Posted at 9:55 PM (CST) by & filed under In The News.

My Dear Friends,

Even though a trip to Toronto is easy travel for me, preparations for today, multiple meetings tomorrow, and the following day for my corporate AGM took its toll.

It is quite clear that with present market conditions for all gold juniors that graduating into low cost producers is a must. Let me assure you exploration is a walk in the park compared to production, which requires many things, least of which is a clear strategy of operation. I am involved with activities in Africa more and more every day.

The combination of a board meeting, AGM and general business meetings had me tied up today and increasingly so tomorrow.

Posted below is a write up that is part of the Holter/Sinclair collaboration which I feel is extremely relevant in present time.

Friday should be a more manageable schedule when I plan to return.

Sincerely,
Jim

Posted at 9:51 PM (CST) by & filed under Bill Holter.

Dear CIGAS,

The title is of course a little misleading because China has many options, none of which except one in my opinion will actually work.  Options to what exactly you ask?  Options to a collapsing global economy and an imploding financial system which will surely affect China as much as anywhere else, but with one caveat.  I take these events as a given, others do not but betting against an outright panic and global bankruptcy is betting against pure mathematics itself.

Let’s back up a little bit and look at where China is currently.  They are the second largest economy in the world (maybe the largest, we can’t really know because the numbers here, there, and everywhere are made up).  China is by far THE largest manufacturer in the world and also an enormous exporter.  China is also in a three horse race as to who owns the most U.S. Treasuries with Japan and unbelievably the Federal Reserve itself.  They have an oversized shadow banking system which has already been shown as fraudulent in several cases regarding copper, zinc and lead as "collateral" (or not).

The Chinese also have a stock market bubble boiling that makes the tulip craze http://www.zerohedge.com/news/2015-05-22/chinas-tulipmania-full-frontal-shenzhens-parabolic-stocks-just-hit-67x-pe  look tame.  Because of sheer size of the country, they are opening something like four million brokerage accounts per month.  In recent days they have had several stocks hit new highs only to drop 50-60% or more in just one day.  In fact, they had one company stock hit a new high and then go to ZERO the following day because it was discovered their books were cooked to a crisp.

We also know China is a huge importer of gold AND the largest producer of gold in the world.  NONE of their production ever leaves their borders.  There have been estimates of gold tonnage held by many.  Alisdair Mcleod believes they may have 25,000 tons or more, I personally believe it is possible if you include legacy or "elders" gold.  Others believe the number is closer to the 5,000 ton range.  My belief is that 10,000 tons is a justifiable number and very easily proven, if this is true, much of it had come from the U.S. and other Western sources and thus depleting the reserves.  

I assume the number is 10,000 tons or more, this is a safe number in my mind.  I think it is also a safe bet to say the U.S. has sold a minimum of one half of "our" gold which would leave about 4,000 tons.  If this is the case, there is already a  new world order where China has as much gold as numbers 2, 3 and 4.  Looking backwards in time, after the Bretton Woods agreement, the U.S. had every incentive to keep the "price" of gold down at $35.  This is so and evidenced by the old saying "it’s as good as gold".  The saying originally came about as a description of the dollar.  As it turns out, the dollar was NOT as good as gold, in fact it was not as good as anything, even a cup of coffee.  The dollar was overprinted and abused (inflated) by politicians (the Fed) in order to hide anything and everything "bad".  This worked until we hit the wall, let’s call this wall "debt saturation".  Now, the process is reversing and will end in a massive deflation versus real money while fiat currencies follow their issuers into insolvency.

Getting back to China, whenever they do make an announcement of how much gold they have, the yuan will appreciate greatly versus all fiat currencies.  Many will pooh pooh this thought because "China will never do that, they will kill their own manufacturing base".  Let me answer this before moving forward.  The Chinese are very smart people, they can see the West is hitting the debt wall.  They also know that as the wall is hit and markets begin to implode, their "customers" are going to have an even harder time buying Chinese produced goods.  In fact, they already know this.  They already know this is happening and can see it in their trade figures …which is why they recently formed the AIIB and are working feverishly to open the "old silk road" trade route!  They are simply lining up new customers from one end of the silk road to the other!

I have hypothesized many times in the past, China has built out their infrastructure and even "ghost cities" using credit.  Once the credit markets begin to default, they will be left with "stuff", in place and will last for the next 50 to 100 years.  Roads, bridges, buildings, airports, ports, etc., you name it they have already built it.  And yes, their stock market will crash, their real estate market is already softening, in reverse and declining.  I am not saying it will be all rosy, to the contrary, there will be bankruptcies galore in China… with a caveat.  The "government" of China will go through this liquidation phase with the most gold in the world.

Moving forward, since China will be hurt badly as investments default, I believe they will re price their gold higher initially.  I believe marking their gold higher in terms of yuan will be their only option.  They will be forced to in order to "recapitalize" themselves (and their banking system) and begin to fill in the black holes created by defaulted U.S. Treasuries and other "assets" held.  You see, not only is the old saying "he who owns the gold makes the rules" true, it is also true that he who owns the gold has the ability to PRICE IT. 

