Posted at 3:31 PM (CST) by & filed under In The News.

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Royal Bank of Scotland suffers loss of £153m in 2015 after it forks out £1.3bn in banking scandal fines

· RBS paid more than £400m to US authorities for its role in forex rigging

· But in three months to June it recorded a pre-tax profit of £293million

· Chief executive Ross McEwan cautions more pain to come

By Mark Shapland
Published: 03:50 EST, 30 July 2015 | Updated: 03:50 EST, 30 July 2015

Taxpayer-backed Royal Bank of Scotland has fallen back into the red after taking another £1.3billion hit for banking scandal fines and warned that was not the end of the payouts.

The part-nationalised group, which includes the NatWest and Ulster Bank brands, made a loss of £153million in the first six months of this year, compared to a profit of £1.4billion in 2014.

Chief executive Ross McEwan cautioned of more pain to come as the bank faces further fines for ‘conduct issues of the past’.

It paid more than £400million to US authorities for its role in the foreign exchange rigging scandal and further compensation for payment protection insurance. RBS said it put aside £459million of extra cash in the second quarter to cover past wrongdoing,

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Jim Sinclair’s Commentary

What the White House will look like one year after Trump is elected President.

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Jim Sinclair’s Commentary

You think we might be in bubble territory?

ETF Trading Volume Eclipses US GDP
Tyler Durden on 07/30/2015 11:35 -0400

In "signs of the coming financial apocalypse" news, ETF trading has now eclipsed US GDP.

You read that correctly. Here’s Bloomberg:

In the past 12 months investors traded $18.2 trillion worth of ETF shares, according to data from the New York Stock Exchange and Bloomberg. That’s a 17 percent increase from the 12 months prior and more than triple what it was 10 years ago. For perspective, that means the amount of dollars exchanging hands through ETFs is now more than the U.S. gross domestic product, which stands at $17.4 trillion.

To the Zero Hedge faithful, it should be immediately clear why this is so frightening, but for anyone who may be new to the "why BlackRock is a dangerous company" (to quote Carl Icahn) debate, allow us to explain, and because we’ve covered this extensively, we’ll stick to the high points.

First, the post-crisis proliferation of ETFs has funneled massive amounts of retail money into corners of the market where mom and pop previously never dared to tread. This trend has been exacerbated by ultra accommodative central bank policy, which has had the effect of herding investors into riskier assets in a desperate search for yield.

This comes as banks have pulled back from their traditional role as middlemen in the secondary market, meaning that while instruments like HY bond ETFs give the impression of daily liquidity, they cannot, by definition, be more liquid than the underlying assets they reference, and if dealers are unwilling to expand their inventories in a sell-off, fund managers facing sizeable redemptions could find that transacting in size is virtually impossible without having a significant negative impact on prices.

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Fed Reporter Pedro Da Costa Is Leaving The Wall Street Journal After Asking Yellen "Uncomfortable" Questions
Submitted by Tyler Durden on 07/30/2015 10:44 -0400

It was virtually inevitable.

As we reported on June 17, Pedro Da Costa, one of the more determined and controversial Fed reporters, was shocked to learn he was no longer welcome to ask Janet Yellen uncomfortable questions, questions related to the biggest scandal currently gripping the Fed: its leaks of proprietary information to "expert network" Medley Global (recently sold by Pearson to Japan’s Nikkei) and one which has since morphed into a criminal investigation.

As a reminder, this is the Q&A that got Pedro in hot water with Janet Yellen during the March press conference:

PEDRO DA COSTA. Pedro da Costa with Dow Jones Newswires. I guess I have two follow-ups, one with regard to Craig’s question. So, before the IG’s investigation, according to Republican Congressman Hensarling’s letter to your office, he says that, “It is my understanding that although the Federal Reserve’s General Counsel was initially involved in this investigation, the inquiry was dropped at the request of several members of the FOMC.” Now, that predates the IG. I want to know if you could tell us who are these members of the FOMC who struck down this investigation? And doesn’t not revealing these facts kind of go directly against the sort of transparency and accountability that you’re trying to bring to the central bank?

CHAIR YELLEN. That is an allegation that I don’t believe has any basis in fact. I’m not going to go into the details, but I don’t know where that piece of information could possibly have come from.

PEDRO DA COSTA. If I could follow up on his question. I think when you get asked about financial crimes and the public hears you talk about compliance, you get a sense that there’s not enough enforcement involved in these actions, and that it’s merely a case of kind of trying to achieve settlements after the fact. Is there a sense in the regulatory community that financial crimes need to be punished sort of more forcefully in order for them to be—for there to be an actual deterrent against unethical behavior?

CHAIR YELLEN. So, the—you’re talking about within banking organizations? So, the focus of regulators—the banking regulators—is safety and soundness, and what we want to see is changes made as rapidly as possible that will eliminate practices that are unsafe and unsound.

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Supply and Demand in the Gold and Silver Futures Markets – Paul Craig Roberts and Dave Kranzler
July 27, 2015

This article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is inconsistent with the conditions of supply and demand in the actual physical or current market where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply. We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.

