular for investors. ...
The international distress call is going out from Europe as the overall eurozone unemployment rate reached 12.1%. Germany had a low rate of 5.4% while Spain was more than 27%. So how is theECB to do deal with the huge discrepancy between the economic performance of its 17 members? If the austerians are being relegated to economic purgatory then the pressure on the ECB to act will be diminished. Cutting rates for the sake of a show of action will be a detraction from the bigger political issue. Why irritate the Bundesbank and Chancellor Merkel by moving the ECBlending rate by a measly 25 basis points? ...
Be sure to click through for the full post and check out all the charts.
Gold futures climbed higher for a second session Tuesday, trimming from what still remained a hefty April loss.
Gold for June delivery added $4.70, or 0.3%, to settle at$1,472.10 an ounce on the Comex in New York. That brought the monthly decline to $123.60, or 7.8%, and the year-to-date loss to$203.70, or 12.2%.
Gold prices jumped 4.2% last week, marking the first weekly gain in five weeks as physical demand for gold bars and gold coins soared. ...
“Most likely what we are seeing is that $1,400 and maybe some level below $1,500 might be the wrong price as physical buying takes up whatever metal is on offer. This price was created by a lot of paper selling (in the first place). The paper market can be quite big, right? So since the paper market is so much bigger than the physical market on any given day, in the short-run the paper market is what matters.
Now we have a position whereby, based on the Commitment of Traders Report, the large specs have the largest short position ever, and the small specs have their largest short position ever. So we know there is a big short in the paper market, and we know physical demand is quite strong. That ought to be a recipe for higher prices. I guess we’ll find out shortly.
One of the things people have to be careful of is that sometimes the shortages you see in the physical market are a function of the fact that refinery capacity is somewhat constrained. But in this case what I think is this is the wrong price (for gold). The under $1,500 price is the wrong price. ...
If this price is wrong then what we are saying is the market is rigged and not free to set its own prices. Think about that for a bit.
April income tax payments sent in by individuals are surging, up by more than $50 billion over April 2012 and higher by $63 billion year to date. That means to me that year end 2012 income from asset sales and bonuses had to have spiked by around $300 billion to generate that $63 billion in bigger tax payments. I know, this is a lot of numbers and some of you should read the transcript instead of this video. To go back, in other words anticipation of this year’s higher taxes created a one time 10 percent pop in income over those few months the $300 billion became income!
And all you GDP watchers out there will never see that pop. Why? The US Bureau of Economic Analysis, which puts the garbage in garbage out GDP number, in its infinite wisdom ignores capital gains as well as any and all real time data. Why? Who knows. You ask them, they won’t answer me.
So no wonder the economy looked great to start this year. The $300 billion income spike created a very rosy glow particularly since none but us at TrimTabs were saying that the year pop in income was a one time event. Checking my year end videos I was guessing $100 to maybe $200 billion in higher income, not $300 billion.
Right now, over the past three weeks, wage and salary growth has slowed to less then 3 percent year over year ...
Robert Fitzwilson tells King World News: “We could see some real fireworks in the markets in the next few weeks. This past week saw a run on bullion, particularly silver. We also found out that inventories of gold and silver are dropping precipitously at the well-known bullion repositories, particularly Western central banks and commodity exchanges.
Refiners are severely backlogged, inventories of popular products have been depleted, and premiums on available items have gone up significantly. Panic buying swept the globe since the coordinated takedown of paper prices for precious metals. It feels as if we are very close to some sort of resolution with the potential for world changing events. There is no question that a form of a bank run on gold is occurring all over the world.
Lear Capital is sponsoring Kentucky Derby frontrunner, GoldenCents with its Goldencents Winners’ Circle Contest. Leading up to the running of the 139th Kentucky Derby, visitors to LearCapital.com are invited to guess GoldenCents’ lap time, worth in gold and the location of the Lear Capital corporate sponsorship logo on the jockey uniform. Participants will be in the running for a chance to win free Gold or Silver Coins and other great prizes. Entries can be made here:http://www.learcapital.com/goldencents.
Lear Capital President, Kevin DeMeritt, recently described the motivation behind the sponsorship of Goldencents by saying, “as a young horse, GoldenCents and his jockey have defied many odds in their pursuit of the Winners’ Circle. At Lear Capital we too understand the value of rising to the occasion to deliver superior products and services in a highly competitive field. The GoldenCents’ team story is one that many of our talented employees and clients can relate to.