This has been true for so many years as the U.S. (the West) has wanted low gold prices as a show or display that their fiat currencies were "good".  Now, as the curtain goes down on the West, China will want a very high gold price in yuan for when the curtain rises again.  A gold price maybe even higher than it should be will give the PBOC more power initially AND will allow them some room to inflate and grow.  Please notice I am only talking about China in this paragraph.  As for the dollar and other Western currencies, they will be revalued downward versus the yuan which gives gold priced in dollars a double whammy of re pricing.

Let’s tie this all together and look at the old silk road and the trade route China is focusing on.  It goes from Asia, through the Middles East and into Europe.  Could this be why various European nations are repatriating their gold?  Not only because they have lost trust in their custodian but they also know China will put an emphasis on gold holdings in the future?  What do many Asians hold as money?  Yes, Gold.  Indians?  Gold.  Arabs?  Again gold.  The point I am trying to make is the "old silk road" might as well be called the "yellow brick road" and one paved with gold from beginning to end!  It seems to me, the only ones who don’t understand this or even disagree are Westerners and in particular, Americans.  Our standard of living is about to pulled right out from under us while violently proclaiming "it can never happen".  I would say, it should have already happened but has not because we still had a few kilos left to supply the paving crew of the "Wizard of OZ paving company".

The above was finished midday on Saturday, since then two new pieces of news have come out.  First, China announced it is setting up "the world’s largest gold fund"  http://www.zerohedge.com/news/2015-05-24/china-establishes-worlds-largest-physical-gold-fund  .  They will earmark $16 billon to purchase physical gold.  If you do the math, this is around 500 tons or about 20% of global production.  By calling it "the world’s largest gold fund", maybe China is saying they do not believe "GLD" is real?  Just an observation. 

  In the latest piece of news, http://rt.com/business/261289-brics-new-development-bank/ RT ran an editorial piece pointing out that China already lends more to Africa and Latin America than the World Bank and IMF combined.  Is this posturing "for" the Chinese before the IMF readjusts the SDR?  Seemingly disconnected pieces to the puzzle, don’t bet on it!

Regards, Bill Holter for;
Holter/Sinclair collaboration. 
Comments welcome!  [email protected]

Posted at 1:11 PM (CST) by & filed under In The News.

Greek "Anti-Austerity" Wave Spreads In Dramatic Loss For Spanish Status Quo
Submitted by Tyler Durden on 05/25/2015 08:51 -0400

Last week in “Portugal’s Left Wing Forces Threaten Troika Revolt,” we highlighted the country’s Socialist Party which is enjoying a lead in the polls ahead of elections expected in October and which has pledged to implement a “reverse policy” as it relates to austerity and the country’s creditors. We argued that the ascendancy of left-wing political parties across the periphery means Europe will take an increasingly hard-line stance in negotiations with Greece. Here’s how put it:

The reason why concessions (any concessions) to the Greeks are a non-starter in Athens’ negotiations with creditors is that the IMF, the European Commission, and most especially Germany, want to send a clear message to any other ‘leftist radicals’ who may be thinking about using the "one move and the idea of EMU indissolubility gets it" routine as a way to negotiate for breathing room on austerity pledges, will get exactly nowhere and will have a very unpleasant time on the way.

With just 10 days until a June 5 IMF payment that Athens almost certainly will not make unless it strikes a deal for the disbursement of more bailout funds, things just got quite a bit more interesting on the political front after Spain’s Popular Party was dealt a dramatic electoral blow on Sunday by the leftist Podemos and center-right Ciudadanos. WSJ has more:

Spanish voters punished the governing Popular Party in regional and municipal elections, throwing significant support to two upstart parties that capitalized on anger over high unemployment, cuts in public spending and corruption.

Near-complete returns showed that Prime Minister Mariano Rajoy’s conservative party was assured of retaining control of only three of the 13 regions that elected parliaments Sunday. That is a reversal of the party’s dominance in 2011, when it won in 10 regions, eight with absolute majorities.

Although it gathered the most votes nationwide, the Popular Party could be hard-pressed to form functional governments in many former strongholds, including the city of Madrid, without support from smaller parties.

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Posted at 1:11 PM (CST) by & filed under USAWatchdog.com.

Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Bill Murphy, Chairman of GATA (Gold Anti-Trust Action Committee), says precious metal prices have been relentlessly rigged by central banks and governments.  Murphy contends, “If gold were to just to have kept pace with inflation, forget all the QE, it would be double what it is today.  That’s how artificially low the price of gold is today, and also silver.  Once they lose control of silver, it will go from $22 to $100 per ounce very fast.”

Murphy claims that one reason precious metal prices are suppressed is central banks are afraid of what Murphy calls “a derivative nightmare” touched off by a rising gold and silver prices.  Murphy explains, “We saw some of this before in 2008.  There is counter-party risk all over the place, and it could set off like a nuclear reaction where there is one default after another.   Derivatives have exploded to $250 trillion, or just pick a number.  They don’t know what the outcome could be if they start getting this kind of reaction.  So, they are maniacal in trying to keep the gold and silver prices in line.”

