GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
EURASIAN TRADE ZONE

CURRENCIES & STOCK INDEXES

* Golden Nuggets
* Germany Resists Washington Fascists
* Eurasian Trade Zone Tour
* Oil World in Major Flux
* Mixed Gold Signals
* Economy in Tatters Still


HAT TRICK LETTER
Issue #160

Jim Willie CB, 
“the Golden Jackass”

24 July 2017

CORRECTION:  Two errors on the electric car comparison to standard combustion engine type cars. Thanks to MarkS in Ontario for the correction. The decimal was incorrect in the cost per kilowatt  hour. It is not $1.16, but rather 11.6 cents per kWh. The equation changes for the Chevy Volt to 7.4 cents per mile, not 74 cents. The comparison in the Hat Trick Letter was incorrect and unfair. MarkS went on to say that his calculations indicate a 2.7 cent per mile cost for the Volt car. He went further to remark that the Tesla Model S-90 that will go about 400 km (=268 miles) at a rate of 3.4 cents per mile, which is competitive. He claimed the BC Hydro guy was a bozo, in his words. “Residential homes in most cities have the capacity at the street to provide 200-amp services. It is standard in all residential subdivisions. Even if the house has an existing 100-amp service, the 75-amp rated circuit for a Tesla can only be loaded to 80%, which would be 60 amps. That would leave sufficient amperage to power a small home overnight. So saying that the existing electrical infra-structure in today’s cities could not handle the demand if everyone had a Tesla is not accurate. How do I know this? I have been a master electrician for 37 years. I have installed hundreds of electrical services, and my company installs chargers for Tesla cars.” Thanks for the correction, as the Jackass wants it right. My apology.

## GOLDEN NUGGETS

◄$$$ THE ENTITY CONTROLLING THE ECONOMIC SYSTEM IS MUCH LARGER THAN THE USFED AND THE CENTRAL BANKERS… IT IS A NETWORK OF ELITES IN DEEP COLLUSION. $$$

It involves a high level of what the Jackass calls uber-lords, together with an armada of bought off corporate executives dispatched to do the elite bidding. They are in deep collusion, working an agenda to maintain control, to exact fees from the system, to execute wars with purpose, to carry out projects like genocide, and to enforce the status quo with murders. Think in terms of Big Pharma, the Military Industrial Complex, Langley black bag ops, and News Networks, just for starters. They have often been called the banker cabal, including by the Jackass. They have been referred to by me as the elite castle dwellers. Increasingly, they are being called the Deep State. They organized world wars, planned the Petro-Dollar structure, and killed Kennedy, as well as other nefarious deeds such as calling for the Ukraine War. Yeah, yeah, like that. See the video by fearless intrepid Rob Kirby (HERE).

◄$$$ BIG PHARMA IS BEING MORE EXPOSED ON VACCINE ISSUE… SWEDEN HAS BANNED MANDATORY VACCINATIONS, CITING SERIOUS HEALTH CONCERNS AND VIOLATION OF CITIZEN CONSTITUTIONAL RIGHTS… ROBERT KENNEDY JR IS ON THE STUMP, EXPOSING THE DANGERS OF VACCINES… THE REAGAN ADMIN LAW CONTINUES TO EXEMPT BIG PHARMA FROM LAWSUITS. $$$

The Swedish Riksdag (their Parliament) rejected seven motions in May that would have forced vaccinations into law, stating “It would violate our [Swedish Constitution] if we introduced compulsory vaccinations, or mandatory vaccinations.” They noted massive resistance by its citizens to any such coercion. The Riksdag also made reference to frequent serious adverse reactions in children who receive vaccinations. The sensible decision by the Swedish Riksdag flies in the face of what is happening in the United States and other Western countries recently. Big Pharma has lawmakers in a chokehold, dictating policy, and using the corrupt media to silence dissenters.

Robert F Kennedy Jr recently appeared on the Tucker Carlson Show (seen on Fox News) and bravely exposed the lawless mafia state that is Big Pharma and their extremely lucrative vaccines scam. He stated boldly, “The pharmaceutical industry is so powerful. They give $5.4 billion a year to the media. They have gotten rid of the lawyers, so there is no legal interest in those cases. They have really been able to control the debate and silence people like me.” Worse, very little known, the USCongress granted Big Pharma a blanket legal immunity when it comes to vaccines. Big Pharma became a law unto themselves after President Regan signed the National Childhood Vaccine Injury Act around 30 years ago, granting the entire sector immunity from prosecution and lawsuits. They can put toxic ingredients into vaccines, or seriously injure children, without recourse toward lawsuits or felony charges. They cannot be sued. One half of the Big Pharma corporate ownership is with the Rockefeller Foundation, which participates in the genocide steps, whether lethal or damaging. The Big Pharma gangsters also own the US medical industry, paying for 35% of medical school costs. Doctors who prescribe natural remedies are at risk to lose their medical licenses. US-based doctors are pharmaceutical prescription machines and working agents.

Kennedy stated, “What you have to understand is that the vaccine regimen changed dramatically around 1989. The reason it changed is that Congress, drowning in pharmaceutical industry money, did something they have never done for any other industry. They gave blanket legal immunity to all the vaccine companies. So that no matter how sloppy the line protocols, no matter how absent the quality control, no matter how toxic the ingredients, or egregious the injury to your child, you cannot sue them. So there is no depositions, there is no discovery, there is no class action suits. All of a sudden vaccines became enormously profitable. It became a gold rush for the pharmaceutical industry to add new vaccines to the spectrum.” Worse still, the enormous profits in the unregulated industry meant Big Pharma companies raced among each other to produce new and unnecessary vaccines to pump into newborn children, often dozens at a time, most needless.

The nation continues to distribute wide arrays of vaccines, even new ones, all loaded with mercury and other contaminants. Protecting kids from Hepatitis-B is lunatic since it is disease from unprotected sex and shared needles, as in prostitutes and crack heads. That Big Pharma obstructs information is untenable and unacceptable. To direct hospitals and clinics toward having 65-70 doses in an array of almost 20 vaccines is utterly insane, deeply irresponsible, and completely dangerous. The effects are a lifetime of poor health, incidents of autism, brain damage, lower intelligence, and even greater vulnerability to cancer. Some of the ingredients reduce not only immunity protection but cancer defense. See Redice (HERE).

◄$$$ EXXONMOBIL CHALLENGES FUNDAMENTALLY UNFAIR $2 MILLION FINE ASSESSED BY THE USGOVT… THE USDEPT TREASURY CHANGED THE LAW, THEN FOUND EXXON IN VIOLATION OF THE NEW AMENDED LAW, WHEN IT WAS IN COMPLIANCE BEFORE THE CHANGED LAW. $$$

ExxonMobil filed a legal challenge against the USGovt immediately after the USDept Treasury slapped the oil producer with a $2 million fine over its partnership with Russia's oil giant Rosneft. The USGovt clowns believe Exxon was in violation of US sanctions. The American oil giant maintains that at no point has its dealings with Rosneft violated the sanctions imposed by Washington on Russia, in the wake of the Ukrainian crisis three years ago. In the legal challenge filed against the Treasury Department’s Office of Foreign Assets Control (OFAC), ExxonMobil insists that it followed guidance from the Obama Admin which OFAC proceeded to retroactively change. The ExxonMobil filing wrote, “OFAC seeks to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today.” That is stern language, citing duplicity. See Russia Today (HERE) and Oil Price (HERE).

◄$$$  MORE AMERICANS ON FOOD STAMPS THAN POPULATION OF CANADA… FOOD STAMP RECIPIENTS HAVE INCREASED BY 24% SINCE YEAR 2001… POVERTY IS SPREADING LIKE A FASCIST WILDFIRE ACROSS THE UNITED STATES. $$$

A recent report by the Joint Center for Housing Studies of Harvard University concluded that in year 2015, there were 18.75 million households who were severely burdened. Their definition involve income devoted to pay for housing. A total of 20.1 million households were moderately burdened in 2015, under a lesser defined amount toward housing. Overall, there were close to 39.0 million households that were burdened in the United States, whether moderately or severely. In 2001, this figure was just 31.5 million, a 24% rise in 16 years. Poverty is advancing rapidly within the Fascist Business Model under full adoption. Some call it the rise of the Free Shit Army in the United States. They voted over 90% for their poverty champion Obama.

Many Americans are living paycheck to paycheck. They do not have much in savings for the down cycle. According to a poll by Bankrate done this year, 24% of Americans have no emergency savings. The use of food stamps in the USEconomy is staggering. According to the most recent data, 42.6 million Americans are using some form of food stamps. Bringing in some perspective, the number of Americans using food stamps eclipses the entire population of Canada, which is 35.8 million. See Lombardi Letter (HERE).

◄$$$ CHINA BUYING UP WORLD’S PORTS AFTER ANNOUNCING WHAT IT CALLS BLUE ECONOMIC PASSAGES FOR DEVELOPMENT OF UP TO FIVE OCEAN PASSAGE ROUTES. $$$

In 2016, Greece signed a EUR 368.5 million deal to sell the operator of Piraeus port to the Chinese shipping group COSCO. The acquisition has been a success for both the Chinese side and the Greek side, as the Port has expanded dramatically and is being more efficiently run by the Chinese side. China spent over $9 billion in 2016 buying up seaports. Recently the policy is accelerating with China purchasing over $20bn in 2017. Consider that the Orwellian concept of Oceania as being coopted gradually by China, as they already have a few years in progress in developing the Eurasia concept.

Several months ago, China put forward plans for three ocean-based Blue Economic Passages, designed to connect Asia with Africa, Oceania, Europe, and beyond. It is an aggressive bid to advance maritime cooperation under the Belt & Road Initiative. The China-Indian Ocean-Africa-Mediterranean Sea blue economic passage will run westward via the South China Sea to the Indian Ocean, and link with the China-Indochina Peninsula Economic Corridor, and connect with the China-Pakistan and Bangladesh-China-India-Myanmar economic corridors. The China-Oceania-South Pacific passage will run southward via the South China Sea into the Pacific Ocean, while another economic passage is also envisioned linking Europe via the Arctic Ocean.

Four separate initiatives are set for Malaysia, with Chinese company investments scheduled for the $7.2 billion Melaka Gateway, the $2.84bn Kuala Linggi Port, the $1.4bn Penang Port, and the $177 million Kuantan port projects. Ningbo Zhoushan Port plans to invest $590 million into the Kalibaru project, an expansion of Tanjung Priok, in Indonesia. See China Money Report (HERE).

◄$$$ H.N.A. TO PURCHASE CONTROLLING STAKE IN RIO DE JANIERO AIRPORT… THE SAME H.N.A. GROUP BOUGHT A MAJOR CONTROLLING STAKE IN A FRANKFURT AIRPORT IN GERMANY… THE GIANT IS VERY AGGRESSIVE IN DEAL MAKING. $$$

China’s HNA Infrastructure conglomerate just announced acquisition of a controlling 51% stake in Brazil’s second busiest airport in Rio de Janeiro. The price tag was CHY 108 million. The Rio de Janeiro international airport recorded 17 million passengers in 2016. The annual revenue of 2016 was 1.2 billion Brazilian real, but the net loss was at 351 million real. The entire Brazilian Economy is reeling in decline.

The purchase was made between HNA Infrastructure and Brazilian engineering group Odebrecht, which had controlled 51% of the stock in Rio de Janeiro Aeroportos SA (RJA). The remaining 49% stake is controlled by Singapore Changi Airport Group. The Chinese company also plans to invest CHY 2.16 billion to pay for the airport’s licensing rights. The move marks the latest purchase by HNA Group after it acquired a 82.5% stake in the Frankfurt-Hahn Airport in March. According to Caixin, the group has announced over $40 billion in acquisitions and investments overseas, making the group one of China’s most aggressive dealmakers in the global market. See Peoples Daily Online (HERE). Next China will decide who comes and goes to Rio, to some extent. Expect some USGovt assassins to slip through, since they are too easily hidden in the crowd.

◄$$$ VENEZUELA’S NATIONAL OIL COMPANY IS ON THE VERGE OF FAILURE… THEIR ENERGY STRUCTURE IS BROKEN, AND TECHNICAL EXPERTISE IS LACKING… SHORTAGES ABOUND IN GASOLINE AND DIESEL… AMAZINGLY, HUGE VOLUMES OF OIL, GASOLINE, AND DIESEL ARE IMPORTED… THE COUNTRY LACKS CASH TO PAY FOR OIL SITTING IN TANKERS OFF THE COAST, WHERE DAILY FINES BUILD UP… CHAOS REIGNS SUPREME… THE PDVSA DEBT HAS RISEN PARABOLICALLY, RAISING THE SPECTER OF DEBT DEFAULT… FOREIGN PARTNERS ARE BACKING OUT… IF THE STATE RUN OWN COMPANY SUFFERS DEBT DEFAULT, THE MADURO REGIME WILL COLLAPSE. $$$

The economic, political, and social situation has reached a breaking point in Venezuela, where the violent revolt gathers momentum. Fully 96% of foreign currency earnings come from oil industry, almost no other exports visible. With the chronically low oil prices, income has fallen more than half. Worse still, oil production has also dropped, aggravating the problem. On July 7th, the Venezuela oil basket was trading around $42.67 per barrel while Brent oil was trading at $46.71 per barrel. Since 2014, Venezuela oil basket prices have dropped by over 50 percent. This crude oil is sold on the international market at a price lower than the Brent oil or West Texas oil, due to its greater viscosity. The average spread price between Brent oil and Venezuela oil has been $9 a barrel since the beginning of 2017. The heavy Venezuelan oil is harder to process, and more loaded with impurities. In addition to having low quality oil, their production costs are relatively high. The highest is Britain, where North Sea operations are difficult and costly.

Paradoxically, Venezuela is suffering gasoline shortages despite having the world’s largest oil reserves. The proven oil reserve in Venezuela is recognized as the largest in the world, totaling 302 billion barrels. Venezuelan refineries are operating significantly below operational capacity, a result of reduced investment and poor maintenance. A nasty backlash has occurred. Technical expertise has vanished to some extent, after many highly qualified personnel from PDVSA (national oil company) who rebelled against Hugo Chavez’s regime in 2002 were fired. They now work in various other countries, such as Colombia, Mexico, Canada, and the USA. Falling output at refineries means that Venezuela needs to import gasoline, further squeezing the national budget with higher trade deficits. Refineries are currently working at less than 40% of average 2016 levels. Hold onto your seat for the next fact. The state run oil company PDVSA is importing between 100 and 150 thousand barrels per day of gasoline, and between 80 and 90 thousand barrels per day of diesel.  Part of this imported oil is to dilute the heavy oil, like from Nigerian sweet crude imports, thus rendering the Venezuelan oil exportable.

