QUOTES ON GOLD
"Turkey is going to continue [the Oil for Gold trade]. If those casting aspersions on the gold trade are searching for immorality, they should take a look in the mirror." ~ Mehmet Zafer Caglayan (Turkish economic minister)
"All Gold & Silver goes to Asia where the buyers are located. Indians and Pakistani are also buying. Whatever physical metal pops up in the market is being bought up immediately. Tons of cash are being converted to hard assets at several major trading centers. The market will change once we see some more Ukraine kind of incidents and/or bank defaulting on payment commitments. Look for a less known but large bank to fail, or a seemingly unimportant intermediary bank process to fail, not located in a prime nation, which causes a chain reaction. To be sure, it is all just around the corner." ~ The Voice (see the Banco Espirito Santo in Portugal, which just requested receivership trustee protection)
"Recall that in the 2000 decade, all English speaking nations fell into the US spell of a housing market bubble, with easy money for home loans, poor underwriting, rabid securitization, and fraudulent bond markets. Similarly, all English speaking nations will be extremely resistant to replace the USDollar, and to move toward legitimate Gold backed currency or Gold Trade settlement. The powers in control wish to continue their privilege of granting themselves $trillion loans or covering $trillions in worthless bonds without consequence. The Nazis (Fascists, Neo-Cons) have taken control of all English speaking nations and have caused rampant widespread deep destruction, their perverse specialty." ~ Jackass
"The United States is behaving like a toothless and clawless tiger. The Russian sanctions have hurt the US more than any other nation. The European Union is not going along with the US on sanctions. The US is desperately trying to fall onto its own sword. One wonders why, probably to lay blame on Russia for its collapse after the USDollar is more widely rejected. A gold currency is coming in some form, riding on a white horse. The Germans will not dismiss it, but rather will join it, even if the Americans do not." ~ Central European source
"The Fed is in the business of reacting to things, instead of acting on things. We are in the midst of this great improvisation. The Fed is constitutionally behind the curve and no doubt will remain so. The wonder of finance is that you never know where the next surprise is coming from. What one can surmise is that after years in which money has been cheap and freer than free, there is certainly going to be a problem, a thunderclap. We just do not know where it is going to come from." ~ Jim Grant (who pointed out the USFed did not see the 2008 housing crisis and credit market meltdown coming, the heretical improvisation being ZIRP & QE)
"We just had a financial coup. A group of investors extracted $40 trillion and shifted enormous liabilities into the G-7 nations, including the United States. Now we are in the end game. The governments bleed out or fail. What happens may well be a military and intelligence question rather than a financial one. Meantime, the folks who have independent control of vast technology and wealth, as well as independent military, intelligence, and facilities, what do they want and what are they going to do? Looking at this through the lens of sovereign governments alone is to miss the deeper game." ~ Catherine Austin Fitts (an end game)
## INTRO GOLDEN NUGGETS
◄$$$ SCOOP FROM RUSSIA ABOUT GERMANY WORKING TOWARD LEAVING THE EUROPEAN UNION, CUTTING OUT OF NATO, AND JOINING THE BRICS NATIONS... THE GERMAN FLIP WILL ALTER THE GEOPOLITICAL BALANCE, AND ISOLATE THE UNITED STATES... THE GERMAN INTEGRATION WITH RUSSIA & CHINA WILL BE MESHED IN WITH CRISIS RESPONSE IN A NATURAL PROGRESSION WEAVE... THE WESTERN SYSTEM IS IN BREAKDOWN MODE, AND GERMANY WILL SHIFT DURING THE CLIMAX IN REACTION. $$$
The grapevine scoop came from London Paul, who was in Moscow dealing with long-term clients. His financial consulting work has led to many informed corners. He claimed their information has proved very reliable in past years. They have their own pipeline of solid information. He passed on the following gem shocker. The news would shake the Western world to its core. Germany will turn eastward and put its support with the BRICS nations. In the Jackass view, it means the Eurasian Trade Zone would have its principal European piece to fill the table. Furthermore, it might mean that the Nordic Euro (gold-backed revived Deutsche Mark) could be coming. Expect at minimum the full German weight to the new BRICS currency backed by gold plus hard assets. That would explain their letting go of the gold repatriation demand from the US & UK. They might have a bigger chess move to make, perhaps even involving some gold provision from the East to compensate for what the Anglo-Americans confiscated illicitly. Notice the theme in the bigger picture rejoinder. The German response will be executed in a manner so as to avoid accusation of cause for breakdown. Instead, Germany will step to the Eastern camp when the West breaks down on its own lacking merits. They will do what they must to continue, survive, and thrive. That means step out of the US-UK-EU quicksand.
Here is what London Paul said, "Germany is about to sever ties with NATO. France is considering its position also apparently. Suggestions if this is the case, we could hear news break on this decision in the next few weeks. Germany is planning to leave NATO and the EU, so as to join the BRICS. This scoop came from a long-term Russian source who works in financial sector, whom I have come to trust. They where told by usually solid Far East connections." Wow!
The Jackass sought confirmation from The Voice, whose has some German sources himself. He tipped off the Jackass in April and May that Merkel would resign prematurely for alliance with the bankers and politicians from the West, with neglect for inadequate links with the commercial interests in the East. She has been out of step. The spin given, she seeks a United Nations or European Council post. But the message is unmistakable to the alert, since the first resignation by a German Chancellor since 1949. See the UK Telegraph article (CLICK HERE). The move signals the German shift eastward, the commercial interests finally overwhelming the banker and politician interests. Merkel's imminent departure signals a bigger German pivot toward the Russia-China fold, described and analyzed in the July Money War Report. Jackass suspicions confirmed three times over. One could say Merkel has been ordered out, dismissed, but with saved face.
The Voice confirmed the German decision, but played down the timing. He did provide some intriguing background color. The quote is formed from a few conversations lately, his words, his thoughts. "It is eventually going to happen, but not right now. The turn East by Germany has actually been decided over a year ago. Whatever Germany does, France will follow. The German commercial ties are vast with many large projects with Russia to demonstrate the commitment. The German trade with China is also considerable and growing. Trade relations with both will nations continue to grow, as trust has been built. The new reorientation and realignment process with the BRICS is well planned. Very smart and careful implementation is required since complex and dangerous. It will be made to appear natural and consensual. Expect it to happen during the next upcoming banking crisis in Europe and the United States.
The West is not fully aware how the Chinese & Russians have it planned and laid out, like chess moves with strategy. Once the crisis unfolds, the two nations will also wipe out all the current terror groups with merciless force. There will be no one allowed to escape. Russia will be the hot bed of renewal and guidance, not by domination but by dialogue and cooperation. Extremism will not be tolerated in whatever shape of form. The West could have played that role of renewal, but instead the leading nations defended the current broken system at all costs. The bond fraud, fixed markets, targeted legal action, and motivated wars have forced a response, and it comes from the East. New global leadership comes." Wow again!
◄$$$ THE LONDON GOLD FIX IS IN FOCUS... NO CLEAR EVIDENCE OF GOLD MANIPULATION IS SEEN BY THE FCA REGULATORY COP IN LONDON... TRUE TO FORM, ALL FINANCIAL FRAUD AND MARKET RIGGING IS INVISIBLE TO CORRUPTED MEN WITH TAINTED EYES... THE FRAUDRIDDEN EXPOSED LONDON HIVE WILL HIRE A TARNISHED EXPERT TO REPAIR (RIG BETTER) THE LONDON GOLD FIX... NUGEE PRESIDED OVER THE BROWN BOTTOM DUMPING OF BRITISH GOLD. $$$
Corrupt men are paid not to see, to become blind men in police service to the banking syndicate. Corrupt markets are seen as not manipulated, when the levers are pulled by the lords of system machinery. The United Kingdom Financial Conduct Authority (FCA) is tasked in oversight. David Bailey is director of financial markets infrastructure and supervision at the FCA. They apparently have offices right over the crime scene. Bailey announced he detects no clear evidence of manipulation during the century-old London gold fixing. Case closed, but he left the door open, possibly for career reasons, hedging his position. He stated that manipulation might possibly have occurred, when addressing the Treasury Select Committee hearing in London. A ruling of sorts is expected in the next month, as industry will decide whether the fixing is in compliance with Intl Organization of Securities Commissions guidelines. Self-policing is a total unmitigated farce, joke, travesty within the financial sector for both the New York and London hives.
An embarrassment from vacant arena posts is becoming evident. The long awaited event of COMEX being an empty arena might be in progress. In June, the World Gold Council called for a meeting on July 7th for the industry to discuss changes in the price setting mechanism. The Intl Exchange proposed to the London Metal Exchange an alternative to the Silver Fix that is scheduled to end on August 14th. The much publicized Deutsche Bank exit from the Gold Fix ritual (done on telephone lines) makes for a poorly populated corrupt arena. It would leave just four banks to set prices for that metal. They are HSBC, Barclays, Societe General, and Bank of Nova Scotia. Big investment banks and their trading legions exploit the ritual process, easy for front running and quick profits during the first 20 minutes of official trading underway. But analysts, economists, and academics accuse those in charge of the process of permitted a club with manipulation that lacks sufficient regulation.
The rotation of scrutiny has gone from LIBOR to FOREX, and has landed on GOLD. The regulators have been coerced to begin the overhaul of financial benchmarks. The FCA in May fined Barclays after a trader sought to influence the Gold Fix in 2012. The action might have been for window dressing on policing. The inside scoop has that the regulator has been visiting member banks involved in the gold fixing this year as part of its review. The potential for illicit manipulation is ripe, due to difficulty to audit, lack of good governance, and obvious indication of manipulation from price patterns.
IOSCO Guidelines are the rage. Guidelines published by the Intl Organization of Securities Commissions last year were designed for financial benchmarks to improve integrity and reliability following the LIBOR scandal. Guidelines maybe, criminal prosecution never, hard hitting lawsuits never! The principles cover issues of governance and methodology, with one of the key recommendations the usage of observable transactions as the basis of a benchmark. Think transparency. Scrutiny and recommendations could soon extend to the smaller but equally corrupted Silver Fix. See the Bloomberg article (CLICK HERE).
The person who chaired the World Gold Council session on London Gold Fix transparency and reform on July 7th was John Nugee. He is the World Gold Council chairman, having spent the bulk of his career at the Bank of England. He has extensive background in the official sector. The majority of his career has been spent at the Bank of England, where his last post was as chief manager of the reserves. He also worked at the Hong Kong Monetary Authority, where he was executive director in charge of reserves management. He actually worked at the Bank of England for nearly a quarter century from 1977 to 2000, and was Reserve Manager for the last four years. What happened during that four year time period was the infamous sale of 400 tons of England's gold at rock bottom low prices, to bail out Deutsche Bank and to conceal their gold leasing.
As Tyler Durden conclude, "In other words, the man who assisted and consulted with Gordon Brown, the man who was chief manager of the Bank of England's reserves when Britain commenced its gold dumping campaign designed in hidden manner to bail the big banks, whose gold shorting trades had gone horribly wrong. The man is John Nugee, the same man tasked with making the London Gold Fix fair, efficient, transparent, and functional. He is reportedly so clueless about finance that he did not and still does not have any idea what a carry trade is, let alone one in gold. It is impossible to make this up." See the Zero Hedge article (CLICK HERE). It is truly amazing that the Gold Fix and the Silver Fix are often mentioned in the financial press without any apparent linkage to price fixing in collusion being an illegal act. Regulators continue to put blind men in charge.
◄$$$ CHINA HAS FOUND $15BN OF LOANS BACKED BY FALSIFIED GOLD TRADES... THE SCANDAL WILL NOT GO AWAY, EXTENDED FROM COPPER COLLATERAL THAT VANISHED... DESPITE ITS IMPORTANCE, ALL IS ECLIPSED EASILY, COMPARED TO THE THEFTS OF ALLOCATED GOLD ACCOUNTS WORTH OVER $2 TRILLION IN VALUE. $$$
The vanished collateral in copper warehouses that erupted in China a couple months ago has not gone away. In fact, it has spread to gold collateral in warehouses, which has also vanished. China's chief auditor discovered CHY 94.4 billion (=US$15.2bn) of loans backed by falsified gold transactions. The fraud laced through commodities financing deals has become systemic and epidemic. Incredibly, 25 bullion processors in China, the biggest producers and consumers of gold, made a combined profit of more than CHY 900 million from the loans, according to national audits. Public security authorities are also probing alleged fraud at the Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans. So what has happened on Wall Street with individual mortgage income streams used in multiple bond securities, has also happened in China, but with pledged metal collateral. In the Chinese case, the financing lubrication for commerce with metal collateral is more like the usage of corporate paper in the USEconomy in the supply chain for inventory replenishment, like with high grade corporate bonds and high quality mortgage bonds. Steps by the Chinese Govt to rein in credit by raising borrowing costs in recent years created a surge in commodities financing deals. Goldman Sachs estimates these deals to be worth as much as $160bn within the Chinese Economy. Conclude that the Chinese Govt and possibly big Chinese banks, as well as retail buyers, have been hoovering up most of the Gold, while the commercial vendors have far less gold than they portray. See the Bloomberg article (CLICK HERE). The Chinese have learned re-hypothecation methods from the Wall Street gangsters well.
The Voice always brings into the discussion and the calculus of crime the missing stolen re-hypothecated Allocated Gold Accounts. The bank fraud from the bullion bankers in Switzerland, London, and New York vastly overshadows the peanuts in Chinese metals fraud. He estimates the stolen gold bullion from such supposedly protected private accounts (with known bar type and serial numbers, like stored cars) to be between 40,000 tons and 60,000 tons. The value of the Allocated Gold Account fraud is between $1.8 trillion and $2.4 trillion. The replaced gold certificates, carefully planted at the scene of crime in vaults, have absolutely no metal behind them backing them up. The accounts held in trust within bullion banks are for clients who have an excess of trust and a miminum of awareness. Some victims to be sure are part of the several ongoing Swiss class action lawsuits that involve several $billion in challenged remedy. If the gold is replaced, rather than redeemed in cash at absurdly low artificial prices, then the Price of Gold per ounce will fly past $5000 and reach $10,000 with relative ease.
◄$$$ PUERTO RICO WAS GIVEN A 3-NOTCH SUPER-DOWNGRADE BY MOODYS... MUNI BOND FUNDS ARE GENERALLY COLLAPSING, AN OVERDUE EVENT... CENTRAL BANK SUPPORT MIGHT BE EXTENDED, AS SOON AS THEY FIND A WAY TO JUSTIFY THEIR HIVES BEING THREATENED, TO CALL IT MINOR IN THE GREATER SCHEME, OR TO CONCEAL IT. $$$
Puerto Rico has been jolted by news of a gobsmacking triple downgrade. The island nation was on the ropes, to be sure. The details are ugly. Puerto Rico bonds backed by the its taxing power were cut three notches to B2 from Ba2 by Moodys Investors Service at end June. The downgrade of its general obligation debt, which leaves the bonds five notches below investment grade, reflects the enactment of a new law that allows their public corporations to restructure their bonds. The new rule triggered the terrible reaction. They will no longer support their debt with new funds, but instead slam investors with loss to capital. Bonds backed by the island's sales tax revenue were also cut. Puerto Rico passed the restructuring law one week early, which triggered the rating slam immediately from all three major rating services. Default remains a potential risk. Moody's took additional action on the PR sales tax debt and general obligation bonds, arguing that the new law impacts all Puerto Rico bonds. See the Market Watch article (CLICK HERE). Keep in mind the motive to slam Puerto Rico since it is offering some tax haven status to US firms, but only in capital gains.
A key Franklin Templeton municipal bond fund is loaded with the industry's biggest allocation to Puerto Rico. The fund has 69% of assets devoted to PR debt as of May 31st. The fund has sunk to the lowest in its 29-year history. The Franklin Double Tax-Free Income Fund has $300.4 million invested, and is deep trouble. The sudden plummet followed Moodys triple notch downgrade of Puerto Rico General Obligations last week to B2, five levels below investment grade.
The USFed issued some pure lies in a statement, saying it is going to end QE in October. With Puerto Rico, Detroit, and other municipal bonds collapsing, and retail sector in a free fall, the words will roll off the table onto the floor, never to be caught, never to be believed. The Jackass has expected the central bank to include Muni Bonds for over a year. They are late to the table. The big banks are too pre-occupied buying not only USTreasurys, but also major stocks. They cannot likely take the muni load too, but the USFed might since it is invincible and almighty and above rebuke. Third World lies directly ahead for Puerto Rico, which just killed its future debt finance capability. Of the three of DR, PR, CR, it seems Costa Rica is doing the best although struggling. From what locals tell, the Dominican Republic is languishing. See the Zero Hedge article (CLICK HERE).
◄$$$ GERMAN MUNI BONDS ARE IN TROUBLE, AS DEBT BURDENS BECOME UNMANAGEABLE, JUST LIKE IN MANY AMERICAN CITIES... THE BLOAT GROWS WITH PUBLIC SECTOR JOBS, THE BIGGEST FACTOR ALWAYS BEING PENSION OBLIGATIONS. $$$
Despite strong trade performance and a powerful export industry, the cities of Germany are in deep trouble. An astonishing 50% of the municipalities in Germany are on the verge of bankruptcy. Many municipalities are saddled with pensions that are badly under-funded, while they collect massive debts from many sides. As seen in Detroit Michigan, where over 50% of current revenue goes to pensions, taxes either are hiked, or the borrowing escalates, without which they are out of business. The trend of rising taxes to compensate for a chronic recession is everywhere. The German municipalities currently require EUR 100 billion to renovate their dilapidated infrastructure. That is not an estimate of current liabilities, but rather additional debt if the projects were started and completed. Their cities are old, like in the US. Government at the local level has been mismanaged on a grand scale. Pensions are the primary culprit, as the system believes all hard working staff (and slackers too) are entitled to a retirement. Such was not the case in colonial times. The result usually is that political leaders at all levels impose higher taxes, which burdens the weak system further. A grand shortage of common sense is widespread. Society votes for people who make promises that cannot be kept in the long run, and all too often the public finances are rendered much weaker. At times, public funds are pilfered.