The law of supply and demand is the basis of economics. Yet the price of gold and silver in the Comex futures market, where paper contracts representing 100 troy ounces of gold or 5,000 ounces of silver are traded, is inconsistent with the actual supply and demand conditions in the physical market for bullion. For four years the price of bullion has been falling in the futures market despite rising demand for possession of the physical metal and supply constraints.

We begin with a review of basics. The vertical axis measures price. The horizontal axis measures quantity. Demand curves slope down to the right, the quantity demanded increasing as price falls. Supply curves slope upward to the right, the quantity supplied rising with price. The intersection of supply with demand determines price. (Graph 1)

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A change in quantity demanded or in the quantity supplied refers to a movement along a given curve. A change in demand or a change in supply refers to a shift in the curves. For example, an increase in demand (a shift to the right of the demand curve) causes a movement along the supply curve (an increase in the quantity supplied).

Changes in income and changes in tastes or preferences toward an item can cause the demand curve to shift. For example, if people expect that their fiat currency is going to lose value, the demand for gold and silver would increase (a shift to the right).

Changes in technology and resources can cause the supply curve to shift. New gold discoveries and improvements in gold mining technology would cause the supply curve to shift to the right. Exhaustion of existing mines would cause a reduction in supply (a shift to the left).

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70% Of Americans See Economy Worsening, Consumer Comfort Collapses By Most In 10 Month
Tyler Durden on 07/30/2015 09:58 -0400

With stocks just 1-2% from record highs, because China is fixed, oil is recovering, Europe is awesome, and gas prices are low? it appears the talking heads forgot to tell the ‘people’ how great things are. Bloomberg’s Consumer Comfort index plunged (by the most since Sept 2014) to hover at 18 month lows…

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As 70% of Americans see the state of the economy as negative.

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Rather amusingly an intriguing 1% of Americans see the state of the economy as ‘excellent’ – wonder which 1% that is…

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Jim Sinclair’s Commentary

If you build it, they will come!

Der Spiegel: Greek Money Is Moving to Bulgaria
By Anastassios Adamopoulos –
Jul 29, 2015

Greek depositors and businesses are relocating their money and their business headquarters to Bulgaria, according to German weekly magazine Der Spiegel.

The magazine reported that 14,000 euros are leaving Greece for Bulgarian banks each week since capital controls were fist imposed in Greek banks on June 28.

On July 20, the Commerce Union had claimed that 60,000 Greek businesses had requested to relocate to Bulgaria. Der Spiegel noted that this year, 11,500 Greek businesses have already set up their headquarters in Bulgaria, as opposed to the 9,000 in 2014.

Some of the reasons the magazine identified for this business strategy are the 10% taxation on businesses and individuals, the favorable legislation for business as well as the lower wage costs.

A bank employee who spoke to Der Spiegel explained that it is very easy to open an account in a Bulgarian bank. He also noted that customers can choose whether to open their account in euros or the Bulgarian lev.

The German magazine also wrote that Krassen Stanchev from the Institute of Market Economics claimed that since the Greek crisis first began, Greeks have invested 4 to 4.5 billion euros in Bulgaria.

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Posted at 12:54 PM (CST) by & filed under Jim's Mailbox.

Jim,

Sure doesn’t pass the smell test of an epic recovery

CIGA C

More homeowners drowning in debt
Diana Olick | @DianaOlick

Home prices are still rising, and the economy is improving, but the ills of the housing crash are far from cured: 7.4 million borrowers were still "seriously" underwater on their mortgages at the end of June, according to RealtyTrac.

The real estate information company defines that as the loan amount being at least 25 percent higher than the property’s estimated market value.

Over 13 percent of all properties with a mortgage are in this predicament, and that is actually a slight increase from the first quarter of this year.

How can this be when home prices are still rising? It depends on how you read those prices. The National Association of Realtors reported that the median price of a home sold in June reached its highest level in history. The median, however, means half the homes sold for more and half sold for less, so if higher-priced homes are selling more, which they are, that skews the median higher. S&P/Case Shiller, which measures repeat sales of similarly priced homes, shows price gains have been shrinking in general but are still higher than a year ago.

Still, another report from Weiss Residential Research digs deeper in local areas and finds that nearly half the homes in the nation’s top markets are actually losing value.

"Don’t be fooled by averages," said Allan Weiss, founder and CEO of Weiss Residential Research. "All of the largest metro indexes are rising more slowly than they were a year ago though market reports give the impression that values are rising across the board. However, people don’t own the entire market, they own one house."

Larger, more expensive homes, are sitting on the market longer and seeing more price cuts than smaller homes with two bedrooms or less, according to Weiss. That is likely because there is so much less supply on the lower end of the market than on the high end.

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Jim,

And yet Martin Armstrong is rabid about Sputniks report about 200,000 metrics tons of Gold being found in Sudan. Talk about misleading the masses. He’s looking more the idiot every time he opens his mouth to bash precious metal holders.

CIGA JB Slear

Finland: 2014’s Most Attractive Destination for Mineral Investment
Published: Wednesday, 08 April 2015 11:39
Written by E&MJ News

Fraser Institute has released its annual survey of mining industry executives that ranks mining jurisdictions worldwide for their government policies as they relate to mining, mineral potential and attractiveness for mineral investment. The latter category, investment attractiveness, is a composite ranking that takes both government policies and mineral potential into consideration.