Venezuela’s daily demand for gasoline and diesel are 225 and 170 thousand barrels respectively. Several tankers are waiting off the coast of Venezuela to discharge cargoes, while PDVSA has difficulties in paying their shipping bills. The result is a penalty of $26,000 per tanker per day. An almost surreal paradox exists in the ravaged country that owns twenty refineries, five in Venezuela and 15 worldwide.

In the last ten years, Venezuela crude oil production has lost more than 500 thousand barrels per day. Their output data is an embarrassment. Just since the beginning of 2017, when the revolt grew in intensity, the country has lost 92 thousand barrels per day. Between May and June 2017, Venezuela’s oil crude production has decreased by 13 thousand barrels in a single month, based on the secondary sources used by OPEC. Chaos builds, adding to the likelihood of the oil company failure, if not collapse in the regime in Caracas. As the national oil company goes, so goes the nation. As colleague Ursel often cites, the official stealing rights will go away. The thugs in power will scatter when they can no longer steal the national assets.

Venezuela crude oil exports to the United States fell to 491,340 barrels per day in June, the lowest level in 14 years. The number of cargoes shipped by PDVSA and its joint ventures to the United States has decreased in May from 42 to 29 crude cargoes. When compared with the Venezuelan exports to the United States in June 2016, the decrease was 25 percent. The United States is the primary market for Venezuela’s crude oil exports, with Venezuelan oil representing 9% of total US imports. Only Canada, with 41% of US imports, and Saudi Arabia, with 14% of US imports, have a larger share of the US market.

The foreign factor is crippling. Venezuela produces 40% of its crude in joint ventures with foreign companies, where PDVSA maintains 51% share or more. If Venezuela succeeds in nationalizing the joint ventures, Venezuelan oil production will likely decline at an even faster rate. Until today, PDVSA has used the joint ventures for two purposes: to increase oil production and to reduce its credit exposure. These measures have worked to enable PDVSA to pay its bond obligations. Any foreign oil company will obviously hesitate to invest in the Venezuelan oil sector. The ruling regime has been busy in seizing foreign corporate assets. Day after day, the PDVSA financial situation worsens. In 2006, the PDVSA financial debt was around $3 billion. Only 11 years later, its debt has reached $44 billion, with another $20 billion to be added for non-supplier and services payments. A total default of PDVSA could potentially lead to a complete crash in oil production, a dreaded scenario for the country, and for the dictatorship in power under Maduro. See Business Insider (HERE).

◄$$$ THE CRUDE OIL PRICE HAS FALLEN BELOW THE $50 MARK, AS BANK ANALYSTS CUT PRICE FORECASTS… THE WALL STREET ENERGY PORTFOLIOS ARE SUBJECT TO ANOTHER ROUND OF ENORMOUS WRITEOFFS AS LOSSES… OPEC IS SEEN TO HAVE NO TEETH, A DISORGANIZED BUNCH OF SELF-INTERESTED RAGTAGS LOCKED IN A DESPERATE CONDITION. $$$

Oil prices have fallen as global oversupply encouraged several banks to cut their forecasts for crude for this year and 2018. The Iran oil supply is the big factor at the margin, well along in coming to market after the sanctions have ended. The oil price remains steadily under the important $50 level. Harry Tchilinguirian is head of oil strategy at French bank BNP Paribas. He told the Reuters Global Oil Forum, “The fundamental mood has taken a turn for the worse.” Simply put, powerful in its effect, the consensus mood is sufficient to keep the crude oil price under $50, the magic mark. BNP Paribas slashed its forecasts for Brent oil by $9 to $51 a barrel for 2017, and by $15 to $48 for 2018. Barclays also cut its 2017 and 2018 Brent forecasts to $52 a barrel for both years from $55 and $57 respectively. Crude prices are about 18% below their 2017 opening price levels, despite a deal led by the Organization of the Petroleum Exporting Countries to cut production from January. The OPEC initiative is vacant, without gusto, and proof that the dying OPEC cartel has no teeth. They are a desperate bunch, facing deficits all, unaccustomed to fighting for survival. Many Arab oil monarchies will fall in the next several months and couple years. See Reuters (HERE). Next in view is the Natural Gas Cartel serving as backbone to the Eurasian Trade Zone. It will fill the void created by OPEC. It will set the tone in the energy world.

◄$$$ TAKE A TOUR OF THE ARAB GULF REGION AND REVIEW SEVERAL ITEMS WITH RESPECT TO THE SAUDI/UAE INSANITY… THE TENSIONS ARE RELAXING, WHILE THE WINNERS ARE QATAR AND IRAN… THE LOSERS ARE THE TWO PRINCES BEHIND THE SEETHING CONFLICT. $$$

The king of Saudi Arabia plans to visit Russia. They will bring the relationship to a new phase. The Saudis are begging as they seek new protector and benefactor to continue the pilferage of their national wealth. The Russians will engage the Saudis, use them, then discard them as garbage at the appropriate time. See Strategic Cultures (HERE). The Russians and Saudis signed a preliminary agreement on a $3.5 billion arms deal. The Saudis no longer comply with the showtime dog & pony displays by the USGovt. No more shell games with weapon purchases, or else they do not want second best weapons. The deal might simply be for the AK-47, best known automatic rifle. Notice that the Saudi Kingdom lusts for technology transfer and for Russia to manufacture some of the equipment in Saudi-land. See Middle East Monitor (HERE).

Qatar has not been cooperating with the Saudi’s attempt to harm Iran by isolating Qatar, which the USGovt clowns approve. They are deeply disturbed in Washington, yet more foreign policy blunders. Doha has made independence from Riyadh a hallmark of its foreign policy. The reality is that Qatar and Iran share the world's largest natural gas field, called North Dome by Qatar, and called South Pars by Iran. The Qatari complex for LNG is vast, shown below. It will continue operations without interruption. Coming is the Petro-Yuan and tensions toward war with Iran. It will not happen, but rather co-existence, as cooler Arab heads will prevail. See Russia Today (HERE).

The tensions surrounding Qatar and the Gulf Arabs continue within a strange feud. Next comes the reduction in those tensions. From 13 demands down to six principles, it is clear that Mohammed bin Salman (MbS) and Mohammed bin Zayed (MbZ) and their adolescent guns-blazing approach against Qatar was a blunder. The most to come from all the high jinks play is two new acronyms for two clown players in Arab garb acting out their supposed royalty, MbS and MbZ. The backfire will be very considerable. In the Saudi-Qatar spat, the clear winners are Qatar and Iran, while the princes who instigated the conflict lose face. See Middle East Eye (HERE).

In the Saudi-Qatar spat, the clear winners are Qatar and Iran, while the princes who instigated the conflict lose face. The author from Moon of Alabama did not mention that both Saudi and UAE are broke. The attempts at leverage will fail. The Saudis could actually suffer a regime failure if China opts out of buying their oil. At worst China would just cut back like 10% on volume purchases, which would cause pain in the SA Kingdom. Coming soon is RMB-based oil sales from the Gulf Region, a very big plate of putrid babaghanoush. Expect a huge impact on USDollar, not its value, but rather its continuation and perceived integrity. Look closely at China. They are forcing the Saudis to accept RMB, the threat ongoing to purchase crude oil from Russia and Iran. The cards are in China's hands as the Petro-Dollar is collapsing fast. The United States is running helter skelter with its war machine, but China and Russia are not afraid. See Moon of Alabama (HERE).

The Saudis have many rivals in the Arab world, capable of creating embarrassment. The Egyptian Daily released documents that indicate clear support by Saudi crown prince for ISIL and al-Qaeda. The United States, Israel, and the Saudi Kingdom are the primary producers and supporters of organized terrorist guerrilla groups. The documents were revealed after a new report released by a British think tank cited how Saudi Arabia is the foremost foreign funder of Islamist extremism in the UK and other Western countries. See Fars News (HERE).

◄$$$ THE SAUDI ARMY DEFENSIVE LINE WITH YEMEN HAS COMPLETELY COLLAPSED, WITH SUPPLY LINES CUT OFF… THE PREDATORS (WITH USMILITARY BACKING) ARE IN DANGER OF BEING REPELLED IN A SHAMEFUL DEFEAT… THE NATIVES ARE WINNING WITH AID FROM IRAN. $$$

A leading political analyst claims that the Saudi Arabia Military defensive line in its southern borders with Yemen has completely collapsed. This comes two years after Riyadh launched the deadly war against its impoverished neighbor, which owns untapped energy riches. The vast oil & gas deposits in Yemen are the ugly secret not mentioned in the Western press, as in motive for war. In a recent interview with PressTV, Yemeni political activist and commentator Hussein al-Bukhaiti described the retaliatory attacks by the Yemeni army against the Saudi forces as very effective. He noted, “The main weakness of the Saudi-led coalition is its southern border. In the last several months, the Yemeni Army backed by the Ansarullah movement has used several tactics to attack behind the enemy lines. All these have resulted in cutting most of Saudi army’s supply line in the south. The Saudi army’s defense line in that area has completely collapsed.” Woe to the Saudis and their vicious ruthless violent warrior Prince. The Saudis have depleted most of their oil reserves, and lie about the remaining volume. They are predators, preying on their poor undeveloped neighbors in Yemen. See PressTV (HERE). The Jackass hopes the Saudis suffer a 100% wipeout with full retreat back home, where they might face an internal coup. They should also face war crime charges. Furthermore, the Saudi Kingdom has barred BBC reporters from Yemen. See Middle East Eye (HERE).

◄$$$ WINDS SHIFT FOR EMERGING MARKET DEBT, A SIGNAL OF CHANGES FOR THE USFED MONETARY POLICY… EASY MONEY POLICY MEANS FLUSH FUNDS FOR HIGH RISK NATIONS AND JUNK BONDS… BIG OUTFLOWS JUST HIT THE EMERGING MARKET NATIONS WITH SOME SHOCKS. $$$

Emerging Market debt funds had a phenomenal first half of 2017, with record inflows and solid returns. They benefited from accommodation at the USFed with their hyper monetary inflation. The momentum has been lost and that sentiment will most likely deteriorate even further in the coming months. Expect deep withdrawal pain to come finally. The biggest Emerging Market debt Exchange Traded Fund just had its largest outflow in its history for a single week. In the past week, investors withdrew $826.8 million from the biggest EM debt ETFund run by JPMorgan. The outflows were the largest withdrawals in the history of the $11.5 billion fund. Hard currency debt of developing nations and their companies have lost more than 1% since June 26th, when benchmark borrowing costs in Europe and the US surged. The estimated USD-based debt for the entire collection of Emerging Markets is in the neighborhood of $8 to $12 trillion. It is all at risk, primarily from fallen local currencies, but in the immediate from rate hikes and bond market shifts. Their currencies are all down 30% or more versus the USD. The extend & pretend by the banks holding their $trillions in debt will not continue forever.

The EM nations are victims of the rising USDollar and more recently shaky bond markets. Rate hikes by the USFed will slam the weak elements. Take the commonly heard mumbo jumbo about macro economic developments, weakening EM economies, debt downgrades abroad, and selloffs in US and EuroBond markets. The reality is that with liquidity drying up in bond markets, the weakest elements are the junk bonds in the US, and Emerging Market debt in the global picture. See Bloomberg (HERE) and Wall Street Journal (HERE).

◄$$$ FORMER DIRECTOR OF THE USMINT TO HOLD EMERGENCY GOLD CONFERENCE TO DISCUSS WHY CITIZENS SHOULD OWN GOLD… THE DOMESTIC AND INTERNATIONAL FACTORS ARE COMPELLING, DURING A TIME OF GLOBAL CRISIS ON MANY FRONTS.  $$$

The organization called US Money Reserve announced last week an Emergency Gold Conference will be held at a secure undisclosed location in Austin Texas. This special event, invitation only, will be led by its President Philip Diehl. At the conference, Diehl will address issues such as global terrorism, cyber attacks, unstable world leadership, the national debt crisis, and the effects of the last financial crisis. In addition to discussing the current state of worldwide uncertainty, Diehl will reveal his new US Gold Report. This exclusive report will reveal the top reasons for citizens to own gold, covering both domestic and international issues. Diehl brings his unique experience and authority as a former USMint director to this timely report. He stated, “Many people do not realize that the price of gold is impacted by a variety of issues making headlines every day. Through this special report, I want to arm people with the best knowledge possible so they can make the best decision possible for themselves and their families.”

Philip Diehl is considered one of the most accomplished USMint Directors in history. He is also president of US Money Reserve, one of the world's largest private distributors of US and foreign government issued gold, silver, and platinum legal tender products. He is widely considered a credible and trustworthy source for the precious metals market. Diehl has written widely on the precious metals topic, and is often quoted by major publications. See Daily Economist (HERE).

◄$$$ MASSIVE FAILURE IN $2 BILLION PRIVATE EQUITY FUND, WHICH COLLAPSED TO ALMOST ZERO IN THE WORST PE-FUND COLLAPSE EVER… THE DECLINING OIL SECTOR WAS THE PRIMARY CAUSE, AS IT KEEPS ON WRECKING. $$$

Investors who had plowed $2 billion four years ago into a private equity fund have suffered a calamity. They might receive at most pennies on every dollar invested. The fund had also borrowed $1.3 billion to lever up the investments. Their fundraising and investing started in 2013. Houston-based EnerVest manages the failed fund. This could be the first time ever that a private equity fund larger than $1 billion suffered a near total loss. The lenders to the fund are in talks to negotiate a takeover of the fund’s assets, in a salvage effort by trustees. Wells Fargo is leading the negotiations, one of the creditors involved. See Wolf Street (HERE). A client watching this development remarked that this is the first $2 billion dollar private equity fund to go belly up. The failure was due to the collapsing oil market. Most of the investors were pension funds, two of which were some of the largest in Canada and Florida.

◄$$$ MONEY MANAGERS ARE BUSY UNLOADING THEIR GOLD HOLDINGS, UNAWARE THAT THE KING DOLLAR IS FAST LOSING ITS GLOBAL PRIMARY POSITION… THEY MIGHT MARK A NEW BROWN BOTTOM. $$$

The net long position in gold futures and options dropped 51 percent to 37,776 contracts for the week ended July 3rd, according to Commodity Futures Trading Commission data. A contributing factor is the many private hedge funds, who follow the trend but with a gigantic blind spot. They ignore the end of the King Dollar Era. Momentum players have to be some of the dumbest guys in the room. They cannot foresee past next week on global shifts of power made evident by non-USD platforms and sovereign ownership of gold.

