WORLD
Saturday, July 14th, 2012 – Another dramatic week, with the financial world waiting patiently for the FED and world central banks to do more.
And yet it is becoming more and more evident that whatever is ‘done’ cannot be enough.
It’s not like central banks around the world and including the most powerful US Federal Reserve have been busy as of late.
Just in the last 2 weeks, the UK has begun another (small) round of QE – while China, Brazil, and the ECB have lowered borrowing rates.
While the FED has extended it’s Operation Twist, we learned that from the FOMC minutes this week, in addition to numerous dovish rumors, that more easing could certainly be coming soon.
This came with the St. Louis Fed Chief Bullard’s proclamation that ‘dramatic’ steps will be needed to restore confidence.
Greece and the peripherals are still struggling, while the Middle East continues to smolder.
In the US, another brokerage reveals the ineptitude of regulators, while delivering yet another blow to the ever so fragile confidence of investors.
Meanwhile, mortgage delinquencies continue to rise while municipals begin falling like dominoes.
And while no one here would be surprised by this, we read that without the FED, stocks would be 50% higher, confirming at least one unspoken FED mandate.
And yes, JPM’s punishment was laughable – as expected, while speculation mounts as to the ultimate fallout.
It is fitting that the LIBOR scandal has made it’s way out of the spotlight when, for all it’s drama, the kings of interest rate manipulation will live on until they destroy the currency – with practically no one questioning the legality (or morality).
In the metals, gold continues to be accumulated by the developing world in a game of catch up – with the China in the lead.
While most of the stories here fall way beyond the mainstream, silver might as well be an island on a another planet. Sentiment continues to remain right where “they” want it — along with the rest of the commidity sector – muted.
Technically, we remain range bound, with what appears to be the beginning of a (very bullish) flag formation. The commitment of traders indicates no significant change (paper is still in control) to the generally bullish set-up. The big shorts remain positioned for a move higher, while the speculators remain biased toward the sell-side.
If you have time, have a listen to Michael Pento’s interview at King World News (linked below). – JL
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ECB Update:ECB Hopes Plunge In Bank Deposits May Spur Lending
The European Central Bank may hope that a plunge by more than half in Eurozone banks’ use of its overnight deposit facility is a sign that banks could begin to increase lending to the real economy. Overnight deposits with the ECB plummeted overnight into Thursday by E483.585 billion to E324.931 billion as the ECB’ Governing Council’s decision last week to lower its deposit facility rate to zero came into effect Wednesday. Overnight deposits fell to their lowest level since December 21, the day before the ECB’s first round of three-year LTROs settled. Deposits are also well below the E787.428 billion level seen on the same day of last month.
China New Yuan Loans Top Forecasts; Forex Reserves Shrink
China New Yuan Loans Top Forecasts; Forex Reserves Shrink By Bloomberg News – Jul 12, 2012 10:05 AM PT Facebook Share LinkedIn Google +1 1 Comment Print QUEUE Q China’s new loans exceeded estimates in June, boosting odds the government will secure an economic rebound after growth probably slowed for a sixth quarter. Banks extended 919.8 billion yuan ($144.3 billion) oflocal-currency loans, the People’s Bank of China said yesterday.That compares with the 880 billion yuan median forecast in a Bloomberg News survey. Foreign-exchange reserves fell to $3.24trillion at the end of June, the central bank said, a record quarter-to-quarter drop.
Spain Plans New Round of Tough Austerity Measures
The new austerity plan came as Finland’s prime minister, Jyrki Katainen, issued a warning Wednesday that the euro’s predicament was as perilous as at any time in the past two years. “This situation is dangerous, very dangerous,” he said in an interview with Finland’s biggest daily, Helsingin Sanomat. One of the main elements of the new round of Spanish austerity measures is a rise in the value-added tax to 21 percent from 18 percent. Mr. Rajoy’s government had previously argued against raising the tax amid concerns that it would deepen Spain’s recession by stifling consumer spending. But the latest budget data indicated that Spain needed to try generating further tax revenue if it wanted to come close to meeting its deficit pledges.
Russia sends warships to Syria
Two destroyers and three amphibious landing vessels carrying marines set sail from Russian bases in the Arctic and the Black Sea, according to Russian military sources.Russia’s defence ministry insisted that the mission was part of a previously scheduled exercise in the Atlantic, Mediterranean and Black Sea and at least one of the vessels in the flotilla has patrolled waters off Syria earlier this year.But Western diplomats say the purpose of the mission is to show tangible support for Mr Assad, to warn the West against military intervention in Syria and to prepare for the possible evacuation of Russian nationals from the country.
