Posted at 11:44 AM (CST) by & filed under In The News.

Housing Starts Tumble, Miss Most Since January 2007; Permits Have Biggest Two-Month Plunge Since Lehman
Tyler Durden on 07/17/2014 08:55 -0400

"Epic disaster." Those two words best explain what just happened with US housing starts and permits in June.

Those who want a slightly more detailed narrative of what the Department of Commerce just reported here it is: in June housing starts were expected to print at a solid 1020K, to validate the sustainable "recovery." Instead, what happened was that the May downward revised number of 985K, which was a consensus beating 1001K last month, crashed to 893K, a drop of 92K which was the biggest since the January "polar vortex" effect, the biggest miss to permaoptimistic expectations since January 2007, and which brought the total number of starts to the lowest level since September 2013. Was it the harsh weather’s fault this time too?


Biggest miss since January 2007!


The reason for the collapse: a plunge in both single and multi-family starts, so one can’t blame the end of Wall Street’s distressed buying frenzy for this one. In fact, single-family starts cratered to 575K – the lowest since November 2012!


Insider Trading and Financial Terrorism on Comex
July 16, 2014
Paul Craig Roberts and Dave Kranzler

July 16, 2014. The first two days this week gold was subjected to a series of computer HFT-driven “flash crashes” that were aimed at cooling off the big move higher gold has made since the beginning of June. During this move higher, the hedge funds, who typically “chase” the momentum of gold up or down, built up hefty long positions in gold futures over the last 6 weeks. In order to disrupt the upward momentum in the price of gold, the bullion banks short gold in the futures market by dumping large contracts that drive down the price and make money for the banks in the process.

As we explained in previous articles on this subject, the price of gold is not determined in markets where physical gold is bought and sold but in the paper futures market where contracts trade and speculators place bets on the price of gold. Most of the contracts traded on the Comex futures market are settled in cash. The value of the contracts used to short gold and drive down the price is well in excess of the actual amount of physical gold that is kept on the Comex and available for delivery. One might think that regulators would pay attention to a market in which the value of contracts outstanding exceeds by several multiples the amount of physical gold available for delivery.

The Comex gold futures market trades 23 hours per day on a global computer system called Globex and on the NYC trading floor from 8:20 a.m. EST to 1:30p.m. EST (the 8:30 a.m. opening time on the face of the graph below is a draftsman’s error). The Comex floor trading session is the highest volume trading period during any 23 hour trading period because that is when most of the large U.S. financial institutions and other users of Comex futures (jewelry manufactures and gold mining companies) are open for business and therefore transact their Comex business during Comex floor hours in order to achieve the best trading execution at the lowest cost.

The big hedge funds primarily trade gold futures using computers and algorithm programs. When they buy, they set stop-loss orders which are used to protect their trading positions on the downside. A “stop-loss” order is an order to sell at a pre-specified price by a trader. A stop-loss order is automatically triggered and the position is sold when the market trades at the price which was pre-set with the stop-order.

The bullion banks who are members and directors of Comex have access to the computers used to clear Comex trades, which means they can see where the stop-loss orders are set. When they decide to short the market, they start selling Comex futures in large amounts to force the market low enough to trigger the stop-loss orders being used by the hedge fund computers. For instance, huge short-sell orders at 2:20 a.m. Monday morning triggered an avalanche of stop-loss selling, as shown in this graph of Monday’s (July 14) action (click on graph to enlarge):


In the graph above, the first circled red bar shows the flash crash that was engineered at 2:20 a.m. EST, a typically low-volume, quiet period for gold trading. 13.5 tonnes of short-sales were unloaded into the Comex computer trading system. The second circled red bar shows a second engineered flash-crash right before the Comex floor opened at 8:20 a.m. EST. This was triggered by sales of futures contracts representing 27.5 tonnes of gold. A third hit (not shown) occurred at 9:01 a.m. This time contracts representing 40 tonnes of gold hit the market.


Gold Manipulators are Desparate
From Egon von Greyerz

With virtually empty gold vaults, the central banks and bullion banks are now becoming desperate.

The action we are seeing in the paper gold market with the recent $50 takedown is yet more proof of the corner that the gold manipulators have put themselves into by having virtually no physical gold left.

A rising gold price is dangerous for the manipulators. This would inevitably lead to more physical demand, something that would be disastrous for the manipulators. As the holders of paper gold begin to realise that neither Comex nor the bullion banks or the Central banks have a fraction of the gold required to satisfy the gold paper claims, they will demand delivery. With the paper gold market being up to 100 times the physical market, there will of course be nowhere near the gold available at current prices to satisfy the outstanding paper claims.