Murphy goes on to point out, “Silver is the only market that in which the authorities have not found wrongdoing in a market they have been investigating–the only one after a five year investigation.  It is bizarre how that could happen.  All this evidence we have collected is like a murder trial.  If you were sitting on a jury . . .  and looked at all the evidence, you would say guilty beyond a reasonable doubt.  People don’t want to go there because we (GATA) are taking on all the money and power in the world.”

The U.S. Justice Department has recently granted UBS immunity in a criminal investigation of “manipulation of, or fraud in” the gold and silver markets.  Why a serious Justice Department investigation now?  Murphy says, “I am so skeptical after all these years, and it’s a question of where they go with this.  If they are just talking about the gold fix itself—big deal.  The ramification of how they are interfering with the markets all the time is the real issue.  Why are they doing this now?  Well, probably because it is so obvious, and they have been doing it in so many other markets they feel compelled to do something, so they are going here. . . . This is going to effect a lot of people, if I am correct, when this market blows up.  Maybe they see something coming with allocated accounts and the gold isn’t there. . . . They know it’s coming, and maybe they are trying to preempt something here so they don’t look so bad.”

More…

Posted at 10:07 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The Krugman article is worth a read. I guess we can take out tin hat off and distrust of government is not mental disease as it is as some now want it classified.

Errors and Lies
Paul Krugman

Surprise! It turns out that there’s something to be said for having the brother of a failed president make his own run for the White House. Thanks to Jeb Bush, we may finally have the frank discussion of the Iraq invasion we should have had a decade ago.

But many influential people — not just Mr. Bush — would prefer that we not have that discussion. There’s a palpable sense right now of the political and media elite trying to draw a line under the subject. Yes, the narrative goes, we now know that invading Iraq was a terrible mistake, and it’s about time that everyone admits it. Now let’s move on.

Well, let’s not — because that’s a false narrative, and everyone who was involved in the debate over the war knows that it’s false. The Iraq war wasn’t an innocent mistake, a venture undertaken on the basis of intelligence that turned out to be wrong. America invaded Iraq because the Bush administration wanted a war. The public justifications for the invasion were nothing but pretexts, and falsified pretexts at that. We were, in a fundamental sense, lied into war.

The fraudulence of the case for war was actually obvious even at the time: the ever-shifting arguments for an unchanging goal were a dead giveaway.

So were the word games — the talk about W.M.D that conflated chemical weapons (which many people did think Saddam had) with nukes, the constant insinuations that Iraq was somehow behind 9/11.

And at this point we have plenty of evidence to confirm everything the war’s opponents were saying. We now know, for example, that on 9/11 itself — literally before the dust had settled — Donald Rumsfeld, the secretary of defense, was already plotting war against a regime that had nothing to do with the terrorist attack. “Judge whether good enough [to] hit S.H. [Saddam Hussein] …sweep it all up things related and not”; so read notes taken by Mr. Rumsfeld’s aide.

This was, in short, a war the White House wanted, and all of the supposed mistakes that, as Jeb puts it, “were made” by someone unnamed actually flowed from this underlying desire. Did the intelligence agencies wrongly conclude that Iraq had chemical weapons and a nuclear program? That’s because they were under intense pressure to justify the war. Did prewar assessments vastly understate the difficulty and cost of occupation? That’s because the war party didn’t want to hear anything that might raise doubts about the rush to invade. Indeed, the Army’s chief of staff was effectively fired for questioning claims that the occupation phase would be cheap and easy.

Why did they want a war? That’s a harder question to answer. Some of the warmongers believed that deploying shock and awe in Iraq would enhance American power and influence around the world. Some saw Iraq as a sort of pilot project, preparation for a series of regime changes. And it’s hard to avoid the suspicion that there was a strong element of wagging the dog, of using military triumph to strengthen the Republican brand at home.

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Today’s CPI Lesson: The Fed’s 2% Inflation Target Is Completely Stupid
by David Stockman • May 22, 2015

The madness of the Fed’s pending 81 month run of zero interest rates comes down to an inflation subterfuge that has no logical or empirical grounding in real world economics. Essentially, the Keynesians who currently inhabit the Eccles Building have turned all of central banking’s anti-inflation history on its head, saying, instead, that there is not enough of it to create optimum economic growth and wealth; and, besides, the CPI is running below the 2% target—so prolonging the free money gravy train can’t do much harm.

Every part of that proposition is dead wrong. To wit, free money does immense harm by fueling rampant carry trade speculation; there is zero evidence that 2% inflation results in any more growth than 1% or even 0% inflation; and, as an empirical matter, there is plenty of inflation in the US economy and has been during the entire past 15 years of rampant money printing designed to stimulate more growth.

Still, real final sales in the US economy have grown at only a 1.8% rate since the year 2000, or by just half of the 3.5% rate recorded for the prior 46 years. But that downshift is not in any way attributable to inflation missing the allegedly optimum 2% target. In fact, during the last 15 years the CPI has increased at an average rate of exactly 2.18%.

So where’s the beef or rather the allegedly missing beef? Well, the monetary high priests hold that the PCE deflator, not the CPI, is the correct measure of inflation because it takes better account of changing consumer preferences or weighting shifts in the market basket of what people buy. That is, it captures their shifting to chicken, tuna or spam when they can’t afford steak.

