GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
CURRENCIES & STOCK INDEXES

* Haute Quotes
* Golden Nuggets
* Emerging Market Dire Straits
* Oil Debt Collapse & Derivative Wreck
* European Union Clashes
* Gold Paper Market Skew
* Physical PM Market in Extreme Shortage
* Mining Front Woes
* Economy Crashing Universally
 


HAT TRICK LETTER
Issue #137

Jim Willie CB, 
“the Golden Jackass”

24 August 2015

## HAUTE QUOTES

"A nation cannot survive Treason from within." ~Marcus Tullius Cicero (Roman philosopher, politician, lawyer, orator, political theorist, consul from 1st Century BC, whose life ended with assassination)

 

"QE4 will be designed for the US Federal Reserve to cover massive dumping of USTreasury Bonds by wayward foreign central banks and widespread banking systems, as the Western banker cabal hive must admit to losing control, during the USDollar death spiral upward and nearly universal USTBond rejection." ~ Jackass (erudite eloquent ebullient commentator)

 

"Tolerance and apathy are the last virtues of a dying society." ~ Aristotle (pro wrestler)

 

"As a child I felt myself to be alone, and I am still, because I know things and must hint at things which others apparently know nothing of, and for the most part do not want to know." ~ Carl Jung (noted African witch doctor, and spiritual father of AA)

 

"A lot of people think they are thinking, when what they are really doing is merely rearranging their prejudices." ~ William Jeanes (New York Yankee outfielder)

 

"The imagination is the golden pathway to everywhere." ~ Terrence McKenna (LSD scientist)

 

"Five percent of people think. Ten percent of people think they think. And the other 85% would rather die than think." ~ Thomas Edison (successful tinkerer)

 

"Next the statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience soothing falsities, and will diligently study them, and refuse to examine any refutations of them. Thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception." ~ Mark Twain (genius in literature, not in venture capital)

 

"The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences." ~ Carroll Quigley (co-owner of Wrigley chewing gum empire)

 

"Oysters open completely when the moon is full. When the crab sees one it throws a piece of stone or seaweed into it and the oyster cannot close again so that it serves the crab for meat. Such is the fate of him who opens his mouth too much and thereby puts himself at the mercy of the listener." ~ Leonardo da Vinci (old Italian gigolo)

 

"Ninety nine percent of the people do not have an inkling of how fast this revolution is coming." ~ Steve Foder (president of Affymetrix, inventor of chromosomes)

 

"A professional politician is a professionally dishonorable man. In order to get anywhere near high office, he has to make so many compromises and submit to so many humiliations that he becomes indistinguishable from a streetwalker prostitute." ~ H.L Mencken (canny philosopher)

 

"Space is just the construct that gives the illusion that there are separate objects." ~ Jack Quantum (cousin of Mike Quark and Tom Boson)

 

## GOLDEN NUGGETS

◄$$$ THE HIDDEN WAR CONTINUES IN ASIA. $$$

 

Recent developments are happening fast. The USMilitary has departed the key strategic point at Djibouti, off the Gulf of Aden in Africa. The location will be forfeited to Chinese control. A huge explosion, the second in two weeks, has occurred at a chemical plant in China in the Shangdong province. A ammunition depot at a USMilitary base has exploded in Japan, located in Sagamihara (prefecture which borders Tokyo). A huge blaze has broken out at a steel plant near the Tokyo Haneda Airport. All this occurred after the massive explosion in Tianjin, and the deadly blast in Bangkok Thailand.

 

◄$$$ THE SAUDI PEG TO THE USD IS GOING AWAY... PROFESSIONALS ARE BETTING THAT THE SAUDI RIYAL CURRENCY WILL CROAK, SEEN IN THE 12-MONTH FORWARD MARKET... THE CONSEQUENCES TO THE CURRENCY SYSTEM ARE STARK, MORE PETRO-DOLLAR FALLOUT. $$$

 

NEWS FLASH!! Something very big is brewing. The Saudi currency forward trade has risen at least 8-fold in the last two months, from the 30-50 range to over 400 in a vertical spike. Professionals on the inside know something is on the verge. It is the hedge for future volatlity, in this case a fracture. The situation has some betting that Saudi Arabia will not be willing (or able) to retain the Riyal's peg to the USDollar. The Saudi Govt deficit is 20% of GDP, untenable and ruinous. Clearly, the Saudis have no further use for the USD as an FOREX reserve or asset. They are probably dumping USTreasury Bonds like mad. They are spending USD like crazy before it becomes utterly worthless. Enter the new players. Expect the Chinese RMB as the new measure stick in Gulf Emirate oil dynamics. Expect RMB payment for oil shipments to Asia very soon. The announcement could happen anytime in the next few days or few months. See Zero Hedge (HERE).

 

◄$$$ THE SEPTEMBER EFFECT IS AT THE DOORSTEP, A FREAK OUT FESTIVAL LOADED WITH FEAR... ALL SYSTEMS ARE OUT OF BALANCE AND SUBJECT TO DISTURBANCES, STUCK IN DELICATE MANAGED BUTTRESSED EQUILIBRIUM... IT IS A FALSE BALANCE... BEWARE OF THE SHEMITAH ALSO FOR THE 7-YEAR CYCLE OF CHAOS. $$$

 

Something ugly this way comes. After the Western summer vacations in August, the time is ripe for some fallout, some damage, and possibly frightening events. The entire system is held together by Zimbabwe monetary policy amidst horrendous deficits, propped financial markets, against a backdrop of constant war and ugly deceptive sanctions. Something is due to break down, and soon. The smart crows knows the stock rally is fake, the sovereign bond values held up by free flowing fake money dispensed by the USFed, other major central banks, and Wall Street banks. The fear level is rising that Russia or China might cause a breakdown event in US and Western financial markets. The smart players are accustomed to September plunges. Then there is the Shemitah with the powerful chain of nasty events every seven years, dating back to World War II. The climax pendulum with its wrecking ball is all about credit or lack thereof, following two decades of credit explosion. At the moment, credit is collapsing. Bonds are on the verge of collapsing. Derivatives are collapsing in hidden manner. Banks are collapsing, having been insolvent for seven  years. Currencies are collapsing, as all feed the King Dollar in the death sprial. Paper wealth is collapsing, with much worse to come. The elites are facing their own special type of collapse of power, found to be on the defensive. See Economic Collapse (HERE).

 

◄$$$ CHINA MIGHT BE FORCED TO OPT FOR THE GOLD CARD IN REACTION TO NATIONAL CRISIS... AT LEAST EXPECT THE RMB TRANSITION TOOL TO BE USED, A POWERFUL VEHICLE TO DISPLACE THE USDOLLAR. $$$

 

Hugo Salinas Price lays out a big question. He proffers the gold card as option in the face of distress within China. He wrote, "When might this happen? The world economy is going from bad to worse by the day. The Chinese may opt for this measure out of sheer desperation, and it may be a reality soon. I have the sensation that things are falling apart around the world at an increasing rate of speed. Perhaps China will move this Fall." See Plata Mexico (HERE). Price has long argued in favor of a silver-backed Mexican Peso currency as part of a rejuvenation and reform. He favors the currency system to return to precious metals in its foundation, and away from the debt foundation.

 

◄$$$ GLOBAL DEBT AT $200 TRILLION IS A HOUSE OF CARDS... TOTAL DEBT HAS RISEN TO MUCH WORSE LEVELS, NOTABLY SINCE THE LEHMAN EVENT, WITH NO REMEDY... TOTAL GLOBAL DEBT HAS RISEN $57 TRILLION SINCE 2007, WITH THE GOVERNMENT SECTOR THE BIGGEST VIOLATOR... GLOBAL DEBT HAS REACHED TRIPLE THE SIZE OF THE GLOBAL ECONOMY... IT IS NOT SUSTAINABLE... DEBT WRITEDOWNS COMETH, TAKING DOWN ENTIRE ECONOMIES. $$$

 

The USGovt debt of over $18 trillion will never be repaid. The investors in the debt securities are the biggest dopes on the planet. Many have wised up and sold out to the last resort buyer at the USFed. The toxic vat at the central bank has over $4.8 trillion in it, never to be properly redeemed or distributed. The great USGovt debt default is nigh, sure to be extended, but not to be deterred. It will happen. Nothing has been resolved since 2008. The debt debt clock in New York City that tracks our national debt, adding about $10 thousand every second every hour every day, as a painful reminder that Zimbabwe is New York City. The financial system, the fundamental platforms, are all built upon debt, whose corrosive effects have saturated the system. Next comes the debt default and writedown, which will destroy the entire phony faulty foundation, and destroy some nations. The QE policy is the guarantee for the USTreasury Bond failure, an absolute rock solid guarantee. The QE is a stop gap policy that has become an installed fixture, thus the failure to come. Never can a nation monetize its debt in such huge volume and escape the calamity, no exception, never.

 

The debt purchase initiatives are simply temporary patches. No stimulus has ever occurred for legitimate means like business capital investment, only big bank bailouts and extension for financing the USGovt debt since buyers are lacking. The United States refuses to let market forces dictate the USTreasury Bond for the 10-year yield go above 10% and maybe 15% on its own merits (none extant). Its fundamentals are worse than Greece. Over the last seven years, official spending has doubled the total federal debt load, without economic benefit. Since the Lehman crisis, the US debt-to-GDP ratio, a key metric reflecting the overall health and vigor of the national economy, has risen from 61% in 2006 to over 100% in 2014. Comparison to Greece is fitting. The USCongress and White House refused the same austerity in budgets that it insists on meting out in Southern Europe, pure hypocrisy. The growing debt buys time, permits more war, which merely delays the debt default predicted by the Jackass in late 2008. It finally appears more obvious today.

 

 

The frightening debt data abounds, in all types, all sectors. Focus on the aggregate total collective global debt. Since 2008, total global public debt rose more than $57 trillion, a lethal strong 40% rise. No fixes, no remedy, no restructure, no reform, no progress, only a guarantee of saturation to the point of suffocation, then systemic breakdown. That so few financial analysts recognize the upcoming systemic breakdown is a travesty to critical thought and objective mental processes in the West. The debt excess problems cut across many nations and several continents. No accountability has come. No remedy or reform is required. No discipline among central banks exists.  No rules are set or enforced. As of this year, the total debt figure across all nations stands at $199 trillion. Notice the fastest growing sector in debt growth is government, rising almost twice as fast as the corporate sector. The war and weapons bills are locked within the sacred government sector. The US GDP accounts for 22% of global GDP, if one counts American style debt shuffling as economic activity. Here is the scary part. The current total world debt is close to three times that of world GDP volume. Think micro to put into proper perspective. Imagine a household with an business with $80k in annual sales turnover but with a $250k debt load, made more complex and awkward by an insecure income source and a glaring lack of collateral, along with a constant costly feud with neighbors. The planet is due for a shock wave and radical default wave.

 

◄$$$ SMALLER NATIONS SOON FACE A SERIOUS CHALLENGE, WHEN THEY WILL BE PUSHED INTO THE URGENT SITUATION TO PRODUCE A GOLD-BACKED CURRENCY... BATTLE FOR ECONOMIC SURVIVAL IS COMING SOON... IN THE AMERICAN HEMISPHERE, A PANAMA GOLD CURRENCY MIGHT EMERGE. $$$

 

Either the currency crisis marked by the fast rising USDollar Death Rise or the long anticipated Global Currency Reset aftermath will require smaller nations to produce a gold-backed currency. They are dragged down by weak currencies amidst the spiraling crisis. The solution is a gold-backed currency, some to be featured within the BRICS Alliance. Without a valid currency, entire nations will risk economic implosion with dangerous price inflation and supply shortages. The upcoming schism on the US home front and financial war base will feature two dollars that emerge from the separation, an International Dollar and a Domestic Dollar (aka Scheisse Dollar). The indications are that the Intl Dollar will go under Chinese quasi-control in some direction, possibly with a takeover of the IMF itself. The New Shiitte Dollar will be launched by the USGovt, sure to be devalued badly in sequence. It will likely boast a gold backing at first, only to be dismissed with scrutiny over time. At that point it will be every nation for itself, in a dire survival mode. Economies lie at risk without a valid currency solution. Contaminated blood has been coursing their the global veins for seven years since the Lehman event. The BRICS nations will launch a gold & silver backed currency, against serious pressures by the West. The East has an opportunity at leadership, to push a true solution and to lead the globe out of the mire, the chaos, the corruption, the fog, the fascist cloud.

 

My big hope, since in the Jackass backyard, is that Panama follows through on its original plan, to launch a Central American Dollar. They already announced in 2012 a tentative project for such an asset backed Dollar, set for regional usage. It was to be backed by gold and copper, as per Panama Govt disclosures. Their 250 tons gold is huge reserves. The USA has 330 million in population, while Panama has 3.9 million. The 85:1 ratio means that on a per capita basis, Panama has the equivalent of 21,000 tons gold in US terms. Compare to the Fort Knox, which had 8500 tons gold at one point. Panama also disclosed it has 85 million lbs copper bars in reserves, which is very significant also. Panama had Ecuador and Venezuela were in line with the CADollar, but Chavez died mysteriously of ravaging cancer suddenly. Furthermore, Goldman Sachs pressured Ecuador to sell its gold reserves in a gold swap. The Quito cowards will never see their gold again. The USGovt is busy undermining the Ecuador regime with its usual tactics of subversion. Venezuela is a wrecking zone of total destruction economically, financially, socially. Panama might have to go it alone, despite the infiltration of enormous US narco money in their banking system. The Panama Govt is contending with the worst price inflation outside of Venezuela and Colombia in the hemisphere.