The gold manipulators are going to lose this game. This is a certainty. The only question is when. They have managed to frighten investors by manipulating the price down substantially in the last few years. In spite of that gold has gone from $250 in 1999 to $1,300 today.

The reason why the manipulators now are desperate and that we are getting nearer to a cataclysm is that physical demand has been at very high levels in the last few years mainly due to substantial buying from Asia and in particular China. This has led to the physical gold in the vaults of the bullion banks and central banks migrating from the West to the East.

As both the world economic and geopolitical situation deteriorates this autumn, we are likely to see major changes in markets. As the dollar comes under pressure, the precious metals will be major beneficiaries. This will lead to the beginning of the end of the manipulation in the paper gold and silver markets and strongly rising gold and silver prices.

Dr. Paul Craig Roberts and Dave Kranzler have just published an excellent commentary, with some very telling charts, on how the gold market is being manipulated.

“The first two days this week gold was subjected to a series of computer HFT-driven “flash crashes” that were aimed at cooling off the big move higher gold has made since the beginning of June. During this move higher, the hedge funds, who typically “chase” the momentum of gold up or down, built up hefty long positions in gold futures over the last 6 weeks. In order to disrupt the upward momentum in the price of gold, the bullion banks short gold in the futures market by dumping large contracts that drive down the price and make money for the banks in the process.”…

Please go to to read the full ‘ must read’ article.

You may view this item at

Egon von Greyerz

Malaysia Airlines Jet Crashes in Ukraine, May Have Been Shot Down

MOSCOW — A Malaysia Airlines Boeing 777 with nearly 300 people aboard crashed in eastern Ukraine near the Russian border on Thursday, the Ukraine government and a regional European aviation official reported, and the Interfax news agency said it had been shot down.

Ukraine’s president, Petro O. Poroshenko, said in a statement that he was calling for an immediate investigation of the crash. He did not rule out that it might have been shot down.

A regional airline official said the plane had been flying at about 33,000 feet when radar trackers lost it over eastern Ukraine near the Russian border.

Eastern Ukraine has been roiled for months by a violent pro-Russian separatist uprising in which a number of military aircraft have been downed. But this would be the first commercial airline disaster resulting from the hostilities in Ukraine.

Malaysia Airlines, still reeling from the mysterious loss of another Boeing 777 flight in March, said it had lost contact with the flight, MH17, from Amsterdam to Kuala Lumpur over Ukraine but offered no further details immediately. Prime Minister Najib Razak of Malaysia said in a Twitter post that he was “shocked by reports that an MH plane crashed. We are launching an immediate investigation.”



Malaysian Plane ‘Shot Down With 295 On Board’

A Boeing 777 travelling from Amsterdam to Kuala Lumpur reportedly comes down in Ukraine, close to the Russian border.

A Malaysian passenger plane with 295 people on board has been shot down as it flew above eastern Ukraine, according to aviation sources.

The plane, which is believed to have been flying from Amsterdam to Kuala Lumpur, was travelling at an altitude of 10km (6.2 miles) when it was shot down, Russia’s Inferfax reported.

The aircraft, reportedly a Boeing 777, was brought down by a ground-to-air missile, an adviser to the Ukrainian interior ministry quoted by the news agency said.

A spokesman for Malaysian Airlines confirmed it had lost contact with flight MH17, which departed from Amsterdam at 12.14am local time.

The flight disappeared from radar as it flew over Ukrainian airspace, he said.

Sky’s Katie Stallard, in Moscow, said media reports suggest the plane came down in the Donestk region, where there has been recent heavy fighting amid continuing tensions between Russia and Ukraine.


Posted at 11:36 AM (CST) by & filed under Jim's Mailbox.


The frequency of the term Bail-In and Resolution has increased on the Canadian news wires as of late. Canada, It’s coming, and coming fast!


"The CBIA also wrote authorities including Finance Minister Joseph Oliver and Bank of Canada Governor Stephen Poloz to ask that more clarity be provided on the “bail-in framework” that addresses requiring that bondholders convert certain debt to equity if a bank is close to insolvency."

Click here to read the full article…

CIGA Perry

Posted at 11:51 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’

- Shifting Production Detail Indicated Still Weaker First-Quarter GDP, Suggested Slowing Second-Quarter Inventory Growth (a GDP Negative)
- Volatile PPI Resumed Upswing in Inflation Reporting

"No. 641: June Industrial Production, Producer Price Index"

Did the Other Shoe Just Drop? Big Banks Hit with Monster $250 Billion Lawsuit in Housing Crisis
Posted on July 16, 2014 by Ellen Brown

For years, homeowners have been battling Wall Street in an attempt to recover some portion of their massive losses from the housing Ponzi scheme. But progress has been slow, as they have been outgunned and out-spent by the banking titans.