◄$$$ GOLDMAN SACHS PARTNERS CASH OUT… WITH LESS THAN 5% OF THE BANK STOCK SHARES OWNED BY ITS PARTNERS, GOLDMAN SACHS IS MORE OF A PUBLIC COMPANY THAN EVER… SIGN OF POSSIBLE COLLAPSE COME TO MIND. $$$

At this time, less than 5% of the Goldman Sachs outstanding shares are owned by its partners. The corrupt club of fraud kings is more of a public company than at any other time. Shares of Goldman Sachs owned by its 450 partners have fallen to 4.8% of the total. It is the lowest level since its initial public offering 18 years ago. The implication is not clear, but if the USGovt handlers wish to scuttle the GSachs crime center for the purpose of executing a $trillion public theft, the timing is right. See FNLondon (HERE).

◄$$$ NEW AGREEMENT WILL ALLOW US-RICE EXPORTS TO CHINA, A TRULY ENORMOUS RICE CONSUMER… INSPECTIONS REMAIN AN ISSUE… IRONY ABOUNDS, AS TRADE FRICTION CONTINUES BETWEEN THE TWO GIANTS. $$$

China has agreed to allow imports of rice from the United States for the first time. The agreement gives US farmers access to the world's biggest rice consumer. Their intake is staggering large, as China imports about 5 million tons last year. The deal follows trade talks between the two countries that resulted in little progress on an assortment of issues. While China opened its rice market in 2001, a lack of protocols on pestilence and plant diseases effectively stopped imports taking place back then. The organization representing the US rice industry said the new agreement was the most complex of its kind, and set strict standards for US exporters to protect against the introduction of certain pests to China. USA Rice added it would work with the USDept Agriculture to make sure the industry complied with the rules, and carries out thorough inspections. A curious agreement and situation really. It is like the United States importing hamburgers, french fries, and pizza to the country. See BBC (HERE).

◄$$$ UNITED STATES, MEXICO, AND CANADA ARE SET FOR SEVEN ROUNDS OF NAFTA TALKS BEGINNING IN MID-AUGUST… THE TRADE DEAL HAS LASTED OVER 20 YEARS, WITH ZERO BENEFIT TO THE UNITED STATES EXCEPT SLIGHTLY LOWER VEHICLE COSTS… LOST JOBS ARE IN THE MILLIONS TO THE USECONOMY IN A SELLOUT TO THE US-LABOR MARKET… NAFTA HAS BEEN GOOD FOR CORPORATE PROFITS, AND A DISASTER FOR US-WORKERS. $$$
 

The first round of talks between the United States, Mexico, and Canada on revamping the North American Free Trade Agreement (NAFTA) will take place in Washington from August 16-20. John Melle, a veteran of North American trade policy and assistant US trade representative for the Western Hemisphere, would lead the negotiations of NAFTA on behalf of the USGovt. Negotiations to upgrade the accord that underpins over a $trillion of trilateral trade between the United States, Mexico, and Canada are due to begin from August 16th at a pace that was described as very aggressive by one of the Mexican officials.

US Trade Representative Lighthizer has said hopes are that the negotiations could be wrapped up by the end of the year. Despite the quick timeframe, no intentions ride to forge a bad agreement. President Trump has pushed for a renegotiation of NAFTA, threatening to abandon it if he cannot rework the accord to the benefit of the United States. He argues it has fueled a trade deficit with Mexico and cost thousands of US jobs. Full agreement with the Jackass, except the job losses are in the millions. The job drain continues with both GM and Ford opening new plants in Mexico, and cutting thousands of jobs just in the last several months. See BNN (HERE).

◄$$$ LARGE US-BASED CORPORATE BIGGEST PENSION PLANS FACE A $382 BILLION FUNDING GAP… THE BIG S&P 500 COMPANY PENSIONS ARE A WRECK… MANY BIG NAMES ARE ON THE LIST OF UNDER-FUNDED PENSIONS LIKE INTEL, DELTA, PROCTOR & GAMBLE AS WORST IN SHAPE. $$$

Retired workers who rely on their company pension plans to fund their retirement are surely in for a shock. Of the 200 biggest defined benefit plans in the list of elite S&P500 companies based on assets, 186 are not fully funded. They lack the invested funds to take care of current and future retirees, to honor obligations. The situation worsened for more than half of these companies, in the passage of time from fiscal 2015 to 2016. A big part of the reason is the poor returns from their assets in the ultra-low interest rate environment, as dictated by the USFed. The central bank favored the big US banks, while doling out punitive yields to the pension and insurance sectors. The effect has been to leave a gigantic gap of $382 billion for the top 200 pension plans. The big names are quickly recognized, like Intel, Delta Airlines, Delphi Automotive, American Airlines, Anadarko Petroleum, and Proctor & Gamble. These companies all have under 60% pension assets relative to their pension obligations.

Any workers covered by traditional defined benefit plans, which pay a lifetime annuity (based on years of service and salary) has been declining for decades. Most companies have shifted to defined contribution plans such as 401k plans. But each time a pension plan is terminated canceled or altered, thousands of workers are affected. This theme has been covered regularly in the Hat Trick Letter, since such a disaster. See Bloomberg (HERE).

## GERMANY RESISTS WASHINGTON FASCISTS

◄$$$ GERMAN RUSSIAN TRADE SURGED IN 1Q2017 DESPITE MERKEL'S POSTURING AND US-EU SANCTIONS… BILATERAL TRADE IS SET TO GROW QUICKLY IN RECOVERY OF THE LOST BUSINESS IN THE LAST THREE YEARS… GERMANY WILL NEXT IGNORE THE RUSSIAN SANCTIONS, A PROCESS ALREADY BEGUN… THE GERMAN ECONOMY GREW AT A SLOWER PACE IN JULY. $$$

German-Russian trade is up 27% over last year in first quarter of 2017. In the first four months of 2017, trade growth regained much of what was lost since the Russian sanctions were imposed, according to the Eastern Committee of the German Economy. This comes after a significant decline of 43% between 2012 and 2016. At the same time, all German exports continued to grow steadily and impressively. Total German export trade is near EUR 1.2 trillion. The bulk of the growth is with China. The share by Russia of the German goods exports has cut in half since 2012 to almost 1.8 percent. In the ranking list of the German export countries, Russia fell back to 16th place after the painful and scurrilous decline over controversial means.

In 2012 the German exporters in Russia reached their peak at around 38 billion Euros, almost doubling since the year 2000 alongside high growth rates in the Russian Economy. The year 2014 then began the oil price collapse, coupled with the Russian sanctions ordered by the uber-fascist lords in the USGovt. The other consequence was two years of recession in Russia. The damage to Russian reserves is exaggerated by the US officials, in self-aggrandizement. The Ruble currency depreciated drastically, even as the crude oil price fell hard. The Chinese RMB currency also fell, making the effect in Russia-China energy trade more facilitated. The cost of imports from Germany were made much more expensive for Russian customers. In effect, Russia was hit twice, as sanctions cut into trade and oil income fell. Expect the Russian sanctions to be ignored on the next stage.

After stabilization at the depressed level, now a strong increase in exports has begun in earnest. The deep decline since 2012 has to be taken into account with the one quarter rise of German exports to Russia now reported for 2017. Further recovery of bilateral trade is widely expected. Trade could enjoy double digit growth in 2017, as expressed by Wolfgang Buchele, Chairman of the German Press Agency. This presupposes that the oil price and the Ruble remain stable. The Jackass fully anticipates the German industrial captains will ignore the Russian sanctions, as the government leaders seem publicly ambivalent about keeping them in place, let alone enforcing them. The effect will be greater bilateral trade growth. See Fort Russ (HERE).

Germany's private sector grew at a slower pace in July, according to the Markit flash composite Purchasing Managers Index (PMI). The proximal cause was weaker activity due to factory closures in the summer months following a sustained period of strong growth. The PMI tracks the manufacturing and services sectors, which account for more than two thirds of the German Economy. The index fell for the second consecutive month to a six-month low of 55.1, but still remained well above the 50 mark that separates growth from contraction. See UK Yahoo Finance (HERE).

◄$$$ THE E.U. COMMISSIONERS ARE WORRIED SICK ABOUT LACK OF UNITY, WHICH CAN BE TRANSLATED AS IGNORED SANCTIONS TAKING ROOT… THEY ESSENTIALLY CALLED WASHINGTON ON THE CARPET FOR ACTING UNILATERALLY, WHICH WILL CAUSE SEVERE PROBLEMS, POSSIBLY FRACTURE IN THE UNION. $$$

The European Union sounded an alarm about moves in the USCongress to step up moronic US sanctions on Germany and Russia. The EU commissioners worriedly urged the Washington NeoCons to keep coordinating with its G-7 partners. In a statement the Commission in Brussels warned of possibly wide and indiscriminate unintended consequences, especially on the EU's efforts to diversify energy sources away from Russia. They warned that adding unilateral measures by the United States could undermine trans-Atlantic unity. The formal statements included the following.

(1) “We highly value the unity that is prevailing among international partners in our approach towards Russia's action in Ukraine and the subsequent sanctions. This unity is the guarantee of the efficiency and credibility of our measures.”

(2) “We understand that the Russia/Iran sanctions bill is driven primarily by domestic considerations.”

(3) “As we have said repeatedly, it is important that any possible new measures are coordinated between international partners to maintain unity among partners on the sanctions that has been underpinning the efforts for full implementation of the Minsk Agreements.”

(4) “We are concerned the measures discussed in the USCongress could have unintended consequences, not only when it comes to Trans-Atlantic/ G-7 unity, but also on EU economic and energy security interests. This impact could be potentially wide and indiscriminate, including when it comes to energy sources diversification efforts.”

(5) “Sanctions are at their most effective when they are coordinated. Currently our sanctions regimes are coordinated. As a result their impact on the ground is increased and through coordination we are able to avoid surprises, manage potential impact on our own economic operators and address collectively efforts to circumvent such measures. Unilateral measures would undermine this.”

(6) “We therefore call on the USCongress and authorities to engage with the partners, including the EU, to ensure coordination and to avoid any unintended consequences of the measures discussed.”

Quick translation of each quote, since the EU Commission will never speak directly of their concerns, worries, and fears. They are a fascist dictatorship office. (1) The unity of the sanctions is disintegrating and might not even exist anymore. (2) Your US domestic politics are insane and have resulted in great disruptions to the European member states, without consideration of the impact or effects. (3) Best to talk to us before making more stupid sanctions decisions, and by the way, the Americans are not invited to any Minsk Agreement discussions over the Ukraine situation. (4) The US sanctions attempts against Germany could result in deep economic damage if implemented. (5) There is absolutely no coordination among the fascists in Washington and the fascists in Brussels, and furthermore the unilateral action by the USCongress will cause severe repercussions since they were done in absurd manner and under surprise, whereas nobody believes the Russian blame story anymore. (6) You maniacs in Washington are idiots and power hungry fools who are interfering with EU internal affairs and causing big headaches.

Furthermore, Germany has already warned of possible retaliation if the United States moves to sanction German firms involved with building a new Baltic pipeline for Russian gas supply to the mammoth German industrial sector. EU diplomats are concerned that a German-US dispute over the Nord Stream 2 pipeline being built by Russia's state-owned Gazprom could complicate efforts in Brussels to forge an EU consensus on negotiating with Russia over the project. The reality is no EU consensus exists at all among member states. They are fracturing. See Zero Hedge (HERE) and Reuters (HERE).

◄$$$ A CHOICE FOR EUROPE IS FOR MORE COSTLY US-SOURCED LIQUIFIED GAS VERSUS CHEAP RUSSIAN PIPELINE GAS… WORSE, THE AMERICAN SUPPLY IS INADEQUATE FOR EUROPEAN NEEDS, SURELY NOT SUFFICIENT FOR GERMAN NEEDS… CURIOUSLY, THE USCONGRESS IS TARGETING RUSSIAN MARITIME OLIGARCHS WHO ARE NOT POPULAR WITH THE COMMUNIST PARTY WHO SEEK TO IMPEDE PRIVATIZATION. $$$

If the macro-economic impact of the new sanctions on Russia will be minimal, the same cannot be said of their political impact. They pose a dilemma for Europe. The new sanctions package will not have the big impact on the Russian Economy that some are expecting. Its economy has overcome the previous far more severe sectoral sanctions which were imposed on Russia in July 2014, and the collapse in oil prices which took place in the second half of that year. The result was only a short and shallow recession, out of which Russia is now rapidly emerging. In fact, some forecasts call for growth this year which will be enough to wipe out all the output loss during the recession, though it might come up a little short.

The new sanctions in economic terms do not add significantly to the sanctions which were imposed in 2014. Apart from the German targets, they appear intended to target the personal assets of super-wealthy Russians, a deeply unpopular class still wrongly referred to as oligarchs. Their power in Russia is long gone. The sanctions seek to impede Western and specifically US participation and investment in certain of Russia’s industries. Here is the curious factor at work. The new sanctions seem intended to obstruct the privatization of certain Russian companies, including the Russian maritime tanker fleet. The initiatives from the USGovt will not have any serious macro-economic impact on Russia, but the USCongress has aligned itself with the Russian Communist Party. They strive to impede Russian privatizations and to target Russian oligarchs. See Duran (HERE).

◄$$$ TRAINS BRING MORE GERMAN PRODUCTS TO CHINA, AS TRADE HAS INCREASED BY 13.4% ANNUALLY… A KEY LINK IS FROM DUISBERG GERMANY TO HANGZHOU CHINA, THE FAST TRACK. $$$

Trains bring more German products to China. Railway freight is bringing increasing volumes of German products to China, according to Chinese customs authorities. A shipment of baby formula and beverages from Germany arrived at a transborder e-commerce zone in Hangzhou last week. This is the 58th shipment received by Dolphin Cross-Border Technology, an e-commerce company. “German goods are thought to be durable. Dinnerware, children's car seats, water purifiers, and baby formula are very popular with Chinese consumers,” said company manager Hu Xiaoxiao.

Hangzhou customs said German goods are some of the most diverse imported goods that are observed. Since May last year, over CHY 64 million (=$9.4 million) worth of German products have been imported via the China-Europe rail link, about 37% of the total amount of imported products via the route. The goods arrive in Yiwu, then travel to the neighboring cities of Hangzhou and Ningbo before being distributed nationwide. The train route linking Duisburg Germany with Yiwu requires 14 days for passage, about half the time needed for sea transport.

According to the General Admin of Customs, trade volume between China and Germany from January to May was CHY 434.5 billion (=$63.9 billion), up 13.4% year-on-year. Import volume was valued at CHY 247.3 billion (=$36.4 billion), up 12.4%, while export volume was CHY 187.2 billion (=$27.5 billion), up 14.7 percent. See China Daily (HERE & HERE).