Yet its hard to believe that the scant daylight shown in the chart below accounts for the drastic deterioration of economic growth during the last 15 years. In other words, we have had 2% inflation on the most commonly used measuring stick—-so what’s wrong with the ruler?

After all, even the Fed’s own preferred inflation ruler has clocked in at 1.84% per year since the year 2000.  Presumably no adult would argue that a shortfall of 16bps per year from the magic 2.0% target would account for the 50% plunge in real economic growth during the last decade and one-half.

And this gets us to today’s report on the April CPI. Normally, Fed heads prefer the PCE deflator less food and energy on the grounds that the later elements are too volatile to properly measure the actual inflation trend.  Alrighty then. The April index for people who prefer to starve and shiver in the dark came in at a 3.6% rate for the month and was 1.8% higher than last April.

Unless you are some kind of monetary monk counting bps of inflation on the head of a pin, therefore, you might say “mission accomplished”. Inflation is running close enough to the magic 2.0% threshold for government work.

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Jim Sinclair’s Commentary

It is all happening now if you have eyes to see.

Austria Confirms Faith In Fiat Fading: Repatriates 110 Tons Of Gold From BOE
Submitted by Tyler Durden on 05/22/2015 11:43 -0400

Six months ago we warned that Austria was considering it, and now, as Kronen-Zeitung reports, with no rigged Swiss-like referendum required, Austrian Central Bank Governor, and the person many claim is in Mario Draghi’s inner circle of trust (soon to be revised) Edwald Nowotny has committed to repatriating 110 tonnes of gold. This is part of Nowotny’s new "gold strategy" and with his position (on paper) as one of Draghi’s foremost lieutenants, appears to be a big stab in the back for super money printing Mario. 

While gold withdrawals from the NY Fed have been incessant over the past year…

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… this time it appears the Bank of England faces the trust-fall as 80% of Vienna’s gold is held there.

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CENTRAL BANK TO BRING MOST GOLD RESERVES BACK TO AUSTRIA: KRONE

KRONEN-ZEITUNG REPORTS ON AUSTRIAN CENTRAL BANK’S GOLD PLANS

AUSTRIA TO TRANSPORT 110 TONNES GOLD BACK TO AUSTRIA: KRONE

Austrian central bank plans to keep 50% of its gold reserves in Austria vs 17% now, Kronen-Zeitung reports, citing governor Ewald Nowotny’s unpublished new “gold strategy.” Bloomberg adds,

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Jim Sinclair’s Commentary

This research company sure has the right name.

Negative Views of New Congress Cross Party Lines
Republicans Want GOP Leaders to Challenge Obama More Often

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The new Republican-led Congress is drawing harsh reviews from the public – including most Republicans. Just 23% of Americans say congressional Republicans are keeping the promises they made during last fall’s campaign, while 65% say they are not.

Nearly four-in-ten (37%) say the new Congress has accomplished less than they expected, while 4% say it has accomplished more than expected. About half (53%) say its accomplishments are in line with what they expected.

On both measures, the public’s views are far more negative than they were of the Democratic-led Congress in March 2007, after the Democrats regained control of both chambers following several years of Republican control. Views are also much more negative than they were in April 1995, shortly after the GOP had gained control of the House and Senate for the first time in four decades.

The new national survey by the Pew Research Center, conducted May 12-18 among 2,002 adults, finds that just 22% approve of the job performance of Republican congressional leaders, little changed since the summer of 2011. Ratings for Democratic congressional leaders are somewhat better (33% approve).

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Unlike after some previous partisan turnovers on Capitol Hill, negative assessments of the new Congress now cross party lines. Today, just 41% of Republicans approve of the job their party’s leaders in Congress are doing. By comparison, in April 2011, 60% of Republicans approved of GOP leaders’ job performance and in April 1995, 78% approved of GOP leadership’s policies and proposals.

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JPMorgan Officially Apologizes For Being A Criminal Market Manipulator
Tyler Durden on 05/22/2015 13:40 -0400

Presented with little comment, aside to ask – how many ‘people’ went to jail for this?

Via JPMorgan,

MAY 20, 2015 DISCLOSURE NOTICE
The purpose of this notice is to disclose certain practices of JPMorgan Chase & Co. and its affiliates (together, “JPMorgan Chase” or the “Firm”) when it acted as a dealer, on a principal basis, in the spot foreign exchange (“FX”) markets. We want to ensure that there are no ambiguities or misunderstandings regarding those practices.

To begin, conduct by certain individuals has fallen short of the Firm’s expectations.The conduct underlying the criminal antitrust charge by the Department of Justice is unacceptable. Moreover, as described in our November 2014 settlement with the U.K. Financial Conduct Authority relating to our spot FX business, in certain instances during the period 2008 to 2013, certain employees intentionally disclosed information relating to the identity of clients or the nature of clients’ activities to third parties in order to generate revenue for the Firm. This also was contrary to the Firm’s policies, unacceptable, and wrong. The Firm does not tolerate such conduct and already has committed significant resources in strengthening its controls surrounding our FX business.