In June, however, the banks may have met their match, as some equally powerful titans strode onto the stage. Investors led by BlackRock, the world’s largest asset manager, and PIMCO, the world’s largest bond-fund manager, have sued some of the world’s largest banks for breach of fiduciary duty as trustees of their investment funds. The investors are seeking damages for losses surpassing $250 billion. That is the equivalent of one million homeowners with $250,000 in damages suing at one time.

The defendants are the so-called trust banks that oversee payments and enforce terms on more than $2 trillion in residential mortgage securities. They include units of Deutsche Bank AG, U.S. Bank, Wells Fargo, Citigroup, HSBC Holdings PLC, and Bank of New York Mellon Corp. Six nearly identical complaints charge the trust banks with breach of their duty to force lenders and sponsors of the mortgage-backed securities to repurchase defective loans.

Why the investors are only now suing is complicated, but it involves a recent court decision on the statute of limitations. Why the trust banks failed to sue the lenders evidently involves the cozy relationship between lenders and trustees. The trustees also securitized loans in pools where they were not trustees. If they had started filing suit demanding repurchases, they might wind up sued on other deals in retaliation. Better to ignore the repurchase provisions of the pooling and servicing agreements and let the investors take the losses—better, at least, until they sued.


China financials dominate in EM debt issuance
By Thomas Hale and Christopher Thompson

China’s financial institutions are issuing more internationally-marketed debt than their counterparts in any other emerging economy as the country’s rapidly evolving financial sector continues to ramp up its global presence….

“China is simply moving towards its natural weight in international capital markets,” said Demetrio Salorio, global head of debt capital markets at Société Générale. “This is not just a spike – the proportion of bonds will continue augmenting as a proportion of emerging market debt.”

So far this year, Chinese financials have issued $16.9bn in internationally marketed issuance – already higher than the $9.2bn raised over the whole of last year. Internationally marketed issuance from Chinese financials was less than $1bn in 2008.

Most major Chinese banks have existing tier-1 capital adequacy ratios of at least 9.5 per cent, according to CLSA, meeting Basel III requirements. But many analysts believe more cash will need to be raised over coming years.


Iraqi forces withdraw from Tikrit offensive
Jul. 16, 2014 | 08:56 AM (Last updated: July 16, 2014 | 01:27 PM)

BAGHDAD: Iraqi forces have withdrawn from the militant-held city of Tikrit after their new offensive met heavy resistance, in a blow to the government effort to push back Sunni insurgents controlling large parts of the country.

The failure highlights the difficulties of Baghdad’s struggle to recapture territory from the insurgents who seized Mosul, Tikrit and other cities last month in a rapid offensive which threatens to fragment Iraq on ethnic and sectarian lines.

The setback came as Iraqi politicians named a moderate Sunni Islamist as speaker of parliament Tuesday. That was a long-delayed first step towards a power-sharing government urgently needed to confront the militants, who are led by the Al-Qaeda offshoot Islamic State of Iraq and Greater Syria (ISIS).

It is unclear if the election of Salim al-Jabouri as speaker will break the broader deadlock over Prime Minister Nouri al-Maliki’s bid to serve a third term. He has ruled since the April election as a caretaker.

Government troops and allied Shiite volunteer fighters retreated from Tikrit before sunset Tuesday to a base 4 km south after coming under heavy mortar and sniper fire, a soldier who fought in the battle said.


Expected Microsoft Layoffs Could Top 5,800, Report Says
Jul 15th 2014 6:02AM
By Supriya Kurane

Microsoft (MSFT) is planning its biggest round of job cuts in five years as the software maker looks to integrate Nokia Oyj’s handset unit, Bloomberg reported, citing people with knowledge of the company’s plans.

The reductions, expected to be announced as soon as this week, could be in the Nokia unit and the parts of Microsoft that overlap with that business, as well as in marketing and engineering, Bloomberg reported.

Since absorbing the handset business of Nokia this spring, Microsoft has 127,000 employees, far more than rivals Apple (AAPL) and Google (GOOG) Wall Street is expecting Chief Executive Officer Satya Nadella to make some cuts, which would represent Microsoft’s first major layoffs since 2009.

The restructuring may end up being the biggest in Microsoft history, topping the 5,800 jobs cut in 2009, the report said.