◄$$$ GERMANY IS ADDICTED TO RUSSIAN GAS, OR BETTER STATED AS CONSTRUCTIVE INTER-DEPENDENCE BETWEEN THE TWO COUNTRIES… THE NORD STREAM 2 PIPELINE WILL ADD NATGAS SUPPLY VOLUME, DISTRIBUTE SUPPLY TO OTHER COUNTRIES VIA GERMANY, AND ADD EFFICIENCIES… GERMANY WILL SOON RECEIVE 50% OF ITS NATGAS SUPPLY FROM RUSSIA. $$$

Not far from Greifswald, Chancellor Merkel wants a $10 billion pipeline expansion built to increase the amount of Russian natural gas imported from Siberia, more than 3000 kilometers (1864 miles) away. The project, led by Russian Gazprom PJSC, is intended to bolster German confidence that it has enough gas to underpin an unprecedented transition from the coal and nuclear plants, which are being step by step shut down. The Germans strive toward a future dominated by renewable energy. But the plan has opponents, both close to home and further afield. The sources for Germany are limited, surely not from the United States. Already the biggest gas user in Europe, Germany obtains about 40% of its needs from Russia, the world’s largest exporter, according to industry consultant Wood Mackenzie. That dependence is only going to increase by 2025 to more than 50%, especially with output from the Netherlands, Germany’s western neighbor, set to drop in coming years.

The Gazprom project called Nord Stream 2 will allow for deliveries elsewhere in Europe, making Germany a significant hub for distributions across the continent. Russia already supplies more than 20 countries with gas used to run power plants, heat homes, and run factories. The existing link was commissioned in 2011 and runs for 1224 kilometers under the Baltic Sea from Vyborg Russia, to Lubmin Germany. It is able to carry 55 billion cubic meters of gas, or two thirds of German gas demand. The pipeline expansion will double the volume. Wood Mackenzie analyst Gergely Molnar stated, “Nord Stream 2 is not only about meeting additional demand. It is also about adjusting gas supplies towards the most cost-efficient routes.” The USGovt wishes to interfere, by adding cost, reducing assured supply, and introducing inefficiency. Thus the German Govt opposes the US concepts and interference.

Transporting gas through Nord Stream to Germany is about 40% cheaper than through land-based pipes via Ukraine. Russian gas at the German border cost $5.07 per million British thermal units (BTU) in May, up 28% from a 12-year low in September, but still 45% below its 10-year average, according to International Monetary Fund data. Germany, the United Kingdom, France, Belgium, and the Netherlands will likely benefit from lower prices. Gazprom would also avoid transit fees paid to use pipelines in Ukraine and Poland. The company plans to reduce flows via Ukraine after 2019. Natural gas may provide 20% of Germany’s power in five years, almost double current levels, according to HSBC Holdings estimates. See Bloomberg (HERE).

◄$$$ GERMANY, LARGE EUROPEAN FIRMS, LARGE AMERICAN FIRMS, ALL IGNORE THE USGOVT SANCTIONS AGAINST RUSSIA… ANOTHER CORRECT JACKASS FORECAST FROM YEAR 2015. $$$

Consider the German energy supply with respect to Russia. The plunge in the crude oil price has worked together with other factors to make firm the Gazprom grip on Germany as a key supplier. Russian gas exports to Germany rose to record levels last year. Germany obtained 55% of its gas imports from Russia in 2016. In fact, despite the sanctions, Germany has proved to be Russia’s most loyal natgas customer even during the last two years. See Bloomberg (HERE).

Consider the European corporate giants with respect to Russia. The sanctions do not apply to European major energy firms. British Petroleum (BP) and Rosneft signed a series of pacts toward refinery functions. The deal is worth $700 million. BP is working to maintain control of the Caspian oil field. See Market Watch (HERE) and Sputnik News (HERE). French oil giant Total has sold its stake in a German refinery to Rosneft. See Market Watch (HERE). Gazprom is working with Royal Dutch Shell. Gazprom is building a global strategic alliance with energy major Royal Dutch Shell that will include asset swaps and allow the Russian gas giant to penetrate new markets, its CEO told Reuters. See Reuters (HERE).

Consider the American corporate giants with respect to Russia. The sanctions do not apply to major American firms firms generally. McDonalds signed a second franchising deal in Russia. See Reuters (HERE). Ford Motors opened a $275 million engine plant in Russia. US carmaker Ford has a Russian venture, named Ford Sollers. It opened a $275 million engine plant, which will help make its Russian-produced vehicles less dependent on imported components and currency fluctuations. Ford Motors thus copies the business strategy used by German firms, to form Russian subsidiaries which supply directly to their domestic market. Ford aims to spend 60% of the cost of producing cars for the Russian market in the country itself by 2020, which help to qualify for benefits such as lower import duties on car components. See Reuters (HERE). Smith & Nephew acquired a Russian manufacturing business. See Market Watch (HERE). The Boeing 747 Jumbo airliner product line is boosted by a fat $7.4 billion order from Russia. See Bloomberg (HERE). Sanctions and saber rattling from the USGovt do little to halt the US corporations from importing Russian petroleum. See Zero Hedge (HERE). ExxonMobil continues to work with Russia on major projects, despite the fines and other obstacles. Having former CEO Tillerson as Secretary of State will help pave the way on deals. Exxon’s Russian exposure has surged as their long-term view outweighs the threat of sanctions. See Bloomberg (HERE & HERE). Schlumberger plans to pay $1.7 billion for a stake in a Russia driller. See Bloomberg (HERE).

◄$$$ THE GERMAN INDUSTRIAL OUTPUT WAS FAR SUPERIOR TO THAT OF ITALY IN THE LAST SEVERAL YEARS… THE COMMON EURO CURRENCY IS PARTLY TO BLAME, AS SOUTHERN NATIONS CANNOT COMPETE. $$$

## EURASIAN TRADE ZONE TOUR

◄$$$ THE LYING DOGS IN MAINSTREAM US-MEDIA ARE FINALLY GETTING A GRIP ON REALITY… THE HAMBURG G-20 MEETING TAUGHT THE WORLD THAT THE UNITED STATES NO LONGER MATTERS… THE FUTURE NETWORK IS THE EURASIAN TRADE ZONE… THE UNITED STATES IS NOT INCLUDED. $$$

The G-20 summit showed that the new Trump Admin’s heralded America First policy is best sold at home, where treason reigns and destruction of the nation has significant momentum from insider actions. The sale of his policy to foreign ears actually has resulted in America Alone, as in the United States isolated. The Jackass has had the US Isolation forecast in place for three years running. It is gaining momentum. In fact, isolation of the US lies directly ahead in visible terms. The process has already started, seen in numerous conferences and venues. The US is being accused of serious crimes against humanity on a regular basis, environmental contamination, human genetic alteration, legislated poisons, and endless war. The US with its promoted fascism is being rejected on the geopolitical stage, such as its fascist trade union concept. Its war tactics are being exposed. Its energy supply disruptions are being worked around. The US no longer has any prestige to claim. The new global leaders are China & Russia in commerce, infra-structure, diplomacy, constructive growth, technology, and geopolitics. The US is gone on leadership roles for all these important global elements. See MSN News (HERE).

◄$$$ TURKISH STREAM PROJECT REFLECTS GEOPOLITICS OF TODAY’S BATTLE OVER ENERGY PIPELINES… IT WILL BECOME A PART OF THE NATGAS CARTEL SYSTEM… THE GEOPOLITICAL ROLE OF NATGAS PIPELINES IS FINALLY BEING RECOGNIZED IN THE OPEN… THE WASHINGTON NEOCONS WILL PLAY A ROLE OF OBSTRUCTION, NOT PARTICIPATION… IT WILL EARN THE USGOVT ISOLATION. $$$

Commenting on Turkey's agreement with Russia's Gazprom on the Turkish Stream gas pipeline, Russian politician Nikolay Starikov touted the pipeline as a strategic project, important for the economic development of the greater region. Refer to the Eurasian Trade Zone. Last week, Turkey's state-owned crude oil and natural gas pipelines and trading company BOTAS and Russia's energy giant Gazprom reached an agreement on financing the Turkish Stream gas pipeline project within Turkey itself. The project is to continue in earnest. BOTAS General Director Burhan Ozcan said that the process of obtaining permits for the construction of the second branch of the Turkish Stream pipeline was going smoothly, without any pitfalls in his words. He summarized, ”We have already agreed with them [Gazprom] on this issue, but I cannot disclose the figures regarding in what percentage share we will do it.” The parties were in attendance of the XXII World Petroleum Congress. The United States did not attend, since busy with waging multiple wars, managing bond market rig machinery, and overseeing global genocide projects.

In an interview with the Russian news network Zvezda, Russian politician Nikolay Starikov emphasized the continued pressure by the USGovt to obstruct progress. He did not mention that Washington has lost its powerful grip, a mere paper tiger who lobs grenades and bullies the players. He painted a picture of geopolitical chess, using energy pipelines. The most recent in focus are of natural gas. He said that Turkish Stream and the Nord Stream 2 gas pipeline are not only “means for delivering hydrocarbons to this or that point of the world. It is about building geopolitical threads, which either connect or tear apart countries and continents. Washington has repeatedly put pressure on Russia. One of the factors of this pressure, as it is quite obvious today, is related to US liquefied gas supplies to Europe. This means that the Americans will pressurize everyone with whom Russia is trying to jointly build gas pipelines to deliver hydrocarbons to Europe. In particular, the United States could use allegedly objective situations in order to make Europe give up Russian gas supplies. Regarding the situation with Turkish Stream, this is not the first news when the construction of this gas pipeline is reportedly about to begin already tomorrow, but nothing goes on at the end of the day. I want you to understand that the Americans will pressure Turkey in this situation, offering them something else in exchange for a delay or, in general, the complete halt of the Turkish Stream project. Exactly the same situation will be in place with respect to Nord Stream-2. In a word, the world is now experiencing a period that can be called geopolitics of gas pipes.” See Sputnik News (HERE). Ankara is poised squarely to fully back the Turkish Stream Project. Also see Sputnik News (HERE). The United States will lose all pipelines battles.

◄$$$ RUSSIAN GAS EXPORTS TO EUROPE & TURKEY SURGED 12% YEAR-ON-YEAR… ALMOST EVERY COUNTRY SAW A RISE IN RUSSIAN GAS IMPORTS… CHINA PONDERS TAKING THE ROLE OF FINANCING NORD STREAM 2, JUST TO SCREW THE USGOVT NITWIT FOREIGN POLICY. $$$

Russian state energy major Gazprom has increased gas exports to Europe and Turkey to 102.9 billion cubic meters since the beginning of the year, marking a 12.3% increase from the same period a year ago. In particular, gas exports to Germany are up 16.7%, certainly not to be interrupted by any USGovt NeoCon stupidity. Austria saw a 77.2% rise in gas supplies from Russia, while the Czech Republic saw a 24.8% rise in imports from Russia. Even Slovakia saw a 25.8% increase. The giant Gazprom also reported an 18.8% rise in output, as no harm done by the nitwit US-led sanctions. Since the beginning of 2017 Gazprom has produced 248.8 billion cubic meters of natural gas year-on-year. Earlier this month, Gazprom CEO Aleksey Miller said the company would produce 450 billion cubic meters of natural gas in 2017. Gazprom expects exports to top 180 billion cubic meters this year.

The company plans to boost future supplies of natural gas by building additional pipelines to Europe and Turkey, as in full speed ahead. The Nord Stream-2 pipeline aims to double the existing capacity delivering natural gas to Germany and Northern Europe under the Baltic Sea. The project has faced multiple hurdles in the EU due to concerns over the market monopoly, compounded by USGovt sanctions aimed at firms investing in Russian gas & oil projects. See Russia Today (HERE). China may finance Russia’s natural gas pipeline to Europe. Talk about a gigantic thorn in the USGovt foreign policy centered upon sanctions and obstructions. The Chinese are determined to stymy all US stupidity on the geopolitical stage. See Russia Today (HERE).

◄$$$ THE TURKS JUST SIGNED A DEAL FOR RUSSIAN S-400 MISSILES… THE FLIP EAST FROM NATO STATION HAS BEEN PROFOUND SINCE THE FAILED US-LED COUP ATTEMPT LAST YEAR… MOMENTUM IS GATHERING FOR MORE WESTERN ALLIED NATIONS TO TEAM WITH RUSSIA, AS THE UNITED STATES IS SHAMED BY THE STAIN OF WAR… THE PRIZED INCIRLIK AIRBASE WILL SOON BECOME A BONE WON BY RUSSIA, AND SERVE AS OUTPUT TO PROTECT THE EURASIAN TRADE ZONE ACTIVITY BY SEA. $$$

More insults to the USGovt, as the Ankara leaders have pledged to purchase the S-400 missile system from Russia. It is the world’s finest defense system. The implications and repercussions are truly vast. See Bloomberg (HERE) and PressTV (HERE). Many are the impacts. The missiles could be used against NATO positions and EU targets. The Turkish Stream should progress on an expedited schedule, since the momentum is clearly with Russia. Advantage to the Russia-China gas cartel, with the Saudis and the Western cabal left hanging, outside looking in. NATO unity is threatened. The next step could be S-400s going to other key US allied nations, even Iraq and maybe to some OPEC players. The coveted Incirlik Airbase for all practical purposes has been rendered useless for NATO. Incirlik eventually will rent space to the Russian Military.

◄$$$ BULGARIA, SERBIA, AND HUNGARY JOINED THE TURKISH STREAM GAS PIPELINE PROJECT FROM RUSSIA, ALLOWING TRANSIT ROUTES, PAVING THE WAY FOR PIPELINE COMPLETION… THE EASTERN FRONT FOR THE NATO FENCE IS DISINTEGRATING… EASTERN EUROPE WILL NOT STAND IN THE WAY OF THE RUSSIAN ENERGY JUGGERNAUT, PERHAPS FOR FEAR OF LOSING ITS OWN GAS TUBE FLOWS. $$$

Bulgaria intends to sign an agreement with Serbia to transit natural gas through its territory via the Turkish Stream gas pipeline, as announced by Bulgarian Prime Minister Boyko Borisov. He also said that Bulgaria had previously signed a road map for 15.7 billion cubic meters of gas in supply. He stated, “Tomorrow, Bulgaria and Serbia will sign the agreement to thereby ensure the flow of 10 billion cubic meters from Bulgaria to Serbia.” Earlier, it was reported that Hungary and Gazprom signed an agreement to extend the Turkish Stream through Bulgaria and Serbia. Hungary will connect to the pipeline in late 2019. The Hungarian Govt believes building the pipeline on this route is most realistic, rather than running it through Croatia or Romania. All of Eastern Europe will eventually align with Russia. The holdouts for the USGovt and its moronic foreign policy team remain as Poland and Romania. See Pravda Report (HERE).