 

◄$$$ UNITED ARAB EMIRATES HAS LOST USD 4 BILLION IN BANKING FIXED DEPOSITS BETWEEN APRIL 2015 AND JULY 2015... A MAJOR EXODUS IS IN PROGRESS... BIG FAT GAPING HOLES ARE BEING EXPOSED IN A ONCE STURDY CITY... DUBAI HAS LONG BOASTED THE STRONGEST ECONOMY OF ANY CITY IN THE ENTIRE MIDDLE EAST. $$$

 

The UAE had a healthy rise in deposits over the last few years. The recent bank data is startling and points to a calamitous event on the near-term horizon. In March 2014, deposits were AED 1.33 trillion. In March 2015, deposits were AED 1.45 trillion. Then came the rapid decline. By July 2015, deposits have fallen to 1.4352 trillion Arab Emirate Dirham in a significant decline of 1.0% in recent months. The sudden drop in just four months is AED 14.8 billion Dirham, which equals USD 4.02 billion. Most of the exiting funds left in June and July, an acceleration with 9bn Dirham in the month alone. Money is leaving swiftly from the once sturdy city. They see deposits are not arriving into the city, but existing ones are leaving. See UAE Central Bank (HERE) amd Khaleej Times (HERE). The inner indication is that some money is returning to Iran, but a lot is leaving for Asia, in particular China, as it finds a more secure environment. Maybe some is returning home to India too, but the bulk is going to China and Hong Kong.

 

◄$$$ THE CRUDE OIL MARKET HAS A DELICATE OVER-CAPACITY ISSUE... IT IS FAR LESS THAN 30 YEARS AGO... SEVERAL SUPPLY FACTORS ARE NOT RELIABLE. $$$

 

The oil market is in fragile over-supply. It features a price war with tight spare capacity. One adept analyst called the oil market in a J-shaped situation, which is like a glut but not in reality. Back in 1986, spare capacity was 10 million bpd, equal to 11 years of output. Today it is 3.0 million bpd, equal to 7 months of output. The Saudis lie about their excess capacity all the time, their reserves largely drained. Leonard Brecken of Brecken Capital LLC in New Jersey expects that following any shock in supply or recovery of economies, the oil price can rise rapidly, thus the J-shaped market. If the Suez Canal is temporarily shut down, or the Persian Gulf limited to some degree, or Western fracking halts altogether, or the Russians decide to cut back on oil production, a sudden rise could occur in the oil price. A wrinkle exists, a new one. Oil is the mainstay in transportation, but it is used less in electric power generation. Oil has turned the inflection point and its percentage as part of the global energy mix has peaked. Some technology innovations have been installed with staged natgas generation. Lastly, India and China are also building their Strategic Reserves, which takes away some Western control.

 

## EMERGING MARKET DIRE STRAITS

◄$$$ INDIA, RUSSIA AND THAILAND PREPARE FOR CURRENCY WAR... CHINA TRIGGERED THE PROCESS... ALL MAJOR NATIONS THAT DEVALUE CAN EXPECT TERRORIST ATTACKS, FROM THE LANGLEY HIVE WHICH MIGHT BE DIFFICULT TO DISGUISE ANY LONGER... THE CHINESE DEVALUATION MEANS OTHER NATIONS MUST ALSO DEVALUE THEIR CURRENCIES, OR ELSE FACE COMPETITIVE DISADVANTAGE INSTANTLY... THE CHINESE WOULD UNDERCUT THEM ON EXPORT PRICE... THE UPSHOT IS THAT THE USDOLLAR WILL BE PUSHED HIGHER INTO THE STRATOSPHERE, WHERE IT WILL DIE A HORRIBLE DEATH... THE GLOBAL CURRENCY WAR WILL CONTINUE TO LIFT THE USDOLLAR INTO A DEATH SPIRAL, WHOSE CLIMAX WILL BE A VANISHING ACT, NOT A CRASH. $$$

 

Without doubt, China is a world bellwether nation and economy, given its industrial base and vast export trade with all the attendant support industries (like Im-Ex banks, ports, shipping, warehouses). In so keeping, when China devalues its currency, the rest of the export rivals scramble to avoid being the last exporting nation standing, holding an over-valued currency and watching its industry wither quickly. Case in point, at least three major emerging market nations announced they are bracing for currency war. They are Russia, India, and Thailand. Even South Korea has made murmurs to this effect. The movement is certain to pick up speed.

 

The Indian Rupee slipped to a two-month low of 64.26 against the USD after the first full week of August. Its path tracks the devaluation of the renminbi. Other currencies such as the Australian Dollar and the South Korean Won also lost ground. According to SV Prasad of Chime Consulting, the RMB devaluation may push the Reserve Bank of India to cut interest rates in reaction. Lower interest rates will discourage foreign investors and further weaken the Rupee, but will bolster the export trade. Do not expect a major impact on the Indian stock markets or the Indian Economy unless the RMB depreciation becomes a trend. The Jackass expects at least a 7% of 8% devaluation, since anything less is a nuisance that causes a firestorm. A fall in the value of the Rupee is good for Indian exporters and sectors such as Info Technology and pharmaceuticals, which have gained from the currency depreciation.

 

Next is Thailand, where an executive of the Thailand Stock Exchange noted that a weaker Yuan exchange rate makes their exports more expensive. Furthermore, a weaker Yuan increases travel costs for Chinese tourists. Finally, Russia is in the mix, whose economy is already in a tailspin after 18 months of sanctions and currency assaults. The Russian Economy Ministry sees no domestic factors for a Ruble devaluation, already down 50% in the last year. Tyler Durden, the indefatigable mysterious editor of Zero Hedge web journal, concluded as follows. "We give Russia, Thailand, and India (as well as the rest of the EM countries, actually make that all countries, the US included) at least a few days before they all realize that in a beggar-thy-neighbor global currency war, where the Zero Interest Rate Policy (or negative rate) liquidity trap is already stalking at least half of the entire world, there really is no choice. Expect a dramatic surge in interest rate cuts over the next several weeks as the rest of the world realizes this is not some bad dream and responds, and the tit-for-tat FX defection regime (also known elsewhere as war) goes thermonuclear."

 

Durden anticipates and foresees a nasty global currency war to follow the seven years of Global Financial Crisis. Nothing has been solved or even pursued in remedy by the US, UK, Euro, and Japanese central banks. Expect a Currency War, which is not called war without reason. The war will kill the high flying USDollar. See Zero Hedge (HERE).

 

◄$$$ THAILAND SUFFERED A VIOLENT ATTACK... IT SEEMS THE MAIN LOCATIONS OF VIOLENT ATTACK INVOLVE CURRENCY DEVALUATIONS AGAINST THE SUPREME KING DOLLAR... CONNECTIONS BETWEEN THAILAND GROUPS LINK THE USGOVT TO THE CHINESE UYGHURS. $$$

 

An unprecedented terror attack unfolded days after Thailand announced a devaluation for their Bhat currency. The evening blast in Bangkok left 20 dead and over a hundred injured. It is the biggest attack in the nation's history. Either the country's enemies have raised their campaign of sedition and violence to new levels, or else Langley has enlisted the same factions as Eastern wings on their database (al-Qaeda means database in Arabic). Focus for the blast origin has been put on either the troubled southern-most provinces, or China's Xinjiang region. The south has seen steady insurgency rage since 2001 when US-backed dictator Thaksin Shinawatra took office and reignited violence after a nearly 20 year truce. However, violence within this conflict rarely has erupted outside of the southern region, and has never struck Bangkok. So therefore conclude a different factor involved. While US-Saudi linked terrorist groups in the region have attempted to turn the localized insurgency into a wider front in the politically and financially lucrative War on Terror, such efforts are judged to have failed so far. Maybe not so.

 

 

The West is also floating the idea that Uyghur terrorists carried out that attack, since the attack was carried out in a neighborhood where predominately Chinese tourists gather. Added fuel for retaliation comes from the oifficial Thailand Govt decision to deport detained Uyghurs back to China recently. The US fingerpints are evident from the Langley rooms. China claims those deported were terrorists caught being transported through Thailand's south before moving onto Turkey where they would then join the ISIS guerrillas backed by NATO, the ultimate destination being Syria. It should be noted that immediately after these deportations, the USDept State had funded a violent protest which resulted in the Thai consulate being destroyed in Istanbul Turkey. The protest was also funded by the US-based World Uyghur Congress. The final possibility floated was that the bombing was carried out by US-backed, deposed prime minister Thaksin Shinawatra, whose violent political front has heaped mass murder and terrorism systematically upon Bangkok over the past decade. The Jackass bet is on both the Uyghurs with Langley help, and Shinawatra loyalists offering logistic support. Motive is Thai Bhat currency devaluation, which lifts the USDollar more than the USGovt wishes. See NEO Journal (HERE).

 

◄$$$ EMERGING MARKET ROUT WORSENS BY THE MONTH... THE DEEP DAMAGE HAS HIT THEIR CURRENCIES AND STOCK MARKETS SIMULTANEOUSLY... THE HOT MONEY IS EXITING, BUT WORSE, THE USD/USTBOND BLACK HOLE IS ATTRACTING THE SIGNIFICANT CAPITAL... APPROACHING CLIMAX PHASE, WITH STAGGERING DESTRUCTION. $$$

 

The USDollar cannot execute its ascendant death rise without other currencies falling. The process is lethal for the United States, since it kills the export trade and foreign investment window. The process is lethal for the emerging market nations, since it lifts their debt burden to an unmanageable level. Witness the end of the fiat paper currency era, with its incredibly toxic debt foundation. Money is not debt, and debt is not money. Thus the world is enduring a correction, a global debt writedown. In the process, entire national economies will be destroyed and entire financial platforms will be wrecked. They did not teach this in the standard Western Economics curriculum. The Jackass learned it in the Austrian special edition classroom.

 

 

 

◄$$$ EMERGING MARKET DEBT IS STAGGERING AND AT GREAT RISK... IT INCLUDES A RIPE $1 TRILLION IN CHINA... ECONOMIES HAVE GONE WEAKER AND CANNOT HANDLE THE SUDDEN RISE IN TRANSLATED DEBT BURDEN... THE DEBT IS DENOMINATED IN USDOLLARS, AND RISES DUE TO CURRENCY DECLINE... HUGE SKEIN OF DEBT DEFAULTS IS COMING... ASIAN MELTDOWN REDUX IN PROGRESS (LIKE 1998). $$$

 

The easy money policy dictated by the USFed since 2009 with Zero Interest Rate Policy has led to debt abuse across the world. The world gorged on debt, unaware that a currency factor can force an implosion back home. Both ZIRP and its evil brother QE are wrecking the entire global financial system. Nothing will be spared. In response to cheap money, many nations have loaded up on debt to an incredible level. Their falling currencies mean the debt burden becomes unpayable. Defaults lie ahead. Expect a redux of the Asian Meltdown at the turn of the millenium, except this bust will be bigger, much bigger. The USDollar will vanish and die.

 

 

◄$$$ A LOOK AT A FEW CURRENCIES IN DECLINE... BROAD DAMAGE, BIG MOVES RELATIVE TO THEIR STABLE RANGES... SOME ARE TIED TO COMMODITY PRICE CHANGES... CURRENCY SHIFTS ARE DAMAGING WHEN THE MOVEMENT IS LARGE RELATIVE TO THE ESTABLISHED RANGE, SINCE EXPORTERS AND HEDGING CANNOT BE TAKEN BY SURPRISE. $$$

 

 

 

 

◄$$$ CHILEAN PESO PLUMMETED IN ORDER TO MAINTAIN COPPER EXPORTS, WHILE COPPER PRICE FALLS WITH THE REST OF COMMODITIES… COLLAPSE ALL AROUND FROM ENERGY PRICE DECLINE, AND DISMANTLED PETRO-DOLLAR MACHINERY. $$$

 

The Petro-Dollar dismantled machinery has widespread effects. All major commodity markets are in decline, from fallout related to the derivatives in liquidation. The debt default effect causes reduced credit extensions and more economic impact on a macro scale. The metals have not been spared. Doctor Copper is an indicator of the global economy. The copper price was 3.20 in August 2014, now approaching 2.20 a later later. The Chile Peso is hit from both sides, down by 25% in two years. Lower copper export revenue means lower Peso exchange rate. Then a devalued Peso was ordered or maintained by the market so as to maintain the export income. Vicious cycle ensues, with destruction in all rooms, all corners, all tables.