The Firm has engaged in other practices on occasion, including:

We added markup to price quotes using hand signals and/or other internal arrangements or communications. Specifically, when obtaining price quotes for bids or offers from the Firm, certain clients requested to be placed on open telephone lines, meaning the client could hear pricing not only from a salesperson, but also from the trader who would be executing the client’s order. In certain instances, certain of our salespeople used hand signals to indicate to the trader to add markup to the price being quoted to the client on the open telephone line, so as to avoid informing the client listening on the phone of the markup and/or the amount of the markup. For example, prior to agreement between the client and the Firm to transact for the purchase of €100, a salesperson would, in certain instances, indicate with hand signals that the trader should add two pips of markup in providing a specific price to the client (e.g., a EURUSD rate of 1.1202, rather than 1.1200) in order to earn the Firm markup in connection with the prospective transaction.

We have, without informing clients, worked limit orders at levels (i.e., prices) better than the limit order price so that we would earn a spread or markup in connection with our execution of such orders. This practice could have impacted clients in the following ways: (1) clients’ limit orders would be filled at a time later than when the Firm could have obtained currency in the market at the limit orders’ prices, and (2) clients’ limit orders would not be filled at all, even though the Firm had or could have obtained currency in the market at the limit orders’ prices. For example, if we accepted an order to purchase €100 at a limit of 1.1200 EURUSD, we might choose to try to purchase the currency at a EURUSD rate of 1.1199 or better so that, when we sought in turn to fill the client’s order at the order price (i.e., 1.1200), we would make a spread or markup of 1 pip or better on the transaction. If the Firm were unable to obtain the currency at the 1.1199 price, the clients’ order may not be filled as a result of our choice to make this spread or markup.

We made decisions not to fill clients’ limit orders at all, or to fill them only in part, in order to profit from a spread or markup in connection with our execution of such orders. For example, if we accepted a limit order to purchase €100 at a EURUSD rate of 1.1200, we would in certain instances only partially fill the order (e.g., €70) even when we had obtained (or might have been able to obtain) the full €100 at a EURUSD rate of 1.1200 or better in the marketplace. We did so because of other anticipated client demand, liquidity, a decision by the Firm to keep inventory at a more advantageous price to the Firm, or for other reasons. In doing so, we did not inform our clients as to our reasons for not filling the entirety of their orders.

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ISIS seizes last Syria-Iraq border crossing 
DEBKAfile May 22, 2015, 6:39 PM (IDT)

The loss of the al-Tanf (known as al-Waleed in Iraq) crossing to ISIS Thursday night followed the Syrian army’s defeat at the ancient city of Palmyra. DEBKAfile adds: With the capture of the Al-Tanif crossing point, the Islamic State has strengthened its grip on its adjacent holdings – Deir el-Zour in Syria and Anbar region in Iraq. The London-based opposition center says that the Islamic State now controls more than 95,000 sq km of Syria – roughly half of the country’s area.

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SEC Commissioner Furious That SEC Has Made A Mockery Of "Recidivist Criminal Behavior" By Banks
Submitted by Tyler Durden on 05/22/2015 07:58 -0400

Yesterday, in the aftermath of the latest settlement by the world’s biggest banks, who finally admitted they have criminally rigged virtually all markets since the Great Financial Crisis (and prior) despite promising repeatedly they would not do that after having been caught time and again and punished with ever "harsher" wristslaps, we wrote that the "Public Is Confused Why World’s Biggest Banks Admitting Criminal Fraud, Leads To Public Yawns."

It appears the public is not the only one who is confused, or yawning, that yet again banks get away with just another penalty (to be paid by their shareholders) and zero jail time for the perpetrators despite what is supposedly "criminal" rigging: none other than a SEC regulator working for the same enforcer who "punished" the Too Big To Prosecute banks only to immediately grant them waivers to continue business as usual, is just as confused.

Here, two weeks after SEC commissioner Cara Stein raged that the SEC would turn a blind eye to Germany’s Deutsche Bank for a "Decade Of Lying, Cheating, And Stealing", is her dissenting opinion with the SEC settlement, this time broadening her anger to include all the banks, not just the German one.

* * *

Dissenting Statement Regarding Certain Waivers Granted by the Commission for Certain Entities Pleading Guilty to Criminal Charges Involving Manipulation of Foreign Exchange Rates

Commissioner Kara M. Stein

May 21, 2015

I dissent from the Commission’s Orders, issued on May 20, 2015, that granted the following waivers from an array of disqualifications required by federal securities regulations:

UBS AG, Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. (“JPMC”), and the Royal Bank of Scotland Group Plc (“RBSG”), waivers from the provisions under Commission rules that automatically make them ineligible for well-known seasoned issuer (“WKSI”) status;

UBS AG, Barclays, and JPMC waivers from automatic disqualification provisions related to the safe harbor for forward-looking statements under Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934; and

UBS AG and three Barclays entities waivers from the automatic Bad Actor disqualification provided under Rule 506.

The disqualifications were triggered for generally the same behavior: a criminal conspiracy to manipulate exchange rates in the foreign currency exchange spot market (“FX Spot Market”), a global market for buying and selling currencies.  Traders at these firms “entered into and engaged in a combination and conspiracy to fix, stabilize, maintain, increase or decrease the price of, and rig bids and offers for,” the euro-dollar foreign currency exchange (“FX”).  To carry out their scheme, the conspirators communicated and coordinated trading almost daily in an exclusive online chat room that the traders referred to as “The Cartel” or “The Mafia.” Additionally, salespeople and traders lied to customers in order to collect undisclosed markups in certain transactions.  This criminal behavior went on for years, unchecked and undeterred.