The institute’s Survey of Mining Companies 2014 was conducted from August 26 to November 15, 2014, with a little more than half of the survey respondents representing exploration companies, 27% representing producer companies, and 22% representing consulting and other companies. The survey includes data on 122 jurisdictions, including subnational jurisdictions in Canada, Australia, the United States and Argentina.
Finland came first in the 2014 survey as the most attractive jurisdiction in the world for mining investment. Saskatchewan, Nevada, Manitoba, Western Australia, Quebec, Wyoming, Newfoundland and Labrador, Yukon, and Alaska rounded out the top 10.

Finland displaced Western Australia, which dropped from first to fifth overall. Saskatchewan moved up five spots to second place, while Manitoba moved into the top 10, after ranking 13th last year. Greenland dropped all the way down to 41st after ranking ninth in 2013.

Looking at the bottom end of the scale, Malaysia was ranked as the least attractive jurisdiction in the world for mining investment in 2014, a significant drop from 70th (of 112) in 2013. Also in the bottom 10, beginning with the worst, were Hungary, Kenya, Honduras, Solomon Islands, Egypt, Guatemala, Bulgaria, Nigeria and Sudan.

The survey was released in late February and was based on 485 responses from representatives of companies that had exploration budgets totaling $2.7 billion. This represents a sharp decline over the past two years, from budgets of $3.4 billion reported in 2013 and $4.6 billion reported in 2012. The survey comments that this continuing year-to-year trend of decreases in exploration spending is likely due to challenges in attracting investment to the sector.

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Jim,

It’s not the amount of the bailout that’s disconcerting, it’s "Moral Hazard’s" absolution! That’s more frightening than 10x the amount of the bailout.

CIGA Wolfgang Rech

Bill de Blasio Demands A Federal Bailout For Puerto Rico
Submitted by Tyler Durden on 07/30/2015 – 12:40

While the Puerto Rican creditors’ bargaining power on the island is to put it mildly, negligible, especially after the budget director made the imminent default into a crusade of poor versus rich, saying he won’t redirect cash from its operating budget to make debt payments, an unexpected supporter has emerged thousands of miles from the beleaguered island: New York’s socialist mayor Bill DeBlasio.

As CBS reports "New York City Mayor Bill de Blasio demanded President Obama and Congress immediately come to the island’s fiscal rescue." "It’s the federal government’s obligation to act, because they can’t stand idly by and watch Puerto Rico fail," de Blasio told a crowd of hundreds of Puerto Rico boosters gathered on the steps of City Hall.

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Dear Jim,

Your generation saved the planet one more time. The next will fight to end it.

CIGA BJS

WW3 Will Be Mankind’s Last – State Duma Speaker
08:59 30.07.2015(updated 09:31 30.07.2015)

Russia will stand by its compatriots by sticking firmly to international legal norms, and WW3 would be mankind’s last, Russia’s parliamentary speaker Sergei Naryshkin said in a newspaper interview in Moscow.

“We want people to be able to determine their future on their own land and we are against attempts to draw any division lines between them,” Naryshkin told Izvestiya newspaper when asked whether eastern Ukraine could repeat the fate of Serbia Russia stood up for shortly before WW1 broke out in 1914.

Sergei Naryshkin also said that whenever a Cold War logic is  forced upon Russia, it will have to “respond adequately to such a challenge” and warned that things like “redrawing of the global map” and “WW3” should not be taken lightly “either in Russia or abroad.”

“The Third World War would be the last for all of us and this is exactly what Russia is trying to prevent by building up its defense potential,” Sergei Naryshkin emphasized.

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Posted at 2:36 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Bill is a man after my belief system. His insight is very clear and direct. Can the dollar be made to perform well when it is truly running out of room?

$60,000 Gold May Be Laughably Low-Bill Holter
By Greg Hunter On May 27, 2015 In Market Analysis

Recent Bloomberg analysis says if China backed its currency with gold, the price would need to be 50 times higher than it is today.  According to Bloomberg, that would be a gold price of around $64,000 per ounce, which is much more than gold expert Jim Sinclair predicted a few years ago.  Financial writer Bill Holter weighs in, “That was a few years ago, before some of the QE, and Jim has said that $50,000 gold may turn out to be laughably low. . . . I think it is very curious that Bloomberg would run this because Bloomberg is as mainstream Wall Street as you are going to get. . . . It would be my guess that Bloomberg has some type of information that China is going to announce their holdings.  I can show you that China has 10,000 tons of gold.  That’s pretty easy to do.  I use the figure of 10,000 tons, and oddly enough, that is the figure that Bloomberg used.”

So, what does the mean to the U.S.?  Holter says, “After they make an announcement that they have all this gold, people are going to say, wait a minute, where did they get all that gold? . . . It’s come from Western vaults, the biggest Western vault is the U.S.  So, the market place will make a judgment between the yuan and the dollar. . . . This is definitely a scheduled event in the fall, and the speculation has been that the Chinese may announce prior to that in order to give the IMF time to evaluate the data.  From my point of view, the Chinese may make that announcement to give it a push.  The dollar versus the yuan is going to depreciate greatly.  You could see a 20% to 30% move in the dollar (downward.)  The yuan is going to strengthen.”