A digression. The Jackass can never leave alone the story of how Clinton and Papa Bush stole $1.6 trillion from Fannie Mae, with all parties involved leaving with greased pockets. The Oklahoma City bombing event in 1995 was part of the vast coverup, where the Murrah Federal Building had one third of its entire front face removed. The site contained Fannie Mae records, being the regional seat for Arkansas. The stupidass story for morons to digest is that a truck loaded with fertilizer was responsible for the blast. However, science tells us that only paint, cement, and facade would be removed, not structural steel. The bomb blast of a Pentagon aircraft coincided in the same year, where a dozen generals and admirals were removed from this world. They had a plan ready for action that was delayed, in response to Clinton leaving the online doors open at Sandia Labs where the Chinese stole entire weapons systems. The Pentagon Brass had an action plotted against the White House. The US has been building the new Chinese Empire at every stage, like with $23 billion in foreign direct investment from 2000 to 2003 following the Most Favored Nation grant.
German municipalities face rising debt burdens at the municipal level that resemble Greece. Like the US cities, they are challenged to maintain schools and roads. The economic abyss lies ahead. Thus part of the motive for bank account bail-in confiscations. Take one city, for example. The Bremen Govt has imposed a spending freeze, as dire straits have been encountered. The deficits have reached EUR 60 million. The city will handle only mandatory functions. The situation is so weird and ugly that 350 German companies must pay back discounts granted on green electricity. The German Renewable Energies Act, once thought prudent and advanced, has gone into reverse. Justice is not equitable.
Meanwhile, the German Constitutional Court criticized the applicable tax privileges for corporate inheritances. To date, heirs have the tax completely canceled if they continue running the inherited company. Heirs of private assets, however, must hand over a large part of the state in taxes. The similar tax rules resulted in the virtual wipeout of small farmers in the United States, who were forced to sell land to pay the taxes. When applied to productive business, applying inheritance taxes forces companies to close and reduce employment. Politicians are desperate to keep the state machinery running, despite known inefficiencies, excessive social networks, and pervasive fraud. An ongoing business is the economic engine of the economy. Taxation has gone amok. Most policy is geared toward the confiscation of wealth rather than system reform and business formation. Unemployment is the trend, not job fairs. Government handouts are the common thread, not business creation. Germany fares much better than almost all European states, but it has the tax and debt disease, like the most unhealthy de-industrialized nation, the United States. The German disease is much milder. Creeping elements of entitlement are seeds of socialism. Germany has some tax load, some pension distress, but still has an excellent capitalist spirit more in common with Russia & China than the US & UK. See the Zero Hedge article (CLICK HERE).
◄$$$ FOOD PRICE INFLATION HAS BEGUN TO ACCELERATE IN THE USECONOMY... CAUSES ARE MANY, LED BY MONETARY ABUSE, FARM COSTS, AND DROUGHT... SOON SHORTAGES WILL BE DUE TO EXPORT OF FOOD, SO AS TO BRING IN FOREIGN CURRENCY. $$$
Hefty price hikes have hit for fresh food amidst drought and disease, as real evidence of food crisis has surfaced. Check out the impressive price increases in the last full year. The US breadbasket is in serious trouble. One factor will become more important, since the departing Petro-Dollar defacto standard will force more export to manage the massive gargantuan Current Account Deficit. Take the China's hungry cattle, who will be feasting on alfalfa grown on a 22,000 acre ranch in Utah under Chinese ownership. Dairy farms in China pay up to $480 a ton for imported alfalfa. In Utah it is grown with free water from the Green River.
From 2009 through 2013, US exports of alfalfa hay to China have risen eight-fold, to nearly 635,00 tons, according to the Livestock Marketing Information Center. Nearly all of that came from seven Western states: Arizona, California, Idaho, Nevada, Oregon, Utah, and Washington. Last year, a Chinese conglomerate paid $4.7 billion for Smithfield Foods, the world's largest pork producer. It assumed control of vast tracts of farmland in North Carolina, Virginia, and other states, estimated at over 100,000 acres. Chinese private businesses and state-owned industries have been on a march to purchase farmland everywhere. See the National Geographic article (CLICK HERE) and the Fresno Bee article (CLICK HERE). Other strains on the food & energy side are coming. Expect a higher gasoline tax soon, since the Highway Trust Fund is running very low. It might not come until after the summer vacation season. The US middle class is going to be run over. See the Bloomberg article (CLICK HERE).
◄$$$ RICK RULE COMMENTED ON JUNIOR MINERS AS EMPTY HOLES CHOCK FULL OF LIABILITIES... AS INVESTMENTS, THEY ARE NOWHERE AS PROMISING AS GOLD & SILVER BARS & COINS. $$$
Rick Rule, as clever wordsmith, enjoys harping negatively on the mining stocks as a losing venture. He points out that if all of the Junior Miners together were pooled into Junior Explorer Co as one giant single firm, the company would lose $2 to 8 billion a year. He concludes that miners and explorers are best at finding money in investor pockets and mining it to pay salaries. He said, "Most of the walking dead Juniors, the zombies, are a bunch of liabilities disguised as public companies. Their assets are liabilities; their financials are liabilities; mostly their managements are liabilities." Their executive compensation packages are also liablilities. Their deposits when in high risk jurisdictions are liabilities. Their entire properties become liabilities when the output is over-committed to the big banks and gold exchange marts. Rule once told the Jackass back in 2007 that the newsletter business has an element of entertainment to it. To which he was told, "Yes possibly, but good solid analysis and writing style make for a better foundation to laugh and hold interest."
◄$$$ THE SOARING PROFITS OF THE MILITARY INDUSTRIAL COMPLEX, MATCH THE SOARING COSTS OF MILITARY CASUALTIES... WAR IS GOOD BUSINESS, EXCEPT IT KILLS THE NATIONS, DEPLETES THE POPULACE, AND WIPES OUT THE YOUTH... THE WAR MACHINE IS A VAMPIRE ON THE NATION'S NECK, HUGE DEBT THE RESULT, AND ALIENATED NATIONS... THE ULTIMATE VICTIM WILL BE THE USDOLLAR, WHICH WILL OPEN ACCESS TO THE THIRD WORLD SLIDE... A GREAT ISOLATION COMES TO THE RAVAGED BUT HOSTILE UNITED STATES. $$$
From a strictly business perspective, the major beneficiaries of the endless US wars are the three major domestic weapons manufacturers, Lockheed Martin (LMT), Northrop Grumman (NOG), and Raytheon (RTN). While Chertoff's firm might win the majority of USGovt security contracts like for airport security checkpoints, the huge arms dealers rake in hundreds of $billions. Their profits are shattering records. The kickbacks to senators are probably ripe, enough for each senator to send an entire class of kids to medical school. The other winners are investors, executives, and investment banks. Profits are incredible, outsized, and even the source of embarrassment. Best not to discuss the profits when in the presence of politicians. According to a recent study by Morgan Stanley, shares in the major US arms manufacturers have risen 277-fold over the past fifty years versus 68-fold for the broader market. In the past three years alone, Raytheon has returned 124%, Northrup Grumman 114%, and Lockheed Martin 149% on share values. War is good, and soldiers are meat, the cause noble, while foreign victims have been widely regarded as subhuman for generations. That is precisely the message.
In terms of cost to the United States, hundreds of thousands of soldiers who had served in the war zones have sustained severe physical and mental injuries, while thousands have died directly or indirectly through epidemic rashes of soldier suicides. If soldiers do not come home with missing arms or legs, they do so with traumatized mental states. According to two USMilitary sources, soldier suicides are caused equally by stress trauma and homosexual rape. Many suffer the revolving door of forced multiple repeat tours of duty. They forgot to read the fine print, which usually means no college benefits since a mental meat grinder is the rule. The invasion, occupation, and failed nation building in Iraq has cost the United States $3 trillion, the figure still rising. Despite the obscene costs and minimal results, the military industrial complex keeps the USGovt on a wartime economy, undermining the domestic social safety net, and suppressing the standard of living for millions of people. Worse, it adds to the debt burden and directs more emphasis to a destructive trickle down rather than a productive multiplier effect. The Jackass estimates that around $8 to $9 trillion of the $17 trillion in USGovt debt is from war. The first $1 trillion in debt was from the Vietnam War. To claim that objection to war, its costs, and harmful effect on the USEconomy is unpatriotic is the height of fascist propaganda. The USGovt creates wars.
The powerful military lobby continues to press for new wars, with the ready help of Langley to destabilize entire regions with great success using covert projects. The Pentagon budget is utterly staggering, bigger than the rest of the world's combined. The Obama Admin made a grand spectacle of reducing the military budget via the annual appropriation bill, like a true demagogue. As it turned out, the emergency supplemental funds were set up to cover the costs of these wars, thereby actually increasing military spending. The faux leader waved the banner of cost cutting, which blew away the remaining crumbs of his credibility. The Obama theatrics win praise from the warmongers, who have fattened their profits. One must wonder if the bankers sit beside defense contractors at the Satanic rituals, where often small children are offered in blood sacrifices. To be sure, the energy firm executives are on board the Lucifer covens. A safe bet is all syndicate leaders are in the camp with worship to the Prince of Darkness, referring to the Wall Street bankers, Big Oil firms, Defense Contractors, Big Pharma, Media Networks, and Loyalist Langley. Their trade is war, death, destruction, and instability. It is very appropriate that Obama is working to remove 'In God We Trust' from federal banners of all kinds.
Incredibly, the same major weapons firms promote the closure of Veterans Admin hospitals and a reduction in retiree benefits. They rely upon an elusive pretext of fighting fraud, incompetence, and poor quality service. Furthermore, economists have emphasized that the more funds spent on veteran and military retirees health care, the less can be allocated for war materials, ships, aircraft, and missiles. The Pentagon even requires new recruits to purchase their own body armor. The care costs are outrageous. The recent wave for the last couple years has been for military recruits, and existing officers, to sign pledges to fire upon US civilians. Over $900 billion are expected to be spent on long-term VA medical and disability services for veterans of the wars in Afghanistan and Iraq. The figure might not actually rise with the new interventions and mis-adventures in Syria and Ukraine, since mercenaries are at work. Their medical aid will be paid for by narcotics funds. It goes on.
The corporate warlords among arms suppliers are urging the USCongress to increase insurance co-pays, to raise enrollment fees, and to hike deductibles for veterans, retirees, and active duty personnel enrolled in military health insurance plans, even to limit VA access. Refer to Tricare. The priorities are clearly laid out for the conflict on the society front. The fight over Pentagon expenditures is a struggle over war or social justice, over health services for troops and veterans versus weapons programs that grow corporate profits for the arms industry. Witness more astonishingly bitter fruit from the Fascist Business Model, and the US War Economy.
Rather than admit defeat, they move onto a different war zone. See Ukraine. The difference this time around is the deep involvement of mercenaries, even Soros type mercenaries. No matter that the wars are dismal failures, admittedly lousy nation building outcomes, if not outright defeats. No matter that civilian aircraft get in the way. New sectarian conflicts have emerged in Syria, Iraq, Ukraine, resulting in mouth watering profits for the US arms industry. The Ukraine battle is unique in another respect. It is likely to fracture the NATO alliance, even turn the members nations against the USDollar. Support for the global reserve currency standard is fast eroding. Love and devotion to war will not only devastate the USEconomy, but also wreck the currency. The war mentality will knock the King Dollar off the throne, and subject the nation to ravages of currency crisis, sending the nation to the Third World. Too many good people are saluting the captured US flag, supporting troops in illegitimate wars, and showing unwarranted respect to the weapons barons. Call it the Brown Suit Syndrome. See the Global Research article (CLICK HERE).
Sadly, humans never learn. Young men are disposable cattle. Future education is in effect a false lure. Broken marriages and home foreclosures are the rule, not exception, for soldiers. The natural human tendency is to lust to kill with a permit, to disrupt constructive engagement, to seek a threat behind every tree, to turn neighbors upon each other. Such is the fascist attraction, which so few notice, the dark side. The wreckage cycle is clear. Wreck ruin repeat, wash rinse repeat, kill maim repeat. Do it for nation, to keep us safe, to make us free, to protect our way of life. Too many soldiers are fighting to protect and ensure military contractor profits and narcotics syndicate profits. We Americans are the envy of the world. No way! A great isolation cometh, like a quarantine, following by a financially euthanized system.
◄$$$ YELLOWSTONE GAS LEVELS ARE HIGHER THAN EVER RECORDED, SIGNALING A RISK OF IMPENDING ERUPTION... SOME ROADS HAVE BEEN MELTED BY THE HEAT BENEATH THE SURFACE... AN EVENT COULD BE EXPECTED. $$$
Major developments appear to be taking place at Yellowstone National Park in the United States. The entire region is a supervolcano. Lately, a notable rise in the ground under Yellowstone Lake has been detected, with readings of huge amounts of hydrogen sulfide and sulfur dioxide being detected. According to scientists, these gases tend to signal potential eruptions of volcanos, like the many seen around the world in the last few months. The Ring of Fire along the Pacific Coast for the entire American Hemisphere is significant. In some locations inside Yellowstone Park, the extreme heat from the subterranean flows has turned the asphalt into a soupy mess, shutting down some of the park's roads. The US National Guard is making preparations for an event. See the Before Its News articles (HERE and HERE) and the Russia Today article (CLICK HERE). An event could be catastrophic, since Yellowstone is the largest caldera in the entire hemisphere. The effect from a supervolcano eruption would be felt for perhaps 1000 miles, and possibly change the course of the nation.
## KING DOLLAR DE-THRONED
◄$$$ THE ALMIGHTY DOLLAR IS IN PERIL AS THE GLOBAL DE-DOLLARIZATION TREND ACCELERATES, GIVING IT LIMITED TIME BEFORE DEMISE... THE MOVEMENT OF US-LED SANCTIONS AGAINST RUSSIA IS LIKELY TO BACKFIRE... ALREADY NINE EUROPEAN COUNTRIES ARE READY TO IGNORE ECONOMIC SANCTIONS, SINCE RUSSIA IS A MUCH LARGER TRADE PARTNER.... DEFIANCE OF THE USGOVT LEADERSHIP IS GROWING. $$$
The US is at great risk of isolation, as a result of every single global initiative it pushes, whether financial or military. The leading EU members are choosing not to follow the US lead; they will not impose trade sanctions on Russia. The sanctions are seen as a push to promote its own US massive free trade pact with Europe, which has many flaws. Germany, France, Italy, Luxembourg, Austria, Bulgaria, Greece, Cyprus, and Slovenia see no justification in the current environment for the introduction of sectorial trade and economic sanctions against Russia. This is a very big bloc of nations in opposition, led by Germany, France, Italy. At the summit meeting, they will obstruct the measure. Incredibly, in order for a new wave of sanctions to pass, all 28 EU members must unanimously vote in favor. EU ministers discussed sanction concepts against Russia at their summit in Brussels on July 16th. Even if only one country vetoed, sanctions would not be imposed.
With heavyweights like France and Germany opposed to more sanctions, the measure will likely again be stalled. Yet another US initiative to gain zero traction, and worse, to leave a bad odor with resentment afterwards. Many nations dislike the trade pact pressures. The Obama Admin is pushing its own trade agenda with Europe, which would interrupt the Russian energy dependence. The Transatlantic Trade & Investment Partnership (TTIP) between the US and Europe would create a huge free trade zone. However, the Europeans correctly suspect the US is trying to annex Europe into an Economic NATO. Like the Asian Trans Pacific Partnership, it would place corporation interest above national interest. Think global corporate fascism.
A hidden source stated, "Last year the EU and the US started difficult negotiations on a free trade agreement, which would force the EU into serious concessions, in particular, agricultural quality standards and regulation on genetically modified products. In this circumstance, restrictions against Russia will force EU countries to expand trade with the US." Other important energy related business practices would also dominate the rules, like shale gas for example. In plain terms, Europe wants no part in sanctions slapped against Russia. As the war proceeds badly in Ukraine, watch for widespread opposition to US initiatives. The economics will not win out for the corrupt bellicose Americans.
Russian officials maintain that sanctions are counter-productive, and will end up hurting the West more than they will Russia. The many European countries, especially the Eastern states, rely heavily upon Russia as a trade partner and vital supply source, especially for natural gas. The World Bank estimates that if sanctions escalate, the European natgas prices could jump 50 percent. The total European annual trade in goods and services is valued at $330 billion. The US trade with Russia is a meager fraction of that level, at $38.1 billion. Defiance is the order of the day in executive suites. The UK-based British Petroleum, US-based Weatherford Intl, and US giant ExxonMobil each continue to defy any and all sanctions, and do business with Russia. Commerce wins. Curiously, the obstreperous yet debt soaked Italy was the first country to speak out in open opposition of Russian sanctions. Rosneft, now the world's largest oil company, recently acquired a 26.2% stake in Italian car tire company Pirelli. It was an unusual backdoor acquisition as a result of a larger deal in a bankruptcy resolution. Rosneft CEO Igor Sechin officially joined the board of the Milan-based company. Three other Rosneft representatives, as well as the CEO of Russia's second largest bank VTB, also sit on the board. Russia is enjoying a quiet corporate colonization process in Europe. The conclusion is simple, as in there is no stopping Russian linkage to Europe. And as Russia expands its sphere to include Europe, the USDollar will fade in importance, as will the endless US bank strictures, and endless US energy guidelines, and the endless US trade pact rules, and endless US sanctions lists. The US Empire is fast fading. See the Russia Today article (CLICK HERE).