Greek unemployment rate at new record of 22pc
Near-bankrupt Greece is dependent on aid from the European Union and the International Monetary Fund, who have demanded spending cuts that have helped push its economy into a fifth year of recession and forced thousands of businesses to close.The jobless rate for April was up from a revised 22pc in March, Greece’s statistics service EL.STAT said on Thursday. It also marked a sharp rise from 16.2 percent in April last year.There was one piece of slightly better news. Youth unemployment, which has more than doubled over the past three years, fell slightly in April to 51.5pc, from 52.8pc in March.Analysts said that the jobless rate could rise further, despite a brief respite thanks to the summer tourism season.
China Q2 growth slows to 3-year low of 7.6%
China’s economy reported 7.6 percent of growth in the second quarter, the lowest since the first quarter of 2009 when the global financial crisis was rampant, amid concerns about the slow-down of the second-largest in the world and the strongest one in the major economies.The National Bureau of Statistics said on Friday that in the first half, the country’s economy grew by 7.8 percent to 22.71 trillion yuan ($3.56 trllion). The growth in the first quarter was 8.1 percent.It is the lowest growth in the past 13 quarters.
DOMESTIC
Regulator: $220 Million Missing at Iowa Brokerage
A regulatory group ordered accounts frozen at Iowa-based brokerage Peregrine Financial Group late Monday, saying it hasn’t been able to account for $220 million in customer funds, following what the company said was a suicide attempt by its founder and chairman.The National Futures Association said it received information that PFG may have falsified bank records, and that the company only had about $5 million of $225 million it had claimed to have in a deposit account. The association, an industry group that serves as a self-regulatory role, said PFG could not demonstrate that it meets capital requirements and rules requiring it to segregate customer funds.
US government records $904.2B deficit through June
The U.S. budget deficit grew by nearly $60 billion in June, remaining on track to exceed $1 trillion for the fourth straight year.Through the first nine months of the budget year, the federal deficit totaled $904.2 billion, the Treasury Department reported Thursday.President Barack Obama is almost certain to face re-election having run trillion-dollar-plus deficits in each his first four years in office. That would likely benefit his opponent, GOP presumptive nominee Mitt Romney.Obama and congressional Republicans remain at odds over how to lower the deficit. Unless their disagreement is broken, a series of tax increases and spending cuts could kick in next year. Economists warn that could dramatically slow an already weak U.S. economy and even tip it back into a recession.
Shake-Up at New York Fed Is Said to Cloud View of JPMorgan’s Risk
After the financial crisis, regulators vowed to overhaul supervision of the nation’s largest banks. As part of that effort, the Federal Reserve Bank of New York in mid-2011 replaced virtually all of its roughly 40 examiners at JPMorgan Chase to bolster the team’s expertise and prevent regulators from forming cozy ties with executives, according to several current and former government officials who spoke on the condition of anonymity. But those changes left the New York Fed’s front-line examiners without deep knowledge of JPMorgan’s operations for a brief yet critical time, said those people, who spoke on the condition of anonymity because there is a federal investigation of the bank.
San Bernardino seeks bankruptcy protection
San Bernardino on Tuesday became the third California city in less than a month to seek bankruptcy protection, with officials saying the financial situation had become so dire that it could not cover payroll through the summer. The unexpected vote came at the suggestion of the interim city manager, who said the city faces a $46-million deficit and depleted coffers.
FHA’s mortgage delinquencies soar
The mortgage market appears to finally be stabilizing — as long as you ignore loans backed by the Federal Housing Administration.Increasingly, FHA-insured loans are falling into foreclosure or serious delinquency, moving in the opposite direction of loans guaranteed by Fannie Mae and Freddie Mac or those held by banks, which are all showing signs of improvement.And taxpayers could ultimately be on the hook for FHA’s growing number of troubled mortgages. The agency’s finances are already on shaky ground, and additional losses from loans going sour could prompt the need for a federal bailout, experts said.
Fitch Affirms Its ‘AAA’ Rating On the US, Keeps Outlook Negative
Fitch Ratings on Tuesday affirmed its AAA credit rating on the United States and maintained a negative outlook, citing a diversified and wealthy economy that is undermined by the government’s inability to agree on deficit reduction measures. Matt Lloyd | Bloomberg | Getty Images”The uncertainty over tax and spending policies associated with the so-called ‘fiscal cliff’ weighs on the near-term economic outlook,” Fitch said in a statement.