Would the U.S. be forced to do an audit to verify its 8,000 tons of gold if China reveals theirs?  Holter says, “The market place will say do an audit or we will keep selling the dollar.  You very well could see an implosion.  I have said for many years now that there is going to be an implosion.  You are going to go to bed Friday night in a world that resembles the current reality, and you wake up Monday morning and everything has changed.  You will be locked into your position.  Markets are closed. . . .  Think about the brokers or banks that have a huge amount of derivatives. . . . The top two banks in the world alone have $150 trillion in derivatives.  The amount of collateral they need to post to keep the game going overnight could be in the hundreds of billions of dollars.  Where are they going to get that from?  The Fed will not be able to put out this fire.”

Another fire, tensions brewing between the U.S. and China in the South China Sea.  Holter says, “There are a lot of unknowns.  The only thing you do know is if it gets started, it’s really, really bad.  You are talking about nuclear nations.  It’s not just U.S. weakness being projected here, it is Chinese strength. . . . If we get into a shooting war, what are the odds it would not go nuclear?  Whoever is losing will push the button.”

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THE MORNING SHOW with Patrick Timpone
The Banking System Is Coming Down
Bill Holter

Bill Holter writes and is partnered with Jim Sinclair at the newly formed Holter/Sinclair collaboration. Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to management of paper assets. In retirement he and his family moved to Costa Rica where he lived until 2011 when he moved back to the United States. Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present.

Show Highlights:

-The banking system is coming down; how can it come down when they can just keep printing money?

-The Achilles Heel is the amount of debt in the system; Bill explains and talks about the problem in Greece

-What are derivatives and why are they an issue?

-The Classic Bond Bubble: Rising interest rates indicate the foundation of the system is cracking

-Mining stocks: If they’re not going to go out of business, they’ll be a home run

-Bail ins and bank holidays; are they eminent? How can we protect our money?

-Bill gives his opinion of numismatic coins vs. bullion

-We asked Bill about his opinion of tariffs; he takes a very different stance than Andrew Gause

More…

Posted at 8:24 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

The Great Flushing ( Lehman Brothers) is to be followed by the Great Leveling (the end of the middle class), which is to be followed by the Great Reset ( In which gold assumes it rightful role as the ultimate valuator, not currency).

US Middle Class Stays Dead: Homeownership Drops To 48 Year Low; Median Asking Rent Soars To All Time High
Tyler Durden on 07/28/2015 11:17 -0400

Three months ago, just as the last Census Homeownership and residential vacancy report hit, Gallup released its latest survey which confirmed just how dead the American Dream has become for tens if not hundreds of millions of Americans.

According to the poll, the number of Americans who did not currently own a home and say they do not think they will buy a home in "the foreseeable future," had risen by one third to 41%, vs. "only" 31% two years ago. Non-homeowners’ expectations of buying a house in the next year or five years were unchanged, suggesting little change in the short-term housing market.

As Gallup wryly puts it, "what may have been a longer-term goal for many may now not be a goal at all, and this could have an effect on the longer-term housing market."

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Earlier today, the US Census released its latest homeownership data, which confirmed that for what is left of America’s middle class, owning a home has become virtually impossible, with the homeownership rate plunging from the lowest level since 1986, or 63.7%, to just 63.4%the lowest reading since the first quarter of 1967.

Three months ago, when compiling this data we said that "at this rate, by the end of the 2015 and certainly by the end of Obama’s second term, the US homeownership rate will drop to the lowest in modern US history." That moment, as shown on the chart below, came far sooner than ever we had expected. The only question is whether the lowest homeownership print on record reported in 1965 and standing at 62.9% will be taken out in the next 2 quarters or in early 2016.

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Jim Sinclair’s Commentary

The latest from John Williams’ www.ShadowStats.com

- Complacency on the U.S. Economy and the U.S. Dollar Could Be Shaken in the Week and Month Ahead
- Durable Goods Orders in a Pattern of Intensifying Monthly and Quarterly Year-to-Year Contractions
- Second-Quarter Durable Goods Orders (Ex-Commercial Aircraft) in Steepest Annual Decline Since Economic Collapse
- Second-Quarter New-Home Sales Fell 7.3% (-7.3%)

"No. . 738: June Durable Goods Orders, New-Home Sales, Household Income"
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

These kids have moxie

A Renegade Trawler, Hunted for 10,000 Miles by Vigilantes
For 110 days and across two seas and three oceans, crews stalked a fugitive fishing ship considered the world’s most notorious poacher.
By IAN URBINAJULY 28, 2015

ABOARD THE BOB BARKER, in the South Atlantic — As the Thunder, a trawler considered the world’s most notorious fish poacher, began sliding under the sea a couple of hundred miles south of Nigeria, three men scrambled aboard to gather evidence of its crimes.

In bumpy footage from their helmet cameras, they can be seen grabbing everything they can over the next 37 minutes — the captain’s logbooks, a laptop computer, charts and a slippery 200-pound fish. The video shows the fishing hold about a quarter full with catch and the Thunder’s engine room almost submerged in murky water. “There is no way to stop it sinking,” the men radioed back to the Bob Barker, which was waiting nearby. Soon after they climbed off, the Thunder vanished below.