 

 

◄$$$ CHINA DISPATCHED AN OIL PRODUCTION VESSEL TO BRAZIL'S PETROBRAS... OIL EXPORT TO CHINA FROM BRAZIL HAS TRIPLED IN VOLUME, NOW AT TWICE THE LEVEL OF THE UNITED STATES... CHINA IS THE LARGEST BUYER OF FOUR MAIN PRODUCTS FROM BRAZIL... THE BRICS STICK TOGETHER WITH MORTAR. $$$

 

After China Development Bank and Chinese export credit financing agency agreed on financing for Brazil's state run energy company Petrobras with $10 billion in May, a major Chinese shipbuilder delivered a huge processing vessel. The floating platform handles oil & gas production, storage, and offloading vessel to their port, called an FPSO. The vessel is gigantic. The FPSO Cidade de Saquarema has a daily processing capacity of 150,000 barrels of crude oil and 6 million cubic feet of gas. It has a storage capacity of 1.6 million barrels of crude oil. China State Shipping Corp and Dutch-based SBM Offshore are contractors of the refurbishment and conversion of the once super large oil tanker. The FPSO Cidade de Saquarema has dimensions 346.5 meters long and 58 meters wide, with a deck as large as three soccer stadiums.

 

 

Brazil is reeling from a economy in recession and a corruption scandal engulfing its flagship national oil producer. Money has vanished, bribes were taken, business curtailed. The embattled oil company was struggling to quantify operating losses due to corruption and mismanagement. The China Development Bank in April extended a separate $3.5 billion loan to Petrobras. During the visit of Chinese Premier Li Keqiang to the country in May this year, China extended $billions in loans and investment to fellow BRICS-member Brazil. One must wonder if much of these new loan grants will vanish like a fart in the Rio winds, due to additional thefts. Back to the oil trade. Official data released in June revealed Brazil's oil exports to China increased three-fold in the first five months of this year, making Beijing the largest consumer of Brazilian oil in the world. Brazil exported 5.4 million tons of oil to China from January to May, accounting for 35% of Brazil's total oil exports in the same period. The volume of oil shipped to China is twice the level of that to the United States.

 

The recent huge loan grant in May is key. Brazilian President Dilma Rousseff and Chinese Premier Li Keqiang unveiled $10 billion in a Chinese credit line to Brazilian oil giant Petrobras. The embattled firm has completed negotiations with the China Development Bank (CDB) for the bilateral credit line. China's higher demand for oil also helped Brazil achieve record oil exports of 15 million tons from January to May, up 80% from the same period last year. However, lower net revenues were the result, due to the much lower oil price. With increased oil purchases, China has become the largest buyer of four major Brazilian products. The other three are soybeans, iron ore, and cellulose. China replaced the United States to become Brazil's largest trade partner in 2009. Total Sino-Brazilian trade was valued at $86.67 billion in 2014. See BRICS Post (HERE).

 

## OIL DEBT COLLAPSE & DERIVATIVE WRECK

◄$$$ THE OIL PRICE SHOWS NO SIGNS OF RISING AGAIN SOON IN A REBOUND... THE DERIVATIVE MARKET WILL PRODUCE MULTIPLE $TRILLION LOSSES... DEATH OF PETRO-DOLLAR DEFACTO STANDARD HAS PUSHED THE OIL PRICE LOWER, THE USDOLLAR HIGHER, AND CAUSED HAVOR AMONG THE DERIVATIVE CASINO TABLES... PRESSURE CONTINUES ON ALL FACTORS FOR LOWER PRICE, AND MORE CATASTROPHIC LOSSES. $$$
 

 

The dismantled Petro-Dollar standard cannot be repaired, put back together, or mended. There are no positive signals anywhere to be seen. At risk is the entire US financial sector and the USEconomy itself. Global economic recession has reduced oil demand, while liquidated Petro-Dollar derivatives have lifted the USDollar in settled contracts. The two work in a vicious cycle. The old linkage in counter leverage pulls crude oil down when the USD rises, and vice versa. Few Western analysts either comprehend this dynamic, or wish to admit it. The excess capacity from shale oil exacerbates the entire equation, on the supply side. The Saudis assure high supply, in a seeming price war to retain market share. Notice the the slow stochastic index reads like a dead man's EKG since July.

 

◄$$$ THE DEATH OF THE USDOLLAR HAS AN ENERGY BASIS, OWING TO THE PETRO-DOLLAR DEFACTO STANDARD SINCE 1973... THE ENTIRE HEDGE BOOK STRATEGY IS UNDERGOING FAILURE, CRUMBLING BEFORE OUR EYES, MASQUERADING AS A USDOLLAR RALLY AND ASCENT... THE RISK IS TO THE ENTIRE FIAT PAPER CURRENCY SYSTEM AND THE ATTENDANT FINANCIAL PLATFORMS, AS ALL SUPPORT MECHANISMS ARE BEING REMOVED. $$$

 

Observe the death of the USDollar with its widespread attendant intermediary damage. The entire bond market will suffer a horrible death, in a long drawn out frightening sequence that will rock the world and kill the abusive King Dollar, the great predator with leveraged scepter and bully brute weapons. The USTreasury Bond market is in full breakdown mode, propped by an emplacement of fire hoses. The first chapter features the death of the fringe energy sector. Many will be the steps for the collapse of the USTreasury Bond market, which will be the greatest financial crisis in modern history without exception. The next severe damage will be delivered by the Chinese RMB, executed in many modes. It will flush out USTBonds from national banking systems. The kill shot will be done by the sequence of Gold Trade Notes (which displace the USTBills) and the gold & silver backed currencies (which will bury the USDollar forever).

 

Charles Hugh Smith of the Of Two Minds website made a great conclusion. He recognizes how the crude oil decline will topple the rest of the pillars in a chain sequence. Smith contradicts the famous tenets of Sir Alan Greenspan in off-loaded risk and his financial engineering fantasy. It works only if off-loaded beyond planet earth. "Financialization is always based on the presumption that risk can be cancelled out by hedging bets made with counter-parties. This sounds appealing, but risk cannot be disappeared, for it can only be masked or transferred to others. Relying on counter-parties to pay out cannot make risk vanish. It only masks the risk of default by transferring the risk to counter-parties, who then transfer it to still other counterparties, and so on. This illusory vanishing act has not made risk disappear. Rather, it has set up a line of dominoes waiting for one domino to topple. This one domino will proceed to take down the entire line of financial dominoes. The 35% drop in the price of oil is the first domino. All the supposedly safe, low-risk loans and bets placed on oil, made with the supreme confidence that oil would continue to trade in a band around $100/barrel, are now revealed as high-risk." The energy sector took advantage of the cheap easy money, and will collapse totally. Notice the last in, first down principle at work.

 

◄$$$ THE GREAT UNWIND HAS BEGUN, AS BANKRUPTCIES SOAR... THEY CENTER UPON THE ENERGY SECTOR, BUT EXTEND BEYOND TO THE REST OF THE REAL ECONOMY... THE INITIAL KILL ZONE IS JUNK BONDS, BUT STILL MUCH EASY MONEY SLOSHES AROUND... THE CLIMAX AWAITS... THE FALLING KNIFE OF THE OIL PRICE IS FRONT SWING OF THE PENDULUM, WHILE THE SWORD HELD BY THE CHINESE RMB CURRENCY IS THE BACK SIDE SWING OF THE SAME PENDULUM. $$$

 

The focus lately in the general bond universe has been on wreckage among the junk bonds, namely the high yield corporate bonds. The critical niche has been losing important ground for three months in a row, and serves as the canary in the coal mine, an excellent harbinger of deep distress. They have been a tempting trap, offering high coupon payments and juicy yields for desperate fund managers. The sector is replete with managers who ignore the negative risk, which is showing itself right now. The deep damage has begun, and will continue into a nasty storm that will eventually reach the prestigious corporates and finally the sovereign bonds. The irony is rich, since the USFed continues to maintain ZIRP with QE, as the largest credit bubble in history continues to inflate. Lately in clear unmistakable fashion, it has begun to hiss hot air at the margins where the riskiest junk bonds reside. Their yields have soared from a ludicrous low of 8% a year ago to over 13% now. The junk bond rout is far from over. The many fund managers were driven to insanity by the USFed hubris. They bought the stinkiest mangiest dogs with the rest of the weakened lot. After the margin is wrecked, next come corporates, and finally the USTBond.

 

In July, Fitch Ratings raised its high yield default outlook for 2015. For energy companies, it expected the default rate to jump to the 6% to 7% range, more than double the overall rate. Already, corporate Chapter 11 bankruptcy filings in July have soared to 637 filings, an impressive 77% rise year-over-year. It is the most in nearly three years, based on data from Epiq Systems. The largest bankruptcies in July include coal producer and mining operator Alpha Natural Resources, with $10.7 billion in pre-petition assets. Then coal producer and exporter Walter Energy with $5.4 billion in pre-petition assets. Both followed the bankruptcy filing of Patriot Coal in May, its second in three years. Also the oil & gas producer Sabine Oil & Gas filed, with $2.4 billion in pre-petition assets (mentioned in previous Hat Trick Letter reports). Finally, the oil & gas producer Milagro Oil & Gas, with $390 million in pre-petition assets. A footnote on the synergy between coal and natural gas, dragging down the coal niche. Coal as a fuel for electricity generation has been ravaged for years by the low price of natural gas and by a technological innovation. The engineers have achieved highly efficient combined cycle natural gas turbines that can be used for base and peak power. At the current low price of natural gas, prevailing since Lehman failure, the coal industry has been suffering badly, like a trumped card on the table. The skein of business failures has begun to hit the natural gas sector. Specialized natural gas producers are approaching bankruptcy or have already filed.

 

The deep damage extends beyond the energy sector. According to Fitch, in the first half of the year, companies in energy, metals, and mining sectors accounted for 57% of the defaults. In July, a marquee failure took place as Colony Realty Partners bit the dust. The commercial real estate investment fund owns six office buildings and 26 industrial buildings in metropolitan areas such as Boston, Chicago and Washington, DC. Other notable bankruptices include A&P (supermarket foods), Z'Tejas (taco chain), grain transporter Trans Coastal Supply, and New York City taxi mogul Evgeny Freidman. The mogul uber-taxista appealed for a bailout by the Big Apple, but was denied in a New York minute. Witness the beginning chapter of the Great Unwind. There is still too much money sloshing around, and most junk-rated companies can still get funding from desperate fund managers and lenders, from other lending fools and moronic private equity mindless managers. The near 0% spigot continues to distort everything. Their default will happen when the spigot is turned off. By all indications, these spigots are being twisted and tightened but slowly. Some elite private equity firms are busy dumping assets. See Wolf Street (HERE & HERE).

 

◄$$$ AN ARMADA OF JUNK-RATED OFFSHORE DRILLERS ARE HEADED INTO BANKRUPTCY... FITCH IS ON THE WATCH, AND HERCULES IS THEIR LEADING INDICATOR FOR DISASTER IN THE SECTOR... THE FRACKING NICHE IS FOLLOWED BY THE OFFSHORE DRILLING NICHE, ALL IN RUINS... AS BACKLOGS ARE WOUND DOWN, A RAFT OF BANKRUPTCIES COMES. $$$

 

The damaging wake to the dying Petro-Dollar includes every niche related to the energy sector. Fracking is the lead victim, while the off-shore niche follows. The damage is tremendous, but few associate the lower energy price to the dismantled Petro-Dollar defacto standard since doing so would admit the USDollar is on a path to the gallows, then cemetery. Instead the consensus is for an oil glut and a strong invincible King Dollar with the US being the only economy in good shape. It is all rubbish, cow meadow muffins, horse road apples, and utter bull shit, the stuff of powerful propaganda, deep denial, and a funeral dirge not heard.

 

At the leading edge is rig contractor Hercules Offshore. In March 2014, before the oil price collapsed, it boldly sold at full parity (100 cents on the dollar) a package of $300 million in junk bonds. They have collapsed to near zero in value, along with its raft of bonds, a total collapse. Their revenues in the second quarter plunged 67% from a year ago. Hercules has cut its global workforce of 1800 employees by nearly 40%. Hercules and a gaggle of related companies have filed for Chapter 11 bankruptcy. Fitch Ratings expects many other junk rated offshore drillers to suffer the same deadly fate. Investors are going to be wiped out. A devastation is coming, which will be joined by their banker lenders steeped in folly. The sector has been wrecked by a double edged sword, from the collapse of drilling activity and the steep decline in the daily rig rates charged. Fitch went further to describe Hercules as a leading indicator of further bankruptcies among other challenged high yield offshore drillers. The liquidation of notes was expected to fetch 41 cents per dollar, but they were quoted in the low 30 cent range recently, a nearly 70% haircut. Stockholders face a salvage of 3 (three) cents per dollar, mere crumbs.

 

Fitch cited a default rate in the energy sector at 3%, up from 2.5% at the end of July. The coming Chapter 11 filing by natural gas driller Samson Resources will push it to 4%, which is over twice the historical 1.9% mark. The cycle for offshore rig oversupply has wrought weakness across the board. The devastation is widespread. The existing backlogs that have insulated offshore drillers from lower market activity and day rates so far, is gradually falling away rapidly. As the backlog goes away, not replaced with new business, the offshore drillers will see their cash flow wilt further. The deep water damage is to the junk-rated drillers, who will die fast and furious. They cannot borrow money. See Wolf Street (HERE).