The flip by Bulgaria is a major blow to the idiots in the room managing Russian sanctions. They truly have dim wattage in the brain stem, expecting to obstruct the Gazprom juggernaut. The stupidity cannot be emphasized enough. The USGovt promises high price and low supply, expecting nations to sign up in support. Bulgaria was in the Washington pocket a year ago, no more. The US is losing ground on all fronts. This route via Bulgaria would bypass Romania, which is joining the NATO camp. Expect the backward nation to remain cut off and left begging economically. In my view the nations from East Europe going to the NATO, or already committed to NATO, are the dumbest of the group. Poland is also going to pay a heavy price for their anti-Russian stance. The Warsaw crew has been on the wrong side of history for over a century. The really laughable part is that Poland and Romania bought scrap metal USMilitary hardware, which cannot stand up to the Russian Military in the nearby regions. By the way, there is no Russian aggression, except in providing honest legitimate energy supply to nations that require it, and at the right price.

◄$$$ KAZAKHSTAN TO INVEST $20 BILLION ON TRANSPORT SECTOR OVER FIVE YEARS… THE NATION STRIVES TO BECOME A MAJOR EURASIAN TRANSIT NODE… CHINA MUST BE LINKED TO EUROPE. $$$

The Silk Road is being paved. Central Asian nation Kazakhstan is planning to invest more than $20 billion on its transport sector over the next five years. They have ambitions to become the main transit country between China and Europe on the new Silk Road. Their Deputy Minister of Investment & Development Zhenis Kasymbek stated, “The new economic policy of Kazakhstan prioritises the development of transport infra-structure and logistics. In 2014, the government invested more than $2.5 billion, and between 2015 and 2017 it will allocate a further $3.0 billion each year from the National Fund. Overall, we plan to invest over $20 billion by 2020.” For the nation, whose GDP is only $134bn, a little over half the size of the Portugal GDP at $205bn, this is an ambitious plan on structural upgrade. See Eurasian Business Briefing (HERE).

◄$$$ THAILAND GREENLIGHTS FIRST PHASE OF $5.5 BLN RAILWAY PROJECT WITH CHINA… THE THAI OBSTACLE TO CONNECT SOUTHEAST ASIA IS APPEARS TO BE OVERCOME. $$$
 

The Thailand Govt approved US$5.5 billion to build the first phase of a high-speed railway that will ultimately link its capital Bangkok to southern China. The project is part of the Mainland’s huge regional infra-structure plan to build a high-speed rail network connecting the southern city of Kunming in China with Laos, Thailand, Malaysia, and Singapore. Construction has already begun in Laos. The obstacle in completing the network has been Thailand. Its railway segment has been stymied for years by bickering over finance and loan terms, plus protective labor regulations in the Southeast Asian kingdom. The high-speed railway is set to start operations in 2021. See Peoples China Daily (HERE).

◄$$$ SINGAPORE AND CHINA ENJOY STRONG BILATERAL TIES THAT HAVE ADAPTED TO CHANGING TIMES… IN SINGAPORE, THE #2 MAN IN CHARGE HAS LAID OUT THE MALACCAN STRAIT POLICY FOR FREE PASSAGE IN UNEQUIVOCAL TERMS. $$$

The following is from Chinese client SouSze in Singapore. Important and crucial for Singapore’s survival and prosperity is the development of mutual ties. There is much concern whether the United States would use the Malacca Straits to blockade China’s vessels from this shipping route. Singapore is making careful plans and is fully onboard with the Eurasian Trade Zone initiative. It is spearheaded by both China and Russia. Progress has been made toward the Singapore-China bilateral ties and cooperation. It will continue full speed ahead.

Teo Chee Hean is Singapore’s Deputy Prime Minister. He noted that large investments are being made to build new transportation links. He believes the full potential of the investments can be realized when they form a network allowing the safe and free flow of goods. This covers maritime routes through the South China Sea, Straits of Malacca and Singapore, and the Indian Ocean. He delineated the Singapore position with respect to the Straits of Malacca, which should anger the bellicose manipulative crew in Washington hell-bent on leverage on the strait.

On the issue of navigation through waterways to facilitate connectivity, Mr Teo said Singapore will continue to uphold the right of transit passage for ships and aircraft of all countries through the Straits of Malacca and Singapore. “The Straits of Malacca and Singapore have the status of Straits Used for International Navigation. Passage through these Straits is covered under the regime of transit passage, specifically provided for in international law. Transit passage cannot be suspended or impeded. Singapore is a strong proponent of the right of transit passage for ships and aircraft of all countries through the Straits of Malacca and Singapore. This is a key principle of vital interest to us as trade is our lifeblood.” His position is plain, simple, direct, and unmistakably in favor of free passage toward peaceful purposes. See Channel News Asia (HERE).

◄$$$ SINGAPORE’S TEMASEK TO INVEST MORE IN CHINA'S CONSUMER SECTORS, HELPING THE CHINESE TRANSITION AWAY FROM INDUSTRY AND MORE TOWARD SERVICE. $$$

Singapore's state owned investment firm Temasek Holdings is optimistic about the world's second biggest economy. It plans to bet more on consumer related sectors in China. Wu Yibing, joint China head, said Temasek is targeting sectors such as healthcare, tourism, and education that will benefit from the rise of the Chinese middle class and the rebalance of the economy given more to consumption and service than in previous years. See China Daily (HERE).

◄$$$ THE NEW SILK ROAD WILL GO THROUGH SYRIA WITH MODERATE CHINESE INVESTMENT COMMITMENTS, INCLUDING AN INDUSTRIAL PARK IN DAMASCUS… THE SCATTERED PROJECTS WITH EASTERN FIRMS WILL TAKE SHAPE OVER TIME, AFTER THE CEASEFIRE HOLDS… SYRIA WILL BECOME A SMALL HUB IN THE EURASIAN TRADE ZONE… ISIS IS BEING DESTROYED IN SYRIA… WHILE THE UNITED STATES REMAINS DEVOTED TO DROPPING BOMBS, CHINA INVESTS $2 BILLION IN REBUILDING SYRIA… NO WESTERN FIRMS WILL BE INVOLVED IN THE REBUILDING SYRIA. $$$

The New Silk Road will go through Syria. China and the government in Damascus have already begun discussing infra-structure investment for the period following the war. The USGovt strives with Israel to produce endless war. Yet Beijing will interrupt the American objectives, while the Russian Military will destroy ISIS. With Chinese investment will will come roads connecting to the New Silk World Order, without the fascist links designed in Washington. Good fortune might come to the war-torn nation. It will join the Eurasian Trade Zone, tied at the hip to Iran.

The China-Arab Exchange Assn and the Syrian Embassy organized a Syria Day Exposition crammed with hundreds of Chinese specialists in infra-structure investment. It was a sort of mini-gathering of the Asian Infra-structure Investment Bank (AIIB). The event was billed as “The First Project Matchmaking Fair for Syria Reconstruction.” Follow-up events are planned already, like the Syria Reconstruction Expo; the 59th Damascus International Fair next month, where around 30 Arab and foreign nations will be represented; and the China-Arab States Expo in Yinchuan, Ningxia Hui province in September. Qin Yong, deputy chairman of the China-Arab Exchange Assn, announced that Beijing plans to invest $2 billion in an industrial park in Syria to be home for 150 Chinese companies.

Before the tragic Syrian proxy war led by the US and Israel, Syrian merchants were very active in the small goods Silk Road between Yiwu and the Levant. The Chinese do not forget that Syria controlled overland access to both Europe and Africa in ancient Silk Road times when, after the desert crossing via Palmyra, goods reached the Mediterranean on their way to Rome. After the demise of Palmyra, a secondary road followed the Euphrates upstream and then through Aleppo and Antioch. The Beijing leaders always plans years ahead. The government in Damascus is participating at the highest levels. Here is the kicker. China, Russia, and Iran will have priority over anyone else for all infra-structure investment and reconstruction projects when the war is over. The West, both the Americans and Europeans along with the British, will be cut out entirely.

The New Silk Roads, or One Belt One Road Initiative (OBOR), will inevitably feature a Syrian hub, complete with the requisite legal support for Chinese companies involved in investment, construction, and banking via a special commission created by the Syrian embassy, the China-Arab Exchange Assn, and the Beijing-based Shijing law firm. Before the war, China had already invested tens of $billions in the Syrian oil & gas industry. Naturally the priority for Damascus, once the war is over, will be massive reconstruction of widely destroyed infra-structure. China could be part of that major effort via the AIIBank. Then comes investment in agriculture, industry, and the transportation corridors in the Levant which connect Syria to Iraq and Iran. Both Iraq and Iran will become other OBOR hubs. China is involved in the resolution of the war, and in providing humanitarian aid. The United States will be involved in providing guerrilla violence, laced vaccines, and hidden pestilence, its specialties.

Pepe Escobar goes out on a limb with a bold potential scenario to unfold. It is not his forecast, but rather a proposition which could come to pass, and bears watching. It goes as follows. A possible scenario from the seeds discussed by Putin and Trump, negotiated in Hamburg, perhaps not relayed by either Lavrov or Tillerson (ministers of state), could be a ceasefire in southwestern Syria. Introduce USMilitary peacekeeping forces, in effect establishing the creation of a demilitarized zone (DMZ) between the Syrian Golan and the rest of the country. Here is the zinger interpretation. The disputed Golan Heights might be defacto annexed by Israel. The other end of the deal would be Western acceptance and the USGovt blessing of Crimea being defacto re-incorporated into the Russian Federation. The Russian Navy requires the warm water port in Crimea. The main question in the Jackass mind is the true volume of Golan energy deposits, which serve as a very hidden motive for Israeli aggression.

Escobar admits that the concept might sound less far-fetched than it seems. The next few months will tell if the quid-pro-quo plan is indeed a plausible scenario. See Asia Times (HERE). Memories linger and aid is rewarded. “China, Russia, and Iran have provided substantial support to Syria during the military conflict. Therefore, it is these three countries that will a major role in the reconstruction of Syria,” the Syrian ambassador said during a recent press conference. Other deals are also in the making to allow Russian companies to operate Syrian oil & gas fields, many of which have been captured from ISIS in recent months. See Almasdar News (HERE). As footnote the unfolding map appears to have Iran, Iraq, Syria to become key regional hub of One Belt One Road, while the Saudis get nothing. The partition game has begun.

◄$$$ BILATERAL RUSSIA-CHINA TRADE SURGED 26% IN FIRST HALF OF 2017, AFTER ONLY 2.2 GROWTH IN 2016… COMMITMENT IS TOWARD $200 BILLION IN ANNUAL TRADE… DEVELOPMENT FUNDS ARE BEING FILLED FLUSH FOR ENABLING THE TRADE GROWTH IN FINANCE FACILITATION… A SIBERIAN GAS PIPELINE IS IN THE WORKS VIA THE ARCTIC CIRCLE. $$$

Through June, trade between Russia and China was valued at $39.78 billion. Russian exports increased 29.3% to $20.34 billion, while Chinese exports to Russia were up 22.2% to $19.44 billion. In 2016, trade between Moscow and Beijing grew a mere 2.2% to $69.52 billion. The countries have set a goal to boost trade to $200 billion by 2020, more than double the present value. In July, the Russian Direct Investment Fund and the China Development Bank (CDB) agreed to establish a Russian-Chinese investment fund worth CHY 68 billion (=US$10 bn). It was created to make settlements in Ruble and Yuan currency easier. Both Moscow and Beijing have repeatedly talked about the importance of payments in local currencies for bilateral trade. They strive to eliminate USDollar settlement in their bilateral trade.

The agreement was signed at a meeting between Russian President Vladimir Putin and Chinese President Xi Jinping, completed in Russia. The countries are also jointly building the Power of Siberia gas pipeline, and a liquefied natural gas (LNG) facility on the Yamal Peninsula in the Russian Arctic. Over the past year, Russia has overtaken Saudi Arabia as China's top oil supplier. China is building a new transport corridor to Europe as part of the Belt & Road Initiative, which goes through Kazakhstan and Russia to Europe. The Eurasian Trade Zone is being constructed without obstructions. The financial platforms to enable its build-out are in place. See Russia Today (HERE).

◄$$$ THE BRICS NATIONS HAVE 23 PROJECTS IN THE WORKS WORTH OVER $6 BILLION… EXTERNAL FLOW OF FUNDS IS IMPRESSIVE, IN REVERSING THE RECENT TREND… IT IS A START, AND SHOULD SERVE AS A TAIL ON THE ONE BELT ONE ROAD DOG… THE EMPHASIS IS MOVING AWAY FROM GREEN PROJECTS TOWARD MORE DIVERSITY. $$$

The BRICS Bank has 23 projects at various stages of preparation for 2017 to 2018, with a total lending amount of $6 billion. The table of projects was announced and reviewed by NDB President KV Kamath at a press conference in Shanghai. The New Development Bank spearheads the project financing. Seven of these projects are in Brazil, six in India, two in Russia, and three in South Africa. Five projects totaling $1.7 billion are designed for China. In 2016, the bank granted $1.5 billion in loans to seven projects. A four-fold growth in a single year is expected. Most projects involved green energy or infra-structure, but next the projects will be more diversified. The new lender hopes to become officially rated by international rating companies by the end of the year. According to the NDB, Standard Chartered and Goldman Sachs have been chosen to be advisers for international ratings. Bond issuances are to grow in volume.

The bank sold its first CHY 3 billion (=US$437 million) in Yuan-denominated bonds in China in July last year, to fund clean energy projects in member states. It plans to issue Rupee-denominated bonds this year in India. It will also look for opportunities to issue bonds in Brazil and Russia, Kamath claimed. A recent Bloomberg report said Emerging Market investors are again investing heavily into the BRICS markets, pushing monthly inflows in a strong trend. Non-resident portfolio flows into BRIC nations rose to $166.5 billion in May, up from $28.3 billion in outflows in the previous twelve months, according to data compiled by the Institute of International Finance and EPFR Global. Financing sustainable development and infrastructure projects and local currency financing remain the focus of the New Development Bank (NDB) launched by the BRICS countries, according to a new policy document for the next five years. See BRICS Post (HERE). The Jackass expects the NDBank to become a potential clearing house later on for converting USTreasury Bonds into Gold bullion for banking systems within the BRICS nations.

◄$$$ THE ETHIOPIA-DJIBOUTI RAILWAY IS EXPECTED TO START COMMERCIAL OPERATIONS IN OCTOBER… SOUTHEAST AFRICA IS GETTING CONNECTED… THE DJIBOUTI PORT WILL CONNECT TO THE EURASIAN TRADE ZONE NETWORK. $$$

Ethiopians are celebrating the newly inaugurated railway at the Lebu station in Addis Ababa, the capital of Ethiopia. The Chinese built 756 km in the electrified rail project connecting landlocked Ethiopia to Djibouti, which will start commercial operations in October. Ahmed Shide, Minister of Ethiopia's Ministry of Transportation, said the rail project is a showcase of China's support for Ethiopia's efforts to transform its economy through infra-structural development. Shide claims Ethiopia is currently doing test runs on the railway and is finalizing preparations to form a joint venture company with Djibouti to manage it. He added, “We hope the rail project will facilitate expansion of industrial manufacturing and boost Ethiopia's competitiveness by significantly cutting time needed for Ethiopia's exports to reach Djibouti port.”