It was an unexpected end to an extraordinary chase. For 110 days and more than 10,000 nautical miles across two seas and three oceans, the Bob Barker and a companion ship, both operated by the environmental organization Sea Shepherd, had trailed the trawler, with the three captains close enough to watch one another’s cigarette breaks and on-deck workout routines. In an epic game of cat-and-mouse, the ships maneuvered through an obstacle course of giant ice floes, endured a cyclone-like storm, faced clashes between opposing crews and nearly collided in what became the longest pursuit of an illegal fishing vessel in history.

Industrial-scale violators of fishing bans and protected areas are a main reason more than half of the world’s major fishing grounds have been depleted and by some estimates over 90 percent of the ocean’s large fish like marlin, tuna and swordfish have vanished. Interpol had issued a Purple Notice on the Thunder (the equivalent of adding it to a Most Wanted List, a status reserved for only four other ships in the world), but no government had been willing to dedicate the personnel and millions of dollars needed to go after it.

So Sea Shepherd did instead, stalking the fugitive 202-foot steel-sided ship from a desolate patch of ocean at the bottom of the Earth, deep in Antarctic waters, to any ports it neared, where its crews could alert the authorities. “The poachers thrive by staying in the shadows,” Peter Hammarstedt, captain of the Barker, said while trying to level his ship through battering waves. “Our plan was to put a spotlight on them that they couldn’t escape.”

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Posted at 10:36 AM (CST) by & filed under Jim's Mailbox.

Jim,

A man speaks his mind!

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CIGA Wolfgang R

“I Own Krugerrands” Says Legendary Jim Grant
Submitted by GoldCore on 07/28/2015 07:06 -0400

“I Own Krugerrands” Says Legendary Jim Grant

- He is “very bullish indeed” on gold

- Gold is “investment in financial and monetary disorder” – says Grant

-  It thrives in current environment – “uncertainty, turbulence and disorder”

- “One of the most radical periods of monetary experimentation in the annals of money”

- “Gold…is now the conjunction of price, value and sentiment”

- Reminds owners of gold that the original reasons for buying gold have not gone away

- Believes Fed will raise rates despite deflationary environment

- Explains detrimental effect of excessive debt on an economy

- Grant light-heartedly destroys Jason Zweig’s “pet rock” gold jibe

Jim Grant, publisher of Grant’s Interest Rate Observer says that gold is “an investment in financial and monetary disorder.” He believes that today we are experiencing “uncertainty, turbulence and disorder”.

When asked how he liked to own gold he said he owned physical, generic, non-numismatic coins – specifically mentioning South African Gold Krugerrands and also mining shares.

Krugerrands are one of the cheapest and most cost effective ways to buy gold with very low premiums. Clients in Ireland, the UK, the U.S. and internationally are currently buying Krugerrands at extremely low premiums of just 2.5%. They remain some of the most popular bullion coins in the market due to their durability (harder 22-carat gold coin), recognisability, portability and liquidity throughout the world.

He warns:

“You look around the world and you see exchange rates are properly disorderly, when you look around the world of lending and borrowing — we are in a regime of price control by another name, so-called zero percent rates and quantitative easing by the world central banks”.

He adds, “We are in one of the most radical periods of monetary experimentation in the annals of money”, with a “low probability” of a favourable outcome.

Given the disorder he sees in the world due to monetary experimentation and the very low gold price Grant says,

“You want to have exposure to the reciprocal asset of the paper assets that are the most popular – so gold, to me, is now the conjunction of price, value and sentiment, and I am very bullish indeed.”

He describes the recent fall in prices as “terrifically vexing but a wonderful opportunity” and reminds owners of gold that the reasons for owning gold have not gone away. He emphasises that gold thrives in periods of turbulence and disorder and uncertainty adding “I think we have all three of these things.”

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Jim,

Yet, within all this flux, I’m constantly seeking a snippet of wisdom in any article I read. Today, it appears I’ve found one.

From the article below, Simona Gambarini, commodities economist for Capital Economics, makes an astute observation: the reduction of exposure to dollars, which brings up the question…WHY? A very important question that is never addressed!

"She added that emerging market central banks looking to reduce exposure to U.S. dollars also have “few credible alternatives to gold” right now."

If that is the case, then all this talk of the U.S. Dollar being the ultimate safe haven, is nothing more than wishful thinking. Hogwash, I believe they called it in my day.

CIGA Wolfgang Rech

Central Bankers To Save The Day For Gold – Commodities Economist
By Kitco News
Monday July 27, 2015 15:40

(Kitco News) – One research firm says central bankers may help gold find a floor after prices dropped below $1,100 an ounce last week.

“[W]e argue that the official sector will remain a net buyer of gold for the foreseeable future and that the additional demand will help to set a floor under the gold price,” said Simona Gambarini, commodities economist for Capital Economics, in a note Monday.

According to the UK-based firm, central banks have become major gold buyers, with the official sector accounting for roughly 10% of total gold demand over the past five years, after having been net sellers of the metal from 1989 to 2002.

She said the tide had turned by 2010 as the official sector became net buyers of gold again.

“Since then, 1,537 tonnes of gold have been added to global reserves, with China and Russia accounting for about 80% of this amount,” she explained, adding that the International Monetary Fund (IMF) remains one of the largest official holders of gold with 9% of global reserves under its belt.