◄$$$ JOHN WILLIAMS FORESEES A TERRIBLE CURRENCY CRISIS AHEAD... THE USGOVT HAS LOST CONTROL OF ITS OWN CURRENCY... GREAT CHANGES LIE AHEAD, AS THE USDOLLAR LOSES ITS EXALTED STATUS... CASH HELD OUTSIDE THE US-BORDERS CAN BE A DANGEROUS FACTOR, LIKE WHEN DUMPED... WHEN THE USD LOSES ITS PRIVILEGED RESERVE STATUS, GREAT CHANGES WILL COME TO THE USECONOMY THAT ARE NOT ANTICIPATED. $$$
John Williams is founder of Shadow Govt Statistics. He makes the argument that the United States faces severe challenges ahead, due to lost currency privilege. The long awaited currency crisis is at the door. He points out there are more than $16 trillion liquid dollar assets held outside of the US borders, by liquid meaning USTBonds, Corporate Bonds, and US Stocks. Some important changes are coming for USD usage in trade. The cascading effect could quickly lead to people of the world no longer choosing to hold the USD cash, and no longer favoring its usage in private transactions, even black market transactions. The storm could come from a global dumping trend of their dollars. Williams said, "That could trigger very high inflation here [in the USEconomy]. You will see, for example, higher oil prices. You will also see mounting pressure, that is already there, to have the dollar removed as the world reserve currency, and that would accelerate domestic inflation. I am still looking for a near term hyper-inflation, that is dependent on a very heavy decline in the USDollar." Recall in the past three years, Williams had expected extreme price inflation from the QE bond purchase programs. The Jackass did not, since walled off, but rather expected the extreme price problems to arrive when the USD-based currency crisis occurred. So Williams and Jackass are finally in unison.
Williams foresees huge tidal wave effects. The intense problems inside the US could be accompanied by pressures to reduce the USD to become virtually worthless. If it is no longer the global standard for trade and banking, then it would have to stand on its own merits. It has none. It has lost industry, import dependence, massive unfixable trade deficits, war trends, bond fraud, and growing distrust. Williams contends, "In a hyper-inflation, which I am looking to evolve here, gold could be $100,000 per ounce or a million dollars per ounce. All that reflects is purchasing power of the dollar assets you put into gold. Gold is a store of wealth. I am not looking at this to make profits. I am looking at this as a long-term hedge against high inflation to maintain purchasing power for the terrible currency crisis ahead." See the YouTube video (CLICK HERE). He could have just said $10,000 to $15,000 and retained more credibility.
The Voice pitched in a quick comment, about the controversial aspect that is not understood. The difference between being rich and very wealthy. Easily 99% of today's millionnaires are rich but not wealthy. They will be pushed back into obscurity, where they originally emerged from, after the USD loses its luster, loses its privileged status, and causes a massive decline in USD-based asset values. The American public seems totally unaware that the wars in Syria and Ukraine are to defend the USDollar, and to prevent the USEconomy from experiencing a massive price inflation and supply shortage crisis. The Jackass expects precisely that crisis, which could tear the nation apart.
Case in point. A new study published by the Russell Sage foundation measured the average wealth of US households by income level. The median household in 2013 had a net worth of just $56,335. A huge decline has been suffered, since the level is 43% lower than the median wealth level immediately before the recession began in 2007, and 36% lower than a decade ago. Much more wealth evaporation is to come, when the USDollar is rejected and replaced for domestic usage. The study concluded almost no signs of significant recovery from the losses in wealth suffered by American families during the Great Recession. See the Yahoo Finance article (CLICK HERE). The Jackass prefers a better description of the Greater Depression, marred by 24% unemployment and 7% price inflation. The GDP has fallen by approximately 20% since 2008, in true inflation adjusted terms.
◄$$$ JIM ROGERS BELIEVES ONLY A RUSSIAN/CHINESE/BRAZIL JOINT CURRENCY CAN BATTLE USDOLLAR DOMINANCE... EXPANSION TO SOUTH AMERICA IS A NEW FRONTIER FOR TRADE, TO SECURE NEW CUSTOMERS IN TRADE... ROGERS SEES NO GREAT VALUE IN THE INDIA COMPONENT, EXCEPT FOR THE LARGE MARKET... TRADE WILL DICTATE THE DISMISSAL OF THE USDOLLAR FROM MONOPOLIZED USAGE. $$$
Maverick investor Jim Rogers offered some opinions on the increasing changes to global finance. He believes Brazil, Russia, and China alone could form a new strong currency to compete against the USDollar. Interestingly, Brazil has requested that Russia form a system to compete against the USD, along with the IMF and World Bank, its devices. He reminded how Brazil has had ambitions to dominate the American Hemisphere for 200 years, without success. Regarding South American, it wants a second source from which to purchase goods, while Russia wants outlets to sell its goods. It is a good fit. Rogers believes Russia should set its sights and targets in Asia rather than South America. However, the Jackass believes China will lock up the Asia market, with the other trade powers in Japan and South Korea. The world has serious problems with the US currency, and seeks an alternative in global forums. The BRICS in his opinion could form a viable new joint currency.
Russia & China (R&C) will soon both have freely converted currencies. But India and Brazil are both stuck with huge debt. Rogers harbors no great optimism in the inclusion of India in the BRICS group, like with a currency. The implication is that the two nations (India, Brazil) would bring their acidic debt into the new currency, and thus weaken it. China has zero external debt. The Jackass believes R&C will bring huge gold and massive minerals and deep energy resources into the new currency equation, and can carry India and Brazil as attached markets in the expanded trade zone. R&C eye the two nations for the massive market, not the currency so much. See the Financial Survival Network (CLICK HERE).
The Voice talks of a new BRICS gold-backed currency kicking the USD off the stage, its arrival possibly coming in the next year or more. It would be backed by gold, silver, and crude oil, with some form of natgas that is not yet clear. The gas component is much more murky for inclusion, since regionally distinct in pricing. Expect the BRICS to launch a new currency. They are pushed into a corner. Already Russia & China have cut an enormous energy deal (Holy Grail over 30 years), the currency used not necessarily to be the USD. The Russian energy trade with Europe is also not necessarily to be the USD. The trade among China, Japan, SKorea, and the Pacific Rim has no need to be in the USD either.
◄$$$ KAREN HUDES HAS DECIDED TO CONFRONT DIRECTLY THE JACKASS CLAIM OF A NEW SCHEISS DOLLAR TO BE LAUNCHED, DEVALUATED HEAVILY IN SEQUENCE, WITH NO LEGITIMATE GOLD BACKING... TO SEE A FRONTLINE CHALLENGE MEANS CONFIRMATION BUT WITH A CERTAIN LEVEL OF FEAR... AN EASTERN CURRENCY WITH GOLD & ASSET BACKING IS TO ARRIVE IN THE NEXT SEVERAL MONTHS. $$$
Karen Hudes never left the World Bank. The indication given by her on such departure last year indicates deception at best, a dishonesty at worst. A significant claim is made by Hudes. She openly claims that entire vaults of gold will reappear, a new US currency to come, and no devaluation will take place, but strangely that the banker cabal will be toast. It is an outrageous contradictory statement intended as propaganda disinformation in my view. She expects gold to appear from the shadows to save the day for the US nation, and legitimately support the new US currency. She forgot to state that all children would be above average, like in Lake Wobegon. She is registering a forecast for gold to reach $2500 in the aftermath. It seems the Jackass theme of a newly launched domestic Scheiss Dollar is being challenged in the open. There are two chances the USD is replaced with a new gold-backed dollar: slim and none.
The Bush-Clinton-Rubin gangsters did not steal the national gold treasury in order to bail out the nation, but rather to gut the nation, to kill its economy, and render it a cornerstone for the global fascism plan. It is extremely unlikely that the banker cabal, with its Langley narco managers, will produce significant gold supplies to rescue the United States as a nation from the Third World outcome. To be sure, Hudes has made several crazy statements in the last few months. The grand White Dragon gold hoard is not for Western usage like a grand trust fund for delinquent children with addictions and spending sprees. The gold hoard is being used to put the Wall Street and London Centre bankers out of business, to wreck the COMEX & LBMA, and to assure that the Eurasian Trade Zone arrives, with a gold central bank stacked with an entire field of chest high palettes of gold bars. The golden field of ingots will come from converted toxic USTreasury Bonds, rendered toxic by the QE hyper monetary inflation stuck in place, blessed as necessary. The sale of these bonds will assure the US a rightful place in the Third World.
The Voice confirmed the Jackass viewpoint once more. "Don't get into a pissing contest with Hudes. Just ignore her challenge in formal statements made. You state clearly and analyze thoroughly in the reports, articles, and interviews, the upcoming US currency transition, devaluation, and rollover. As you describe it, you are pretty much spot on." The Jackass has concluded with direct confirmation that The Voice is part of a very large global implementation team, thus less specifics on the new Easter, gold-backed currency with other reinforcement. He refers to large teams for implementation, and large teams of cleanup crews. My understanding is that it will be backed by the monetary metals (Gold & Silver) and the energy duo (Crude Oil & Natural Gas). When the new gold-backed currency arrives, it will put the corrupted acidic USDollar out to pasture, essentiall giving it a death notice.
◄$$$ THE UNITED STATES NEEDS THE GOLD STANDARD MORE THAN EVER... THE GOLD STANDARD IS REQUIRED TO BRING BACK ORDER, TO UTILIZE CAPITAL EFFICIENTLY, TO GOVERN OVER FINANCIAL VIOLATIONS, AND TO IMPROVE THE LIVING STANDARDS... ASSASSINATED AMERICAN PRESIDENTS HAVE ONE COMMON THEME, SUPPORT OF THE GOLD STANDARD. $$$
Economics godfather John Maynard Keynes dismissed the Gold Standard concept, calling it ignorantly the barbarous relic. Economics titan Milton Friedman, conceded that gold is good in theory, but he opposed gold usage in practice, arguing that a return to a Gold Standard is neither desirable nor feasible. Perhaps Keynes failed to comprehend human nature to saturate debt and to counterfeit money. Perhaps Friedman failed to comprehend the benefits of fair barter systems in implementation. Neither man appears as blessed with much wisdom. Neither man could see that sound money meant prosperity for nations with stable growth. Both Keynes on the left and Friedman on the right had it horribly wrong. The Gold Standard is the solution to the chronic global financial crisis. The enforcement of fiat paper money as a standard has failed. It has set in motion an accelerating series of crises, each worse than the previous.
The global situation is grave. The saturation of debt, the default of debt, and the usage of money as debt have put the entire global financial structure at risk of collapse, set wealth systems in motion for a collapse event, while the mass of capital in the world is being retired and put to the sidelines, smothering the global economy. To be more accurate, capital is not killed, as the Jackass prefers to state in metaphor terms. The idle machine can be put to work as soon as the monetary system is put back in order. The capital is moved to the sidelines, where it no longer generates wealth and converts work. If liquidated, it can serve elsewhere. The world, led by the bankrupted Western industrialized nations, cannot continue to borrow to infinity, nor can the US impose zero interest much longer, nor can the world tolerate the US bond monetization in unsterilized manner much longer. Both ZIRP & QE put the USDollar on notice for global rejection. The global system begs for the Gold Standard to return, urged by the zero bound rate and unsterilized bond purchases. It will return, but in trade, with banking to follow its lead. The punishment for the United States is no longer to be the financial leader or custodian. It will guard its fascist doorways, while its USD credit card is taken away for promoting war. Instead, tragically, the US will resort to narcotics funding for war, as seen in both Syria and Ukraine.
Hoisington authors have no praise for Keynes. They wrote, "Keynes failed to note that the under-consumption of the 1930s was due to over-spending in the second half of the 1920s. In other words, once circumstances have allowed the under-saving event to occur, the net result will be a long period of economic under-performance. In aggregate, the United States, Japan, and Europe are all trying to solve an under-saving problem by creating more under-saving. History indicates this is not a viable path to recovery." See the Global Economics Analysis article (CLICK HERE). The Great Depression followed the insanity of spending and debt creation of the Roaring Twenties, following World War I. The decade was pure insanity, lunacy, debauchery, and reckless abandon. The depression was earned.
Some believe the assassinated US Presidents had a common link, in promotion of the Gold Standard and movement away from banker syndicate control. The Jackass concurs emphatically. William McKinley held up the Gold Standard in his campaign run (stood on a gold coin image in the graphic). He advocated sound money, free commerce, and working factories. He was killed. James Garfield was an advocate of the bimetallic monetary system (Gold & Silver), but also for agricultural technology, an educated electorate, and broad civil rights. He was killed. Lincoln opposed the London bankers for financing the US Civil War, preferring the Continental Dollar instead. He was killed. In fact, Lincoln, Garfield, and McKinley were killed in rapid succession. The Federal Reserve was formed not long afterwards. Many analysts point to Northern control of the commodity markets leading to the Civil War, the markets supplied by the South, a point of great conflict. Kennedy wanted to move formally to the Silver Certificate in USDollar backbone, but also to eliminate the Central Intelligence Agency (CIA). His family from father Joseph Senior had a great many skeletons in the closet. He was killed.
Any rational examination of history supports the case for the Gold Standard. Under its standard shadow in the 19th century, the quality of life of most people improved faster than ever before in history. The interruptions came from war, a banker favorite pastime. It wrecks capital, adds to expenditures, increases debts, creates vassals out of leaders, and assures the bankers as winners. War is waged by debt, and results in destruction. Only fascists support war on an ongoing basis. For the most free nation on earth at the time, the United States of America, to establish a central bank in 1913, the course of history was altered with the creation of the Federal Reserve. It is neither federal or a reserve. The USFed is a global HQ of banker criminality, a veritable Satanic hive tied at the hip with Wall Street, the other fascist enclave. The Gold Standard would yield to the banker cabal after the milestone 1913 event. It doomed the US nation, but it took one hundred years to render the US to economic rubble and financial charred ruins. When interventions were ordered and conflicts waged to control free markets, gold lost the battle. The result was the collapse of economies, initially previewed by outsourcing to Asia. The aid granted to the failed states only served to extend the reach of the banker cabal, to capture assets and to control governments.
Central banking is simply central planning in the market of money and imposition of its will on capital. The US embraces its own queer Politburo. Therefore, it is not from a capitalist system, but rather a fascist system. The many government interventions applied to money and credit act like a grand wrecking ball on economic systems and capitalist structures. War is the option at the eleventh hour of the doomed cycle. The US is marching to war at a different site to defend the dying USDollar, replete with corruption and soaked with debt. Events in Libya, Cyprus, Syria, and Ukraine should teach the populations of the world that the USDollar is ready for a funeral pyre, and the Gold Standard must be hauled back onto the global stage. War is a suicidal gesture. Endless war is a fascist declaration. Only the Gold Standard can enforce the rules fairly, and to keep the fraud kings on the sidelines. Ironically, without gold laced in the banking and currency systems, the world is careening out of control, toward total barbarism. The United States should lead the world back to the Gold Standard. But it is not, since it is overrun by Fascists and bank cabal criminals. See the Forbes Magazine article (CLICK HERE). The Jackass has been firm in the last few years, that the nations that discards the USDollar and establishes a new gold backed currency will be the leaders of the Next Chapter. The leaders are clearly coming from the BRICS yard, led by Russia & China.
◄$$$ HKDOLLAR THREATENS TO RISE, REQUIRING INTERVENTION. $$$
The Hong Kong Dollar had threaten to breach its trading band, defined to be between 7.75 to 7.85 HKD per 1 USDollar. The Hong Kong Monetary Fund had to step in for the 14th time in July to stop HKD strength, as it pushed the lower end at 7.75 per USD. Given that July 1st was a public holiday in Hong Kong, the HKMA had been intervening every day in July to stop Hong Kong Dollar strength. See the Business Times of Singapore (CLICK HERE). Today it stands at 7.7505 per USD.
◄$$$ THE UNITED STATES EXPORTS MORE GOLD TO HONG KONG THAN IT PRODUCES FROM ITS MINES... US-MINE GOLD OUTPUT IS DOWN 5.0% SO FAR THIS YEAR... MOTIVE IS DIFFICULT TO IDENTIFY WITH CERTAINTY, BUT RESTITUTION TO DEFRAUDED HONG KONG BANKS SEEMS THE REASON. $$$
In the first four months of the year, the US exported more gold to Hong Kong than it produced from its domestic mining industry. Actually, gold shipments to Hong Kong were 29% higher than total mine supply from January through April. The output is not at minor volume, since the US gold production ranks third in the world. In fact, the US gold production is down 5.0% in the first four months of the year from 72.7 metric tons in 2013, to 69.1 tons this year. So the lower gold price has had a detrimental effect on gold mine output. Keep the 69.1 ton figure in mind, since it is less than what is exported to Hong Kong alone, and a little greater than exports to Swiss refineries.
Gold mine output this calendar year has declined the most in percentage terms from Alaska at 9%, followed by Nevada at 5%, but the bigger volume drop was suffered by Nevada. The state's gold output fell 2.5 tons from 53.3 tons in Jan-Apr 2013, to 50.8 tons in the same months this year. Next compare to the total US gold exports to Hong Kong, for the shocker. From Jan-Apr, the US exported 89.5 tons of gold to Hong Kong and 56.2 tons to Switzerland. Two important points to make. First, total US gold exports are down 35% but shipments to Hong Kong are up 27% (=20 tons) compared to the same period last year. Second, the US exported 20.4 tons more gold to Hong Kong (89.5 tons) than its entire domestic mine supply of 69.1 tons. Another perspective is that the US exported twice as much gold to Hong Kong and Switzerland than it produced in mine output, 145.7 tons versus 69.1 tons. The table details the break-down in US gold exports. SRS Rocco expects as the global financial markets continue to disintegrate, we will see and increase in these gold exports. SRSrocco Report article (CLICK HERE).
Officially the USGovt reports the gold exports as Industrial Supplies, to gain the deceptive cover, and shoves it into an obscure Commerce report. It is extremely likely that the huge hidden export is for restitution intended to prevent a global lawsuit by HK Banks. They were defrauded by the Clinton-Rubin Admin, which sent them over 1000 fake gold bars (tungsten). Thus the bad publicity averted. Note how almost nobody figures it out, too many truly dullard analysts out there, including in the gold community. Another possibility is China is demanding redemption of its USTreasury Bonds in the form of Gold bullion, as part of the Mao Era gold leasing in 1999. The Wall Street banks reneged on the deal, forcing a grand default, kept out of the news. The huge shipments to Switzerland are to avert a gold market default, enabling the vast Swiss refineries to continue to make recast bars (new serial numbers, higher .9999 grade) for Asian buyers. Criminality abounds in any and all matters of US finance.