PFG’s Chairman Was Forging Bank Documents For Years Even As The CFTC Gave An “All Clear”
If there is an event that should cost Gary Gensler his job as head regulator at the CFTC, it is this. According to a just released Reuters report, the head of MFG(lobal) part 2, PFG, whose story we broke yesterday, Russell Wasendorf Sr. “intercepted and forged bank documents for more than two years to cover up hundreds of millions of dollars in missing money, a person close to the situation.” Once Wasendorf realized he was caught, and knew the implications of his actions would be exposed for the whole world to see, he tried to commit suicide, and failed. “Wasendorf, 64, is reported to be in a coma after a suicide attempt Monday morning, according to a complaint filed by the Commodity Futures Trading Commission on Tuesday that accuses Wasendorf and Peregrine of fraud.” And while crime happens all the time, what is truly stunning is that as we reported previously, the CFTC gave the firm a clean bill of health in its January inspection of Peregrine Financial Group. That’s 6 months ago. The CFTC, as a reminder, was it regulator. The entity whose sole charge is to make sure that firms at least have real, not rehypothecated, cash in their segregated client bank accounts. PFG never did for the past two years. And somehow the CFTC missed this. MF Global was a warning shot, and the CFTC missed it entirely. And not only that but 2 months later ir pronounced PFG clean. For this Gensler has to be fired immediately, and with prejudice.
“The few who understand the system, will either be so interested in its profits, or so dependent on its favors that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
PFGBest, Brokerage Firm, Missing Over $200 Million In Customer Funds As Founder Attempts Suicide
More than $200 million in customer funds appears to be missing from the accounts of U.S. futures broker PFGBest, regulators said on Monday just hours after the firm’s founder attempted suicide outside the company’s Iowa headquarters. The suicide attempt and missing money renewed anxiety over the stability of the brokerage industry less than a year after the collapse of much larger MF Global. PFGBest told customers their funds had been frozen and clients would be allowed to liquidate open trading positions, but would not be able to withdraw funds or make new trades until further notice. The National Futures Association (NFA), an industry group that also plays a regulatory role, said it had issued an emergency order to effectively freeze PFGBest’s operations after finding that a U.S. bank account the broker said contained $225 million in customer funds actually held only $5 million.
Exclusive: U.S. probing failed broker PFGBest’s use of small auditor
U.S. futures industry investigators are looking into why Iowa-based collapsed brokerage PFGBest used a tiny accounting firm that appears to be operating from inside a suburban Chicago home to audit its books, according to a person familiar with the matter.Experts said the use of such an auditor should have been a red flag to regulators of a futures brokerage with more than $500 million in assets and several hundred employees across the United States as well as in Shanghai and Canada.
Libor Scandal Intensifies Spotlight on Bank Regulators
As big banks face the fallout from a global investigation into interest rate manipulation, American and British lawmakers are scrutinizing regulators who failed to take action that might have prevented years of illegal activity.Politicians in both London and Washington are questioning whether regulators allowed banks to report false rates in the run-up to the 2008 financial crisis and afterward. On Monday, Congress stepped into the fray, requesting information about the role of the Federal Reserve Bank of New York, according to people close to the matter. The Senate Banking Committee on Tuesday also announced it was looking into the issue.
U.S. states look to enter Libor manipulation case
State attorneys general are jumping into the widening scandal over whether banks tried to manipulate benchmark international lending rates, a move that could open a new front against the top global banks.A handful of state attorneys general said they are looking into whether they have jurisdiction over the banks, and are starting preliminary discussions to determine what kind of impact the conduct involving the Libor rate may have had in their states.
Market Savior? Stocks Might Be 50% Lower Without Fed
What they found was that the Federal Reserve has had an outsized impact on equities relative to other asset classes. For example, the market has a tendency to rise in the 24-hour period before the release of the Fed’s statement on interest rates and the economy, presumably on expectations Chairman Ben Bernanke and his predecessor, Alan Greenspan, would discuss or implement a stimulus measure to lift asset prices.
Analysis: Fallout from JPMorgan loss may have just begun
Jamie Dimon will do his best to put the “London Whale” trading flap behind him on Friday when JPMorgan Chase & Co reports earnings, telling Wall Street that the bank has capped losses from the bad trades and found the key risk management flaw behind the positions. But that doesn’t mean the firm is off the hot seat. Former employees and experts outside the bank say JPMorgan may be underplaying deeper management problems. Senior executives at the bank missed multiple red flags at the group responsible for the bad trades, including high turnover among risk managers, that raise questions about how far up the chain blame should be assigned.
JPM’s Punshiment: Two Years Of Clawbacks For Three Traders
Behold Newton’s 3rd law of Fraudics: Every gross fraudulent action has a laughably inadequate and unequal wristslap reaction. For years of mismarking CDS and the CIO ‘Mistake’, which incidentally everyone at JPM knew about for quarters, and where JPM thought it could manipulate any market it wants simply by sheer scale and due to being the market itself (just like the Fed), the response is: 2 years of clawbacks for the key exec responsible. In other words, just like Goldman paid a “massive” SEC fine of a few hundred million for activity that allowed it to make billions in profits, so those who have made tens of millions for years end up having to pay back one or two years of ill-gotten gains. And all shall be well.