She added that there is good reason to expect the pace of gold purchases to pick up this year, especially from emerging market economies.

“[T]he World Gold Council (WGC) reported that 120 tonnes of gold were added to global central banks reserves in Q1 in 2015 and a further 11.4 tonnes were accumulated in April and May. However, these figures do not take into account the 604 tonnes addition to China’s official reserves, announced last week, as the time of the buying has not been confirmed and it likely happened over several years,” she said.

“While the increase was (arguably) less than might have been expected given the surge in total reserves over this period, this does suggest that there is more buying to come [from China].”

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Posted at 11:11 PM (CST) by & filed under Bill Holter.

Dear CIGAs,

While taking a short vacation last week, this article was intended to be my first one upon returning.  That plan was squashed a week ago with the brutal "interventions" upon gold and silver during the illiquid overnight hours early Sunday morning.  Let me add to what I wrote last Friday by saying the phrase "TIME AND SALES"!  For anyone who does not know what this means, any trade on any market anywhere in the world has a "paper trail".  It is called a "time and sales report".  Very simply, it reports who traded what, in what amounts and to whom.  Once the broker is identified, then regulators can query as to who the customer was for whatever trade in question.  If they want to know "whodunit", it’s quite simple.

This is not rocket science.  It is not hocus pocus or even anything "special".  Time and sales have been around since the dawn of trading.  Even prior to computers, handwritten records were taken to record who traded what, when and in what quantities.  Should the SEC, NYSE, CFTC or anyone else want to know who is doing what, it takes five seconds or less to find out.. (This includes the Chinese who have outlawed selling under the penalty of firing squad!!!  So who is doing all the selling?) In my opinion, the regulators should be strung up on lampposts for their lack of doing the jobs they are being paid public tax money to do.  They have turned a blind eye, presumably because they are told or believe it is for "the greater good"?  …the greater good… sounds like something out of Russia or China back in the day when I was a youngster in the 1960′s – or even something in the history books we read as kids in school regarding Nazi Germany.

Do you remember this time period?  I still remember this time frame very well and pine for it every day.  Back in those days we couldn’t wait to get home from school so we could get to play baseball, football, basketball or even hike it to the nearest pond in winter time to play some pickup hockey.  Back in those days our parents knew where we were by where our bicycle was.

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There were no cell phones and if we needed to make a call from a public place, we would pull the dime out of our pocket our parents always insisted we have.

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We could sell (or even buy) lemonade without a health department license and had no fear of arrest – we even gave the police free samples.  We walked a half mile or even a full mile to get to school (but not uphill both ways nor always in the snow).  We did this with friends or if we were late we did it alone.  Back then this was the norm.  Today, parents are regularly being arrested for allowing a child to go two blocks away on their own… not to mention the nine-year-olds for selling lemonade!!!
  After playing, we’d all head home for dinner and get to watch some TV.  Remember?  " TV" where no cussing was allowed.  Most shows had a "theme" or an underlying lesson that taught kids "good always triumphed over evil".  We watched Batman, Superman and others.  Western’s were in vogue and there was always a lesson to be learned from watching The Rifleman or Gunsmoke.  I have said several times over the years when writing on this subject, "Leave it to Beaver cannot even be found on syndicated reruns anymore".  My point is, the "wholesome" world we grew up in is so far gone, current history books don’t even mention it as a footnote!

Think about where we are today.  Where handshakes used to suffice, contracts are now drawn up to be purposely broken.  More than half of our population "takes" while less than half the population supports this spending habit.  Worse, it is the "supporters" who are vilified today because they don’t "give enough."  We used to have free speech as outlined in The Constitution, now there is only free speech for the "special" groups.  Anyone who speaks against any of these very special groups is branded a racist, sexist, homophobe, or religious persecutor (except of course, unless you’re speaking against Christians – that’s OK… even seemingly encouraged).  Or worst of all, you could be labeled a "CONSERVATIVE!"

Today it is OK to burn the American flag, outlaw the quaint historical  Confederate flag …while flying the flag of any other nation (here in Texas the favorite to fly is that of Mexico) on our own sovereign soil.  I noticed yesterday while in a very long  U.S. Customs line upon returning home, how much longer, formal and probably difficult it was rather than just swimming across the river!  Many states no longer require a voter registration card to vote or even a driver’s license, so the motto "vote early and often" applies.  Citizens who pay for "old" health insurance now get "charged" extra on their taxes, while those who can’t afford insurance get it for free… along with cellphones, housing, food, stipends for each child etc. …and anyone who speaks out about it is branded a "crazy."  Please let me remind you, this country was originally formed because of oppression and the practice of "taxation without representation."  Have we pretty much gone full circle?

You could not have told me even 20 years ago we would be where we are today.  We have a system where the president makes up laws as he goes along, the Supreme Court rubber stamps his illusions and Congress has been relegated to irrelevance.  Speaking of Congress, didn’t "We the People" just throw the bums out?  Didn’t the Republicans run on a ticket that said they would overturn all sorts of ridiculous (and if you ask me) tyrannical laws?  Have they overturned anything?  No, they just passed the fast track trade bill which will gut our economy even further …while the Democrats voted against it …?  Forget about the giant sucking sound Ross Perot spoke of, we will soon hear the wheezing and gurgling last breaths of a nation, in my sad opinion.  In the interest of not losing you as a reader, I could go on and on about subjects like guns, GMO’s, baby parts for sale or whatever but I think you get the point and I’ll stop here.