## RMB MOVES TO CENTER STAGE
◄$$$ INTERNATIONALIZATION OF RENMINBI BENEFITS GLOBAL FINANCE BY INTRODUCING A STABLE CURRENCY PLATFORM... GLOBALIZED RMB IS BEING TOUTED AS KEY TO STABILIZE THE WORLD ECONOMY... THE CHINESE TRADE AND CURRENCY EXCHANGE IS GROWING RAPIDLY, AS IS RMB USAGE... CHINA MEETS THE REQUIREMENTS ON SIZE, TRADE VOLUME, AND CRITICAL MASS OF INDUSTRY, WITH NO EXTERNAL DEBT... THE PBOC HAS BEGUN TO RELAX THE CONTROLS OF BID/ASK PRICES FOR RMB EXCHANGE AT BANKS. $$$
China is making a statement. They are saying flat out here that the RMB is the new reserve currency in a global challenge to the cabal. The West led by the United States is not listening, and Europe seems deaf, the blind obedient follower into a dead end war. Behind the scenes, the Jackass suspects that Chinese officials meet regularly with their new bankrupt squires (US leaders, current and past) on policy making and key decisions. The US is fast becoming a vassal nation. A recent visit was paid by former US Treasury Secretary Henry Paulsen in Beijing, no agenda cited. A strong source suggested that Paulson might be a messenger to give an eyewitness report on the real condition of the USDept Treasury accounts, or transfers of state assets that follow the JPMorgan HQ. He might be formally responding to Chinese Govt (and wealthy families) challenges of legacy USTreasury Bonds that enabled the USGovt to continue through the Great Depression in the 1930 decade. The USGovt has actually told them that the bonds are too old to be relevant. Perhaps the USGovt sent Paulsen in order to beg for more time before the global USDollar dismissal, with a gold-backed Yuan to brush the USD off the stage.
Greater international usage of the Chinese Yuan (aka RMB) will not only benefit the Chinese economy, but also help stabilize global finance. It will do so since it has a strong industrial base. It will do so since it has strong trade with every continent. It will do so since China has zero external debt and therefore provides a stable currency for trade. The USDollar is the exact opposite, saddled by $17 trillion in debt, burdened further by four times that amount in future obligations, the object of hyper monetary inflation by the USFed, not reinforced by adequate industry, and the credit card used by an over-extended society, even used for promoting destructive motivated wars. The USDollar is a cancer that acts like contaminated blood in the global body economic, ruining all organs over time.
Renminbi is qualified to go global, ready for the debutante ball. Currently, China ranks second in economic aggregate size (measured by GDP) and first in trade volume. Its cross-border trade is growing fast, and with an expanding list of sites. In 2013, the Chinese GDP represented 12.4% of the world total, and its foreign trade amounted to 11.4% of the world total. The claim is justifiable that the Renminbi can qualify as an international currency. The PBOC data shows that in 1Q2014, the net RMB outflow from China reached CHY 340 billion. The foreign RMB deposit balance was CHY 2.4 trillion, making up 1.5% of the world's total off-shore deposits. Newly issued foreign RMB bonds increased 160% on an annual basis. The foreign RMB trade volume doubled from Q4 in the last twelve months. The SWIFT data tracks RMB usage, to show in May, 1.47 percent of global payments were in RMB, up from 1.43 percent in April. This indicated progress in the second and third steps to become a global currency. Some countries in Southeast Asia, Latin America, and Africa accept or are ready to accept RMB as an official reserve currency. The action indicates the fourth and the fifth steps are occurring.
Strong currencies are bulwarks during crisis. Following the 1997 and 2008 financial crises, the Chinese Yuan exchange rate did not depreciate, holding its stable value. In fact, after 2008 leading to the Lehman failure, the RMB actual rose in valuation. China has the needed economic power and huge foreign exchange reserves required to support the RMB going global. The United States no longer does. The wars will hasten the USD rejection and dismissal. The Chinese political, banking, and academic leaders see the internationalization of the Renminbi as a long-term task. Former central bank governor Dai Xianglong anticipates that it will take about 10 to 15 years to achieve a high level of RMB standard. They plan to take pragmatic and steady steps toward the goal and to integrate its wider usage with financial reform in China. See the Xinhua articles (CLICK HERE and HERE).
The broader global usage of Chinese Yuan and its full convertibility are important stepping stones. The Chinese Yuan Swap Facility has been in wide usage for several years, a real set of platform positioning pylons. Next comes the BRICS asset backed (mostly gold) currency for trade usage. Afterwards comes the gold-backed Yuan. The Gold Trade Note will form the officially recognized Letter of Credit soon, displacing the corrupted contaminated USDollar. Then at a later date, still not known, maybe not decided, a full table of other gold-backed currencies will be introduced. Look for the new Russia Ruble, Gulf Dinar, Nordic Euro, and possibly Central American Dollar. It would be fascinating, like in a carnival show or cabal banker swimming in shark infested waters, to observe an IMF Super Sovereign currency as a transition basket currency with USD, Euro, BPound, JYen, Gold & Silver. It would fail rapidly, and demand a bona fide currency backed by a much greater weight in Gold & Silver, the precious monetary metals.
Chinese banks have been given more freedom on the Yuan exchange rate. The State Admin of Foreign Exchange (SAFE) announced in the first week of July that it will allow banks to set their own exchange rates for RMB against the USDollar, a further step in its liberalized policy. The individual banks can respond to their own local demand. For the longest time, the bid/ask spreads at the banks for RMB/USD exchange were subject to regulatory controls. The Peoples Bank of China has widened the spreads to 3% from the previous 2% in March. See the CCTV News article (CLICK HERE).
◄$$$ FORMER EURO-CB CHIEF TRICHET BELIEVES CHINA'S CURRENCY HAS A BRIGHT FUTURE AS GLOBAL CURRENCY... HE IS IMPRESSED WITH THE NATION'S REBIRTH, ESPECIALLY ON THE MONETARY FRONT... HE WARNS THAT THE YUAN MUST BECOME FULLY CONVERTIBLE... TRICHET HAS SOME BLIND SPOTS, UNABLE TO SPOT CURRENCY CRISES IN THE PAST. $$
China's Yuan currency (aka Renminbi) would play an increasingly important role in the international monetary system as the Chinese Economy continues to grow rapidly. So claims Jean-Claude Trichet, former president of the European Central Bank (ECB). He cited a remarkable economic success in China, in addition to a monetary success. He means stable currency, stable rates, and might refer to the zero external debt. His new role is co-chairman of the IFF, a Beijing-based non-profit international organization. He made the claim that the emerging giant has changed the entire world. The recent more tepid growth is no cause for alarm in his view, which might come under the official 7.5% GDP goal. He has noticed the RMB's pace of internationalization had recently accelerated. The new scattered RMB hubs are an important addition to the financial landscape of Europe. He noted London and Frankfurt as the key spots.
Trichet cautioned that the RMB had to be completely convertible for the benefit of savers and investors in order to win full confidence in it as a free floating global currency. Then the ex-central banker said something truly stupid. He stated that thanks to smooth global cooperation among major economies and their central banks, no dramatic crisis on the exchange market has occurred during the worst financial crisis of advanced economies since World War II. Credit him with a memory lapse for the Soros exploit of the British Pound in the 1980s, the Mexican Peso near failure in 1995, the Asian Meltdown in 1995, the tech-telecom bust of 2000, the Euro explosion in 2009, and countless other smaller crises. Trichet went on defend the EuroCB decision to install a negative interest rate policy, which he regards as evidence the central bank was taking serious measures to tackle low inflation in the EuroZone. He overlooks the bank skimming potential in sanctioned fraud. He refers to the imploding banks and economies, not the rabid hyper monetary inflation which complements the breakdown like a perfect high-low pressure hurricane.
Trichet submitted to a recent interview in Beijing, at the International Financial Forum (IFF) 2014 Leadership Dialogue. He stated, "The RMB has a very bright future as a global currency. China's development is absolutely fantastic. I would say that 7.5% growth is a dream for other major economies. [The current monetary system] was far from perfect, but it remained reasonably resilient. We are not at the epicenter of the global crisis now. Price stability, without inflation and without deflation, is not opposed to growth and job creation. But on the contrary, it is a precondition of growth and job creation." He is not prepared for the USDollar and Euro to be eclipsed and supplanted by a new BRICS gold-backed currency. He cannot define epicenter of crisis. He probably still maintains the heretical notion that strong economic growth can foster inflation. He surely believes that central bank dispensation of money alleviates financial problems. Trichet is a hack, now a harlot. See the Xinhua article (CLICK HERE).
◄$$$ CHINA-EUROPE SETTLEMENT IN RMB GREW FAST IN MAY, DOUBLE LAST YEAR BUT ONLY 8% OF TOTAL CROSS-BORDER TRADE... OVER THREE QUARTERS OF RMB TRADE COMES FROM ASIA, BUT DISTRIBUTION IS IMPROVING. $$$
The China-Europe settlement in Renminbi (RMB), the common name given to the Yuan currency, saw fast growth in May, reported the Bank of China. The RMB settlement amount between Mainland China and four European countries (Germany, Britain, France, Luxembourg) doubled from a year earlier. Furthermore, the total for the four accounted for 8% of China's overall cross-border RMB settlement. The bulk of RMB trade remains in Asian trade. Hong Kong, Macao, Taiwan, Singapore, Japan, South Korea, and Vietnam jointly accounted for 77.5% of the total. In volume terms, the May total of cross-border RMB settlement amounted to CHY 594.2 billion (=US$96.67 bn), making for a 52.6% surge year on year. The bank reported more extensive usage abroad with more reasonable regional distribution. The hubs are spreading like pylon pillboxes. See the Xinhua article (CLICK HERE).
◄$$$ CHINA PLANS TO DESIGNATE RMB CLEARING BANKS IN PARIS AND LUXEMBOURG... COMPETITION HAS HIT THE CONTINENT IN A GRAND EXPANSION OF RMB SETTLEMENT, THE TARGET TO MATCH BEING LONDON... CROSS-BORDER TRADE IS GROWING EXTREMELY FAST IN RMB... THE WINNER WILL BE CHINA, THE LOSER UNITED STATES. $$$
In its continued initiative to make the Yuan a global currency, the Peoples Bank of China (PBOC) announced in late June the plans to designate RMB clearing banks in Paris and Luxembourg. These two cities are key financial centers, when looking west from Germany. They battle with London to become the leading European offshore RMB trading city, a battle that Frankfurt Germany will ultimately win. Germany has the industry and trade volume. The timing for operation is not clear yet for the two presented cities. The French and Luxembourg central banks disclosed signed agreements with PBOC to allow for greater cooperation in the oversight of their domestic Yuan market. This is the latest salvo in the race to win a major share of business in cross-border transactions in the Chinese currency. Singapore and Sydney Australia are also vying for a significant share of the global RMB market. Opening dubbed clearing banks is a critical step in the process. The designated banks will be able to supply Yuan liquidity in case of a shortage by directly accessing China's onshore currency market. The businesses in France and Luxembourg will benefit from the easier flow of currency, including financial firms, as trade and investment are promoted.
French officials have openly pushed for Paris to become a RMB hub. Steps have been taken. In March, China granted CHY 80 billion (=US$12.9 bn) of quotas to French financial institutions, which will enable direct investment in the Chinese domestic financial market. The nation of Luxembourg is different, home to a powerful asset management industry. It has actually built strong ties with Chinese investors in recent years as it hosts the European headquarters of three leading Chinese banks. Last year, their finance minister cited figures to demonstrate that the tiny country was the leading center for RMB business in the entire EuroZone, with some CHY 40bn in deposits, CHY 62bn in loans from Luxembourg banks, and CHY 220bn under management in the investment fund industry.
Progress continues with the London RMB hub. On June 18th, the PBOC appointed China Construction Bank to clear Yuan-related transactions in London. It became the first RMB clearing bank in a European country. In addition to designating a London clearing back, the PBOC also announced that the Yuan can now be exchanged directly for British Pounds in Shanghai's foreign exchange (FOREX) market. Germany has a battle on its hands, one it will win. Previously, traders have had to exchange the currencies through the USDollar in a two step process, which added to transaction costs. In 2013, the total RMB foreign exchange trading in London reached $25.3 billion per day, up 50% compared with 2012. The Chinese currency has become increasingly popular in settling total trade, even in the United States, where retail importers do brisk business. Next some global statistics. In the first three months of 2014, 18% of total Chinese trade, or CHY 1.09 trillion, was settled in RMB, up from 14% in the fourth quarter of 2013, data from Bank of China. That compares with just 1% of total Chinese cross-border trade five years ago. The acceleration is impressive.
It is a Zero Sum Game. The additional RMB that flows freely in trade, business investment, and asset stakes will boost demand for the currency and reduce the amount of USDollars entering the country. A wrinkle must be soon addressed. The Chinese Govt still maintains a tight control on the Yuan exchange rate, which is strictly controlled in trading within the mainland market. A surge in FOREX capital inflows in the past several years has contributed to a property bubble in China and excess liquidity in the country's financial system, spawning numerous problems. As strategic goal, China wants to convert the Yuan into a global reserve currency that is used for investment, trade, and loans, in a similar manner to the USDollar and Euro. Also, a widely accepted Yuan could alleviate problems Chinese companies have in managing FOREX risks, as time passes and contracts are under obligation. See the Market Watch article (CLICK HERE) and the Xinhua article (CLICK HERE).
◄$$$ CHINA CASH TRANSFER HAS BEGUN WITH SINGAPORE... CHINESE BANKS HAVE MADE FINAL RMB DEALS WITH SOUTH KOREA... THEY ARE LOCKING IN ASIAN TRADE WITH RMB SETTLEMENT... AN IMPRESSIVE 71 INSTITUTIONS HAVE RECEIVED APPROVED QUOTAS TOTALING CHY 250.3 BILLION, WITH WHICH TO CONDUCT TRADE AND INVESTMENT (LIKE IN CHINESE STOCK MARKET). $$$
Cross-border RMB cash transfer between China and Singapore began on July 9th in Guangzhou, at the Guangdong provincial office of the Industrial & Commercial Bank of China (ICBC). The practice will reduce exchange costs and risk for banks in Singapore and Southeast Asia. Singapore has a distinction, as the first country to sign a RMB clearance agreement with China, which has grown massive volume of cross-border businesses. In the first five months of 2014, RMB settlement between China and Singapore reached CHY 421 billion (=US$68.4 bn ), of which 17% went through Guangdong. The PBOC will actively support such cross-border transfer, assuring an orderly flow. The giant Chinese bank will become a household name in time. ICBC is the world's biggest bank in terms of assets, with RMB clearance business in Singapore alone worth more than CHY two trillion last year. See the China Daily article (CLICK HERE).
The Chinese Govt appointed a clearing bank for South Korea. The Bank of Communications, its fifth largest lender, was appointed as the RMB clearing bank in South Korea, the announcement coming from the PBOC. Key parties for the two nations signed an official memorandum of understanding in Seoul to cooperate toward the expansion of the offshore RMB market. Expect a rise in listings for RMB-denominated financial products on the Korea Exchange while jointly developing new financial products in the Chinese currency. A quota for CHY 80 billion (=US$12.9 bn) under China's Qualified Foreign Institutional Investor system also was granted to South Korea. The nation strives to use in prudent investment manner its RMB deposits to purchase securities in China. Native South Korean RMB deposits rose sharply by 70% to the equivalent of $11.33 billion in the first five months of 2014, according to Bank of Korea data. Currency transactions are reduced by investment of RMB funds, while economic linkage increases. The RQFII quota awarded to SKorea was the same amount granted to London and Paris, and compares with the CHY 50 billion quota for Singapore and the CHY 270 billion quota for Hong Kong. As of end June, fully 71 SKorean institutions received RQFII quotas totaling CHY 250.3 billion, according to the State Admin of Foreign Exchange. See the China Daily article (CLICK HERE).
◄$$$ CHINA IS PREPARED TO SET UP INDUSTRIAL PARKS IN INDIA... THE GOAL FOR INDIA IS TO REDUCE THEIR CURRENT ACCOUNT DEFICIT... MASSIVE INVESTMENT BY CHINA IN INDIA IS DESIRED, FOCUSED UPON COMPUTER SYSTEMS AND PHARMA PRODUCTS... ALSO INDIA WANTS SOMEWHAT MORE OPEN ACCESS TO CHINESE MARKETS TO SELL THEIR GOODS. $$$
India and China signed a key agreement in late June to create Chinese Industrial Parks in India, the deal cut with the mutual Commerce Ministers. It was a key action taken since the new NDA Govt in India was formed. The commerce ministers met from the two countries for extensive talks. Commerce Minister Nirmala Sitharaman identified Indian concerns over the trade deficit which has averaged over $35bn per annum. She wishes to secure more open Chinese markets in which to sell Indian goods & services. The nation has strong skills in technology and off-shore drilling. The two sides later signed the MOU on Cooperation on Industrial Parks India to facilitate more Chinese investment in India, expecting to relieve the escalating trade deficit. Their bilateral trade totalled to $65.47 billion last year. The minister seeks big ticket investments into the Chinese industrial parks. India is expecting China to set up four industrial parks in different states. According to Chinese officials, current mainland aggregate investment in India stands at $1.1bn, mostly in the Gujarat state. India is formally petitioning China to open its market primarily for Indian information technology and pharmaceuticals, in an effort to reduce their trade deficit.