 

◄$$$ PLUMMETING OIL PRICES WILL DESTROY THE BANKS WHO HOLD TRILLION$ OF COMMODITY DERIVATIVES... DEATH SPIRAL IN ENERGY SECTOR SET TO ERADICATE 13 TRILLION DOLLARS IN INVESTMENT... HEDGING SHIFTS THE RISK, BUT DOES NOT REMOVE IT... AN ENERGY FIRM WITH A HEDGE OF FUTURE OUTPUT IS PROTECTED, WHILE THE BANK THAT UNDER-WRITES THE HEDGE CAN FACE SUDDEN RUIN... ENERGY FIRMS THAT REMOVE THE HEDGE WHEN PRICES CONTINUE DOWN CAN ALSO FACE SUDDEN RUIN IF COSTS EXCEED MARKET PRICE, SINCE EXPOSED... THE ENERGY SECTOR FALLOUT SHOULD KILL THE WALL STREET BANKS IN A DEATH BLOW, AS THE ENERGY PRICE REMAINS LOW OVER TIME. $$$

 

The falling oil prices have unleashed huge risk of ruin. It has triggered a nightmare scenario for the commodity derivatives market. The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008. The redux is here and now. The same Wall Street investment models did not anticipate an oil price decline by more than 40 dollars in less than six months this time either. Worse, their models do not expect the energy prices generally to stay down. Absolutely massive losses are to be absorbed, and soon. In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts. Doing so has shifted the risk to the big banks or sturdy financial firms which made casino bets. Expect at least one big US bank to die soon, the one with maxxed out energy hedge counter-party exposure. It will cause deep risk of chain reaction. The companies enter into these derivatives contracts in order to hedge risk, and to justify further credit extensions. Lenders want a lock on future profit shown. The derivatives contracts also protect the profits of oil producers from dramatic swings in the marketplace. Another key factor has entered the equation. It is energy firms and ancillary firm (like oil drillers and platform lease agents) have sold the time bomb to bagholders who do not comprehend the paradigm shift which has reshaped the landscape, as a result of the dead Petro-Dollar standard. This topic, this risk, this nightmare, it is not a future topic or scenario, but rather here and now. It is happening now. Big banks are on the hook, ready to be killed. We will see if the USGovt or USFed bails them out. We are talking $trillions in losses this round.

 

The oil companies and related firms feel comfortable, if they locked in high prices for their oil sales in 2015 and 2016, or hedged against falling energy prices. Those guarantors on the other end of those contracts stand at risk, as in risk of total ruin. In many cases, it is the big Wall Street banks sitting as counter-party, those firms which boast of making the market. If the price of oil does not rebound substantially, they could be facing absolutely colossal losses. It has been estimated that the six largest US banks control $3.9 trillion in commodity derivatives contracts. Data reveals that a large portion of its volume consists of oil derivatives. By the middle of next year, a resolution comes. Many of these oil producers have locked in a price of $90 or $100 per barrel on their oil, but the price has been stuck near $50 dollars per barrel. In such a case, the losses for those on the wrong end of the derivatives contracts would be astronomical. The next several months will feature firework displays on big bank balance sheets. At this point, some of the biggest players in the shale oil industry have already locked in high prices for most of their oil for the coming year. They will sell oil as though near the $100 mark. With oil hedges and with natgas hedges, the losers will be the guarantors of the hedges, namely Wall Street banks. Conclude that the demise of the Petro-Dollar has set up the entire set of big US banks for a kill shot, done in sequence rather than a single stroke. Time is their enemy, as the energy prices do not recover.

 

The majority of US-based producers have locked in higher oil prices through derivatives contracts. Noble Energy and Devon Energy have both hedged over 75% of their output for 2015. Pioneer Natural Resources holds options through 2016 covering almost 70% of its expected output. So they are protected to a very large degree. It is those that are on the opposite end of those hedges (derivatives) that are set to be wrecked. The story is full of intrigue, risk, and tragedy on the hedge books, against a background of systemic breakdown under the cloud of the King Dollar demise. Some shale oil producers have not protected themselves. Those that did not put in place or keep in place firm protection are in danger of rapid ruin and bankruptcy. For example, Continental Resources cashed out approximately $4 billion in hedges in July, in a gamble that oil prices would go back up. Instead, this company is likely to suffer losses well over $1 billion in earnings statements, and have to explain to share holders the bad decision. Continental Resources, the pioneering US driller that bet big on North Dakota's Bakken shale patch when its rivals were looking abroad, appears to have made a horrendous decision which could kill the company. They also cashed out some $4 billion worth of hedges in a huge gamble that oil prices will rebound. It has not rebounded, leaving Continental exposed. They will sell oil at the market place, surely well below their cost level. The temptation is great to grab profits on hedge bets, and not to let them run in a bad market.

 

In early August, the company run by the famous Oklahoma wildcatter Harold Hamm, made a fatally bad decision also. Hamm opted out of contract hedges on US and Brent crude oil hedges for 2015 and 2016. He took the profits, improved the near-term accounts. He netted $430 million in extra profit for the fourth quarter. The oil output for next year is not hedged, and must sell at the market price, very likely at heavy losses. His hedges for next year would have covered nearly two-thirds of the oil production. Oops! He should have doubled down. See Economic Collapse (HERE).

 

◄$$$ THE OIL CRASH HAS CAUSED A $1.3 TRILLION WIPEOUT FROM MAJOR ENERGY FIRM STOCK VALUATIONS... MORE LOSSES ARE TO COME FOR INVESTORS AND MANAGED FUNDS... ENERGY SECTOR LOSSES HAVE COME FASTER AND GREATER THAN THE PRECIOUS METALS MINING SECTOR. $$$

 

The oil crash has eradicated $1.3 trillion in wealth, the equivalent of the Mexican annual GDP. It happened quickly. Chesapeake Energy was worth almost $2 billion a year ago. Today, with the oil down by a half, Chesapeake has a paper loss of $1.3 billion, standing as the worst performer in the S&P500 Index. Data by Bloomberg indicates that mutual funds and exchange traded funds had $1.8 trillion tied to energy stocks in June 2014. They have suffered massive losses in the sector. The firm Delaware Investments, located in Philadelphia, has $180 billion in assets under management. Its brain trust expected that crude oil would remain in the $90 to $100 a barrel range. They did not comprehend the Petro-Dollar factor and its demise. Few did, few do. They are massive losers. Maybe they all sport spiffy Economics and MBA degrees that did not result in much learning of the Petro-Dollar phenomenon.

 

California Public Employees Retirement System (CALPERS) is a $303 billion fund that provides benefits to 1.72 million retirees (now and future). It owned a $91.8 million stake in Pioneer Natural Resources in June 2014. At the time, Pioneer was a $33 billion company and one of the biggest shale producers in Texas. Today, Pioneer is worth $19 billion and the CALPERS stake has lost about $40 million in market value. The California pension was a big loser back in 2007-08. They are in line for more massive losses.

 

Since June 2014, the combined market capitalization of 157 energy companies listed on either the MSCI World Energy Sector Index or the Bloomberg Intelligence North America Independent Explorers & Producers Index have lost about $1.3 trillion in valuation. With the final phase of the Petro-Dollar death, demise, removal, and collapse, expect further energy sector losses. It is almost ironic that the gold & silver mining sector suffered staggering losses over a four year period. The energy sector has lost much more wealth and much more rapidly, in just a year or so. See MSN News (HERE).

 

◄$$$ BIG DAMAGE IN OIL SECTOR WITH THEIR PRIVATE EQUITY DEALS… HUGE DAMAGE TO FRINGE FINANCIAL SECTOR FROM FALLEN OIL PRICE, AS THE BIGGEST RISK TAKERS ARE FALLING VICTIM... BOND LOSSES ARE ENORMOUS, ESPECIALLY FOR UNSECURED DEBT HOLDINGS... SOME SMART PRIVATE EQUITY FIRMS ARE DOUBLING DOWN, TAKING HUGE RISKS, BUT SET TO GRAB ASSETS IN RESTRUCTURE... A DOUBLY WHAMMY OF EARNINGS HIT AND CASH FLOW SLUMP COMES AFTER HEDGES EXPIRE... WITNESS A LIQUIDITY DEATH SPIRAL WITH FOCUS ON THE ENERGY SECTOR. $$$


The smart money is taking on bloody losses in an unusual turn of fate. Banks are specialized venture capitalist firms are suffering massive losses. Lower oil price, credit crisis, and vaporized liquidity have invited a panic. This is bigger capital destruction than the QE itself, like a death blow to the USEconomy. It is not yet fully recognized. The oil sector factors are well recognized. The drill rig count has been rising again. Shale oil companies like Whiting Petroleum boast of record output to prop up their shares. Moodys rang the alarm that the oil & gas sector contributed to 7 of the 15 recent defaults. They expect the energy sector to be a primary driver of defaults over the next year. A liquidity death spiral is in progress, as described by S&P Capital IQ.

 

Production in Russia, Saudi Arabia, and even Iraq lately, have raised production in July to 32 million barrels per day. The new wrinkle is Iran, whose oil minister revealed that oil production could be raised by 500,000 bpd within a week of lifted sanctions, and by a total of 1 million bpd within a month. The oil surplus will only get worse. Price will remain down depressed.

 

The wrecking field is as broad as it is deep. Energy companies issued about 15% of all junk bonds since 2009. Efforts are now devoted to salvage and additional investment with hope of miracle. Linn Energy LLC saw its share units plunge 50% over three trading days. They are down 90% from their 52-week high last September, following disclosure of a net loss of $379 million in the quarter, with revenues down 46% hard. This time around, major private equity firms and bond funds that had already pocketed big losses in the sector such as Carlyle Group, Apollo Global Mgmt, Blackstone Group, KKR, and Franklin Resources, were throwing more money at these companies, often companies within their own portfolios. They did so with a twist. But the PE firms structured their deals to give themselves preferential treatment during a restructuring, in which they could acquire some prime assets. They will still lose their asses, and surely lose face. Some massive losses are being suffered by managed funds within Franklin Resources, Blackstone Group, and Oaktree Capital Group, and others. They are facing paper losses on substantial investments this year in Exploration & Production companies.

 

Many of the investments involved doubling down on existing stakes, with hundreds of $millions extended to energy companies whose debt they already held. Among those gaining access to much needed cash were Warren Resources, Goodrich Petroleum, and Energy XXI Ltd. The largest among these deals was an Energy XXI $1.45 billion offering in March of 11% secured bonds due in 2020. To complete the deal, Franklin and Oaktree bought almost half of these bonds at issuance. Since then, these secured bonds have lost about 25% in value, but the unsecured bonds lost 50% and are set for total wipeout loss. Last week, the secured bonds were trading at 73 cents on the dollar. The unsecured 9.25% bonds due in 2017 were trading at 36 cents, down from 75 cents in March just before the deal. A measure of denial can be heard by the PE firms and other well-healed investors. They simply are not accustomed to such outsized losses. By doubling down, they are set for much greater losses. See Wolf Street (HERE).


George of the COMEX pitched in with some thoughts. The big damage starts for real in the coming months as all the oil hedges expire, which will unleash the full brunt of the energy price decline. Since the impression is finally dawning that no quick bounce is to come anytime soon, the reality is setting in for upcoming interest and principal payments. The hedges in place would have provided huge cash flows months ago, but they masked a lot of problems. The typical effect of smoothing the earnings over the life of the hedge is not present today. What comes next will actually be a double whammy, an earnings hit and a cash flow slump, after having already eaten through the windfall from the hedges. It will be very ugly indeed.

 

◄$$$ SAUDI ARABIA PLANS $27 BILLION IN BOND ISSUES, THE FIRST $5.4BN ALREADY PLACED... CONCLUDE THE SAUDIS ARE PUTTING THEMSELVES IN POSITION FOR STRATEGIC LOSS, AMIDST THE LOW OIL PRICE AND DRAMATIC DECLINE IN REVENUES... WATCH ATTEMPTS AT FORFEITURE OF SOME MAJOR ASSETS TO FOREIGN HANDS... THEIR DEFICIT IS 20% OF GDP, TRIPLE THAT OF THE CRIPPLED USGOVT. $$$

 

Fahad al-Mubarak, the governor of the Saudi Arabian Monetary Agency, said in July that Riyadh had already issued its first $4bn in local bonds. They plan a total of $27bn in bond issuance in the coming months. These are their first sovereign issuances since 2007. More multi-$billion debt sales could follow in the coming months. Oil revenue makes up for almost 90% Saudi Arabian budget revenues. Until now, most Gulf emirates have opted to continue spending on infrastructure so as to spur economic growth. The spending cuts come in the face of widening deficits and increasing budgetary strains. Any big high profile bond bust from the Saudi Govt could result in claims for some key Saudi assets. Last month, the kingdom appears to have changed the laws, in an attempt to prevent forfeiture to foreign hands. The Intl Monetary Fund recently said Saudi Arabia is likely to run a fiscal deficit of about about $150 billion this year, equal to 20% of its GDP. The Saudi finances are worse than Japan's, which are really bad. A bust is in progress at both sites. Simple simple math comparison shows the USGovt deficit of $1 trillion on a $17 trillion GDP, for a 6% ratio. But the US GDP is exaggerated to the extreme by false inflation adjustments. Maybe the real GDP is a couple $trillion less. See Market Watch (HERE).