From an economic and financial standpoint, it is funny that while away I read "The Scarlet Woman of Wall Street."  This was the story of Daniel Drew, Vanderbilt, Fisk, Gould and Erie railroad during the mid to late 1800′s.  There were no financial laws back then that prevented anything with the exception of bribery which was impossible to prove unless the giver and receivers were both stupid beyond their years.  Then all sorts of laws were written and the playing field was somewhat leveled (as much as it could have been).  Now, there are so many laws on the books, it is impossible not to break one of them.  The thing is, financial institutions do not care.  Since no one goes to jail (except for a couple of hedge fund managers), it is more profitable to illegally and blatantly swipe $10 billion because you know your fine will only be $100 million.  If you think about it, management in today’s world could probably be held accountable in today’s civil legal system for NOT BREAKING THE LAW and leaving money on the table.  Why play fair when everything is rigged, while you can steal and pay only 1% or less of what you made?  It is almost management’s "fiduciary duty" to lie, cheat and steal in order to not fall behind!

To wrap this piece up I would like to say this, if you don’t believe or cannot see that all markets are rigged all of the time I’m sorry.  If I offended anyone for any reason, again I’m sorry.  If you believe today is "normal" in any way, I am sorry.  Actually, let me clarify this: I am not sorry, but I am sorry you don’t understand the point I am trying to get across and sorry you cannot see it.  Unfortunately, the American people have been slow boiled into believing our lives are normal and things are "just the way they are."  We have been lulled into believing we are an "exceptional" people and "deserve" the finer things in life.  What we have forgotten is that hard work, hard money, and innovation is what made this country great to begin with.  Many today don’t remember or never knew this very basic tenet…but ignorance does not change the fact.  Truth and justice (and for the most part "business") was what America was once all about.  Please do not tell me I am naïve.  I am not.  Please do not tell me this is not being done according to a plan.  It is.  There is zero percent probability the policies in place today are by mistake.  They are not by mistake and no one could be so stupid which leaves only one option …"purposeful" is the operative word.

The United States was the shining light of the world in so many ways.  We are no longer.  We were built as a Republic that followed The Constitution which was written mainly by God fearing Christians.  We have evolved into a perverted, apologetic, weak and slovenly society with little to no values regarding anything from our ethics, morals, constitutions, or anything else.  We believe we deserve the best and should work the least (if at all).  It’s the American WAY!!!  Unfortunately, what I write here is now considered by the majority as either anti-government or unpatriotic.  It is neither.  In fact, all I advocate is following The Constitution.  You know, that "thing" our politicians "swear to God to uphold" (did you catch that?  They swear to God!  Not to Walt Disney, Facebook or even the almighty Google!) while raising their right hand with their left hand on The Bible?  I am a true patriot in a world where burning the flag, shredding The Constitution and spitting on The Bible is considered sane and normal.  I am here to remind you it certainly is not!  I am not writing this to convert the perverts, only to let those who are still sane know that yes, you are still sane.  That said, in today’s ludicrous world, what I write here can be used as proof of my "insanity" and my lack of "patriotism."  You decide.

I guess I would sum it all up by twisting the words of Superman, "Truth, Justice and (is no longer) The American Way!

Standing watch (with tears in my eyes),

Bill Holter
Holter -Sinclair collaboration
Comments welcome!
[email protected]

Posted at 1:42 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

FT article "Gold a Flight to Safety" was in the main a review of gold’s fall over the past years, as is most reporting. It is however impressive that that Henry Sanderson of the prestigious Financial Times reached out to provide needed balance to the subject by interviewing gold and PM expert Bill Holter. Bill, as always, is a master at laying out the entire situation without exaggeration in precise, easy to understand language. Bill went directly to the points.

Well done Bill Holter.

Gold: Flight from safety
Henry Sanderson, David Sheppard and Neil Hume
July 24, 2015 7:18 pm

(Excerpts from article)

“Over the past year, our physical gold sales in branches have not been very good,” says an employee at one of China’s largest state-owned banks in Shanghai, who asked to be called Mr Chen. “Gold prices had a big fall, no aunties have come to buy,” he adds, referring to the middle-aged women who were big buyers when the price last posted a big fall in 2013.

But the gold bugs are not for turning: Texas-based former stockbroker Bill Holter believes it remains a buying opportunity. 
“I can calculate on the back of a napkin that China is buying more gold,” says Mr Holter, adding that import data supports his view. He also believes that gold will have its moment again when the world’s current build up of debt pops.

“Mathematically it’s guaranteed to happen, it is just a question of when,” he says. “You cannot try to time gold. You just buy it and close your eyes and you know time is on your side.”

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Credit card debt makes up for lack of income growth: Credit card debt outstanding back up to $900 billion. Since 1980 household income up 300% while credit card debt up 1,760%.