CURRENCY WARS
‘A cesspit’: Libor scandal may be going on elsewhere
Paul Tucker told MPs that Barclays’ abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information, suggesting that other markets should now be investigated. An official inquiry into Libor – which helps determine interest rates for householders and businesses – should be broadened to include several over markets where banks are trusted to report their own data, he said.
Fed’s Rosengren: Latest U.S. Jobs Data Indicate U.S. Needs Much More Growth
The latest U.S. jobs data released on Friday were disappointing and indicated that the U.S. economy needs much more growth, a top Federal Reserve official said Monday. It is possible that the U.S. authorities will come up with a fresh round of quantitative easing measures, Federal Reserve Bank of Boston President Eric Rosengren said at an economic forum in Bangkok. When asked when a third round of quantitative easing should be implemented, he said it was data-dependent. On the ongoing crisis in Europe, he said the European Union has the capacity to deal with its economic problems, but the road ahead remains bumpy and the bloc has a long way to go.
Central banks: Running out of ideas, road
On page two of today’s Wall Street Journal Europe you will find the result of a readers’ poll from last Friday: Question: Will the ECB’s rate cut help restore confidence in the bloc’s economy? Answer: 81 percent of readers say no, 19 percent yes.Last week’s round of global monetary easing – another ECB rate cut, another round of debt monetization from the BoE, another rate cut from the People’s Printing Press of China – is, of course, more of the same old same old. It has a discernible touch of desperation about it and this is not lost on the public. Monetary policy is ineffective. Or, to be precise, it is only effective in delaying a bit further the much-needed liquidation of the massive imbalances that previous monetary policy helped create, and thereby is contributing, on the margin, towards making the inevitable endgame even more painful. It is counterproductive and destructive. It is certainly not restoring confidence.
FOMC Minutes: Fed Officials Divided Over Threshold For More Action
Some Federal Reserve officials thought in June that the central bank would likely need to take more actionto help the jobs market, while others thought that would only be justified if the economic recovery loses momentum orinflation drops, according to minutes of the Fed’s last meeting released Wednesday. Fed officials at their June 19-20 meeting seemed split over whether and when the central bank should launch anothermajor stimulus program. “A few members” thought “further policy stimulus likely would be necessary to promotesatisfactory growth in employment and to ensure that the inflation rate” stays on target, according to minutes, releasedafter the customary three-week lag. However, “several others” thought that new action from the Fed “could be warranted”if the economic recovery were to lose momentum, risks to the forecast “became sufficiently pronounced,” or if inflationseemed likely to run “persistently below” the Fed’s 2% target.
Fixing Libor rates has been carried out for decades, claims bank whistleblower
Several of Britain’s largest banks have been fixing the Libor rate in the own favour for decades, a whistleblower said today.The rigging of the key interest rate has been a ‘well-kept’ secret at the heart of banking since the 1980s, several bankers have claimed.And these experts say that the Bank of England and regulators like the FSA allowed it to happen.
St. Louis Fed Chief Bullard: US Needs ‘Dramatic’ Steps to Restore Confidence
Federal Reserve Bank of St. Louis President James Bullard said the U.S. fiscal position is as weak as some euro-area countries’ and lawmakers must take “dramatic” measures to tackle it and restore confidence.“The U.S. fiscal situation is similar to that of some countries in Europe and requires dramatic and sustained attention,” Bullard said in a speech in London. “The political compromise in the U.S. has been to delay action until after the November election, but markets tend to pull the uncertainty forward.”
HSBC Reveals Problems With Internal Controls
HSBC, the largest financial institution in Europe, has become the latest British bank to reveal major internal-control problems, saying that senior officials would apologize to United States lawmakers next week for not cracking down soon enough on money-laundering activities in America.The money laundering, which a United States Senate subcommittee indicates was linked to terrorism and drug deals, could result in HSBC paying fines of up to $1 billion, according to analysts.
PM’s
Comprehensive report on gold by Erste Group’s Ronald Stoeferle
Erste Group’s commodity analyst, Ronald Stoeferle, has produced what may be the most comprehensive and incisive report about gold’s use and prospects as money throughout history and into the age of negative interest rates and “financial repression” by bankrupt governments. The report, published today and titled “Gold Report 2012 — In Gold We Trust,” concludes that gold’s rise is likely to continue as the metal is gradually reintegrated into the world financial system.Erste Group’s introduction and summary of the report is here:
What’s Iran doing with Turkish gold?
That is the question beyondbrics found itself asking after it had a look at Turkey’s latest trade figures.According to data released by the Turkish Statistical Institute (TurkStat), Turkey’s trade with Iran in May rose a whopping 513.2 per cent to hit $1.7bn. Of this, gold exports to its eastern neighbour accounted for the bulk of the increase. Nearly $1.4bn worth of gold was exported to Iran, accounting for 84 per cent of Turkey’s trade with the country.So what’s going on?