 

## EUROPEAN UNION CLASHES

◄$$$ TAKE A QUICK TOUR OF RAVAGED EUROPE... IT IS A MESS... GERMANY IS MAKING INTERNAL NOISES ABOUT THE UNION, THE SANCTIONS, AND THE AMERICAN LORDS... SOME LEADERS YEARN FOR CLOSER RUSSIAN RELATIONS AND COMMERCE... THE RAPE OF GREECE IS RECEIVING MORE ATTENTION AND DETAILS... THE USGOVT TAKES AIM AT DEUTSCHE BANK AGAIN, WITH BOLD HYPOCRISY. $$$

 

The Russians believe Germany's withdrawal from the European Union is overdue. Surely the EU does not serve Germany well in any respect. The proud nation bristles at the thought of being servants to the American Fascists. See Sputnik (HERE). An astute comment came from George of COMEX. He said, "Germany is in my opinion totally captive at this point. When they break away, if the national economic integrity has not all broken down, it will be the last pitch of the ninth inning [the last moment]. It will be a situation of very suddenly, the game is lost for the United States. The nation is approaching its limit of violence, destruction, economic loss, and control by a foreign entity."

 

German leading figures call for renewal of the important Russian linkage. There is more movement detected within Germany toward dedication to the Eurasian Economic Union. Influential leaders are more outspoken against Merkel, reflecting public sentiment. It is just a matter of time and question of damage before regarding both Ukraine and sanctions on Russia. See Global Research (HERE).

 

Greece wants to set up bad bank for non-performing loans, but creditors want assets liquidated to manage distressed debts, thus filling drainage funds. Athens has lost control of its fate, as the nation is victim to banker predators hell-bent on liquidating the entire nation. See Reuters (HERE). The division of Germany is clear, the banker politicians versus industrial captains. The big German banks made a EUR 100bn profit on the Greek crisis. See Russia Today (HERE). Finally the outrageous Greek Govt spending on weapons has gained attention. The focus is on their position with respect to NATO defense spending, like a black sheep to ruin. See David Stockman Corner (HERE). The French finance minister has taken aim at his German counterpart Schauble over the Greek Exit concept. Minister Sapin has some treaty changes to introduce. See Reuters (HERE).

 

The USDept Justice initiated a criminal probe against Deutsche Bank. The USGovt truly has a death wish. In focus are trades worth $billions that Deutsche Bank made on behalf of its Russian clients, so-called mirror trades with chicanery on funds movement. Germany cannot tolerate the deep hypocrisy in Washington much longer, since the greatest sites for banker corruption and fraudulent market activity are New York and London. See Reuters (HERE).

 

◄$$$ ITALY HAS TURNED INTO A WASTELAND AND WRECKED ZONE, OVERLOADED WITH TAXES AND REGULATIONS, A REAL TRAGEDY. $$$

 

The Italian debt to GDP ratio is currently at its highest level since 1924. Italian agriculture cannot survive in the EU system with the Euro currency used. The average size of farms in Italy is 7.5 hectares. In Germany they are much larger at 56 hectares. Spain also has large farms at 54 hectares. In France they are smaller at an average of 24 hectares. The lack of efficiency makes the whole country uncompetitive. Same items in Italy are more costly, such as butter, fruits, vegetables. A Hat Trick Letter client complained of the plan to turn Italy into a Third World country in order to make it competitive. She called the EU a death trap. Of the many exporting European nations, only the Netherlands comes close to maintaining the pace with respect to Germany.

 

 

Thanks to HTL client Niki in Italy, a woman in her late 70s who has seen a lot in her life. She continued. She wrote the following, her words, my edits. No evidence of Chinese buying farm businesses in Italy, and I do not think they will do in the future. Our farms are small, often run by families, designed long after the Spanish ones, and quite different on the business ownership. They like big things and besides, Spanish agriculture is much less specialized than the Italian. I was living in Spain for a few years. In my opinion the big potential targets for the Chinese acquirers will be Spain and France, since they have the biggest farms. Greece is good only for oil, sheep, and goats, and not big fruits or grain cultivations. They also have water problems in Greece, a little known fact. Also, I do not think they have the big estates structure like Spain and France. I know nothing about Portugal. In the markets in Europe you find lots of products coming from Spain (like fruits, vegetables, ham), some from France (mainly wine, cheese, some fruits) but nothing seen from Portugal. It is a meaningful observation. In France farmers have a lot of problems, with a new wave of suicides. But for France the point is this. If Mrs Le Pen wins the president position, she is a strong statist and nationalist. So it would present quite a problem for the Chinese to buy big farm estates in France.

 

Niki concluded sadly about her country. Italy once was a nice place where to live, but everything is changed. This country is deteriorating very fast. Since 2008 the industrial sector and capacity of production was dismantled by about 30% in total volume. The real tax burden for small and medium factories and independent workers is around 75% to 80%, sometimes even more. I know people who ask for loans to the bank to pay taxes. It is an unbelievable situation. All together taxes are more than what they earn! They are taxing everything! The farmers do not know how to survive. The European Union rules and the Russian sanctions are destroying what is left of Italian farming. The country cannot continue in this way. We are becoming poorer and life is becoming more and more expensive. The Italian Govt has gone completely crazy with countless regulations. Since we joined the European Union, they are growing exponentially. Our politicians sold us out. Italy has become a tragedy.

 

## GOLD PAPER MARKET SKEW

◄$$$ BOTTOM IN GOLD & SILVER BEING CONSTRUCTED IN A MULTI-YEAR PATTERN, PERHAPS FINALLY... THE DEATH OF THE KING DOLLAR URGES THE PRECIOUS METALS ONTO CENTER STAGE... GOLD & SILVER WILL BE THE BASIS OF THE NEW CURRENCY AND TRADE SYSTEMS. $$$

 

Consensus analysis and projections in the mainstream press have been loaded with profound lies, repeated propaganda, all of which cannot be justified. The perspectives have failed for several years running. The Global Paradigm Shift is underway, and actually accelerating. The Gold has gone East, and with it the power. The fiat paper currency system with its debt foundation is crumbling. The USTreasury Bond market is fracturing and soon to go bust. The paper system is fading away, blown to pieces.

 

The Gold & Silver markets have been controlled for over two decades by paper merchants hell-bent on price suppression. There is no law enforcement for criminal activity, either in the futures market or the big banks. The GLD & SLV funds have been routinely raided. The control center at the USDept Treasury is busy with derivative management, barely holding things together with the everpresent Exchange Stabilization Fund. Expect non-linear movement and discontinuous price action. That means expect big quantum jumps in price, and possibly shutdowns that later reveal much greater prices. The silly propaganda argument that an inadequate amount of gold & silver exists to serve as monetary basis is absurd and pure nonsense. Given the 5-fold or 10-fold increase in money supply over the last several years or few decades, the solution will be simple.

 

The Gold price will be 10-fold the current price, and the Silver price will be 15-fold the current price. Gold will win the battle but silver will take the greater spoils. Notice how the shortage is much more acute in the silver market. A long-term chart is presented for both precious metals. Each has current official price at long-term critical support. The three-year correction is over. The death of the King Dollar will be the geatest story in financial history, and we are living it here and now. The return to the Gold Standard will be rocky and violent. The Jackass has mentioned many times in the last several years, that the USGovt will use fraud, coercion, violence, and war to defend the USDollar under the constant din of propaganda lies. The claim is utterly obvious as we watch events unfold.

 

 

 

◄$$$ GLOBAL EXCHANGES CONTINUE TO BLEED SILVER... HUGE REMOVALS ARE BEING EXECUTED... OFFICIAL REGISTERED SILVER IN THE COMEX IS DOWN BY 21% IN FOUR MONTHS... WITH ALL CRITICAL ELEMENTS BROKEN WITHIN THE FINANCIAL SYSTEM, EXPECT DEMAND TO RISE... THE IMPLOSION IS IN PROGRESS, IN CLIMAX MODE. $$$

 

Huge silver demand is taking place around the world, even in North America. Some extremely large withdrawals have been done at the COMEX Depositories. On August 5th alone, CNT removed 967,619 ounces of silver (almost 1 million oz). This is astonishing and almost without precedent. The COMEX Registered silver inventories continued to build after bottoming in mid-2011 at 26 million oz. During the last four years, the largest decline was no more than 10 moz. The rise has been reversed. The Registered Silver Inventories have fallen by 15 moz in just the past four months, a staggering 21% from the peak. For definition, Registered means that the silver bullion is available for delivery upon demand by being registered as such with a bullion dealer. The Registered (deliverable) silver inventories are being depleted quickly.

 

 

With QE firmly fixed in place, with ZIRP firmly fixed in place, with the monetary spigot on high volume and firmly fixed in place, with the big insolvent banks firmly fixed in place, with huge sovereign debts firmly fixed in place, with tactical wars firmly fixed in place, expect the demand for Gold & Silver to rise. With the USTreasury Bond market cracking, fracturing, seizing up, and requiring daily emergency maintenance, expect the demand for Gold & Silver to rise. We are finally in climax mode. See SRS Rocco (HERE).

 

◄$$$ JPMORGAN HELPED COMEX TO AVOID GOLD DEPLETION, BY BOOSTING REGISTERED GOLD 78% OVERNIGHT, IN A TIMELY INCREASE OF 281,000 OUNCES GOLD.... JPM IS A CABAL HERO, BUT DIRTY TO THE CORE... BANKS ARE MANIPULATING DATA ON GOLD INVENTORY, USING A RECENT ACCOUNTING REFORM IN THE NICK OF TIME. $$$

 

On a day in the first week of August, a near miss occurred. For a moment the COMEX was on the edge, as its Registered gold had dropped to a low of just over 10 tons, which had never been seen before. The observers noted that at a pace of 25k ounces per day, the gold vaults that make up the CME's vaulting system would be depleted in less than two weeks of daily withdrawals. Quickly and with swift dispatch, JPMorgan rode into the market with a timely replenishment. JPM boosted the COMEX Eligible gold by a sturdy 78% overnight, from 362k ounces to 643k, thereby removing the immediate risk. See Zero Hedge (HERE).

 

More to this story, as accounting reform was ordered. Fake COMEX inventory for gold is becoming the story. The banker cabal huddled, plotted, concluded, and ordered a gimmick. They performed an accounting trick by manipulating data to change registered gold into eligible gold on inventory ledgers. It is not clear that any new gold physical metal entered the exchange. The accounting change used to boost inventory in the COMEX was egregious. The Examiner stated, "In reality, the COMEX is no longer used as a true futures market for delivery of physical precious metals, as it has not made an actual delivery in over two and a half years. Instead the COMEX presides over a paper and derivatives market, even allowing the use of naked short selling of futures contracts to protect the dollar and the derivatives tied to the reserve currency. For years there has been much speculation on just how much the COMEX is used to manipulate the price of gold & silver by allowing the Fed through bullion banks like JPMorgan to manipulate prices through the futures market." See Examiner (HERE).

 

◄$$$ BARRICK GOLD WAS HIT WITH ANOTHER DOWNGRADE, NOT IMPRESSED BY DEBT REDUCTION... PRESTIGE IS LONG GONE FOR THE CORRUPT LINK TO WALL STREET AND THE ELITE HIVE. $$$

 

Another rating agency downgraded Barrick Gold credit to one notch above junk status, citing their declining production and weak bullion prices. DBRS acknowledged the Barrick efforts to reduce its US$13 billion debt by $3bn this year, but the effort is inadequate. The rating service is out of Toronto. The downgrade follows a similar move by Moodys, which reduced its Barrick rating to the lowest investment grade level last week. DBRS did change its trend on Barrick to stable from negative, citing a bolster in its finances. With asset sales, the debt will be reduced, but the process will contribute to lower output. The firm might be the world's biggest gold producer, but they are also the biggest scumbags in the industry. Keep an eye on their Evergreen contracts for a certain disposition. See Globe & Mail (HERE).

 

## PHYSICAL PM MARKET IN EXTREME SHORTAGE

◄$$$ DIRE SHORTAGE IN SILVER MARKET HAS GONE ACUTE FOR BOTH COINS AND BARS... THE SHORTAGE IS NOT ISOLATED, BUT RATHER UNIVERSAL ACROSS ALL LOCATIONS... THE INVENTORY IS UNDER DEEP DISTRESS, THE STORIES ALL IN RHYME... THE WEAK SIDE OF PRECIOUS METALS IS SILVER. $$$

 

The precious metals publications are ripe with stories about shortage, having gone universal. The wholesale silver shortage is developing rapidly. With the SDBullion contacts with the nation's leading precious metals mints, wholesalers, authorized purchasers, and distributors, the latest evidence indicates that the wholesale silver shortage is becoming much worse. The online vendor has accumulated much evidence from the week of August 15th:

  • USMint Authorized Purchasers shared that Silver Eagle allocations have been substantially declining every week since sales resumed.
  • USMint made 1.4 million Silver Eagle coins available two weeks ago to Authorized Purchasers. Last week only 1.0 million coins were made available. This week the number declined an additional 20%.
  • Further, USMint officials reportedly are advising Authorized Purchasers that they will begin making the switch to 2016 Silver Eagle production in September, drastically reducing output of 2015 coins.
  • USMint will have extreme difficulties in sourcing raw material for Silver Eagle coins, due to annual switchover in November & December time frame when they change out dyes and stamps, resulting in a sales halt.
  • The Exclusive Distributor for the leading private mint shared information that the mint had been scheduled (and promised) to deliver 10,000 bars of 100-oz Silver, but was only able to deliver a little over 3000 bars.
  • The Royal Canadian Mint reportedly did not release a single 1-oz Silver Maple to any of the Authorized Purchasers in contact with SDBullion for the week.
  • New orders for 1-oz rounds by Sunshine Mint are shipping to dealers & distributors with a nine week delay.
  • The third largest US wholesaler & distributor of precious metals with 21 warehouses has been cleaned out. They usually are stocked to the rafters with bullion products.
  • At one point over a 48-hour period, nearly all of the last remaining Live products at US Wholesalers have virtually all been sold out at the wholesale level. They are higher premium retail products from world mints such as the Perth Mint, New Zealand Mint, Banco De Mexico, Royal Mint, Austrian Mint, Armenian Mint, and the Chinese Mint.
  • Bullion mainstays such as Johnson Matthey and Royal Canadian Mint selling 100-oz bars have gone 'No Offer' at several of the largest US wholesalers & distributors. Even Engelhard has nothing offered.