There are compelling reasons to reject these requests to waive the automatic disqualifications required by statute or rule.  Chief among them, however, is the recidivism of these institutions.   For example, in the face of the FX criminal action, a majority of the Commission has determined to grant Citigroup yet another WKSI waiver, its fourth since 2006.  It is worth noting that Citigroup was automatically disqualified from WKSI status between 2010 and 2013 for unrelated misconduct, meaning that it has effectively now triggered WKSI disqualifications five times in roughly nine years.  Further, through this latest round of Orders, the Commission has granted:

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Posted at 10:02 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

Very soon we will be entering the month of June. Normally June is the time of year in the northern hemisphere when people think of picnics, parks, water sports and the outdoors. It is a time where plans are made for vacation, rest and relaxation. This year may be a little bit different. I say "different" because there is a plethora of converging events, any single one of them with the ability to take the financial markets down to their knees!

Let’s first list the events (which may not even be all inclusive because I either forgot something or am unaware of). What I see converging in June is as follows; the Austrian mortgage banks and banking sector, Greece, Ukraine, India, Russian sanctions, a Russian/Chinese announcement, the "very secret" TPP, and let’s not forget the second largest gold expiration on COMEX.

Since we know so little about the TPP (Trans Pacific Partnership), let’s start with this one. We know so little about it because it is being negotiated in secrecy. So "secret" in fact, anyone who gets to see what is written so far is threatened with jail time if they divulge anything about it http://www.zerohedge.com/news/2015-05-19/someone-finally-read-obamas-secret-trade-deal-and-admits-tpp-will-damage-nation . This harks back to Obamacare when Nancy Pelosi once giggled like a little school girl and said "we have to pass it to see what’s in it!". Fast forward and yes, we now know what was in it, a healthcare industry in turmoil, higher premiums and a "tax" if you don’t participate… Going all the way back to NAFTA, none of these deals has been "good" for the American worker, one can only imagine how deafening that "giant sucking sound" will be that Ross Perot first heard in 1991? Not even sure how this is possible, our legislative process has been kidnapped with no ransom even requested. If this masterpiece gets unveiled in June, a wonder as to market reaction?

Next there is the Austrian mortgage bank Hypo Alpe Adria, will they make their smallish payment of 500 million euros or will they start a chain reaction? If you recall, this pinch came about when the Swiss de pegged the franc and revalued some 20-30% higher within 10 minutes, in many cases it made the loans in Swiss francs worth more than the underlying properties themselves. The southern province of Carinthia has already backed away from pledges previously made by simply saying "we can’t pay". An important understanding is how all of these banks …own each others debt. In other words, the "cross ownership" of debt means that when one goes down it will act as a hit to many of the other’s portfolios. While this is not a huge trigger, all of Eastern Europe can and will be affected by what originated from the Swiss de pegging the franc from the Euro. With the system as illiquid as it is, there is no telling how far this one could reverberate?

On to Greece, they have already raided pension funds and sequestered local monies, June 5th is the deadline according to their finance minister. They owe 320 billion euros, they do not have the money to pay nor do they have a printing press to create it. The only way out is to borrow more …or default and fall into the open arms of Russia and China. The latter seems most likely to me. Greece is a natural trading partner with Russia and does sit along the "old silk road", moving away from the U.S. and even the Eurozone seems a natural. Please remember the big "nut" here is not the 320 billion euros, it is the CDS written in multiples on their debt AND the interest rate swaps in existence, these are in the TRILLIONS, not chickenfeed in an already illiquid world!

Logically, the next one to segue into is Russia and the NATO sanctions due to expire …in June. If a vote were to be taken today, would the sanctions be re imposed? Would Germany vote for them? Will Greece vote for them if they are still a member of NATO by June? Please understand the relationship between Mrs. Merkel and Mr. Putin, they "used to" talk on the phone daily …until the NSA spying revelations of last year. Will Mrs. Merkel go for more sanctions? What will she do about further aid to Greece. Greece has the ability to ignite many things, financially and politically all bad for the West.

Moving along, let’s look at Ukraine. The IMF is seeking a restructuring (read haircut) on $10 billion worth of Ukrainian debt with private holders. This the IMF says is necessary before another aid package of $40 billion is approved http://www.reuters.com/article/2015/04/14/us-ukraine-crisis-imf-idUSKBN0N50MV20150414 . The "haircuts" requested are in the neighborhood of 40-50%, will this one fly? Let’s not forget, Russia lent $3 billion to Ukraine in late 2013, I wouldn’t bet they will be accepting haircuts any time soon. In fact, wouldn’t it behoove Russia to watch Ukraine default …and further pressure the financial system of the West? Interestingly, John Kerry just met over the weekend with Russian minister Lavrov, what exactly did they talk about? If I had to speculate, my guess would be the U.S. has just walked away from this pink elephant. But why? Why would the U.S. walk away now?