Some of the job cuts will be in marketing departments for businesses such as the global Xbox team, and among software testers, while other job cuts may result from changes Nadella is making to the engineering organization, Bloomberg reported.

Last week, Nadella circulated a memo to employees promising to "flatten the organization and develop leaner business processes" but deferred any comment on widely expected job cuts at the software company.


Bron Suchecki: GLD worries about failure of unallocated gold
Submitted by cpowell on 07:09AM ET Wednesday, July 16, 2014. Section: Daily Dispatches
10:08a ET Wednesday, July 16, 2014

Dear Friend of GATA and Gold:

The Perth Mint’s Bron Suchecki reports that gold exchange-traded fund GLD is proposing an amendment to its procedures that expresses concern about the reliability of unallocated gold.

Suchecki writes: "Why the need to clarify this now? Is there something the World Gold Council (which sponsors GLD) knows about the state of the market that didn’t exist before?"

Suchecki’s commentary is headlined "GLD Amendment Refers to ‘Unforeseen Reasons’ for Unallocated Failure" and it’s posted at his blog, Gold Chat, here:…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Posted at 11:46 AM (CST) by & filed under Jim's Mailbox.


Here is another reason for foreign companies NOT to have operations in the US. Just another step towards self-imposed isolation.

CIGA Craig

Obama administration says the world’s servers are ours
US says global reach needed to gut "fraudsters," "hackers," and "drug dealers."
by David Kravets – July 14 2014, 12:12pm MST

Global governments, the tech sector, and scholars are closely following a legal flap in which the US Justice Department claims that Microsoft must hand over e-mail stored in Dublin, Ireland.

In essence, President Barack Obama’s administration claims that any company with operations in the United States must comply with valid warrants for data, even if the content is stored overseas. It’s a position Microsoft and companies like Apple say is wrong, arguing that the enforcement of US law stops at the border.

A magistrate judge has already sided with the government’s position, ruling in April that "the basic principle that an entity lawfully obligated to produce information must do so regardless of the location of that information." Microsoft appealed to a federal judge, and the case is set to be heard on July 31


Posted at 10:11 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

The latest from John Williams’

- Net of Inflation, Headline Real June Retail Sales Likely Contracted
-  Although Real Retail Sales Appear to Have Gained in Second Quarter; Contracting Second-Quarter GDP Outlook Remains Intact

"No. 640: June Retail Sales"

Emerging nations plan their own World Bank, IMF
Jul. 14, 2014 5:44 PM EDT

WASHINGTON (AP) — Fed up with U.S. dominance of the global financial system, five emerging market powers this week will launch their own versions of the World Bank and the International Monetary Fund.

Brazil, Russia, India, China and South Africa —the so-called BRICS countries — are seeking "alternatives to the existing world order," said Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution.

At a summit Tuesday through Thursday in Brazil, the five countries will unveil a $100 billion fund to fight financial crises, their version of the IMF. They will also launch a World Bank alternative, a new bank that will make loans for infrastructure projects across the developing world.

The five countries will invest equally in the lender, tentatively called the New Development Bank. Other countries may join later.

The BRICS powers are still jousting over the location of the bank’s headquarters — Shanghai, Moscow, New Delhi or Johannesburg. The headquarters skirmish is part of a larger struggle to keep China, the world’s second-biggest economy, from dominating the new bank the way the United States has dominated the World Bank.


The Next Domino: Espirito Santo Holding Company Preparing To File Bankruptcy
Tyler Durden on 07/15/2014 10:49 -0400

While Banco Espirito Santo continues to exist on fumes and life support (that last ditch equity injection by Baupost a week ago may not have been Seth Klarman’s wisest investment), a key link in the Espirito Santo Holding Company structure is preparing to default. According to Reuters:


For those confused, "creditor protection" =  bankruptcy.

Which one is RioForte again? We showed this handy org chart a few days ago, here it is again.


The good news: as every single European bank "expert" predicted last week when scrambling to avoid a panic, there is no fear of contagion. Aside from this one of course. Remember: there is always only one cockroach.

The full report from Reuters:

Rioforte, a holding company of Portugal’s troubled Espirito Santo banking clan, is preparing to file for creditor protection, sources familiar with the matter said on Tuesday, hours before Rioforte was due to repay over $1 billion in debt to Portugal Telecom. The filing will be made with a court in Luxembourg, where Rioforte is registered, one source close to the process said, adding that the filing is aimed at preventing insolvency that would entail uncontrolled asset sales at any price.

Rioforte declined to comment. The sources would not comment

The timing of the filing depends on lawyers working on it in Luxembourg, the sources said.