Demeritt went on to say, “GoldenCents is a 3-year-old Colt bred from Kentucky by Karyn Pirrello. The horse is owned by W.C. Racing, Dave Kenney and Louisville Cardinals coach Rick Pitino. Doug O’Neill, trainer of “I’ll Have Another”, winner of last year’s Kentucky Derby and Preakness is also behind GoldenCents. 29-year-old Kevin Krigger is competing to become the first black jockey to win the Kentucky derby since 1902. He is from the Virgin Islands and began riding at a young age.”
Lear Capital is excited to watch the event and hopes to excite their clients as well. Lear Capital is holding a contest for the public to guess GoldenCents’ finishing time, worth in gold and location of sponsorship on the jockey. The prizes include gold and silver coins, discounts, gift certificates, Lear Capital merchandise and DVDs. For more information, please check out http://www.learcapital.com/goldencents.
Lear Capital is going all in for the 2013 Kentucky Derby by placing its brand behind such an intriguing story.
GoldenCents is currently boasting 6/1 odds to win the race. Only two other horses have better odds of winning the Kentucky Derby, so he has a very favorable chance to win among 25 horses. In the past weeks, GoldenCents’ rank has increased dramatically from being a top 10 horse to now a top 3. GoldenCents placed 1st at Santa Anita as an underdog and we see this being a very similar situation.
To enter to win, simply go to http://www.learcapital.com/goldencents and enter your guesses. Winners will be notified shortly after the race.
About Lear Capital:
Lear Capital (http://www.learcapital.com) has been America's Precious Metals leader since 1997, helping customers diversify their portfolios with bullion, premium rare coins, and the addition of physical gold and silver to IRA accounts. For investors looking to realign their asset allocation, maintain an aggressive hedge against global volatility, or secure tangible retirement protection, Lear Capital has a plan. They provide a personal account representative, a secure ordering environment, and a "real-time" investment relationship that keeps customers abreast of spot pricing, precious metals news, and economic events that impact savings and retirement accounts.
Moments ago the market jeered the announcement of DB's 10% equity dilution, promptly followed by cheering its early earnings announcement which was a "beat" on the topline, despite some weakness in sales and trading and an increase in bad debt provisions (which at €354MM on total loans of €399.9 BN net of a tiny €4.863 BN in loan loss allowance will have to go higher. Much higher). Ironically both events are complete noise in the grand scheme of things. Because something far more interesting can be found on page 87 of the company's2012 financial report.
The thing in question is the company's self-reported total gross notional derivative exposure.
And while the vast majority of readers may be left with the impression that JPMorgan's mindboggling $69.5 trillion in gross notional derivative exposure as of Q4 2012 may be the largest in the world, they would be surprised to learn that that is not the case. In fact, the bank with the single largest derivative exposure is not located in the US at all, but in the heart of Europe, and its name, as some may have guessed by now, is Deutsche Bank.
The amount in question? €55,605,039,000,000. Which, converted into USD at the current EURUSD exchange rate amounts to $72,842,601,090,000.... Or roughly $2 trillion more than JPMorgan's. ...
We are coming very close to a point where the manufacturing of unprecedented amounts of fiat currency has to have a global impact. You simply can’t increase the amount of currency as violently as what been done without having to face the consequences, one of which is the collapse of the purchasing power of those fiat currencies.
The massive and ongoing currency war the world has been witnessing may come to a head much sooner than any of us realize. So investors must have an understanding of how the system will be preserved, and eventually reset, in order to survive the coming wealth destruction. ...
Revenue to the government was $2.58 trillion in fiscal 2007. But despite all the government spending and money printing by the Fed, revenue for fiscal 2013 is projected to be just $2.7 trillion. The growth in Federal revenue has been just over $100 billion in 6 years! Nevertheless, our publicly traded debt has grown by $7 trillion during that same time frame. The fact is that the U.S. economy isn’t growing fast enough to significantly increase the revenue to the government, but our debt is still soaring.
Eric King: “Jim, what do you make of the fact that there was virtually no reporting outside of KWN on this situation?”
Sinclair: “What that tells me is that ‘bail-in’ is now a go globally. There is no question that if you were to analyze the various initiatives in New Zealand, Canada, the United States, Great Britain, etc, you would know that ‘bail-in’ is definitely being framed and will now be applied as a replacement for ‘bail out.’
So the fact that the news of the $4.2 billion which was just stolen from accounts in Cyprus didn’t make any mainstream US news, and wasn’t even mentioned on financial media during the day, tells me there is definitely a feeling that what has taken place, and what is still to take place, will disturb the ‘social order.’ ...
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