The London Gold Pool 2012
The LIBOR scandal and gold. Not something many people would put together. But over the past two weeks as news broke of the LIBOR manipulation scandal some of us in the gold world thought it sounded like an all too familiar story. However the story of gold price manipulation was never juicy enough for the press, although it seems this may slowly be on its way to changing.Ned Naylor-Leyland appeared on CNBC earlier this week and mentioned his thoughts on the LIBOR saga and his belief gold has been manipulated in a similar way over a long-time frame. CNBC picked up on it and soon ran a story on his remarks.
Gold to Hit $2,000 by Year-End on More Fed Easing: Merrill – Asia Business News
Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research at the investment bank, says he expects the Federal Reserve span#ExplainsLink a, span#ExplainsLink a img, span#ExplainsLink a:visited img, span#ExplainsLink a:visited {border:none;}to initiate an asset-purchasing program of as much as $500 billion in the second half of the year, which will drive spot gold much higher by the end of the year. “We think that $2,000 an ounce is sort of the right number,” Blanch said on CNBC Asia’s “Squawk Box” on Thursday. “We believe that ultimately the Fed will be forced to do quantitative easing span#ExplainsLink a, span#ExplainsLink a img, span#ExplainsLink a:visited img, span#ExplainsLink a:visited {border:none;}. If it happens in September, as our economists expect, we will get a rally sooner in gold. If it happens after the election (in November), we will get the rally a little bit later; probably we will touch $2000 an ounce sometime next year.”
Iranians in Turkey Collecting Gold for Central Bank, Zaman Says
Wealthy Iranians in Turkey are collecting gold on behalf of the Iranian central bank and exporting it to Iran, Turkey’s Zaman newspaper reported. The expatriates are strengthening the resources of the Islamic republic’s central bank amid concern over tougher sanctions against Iran, the Istanbul-based newspaper reported,citing a Turkish economy administration official it didn’t name. Iranians in Dubai and India are also collecting gold and sending it to the Iranian central bank, Zaman said, citing the official. Some gold is being imported into Turkey from Europe,refined or re-shaped and then exported to Iran, Zaman said.
Gold purchases made easy
When buying gold, you need to make sure that you’re getting a good deal. Are you paying a fair premium, based on gold’s market price – or are you at risk of getting ripped off by unscrupulous dealers? Is your gold actual physical metal (either coins and bars in your possession or allocated bars in a vault) or “paper gold”? Do you have the option of taking physical delivery of bullion? All these questions and more are addressed in GoldMoney’s new Ultimate Guide To Buying Gold. This 22-page pdf looks at all of the most popular ways that people own the yellow metal – be it in the form of coins, bars, ETFs, certificates, closed-end funds or GoldMoney-style bailment programmes. There’s also commentary on mining shares and futures.
China Imports More Gold From Hong Kong In Five Months Than All Of UK’s Combined Gold Holdings
There are those who say gold may go to $10,000 or to $0, or somewhere in between; in a different universe, they would be the people furiously staring at the trees. For a quick look at the forest, we suggest readers have a glance at the chart below. It shows that just in the first five months of 2012 alone, China has imported more gold, a total of 315 tons, than all the official gold holdings of the UK, at 310.3 according to the WGC/IMF (a country which infamously sold 400 tons of gold by Gordon Brown at ~$275/ounce).
The CME On Gold As Collateral And Its Unsurprising London-Based Custodian
While the increasing use of gold as accepted explicit (not implied) collateral has long been known, especially with an increasing push by Germany to receive gold as the ultimate guarantee backstop of the only viable Eurozone extension scheme, the Redemption Fund, the other side’s perspective, that of the exchanges has been missing. Now, courtesy of a report by Harriet Hunnable from the CME, titled “Some Insights into Changes in the Gold OTC market”, we can see just how the status quo views gold’s rising role in a world increasingly short of good collateral (even if, as the Chairman says, it is anything but money). And yes: that the CME has its gold custodian facilities with JPM London, where it is subsequently infinitely rehypothecatable and where it serves to restock the occasiona physical shortage here and there, does not surprise us at all.
Why do so few investors seem to understand the silver story?
t is a mystery story really: why do so few investors seem to understand the case for silver? After all the track record is formidable. Silver prices have risen 10-fold in a decade, out performing gold and pretty much any other investment available to the ordinary investor.You would need to have been a private equity investor like Mitt Romney to have done better or some kind of hedge fund rocket scientist trading derivatives in a favourable market. Silver is a boring lump of metal and anybody could have owned it. Those who did, and held their nerve during the volatility, are laughing
E-goods gobble up gold, silver
Personal computers, mobile phones, tablet computers and other electronic items gobble up a staggering 320 tonnes of gold and 7,500 tonnes of silver worldwide, experts say.Manufacturing these high-tech products requires more than $16 billion in gold and $5 billion in silver.Most of these metals will be squandered, however. Just 15 percent or less is recovered from e-waste today in developed and developing countries alike, according to a United Nations University statement.Electronic waste now contains precious metal “deposits” 40 to 50 times richer than ores mined from the ground, experts said at the first meet of GeSI and StEP E-Waste Academy in Ghana, co-organised by the UN University and the Global eSustainability Initiative (GeSI).Quantities of gold, silver and other precious metals available for recovery are rising in tandem with the fast growing sales of electronic and electrical goods.