The electrified rail line is expected to cut transportation time needed for goods to reach Djibouti port from the Ethiopian remote areas, and vice versa, from at least two days to 10 hours. The rail line will also provide a passenger service, with an average speed of 120 km per hour and a single coach holding 118 passengers. The first 320 km segment of the rail project from Sebeta to Mieso was carried out by China Rail Engineering Corp, while the remaining 436 km of track from Mieso to Djibouti port section was built by China Railway Group. The port will connect to the entire Eurasian Trade Zone. See Xinhua Net (HERE).

## OIL WORLD IN MAJOR FLUX

◄$$$ SAUDI-CHINA DEAL SEEMS IMMINENT FOR RMB-BASED OIL SALES… THE PRESSURE WILL CONTINUE UNTIL THE SAUDIS RELENT… CHINA HAS DIVERSIFIED ITS OIL IMPORTS, DEPENDENT UPON RUSSIA PRIMARILY, BUT ALSO ANGOLA… BEIJING LEADERS SEE THE RMB CONCESSION BY SAUDI AS A GEOPOLITICAL GOAL, TO STRIKE A LETHAL BLOW TO THE PETRO-DOLLAR… CHINA RESENTS BEING COMPELLED TO PAY FOR OIL IN USD TERMS, ESPECIALLY SINCE THE KING DOLLAR IS CORRUPT TO THE CORE. $$$

China is currently modifying the terms of its oil trade with Saudi Arabia, with near constant pressure to win its way. The desire is for China to win a deal to pay for Saudi oil using Chinese Yuan currency. This effort poses a direct threat to the security of the USDollar, whereby oil payments have been universally done in USTBill terms. If this China-Saudi deal happens, oil for RMB currency, it is another step closer to the grave for the Petro-Dollar. Its defacto standard has dominated global finance since 1974. It can be said that the Petro-Dollar is weakening because the USDollar is losing power as the world’s reserve currency. It could also be said that it is losing its effectiveness since the USD managers are corrupt to the core in the USTBond market by relying upon monetary inflation and derivative machinery to sustain the low bond yield. The teetering position is similar to the way the British Pound gradually fell out of favor during the decline of the British Empire. The decline may take a long time. Once begun, the process moves in only the declining direction. The China-Saudi negotiation should be seen as another, and possibly final step in the death march of the King Dollar.

Beginning about 15 years ago, China ceased being self-sufficient in oil, and began buying Saudi oil. As per all Saudi customers, China was compelled to pay in USD terms. Even today, China still pays for Saudi oil in USDollars and not its native Yuan currency, which perturbs China’s leaders. China pays Russia in RMB terms, which causes no troubles for the Kremlin. Since 2010, China’s total oil imports have nearly doubled. Recently, China has surpassed the US as the world’s largest oil importing nation. Notice the trend, which just saw a crossover last year.

As China imports more and more oil, the idea of paying for that oil in RMB instead of USD becomes more critical, more a geopolitical bone. China does not want to use USD to buy oil; it hates the corrupt toxic USDollar which stands as a symbol of power. The power is lost. As a result, China is beginning to squeeze Saudi over the form of currency in which their oil trade is conducted. China is doing this by steadily lowering its oil purchases from Saudi. The current top Chinese oil suppliers are Russia, Saudi Arabia, and the West African nation of Angola. The other sources behind these three key suppliers are Iran, Iraq, and Oman, which help to diversify China’s oil supply chain. In the past few years, China has shifted oil purchases away from Saudi, forcing the Russian oil imports up from 5% to 15% of the Chinese total. The pressure will continue until the Saudis accept RMB payments for Chinese oil sales, an inevitable event. Even then, the Jackass does not expect a notable rise in Saudi oil imports, since the Russian bond is firm. See Zero Hedge (HERE).

Perhaps the Beijing officials perceived the Saudis as tarnished by a big Washington brush, involved too deeply in the USTreasury Bond inner workings. The Saudi share of Chinese imports has dropped from over 25% in 2008, to under 15% now. Meanwhile, Saudi faces competition from Russia, in addition to its own neighbors Iran, Iraq and Oman which are selling more oil to China. The Saudis would like to reverse this declining trend of oil trade with China.

◄$$$ NIGERIA POLITELY DECLINED THE HASTY OPEC ACCORD TO CAP OIL PRODUCTION… THE SAUDIS ARE POISED TO MAKE LARGEST CRUDE OIL EXPORT CUTBACK THIS YEAR, IN AN EFFORT TO LIFT THE OIL PRICE… THE SAUDI BUDGET WILL EXPLODE IN GREATER DEFICITS… OPEC IS A DEAD CARTEL, USEFUL ONLY FOR FILLING OFFICE SPACE. $$$

The Saudis are true clowns. For two years, they fought against the OPEC tide by refusing to cut output. They needed to finance the ugly Yemen War. Now finally they see the light, which means chronically lower oil price. Their Iranian rivals are to flood the oil market with supply, thus keeping the price down. The Saudis have promised to cut oil output. They are not a trusted player. The Jackass suspects they are having big problems in oil production and all operations. They might be experiencing oil depletion consequences, and simply cover their asses with lies on output cut initiatives. They will not placate their Arab rivals in OPEC with this decision. They are hated, ever since Prince MbSalman took control. The man is the poster boy of Arab arrogant prima donnas. Nonetheless, the Saudi GDP is expected to decline by 2% as a result of the OPEC-led output cuts. Believe it when you see it. The OPEC deal is breaking point as compliance is not happening. See Oil Price (HERE & HERE).

The fractures within OPEC's precarious production cut agreement are becoming increasingly more visible. Last week, the Nigerian oil minister Emmanuel Ibe Kachikwu surprised the oil cartel group. He politely declined such an overture, saying that his country will miss the ministerial meeting in Russia on July 24th. Furthermore, it has no set timeframe to join OPEC oil production cuts. They will adopt a wait & see attitude over the next two to three months. In principle, Nigeria accepts the production cap, but not for a while in implementation. The country is currently producing 1.7 million barrels of crude per day. Faced with the prospect of continued supply coming out of Nigeria, the oil price is in decline. The bigger factor is Iran, whose supply had accumulated over the last couple years. It is hitting the market in fierce style. See Russia Today (HERE) and Zero Hedge (HERE).

◄$$$ ECUADOR HAS ABANDONED THE OPEC DEAL TO REDUCE OUTPUT, IN A FLAILING FUTILE ATTEMPT TO SUPPORT THE CRUDE OIL PRICE… THE DEAL HAS NO UNITY. $$$

The Organization of the Petroleum Exporting Countries and other producers outside the group agreed in November to cut output by about 1.8 million barrels per day (bpd) in an effort to halt the oil glut that has depressed prices for over two years. Ecuador announced its rejection of from the OPEC agreement last week, a move that could shake the foundation of a deal that was already starting to show some cracks. They do not wish to reduce federal income and to worsen their deficit. They will lift output instead.

“We need funds for the fiscal treasury and for that reason we have taken the decision to gradually increase production,” Ecuadorian oil minister Carlos Perez. Ecuador is running a massive fiscal deficit equivalent to 7.5% of GDP. Low oil prices are inflicting considerable damage on government finances, and production restrictions only add to the pain. The country will work to produce as much oil as possible. The Andean nation produced just 527,000 bpd in June, making it the third smallest OPEC producer after Equatorial Guinea and Gabon. The impact is more psychological than tangible. The OPEC accord is essentially scrapped. See Oil Price (HERE).

◄$$$ IRAN PLANS 14 OIL & GAS EXPLORATION TENDERS FOR PARTNERS IN EXPLORATION… SEVERAL RUSSIAN AND EUROPEAN ENERGY FIRMS ARE INVOLVED IN THE BIDDING… ZERO AMERICAN FIRMS ARE INVITED. $$$

Iran is readying its first round of oil & gas exploration tenders since the easing of economic sanctions. The goal is to attract the BP and Gazprom, as well as other Western giants. Sitting on some of the world’s biggest energy reserves, Iran has already been working on deals to develop existing fields such as South Pars, South Azadegan, Yadavaran, West Karoon, Mansuri, and Abe-Timur. Last month, France’s Total became the first major to sign a big development deal with Iran in the wake of recent lifted sanctions. Russia’s Lukoil and Denmark’s Maersk are also potential investors. Iran strives to develop its huge energy potential again, and earn significant income. Economic development depends upon its success.

Next on the horizon is the search for new oil, with the state national oil company (NIOC) planning to tender 14 oil & gas blocks for exploration in the next two to three months. The news came on the sidelines of an energy industry conference in Istanbul. Most of the new exploration blocks are in the Zagros, Koppet Dagh, and the Middle Eastern Gulf region. They would require minimum exploration expenditure of between EUR 14 million and EUR 80 million. The biggest exploration expenses are expected for blocks Parsa (EUR 80 million) and Bamdad in the Gulf (EUR 75 million). NIOC deputy director Nematollahi cited BP, Austria’s OMV, Gazprom, Lukoil, as well as Italy’s Edison and Malaysia’s Petronas as having expressed interest in new exploration blocks. See Medi Telegraph (HERE).

◄$$$ IRAN SIGNED A DEAL WITH JAPAN’S TOYO TO BOOST OUTPUT AT THEIR OFFSHORE FIELD… EGYPT PLANS TO DOUBLE GAS OUTPUT BY 2020… NORWAY’S GIANT GAS FIELD IS SET FOR RECORD OUTPUT, NEEDED TO SUPPLY THE UNITED KINGDOM. $$$

The National Iranian Oil Company (NIOC) signed a memorandum of understanding with a consortium that includes Japan’s engineering group Toyo. The project is to revamp the facilities and upgrade gas production at the Salman field in the Persian Gulf. The Iranian company Petropars is also part of the consortium. Under the agreement, NIOC, Petropars, and Toyo will finance studies for the rehabilitation project. In the future event that they decide to turn the MOU into a deal, it would be an Engineering, Procurement, Construction, and Finance (EPCF) contract, with the Japanese firm financing the project. This was according to oil ministry service Shana, which quoted Gholamreza Manouchehri, deputy for development and engineering at NIOC. See Oil Price (HERE).


Output from three of Egypt’s newest natural gas fields will boost the the country’s national output by 50% by 2018, then later by 100% in 2020, according to new forecasts from the petroleum ministry. Petroleum Minister Tarek El Molla stated, “The fields of Zohr, North Alexandria, and Nooros are among the most important projects that will increase natural gas production. They will contribute to Egypt’s natural gas self-sufficiency by the end of 2018.” The North African country’s output has been on the rise this year, with government figures showing 5.1 billion cubic feet per day of production. That represents an increase of 0.7 billion cubic feet from 2016, due to the first gas from a new phase of BP’s North Alexandria project. A reliance on imports to meet energy needs has pushed the nation to adopt an agenda that will end gas shipments from abroad by 2019. Egypt lost its status as an energy exporter when domestic demand heightened alongside industrial development and population increases. By 2019, the Zohr field run by Italian ENI and the two other projects will cause gas production to jump by 4.6 billion cubic feet of gas per day. Nooros began production back in September 2015. See Oil Price (HERE).

The giant gas field that holds around 40% of total natural gas reserves on the Norwegian Continental Shelf is set to produce a record amount of gas this year, just as natgas demand in the UK is on the rise. Output at Norwegian field Troll, operated by Statoil, is expected to rise to record levels this year after Norway increased its production allowance for the field’s gas output. Moreover, the UK gas production from the North Sea is expected to decline. The country’s dependence on gas imports is expected to rise. According to the Oil & Gas Authority, the UK gas import dependency would rise to 78% in 2035, compared to 48% dependency estimated for 2017. Also, according to the UK regulator Office of Gas & Electricity Markets, last year around 32% of gas demand came from GB North Sea fields and 44% from Norway. See Oil Price (HERE). Expect a battle for Norway to join the NatGas Cartel led by Russia and Iran.

◄$$$ IRAQ WILL NEED IRANIAN GAS FOR POWER GENERATION, AMIDST US-BASED RETREAT FROM THE REGION…. NEW PLANTS ARE COMING ONLINE, WHEREAS IN THE NEAR FUTURE THREE GAS FIELDS IN IRAQ WILL BEGIN PRODUCTION, ENOUGH TO REMOVE MUCH OF THE IMPORT NEED. $$$

Over the next seven years, Iraq will need Iranian natural gas supplies to feed its power generation plants, because domestic gas output will not be enough. Such was the admission by the Iraqi Minister of Electricity, Qasim Al-Fahdawi. New generating stations are entering into service soon, which require gas supply from imported sources. Natural gas output from Iraq’s southern fields in the Basra province will not be enough to meet the demand for powering electricity generation. However, Iraq’s need for gas imports could lessen in the future, after planned fields for producing natural gas come on stream, such as Siba, Mansouriya, and Western Anbar.

In June, Iran finally started exporting natural gas to its neighbor Iraq. The multi-year stall was due to the risk-filled security situation in war-torn Iraq, in addition to the pariah status of Iran from US-led sanctions. The exports have started at a daily rate of 7 million cubic meters, but volume should reach 35 million cubic sometime in the future. See Oil Price (HERE).

◄$$$ THE MIGHTY US-BASED SHALE OIL INDUSTRY IS SET TO LOSE ANOTHER $20 BILLION IN 2017… A STEADY OIL PRICE UNDER $50 KILLS THE BULK OF THE SHALE INDUSTRY… WALL STREET BANKS ARE ON THE BLOCK FOR MORE WAVES OF BIG LOSSES AND FINAL WRITEDOWNS… THE US-SHALE SECTOR IS ACCELERATING ITS BUST. $$$

The US shale oil industry is going to chalk up another lousy year of financial losses in 2017. The news should not be a surprise. The propaganda continues to spin nonsense, as articles still are suggesting that the United States will become energy independent by ramping up its Mighty Shale Oil Machine. Unfortunately, the country’s shale oil industry is on the certain path to go bust trying to do so. Investors hungry for yield are throwing money into companies who then strive to increase drilling in hopes of adding to production volume. The end effect is to add to oil supply, and thus put steady downward pressure on the oil price itself. The surge in production is hurting the industry as a whole. Despite efficiency improvements, the shale industry is expected to be cash flow negative by a combined $20 billion this year as oil prices sink. Wall Street banks will face further rounds of big losses.