Again, further speculation but it seems to me quite odd that Russia would announce "Chinese gold holdings" of 30,000 tons via Pravda. To rehash this, would Pravda have released this article without Moscow’s permission? Would Moscow have given permission without the approval from Beijing? Was Mr. Kerry/Obama informed that China will announce this 30,000 ton hoard of gold shortly? Is it a true story or not? As I wrote a few days ago, "gold" is a financial thermonuclear weapon, able to destroy the fiat of the West. It would not surprise me in the least if Washington was given the "courtesy" of a heads up to some sort of coming announcement even if a smaller sum than 30,000 tons. The point here is this, any announcement by China raises the question of Western holdings which of course brings Western currencies into question. It will be very interesting to see how forceful the U.S. is regarding Ukraine, this gold issue may just be the "softener"? I believe we will see very soon whether or not the U.S. changes tack regarding Ukraine (amongst others) as I suspect the Pravda announcement was no error at all.

Another June deadline is India trying to remonetize gold

http://www.thehindu.com/business/all-you-need-to-know-about-gold-monetisation-scheme/article7224428.ece#. They propose to allow the deposit of gold on account and interest paid on it. This would immediately boost the economy with a shot of adrenaline as collateral would be massively boosted and lending could blossom. The only problem is that this is about the 5th or 6th time such a plan has been trial ballooned and even if passed, the citizens of India will probably not go for it en masse anyway. They have a long history of holding their gold in hand with no counterparty risk between them and their gold. It might work to some extent but the number of 25,000 tons being deposited is a pipe dream. It should be said however, when China does finally announce their holdings and increase their ability to "price" global assets, the Indians will sit at the table as there is no doubt they hold massive quantities in total!

Lastly but not least important is the June gold expiration on the planet’s favorite gold "pricing" mechanism, COMEX. As of today, there are 187,500 contracts open for June, this represents 18.75 million ounces of gold or 581 tons. The "registered" for delivery category has been bled down to about 11 tons or about 378,000 ounces of gold. The first notice day is June 1st, only seven trading days away. Does anyone see a potential problem here? A "problem" as in there are 50 ounces of gold contracted for every one ounce COMEX claims to have?

Yes, yes, I know I have gone through this exercise before and each time the open interest just dried up and blew away. In fact, many expiration months have seen accounts FULLY FUNDED with cash to purchase the gold on first notice day, only to "go away" later in the month. This makes no sense whatsoever. Why would anyone fund their account fully in order to pay for purchase and then just walk away? On the other side, why would any short not deliver on the 1st or 2nd day of the month as they must pay storage costs for each day they don’t deliver? The answer of course is very simple, the gold does not exist to make delivery and the shorts do not want to let go of what very little they have …and instead cash settle with a little cherry on top? Before finishing this section, it should be pointed out that the ETF GLD has bled 17 tons over the last few weeks where gold rose $50. How does this make any sense at all? It only makes sense to me if someone needed the metal to deliver elsewhere and immediately. A strange occurrence but a topic for another day.

So there you have it, June could be quite the month as many events all converge over the 30 day timeframe, and none of them good! I have warned and warned, you must have exactly the positions you want should the markets close and not offer you the chance to alter. Please, imagine a world where things actually make sense and logic counts for something when it comes to valuing assets. Let’s call it "Mother Nature world" where values make some sense and are actually related to each other and to reality. How would your portfolio or financial position look like if we woke up one fine Monday morning in June to a brand new world?

Regards, Bill Holter
Holter/Sinclair collaboration [email protected]

Posted at 6:20 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The great Economic Recovery.

Feds Spent $100 Billion on Food Assistance Last Year
109,930,090 Americans participated in overlapping programs
Elizabeth Harrington
May 20, 2015 3:02 pm

The federal government spent $100 billion providing food assistance to Americans last year, according to the Government Accountability Office (GAO).

The lion’s share of spending comes from the food stamp program, which gave benefits to an average 46 million Americans in 2014, at a cost of $74.6 billion, according to a testimony from the GAO’s Director of Education, Workforce, and Income Security Kay E. Brown before the House Subcommittee on Nutrition Wednesday.

The national school lunch program was second, costing $11.3 billion, followed by the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) at $7.1 billion.

Other spending included $1.9 billion for nutrition assistance for Puerto Rico, and $10.7 million for the “Special Milk Program.”

Brown said there is a potential for overlap and “inefficient use of federal funds” due to the government’s “complex network of 18 food assistance programs, administered by three federal agencies,” which are unsure how effective the programs are.

“In 2010, research GAO reviewed suggested that participation in seven of these programs was associated with positive outcomes, such as improving nutrition among low-income households,” Brown said. “Little was known about the effectiveness of the remaining 11.”

The GAO provided a list of the 18 federal programs, which together served a total 109.9 million Americans in 2014. The list only provides the total number of participants for each program, and does not take into account the potential for individuals to participate in more than one program.