South American Silver Plummets As Bolivia Announces It Will Nationalize One Of World’s Largest Silver Deposits
Anyone long silver miner South American Silver Corp today is not happy, because while the precious metal responsible for the company top and bottom line has risen significantly, it is our old nationalizing friend, Bolivian President Evo Morales (who last year caused substantial moves higher in silver with threats to nationalize various silver mines in his resource rich if everything else poor country) who has stolen the spotlight, with his latest announcement that he is on his way to nationalize SAC.TO’s Malku Khota property, which the company describes as “one of the world’s largest undeveloped silver, indium and gallium deposits” and which El Pais adds “is considered one of the largest undeveloped silver deposits, with reserves estimated at 230 million ounces, and at least 2,000 tons of indium, gallium and gold as well.” Of course, while this is good news for the actual precious metals as it means much more supply is coming offline, it is very bad for mining and extraction companies such as South American Silver, which stand to lose one after another property to a repeat of last year’s wave of nationalization. Indeed, at last check SAC.TO was down 27% today alone and plunging.
Bolivia to consider nationalizing embattled silver project
Bolivia will consider nationalizing Canadian miner South American Silver Corp’s (SAC.TO: Quote) silver property, President Evo Morales said on Sunday, following violent indigenous protests against the mining project. Leftist Morales, who last month took control of global commodities giant Glencore’s (GLEN.L: Quote) tin and zinc mine in the Andean country, said he hadn’t taken a final decision on whether to revoke the Canadian miner’s concession. “Nationalization is our obligation, I already raised the issue of nationalizing (the Malku Khota project) last year, and I told (local residents) to reach an agreement, because when they want we’re going to nationalize,” Morales told a farmers’ gathering.
Sprott Silver Trust Prices Follow-On Offering of Units In An Aggregate Amount of $200,005,000
Sprott Physical Silver Trust (the “Trust”) (NYSEARCA:PSLV) / (TSE:PHS.U), a trust created to invest and hold substantially all of its assets in physical silver bullion and managed by Sprott Asset Management LP, announced today that it has priced its follow-on offering of 18,100,000 transferable, redeemable units of the Trust (“Units”) at a price of US$11.05 per Unit (the “Offering”). As part of the Offering, the Trust has granted the underwriters an over-allotment option to purchase up to 2,715,000 additional Units. The gross proceeds from the Offering will be US$200,005,000 (US$230,005,750 if the underwriters exercise in full the over-allotment option).
COMMENTARY
Gordon Brown Sold Britain’s Gold at Artificially Low Prices to Bail Out a Large American Bank
The Telegraph’s Thomas Pascoe reported Thursday:One decision stands out as downright bizarre, however: the sale of the majority of Britain’s gold reserves for prices between $256 and $296 an ounce …. When Brown decided to dispose of almost 400 tonnes of gold between 1999 and 2002, he did two distinctly odd things. First, he broke with convention and announced the sale well in advance, giving the market notice that it was shortly to be flooded and forcing down the spot price. This was apparently done in the interests of “open government”, but had the effect of sending the spot price of gold to a 20-year low, as implied by basic supply and demand theory.
Libor Scandal: As New York Fed Chief, Timothy Geithner Had Multiple Meetings With Barclays
‘Libor Scandal: As New York Fed Chief, Timothy Geithner Had Multiple Meetings With Barclays’, ‘As president of the New York Federal Reserve before and during the financial crisis, Treasury Secretary Timothy Geithner met repeatedly with Barclays officials, according to documents released by the bank and the New York Fed. Though the subject of those discussions is unknown, they came at a time when Barclays was also talking to New York Fed officials about problems with an interest rate known as Libor, some five years before the bank agreed to pay $450 million…As president of the New York Federal Reserve before and during the financial crisis, Treasury Secretary Timothy Geithner met repeatedly with Barclays officials, according to documents released by the bank and the New York Fed. Though the subject of those discussions is unknown, they came at a time when Barclays was also talking to New York Fed officials about problems with an interest rate known as Libor, some five years before the bank agreed to pay $450 million to settle charges that it manipulated that interest rate.