 

 

◄$$$ PREMIUMS IN STRATOSPHERE ON 2008 AND EARLIER SILVER SOVEREIGNS... A QUICK FIELD REPORT BY COLLEAGUE AARON KROWNE. $$$

 

The following is from AKrowne with minor edits. APMEX is pretty much the cheapest of discount brokers who sell only real metal, with no paper forward sales. This indicates the retail physical market has tightened immensely, and most extremely at the margins. No such market segmentation has been seen like this before, where basically stock bullion coins are split into and treated like a rare coins market. The mainstream media will apparently not catch on that anything is wrong with the pricing system until every bullion dealer is bankrupt or has cleaned out inventory, with premiums on nearly everything left in stock at double the silver price or more. Note the 2006 American Eagles at $10.99 premium, the 2008 Canadian Maple Leafs at $21 premium, and the 2008 Austrian Philharmonics at $25 premium. See APMEX (HERE & HERE & HERE).

 

◄$$$ PHYSICAL GOLD COINS ARE RISING FAST IN TRUE PAID PRICE, AS THE PREMIUM IS JUMPING... NEWER MINT COINS ARE STARTING TO RESEMBLE OLDER COLLECTOR COINS... THE SHORTAGE WITH PREMIUM MATCHES THE SILVER MARKET. $$$

 

The following is a story from a Hat Trick Letter client, his words with my edits. Two weeks ago, he purchased one Augustus St Gaudins $20 Double Eagle gold piece minted in 2015 for $1275. Suddenly the price has risen to $1465, up by 14.9% in two weeks. This coin was purchased at the USMint in West Point NY. The price of physical gold is rising significantly, while paper instruments are holding steady or declining. Aaron Krowne added a comment. This jibes with what is seen elsewhere. Premiums are up strongly on coins. Some bullion coin issues are even starting to resemble collector coins with their premiums included. We also know that junk silver coin premiums are moving up fast. Bullion bar products have not really gone up in premium though. They may be next to rise, if the same fundamentals remain in place.

 

◄$$$ USMINT AND CANADIAN MINT DYSFUNCTION GETS WORSE AS SILVER COIN PREMIUMS RISE... DELAYS, RATIONING, PREMIUMS. $$$

 

Both the USMint and the Royal Canadian Mint (RCM) continue to run into serious issues. They cannot keep up with retail silver coin demand. The retail market for gold & silver coins & bars and even rounds has been overwhelmed with high demand since mid-June. The USMint has resorted to rationing Silver American Eagles after resuming delivery, following an impasse. Mint officials are to cut further back on Silver Eagle shipments, reducing them as much as 20% below already inadequate levels. RCM officials announced significant problems with sourcing silver blanks for production of the Silver Maple Leaf coins. At least one major wholesaler stopped accepting new orders. The one-two punch of USMint and RCM rationing and production breakdowns promises to keep buy premiums elevated with associated shipping delays on most official minted silver coins for the foreseeable future. Seizing the opportunity to buy silver at ultra-low prices has proven harder than expected. The Jackass always tells clients "Buy silver coins if you can find them" in private messages, at least for the last couple years. Inventory constraints in the marketplace so far are explained as bottlenecks in manufacturing of certain products, and not an outright shortage of raw silver inputs. The Jackass calls such viewpoints patently incorrect. The shortages are acute and worsening, as the imbalance between supply & demand is astounding. See Mining (HERE).

 

A case in point on the supply chain breakdown is seen with Provident Metals. They defaulted on delivery of 10-oz silver bars to the Royal Canadian Mint. Provident advertised them as in stock. They were not. They called it an unforeseen production and allocation error by the Royal Canadian Mint, coupled with an internal inventory discrepancy which has effected a few of their customer orders. Shipments of 10-oz silver bars has been curtailed, as other sources are being investigated. See Investment Research Dynamics (HERE).

 

◄$$$ GERMANY LEADS THE WESTERN NATIONS IN GOLD PURCHASES AND ACCUMULATION... GERMAN GOLD DEMAND IS TWICE THE UNITED STATES, AND EASTERN GOLD DEMAND IS TWICE THE WEST. $$$

 

Against the prevailing flow to the East, the nation of Germany continues to demand physical gold for investment. They are the exceptionally smart nation of educated bilingual individuals. Its gold demand remains the highest among the Western nations. Chalk it up to the countless countrymen who are deeply discontented with the current relations with the European Union, the Bundesbank dispute with the Euro Central Bank, the refusal to repatriate their gold from the New York Fed, the sanctions against Russia, even the debt negotiations with Greece. The German demand is almost as great as the rest of Europe combined, impressive.

 

 

According to the World Gold Council 2Q2015 Demand Trend Report, the German gold bar and coin demand was 24.1 metric tons for the second quarter. Do a simple calculation to conclude that German physical gold investment during Q2 was 40% of the total in the West, which rang in at 59.6 tons. Although only one quarter the US population, Germany had twice the gold demand. Notice poor France actually was a net seller of gold for the quarter, as the nation struggles mightily. Compare to the total Eastern world gold bar & coin demand for the second quarter. It was 115.9 tons versus 59.6 tons in the West, a ripe double. Rocco points out that the World Gold Council figures do not fully account for total gold flows into China and India, but it gives some guidance to just how much less gold is flowing into the major Western countries. See SRS Rocco (HERE). The Eastern nations, primarily Russia and China, are stockpiling gold. See UK Telegraph (HERE).

 

◄$$$ INDIA IMPORTED 155 TONS OF GOLD IN TWO MONTHS OF APRIL & MAY, A HEFTY 61% RISE OVER LAST YEAR... A VERY STRONG PACE IS KEPT, SURE TO MATCH THE STRONG FULL YEAR PREVIOUSLY... RESTRICTIONS ARE GONE ON IMPORTS, AND THE CURRENT ACCOUNT DEFICIT IS WITHIN THE COMFORT ZONE. $$$

 

Gold imports are on the rise in India, as the nation girds for currency war amidst a backdrop of wreckage in emerging market economies. The nation also reacts to lower prices globally, and the easing of restrictions by the Reserve Bank of India. In April-May of the last year, gold imports had aggregated about 96 tons, according to official data. This year the two months generated 155 tons in gold demand. In 2014-15, India imported 915.54 tons of gold as against 661.71 tons in the previous financial year. The nation of India is the largest importer of gold, which mainly serves the demand of the jewelry industry. At issue is the effect on deficits. Keep in mind that Indian households are in possession of at least 20,000 tons of gold. They are a smart nation, always distrustful of their former British uber-lords. Conclude the Indians are far wealthier than the US populace, which stores ornate toxic paper in shoeboxes, vaults, and criminal cubby holes called stock accounts and mutual funds.

 

Large imports of gold impact heavily its Current Account Deficit, which results when imports and services exceed exports. The CAD in 2014-15 shrank to 1.3 percent of GDP (US$27.5 billion) from 1.7 percent (US$32.4 billion) in 2013-14. The downward pressure remains on the Rupee currency, despite inherent true wealth in their possession, an irony. The central bank and the government have maintained that the CAD level is comfortable. In November last year, the RBI had scrapped the controversial 80:20 scheme that used to guide imports. In 2014-15, India imported 915.54 tons of gold as against 661.71 tons in the previous financial year. At 77.5 tons per month in current pace, they are on track for another 930 ton year. They maintain a very strong gold demand, thus adding pressure on the tight market. Of course the smuggling is not accounted for in official data. Given relaxed restrictions, it is probably lower than before. See Economic Times of India (HERE).

 

◄$$$ SHANGHAI GOLD EXCHANGE HAD THE THIRD LARGEST WITHDRAWAL WEEK IN ITS HISTORY... TRULY ENORMOUS AMOUNTS OF GOLD ARE BEING REMOVED FROM THE MARKET IN CHINA, ADDING STRESS TO THE SYSTEM PLAGUED BY SHORTAGE... THE GOLD PRICE IN RMB TERMS IS STARTING TO COME INTO VIEW, OFTEN REPORTED. $$$

 

For the week ending July 24th a massive 73.29 tonnes of gold bullion were withdrawn from the Shanghai Exchange into China. It was the third largest week for gold offtake. That translates to about 2,356,296 troy ounces in a single week. The chart below is from Nick Laird at sharelynx.com. See Cafe Americain (HERE).

 

 

## MINING FRONT WOES

◄$$$ ANOTHER $10 MILLION DOLLAR GOLD ROBBERY IN MEXICO OCCURRED, WITH POSSIBLE BLAME TO EITHER DRUG CARTEL OR GOVT OR BOTH... MINING FIRMS ARE SUPPRESSING REPORTS ABOUT ROBBERIES AT THE MINE SITES, AS THEY FALSIFY OUTPUT REPORTS... THE OFFICIAL FILINGS CITE LOWER OUTPUT, AND LOWER ORE YIELDS. $$$

 

Mining stock investors are more concerned about the falling and highly corrupt official gold price, and silver price too. They have yet to figure out that mining firms are having output stolen, as a regular occurrence in Mexico. Masked gunmen in a group of at least 20 men made off with 300 kg of gold bars in Sonora Mexico. They ambushed an armored truck, masked and wearing para-military uniforms. The heist took place in the mine La Herradura during a cargo transport. The heist was valued at 180 million MexPesos, equal to about US$11 million. To anyone with a pulse and working brain stem, it is clear that the government and owners of the telephone networks listen in on the communications, both written and telephonic. The other possibility is an inside job, where friends of the foreman and site manager took advantage of the situation. The mine site heist was not the first in Mexico, the site of several in the last year. The authorities wish to keep the news a secret. The Jackass first reported on Mexican mine heists in the middle of 2013, when a fellow analyst (and friend) was the victim of an armed roadside holdup near a mine, with his face in the dirt for 40 minutes and sub-machine gun pointed at his head. The key point is that Mexican mine projects report lower output, without mention typically of the robberies. They cite lower mine yield. See Milenio (HERE).

 

◄$$$ MEXICAN SILVER MINE OUTPUT, A WORLD LEADER... MEXICO IS NOT DETERRED BY A LOWER PRICE... ITS NATIONWIDE OUTPUT IS STEADY, AND AT A LEVEL DOUBLE THAT OF 2008... MEXICO COULD SUPPORT A SILVER CURRENCY. $$$

 

Notice the Mexican silver mine output doubled from the previous stable silver price before the Lehman event in 2008. It has gone from a trend of 6 million ounces to around 13 million ounces annually. Factor in robberies and it is slightly higher. The nation is positioned for a silver-backed Peso currency, a natural development. To carry it off, they must resist the killers in New York and Washington under the government aegis and banker wings. The USGovt would regard the move as an act of war. Although the nation could execute such a plan, the US controls the Mexican Govt. The American uber-lords would not permit it. When the USDollar vanishes, it will be every nation for itself in a survival scamble. Then and only then, can Mexico, Panama, even Costa Rica struggle to produce a new strong currency backed by gold or silver. The nations all have untapped gold in the hills.

 

 

◄$$$ A BIG FALL IN GOLD OUTPUT WILL COME FROM MINE CLOSURES... THE MANY MARGINAL MINES MUST BE SHUT DOWN SOON, WHEN THEY CAN BE CLOSED AFTER CONTRACT OBLIGATIONS... THE GLOBAL MINE OUTPUT IS POISED TO DECLINE A QUANTUM LEVEL... STRESS ON THE MARKET DYNAMICS FROM REDUCED SUPPLY WILL BE ACUTE. $$$

 

The consultancy Metals Focus has concluded that almost 25% of global new mined gold output is running at a loss at the $1100/ounce gold price. Any further drop in price would result in a sharp further decline. The firm monitors half the projects of the world, from which global gold output yields 1650 tons. They estimate that 400 tons will be uneconomic at current prices. Project shutdowns will continue in earnest. Extrapolate to conclude that on a global scale, as much as 800 tons of output could currently be running at a loss. A time delay is inherent in the business, due to ongoing contracts and the substantial costs involved in closing an operating mine down. Operating at a small loss might be viewed as preferable therefore. Decommissioning of the process plant, removal of large mining equipment, as well as reclamation of the land and watercourses, and other environmental related site rehabilitation carry heavy costs. By extending projects, the mining firms buy time and hope that the gold price will make a recovery.