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Putin Pans Ukraine’s Debt Moratorium As "De Facto Default", Threatens Court
Tyler Durden on 05/20/2015 21:30 -0400

In exactly a month, Ukraine will owe Russia a $75 million debt coupon payment. Finance Minister Anton Siluanov told reporters in Moscow today that "if they miss the payment, we will use our right to go to court." Then it got serious, as Vladimir Putin instructed Russian Prime Minister Dmitry Medvedev to assume control of Ukraine’s repayment of its $3-billion debt in Eurobonds that Russia bought in 2013, slamming Ukraine’s bill allowing them to impose a moratorium on foreign debt repayments as a de facto announcement of default. As one market participant warned, "I would wait until after June 20 to go forward with" any moratorium, as "if Russia takes Ukraine to court, that might be an incentive for other creditors to go down the same route."

As we previously noted, on Tuesday, Ukraine’s parliament adopted a bill allowing Ukraine to freeze repayments of its foreign debt. As RT notes,

Experts agree that Tuesday vote meant a technical default for the country and would impede Ukraine’s ability to raise private investment from the EU and the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB), a European source told TASS on Wednesday.

"Suspension of debt payments not coordinated with creditors results in a technical default, and in the case of Ukraine, it threatens to undermine Kiev’s ability to attract private investment through EU programs,“ the source said.

As part of the underpinning of Kiev’s bailout plan, the International Monetary Fund said in March that Russia would not receive the $3 billion bond repayment from Ukraine this year.

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Chicago Fed Contracts For 4th Month In A Row As Initial Jobless Claims Hover Near 40 Year Lows
Tyler Durden on 05/21/2015 08:44 -0400

Initial claims rose very modestly this week but the smoother 4-week average hit fresh cycle lows at 271k – just shy of the lowest level since 1973. Continuing claims also fell to new cycle lows at their lowest since 2000. It appears, as we have noted previously, that peak job-related cost-cutting has been achieved. However, it’s not all unicorns and ponies… as Chicago Fed National Activity Indicator printed a disappointing -0.15, the 4th month in a row of contraction.

Jobless data says everything is awesome…

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But Chicago Fed says all is not well…

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The CFNAI Diffusion Index, which is also a three-month moving average, was unchanged at –0.12 in April. Thirty-eight of the 85 individual indicators made positive contributions to the CFNAI in April, while 47 made negative contributions. Forty-six indicators improved from March to April, while 37 indicators deteriorated and two were unchanged. Of the indicators that improved, 19 made negative contributions.

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More Russian, Chinese Companies Switching to Yuan Transactions – Bank
17:08 21.05.2015(updated 17:23 21.05.2015)

The volume of currency exchange operations ‘ruble to yuan’ saw a six-fold increase in the first quarter of 2015 in comparison with the first quarter of 2014.

VLADIVOSTOK (Sputnik) — A rapid increase in the number of ruble to yuan currency exchange operations and bank accounts opened in yuan signify that more and more Russian and Chinese businesses are switching into mutual payments in the Chinese currency, deputy chairman of Russia’s VTB Bank management board Mikhail Oseevskiy said Thursday.

“In first quarter of 2015 the volume of currency exchange operations ‘ruble to yuan’ saw a six-fold increase as opposed to the first quarter of 2014. The number of companies opening accounts in yuan is increasing.”

He added that currently most Chinese companies are oriented primarily at transacting in US dollars due to the significant volume of Chinese exports to the United States. However, VTB’s branch in Shanghai, according to Oseevskiy, is working actively to educate Russia’s Chinese partners on the benefits of using national currencies in mutual payments.

“In some time we will see Chinese companies taking loans in rubles, I believe this will be the practice of the nearest future,” Oseevskiy said.

The main benefits of mutual payment in national currencies are an absence of currency conversion charges, direct payment and higher transparency in relations between banks.

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Consumers’ Expectations for U.S. Economy Drop Most Since 2013
by Michelle Jamrisko
9:45 AM EDT
May 21, 2015

Americans’ expectations for the economy slumped in May by the most since October 2013, casting doubt on consumers’ ability to revive growth.

A measure tracking the economic outlook fell by 6 points to 44 this month, data from the Bloomberg Consumer Comfort Index showed Thursday. Thirty-nine percent said the U.S. economy is getting worse, the largest share since the federal government shutdown 19 months ago.

“The increase in negative expectations occurred among a disparate collection of groups, indicating a generalized retrenchment,” Gary Langer, president of Langer Research Associates LLC in New York, which produces the data for Bloomberg, said in a statement.

The weekly sentiment index dropped to 42.4 in the period ended May 17, the lowest since mid-December, from 43.5 as fewer consumers said now was a good time to spend. Such angst, particularly among lower-income households, probably has its roots in steadily climbing prices at the gas pump and limited wage gains.

“Despite positive employment and housing reports, consumer concerns may reflect still-stagnant wages as well as sharp divisions between higher- and lower-income groups in economic views,” Langer said. “The latest stumble makes clear that economic travails continue for many Americans.”

The U.S. economy has largely disappointed this year, with weaker-than-expected retail sales data last week capping a recent run of reports showing scant momentum. Consumer spending, which accounts for almost 70 percent of gross domestic product, climbed at a 1.9 percent annualized rate in the first quarter, the slowest in a year and less than half the 4.4 percent advance in the final three months of 2014.

Economy Views

Two of three components in Bloomberg’s weekly comfort index deteriorated last week. Americans’ current views of the economy soured to 32.8, also the lowest since mid-December, from 34.5 in the prior period.

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