‘Idiots` controlling the world`s economies – gold in lockdown
For some scary nighttime reading I would recommend Paul Mylchreest’s latest Thunder Road report – Part 1. Once one gets by some of the popular music and U.K. football references which may be obscure to non-Brit readers (and even to many Brits) and into the nitty-gritty of Mylchreest’ s latest irregular report, everything makes a huge amount of sense – and in the words of Hollywood hype -‘be afraid – be very afraid’. Or perhaps even more apposite might be one of the recurring catch phrases from excellent British TV comedy Dad’s Army (about the Home Guard during World War 2) – ‘We’re doomed, we’re all doomed!’
Jesse’s Café Américain: US Government Current Expenditures
I suspect that these charts might induce cognitive dissonance in some, and I am sorry for that. But these are things are they are. The sharp increase in debt under Obama is not because of increased spending, which had already increased significantly with Bush’s unfunded wars, but was precipitated primarily by a very sharp decrease in receipts, because of the tax cuts, organized tax avoidance in the predominant financial sector, and most of all the sharp falloff in economic activity from the deepest dive in employment in post war history.
Big Banks Are Rotten to the Core
Among other things, the Libor scandal is the largest insider trading scandal of all time.It also shows that the big banks are literally rotten to the core. And see this.UC Berkeley economics professor and former Secretary of Labor – Robert Reich – explains today:What’s the most basic service banks provide? Borrow money and lend it out. You put your savings in a bank to hold in trust, and the bank agrees to pay you interest on it. Or you borrow money from the bank and you agree to pay the bank interest.How is this interest rate determined? We trust that the banking system is setting today’s rate based on its best guess about the future worth of the money. And we assume that guess is based, in turn, on the cumulative market predictions of countless lenders and borrowers all over the world about the future supply and demand for the dough.
Gold Manipulation – Market, Economic, Social, Political and Life Commentary by Peter Grandich
Once again it hasn’t been hard to spot, but it doesn’t really seem to matter as few care (outside of this author, a handful of other individuals and the good people at GATA) about manipulation of markets, including gold (like the latest scandal over LIBOR, which should have caused widespread anger but most seem resigned to accept it now as business as usual).It’s absolutely foolish to think all sorts of markets are manipulated and somehow it stops at the door of the gold market. But that’s exactly what 99.9% think or just don’t seem to care and why the manipulators are now willing to virtually wear a bulls-eye on their backs when they are in the midst of doing what they do best.
The price of gold has been manipulated. This is more scandalous than Libor
The new media and the 24-hour news cycle have a great deal to answer for, not least encouraging a political class which would otherwise be happily engaged expensing duck houses into the belief that it should demonstrate perpetual action on our behalf – hence the endless stream of badly drafted legislation from the corridors of Whitehall.It does, however, reveal things that would otherwise be ignored. The issue of manipulation in the gold market which I wrote about last week is a case in point. The ball of half-truths and downright lies which have surrounded the issue for a long time is beginning to unspool in an issue internet activists kept alive long before it was acknowledged by the mainstream media.
The Seeds For An Even Bigger Crisis Have Been Sown
On occasion of the publication of his new gold report, Ronald Stoeferle talked with financial journalist Lars Schall about fundamental gold topics such as: “financial repression“; market interventions; the oil-gold ratio; the renaissance of gold in finance; “Exeter’s Pyramid”; and what the true “value” of gold could actually look like.
When bailouts don’t work
Sometimes bailouts do not achieve what is intended, which is one reason they should be avoided. The people of Iceland apparently have some discerning insight into this basic financial reality. When a financial collapse over three years ago sent their economy into a tailspin, Icelanders were given a chance to vote on whether they should impose more debt on themselves in order to bail out insolvent banks. The Icelanders decided to reject the proposed debt burden and the accompanying draconian austerity that would be required. As it turns out, they chose wisely. Happily, Iceland’s economy is back on its feet. As the BBC reported a few months ago: “Iceland is safe to invest in again, according to Fitch, which has upgraded its credit rating three years after its economy spectacularly collapsed.” In contrast to what happened in Iceland, people in the eurozone were not given a chance to vote on the serial bailouts or the oppressive austerity measures that were intended to solve Europe’s long simmering bank and sovereign debt crises, but have failed to do so. Consequently, following the Spanish election that resulted in a leadership change, the recent election results in Greece and France that dealt incumbents with stunning losses should not be a surprise. They should be seen as an inevitable reaction by citizens in those countries rejecting the economic choices made by their governments.
Jawbone of an Ass
So it turns out that the great scandal of the London Interbank Offered Rate has spilled over to the Federal Reserve. It seems, according to a dispatch of Reuters, that the Federal Reserve Bank of New York “may have known as early as August 2007 that the setting of global benchmark interest rates was flawed.” It was consulted when the problems first arose at Britain, and it sent some suggestions for reform. But these are now looking inadequate. “As one of the world’s most powerful regulators, the New York Fed has the power to ‘jawbone’ banks to force them to make tough decisions,” Reuters reported, attributing the point to a former associate general counsel at the Federal Reserve in Washington, Oliver Ireland.