The Indian Commerce Dept will press the Chinese to provide greater market access also for Indian goods like gemstones, jewelry, and grey cotton fabric. A main priority for India is to address its large trade imbalance with China, and its oversized Current Account Deficit generally. Minister Sitharaman said, "We are importing lots more than we are exporting. The scope [challenge] for the Chinese is to come to India to somewhat redress the imbalance, to get their investments in India, to set up manufacturing several goods, to do some justice to redress the imbalance. What I want to raise with the minister is that there is immense scope for Chinese investments in India both in manufacturing and other sectors in which Chinese do have an advantage, whether it is infrastructure or railways. More such areas can be found where the Chinese investments can be encouraged." See the Economic Times of India article (CLICK HERE) and BRICS Post article (CLICK HERE).
## ENERGY POTENTIAL RELEASE
◄$$$ USGOVT HAS OFFICIALLY REVISED OIL EXPORT RULES... IT HAS RELAXED THE CRUDE OIL DEFINITION OF CONDENSATES, SO AS TO PERMIT OIL EXPORTS... REFINERY COMPLICATIONS CONFUSE THE MATTER... THE KEYSTONE PIPELINE APPROVAL IS COMING BY NOVEMBER... SHALE EXAGGERATIONS HAVE GREATELY SKEWED THE NATIONAL ENERGY STRATEGY WITH HUGE DECEPTION... THE ROCKEFELLERS SEEK HIGHER OIL PRICE FROM ASIANS, AS THE PETRO-DOLLAR HAS QUIETLY DIED... THE UNITED STATES MUST CONDUCT TRADE TO ASSURE IMPORT SUPPLIES, AND MUST THEREFORE EXPORT MORE CRUDE OIL. $$$
In a late June decision, the Obama Admin has taken a bold step toward loosening the grip of tense geopolitics on oil prices. It has given the first permission in 40 years for the export of unrefined American oil. The decision has been disclosed in the form of private letters from the USDept Commerce to two oil companies, according to the Wall Street Journal, which broke the story. The story appears to have caused a significant stir in the oil market, perhaps a key factor behind the move from $105-107 to below $100, but with sudden recovery. Global oil prices have been at the mercy of the turmoil in the Middle East, the advance of ISIS militants in Iraq, the halted oil exports from Libya, and the renewed turbulence in Nigeria. In aggregate, the combined effect has been to remove 3.5 million barrels per day in oil production capacity from the market. It is indeed a bizarre rule being relaxed on a thin crude of oil. Companies are allowed to export refined fuel, such as gasoline and diesel, but not crude oil itself.
The looser USGovt oil policy permits two Texas companies, Pioneer Natural Resources and Enterprise Products Partners, to export a form of extremely light oil called condensate, the volume not yet known. US condensate production in 2012 was about 250,000 barrels per day, taken from EIA data. Although small, a broader definition of condensate could be significant for export purposes. The complication is that US shale output is very light, and the volume of shale reserves has been rocked by massive writedowns. The effect on refineries is disruptive, since shale output tends to qualify as condensate. American refineries are not able to process much of the shale output ironically, even though the hapless White House occupant has made shale a centerpiece of a lunatic national strategy. The solution appears to be shipping about three million barrels of light crude oil in daily output. Still not huge in volume, it would exceed what Iraq exports. The full effects of redefined condensates remains to be examined.
Two Quartz news sources indicate a nuance in the news. Early indications are an updated definition, which expands and loosens what constitutes refined condensate. The distinction is important since refined exports are permitted for export. So the two producers could next be required to do only minor processing of the condensate before permitted for export. An outsized market impact could be engineered. It also would provide political cover for the Obama Admin to satisfy a US oil industry clamor for exports, while also having plausible deniability that it opened the taps. The joke in the industry is the new rule permits export after the barrel is merely stirred a bit. America produced 8.3 million barrels per day of crude in April, the highest level since 1988.
Here is the lunacy that fails to take into account revisions, writedowns, and reality. The energy research group IHS believes that added thrust from shale output could add more than $1 trillion to USGovt revenues through year 2030, keep fuel prices under control, and create an average of more than 300,000 jobs per year. They overlook two critical realities. The shale process takes three times as much energy to produce one unit of crude oil, a huge sink in capital leakage. The reserves of shale oil are vastly overstated, as some sort of national energy strategic in grotesque form. See the Quartz article (CLICK HERE) and Wall Street Journal article (CLICK HERE) and the UK Telegraph article (CLICK HERE). For a war front look on ISIS, Iraq, and Pentagon, as it related to crude oil, see the Zero Hedge article (CLICK HERE).
More drama behind the scenes. As background canvass, the heretical USFed policy of bond monetization keeps a constant upward bias on the crude oil price, the reaction as systemic inflation hedge. The Petro-Dollar is fading away, given the US-Saudi divorce. Its defacto standard rejection is widely confirmed, even with convergence of the Brent oil and West Texas oil prices. The United States as a nation is being forced to barter for goods instead of paying for them with fiat/USD, a harsh new geopolitical reality after 40 years since Nixon took the USD off the Gold Standard. Export might be the only means to avoid systemic national shortages and sudden economic crisis. When the Keystone pipeline is approved, only a question of when, it will reveal an accelerated rejection of the USDollar in international markets. The Keystone ramped full implementation is expected after the November mid-term elections. Domestic issues aside, at that time impeachment could be on the table with a new Republican led Congress. The crude oil price is rallying because the Rockefellers will seek the highest price possible from the Asians, payable in non-USD. The crack between the Rockefellers and Rothschilds is growing. The global trading system has making steps slowly but surely to a net trade settlement in Gold.
◄$$$ THE US-SHALE ENERGY STATEGY IS LIKE A SHRIVELING VINE, ITS OUTPUT IN EXTREME DECLINE... CREATION OF A HIGH COUNT OF NEW HOLES IS DONE TO OFFSET THE RAPID DECLINE IN OUTPUT, PRECISELY AS FORECASTED A YEAR AGO... A HIGHER OIL PRICE AND HIGHER NATGAS PRICE IS REQUIRED TO KEEP THE MOST MARGINAL OF PRODUCERS GOING, NAMELY THE SHALE OUTFITS. $$$
The rapid acceleration in US-based shale energy decline rates spells big trouble ahead for the industry and nation. The Obama Admin strategy is a leaking derelict vessel with a flag on display. Few people seem aware of what is essentially a short-lived Ponzi game at work. The following is taken from excellent analysis from SRS Rocco, where he continues to provide great work. Not only will the peak and decline of US shale oil & gas production spell disaster for the USEconomy, but also it will be a key factor responsible for ending precious metals manipulation. Without a growing economy, without a Petro-Dollar to accept our baseless fraudulent corrupt USD currency, the nation will have to stand on its own powers to prevent a topple. The USFed and Western central banks will fast lose the ability to control the huge debt-based fiat currency system, as it makes a transition toward balanced trade and three-stage barter usage.
The USGovt and its mouthpieces continue the banter about US Energy Independence like it is a right. They are loud and errant to the extreme. They do so in the face of a new report recently released by the Paris-based IEA that forecasts a decline of North American oil supply. They European analysts seem objective. The harsh reality for this story is the the national shale energy industry takes steps backward each month, as decline rates grow worse. They run out of potential offsetting wells. In the last few months, the decline rates at the Bakken, Eagle Ford, and Marcellus sites increased substantially. The USDept Energy group, the Energy Information Agency (EIA) released a report in November 2013. It forecasted a decline rate for the Bakken field for December output at 63,000 barrels per day (bd). Each month, the EIA releases an update report on declines and new wells. The EIA omitted the Barnett shale gas field data, since so dreadfully bad. The Bakken decline rate increased from a 63,000 bd in December 2013 to an estimated 72,000 bd in July. That means the existing Bakken wells produce 72,000 barrels less per day than a year ago. Notice new output falls off extremely fast, hardly the basis of a national strategy. It is a 14% increase in the decline rate in just seven months, a rapid deterioration. The situation is even worse at the Eagle Ford shale oil field in Texas. The Eagle Ford decline rate ramped radically, from 83,000 bd to 114,000 bd. Thus, its decline rate move three times as fast in the wrong direction, compared to Bakken.
The term Legacy Oil refers to production from existing wells. Decline rates require new wells to offset the harmful effect. The decline had a major impact on monthly production. The Bakken legacy decline rate (net output) increased from 71% of new production in December 2013 to an estimated 78% in July. When the Bakken produced 89,000 bd of new production in Dec 2013, the 63,000 bd decline rate was 71% of this total. The EIA estimates the decline rate in July at 72,000 bd, which is now 78% of the 92,000 bd of new production. As declines worsen with each passing month, the companies drilling in the Bakken must find and put in place new wells even more urgently, or else the major field will peak and enter net decline. This is the trouble the energy companies are faced with drilling in the Eagle Ford. Thus the nature of the Ponzi game in the strategy, since the major field is limited in size and scope. In the near future, the entire shale energy story will collapse, and make big news. The Jackass is ahead of the story, with expert analysis from HTLetter subscriber SRS Rocco.
Turn to shale gas, where a giant is at work, also struggling. The decline rate at the Mighty Marcellus shale gas field has become twice as bad. If not for the Mighty Marcellus shale gas field, overall natural gas production in the United States would be declining. When it turns downward, the US output will enter decline finally. For the same time period December 2013 to July 2014, the Marcellus decline rate has gone from 31% to 58% in the space of merely seven months.
In December 2013, the Marcellus added 593 million cubic feet (mcf) per day of new natural gas production, with an associated decline rate from existing wells of 182 mcf with a net change of 411 mcf per day. This was a large amount of net new production at a 31% monthly decline rate (amount falling on daily output). However, in just a little more than half a year, the Marcellus legacy decline rate is forecasted to worsen to 383 mcf or 58% of new production. The total volume of new output is up to 663 mcf, providing a net addition of 280 mcf per day in July. So Marcellus must pedal faster in finding and installing new wells, the pressure having intensified to maintain the business. It will peak and enter decline at some point soon, with vast capital outlays no longer paying off. Furthermore, very few energy companies are making money producing shale gas at the current market price of $4.50 per unit.
Several of the energy analysts whose work Rocco respects (like David Hughes, Art Berman, my friend Bill Powers) believe the peak of the Bakken and Eagle Ford may occur sooner than 2020, possibly within the next year or two. It really depends on the price of a barrel of oil, as well as available capital to toss at reduced returns. If the US and global economies fall into a bad recession or depression in the next few years, the price of oil will more than likely decline significantly. If the USFed, EuroCB, Bank of England, and Bank of Japan continue with the wide open QE monetary spigots (as opposed to energy spigots), the price of oil & gas might rise in concert, regardless of the economies. The monetary effect on energy prices is valid. Generally, soft energy prices would destroy the ability for the shale oil & gas companies in focus to continue drilling. In addition, the major oil companies are already cutting back on capital investment (CAPEX) spending as well as selling assets to remain profitable. Therefore the capital angle is already a negative. They realize that increasing production is impossible unless the oil price goes high enough to justify the added expense. Basically, the world cannot afford expensive oil, which means the major oil companies cannot increase investment. Without the needed investment, peak oil comes sooner than later. See the SRS Rocco article (CLICK HERE). Notice some desperation by hidden forces to capture the Iraqi oil fields by violent mercenary forces. War has been a national energy tool for a long time.
◄$$$ THE FOSSIL FUEL INDUSTRY IS THE SQUEEZE DANGER FOR THIS CYCLE... COSTS HAVE RISEN BUT OUTPUT IS RELATIVELY STAGNANT... THE MARGIN IS NOT FAVORABLE. $$$
The epicenter of irrational behavior across global markets has moved to the fossil fuel complex of oil, gas, and coal. The investors have been rushing the gates, eager to follow some deceptive themes and worsening fundamentals. They are likely to be left holding a clutch of worthless projects as reality strikes later on, always later on, when the dust clears, the confusion abates, and the propaganda is dismissed. Also, renewable technology is gradually sweeping in below the radar, as China embraces a greener agenda. The Obama Admin might talk green, but it usually is based in crony deals, cushy loans, and stock fraud. The cumulative outlays for exploration and production over the past six years have totaled $5.4 trillion, yet almost nothing to show for the grand efforts and funds committed. Output from conventional fields peaked in 2005. Not a single large project has come on stream at a break-even cost below $80 a barrel for almost three years. "What is shocking is that upstream costs in the oil industry have risen three-fold since 2000, but output is up just 14 percent," said Mark Lewis from Kepler Cheuvreux. The damage has been masked so far, as big oil companies draw down on their cheap legacy reserves. The real story is always at the margin, and it is not favorable. Higher costs are absorbed to record minor gains. Oil & gas investment in the US has soared to $200bn per year, the payoff minor. See the UK Telegraph article (CLICK HERE), which goes into great detail about the diverse fossil fuel fields. The author called the energy industry in subprime zone.
◄$$$ RUSSIA'S ROSNEFT TO LEAD CUBAN EXPLORATION OFFSHORE TO DEVELOP ITS OIL RESERVES... ALTHOUGH CUBA IS SMALL, IT HAS A LONG SHAPE REACH ON THE ISLAND, WITH EXTREMELY DEEP OIL DEPOSITS... THE OFF-SHORE CUBAN STORY IS OF UNTAPPED LARGE RESERVES. $$$
Giant Russian oil company Rosneft will work with Cuban State oil company CUPET to explore the their offshore oil reserves. A memo of cooperation was signed between Russia and Cuba during President Putin's historic visit to Havana. Putin met the nation's President Raul Castro. Putin (the Man from Vlad) cited numerous contract deals as confirmed. The centerpiece deal allows the Russian oil company Rosneft to work side by side with Cubans to explore and drill on an offshore oil platform on the island nation's northeast coast. The area potentially has up to 20 billion barrels of oil, according to CUPET. My source indicates the volume is double to triple that amount. At this time, Cuba has limited onshore production and relies heavily on imports from Venezuela for its oil consumption needs, plus donations from Caracas. Putin also confirmed that Russia is writing off 90% of Cuba's debt, which amounts to $32 billion, a done deal. Putin reminded that Cuba will reinvest the remaining 10% of the huge debt into the Cuban Economy. Putin also played to the crowd, citing the illegal US blockade of Cuba.
In a separate deal, Russian company Inter RAO Export and Cuba's Union Electrica signed a contract for the construction of four 200 megawatt stations for the Maximo Gomez power plant. Other signed agreements include peaceful usage of outer space and cooperation in information security. During the visit to Cuba, Putin also met with former President Fidel Castro, who stepped down due to health concerns in 2008, and is ailing badly but conversant. See the Russia Today article (CLICK HERE). Next they can get down to the real business, like the Russian Naval base. The Jackass suspects that any mis-step by Cuba on deal progress will require a quick conversion of Mariel into a naval base for Kremlin usage. Cuba extends 1223 km (760 mi) east & west, and about 89 km (55 mi) north & south. The island nation is the largest country in the Caribbean, accounting for more than half of West Indian land area. Comparatively, the land area of Cuba is only slightly smaller than the state of Pennsylvania. So Cuba has at least 1500 miles of coastline, equal to 2400 kilometers, when doing a straightline calculation without counting inlets and peninsulas. That is a lot of coastline to conduct off-shore exploration.
Jaroslav in St Petersburg Russia reports the Cuban energy deposits are extremely deep, the total national oil reserves to be rather substantial, and far greater than publicized. Cuba has oil reserves of between 4 billion and 20 billion barrels, though likely in the area of 9 billion barrels. With the oil price at $110 per barrel, this deal could bring around $900 billion. The deal could be comparable to the deal Rosneft currently has with Exxon Mobil in the Russian Arctic. As Rosneft stands to produce close to a cool $trillion (perhaps more) from Cuban oil, forgiving a $32 billion debt might be considered a future royalty outlay much like for an author on a popular novel or memoirs. Expect the pushed contract negotiations to go clearly in Russia's favor, while any modicum of success would lift the Cuban Economy out of abject Third World poverty. Most reserves of Cuban oil are located offshore. Oil reserves (according to CUPET) are about 20 billion barrels on the Cuban shelf, whereas the US Geological Survey estimates reserves of 5 billion barrels of oil. Gas reserves range from 10 to 21 trillion cubic meters. The US estimates might not consider greater depths for potential discoveries. See the Standart News article (CLICK HERE) and the RBC article (CLICK HERE) in Russian.
◄$$$ WASHINGTON BLAMES MASSIVE UK TAX HIKE FOR COLLAPSING NORTH SEA OIL FUTURE OUTPUT... THE NEW POLICY IS A HORRENDOUS TAX GRAB AND SOCIALIST SWAP... THE TAX IS A DEATH BLOW, TYPICAL OF INCOMPETENT GOVERNMENTS SEEKING REVENUE (LESS WILL COME)... THE OFF-SHORE TAX REVENUE IS HALF WHAT IT WAS IN 2011... LOOK FOR A HALT TO COME SOON IN THE OUTPUT AND TAX TAKE. $$$
The USDept Energy issued a blistering indictment of the UKGovt tax raid on North Sea oil and gas revenues. The US warned that prohibitive costs threaten much of the British energy industry. The increase in Britain's petroleum revenue tax to 81% of profits for old fields and 62% for newer ventures pushed through in 2011, along with other penalties and a cap on relief for winding down old fields, have choked North Sea exploration and paralysed a string of major projects. The policy is pure insanity wrapped in stupidity, clouded by desperation, indicative of fascist seizures. "As a result of the significant increases in taxes, the UK Continental Shelf [UKCS] projects have become even less competitive. Increases in operating costs coupled with higher taxes have resulted in decreased investment in both brownfields and new exploration. Even without the increased taxes, operating costs in the UKCS were prohibitively high, exacerbated by the high decommissioning costs of old facilities," declared the USGovt report by its research arm, the Energy Information Admin. Rarely has the US so harshly criticized its British masters. Critics assuage the damage. An added cost comes to turn off a platform wellhead, kind of liKe a reversal of the depreciation tax benefit. The taxes are awful, but they will not matter much, since North Sea oil production has been in decline for almost two decades now. The effect will be to bring output to a near total halt.