Investors are slowly waking up to the idea that they will not see hefty profits by betting on a sharp rebound in oil prices. There is some early evidence that big financial firms are pulling back, with new stock equity issuance and bond issuance down recently. Also, a point not often mentioned, the Iran supply is ramping up on the margin and it is truly huge. The Iran factor is pushing down the oil price. A steady oil price under $50 kills the shale industry, simply put. More importantly, it raises the risk of enormous writedown losses to the Wall Street banks in round #2, which will include the car loan sector also. The round #1 was subprime mortgage losses in 2008-2009. See SRSrocco Report (HERE).

◄$$$ THE FATAL FLAW IS CLEAR TO OUTSIDE OBSERVERS IN WASHINGTON’S NEW ENERGY STRATEGY TO USE POLAND AS A NATURAL GAS SUPPLY CENTER HUB… THE US-SHALE SECTOR CANNOT EVEN REMOTELY MEET THE SUPPLY REQUIREMENTS, TRUE FOLLY… A UNION ON THE PERIPHERY OF FOOLS… IT WILL GO AS FAR AS A FART IN THE WIND, NOWHERE. $$$

The Three Seas Initiative is a loose effort of 12 Central and East European nations to coordinate energy policies among others. Trump told his Polish audience, clearly referring to Russia, “Let me be clear about one crucial point. The United States will never use energy to coerce your nations, and we cannot allow others to do so. You do not want to have a monopoly or a monopolistic situation. We are committed to securing your access to alternate sources of energy, so Poland and its neighbors are never again held hostage to a single supplier of energy.” Nothing but grandstanding and bluster.

The misguided wrong-footed maniacs in Washington have devised an LNG Energy Hub as goal for Poland. The plan is incredibly lost. Trump’s stop in Warsaw on route to the Hamburg G-20 summit was calculated to feed Polish dreams of US backing to block the Russian-German Nord Stream 2 gas pipeline. Its path goes under the Baltic Sea from Ust Luga south of St Petersburg to Greifswald Germany, midway between Berlin and Hamburg and 80 km from the Polish border. The Poles are furious that they lose the transit fees from Gazprom for a Polish pipeline from Ukraine. They also want to push Russia’s Gazprom out of the huge and growing EU gas energy market. This is precisely the Trump Admin long-term agenda, and destined to fail. In his meetings with the Polish Govt, President Trump spoke about LNG gas infra-structure and the enormous possibilities to import US-sourced LNG from its surplus of shale gas. The plan is so inept as being indescribable.

The strategy has large fatal flaws. The new USGovt gas wars geopolitical strategy cannot succeed. Despite the fact that there are another 12 LNG ports under construction along the US East Coast and Gulf of Mexico, the reliability of USA shale gas supplies over the long term is highly dubious. Fracking involves massive water table contamination. The side-step of environment laws on the books must take place. The most serious fatal flaw however on the Trump USA shale export domination plan is the stability of shale gas production itself. Because of the geology of unconventional shale gas, the well production has a relatively high beginning flow rate. However, as repeated tests have shown, shale gas wells experience a hyperbolic decline in volume after about 4 to 5 years. Tests indicate that gas volume can decline by some 80% after 7 to 8 years. This means that perhaps 80% of the profit of a shale well comes only in the first initial years before dropping dramatically. The sector cannot maintain a sufficient growth in well counts, while defending against violations of environment laws. This is the fatal flaw which everyone is ignoring, especially Poland in the US shale gas seduction. See New Eastern Outlook (HERE). As an unnamed colleague stated, the Americans are not even capable of continuous delivery. The Poles and Americans deserve each other.

◄$$$ MEXICO OIL PRIVATIZATION PAYS OFF WITH A VAST BILLION BARREL FIND… THE CONSORTIUM MADE THE LARGEST DISCOVERY IN MEXICO IN 80 YEARS… THE SHALLOW FIND MEANS LOW COST OF PRODUCTION AND FASTER ARRIVAL TO MARKET… HELP WILL COME TO THE MEXICAN GOVT BUDGET, BUT IN A FEW YEARS. $$$

Mexico’s decision to allow private companies to explore for oil & gas realized a grand reward, after the discovery of at least a billion barrels in a new offshore field. A consortium of Premier Oil, Sierra Oil & Gas S de RL de CV, and Talos Energy made the discovery in the shallow waters of the southern Gulf of Mexico just two years after winning the exploration license. It is called the Zama discovery, and it represents the first new find by a private company in the country in almost 80 years, according to consultant Wood Mackenzie. The success was enabled by the government ending the monopoly of state run Petroleos Mexicanos (PEMEX). The Zama discovery “is the most important achievement so far of Mexico’s energy reform. It is one of the 15 largest shallow water fields discovered globally in the past 20 years.” Such is the opinion of Pablo Medina, the senior upstream analyst for Latin America at Wood Mackenzie. See Bloomberg (HERE). It is surely a valuable future income source, just not at the flush ripe $100 per barrel price. The Mexican Govt finances are a total disaster now, as help will come in a few years when production arrives. That now is a long way off.

◄$$$ OIL RESERVES IN RUSSIA HAVE BEEN INCREASED, AND PROBABLY ARE EXTREMELY CONSERVATIVE. $$$

Some widely varying estimates of proven oil reserves in Russia have come to the global table. Most estimates included only Western Siberian reserves, which have been exploited since the 1970s. It has supplied two thirds of Russian oil needs. However, there are potentially huge reserves elsewhere. In 2005, the Russian Ministry of Natural Resources estimated that another 4.7 billion barrels of crude oil exist in Eastern Siberia, a vast wilderness largely under-explored. In July 2013, the Russian Natural Resources Ministry made official estimates of reserves available for the first time. According to Russian Natural Resources Minister Sergey Donskoy, as of January 2012, recoverable reserves of oil in Russia under category ABC1 (equivalent to proven reserves) were 17.8 billion tons and category C2 reserves (equivalent to probable and possible) were 10.9 billion tons. See Write Opinions (HERE). Whatever the figures posted, the Jackass considers them all very conservative.

◄$$$ CHINA, A LARGE OIL IMPORTER, IS BUYING NEARLY 100,000 BARRELS OF OIL PER DAY FROM THE UNITED STATES, 10 TIMES THE AVERAGE IN 2016… CURIOUSLY, THE USGOVT MIGHT BE A MAJOR FACTOR IN CONTINUED USD-BASED OIL SALES …THE UNITED STATES IS ON TREND TO EXPORT CRUDE OIL, IN NEAR DESPERATION TO REDUCE THE TRADE DEFICIT. $$$

It was a gusher few expected. What began as a trickle of US crude being sold to China is turning into a flood, the result of a surprise American glut that has made the country’s oil cheaper than Mideast rivals just two years ago after the USCongress lifted the 40-year export ban. The perception in China is that US crude oil supply will need to remain cheaper than rival offerings to make up for the higher costs in production. See Wall Street Journal (HERE).

EuroRaj offered an opinion. “Interesting to say the least. The source might be from the Strategic Petroleum Reserve, which has seen a reduction over the last year. Clearly this is an unsustainable dynamic. So the United States now competes with Saudi Arabia to sell oil in USD terms in order to keep the charade going a bit longer. The last defender of the Petro-Dollar might actually be the United States.” Almost laughable if the case, as the USGovt might be growingly desperate to maintain significant oil sales in USD terms. The era of USD standard oil sales is vanishing.

For 40 years, it was virtually impossible to sell American oil to any country except Canada because of an export ban that was a bedrock of United States energy policy. It was a strange but stubborn law on the books. Finally the United States is selling $1.5 billion worth of crude oil per month while continuing to increase production, even at today's depressed oil prices. It all smacks of desperation to gather hard currency, like a Third World nation. See New York Times (HERE).

## MIXED GOLD SIGNALS

◄$$$ THE LOGIC OF A MODERN GOLD STANDARD… THE RETURN OF THE GOLD STANDARD WILL BE ARDUOUS TO IMPLEMENT… IT WILL BE DIFFICULT FOR FRACTIONAL RESERVE BANKERS TO GIVE UP THEIR OLD CORRUPT WAYS… IT REQUIRES A MAJOR FINANCIAL CRISIS TO TAKE PLACE, OR A TECHNOLOGICAL REVOLT TO REMOVE THEIR COMPUTER PLATFORMS OF CONTROL. $$$

A return to sound money will require a radical reform of financial markets, as well as the laws and regulations under which banks and investment houses work. The weaknesses of the current fiat money system must be identified and understood by reforming governments. It also amounts to no less than discarding the entire evolution of mainstream economic thinking that has evolved in the welfare-states since the 1930s. Revolutions of this sort normally occur after a major economic and financial failure, when the shortcomings of received wisdom are so glaringly obvious that it loses all credibility. Just occasionally, this can happen without the crisis occurring first. It appears, from what we can deduce as observers, that the assembly of the Asian and East European continent into a self-contained economic and financial unit presents such an opportunity.

It is one thing to advocate sound money policies to replace the unsound money we all use today, but it is another to implement them. It requires a new revolution in economic thinking, and an understanding of why sound money matters with respect to prices. Its introduction is likely to disrupt the currencies and economies of the countries that remain with unbacked fiat money systems. Furthermore, if a sound money arrangement for a currency is to be long-lasting, it will require the end of fractional reserve banking. There are a few practical difficulties in reintroducing sound money. Sound money is radically different from what we have today. So the only chance it will be reintroduced for the Western currencies is in the wake of a financial crisis so great that these unsound currencies are destroyed. See the fine essary by Alasdair Macleod at Gold Money (HERE).

The Jackass believes that the Western bankers will not be given the option to give up their ways. They will be bankrupted, disempowered, then sidelined and made marginal. Many are the means by which this sweeping reform takes place. It begins with the USDollar being isolated, no longer universally used in trade and banking. It continues with the banker set losing control of money movements. Client MarkS in Ontario summed it up well. “This is a very well written article about the return of the Gold Standard and how hard it will be for fractional reserves bankers to give up their old corrupt ways. But first, it will require a major financial crisis to take place before the world’s governments and bankers give up on the poison they are addicted to. The Chinese and Russians will patiently watch and wait as the Keynesians feed upon themselves to an eventual and certain mathematical demise. The Chinese will then launch sound money so as not to be blamed for destroying the corrupt global financial system. In the interim, their plan will be to continue to hoard cheap gold and silver until it is time to pull the trigger. We will have to see how oil sale for RMB helps to initiate the plan.”

◄$$$ CEO DUFFY OF THE CME TOLD FOX BUSINESS THAT THE GOLD PRICE SHOULD PROBABLY BE AT $5000 TO $6000 PER OZ. $$$

It is a perplexing development and curious event. The CEO of the CME used an opportunity on live TV to proclaim that he now expects much higher metals prices in the months ahead. He could be a renegade from inside the castle walls, enduring battles not publicized internally. Perhaps he and his ilk plan to front-run the aggressive upward price moves with his analysis and forecast, but not much in the way of analysis has been shared. Rather it was just a plain statement made. Possibly Duffy is tipping off the banks that their games are almost over. He might know about the Global Currency RESET which is overdue to occur. On the Fox Business channel, Neil Cavuto was discussing the financial markets with Terry Duffy, CEO of the CME Group. The first five minutes are the standard boilerplate of Fed policy, wondrous stock rallies, the sluggish recovery, debate over rate hikes, and regular chatter. However, at the 4:55 minute mark, Cavuto asks “But we have not seen money move into the metals. What is going on there?” To which Duffy answers, “With all that is going on in the world, it (gold) should probably be at $5000 to $6000 per ounce.” Ouch! Gadzooks! See Silver Doctors (HERE) and the YouTube video (HERE).

◄$$$ THE GOLD DIRECTION INDICATOR JUST TURNED GREEN. $$$

Peter Degraaf maintains his GDI indicator. For the benefit of his subscribers and to help all to make good decisions, he plots an indicator with ten components on a daily basis. He refers to it as the GDI. On July 10th, the GDI closed at 39% and two days later it moved into positive territory with a reading at 61%. This is very positive. See Gold Seek (HERE). In the associated chart below, notice that the precious metals have outperformed industrial metals, agriculturals, and energy, all of them. The commodity market drubbing has been powerful. Yet Gold & Silver have done relatively well, and their near-term prospect is very positive, due to the Gold Direction Indicator.

◄$$$ GOLD DEMAND HAS SOARED IN INDIA, AS THEY IMPORTED MORE GOLD IN 1H2017 THAN THE FULL YEAR 2016… PROBLEMS HAVE BEEN RESOLVED, AND THE FARM CROP WAS FAVORABLE. $$$

Some positive news emerged this week for gold demand. With the world’s top consuming nation India showing a big rebound in gold buying, conditions might be setting it up for one of the strongest years of demand in recent memory. Their data showed that gold imports during the first half of 2017 set a torrid pace. During the first six months of the year, Indian buyers brought in a full 521 tons of gold. The volume marked a big increase from the same period a year ago, eclipsing the import total for the entire 2016 year, when just 510 tons of bullion was imported for the twelve months. The trend this year suggests that imports for the whole of 2017 could come in above 1000 tonnes, a feat that has not happened in any of the last five years. The best year recently has been 2012 with the total in that period registered at 969 tons. Encouragement is felt for the global gold market. The Indian demand was very disappointing last year, partly because of a prolonged jewellers strike that saw gold sales completely crippled across the country. Those issues are now resolved. The local sources report that demand is coming back strong because of currently lower gold prices, as well as a favorable farming season in India which resulted in higher rural gold consumption. See Oil Price (HERE) and Mining.com (HERE).

With an impending cashless society and crypto-currencies rising, demand for Gold is expected to double in India this year. Sales for June were four times higher than the same period last year due to the gold rush to beat the deadline for the increase in the Goods & Services Tax, which jumped from 1.2% to 3%. As expected, demand suddenly dropped a bit as soon as the tax increase was imposed.

◄$$$ MONEY MANAGER STEPHEN LEEB CONCURS THAT A MASSIVE SOVEREIGN GOLD PURCHASE IS COMING AND WILL BE USED TO FUND GOLD BACKED CRYPTO-CURRENCIES TO REPLACE THE DOLLAR… HE CONFIRMS THE MAGUIRE FORECAST. $$$

Stephen Leeb, a respected fund manager for over 20 years, has earned the Jackass respect on a consistent basis for his financial expertise and global vision. He spoke with King World News. He stands in agreement with Andrew Maguire's prediction. Leeb believes that not only is there soon to be a massive purchase of physical gold coming to the markets by one or more sovereigns, but that this gold will be used to both fund a national crypto-currency being established in China, and it will lead to the eventual replacement of the USDollar as the global reserve currency. Leeb also went on to say that this gold backed crypto-currency system would likely be facilitated through the new Eastern oil payment structure being developed between Russia, China, Iran, and quite possibly Qatar. The tiny Arab monarchy Qatar, the subject of belligerence and attempted isolation in recent weeks, has initiated important moves toward integration of the Chinese Yuan into their financial system. See Daily Economist (HERE). So Leeb confirms the Maguire viewpoint and expectation.