Many Wall Street executives says wrongdoing is necessary: survey
If the ancient Greek philosopher Diogenes were to go out with his lantern in search of an honest man today, a survey of Wall Street executives on workplace conduct suggests he might have to look elsewhere.A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.
Gold v paper money: Which should we trust more?
A popular solution to the financial crisis has been to print more money, but is there another way of fixing our economy? Would the financial system be more stable if each pound, dollar or euro in our pocket was once again backed by gold? Brian from Manchester has lost faith in money. After selling his house, he decided to turn his cash into something he says he can trust – gold. “I started in 2005 and now I’ve got £200,000 worth – about half of what I own – in gold. “If I kept all my money in the bank, the value of my work would either devalue over the long-term or it would be wiped out.” Brian’s worry is that inflation will erode the value of his savings over time, or worse still, that fragile banks and governments will fail to protect them in another financial crisis.
Guest Post: Propping Up The Gold Price?
The obvious thing, though — even if we take central bank buying out of the equation altogether — is that total demand for gold is still increasing. And the price of gold has increased faster than sales, illustrating that the market has struggled and continues to struggle to keep pace with underlying demand. And it’s not just demand for gold-denominated paper (i.e. ETFs or other such as-risky-as-anything-you’ll-get-from-MF Global assets) — it’s recently manifested as demand for hard physical gold:
Sprott Sees Record Gold in 2012: Corporate Canada
Gold will climb to a record byyearend as the global economy slows from the weight of too muchdebt, says Eric Sprott, the founder and chairman of Canadianfund manager Sprott Inc. (SII) “I just can’t imagine the demand for gold is going down,”he said in a July 9 interview at Bloomberg’s Toronto office. “Idon’t personally see a solution to the problem that we’re in,the financial leveraging issue that we all have where everybodywants to shed debt and there’s no buyers.” Sprott’s company manages funds investing mainly in gold,silver, and precious-metals equities. He expects bullion willrise as investors seek the safest assets while governments spendto stimulate their economies, increasing chances that inflationwill accelerate.
Gold market manipulation issue seeping into polite company
Commentary concurring that the gold market is or is probably manipulated by central banks for the same reasons the LIBOR interest rate was manipulated is turning up frequently now. Jan Skoyles of The Real Asset Co. today notes, as GATA has been doing for a while, that the current manipulation just continues in secret the central bank manipulation that was conducted in the open through the London Gold Pool in the 1960s. Skoyles’ commentary is headlined “The London Gold Pool 2012″:
Step-By-Step: How To Fix Europe
As we prepare to push off from Green Turtle Cay tomorrow morning and “Wishes Granted” heads back to Fort Lauderdale I look over the ocean and wonder what has changed since I began my journey. There is nothing quite like “messing around on boats” or those moments in the early morning before the sun tips over the horizon to consider the financial seas. After almost four decades of messing about on Wall Street I visualize the times and tides from a long perspective of having ridden the waves of both calm and storm. With record low Treasury yields it is clear that the bond markets think we are about to embark upon a difficult journey while the equity markets are still regaling in the quarters past and concentrated on the technicals of the rigging. The bond markets have read the charts and looked at the weather ahead more correctly I fear and the length of our European journey changes nothing about the difficulty of the upcoming passage.
AUDIO/VISUAL
Michael Pento – “Central Banks Will Do Anything”
Michael Pento
From the world champions of ‘Rant’:
Always entertaining, Biderman:
Jim Grant Discusses The Fed’s ‘Backward Shooting Gun’, And Black Walnut Tree Treasury Replacements
Yesterday, when discussing the forthcoming implications of the Libor scandal, we said that in the barrage of coming lawsuits, “the entity that will be sued by proxy is the Federal Reserve, whose Federal Funds rate is really the setter (manipulation – JL) for the baseline Libor rate.” This claim came at an opportune time, just hours before one of the Fed’s most vocal critics (and gold standard advocates), Jim Grant, appeared on TV to discuss precisely the same thing. Best summarizing his position is a cartoon that appeared in a recent issue of Grant’s Interest Rate Observer in the context of Lieborgate, and who is really at fault here.
The Chronology Of A Collapse: Santelli’s Primer On The PFG Debacle
There remains some confusion about the timing of actions around the PFG Best disaster. From withdrawn salary cuts to liquidation-only orders to forced liquidations from Friday to today, CNBC’s Rick Santelli provides a succinct and shocking insight into what real money accounts and brokers have dealt with and continue to try to comprehend. The sad truth about where the money went is summed up by his guest that “we’re just hearing rumors; it could be, on a percentage basis, worse than MF Global.”