Effects have been swift. The EIA cited the tax hike as leading quickly to the suspension of Statoil's Mariner and Chevron's Bressay fields and other start-ups. The tax hike also forced Centrica to launch a feasibility review of all of its exploration activities. The EIA continued in the slam. They highlighted Britain's worsening fortunes on its webpage, noting that all key areas of energy are now in drastic decline. Great Britain became a net importer of refined petroleum products in 2013 for the first time in 30 years. The UKGovt stupidity can be detailed. Chancellor George Osborne imposed the tax rises to offset a popular cut in fuel duties for consumers. He ignored all warnings that the tax measure would inhibit investment and kill the goose that lays the black golden egg. Such is typical of socialist government non-thinkers. The sector typically furnishes a fifth of UK corporate tax revenues, which can be kissed goodbye. The tax load should be reduced, not amplified in aggravation. Malcolm Webb is head of Oil & Gas UK. He offered, "Exploration wells fell by half in 2011 and that is not a coincidence. UK offshore is a very high-cost province and they need to lighten the tax burden."
The greater tax bite will make matters worse over time. The proof is beginning to show on effect. Data released by the UK Treasury in late June showed that the tax income generated from oil & gas collapsed from GBP 8.8 billion in 2010-2011 to GBP 4.7 billion last year, the lowest slice in a generation. The revenue decline occurred even though Brent crude prices have been above $100 per barrel. See the UK Telegraph article (CLICK HERE). The struggle to avoid the Third World for Britain will be made more difficult by lost North Sea revenue, which was once a juggernaut. The RMB Hub will supplant some lost revenue, but not much since Frankfurt Germany is set to grab the lion's share and leave London with far less than is forecast.
◄$$$ KURDS SEIZED IRAQ OILFIELDS IN A LAND CLAIM, AS THE REGIONAL MINISTERS PULLED OUT OF THE FORMAL IRAQI GOVT ENERGY SHARING CONSORTIUM... THE REGIONS HAVE BEGUN TO LAY OUT NEW BOUNDARIES, HOPING FOR SOME CONFIRMATION... CHAOS HAS HIT IRAQ. $$$
Kurdish forces (not related to ISIS guerrillas) seized two oil fields in northern Iraq and took over operations from a state-run oil company. The Kurdish politicians formally suspended their participation in the Maliki regime that calls itself the Iraqi Govt. Kurdistan is a quasi independent breakaway state. The capture has escalated a feud between the Shiite-led central government and the autonomous Kurdish region driven by a Sunni followers. The conflict threatens to fragment Iraq along sectarian and ethnic lines. Iraq is fracturing, but its progression into a certain disorder might not be a negative development. Keep in mind that the ISIS guerrillas seized Mosul, a northern Kurdish city. Mayhem has come to the Kurdish region.
More stability could come from formal boundaries and recognized autonomy. The Kurdish forces took over production facilities at the Bai Hassan and Kirkuk oilfields near the city of Kirkuk, the regional capital. Kurdish forces took control of Kirkuk a month ago after Iraqi troops withdrew in the face of a lightning assault by Islamic State (ISIS) militants. One might conclude the Kurdish action was to define the new Kurdish state and to secure it, as the ISIS forces do the same. See the Reuters article (CLICK HERE). A new definition of Iraq boundaries is the potential event. Consider the redrawn map to accommodate many frictional forces for Iraq, Turkey, Iran, and Saudi Arabia. Certain countries would donate slices of their lands in the promotion of more peaceful constructive relations. Just speculation. It is just a fantasy concept map, but with certain merit to provoke thought.
## BANKS CRATERING ON BROKEN PLATFORM
◄$$$ JANET YELLEN HAS SIGNALED SHE WILL NOT RAISE RATES TO FIGHT ASSET BUBBLES... SO THE DISTORTIONS CONTINUE, ALONG WITH COLOSSAL CAPITAL DESTRUCTION... TOTAL DEPENDENCE UPON WEIMAR FUNDING IS PERMANENT, QE TO INFINITY ETCHED INTO THE MARBLE FACADES, UNTIL THE COLLAPSE... THE USGOVT DEBT AND FINANCIAL MARKETS DEPEND UPON THE WEIMAR PRESS... THE MONETARY MONKEYS ARE A TRUE TAG TEAM, AS THE WORLD ATM MACHINE HAS SHIFTED TEMPORARILY TO FRANKFURT AT THE EURO-CB OFFICE. $$$
Still new to the post, USFed Chair Janet Yellen delivered the most significant speech yet in her brief tenure. The message reveals a great deal about how she will deal with new risks on the horizon from financial asset bubbles, which the United States as a nation has grown dependent upon for over 20 years. Think Ponzi Economy. Yellen believes that it would be imprudent to raise interest rates to fight financial excesses. Her focus is to prevent financial instability in the financial markets (primarily the bond market) from causing economic disaster. This focus on resilience differs from the typical talk of responsibly pricking bubbles before they grow too large. In the 1980 and 1990 decades, the more competent USFed Boards halted bubbles. Since the Lehman kill event, the USFed has been busy promoting and building the grandest asset bubble in history, in the USTreasury Bond. It is supported with both Zero Interest Rate Policy and Quantitative Easing. The US has no resilient financial system with its Third World finances and stuck hyper monetary inflation in place.
Janet Yellen spoke before at the Intl Monetary Fund staff in WashingtonDC. The newest monetary maven fool stated, "Monetary policy faces significant limitations as a tool to promote financial stability. Its effects on financial vulnerabilities [xxx] are not well understood and are less direct than a regulatory or supervisory approach. In addition, efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment. The magnitude of this effect would likely have been modest relative to the substantial momentum in these prices over the period. But the job losses and higher interest payments associated with higher interest rates would have directly weakened the household ability to repay previous debts, suggesting that a sizable tightening may have mitigated vulnerabilities in household balance sheets only modestly." See the New York Times article (CLICK HERE). The Jackass submits the effects of hyper monetary inflation are well known, and have been well known for centuries, including the decades leading up to their full adoption in Quantitative Easing by the Bernanke Fed.
As Yellen claimed to slow the dispensation of Weimar money output from the overworked machinery, the world's ATM machine moved to the Draghi Euro Central Bank. The USFed has been talking of winding down (lying better, hiding effectively) the money printing operation. So enter Mario Draghi, who is tasked with boosting Europe's cash supply. The ample free USDollars that the Yellen Fed claims are being removing could be compensated for by free Euros from the European Central Bank. The result is certainly sufficient to support this year's run-up in riskless assets, suffering coincidentally from badly reduced trading volume. The new job of the USFed and EuroCB is to support the bond and stock markets, to prevent their collapse, and to ensure our way of life. The USMilitary and Langley are tasked with promoting wars to protect and to defend the USDollar Regime. See the Bloomberg article (CLICK HERE).
◄$$$ BNP TO PAY US$9 BILLION IN FINES, FINALLY... THE USD TRADING BAN REINFORCES SUSPICION OF HIDDEN MOTIVE TO BLOCK DUMPING OF USGOVT DEBT. $$$
French bank BNP Paribas finally pleaded guilty to two criminal charges and agreed to pay almost $9 billion in fines. The case is closed on violations of unilaterally defined sanctions by the USGovt directed against Sudan, Cuba, and Iran. In an unprecedented move, regulators also banned BNP for a year from conducting certain USDollar transactions, a critical part of the bank's international business. The authorities justified the severe penalties as warranted, because of persistent and deliberate BNP violations, even after US officials warned the bank of its obligation to police for illicit money flows. The hidden angle of blocking future USTreasury Bond dumping by major clients has been removed, if that was the case. The USD trading ban reinforces the Jackass suspicion of hidden motive on USTBond dumping in the futures contract arena. See the NBC News article (CLICK HERE).
◄$$$ CITIGROUP WILL PAY $7 BILLION FINE ON MORTGAGE BOND FRAUD... THE SAME OLD BUNDLED TOXIC PAPER DISCHARGED ON UNSUSPECTING INVESTORS... REMEDY HAS COME, BUT NOWHERE NEAR ENOUGH. $$$
Citigroup has agreed to pay $7 billion to settle a USGovt investigation into mortgage backed securities the bank sold toward the height of the 2008 financial crisis. The settlement figure was more that twice expected earlier, but less than the $12bn the officials had sought in negotiations with the bank. The remedy will come in the form of $4.5bn cash and $2.5bn provided in consumer relief. Of the cash payout, $500 million will go to payments for state attorney general compensation and the Federal Deposit Insurance Corp, which incurred significant costs. Citigroup is the second major bank to settle with authorities since the Obama Admin ordered a task force to investigate the sale and packaging of toxic home loans. The mortgage bonds were sold with improper debt ratings, basic junk paper. Despite the fact that Citigroup knew of serious defects in the securitized loan products, the bank concealed them for years from investors. See the Huffington Post article (CLICK HERE). Note that Citigroup did not admit guilt in any way, just a fine and restitution. An admission of guilt would put the big corrupt bank at risk of liquidation or forced merger.
◄$$$ BIG BANKS HAVE BEEN HIT WITH MONSTER $250 BILLION LAWSUIT FOR FRAUD IN HOUSING CRISIS... THE PLAINTIFFS ARE GIANT BLACKROCK AND GIANT PIMCO... THEY SEEK DAMAGES FIVE TIMES GREATER THAN THE FDIC FUND... A MAJOR IMPACT COULD HIT IF THE CABAL DOES NOT REACH THE COURT BENCH. $$$
Investors led by Blackrock, the world's largest asset manager, and PIMCO, the world's largest bond fund manager, have sued the big US banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses in excess of $250 billion. The scope is grand. It is the equivalent of one million homeowners with $250,000 in damages suing at one time, which would be a significant slice of American heartland. Individual homeowners have been battling (and winning) against Wall Street and the big US banks for a few years. The diverse violations of MERS title database used to rotate titles for multiple usage, while denying local municipalities their property tax, are being challenged. Other diverse violations like hiring clerks to conduct Robo-Contract signings of improper home evictions are also being challenged. This biggest financial players have filed lawsuit. It could be a landmark case. Theoretically, deposits under $250k are protected by FDIC deposit insurance. But the FDIC fund contains only about $47 billion, and since 2010 the FinReg Bill prevents further bailouts. The big banks must save themselves by bail-in raids of their own client accounts.
The defendants are the trust banks that oversee the $2 trillion in residential mortgage securities. They include units of Deutsche Bank, US Bank, Wells Fargo, Citigroup, HSBC Holdings, and Bank of New York Mellon. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage backed securities to repurchase defective loans. The case could expose the big banks for insolvency, and thus expose the entire US banking system for insolvency. The largest banks cannot withstand a $250 billion damage award. They would require a USFed grant, a USGovt bailout, or enter bankruptcy. The sum is more than 40 times the $6 billion amount that the infamous Bruno Iksil (aka London Whale) was fingered with losing for JPMorgan Chase, which shook its foundations.
The fallout is subject to speculation. Any major award even close to $250bn would result in drastic deleveraging (sold assets like USTBonds and S&P500 stocks), drastic bond writedowns (forced investor losses), perhaps bank failures (liquidation of assets & derivatives), severe shock to US financial markets (from lost confidence), and more. Worse, a huge damage award could result in bank account confiscations or bail-in taxes, with a subsequent bank runs across the major US criminal banks. Do not expect to see any RICO application and asset confiscation by the USGovt, because these big banks control the USGovt. See the Resilience Org article (CLICK HERE) and the Economic Monitor article (CLICK HERE). Before too much excitement hits the populist masses, consider that in the past, the New York Supreme Court has ruled that a six year statute of limitations holds. Time will tell how it is all resolved.
◄$$$ JPMORGAN AND OTHER MAJOR US-BANKS ARE CRATERING, AS CAPITAL CONTROLS ON CASH HAVE BEGUN... THEY ARE IMPOSING CASH RESTRICTIONS, EITHER TO GAIN LIQUIDITY OR TO TRAP DARK FUNDS... THE EXCUSE OFFERED IS TO TRAP NARCO MONEY LAUNDERING, WHEN DEEP INSOLVENCY AND ILLIQUIDITY ARE THE ACTUAL PROBLEMS... WITHOUT DEVALUATION OF THE USDOLLAR, THE SYSTEMIC DISTRESS WILL GROW FAR MORE ACUTE. $$$
A Hat Trick Letter subscriber GlenS from California served up a stunning memo, in a report from the situation with Los Angeles banks. He passed on what he heard from a friend at the doctors office. A lady told of her father living in Minnesota. His $110,000 CD just matured at a major bank. He asked to transfer it out of the bank. They refused his request, offering instead $30,000 with the rest to be kept at the same bank in a savings account. Another friend was just given a $10,000 gift in the form of personal check. He expected to use the money to pay off a $3000 car loan and to pay some bills. The bank instead told him they were putting a two-week hold on the check, and he couldnt touch it. He screamed like a lunatic, at which point they finally told him they would allow access to $5000 in three days.
The Steve Quayle website mentions a Chase Bank in Riverside California, which does not accept cash unless the depositor has a bank account with them. The details are of Susan trying to place some cash urgently needed by her daughter, who was stranded in Israel. She needed the money to return home. The bank refused her cash deposit. Chase said they no longer are accepting denominations over $10 from anyone except their own banking clients. Another Quayle story has a woman in Parker Colorado, who tried to deposit cash in a Chase Bank into her son's account. They also told her they dont accept cash unless from an account with them. The bank manager actually admitted that they had a policy designed to stop money laundering and counterfeit money. The task was resolved by means of a bank check secured at her own bank where she had an account. The teller also mentioned that all US banks would be doing the same within the next year.
My source George of COMEX fame (mentioned often in the MFGlobal fiasco crime scene) claims that the big banks are entirely dependent on appreciation of the equity market. The USFed and Wall Street banks are increasingly struggling to pump it up higher, not due to higher value, but greater liquidity needs for the banks themselves. If the stock market suffers a decline to any degree, the five-year equity pyramid built from the Weimar room will implode on them. The big banks do very little conventional lending, and they are largely out of the commodity business. They dont issue much in the way of bonds, and the IPO stock channel is empty. They cannot squeeze out too much in equity trading profits without running the extreme risk of creating some unwanted volatility. They cannot afford to risk a stampede toward even a 5% correction, since it could go out of control. Even a 1% equity correction is as rare as an honest politician. No 5% correction in the monster bull market has occurred in two years, a testimony to the powerful upcoming recession that has made urgent QE bond buying and hidden stock buying. The reason is simple, the utterly huge equity holdings the banks are maintaining and managing.
◄$$$ THE ZERO PERCENT OFFICIAL RATE IS THE PROBLEM, NOT THE SOLUTION... IT IS A GIGANTIC WET BLANKET ON THE USECONOMY... SAVERS RECEIVE NOTHING FOR THEIR SAVINGS, LOADED WITH BANK RISK. $$$
◄$$$ BANCO ESPIRITU SANTO FROM PORTUGAL HAS MISSED A BOND PAYMENT LAST WEEK, WHILE THEIR FIRM'S CORPORATE BONDS HAVE DROPPED BY ALMOST 80% IN VALUE IN A SUDDEN SWOON... FINALLY THE BANK HAS ASKED FOR BANKRUPTCY PROTECTION, A BANK FAILURE. $$$
A very large Portuguese bank is at death's door, suffering a staggering decline with a massive ripple effect. The Banco Espiritu Santo (BES) has over 10,000 employees, with a presence in over 25 countries, and over 640 domestic branches. It has 20% market share in Portugal. A major event just occurred, a preview of future bond breakdowns, with possible ripple effects. The bank missed a bond interest payment and was quickly downgraded by Moodys to CCC level (down by 3 notches to Caa2). Standard & Poors downgraded Banco Espirito Santo to B minus the next day. The large bank has been owned by the same family since inception 94 years ago. They suffered the ignominy of being formally removed from the bank ownership listing. In early July, its bond price of 2019 maturity with 6.875% coupon had tumbled from EUR 100 to EUR 21 in under two weeks. The 2018 bond had a lower coupon of 4.75%, hence a lesser decline to EUR 98 from EUR 107 in the same two weeks. See the Moodys announcement (CLICK HERE).
The Voice claims the ripple impact has been enormous and not fully told on asset evaporation. Portugal's Espirito Santo bond payment default wiped out an overall 1 trillion Euros in asset values within three hours. He said, "So much for paper investments, with more like that to come on a guarantee." The next crater spotted could be the Portuguese sovereign bond, the government debt. When a bond fails or takes a large writedown in principal value, the impact is felt with other bonds from sympathetic effect. Where there is smoke, there is fire. But also, the BES bonds are pledged as collateral for other investments, including bonds. They are all written down. The Western financial structure is far more a Ponzi scheme than most realize, since absent the gold foundation.
The fallout and impact is a far greater story. Blackrock secured a 4.65% stake on July 8th of 2014. They have been the vulture investor, adding to their stake, which was just 2% until February 2014. Other major shareholders are French Credit Agricole bank at 14.6% and Portugal Telecom at 2.1%. The ripple could easily slam the big French bank Agricole with even more impact downstream in the France financial system. The Portuguese GDP has shrunk notably, having gone from a peak EUR 252bn in 2009 to EUR 220bn in 2013. Even their population has been hit by a decline, with people leaving for greater opportunities elsewhere. See the Bloomberg article (CLICK HERE) and the EuroNews article (CLICK HERE).
The big picture is bleak and gray on the PIIGS debt ramparts. They are far more broken than presented. The Southern European sovereign debt crisis in the summers of 2011 and 2012 was also a banking system crisis, the two inseparable. Therefore, the BES event forebodes another round of Portuguese Govt sovereign debt troubles, probably in France and Spain too. Either the Draghi EuroCB to step in to prevent another bond event, or else it will be surely tomorrow's news. The entire set of European sovereigns in the South and the periphery are poorly capitalized, highly levered, with a declining economy dragging it down further. The same forces and factors are at work rendering damage to their banks. The frightening disruptive spike in sovereign bond yields witnessed in countries like Portugal, Spain, Italy, and Greece in the years following the Lehman event was exactly like a run on the bank, except on a national scale. It is from a collapse in confidence and vanishing of bond asset values, coincident with exposure of government insolvency. The quick target is their sovereign bond, manifested as a liquidity crisis.