The middle class started disappearing in earnest in the late 1970s.  Massive inflation started eating away at the standard of living for most Americans.  Yet much of this was covered up by access to debt.  Credit cards, creative mortgages, student loans, and auto debt all allowed Americans to continue acting as if prosperity was only an American Express card away.  Credit card debt outstanding is now back up to $900 billion, a number last seen during the Great Recession before the great deleveraging.  Americans have used debt as a means to cover up the reality that the middle class is disappearing.  Credit cards are probably the clearest example of spending money you don’t have.  Credit cards allow you to literally spend future earned money today.  We always hear that many pay their balance off each month.  Well the data shows something else.  There is $900 billion in credit card debt floating out in the system.

The growth of credit card debt

Our entire system is built on easy money.  Debt is the spending elixir for many households.  Unfortunately as wages have gone stagnant people have found it necessary to be reliant on debt to purchase the artifacts of middle class living.

Here is a sobering thought; household income is up 300% since 1980 while credit card debt is up 1,760%.  As the middle class standard of living has fallen, people simply cannot give up on this path and have borrowed their way up:

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And Americans have gotten more comfortable going into debt for a variety of things.  Credit card debt used to be the number one non-housing related debt class in the country.  That award now goes to student debt reaching $1.36 trillion.  But as the recession looks further in our past, Americans are quickly going back into credit card debt:

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Gold and Gibson’s Paradox
Tyler Durden on 07/26/2015 17:15 -0400

Submitted by Alasdair Macleod via GoldMoney.com,

There is a myth prevalent today that the gold price always falls when interest rates rise.

The logic is that when interest rates rise it is more expensive to hold gold, which just sits there not earning anything. And since markets discount future expectations, gold will even fall when a rise in interest rates is expected. With the Fed’s Open Market Committee debating the timing of an interest rate rise to take place possibly in September, it is therefore no surprise to market commentators that the gold price continues its bear market. Only the myth is just that: a myth denied by empirical evidence.

The chart below is of a time when the opposite was demonstrably true. From March 1971 to December 1979 the trends in both interest rates and the gold price rose and fell at the same time. It is worth noting that this occurred over more than one business cycle, so it is not a relationship which was cycle-dependant.

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The myth is therefore satisfactorily debunked.

To understand why this relationship between interest rates and gold is not as simple as commonly believed, we must take the argument further to bring in commodities generally and visit the tricky subject of Gibson’s Paradox. This paradox is based purely on long-run empirical evidence, when gold was transaction money, covering the two centuries between 1730 and 1930. It observes that the level of wholesale prices and interest rates are positively correlated. It is not the price relationship that is consistent with the quantity theory of money, which presupposes that interest rates correlate to the rate of price inflation instead of the price level itself. This maybe a reason why monetarists mistakenly argue, as we also discovered in the seventies, that central banks can manage the rate of inflation through interest rate policy.The common view in markets today about the relationship between interest rates and price inflation is wholly at odds with the longer-run evidence of Gibson’s Paradox and accords with the more fashionable quantity theory instead.

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Chinese Stocks Suffer Second Biggest Crash In History, 1,500 Companies Halted Limit Down
Tyler Durden on 07/27/2015 06:32 -0400

This was not supposed to happen.

After pledging, investing and otherwise guaranteeing the Chinese stock market to the tune of 10% of GDP, and intervening on at least 40 different occasions in the past month ever since China’s stock bubble burst in late June, with the subsequent crash nearly taking the Shanghai Composite red for the year, overnight China officially lost control for the second time, when after a weak start to the Monday trading session, things turned very ugly in the last hour, when the Shanghai Composite plunged by 8.48%, closing nearly at the lows, and tumbling some 345 points for its biggest one-day drop since February 2007 and its second biggest crash in history!

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The selling was steady throughout the day, but spiked in the last hour on concerns China would rein in its market-supporting programs following IMF demands to normalize its relentless market intervention. According to Bloomberg’s Richard Breslow: "fear that the extraordinary support measures employed to hold up the market may be scaled back caused heavy afternoon selling resulting in a down 8.5% day." Of course, one can come up with any number of theories to explain the plunge: for example the PBOC did not buy enough to offset the relentless selling.

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The last thing the communist party and the PBOC wanted was another massive sell off after having not only fired the "bazooka" but come up with a different bazooka to halt "malicious sellers" virtually every day, including threats of arrest.

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Posted at 11:31 AM (CST) by & filed under Jim's Mailbox.

Jim,

From your posting yesterday (listed below), July 26, 2015, one must take note of the corner the Fed has painted itself into.

A true definition of “Between a rock and a hard place.”

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To save the housing market, the Fed must increase inflation. However, in doing so they would crash the bond market.

Sadly, there is no respectable choice.

And the longer they wait, the more severe the consequences.

CIGA Wolfgang Rech

The Most Dangerous Bubble In History And Why The Central Banks Are Now In A Panic
July 24, 2015
By Michael Pento of Pento Portfolio Strategies

July 24 – (King World News) –

According to Trulia, at its 2006 peak home prices were 39% overvalued based on consumer incomes and cost to rent

But the bond bubble is a classic bubble thanks to Wall Street and the Federal Reserve. The bond market qualifies as being in a state of over supply because there has been an additional $60 trillion in total global debt that has accrued since 2007.

During the first half of this year, $891 billion in bonds were issued in the U.S. alone. That’s up 7.5% from the same period in 2014, which was itself a record year, according to the Securities Industry and Financial Markets Association.

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