 

The Metals Focus report specifically cited South Africa as a case in point. It notes that 20% of unprofitable production is located in the rainbow nation, where mining companies must deal with production at enormous depth, activist labor unions, and falling grades from old mines. The nation has exerted pressures to maintain the employment levels due to the high jobless rate. In contrast, Australia accounts for 18% of the unprofitable mine production. The nation Down Under might be more likely to see closures and cutbacks implemented, since political interference with such decisions might be less strident. The consultancy concludes that the actuality of closing an operating mine could still only be the last choice while companies seek other ways of cutting costs. Given how the easy cuts have already been made, this becomes a harder and harder task. For projects large and mid-sized at the top end of the cost curve, the future looks bleak and closures seem inevitable. Over the next 12 months, they expect a decline in global output of around 75 tons gold. More supply pressure is to come to the official gold exchanges. See MineWeb (HERE).

 

More pressure comes to the Supply & Demand imbalance. Expect an aggravated effect to COMEX dynamics. In fact, the COMEX has no gold. The banker cabal is stealing golf from the GLD Fund, from the USMint supply lines, and coercing Scotia Mocatta to supply gold after murdering their founder. The Jackass expected that in 2014, the gold mine output would be noticeably lower, like 20% lower. The forecast was not correct, as contracts had to be honored, and shutdown costs were overlooked in the analysis. The reduction in output should occur finally in 2016.

 

For an update on the important South African mine sector, see MineWeb (HERE) and Mining (HERE). Its producers are making hard decisions in the face of broadbased lack of profitability. A Hat Trick Letter client located in South Africa provided some interesting information. He said the SAfrican mines have released 625,000 workers, who are relocating to Zimbabwe to take on other projects. The migration affects about 6% of the population. The Jackass expects throngs of Chinese to operate many SAfrican mines before long, perhaps in secrecy, like with mines regarded as shut down but with the back gates open by day and the field lights on by night. The motive for BRICS inclusion is held tightly in secret. My suspicion is the massive ramp-up in the Rand Refinery in the last several years will be accompanied by a move by Chinese workers to operate what are believed to be shutdown mines, to be sure difficult deep mines. Think prison gangs offered liberty after something like a three year period. The practice is common across much of Africa. On a positive note, the Rand currency decline means more car production and export potential for the nation.

 

◄$$$ BARRICK TO START FORMAL PROCESS TO SELL BALD MOUNTAIN, ROUND MOUNTAIN, SPRING VALLEY, RUBY HILL, HILLTOP, AND GOLDEN SUNLIGHT... BARRICK ON THE DEFENSIVE EXTREME WITH A LONG LIST OF PLANNED ASSET SALES, INTENDED TO REDUCE THEIR DEBT BURDEN... THEIR LIQUIDATION WILL BE DIFFICULT TO BRING TO A HALT, WHICH THEY CALL STRENGTHENING THE BALANCE SHEET... GIVEN THE TAPPED OUT PROPERTIES, IT SEEMS MORE LIKE A DEATH MARCH. $$$

 

Earlier in 2015, Barrick Gold set a debt reduction target of $3 billion for 2015. Current asset sales have reached $2.45 billion toward the goal, from joint ventures and streaming (investment in cash for rights to partial output). Counting usage of cash they have reduced debt by $2.7 billion, or 90% of the target. Transactions announced to date include the following. a) Sale of 100% of the Cowal mine for $550 million in cash, divesting the last Barrick-operated mine in Australia; b) Sale of 50% interest in Barrick Niugini Ltd for $298 million in cash, establishing a long-term strategic partnership with Chinese Zijin Mining; c) Sale of 50%interest in the Zaldivar copper mine in Chile for $1.005 billion in cash, setting up collaboration with buyer Antofagasta Plc; d) Streaming contract on a portion of Barrick's share of gold & silver production from Pueblo Viejo in the Dominican Republic for $610 million in cash. In addition, Barrick Gold maintains a $4 billion undrawn credit facility and holds $2.1 billion in cash on hand at 2Q2015 end.

 

Additional asset diverstiture ensues. Over the last several months, Barrick has received a number of proposals and queries relating to the proposed acquisition of various non-core assets in Nevada and Montana. Over the next several weeks, they intend to commence a formal process to sell Bald Mountain, Round Mountain (50 percent interest), Spring Valley (70 percent interest), Ruby Hill, Hilltop, and Golden Sunlight. These assets represent an attractive portfolio of producing and development assets. See Buckaroo (HERE). A brief update on Pascua Lama in Argentina on the Chile border has revealed the consequence of shutdown. An annual cost of $200 million must be borne in maintenance of abandoned installations, to comply with demands from the Resolucion de Calificacion Ambiental (RCA), within the Chile Govt environmental agency. See MDZ (HERE) in Spanish. Savvy colleague UrselD pitched in a comment. "Barrick faces a huge problem. This list of mined out old dog projects will not only bring in miniscule revenues, but they could have to pay someone to take over the reclamation liabilities. Talking big numbers for some, and extremely big numbers for others." To the Jackass, it seems Barrick is on a death march. My eyes are on the old Evergreen gold contracts from the 1990 decade, which serve as logjam in the gold market.

 

## ECONOMY CRASHING UNIVERSALLY

◄$$$ THE REASONS FOR THE GLOBAL ECONOMIC DEPRESSION AND GLOBAL FINANCIAL BREAKDOWN ARE SIMPLE... THEY HAVE BEEN CITED WITHIN THE HAT TRICK LETTER FOR SEVERAL YEARS... THE DETERIORATION AND BREAKDOWNS ARE VERY MUCH ANTICIPATED. $$$

 

The biggest factor for the global depression is 1) the USFed for its QE monetary policy, which is pure Zimbabwe hyper inflation. The result lifts the cost structure, removes the profit margins, and retires capital. QE kills capital globally. 2) The insolvent  banking system eliminates the credit engine as a vital function for economic sustenance. The big banks are zombies. 3) The rising USDollar has caused export trade problems around the world, while increasing the debt burden for the entire set of Emerging Market nations. Currency instability is a plague to business. 4) The constant spate of USGovt sponsored sanctions has interfered with global trade, the results from the Russian chapter the most painful. Consider them economic roadblocks. 5) The obstructed infrastructure projects around the Eastern world are numerous, each interfering with labor and trade. The United States is behind each deadly lethal dangerous factor, collectively responsible for the tremendous damge to the Global Economy. Therefore the US will be isolated, quarantined, liquidated, occupied, and colonized. Not even the self-administered martial law can stop what comes.

 

◄$$$ STRONG USDOLLAR SIGNALS PROBLEMS TO THE USECONOMY, DERIVED FROM THE EXPORT SIDE... LOSERS ARE ON BOTH SIDES OF THE EQUATION, DESPITE THE PROPAGANDA FROM WALL STREET... THE STRONG FAST RISING USDOLLAR WILL EVENTUALLY DEEPEN THE USECONOMIC RECESSION... A WEAKER PERCEIVED ECONOMY AND LOWER US-BASED ASSET PRICES WILL CAUSE A SEVERE CRISIS, SURE TO OCCUR SOON... THEN COMES THE EMERGING MARKET DEBT BUST. $$$

 

The significant frightening rise of the USDollar has become singularly the biggest story in the global markets. While a strong dollar is good for importers, it is correspondingly bad for exporters on the US side. This is particularly the case with US-based multi-national companies who do a bulk of their business overseas, where now those nations are in dire straits. Exports make up 40% of corporate profits, thus the surge in the USD exchange rate has become a grand excuse for earnings weakness. However, as with most destructive trends, most analysts join the bandwagon and assume the current trend will last indefinitely, and assume it is beneficial. Neither is true. The rally in the USDollar will end in a tragic vanishing act, much like a hot air balloon which rises to the stratosphere (where it pops) from the absent ambient pressure. Like with a stronger domestic economy, a rising USDollar attract inflows of foreign capital. However, at the point where the USD strength sufficiently impacts exports, a recession is eventually triggered. Also, if foreigners worry about a correction in the USD rise, the inflows will halt suddenly.

 

The US-based recession will join the foreign economic recessions, to produce a global crisis unlike any seen in modern history. The USEconomy, if more accurately viewed and measured, is mired in a powerful recession that has endured since 2007, coincident with the subprime mortgage episode. It was never properly cleaned up, just papered over. The USEconomy is not strong enough to offset the negative impact to exports of the sharp currency spike. Hence, the currency impact on economic activity could trigger a much more drastic slowing of the economy than currently perceived. Watch the next GDP growth data be horrible. From an historical perspective, sharp declines in exports have been a precursor to the onset of economic recessions in the past. While the majority of analysts suggests the USD strength will continue, a flight out of the global reserve currency could be easily triggered by a further unfolding of domestic economic instabilities, or a USD rejection in foreign nations. The effect would be doubly powerful in the case case that economic weakness is coupled with a sudden decline in US asset prices, like stocks or property or businesses. See Zero Hedge (HERE) or Street Talk (HERE) for an essay by Lance Roberts.

 

◄$$$ US-BASED CONSUMER DEBT HAS NOT BEEN RECTIFIED SINCE THE LEHMAN EVENT... IT IS THE NEXT WRECKING ZONE... AND STUDENT LOAN DEBT HAS GONE EXPONENTIAL IN VOLUME, MORE THAN DOUBLING SINCE 2008... IT IS THE NEXT WRECKING ZONE. $$$

 

Three blatant subprime debt puss bags remain to be popped and drained. They are car loans, student loans, and the energy sector loans. The United States has an impressive nearly infinite capacity to create new bigger asset bubbles after the failure of previous puffed asset bubble events, like in 2008 with Lehman and subprime mortgage bonds. Of course, the biggest asset bubble in the history of mankind is the current USTreasury Bond bubble, with $18 trillion in debt and a supporting platform of $700 trillion more with derivatives. Embedded in consumer debt are risk-filled car loans.

 

 

 

◄$$$ RECENT PRICE INFLATION GROSSLY UNDER-STATES THE ACTUAL RAVAGING EFFECTS... THE TRUE CPI INDEX UP AT LEAST 600% AND MAYBE OVER 700% IN THE LAST FOUR DECADES. $$$

 

View a real bullshiitte chart, fashioned by the stat rat gimmick team at the Bureau of Labor Statistics, which is dedicated to falsify important economic statistics. Once again, the overall composite 279% is below all the components, which is the blatant signal. The tuition rise matches somewhat my school at Carnegie Mellon Univ. My Masters annual tuition was $3500 in 1976, and a few years ago it was $32k, and surely over $35k now. The CPI has been rising 8% to 10% per year for over 10 years, which the Chapman CPI confirms against the Shadow Govt Stat backdrop.

 

 

Do a quick calculation. For a 10-year span like after 9/11 and the adoption of the Fascist Business Model, the 10% annual price inflation yields a total CPI rise of 259% when compounded. A 9% annual inflation yields a total CPI rise of 237% compounded. An 8% annual inflation yields a total 216% rise. The chart claims 279% over 37 years, which is rubbish poppycock and obviously in error by an order of magnitude. It is more like 600% to 700% over the four decades, which seems right for a bottle of beer, carton of juice, gallon of milk, toll booth, or sports event ticket, even drivers license or water bill. One must ignore the gasoline price in such comparisons, ever since the Petro-Dollar began the dismantle in 2014.

 

◄$$$ US-BASED CONTAINER EXPORT TRAFFIC CONTINUES A STEEP DECLINE... US FREIGHT CARLOADS ARE IN COLLAPSE, FLASHING RECESSION WARNINGS THAT FEW OBSERVE... ANOTHER INDEX TO FOLLOW THE HORRENDOUS SIGNAL BY THE BALTIC DRY DROP FROM SIX MONTHS AGO... THE USECONOMY IS NOT THE ENGINE ANYMORE... THE USFED IS THE TOXIC SPEW GARDEN HOSE INSTEAD... THE GLOBAL RECESSION IS ON THE VERGE OF A GLOBAL DEPRESSION. $$$

 

Global trade has suffered tremendous damage ever since the seminal Lehman event and Western banking insolvency transformation. The Global Financial Crisis has not been addressed toward remedy. The signal for no remedy is no liquidation of big banks and no return to Gold Standard. The surge of shipping activity in 2010 was the brief fleeting effect from the TARP and ZIRP non-solutions, the huge grant of funds to repair big bank balance sheets, coupled with the 0% official rate on money (to fund the derivative engines). It peaked in March 2011 and ever since 2012, the decline is obvious and the collapse is powerful. The effect is already cascading around developing market currencies, which are swooning. The export market for containerized goods is not showing signs of a turnaround in the near future. Such is the new headline and consensus view. See the graph below.