Enter Prince Draghi into the room, who must honor his bluster (Whatever It Takes) and arrogance. The Draghi patches, including the fanciful OMT program, that baseless system of Outright Monetary Transactions, serve as feeble paper mache to create unstable patches, all temporary rubbish. It is a European Central Bank program where the bank makes purchases in secondary sovereign bond markets of bonds issued by Eurozone member states under conditions of deep distress. The program is an empty solution with arrogant narrative, hardly sufficient. The big headache for the Draghi ECB is that Espirito Santo and Erste are not isolated incidents, any more than Laiki and Fortis and Anglo Irish and WestLB and BMPS and others. Each is portrayed as isolated, when each is a link in the greater chain of Western bank insolvency. The problem is that no amount of backroom scrubbing and public show trials with egotistical podium speeches can change the fact that the entire European banking system has been an accomplice to domestic political interests and their agendas for decades. The bubble and bust cycle has killed the banking system, rendered insolvent structures propped by the EuroCB and in the United States by the Federal Reserve. The rot is making a second appearance, after two to three years of smoldering since the first Greek crisis and its parade of PIIGS in a viral outbreak. This next rounds might indeed be too much to swallow for the Euro Central Bank, especially if the ripple hits France and Spain as expected. If a powerful wave, the German backstop banks will feel the impact.
Word has come from London Paul that Banco Espirito Santo has entered default. It has suffered failure. The bank officials have formally declared they cannot meet their obligations. It has requested to be placed under controlled management. The Holding Company has filed for bankruptcy protection. It sounds like a process like liquidation under the Trustee in order to manage obligations. Much remains in flux.
◄$$$ IN ALL SIX BIG EUROPEAN BANKS ARE IN SERIOUS TROUBLE, THEIR DIRE STRAITS SHOWING THROUGH THE SURFACE... THEY ARE LOSING KEY PEOPLE, GOOD RATS LEAVING SINKING SHIPS... THE BANKS ARE IN DANGER OF FAILURE, THE CONTAGION SPREADING SINCE THE ECONOMIES ARE FAST DETERIORATING DUE TO CENTRAL BANK POLICY... THE QE BOND PURCHASES KILL CAPITAL INDIRECTLY AND POWERFULLY. $$$
People should be very worried about their money if held in these six banks, or worried if holding bank corporate bonds. They are Coutts (England), Barclays (England), Societe Generale (France), Generali (Italy), Banco Espirito Santo (Portugal), and the Bank of Cyprus. A domino effect might finally be underway, where bank failures hit and continue hitting. The insolvency is incredible, and accounting is finally catching up to the walking dead banks. The big Portuguese bank has been discussed in the previous story.
Coutts International is positioning itself to be sold, the overseas subsidiary of Royal Bank of Scotland. Its international arm has clients in Asia, the Middle East, and Europe, with offices in Hong Kong, Singapore, Abu Dhabi, Qatar, Dubai, Geneva, Zurich, and Monaco. Those operations are suddenly an uncomfortable fit in the RBS UK-focused strategy. Located in Switzerland, the bank is in talks with the USGovt to settle allegations of aiding Americans to avoid taxes by paying a fine and handing over information about their US clients. See the Financial Times article (CLICK HERE).
Barclays has people quitting like rats leaving a sinking ship, as its wealth mgmt division was rocked by another senior departure. The bank lost its CEO Peter Horrell in June. Other high profile names to have left the wealth mgmt arm since December include Henry Fischel-Bock (head of European & UK accounts), David Semaya (head of UK and Ireland accounts), Catherine Grum (director of wealth advisory), Oliver Gregson (head of discretionary wealth mgmt), and Kevin Gardiner (CIO for Europe). Lesson learned is never to put a private client division under retail. In addition, the Chairman of Asia Pacific, Robert Morrice quit last month in June 2014 from Barclays Asia-Pacific division. Vice Chairman of mergers & acquisitions for the Asian-Pacific region, Jason Rynbeck has left as well. See the Financial Times article (CLICK HERE) and the City Wire article (CLICK HERE) and the Wall Street Journal article (CLICK HERE).
Societe Generale has had major departures in Asia in the last week. Following the completion of a subsidiary sale, two senior people with their entire teams have quit. Alex Fung resigned from the executive post for the HK office. The entire team was grabbed by Vontobel of Switzerland. David Poh left the post of regional head in the investment advisors to join Credit Suisse. See the UK Reuters article (CLICK HERE).
Generali Bank of Italy had been put up for sale for over three years. It has finally found a buyer in a new Brazilian investment bank, BTG Pactual. The buyout price was $1.7 Billion. See the Bloomberg article (CLICK HERE).
Bank of Cyprus is ready to go bust all over again. They might levy a 8% haircut on all deposits and debt too. In less than one and a half years since the bank seized deposits to recapitalize itself in the precedent setting bail-in confiscation, it is seeking at least EUR 1.0 billion to boost its Core Tier 1 capital at the behest of the Central Bank of Cyprus. The bank has a shaky portfolio in which close to half its loans are non- performing (over 90 days in arrears). The bank is brutally exposed to the real estate sector. After John Hourican was appointed as CEO, he supposedly wanted to create a bad bank to handle risky non-performing loans. The insolvency has festered to the surface. See the Cyprus Mail article (CLICK HERE).
◄$$$ THE MASSIVE DOLLAR SWAP FACILITY PATCHES WERE 3X TO 4X LARGER THAN ORIGINALLY REPORTED.... THEY WERE NOT SUFFICIENT... THE ABUSE OF FREE MONEY, SWAPPED CHANNELS, PATCHED ABSCESS HOLE WITH DEBT PUS, ACCOUNTING GIMMICKS, AND COLOSSAL LEVERAGE IS TO CONCEAL A BROKEN FINANCIAL STRUCTURE THAT IS A PONZI SCHEME. $$$
The Banco Espiritu Santo story points out the mischief and patches and paint job on the broken PIIGS financial structure. Recall back in 2011 the Dollar Swap Facility placed by Bernanke for aid to European banks. It was reportedly $2.3 trillion, which we were told enabled the problem to be fixed. It was not fixed, but rather patched over and not very well. Other sources indicate that the total Dollar Swap patch was at least $6 trillion and possibly $10 trillion, kept well hidden. The dole channel was flowing in force up to 4Q2012. Apparently the $2.3 trillion was an initial installment on an emergency rescue to prevent a pan-European banking collapse stemming from the PIIGS sovereign bond bust. The USFed released the swap funds to cover the many types of Euro IOUs in a massive USDollar infusion. The same channels were re-utilized. They had to stop the meltdown. The best part is that swaps never show up on the USFed balance sheet. Swaps conceal gimmicks. The public story was of a fixed problem, quickly addressed, effectively managed. But it cured nothing, the result being a can kicked down the road for two to three years.
This time the current environment is entirely different. The QE programs are stuck in the system, whereas before they were being hatched. Another multi-$trillion Dollar Swap unleashed would trigger a revolt against the USD. The global revolt is already underway, with Russian sanctions, BNP prosecutions, Belgium Bulge, German Bundesbank resistance, and even LIBOR & FOREX & Gold scandals seeing actions taken. The revolt was triggered by demands for gold repatriation. The environment has turned hostile against the King Dollar Fortress, the attacks on several flanks. Conditions are far more fragile both in the United States and Western Europe than they were six years ago at Lehman and four years ago with PIIGS collapse. The impact craters will will become far more economically visible perhaps within the next two months, with more severe bank bond downgrades and more ripple effects. This time around, the entire equity market has been manipulated and managed in the same way, with slush money of questionable origin, as in the Weimar basement, machines burning oil and hissing with smoke seen out the windows. Thanks to COMEX George for his contributions.
As footnote, he adds that the USFed practices are profound, enormous, hidden, loaded with accounting charades, with the $10 trillion was pushed around, distributed domestically, and offset on the balance sheet. There is even a section in the basement of the New York Fed which is not considered part of the United States. George has absolutely no doubt the USFed balance sheet is $50 trillion and potentially twice that figure. The claim makes sense, since whatever the banking high priests do is decreed as policy, blessed as good by economist harlots spouting dogmas, ring kissed, on bent knee. Witness the Western financial system fracturing.
◄$$$ SPAIN PLANS TO CHARGE TAX OF 0.03 PERCENT ON BANK DEPOSITS... IT IS SMALL ENOUGH NOT TO NOTICE, LARGE ENOUGH TO MATTER ON TREND... LATER IT CAN BE EDGED UP EVERY YEAR WITH LITTLE DETECTION... THE PRECEDENT HAS BEEN MADE, OTHER NATIONS TO FOLLOW LIKE IN THE PIIGS PEN... A TAX ON SAVINGS AND SITTING WEALTH IS TESTIMONY TO A FAILED SYSTEM... TAX REFORM IS AIMED IN THE RIGHT DIRECTION, TO SPARK BUSINESS INVESTMENT AGAIN. $$$
Spain announced it would impose a wealth tax across the national banking system, a gesture of utter failure. The blanket tax rate of 0.03 percent on all bank account deposits will generate revenues for the country's struggling decrepit communities. The regulation is expected to produce around EUR 400 million (=US$540 million) to the state coffers, based on total deposits worth around EUR 1.4 trillion. The regions had been given a bitter cocktail after tough deficit limits for this year and next were set by the central government. Deputy Prime Minister Soraya Saenz de Santamaria announced the tax at a news conference following a weekly cabinet meeting. At least they do not call it a revenue enhancement like in the United States. Think tax producion rather than industrial production. The nation of Spain is aiming for an end-of-year deficit of 5.5% of GDP, after ending 2013 with a deficit of 6.6% of gross domestic product. Naturally the actual deficit will be greater, but they must present the best false face amidst head nods. The regions have been given an impossible deficit limit of 1 percent of GDP. The country has one of the lowest tax rate schedules in the European Union. The massive historic property bust crippled the construction sector, one of the largest contributors to government tax revenue.
Madrid passed in June a blueprint for tax reform which aims to cut income and corporate taxes, designed to stimulate consumer demand and investment in the midst of a nascent economic recovery. More consumption is not the goal in a healthy system. Rather business investment is. Like with the USGovt, it is illegal to discuss recession. So the press reports are required to cite an economic recovery, then to attach a descriptor. Theirs is nascent. In the US, ours is struggling, or better yet non-existent. See the Reuters article (CLICK HERE).
## GOLD READY FOR MONETIZATION
◄$$$ TURKEY'S 200 TONS OF SECRETIVE GOLD TRADE WITH IRAN HAS BECOME THE BIGGEST AND MOST BIZARRE MONEY LAUNDERING SCHEME EVER FOR THE REGION... IT CONSTITUTES THE OIL FOR GOLD TRADE PROTOTYPE... THE TURKISH CENTRAL BANK DATA REVEALS THE LIKELIHOOD THAT ITS BANKS BROKERED THE GOLD DEALS, SECURING IT FROM DUBAI (AGAIN, MOST LIKELY)... THE PROTOTYPE FOR GOLD TRADE SETTLEMENT HAS BEEN DEMONSTRATED AND TESTED... OTHER SITES COULD POSSIBLY HAVE SERVED AS CONDUIT FOR GOLD PURCHASES... THE USGOVT HAS BEEN OBSTRUCTING THE GOLD TRADE PROCESS BEHIND THE TRADE PLATFORMS. $$$
The world is still digesting and contemplating the Turkish role on Iran sales of crude oil to India. The intermediary role played by Turkey has been well mentioned in the Hat Trick Letter over the last two years. The USGovt sanctions had a massive backfire, in the development of the Gold-Oil trade prototype for wider usage, like a standard. The lunatic Western central bankers declare regularly that Gold is not Money, when it is precisely that, seen in the energy trade. The nations of China, Dubai, and most especially Turkey and Iran would disagree. The Petro-Gold Wars have been amply discussed on the excellent and unique Zero Hedge web journal. A recently leaked report of a secret plot to ramp up Turkey's trade balance has exposed Gold at the heart of one of the most complex illicit finance schemes that prosecutors have seen. It occurred in Ankara Turkey. See the Zero Hedge article (CLICK HERE) and the Bloomberg article (CLICK HERE).
The story goes much deeper, and brings to the fore the Turkish gold intermediary role described by the Jackass all these months. Turkey has only 519.7 tons of gold as reserves, as cited by Wikipedia (CLICK HERE). In no way could Turkey have sold 200 tons to Iran from its own gold reserves, for the completion of Indian energy sales (and sales from other nations too). Instead, very likely Turkey simply exported it, after having secured it for the third party India. The Turkish banks must have brokered the gold from Dubai, which is the favorite location for the entire Middle East and Moslem world. They could have secured it from another site, like Shanghai or Russia. Secondly, imports were also rising in Turkey to counter-balance the rabid gold exports. It seems extremely likely that Turkey was acting as a conduit for energy and gold transfers. The energy (oil, gas, electricity) flowed to Europe from Iran via Turkey and in return, Iran was paid in EUR or USD, which it quickly converted to Gold.
The great annoyance to the cabal is the conversion of EUR or USD to Gold from the energy transactions. Bear in mind that perhaps Cyprus was also used by Turkey to convert Euros and USDollars into gold, as were the big Russian banks. Also bear in mind most recently, that perhaps Credit Suisse and BNP Paribas were facilitating the Turkish gold trade. The Jackass contends that these alternative sources should be regarded with high likelihood. The USGovt is covering its tracks well, in the gold trade obstruction.
It should be noted that Turkey and Russia will conduct trade outside the USDollar. After a meeting in Australia at the Business 20 Conference, which included Economic Ministers Alexei Ulyukayev and Nihat Zeybekchi in attendance, the press service announced tersely but with significance, "Turkey offers Russian to move in mutual settlements to national currencies." The ministers reminded that Turkey initiated the establishment of a free trade area with the Customs Union of Russia, Belarus, and Kazakhstan. See the Kommersant article (CLICK HERE) in Russian language. The Erdogan regime in Turkey is coming apart at the seams. Turkey is a bridge country between Europe and the Orient. The buzz is that anyone uses Turkey as they see fit, a nation for hire.
The new BRICS gold-backed currency will have a barter element to it. The Turkish intermediary system has exposed that system in its basic form. As for the Turkish financial system, they are at the mercy of Qatar who provides them with liquidity. This Barter system soon to emerge will involve gold, energy, metals, foodstuffs, or any goods & services in transactions. Later, when the barter trade system is more mature and hierarchical, it will develop the strata. Refer to nation-nation, company-company, and retail-vendor. The new system at the uppermost level will enable Iran and other countries no longer to have the need to hold any fiat currency as a reserve. Gold will fill that purpose effectively. Special thanks to EuroRaj for his contribution.
◄$$$ NEWCOMER CNT HAS SUDDENLY BECOME THE LARGEST SILVER WHOLESALER TO THE USGOVT... EITHER A THRIVING LITTLE BUSINESS, OR A MARKED BUSINESS AS SCAPEGOAT FOR THE UPCOMING SILVER MARKET DEFAULT, TIME WILL TELL. $$$
Enter Coins N Things (CNT), the new kid on the silver block. The COMEX silver warehouses seem to be well stocked, with the obvious routine corruption of data. Two relative newcomers CNT and JPMorgan have built up some significant stockpiles. Of the total inventory, only a modest portion is for sale at current prices, and a big chunk of that is held at CNT. It is a privately held family business in Massachusetts that grew from a single coin shop bearing the same name. Suddenly, CNT has become the largest wholesaler of gold & silver to the USGovt for minted coins. It has risen to become a major reseller of American Silver Eagles. Given its private status with no outside investors, the company does not report its financial data. Perversely, the near-term deliverable silver market at the COMEX finds itself systemically dependent on CNT. Any odd episode or mis-step, even a major failure by one of their counter-parties, and the tiny firm could possibly trigger a silver market dislocation. Jesse believes such an event with the vulnerable little firm could result in a force majeure. Oddly, CNT is a major point of potential failure with cascading results. See the Cafe Americain article (CLICK HERE).
Colleague Craig McC from Northern California pitched in with a pertinent comment. He said "A market failure that could be blamed on a private company and JPM would come to the rescue. It would be very convenient. The theory would make sense of this new entity going belly up and being blamed. Although the CNT is a significant storage facility, some things must be explained, as to how CNT has seemingly come out of nowhere to dominate a large portion of the registered COMEX silver." The Jackass believes a legitimate company doing brisk business would eventually overshadow the corrupt vaulting sites extended from the Wall Street hive. An actual company moving real metal would overshadow any firm shoving paper silver around.
◄$$$ SHANGHAI SILVER STOCKS HAVE FALLEN TO THE LOWEST LEVEL ON RECORD... THE TOTAL DECLINE SINCE MARCH 2013 IS A WHOPPING 83%... A GREAT SQUEEZE COULD BE SHAPING UP. $$$
In just 15 months, the silver warehouse stocks at the Shanghai Futures Exchange declined 83%, the volume having gone from 1143 metric tons in March 2013, down to 391 tons last November 2013. More recently it has come down further to the present 200 ton level, recorded as July 3rd. With all the Chinese metal re-hypothecation problems currently taking place, it will be interesting to see how events unfold throughout the summer. The silver shortage could be the initial point of failure in the precious metals market. See the SRS Rocco Report (CLICK HERE).
◄$$$ INDIA MIGHT SOLVE ITS GOLD PROBLEM BY REMONETIZING THE METAL... INDIA COULD CONCEIVABLY FIX ITS WOBBLY FINANCIAL STRUCTURE BY DECLARING THE GOLD STANDARD AGAIN... INDIA HAS VAST WEALTH, YET IT CANNOT SEE THE SOLUTION... IT WILL EAGERLY JOIN THE BRICS NATIONS AND THEIR NEW GOLD-BACKED CURRENCY. $$$
MineWeb's Shivom Seth reports from Mumbai that the Indian Govt might soon awaken, and conclude a solution to what it supposes to be the country's gold problem. It might recognize gold as money again. Eureka!! The concept would allow gold held by banks to count toward cash and satisfy liquidity reserve requirements. The chairwoman of the State Bank of India, Arundhati Bhattacharya, is quoted as saying: "Gold is after all a store of value, [with need] to make use of gold available in the country, and make it more liquid." The banking officials, the businesses, the people, they have all turned imbecile, unaware of what money is anymore. The global financial crisis has an easy solution in principal, but a terribly difficult one in implementation. Not so long ago, gold was money and was minted into coins with the sovereign's seal on them, certifying their weight and measure. During past times of prosperity and tranquil growth, the many government currencies were redeemable in a fixed amount of gold, a weight. The key concept is that money is a weight. The crises will not end, unless and until the Gold Standard is put in place. It matters not whether the standard is re-installed with trade or currency, since the other will follow.