◄$$$ ANDREW MAGUIRE EXPOSED THE CATALYST THAT WILL CREATE MASSIVE GOLD PRICE SURGE, BUT APPARENTLY THE HERALDED EVENT WILL ARRIVE WITH A SMALL DELAY (HALF OF FOREVER?)… IT IS FOLLY TO EXPECT ANY STRONG CORRECTIVE MOVE IN THE CORRUPTED PAPER GOLD MARKET… THE CHANGE AND DISRUPTION WILL COME FROM THE TRADE SIDE. $$$

London gold trader Andrew Maguire said he is 100 percent certain. Sunday night on July 9th in London, the 250 gold tons apparently were scheduled for delivery. Yet nothing happened, again. The Jackass is almost equally certain that Maguire will be discredited for his daring claim and forecast. The story in the June Hat Trick Letter did not convey enough doubt, as it just reported the story, the claim, and paper charade expectation. As the Voice stated, Maguire seems not to know how the gold market works. And besides, the esteemed gold trader related, big sovereigns never use the COMEX. Beware that anything electronic the Boyz can and will control. Expect it. The Commitment of Traders did show that large speculator shorts were up 128k contracts. The amount is nearly 15k more than the peak just before the sizeable $160 move up in the gold price in early 2017. Yet more disappointment, but to those who deeply distrust all things paper and their market control teams, same old same old. The paper Gold market is corrupted beyond remedy. No logical conclusions can be made when viewing it. See King World News (HERE) and Silver Doctors (HERE).

Gold analyst Maguire has updated his forecast made for July 5th, citing a short delay in large buyers ready to pounce on gold price. So Maguire says small delay. What is half of forever? Meanwhile the official paper gold price continues to languish, as corrupt as ever. See Daily Economist (HERE).

◄$$$ THE BIG BANKS ARE NET LONG INVESTED IN GOLD FOR THE FIRST TIME SINCE DECEMBER 2015… IT IS UNCLEAR THE IMPACT… PERHAPS A TURNING POINT IN THE GOLD PRICE. $$$

The banks have moved their swap exposure (blue bars) into positive ground finally. The last time this phenomenon occurred was in late 2015. The event is marked by “151124” in the chart, as in November 2015. Severe downward pressure on the Gold price came in 2016 with the high blue bars. The GLD stock price which follows gold is shown in the red line, the gold price divided by ten roughly. To read the chart, be sure that the first two numbers on the horizontal axis markers indicate the year, the next two the month, and the last two the day. For instance, 170703 means 03 July 2017.

## ECONOMY IN TATTERS STILL

◄$$$ ANGLO-AMERICAN GDP PER CAPITA RUNS 20-25% BELOW THE PREVIOUS LONG-TERM TREND… WITNESS DAMAGE FROM THE FASCIST BUSINESS MODEL OF BOND FRAUD AND UNSOUND MONEY, COUPLED WITH ENDLESS WAR… THE YEAR 2007 MARKED THE TURNING POINT, THE LEHMAN EVENT AS BITTER FRUIT FROM THE FASCIST BANK CONTROL… THERE HAS BEEN NO EFFORT AT REMEDY, ONLY FURTHER FRAUDS AND THE STEADY FLOW OF HYPER MONETARY INFLATION… CAPITAL DESTRUCTION IS THE RESULT, NEVER DISCUSSED OR CITED. $$$

◄$$$ THE USECONOMY HAS THE GREATEST RETAIL PERFORMANCE PER SQUARE FOOT, A TREND THAT WILL SOON END… THE UNITED STATES IS MISLED INTO BELIEVING THAT CONSUMPTION CAN POWER AN ECONOMY… IN REALITY THE PRACTICE LIQUIDATES THE ECONOMY… MALL DAMAGE IS UNIVERSAL INSIDE THE USECONOMY, A TREND TO CONTINUE MUCH LONGER. $$$

◄$$$ RETAIL AS THE TITANIC, THE BIGGEST THREAT FROM THE COMING AMAZON MONOPOLY… THE ONLINE RETAIL TREND IS POWERFUL AND ENDURING… THE BUSINESS MODEL IS DISRUPTIVE, WHILE MIXED WITH THE MESSAGE OF DEEP USECONOMIC RECESSION. $$$

The department stores are dying a horrible death. The buyer warehouse clubs have leveled off. The number of planned 2017 retail store shutdowns is monstrous huge. The malls are looking like Detroit and ghost towns. See Zero Hedge (HERE).

◄$$$ JPM CREDIT CARD CHARGE-OFFS JUMP TO FOUR YEAR HIGH AT OVER $1 BILLION… THE CRIMINAL BANK SET ASIDE $1.4 BILLION IN LOAN LOSS RESERVES. $$$

In its recent quarterly dog & pony earnings presentation, JPMorgan ignored and bypassed its troubled credit card business. It is a very troubling trend. The concern is over an increase in net credit card charge-offs, which last quarter rose to just under $1 billion. It prompted JPM to report an unexpected increase in credit costs, driven also by JPM's writedown in its student loan portfolio. With the net credit card chargeoffs having surpassed $1 billion as of June 30th, it is the highest going back to March 2013. The chronic liar, CEO Jamie Dimon claimed “the US consumer remains healthy, evidenced in our strong underlying performance in Consumer & Community Banking.” What a deceptive bastard. Notice the huge increase in Loan Loss Reserves set aside.

In the JPM official statement see the following details. The provision for credit losses was $1.4 billion, an increase of $193 million, driven by higher net charge-offs and a higher reserve build. The current quarter reserve build of $425 million included $350 million in Credit Card, $50 million in Business Banking, and $25 million in Auto, driven by both loan growth and higher loss rates, predominantly in Card. The credit card damage is noteworthy. As per the S&P/Experian Bandcard Default Index, credit card defaults have surged the most since the financial crisis began in 2008. It has grown worse and accelerated. The latest data showing that as of May, the rate of defaults on credit cards have risen to 3.53%, up more than 13% from a year ago. See Zero Hedge (HERE).

◄$$$ AUTO DEFAULTS SOAR ON THE BACK OF HASTY LOANS AND, AT TIMES, OUTRIGHT FRAUD… CAR LOAN UNDERWRITING RESEMBLES THAT OF HOME LOANS IN 2003-2006… NOTHING REFORMED, ONLY THE LOCATION OF CREDIT ABUSE HAVING MOVED… THE BUST IS NEAR. $$$

In the years after its 2009 bankruptcy, Chrysler looked for a dedicated lender to help customers finance their cars quickly in expedited manner. It was code for a lenders to help the struggling OEM expand their market share by making extremely risky loans to subprime borrowers, all while laying off the credit risk to unsuspecting pension funds. They gobbled up the asset backed bonds, with risky hidden car loan tranches.  As such, Chrysler ultimately picked Santander due to its expertise in what is called automated decision making. The result was approvals to advance credit without actually performing income verification tests on borrowers.

For a time, Chrysler and Santander enjoyed a perfect symbiotic relationship as it offered Santander an opportunity to aggressively expand in the US subprime loan market. As well, Chrysler was the perennial third wheel among the Big Three American Carmakers. The company was able to target customers that were previously deemed untouchable by lenders.  Of course, the problems surfaced almost from the start and have now blossomed. Nothing is ever fixed or reformed in the USEconomy. The credit abuse just moves location, and in this case from home loans to car loans. See Zero Hedge (HERE).

◄$$$ WITH LOAN DELINQUENCIES AND DEFAULTS RISING, THE NEW TREND IS FOR INCREASED CONSUMER BANKRUPTCIES… BACK TO BACK MONTHLY READINGS HAVE TURNED TOWARD INCREASES, THE RED LIGHT ALARM GIVEN. $$$

◄$$$ FINANCIAL CRISIS STYLE CARMAGEDDON HAS DESCENDED UPON HOUSTON, AS TRUCK & CAR SALES HAVE PLUMMETED… MORE HINTS OF A CAR BOND BUST COMING ON THE HORIZON. $$$

Auto sales in Houston, whose economy had been battered by the oil bust, should be turning around if the ballyhooed USEconomic recession is to be believed. It is a grand lie. The vehicle sales trend has gone from bad to worse. New vehicle sales plummeted 26% in June from a year ago, with car sales totally crushed and even trucks sales plunging. For the 12-month period through June, auto dealers sold 284,085 new vehicles, down 16.8% from the same period last year, and down 25% from the levels in late 2015 and early 2016. That was before the oil bust began wrecking households and businesses alike. Vanished was their desire to buy a new car or truck. Sales are now back to the same level as in January 2009 (chart by the Greater Houston Partnership, red marks added). See Wolf Street (HERE).

◄$$$ US CREDIT CARD DELINQUENCY RATE EXCEEDS COMMERCIAL & INDUSTRIAL CREDIT ANNUAL GROWTH RATE… AS DICTATED BY PAST HISTORY, EXPECT A MAJOR CRISIS TO HIT. $$$

◄$$$ JUNE COMMERCIAL BANKRUPTCIES ARE UP SIGNIFICANTLY, SOUNDING ALARMS… PERHAPS AS A RESULT OF THE SLUGGISH RECOVERY THAT IS PAINTED AS A POWERFUL MYTH. $$$

◄$$$ US-BASED CORPORATE INCOME TAX RECEIPTS ARE HARD DOWN, ANOTHER KEY SIGN OF VICIOUS RECESSION… HARD TO FUDGE TAX DATA… AN OFFICIALLY RECOGNIZED RECESSION IS NEXT. $$$

◄$$$ COMPANIES NOW SPEND ABOUT THE SAME ON BUYBACKS AND ACQUISITIONS AS ON CAPEX… VERY LITTLE NET INVESTMENT IN THE USECONOMY BY AMERICAN CORPORATIONS… THEY ARE MORE INTERESTED IN FORTIFYING THEIR STOCK, WHICH AIDS IN EXECUTIVE OPTIONS. $$$

Notice a significant reduction in debt load during the cheap money era. The main point is trend in declining CAPEX, with rising stock buybacks. Companies are not investing in the USEconomy. They are gambling, while adding some corporate acquisitions also. Capital Expenditures are a key to building a business, which is clearly not happening. The executives are gambling and stuffing funds into stock buybacks for the benefit of their stock option packages. The practice is a profound abuse and a cancer, but shareholders like it since they do not tend to focus on the business. They just watch the stock share price.

◄$$$ US-BASED CORPORATIONS HAVE A NASTY DECLINING TREND IN RETURN ON EQUITY… THEY ARE STUCK IN A RECESSION, NOT INVESTING IN THEIR OWN BUSINESSES, AND GAMBLING WITH FUNDS… THE EXECUTIVE DECISIONS ARE SETTING UP STOCK DECLINES IN THE NEAR FUTURE. $$$

◄$$$ GARTNER SAYS WORLDWIDE PC SHIPMENTS DECLINED 4.3 PERCENT IN SECOND QUARTER OF 2017 LOWEST QUARTER VOLUME SINCE 2007… MORE EVIDENCE OF GLOBAL ECONOMIC RECESSION… HEWLETT PACKARD TOOK THE TOP SPOT, WRESTING IT FROM LENOVO. $$$

Worldwide PC shipments totaled 61.1 million units in the second quarter of 2017, a 4.3% decline from 2Q2016, according to preliminary results by Gartner. The PC industry is in the midst of a five year slump. This is the 11th straight quarter of declining shipments. Shipments in the second quarter of this year were the lowest quarter volume since 2007. Mikako Kitagawa is principal analyst at Gartner. He stated, “Higher PC prices due to the impact of component shortages for DRAM, solid state drives (SSDs), and LCD panels had a pronounced negative impact on PC demand in the second quarter of 2017. The approach to higher component costs varied by vendor. Some decided to absorb the component price hike without raising the final price of their devices, while other vendors transferred the costs to the end-user price.”

The business segment was a different environment. Vendors could not increase the price too quickly, especially in large enterprises where the price is typically locked in based on the contract, which often run through the quarter or even the year. Kitagawa went on to say, “In the consumer market, the price hike has a greater impact as buying habits are more sensitive to price increases. Many consumers are willing to postpone their purchases until the price pressure eases.”

Hewlett Packard reclaimed the top position from Lenovo in the worldwide PC market in the second quarter of 2017. HP Inc has achieved five consecutive quarters of year-over-year growth. Shipments grew in most regions, and it did especially well in the US market where its shipments growth far exceeded the regional average. See Gartner (HERE). The Jackass uses only HP personal computers, ever since 1995.

◄$$$ IN SOUTH KOREA, THE NUMBER OF JOBLESS COLLEGE GRADUATES HIT A RECORD IN 2Q2017… IT IS SLIGHTLY OVER ONE HALF OF THE TOTAL GRADUATES, WHO ARE FACING A JOBLESS FUTURE. $$$

The number of jobless people with a Bachelor's degree (BA, BS) and above (Masters and Doctorate) reached 546,000 in the April-June period. The figure is up 11.8% from a year earlier, according to Statistics Korea. It marked the largest quarterly figure since 1999, a time when the agency changed its calculation standard for compiling jobless data. The portion of unemployed college graduates accounted for 50.5% of 1.08 million total jobless people. The unemployment rate for young people aged between 25 and 29 years was 10.1% as of end June, up from 9.4% tallied a year earlier. On a sequential basis, it was up from 8.6% in May. See Yonhap News (HERE).

◄$$$ MICROSOFT INVESTS IN FOREIGN LABOR… THEY ANNOUNCED THE LAYOFF OF 3000 EMPLOYEES, OFFSET BY THE NEED FOR 5500 CHEAP FOREIGN WORKERS… IF NOT OUTSOURCING LABOR, US-BASED COMPANIES ARE IMPORTED THEM… USGOVT ADDS MORE FOREIGN GUEST WORKER VISAS TO ADDRESS LABOR SHORTAGE… THE ECONOMIC SABOTAGE CONTINUES. $$$

The Microsoft Corporation is expected to lay off up to 3000 employees as the tech conglomerate continues to seek and hire more foreign workers. In a new report following rumors of massive job cuts at Microsoft, company executives confirmed that potentially 3000 jobs from the sales department would be cut. Executives said employees working outside the United States would be the hardest hit by the layoffs. However, the monopoly hegemon firm did also confirm that about 25% of the layoffs would affect employees working inside the US market. A Microsoft spokesperson spun the mass job cuts as simply changes to better serve our customers and partners. Microsoft is a key fascist system player, with Windows-10 operating system monitors of online movements disguised as aid to the PC user. See Breitbart (HERE). See Xinhua Net (HERE) on foreign guest worker visas.

Although not foreign workers, WalMart is to replace more than 4000 employees with machines. The trend toward greater robot usage is advanced primarily by Amazon, automating their entire operations. The trend is followed by several other companies. See Zero Hedge (HERE).

## THANKS

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

 

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