 

 

As US exports become less competitive overseas from the higher USD exchange rates, imports to the US shores become cheaper. Exporter loss is importer gain, so it seems. The import container index in July jumped 21.5% from June to the second highest level in the history of the index. It is up 10.3% from July last year, already a record year for container imports. Attribute it to rising imports from China as the back-to-school and fall merchandise arrived in the US retail chains. But even in this scenario, problems are cropping up. The other headline is that slow ordering patterns are showing up in China's measure of new orders, which indicate that US retailers are being a little cautious with their ordering. The USGovt Census Bureau reported that the already elevated business inventories rose even higher again, from manufacturers to retailers. Hampered by lackluster sales, the seasonally adjusted inventory-to-sales ratio reached 1.37, same as in February, the worst level since July 2009. Businesses are going to cut back ordering and end their detrimental channel stuffing. This will curtail imports, which will hit China and other countries. No more is the United States the engine that pulls the global economy out of the quagmire. It is the site of the toxic USDollar spew which wrecks capital globally. See Wolf Street (HERE).

 

◄$$$ RAILWAY TRAFFIC IS DOWN HARD, THREATENING TO MAKE A BREAKDOWN... MUCH BLAME GOES TO MOVEMENT OF OIL AND COAL ON RAILWAY LINES. $$$
 

Railway traffic fell in July from a year ago. The main factor is a steep decline in oil and coal shipments, according to the Assn of American Railroads. Despite almost constant reassurance that plunging oil prices are positive for the America consumer, they are deadly dangerous for the companies across the US landscape. The AAR analysts warn "Railroads are overexposed, relative to the economy in general, to the energy sector. [The traffic data indicates] growth is slow and the recovery could be threatened by an interest rate increase by the Fed." The recent bright spot for the railroads was a fleeting moment, nothing more. Some data was offered for the July month. The number of carloads carrying oil and petroleum products dropped 13.6% from a year ago to 67,909 last month, while coal volumes sank 12.5% during the same time period. Traffic of container shipments overall fell 1.8% to 2.7 million. Oil on train shipments have tumbled this year, hurt by safety concerns on transporting petroleum by rail after a couple key accidents. The declining demand for coal from power plants and overseas buyers has exacerbated the effect. See Zero Hedge (HERE) and Wall Street Journal (HERE).

 

 

◄$$$ CONTAINER FREIGHT RATES FROM ASIA TO EUROPE CRASHED 24% IN A SINGLE WEEK IN AUGUST... SHIPPERS ARE LOSING 50 CENTS PER DOLLAR BOOKED ON CARGO, WHICH IS NOT SUSTAINABLE... THE GLOBAL RECESSION IS STRONG, UNIFORM, AND ENDURING. $$$

 

Shipping freight rates for transporting containers from ports in Asia to Northern Europe dropped 22.8% to $400 per 20-foot container (TEU) in the last week ended of July, according to data from the Shanghai Containerized Freight Index showed. The decline is due to overcapacity in available vessels and very weak demand for transported goods. The signal is there to see of EuroZone Economic bust. Rates generally regarded as profitable for shipping companies on the route are at about US$800 to US$1000 per TEU. In other words, at current prices shippers are losing 50 cents on every dollar booked on contract at current rates. It was the third consecutive week of falling freight rates on the world's busiest route. Container freight rates have so far increased in five weeks this year, but have fallen in 23 weeks. In the week ending July 31st, container freight rates fell from Asia to ports in the Mediterranean to make a calamity. The shipping industry is at risk of wreckage. The rates fell 4.4% to ports on the US West Coast and were down 3.7% to ports on the US East Coast. See Zero Hedge (HERE).

 

◄$$$ THE US-HOUSING MARKET IS ALSO BADLY DEPRESSED... EVIDENCE IS THE RECENT LIMIT DOWN EPISODES IN LUMBER FUTURES CONTRACTS... NOT EVEN 4% HOME LOAN RATES CAN SAVE THIS SECTOR. $$$

 

The nitwits who produce USGovt economic reports should see the lumber futures decline as water on the lying face. They talk like fools of a housing market recovery also. The critical support at 240 is on the verge of being broken. Demand for lumber and copper are way down, due to the housing market depression (no better description applies). Most commodities are down hard in price, lumber no exception. Put blame on the powerful global recession. The homebuilder sentiment peaked in mid-2005, followed by the plunge in the Dow Jones Home Construction Index from 1039 to 140 over the next three years. This sector currently has more debt and more overvalued inventory than it did at the peak of the market in 2005-2006. The next phase will be worse than the previous bear market that ensued back then.

 

 

◄$$$ REVENUE DECLINE HAS SLAMMED MAJOR US-BASED S&P500 COMPANIES... MORE CONFIRMATION OF A POWERFUL RECESSION, IF NOT DEPRESSION IN PROGRESS... THE SALES DECLINE IS FOR HALF A YEAR, YET TO INCLUDE THE ENERGY SECTOR. $$$

 

The Great Revenue Recession has hit the USEconomy in its biggest corporations. The growth slowdown began in 2010, but has recently turned into an actual revenue decline. The following companies are all registering negative revenue growth. They are General Motors, JPMorgan Chase, Microsoft, IBM, Proctor & Gamble, Citigroup, Johnson & Johnson, Coca-Cola, Oracle, and Caterpillar. They are the kingpins of the S&P500 index. Notice they are not in the energy sector. Hence the trend will grow worse. With 80% of companies already reported, the S&P500 company sales are on pace to decline (year-over-year) by 3.1%, the second consecutive quarter of negative growth. The USGovt officials and USFed hacks claim the recovery is good, and the basis for a rate hike. They are delusional foolhardy idiots at best and corrupt agents of destruction at worst. They should be fired, and put in pillory padlocks on public squares, where the public can spit on them, toss tomatoes at them, and point fingers at them in front of their children.

 

 

◄$$$ US JOB LAYOFFS REACH HIGHEST LEVEL IN 4 YEARS, WITH A MASSIVE JUMP IN OCCURRENCE... JOB CUTS SOAR TO HIGHEST SINCE SEPTEMBER 2011 AFTER MASS ARMY TERMINATIONS, THE HIGHEST YTD LAYOFFS SINCE 2009... THE ENERGY AND MILITARY SECTORS ARE A TOXIC MIX... THE PETRO-DOLLAR DISMANTLE HARMS THE ENERGY SECTOR, WHILE RELIANCE UPON MERCENTARY KILLERS IN ISIS/ISIL DISPLACES REGULAR ARMY TROOPS. $$$

 

The labor market consultancy Challenger Gray has come out with a dreadful report on the US labor market. They do an excellent job in compiling true layoff data, far better than the clownish foppish drivel by the USGovt hired team on conjurers. They reported that in July a whopping 105,696 large firm job cuts took place, up 136% from the 44,842 job cuts in June, and the highest in nearly four years. Not since September 2011 have there been more than more than 100,000 layoffs in a single month. The USEconomy is deteriorating at a very rapid rate. The July wrecking ball brought the job cuts up to a total of 393,368 year to date. The figure is 34% higher than the run rate for the same period in 2014. Worse, it is the highest seven-month total since 2009, yet another signal that conditions are as bad or worse than the Lehman time frame. Remember President Obama claims that USGovt has the right to make all the rules since it owns the strongest economy in the world. He is the most ignored leader the United States has ever had in high orifice.

 

 

Expected were the energy sector terminations following the plunge in energy prices. But the expected surge in July layoffs came from an unusual source, in the USMilitary. According to Challenger, more than half of the July job cuts were the result of massive troop and civilian workforce reductions announced by the United States Army. Reliance upon ISIS/ISIL guerrilla mercenaries, paid largely by Langley narco money, has relieved some USGovt payroll pressure. The military related cutbacks will eliminate 57,000 from government payrolls over the next two years. The report is also ugly on other fronts. The technology sector announced several major workforce reductions. Job cuts came from Microsoft (via their Nokia division), Qualcomm, and Intel. All in all, computer and electronics firms announced 18,891 job cuts in July, although the 25,542 job cuts in the sector this year is actually 47% lower than the same time last year. See MSN (HERE) and Zero Hedge (HERE).

 

A few layoff storys with high profile corporations in the USEconomy can be noted. Hewlett Packard will cut an additional 5% of their workforce. They are nearing the end of the 2012 restructuring program. Recently 3900 people exited in Q3. By the end of Q4, they expect to exceed the previous goal of 55,000 people estimated to exit the company. This particular layoff will be completed in October with an expected cost of $5.5 billion. See Business Insider (HERE). The A&P supermarket chain filed layoff notices effective Thanksgiving Day for 3781 employees at 45 of the New Jersey stores. The New Jersey-based company plans to sell assets as part of its pending bankruptcy. Many of the company stores are being sold in separate deals with Stop & Shop and Acme Markets. The chain plans to close 10 stores in New Jersey. They filed another 867 layoff notices in July with an effective date of September 19th for eight New Jersey locations, bringing the total number of employees affected in the state to more than 4600. See NJ News (HERE). The Houston-based consultancy Graves & Co counted nearly 50,000 energy job losses in the past three months, as part of the massive energy sector damage. Halliburton and Baker Hughes, two oil field services providers poised to merge, are planning to double the job cuts announced in February. The job cuts, which initially focused on blue-collar employees, will widen and affect engineers and scientists. See Fortune (HERE).

 

◄$$$ FITCH HAS CALLED ATTENTION TO STALLING GLOBAL TRADE ACTIVITY... THE GLOBAL ECONOMY HAS ENTERED A NEW DOWNTREND WHICH WILL LIKELY BE WORSE THAN THE 2009 PERIOD... YET ANOTHER SIMILAR PATTERN OF A 2008 CRISIS REDUX IN THE WORKS. $$$

 

 

Notice again the indication of a repeated massive decline to repeat 2008-2009. Also notice no recovery after QE was put in place in 2011. It is not stimulus, but rather a destructive sledge hammer with toxic corrosion and acid drip, wrecking global capital. A legend for reading: DM = Developed Market, EM = Emerging Market, LATAM = Latin America, MEA = Middle East & Africa.

 

◄$$$ THE USGOVT HAS RECENTLY GRANTED MORE GREEN CARDS (VISA LABOR PERMITS) TO FOREIGN WORKERS THAN THE POPULATIONS OF IOWA, NEW HAMPSHIRE, SOUTH CAROLINA COMBINED... IT IS A TRAVESTY AND MOTIVATED POLICY TOWARD WRECKAGE, UNDERCUTTING THE AMERICAN WORKER. $$$

 

The Manchurian Candidate who goes by the name of President Obama has written in the past of his fervent desire to make level the US labor market. Interpret his goal as a desire to reduce wages significantly. His policy relies upon the Green VISA Cards as a key tool. The USGovt Census Bureau estimates 13 million new immigrants will arrive, on net basis, between now and 2024. The influx movement is going without much recognition, but it is quickly eclipsing the historical levels recorded 105 years ago during the 1880–1920 immigration wave. Harken back to scenes at Ellis Island in New York City. The immigration as a share of population will continue setting new records each year, for a long time.

 

Another side to immigration reform can be seen and should be given more attention. In a proposal before the USCongress recently, focus on the Senate Gang of Eight and their comprehensive immigration bill. The current plan triples the number of green cards (worker visa) issued over the next 10 years. Instead, the Gang of Eight proposal would issue at least 30 million green cards during the next decade. The volume is hard to grasp. It exceeds the populations of Iowa, New Hampshire, and South Carolina combined. The USGovt under the guiding hand of President Obama, are working against public sentiment. Polling from Gallup and Fox shows that Americans want lawmakers to reduce, not increase, immigration rates. They vote by a 2:1 margin for reductions. Reuters polls puts it at a 3:1 margin. Worse, polling from Republican party pollster Kellyanne Conway (surely with built-in party bias) shows that by the huge margin of nearly 10:1, people of all backgrounds are united in their belief. They want the US companies seeking workers to raise wages for citizens living here, instead of importing new labor from foreign countries. The outsourcing has taken another nasty turn. See Breitbart (HERE).

 

The Obama Admin is gutting the US labor market with green cards, in a direct policy initiative. At least 6 to 8 Hat Trick Letter clients have written directly to the Jackass, to complain of lost jobs due to Indian lower paid folks. They are feeling dejected and abandoned. The DisneyWorld story was part of this pattern.

 

◄$$$ THE BETRAYAL OF MICHIGAN AT THE TOP IS MOVING ALONG... MICHIGAN INVITED TENS OF THOUSANDS OF FOREIGN WORKERS INTO THE STATE TO WORK IN FACTORIES… COLONIZATION IS AFOOT. $$$

 

Michigan is under twisted leadership. First, the governor requested for 50,000 EB-2 visas for that state of Michigan. They desire to bring in the foreign workers while the state reels under the weight of 25-50% unemployment. Rumors are flying that 50,000 Chinese are to arrive for work at unnamed revived auto manufacturing plants. Second, a China owned car plant named Nexteer Automotive is relocating its HQ from Saginaw o Auburn Hills, which is located in metro Detroit. Since China's AVIC Automotive became a controlling shareholder in 2010, Nexteer has added approximately 2000 jobs in Michigan, and furthermore invested over $400 million in the state. The new headquarters will house approximately 150 employees who will be a combination of new and current Nexteer employees. Third, China is well known for purchasing entire city blocks of abandoned homes, which have no water or electricity service. They might be preparing for residential restorations, which could accommodate Chinese workers. See Al Jazeera (HERE) and  WNEM (HERE).

 

## THANKS

Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.