In the prudent sane times, gold was money. Seth wrote, "A fixed weight of gold could always be recognized as an independent currency in itself, priced at market against the domestic currency and other currencies and held on bank, corporate, and personal balance sheets in both its own weight and the equivalents of those other currencies. Loans could be issued in gold and require repayment in gold. Not so long ago they used to do that sort of thing too. Such policies might not do much for the Rupee [currency]. But then if, as their huge inventories of gold suggest, Indians would prefer a metallic currency, that may be the price of fully mobilizing their enormous savings and bringing their country into the rank of the great powers. If gold as money ever had the full support of a government and central bank and was priced in a free and transparent market, liberated from the price suppression of the infinite unbacked claims of the futures markets and the fractional-reserve gold banking system, its price would explode and India might transform itself from a struggling, developing country into another Switzerland."
The solution is at hand, within reach, right before the noses. Indian is a tremendously wealthy nation, with perhaps 20,000 tons of gold held in private hands. The nation has distrusted paper money historically. Its financial structure could be quickly remedied with an overnight decision, one that Gold is Money again in the prosperous nation of India. The nation will offer immediate support for any gold-backed currency emerging from Russia & China. See the MineWeb article (CLICK HERE). India will be a strong stern supporter of the new BRICS gold-backed currency.
◄$$$ DUBAI, NOT CHINA OR INDIA WILL SOON BE THE KING OF THE GLOBAL GOLD MARKET... IT HAS THE INFRASTRUCTURE AND HISTORY, WITH STRONG VOLUME... SOON DUBAI WILL BE A PRIMARY COG IN GOLD PRICE DISCOVERY... DUBAI AND SHANGHAI MIGHT SET THE GOLD PRICE WHEN THE EASTERN POWERS LAUNCH THE GOLD TRADE STANDARD. $$$
Dubai is not just a regional Gulf gold center, or an Arab gold center, or a Moslem gold hub. The city of Dubai in the United Arab Emirates is a global gold center, known affectionately as Offshore India. The city's gold business is run mainly by Indian experts in the precious metal industry, and Indians dominate the buy-side of the trade. Not only Indian locations are destinations for Dubai purchases, but Turkish locations as well. In the jewelry sector, Dubai is dominant with its wide assortment of souks (shops). As time passes, Dubai should completely dominate all gold markets, while serving as the undisputed leader in global gold price discovery, if its leaders can get out of the way. As Silver Doctor said, "The battle for control of gold price discovery is probably best summed up like this: Singapore and Shanghai may talk a good talk, but only Dubai walks the walk. In the supposed battle to overtake London and New York as the prime market of gold price discovery, there is everyone else, and then there is Dubai." In fact, Dubai and Shanghai could set the global gold price if and when New York and London go dark. Please ignore what the Silver Doc writes about the USFed tapering QE down to zero. The naive comment is 180 degrees off the mark, and surprising errant to read. The USFed will ramp up the bond monetization with radical QE to Infinity, and lie with abandon, nothing to lose, since integrity is long gone. See the Silver Doctors article (CLICK HERE). See the popular Deira Gold Souk in Dubai in the photo below.
The Gulf News offered a good summary, with a stern implicit challenge to London and New York. It wrote, "As much as 40% of all gold flows in the world happen through Dubai, and the city is easily the most important hub for the trade. Dubai has the infrastructure and the systems to set benchmarks, and even its own good delivery standards. It is now time for it to start asserting its role and demand recognition for its contributions to the trade. With such major changes happening in every sphere of business, the current age belongs to performers and not consultants, who have had their share of fame but are now ready to be consigned to the dustbins of history. If managing global gold trade is anybody's business, it is most obviously that of the producers, consumers, or those who make trade happen. Any other role is secondary." True datt!
◄$$$ THE GOLD PRICE HAS BEEN JUMPY IN THE LAST MONTH, ALONG WITH SILVER, HAVING FORMED BOTTOMS AND MADE EARLY UPWARD MOVES... MINOR SHORT SQUEEZES HAVE HIT, NOW SUBSIDED... THE POTENTIAL FOR A BIG PRICE MOVE WITH A MAJOR SQUEEZE IS VERY HIGH. $$$
The long-term demand dynamics have changed, in concert with a massive gold flow to the East. Asian wealth spurs demand, but some big factors are at work. London is being drained, the Bank of England gold vaults virtually empty. The COMEX vaults are nearly empty. A major shift is in progress. Eric Sprott foresees a $10,000/oz gold price in the future. Sprott has $billions invested in the precious metals market. See the Bloomberg article (CLICK HERE) and the King World News interview (CLICK HERE).
Gold Money founder James Turk believes a monster Gold & Silver short squeeze event is developing. He made numerous germane comments. The recent $40 jump in gold indicated that the shorts in gold are nervous too. The long gold contract holders cannot be sure of their counter-parties for fulfilling the contract delivery. He notices a similar layout in the positions. The commercial entitiess have not hedged their delivery risk. They have placed their bets on the quality of paper contracts, not physical metal. It can be compared to what happened in 2008 when Goldman was hedged with AIG paper. An eruption ensued. Turk expects a huge scramble for gold metal, since commercials in the aggregate always run a short position on their commitments to deliver physical metal. They always make more commitments to deliver physical metal than they have available, in a corrupted system that is the essence of the fractional reserve banking. A rapid price spike could occur if the squeeze gathers momentum, with movement from paper to physical. Also, a rapid price rise will cause many of the dealer hedges to unravel because of the inability of those on the other side of the trade to meet their commitment. Thus the similarity to the Goldman/AIG example. Important value and price trends are both very favorable to the longs at the moment, signaling upward moves and short squeezes. See the King World News article (CLICK HERE).
Singapore-based fund manager Grant Williams also detects the initial stages of a short squeeze in the gold market. The potential is for serious fireworks. As the upside occurs, people are looking to buy physical gold and take possession of the metal. They have to go out and find some physical gold, in the midst of a shaky confidence game. We have seen little or no confidence in the gold market for the last couple of years, with unmet demands for repatriation, with COMEX requirements to take cash delivery, and with controversy over the Gold Fix. The physical asset has been pouring into India, China, the Philippines, Turkey, and all these other countries which have been soaking up the physical gold. On the physical side is this tremendous drain of metals going from West to East. It has going from the UK, through Switzerland, and eventually to Asia, and in extremely large quantities to China. With the gold disappearing into such strong hands, expect some sharp moves to the upside. This will take place as people desperately try to get their hands on gold and find the people owning it are not sellers, certainly not until the price is at least several hundred dollars from current levels. See the King World News interviews (CLICK HERE and HERE).
◄$$$ BELGIUM IS NOT BULGING ANY FURTHER... SINCE THE PUBLICITY SHINED A LIGHT ON THE SPURT OF ITS DUBIOUS SUSPICIOUS USTBOND ACCUMULATION, THE BULGE HAS SUBSIDED A TINY BIT... MINOR SHIFTS HAVE COME. $$$
It is difficult to make firm conclusions. The Belgium Bulge of USTreasury Bonds has subsided since its March detection, in all by $19bn. The amount is only 5% of the big bulge, which still sticks out like an infected thumb and demands explanation. None comes. Perhaps the USFed is using it less to conceal QE activity. Perhaps Russia is using it less to dump USTBonds. Perhaps the BRICS nations are using it less to set up a grand central bank gold sourcing. Note some minor movements. No changes are seen over the past two recorded months by China, Caribbean, Taiwan, Switzerland, and Hong Kong. Slight increases are seen by Japan, OPEC nations, Brazil, United Kingdom, Russia, Singapore, and Mexico. But the Russian account is jumpy. An inference is hard to make. A couple nations reduced holdings. See the USTreasury TIC Report website (CLICK HERE).
## PRECIOUS METAL DEMAND RELENTLESS
◄$$$ GOLD & SILVER FROM DEMAND AT USMINT DISPLAYS AN UNUSUAL TREND... DOLLAR VALUE OF SILVER COINS IS RUNNING EQUAL TO GOLD SALES, DESPITE THE 62:1 PRICE RATIO... WHETHER ASTUTE OR PARSIMONIOUS, INVESTORS WILL BENEFIT FROM OUTSIZED SILVER GAINS. $$$
The USMint coin sale chart shows the dollar value of Gold Eagles and Gold Buffaloes versus Silver Eagles on a monthly basis. The last three years of data display a new trend. With the exception of just a few months, Silver Eagles sales in USD terms are amazing compared to gold coin sales, running almost equal. It means that 62 times as many silver ounce coin are being purchased, compared to gold ounce coins. One might conclude the public is aware that silver is by far the more under-priced, except that often investors flock to the cheaper item. Since January began, silver dollar volume has exceeded gold dollar volume in three of the six recorded months. Thanks to Nick Laird for a fine chart.
◄$$$ CHINA GOLD IMPORTS MAY DROP 400 TONS AMIDST FINANCING CURBS, CONFUSION, AND DISTRACTIONS... THE DAMPENING EFFECT ON THE GOLD PRICE IS UNCLEAR... TOO MANY POSITIVE FACTORS ARE AT WORK. $$$
The Chinese metal collateral problems have a side effect, in reduced gold imports. The nation is in the midst of investigations and audits for collateral vanishing acts. Imported Gold into China was being used via gold loans and Letters of Credit to raise low cost funds for business investment and speculation. It blew up. Buyers have a Wait & See attitude. The total Chinese gold imports could fall by up to 400 tons this year as Beijing officials tighten controls on gold financing deals and domestic demand softens. Precious metals consultant Philip Klapwijk is director of the Hong Kong-based Precious Metals Insights. He expects the Chinese authorities will move to rein in abuse of gold lending, after a crackdown on commodity financing last year. The weaker import volumes in recent months suggested the gold lending business was already declining, being partly wound down. China's gold imports from Hong Kong dropped in May to the lowest level since January 2013 during the confusion. The analyst Klapwijk played down the impact of a large scale unwinding of Chinese gold financing deals. In the full year, imports to China could fall as much as 22%, in other words fall by 300 to 400 tons. It is just temporary.
Klapwijk spoke to the Reuters Global Gold Forum. He said, "[Gold imports] will probably decline for the full year given the impact of firstly, weaker real demand in China compared to its outstanding level in 2013, and secondly, measures to restrict the abuse of gold lending and other financial plays using the yellow metal. Total imports into China may have reached nearly 1800 tonnes in 2013, taking into account unofficial and direct shipments. That figure will surely be several hundred tons lower in 2014. It is another headwind for any rally in gold this year, and it also means the price floor may be a bit shakier." It is amazing that 1400 tons of gold imports this year would be considered puny and tragic, still a big mound of bars. The gold price is rebounding this summer for other reasons having to do with USDollar rejection, pressure on outsized naked short positions, possible massive BRICS central bank gold sourcing, and absent COMEX vault inventory. Perhaps the resilient rebound had to do with China taking control of the JPMorgan HQ in South Manhattan. Perhaps it had to do with investigations and legal actions taken against Vatican bankers for Satanic rituals and child blood sacrifices, forcing them to lose attention and focus on the corrupt gold market. See the Indian Reuters article (CLICK HERE).
◄$$$ DONALD DUCK GOLD COINS WERE SOLD OUT IN MINUTES IN AUSTRALIA AND NEW ZEALAND, JUST LIKE MICKEY MOUSE COINS... EVEN THE NOVELTY COINS ARE SEEING STRONG DEMAND... ANY AND ALL SUPPLY IS BEING RAVAGED BY FIRM INVESTMENT DEMAND. $$$
One thousand Donald Duck gold coins made by New Zealand's and Australia's Mints sold out in the first 10 minutes after their release in the final June week. They are actually being traded on auction websites for a 100% profit. According to the vendor mints, all that remain are silver coins. The two coins display the Disney character as it appeared for the first time in 1934, wearing his trademark sailor suit and bow tie. The Donald Duck coins follow similar precious metal coins released in April, which depicted Mickey Mouse. Those also sold out within days. Consumer collectors prefer to hold gold instead of cash during these periods as gold acts as a value retainer for them, during the official sanctioning of global currency debasement and debauchery, perpetrated by coordinated central banks. See the Mining article (CLICK HERE).
◄$$$ INDIA'S JUNE GOLD IMPORTS SURGED 65% DESPITE THE IMPORT DUTY UNCHANGED AT 10% STILL... A SURGE IN INDIAN GOLD IMPORTS DROVE UP THE JUNE TRADE DEFICIT TO 11-MONTH HIGH, THE TOUGH GOLD RULES HAVING BEEN REMOVED. $$$
Finance Minister Arun Jaitley surprised bullion markets by keeping the import duty on Gold & Silver unchanged at 10% in the budget. Gold imports into India surged in June, registering a 65% annual rise in gold bullion imports. Gold imports as one of the principal factors in sending the nation into a balance of payments crisis last year. In a desperate attempt to trim its trade imbalance, the government last year increased import duties on gold and imposed a rule that required a fifth of all bullion imports had to be re-exported. India's huge appetite for gold is due to still very high levels of inflation. Obviously, the traditional gold gifts at weddings and birthdays continue, the recognized store of value. The official rate is still highly charged in measure and public sentiment. Retail inflation in June hit 7.31%, driven upward by Indian Rupee depreciation and Indian Govt largesse as reckless politicians throw it away in search of votes (purchased). See the GoldSeek article (CLICK HERE).
A surge in gold imports widened India's trade deficit to an 11-month high in June. The continued heavy import of crude oil to the country piles more pressure on its Current Account Deficit. The trade deficit swelled to $11.76 billion last month, its highest level since July 2013. The CAD is aggravated regularly these past several months, after a Reserve Bank of India decision to ease its tough gold import rules. The reaction has been swift and strong, with ramped up gold purchases in various forms. A voracious appetite for gold among Indian consumers, part of the country's tradition, has made the bullion the country's second largest import item after crude oil. See the Indian Reuters article (CLICK HERE). India needs to seriously consider investing in a domestic gold mining industry, off the expansive Himalayan foothills. It has the capital, the gold ore, the labor, and can hire the engineering if necessary. A domestic supply would cut into the trade imbalance.
◄$$$ SILVER IS THE BIG BENEFIARY AS A RESULT OF THE INDIAN GOVT GOLD CURBS... THE RISE IN SILVER DEMAND IS ALMOST 150% FROM THE PREVIOUS MONTH, AND 55% FROM THE BEGINNING OF 2014. $$$
Gold import is currently still being limited by the Indian Govt in an attempt to control the Current Account Deficit. In fact, last year the Delhi leaders saw fit to hike the import duty on gold from 4% to 10%. The 80/20 rule remains in effect on domestic usage. In response, the Indian people have crashed the doors and cleaned out silver supply. The nation imported 713 metric tons of silver in April. In the previous month, the March figure was 287 tons imported, making for a 148% sequential growth rate. Notice in the previous two months, January and February were greater, like in the 460 ton range, which would render the April import figure 55% higher, still robust. Their total silver import is 1921 metric tons year to date in 2014. Many Indians seeking for a store of value fled to silver because of the large premiums on gold, running at around 10% (in addition to the import duty). See the In Gold We Trust article (CLICK HERE).
◄$$$ CHINA IS GOING TO PUSH SILVER OVER $100 WITH GREEN ENERGY INITIATIVES, THE CENTER OF WHICH IS THEIR AGGRESSIVE PHOTOVOLTAICS PLAN... THEY USUALLY EXCEED THEIR PLANS, WHICH ARE MOTIVATED TO CUT COAL USAGE (REDUCE POLLUTION). $$$
Stephen Leeb is not impressed with most energy strategies. He points to Germany and China as being exceptions for their forward thinking, planning, commitment, and wisdom. He responded to the fracking stupidity as no way to run a business, a country, or a world. If he only knew about Halliburton's dumped toxic waste. He said, "The West is completely lost [on energy strategy], but there are two countries that get it in spades: Germany, which has the largest renewable energy infrastructure in the world, and the other is China, which incidentally just raised their target for photovoltaics to a remarkable 70 gigawatts by 2017. I always think that China will exceed whatever internal targets they have for renewable energies, but I never dreamt that they would get to 70 total gigawatts. China is going full force on this project and they are spending a lot of money to get there.
Now, coming back to that 70 gigawatt photovoltaics target for China, you better own some silver. Silver is vital for the Chinese to achieve that objective. The problem is there is not enough silver in the market to satisfy their objective at current prices. So far President Xi has not failed in any of his objectives, and he does not want to fail on this target of 70 gigawatts of photovoltaics. This means the price of silver is going to have enormous momentum behind it when it starts moving. In fact, the move in silver will shock people in the West, because they will not understand why silver is moving so fast and so violently to the upside: Chinese demand. This is what is going to turbocharge the move in silver and send that metal past the $100 level." See the King World News interview (CLICK HERE) and the Commodity Online article (CLICK HERE) and the Bloomberg article (CLICK HERE).
An engineer type HTLetter client offered some rough calculations, like on the back of a napkin. Big numbers can be confusing for silver usage. We know 1 Gigawatt = 1000 Megawatts = 1 Billion Watts. Figure roughly 0.1 gram of silver is required per watt in the solar equipment. If close to correct, then 70 billion watts would require 7 billion grams of silver for the industry. That equates to 225 million ounces of silver, a significant enough amount to disrupt the market and thereby move the needle. The demand would be spread over several years.
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.