Dear CIGAs,

Gold found a bottom a year ago at $1180 on June 30 at precisely 10:00 AM EST, the final London fix of the quarter. This price was tested again on the last day of 2013, clearly being driven by predatory speculators.

Since then, the gold market has changed markedly. During the two-and-a-half year decline, price tended to fall during Western hours, as speculators sold and shorted, and to rise in Eastern hours as Asia exploited soft prices to buy physical metal. That pattern has reversed, with gold tending to be strong in the West, as speculators re-enter the market, and soft in the East, as credit troubles in China and elsewhere slow purchases.

Bank analysts, such as at Societe Generale, have seized on weak physical markets – meaning the flow of gold to Asia has slowed marginally – to repeat bearish prognostications. But the story is once again Western speculators and the fact that the massive transfers of gold to the East over the past two years have left a lot less gold in the West to speculate on.

Western speculators have re-entered the market in part because, as argued in the attached report, there has been a shift in perception such that inflation has become the primary risk to the debt markets, not deflation.

Myrmikan’s investment thesis (Click here to view the report…) is based on the premise that interest rates have been artificially low, debt levels too high, and that gold is the antithesis of debt. Debt bubbles burst either through inflation or deflation, and either way benefits gold as against all other financial assets – investing in gold and unlevered gold mining stocks permits agnosticism as to the method of debt default.

Looking back some time hence, it may well be that the shift from a deflationary to inflationary mindset helped cause gold’s huge correction. But, whereas gold does well in real terms in a deflationary debt default, it really flies in nominal terms during inflationary defaults. This is the prospect before us.

Regarding yesterday’s $30 decline in gold prices, it is worthy of note that 10% of yesterday’s volume occurred in the span of just 11 trading minutes. As the chart below shows, it produced little damage to the chart of the gold miners.

CIGA Bill Holter



Santelli Goes Berserk, Slams Fed Which Was "Not Created To Be A Feel-Good Institution"
Submitted by Tyler Durden on 07/14/2014 21:04 -0400

It started as a discussion about the reality of inflation versus propagandized "noise" and devolved into what is possibly Rick Santelli’s most epic rant. First,Santelli says the Fed has done enough (and it hasn’t worked "but to get the market higher") to which Liesman’s "but higher interest rates won’t help" argument is backed up by more counterfactuals of "just think how bad it would have been" without the Fed. Santelli’s screamfest rightly attests that we do not know – we might have been well on our way to recovery by now… and adds that – despite Liesman’s imploring, "the Fed was not created to be a feel-good institution."


Finally, slamming the herd of zombified analysts and talking-heads that follow sheep-like the Fed’s every word off the inevitable cliff, Santelli blasts (unafraid to stand up for the jobless Americans not driving their new Rolls-Royce on the back of levered ‘wealth creation’ in stocks), "This is America! We don’t follow consensus, we set it!"

This is what Santelli is upset about… Who is the Fed working for? Main Street or Wall Street?


The "people" never caused the crisis that the Fed bailed the banks out of… Liesman cannot let "low rates" go and Santelli explains how capital will come out if it can get a decent return and the status quo thinkers have it backwards… "The Fed was not created to be a feel good instituion"



“Where should I go?" -Alice. "That depends on where you want to end up." – The Cheshire Cat.”
Lewis Carroll, Alice’s Adventures in Wonderland & Through the Looking-Glass

US Fed expects to retain ‘unusually accommodative’ monetary policies
July 14, 2014

The Federal Reserve will still need to deliver "unusually accommodative" monetary policy even once the U.S. economy returns to "where we want it to be," Fed Chair Janet Yellen was quoted as saying in a magazine article.


Jim Sinclair’s Commentary

This is the strangest global economic recovery in history.

Puerto Rico Utility May Default on January Interest Payment
By Michelle Kaske Jul 14, 2014 5:55 PM GMT-0300

The Puerto Rico Electric Power Authority may miss a January interest payment to investors, according to Municipal Market Advisors, potentially triggering the largest restructuring ever of state and local debt.

The agency, called Prepa, used $41.6 million of reserve funds to help make a $417.6 million payment to bondholders on July 1. With the reserve now depleted by about 10 percent, “we expect the bond trustee is unlikely to make any more distributions to bondholders, reserving cash for likely litigation expenses,” Matt Fabian, a managing director at Concord, Massachusetts-based MMA wrote today in a report.

The next payment is due Jan. 1, according to Fabian. Unless the utility replenishes the reserve, investors in uninsured Prepa bonds “have likely seen their last cash in awhile,” wrote Fabian, who’s been analyzing the municipal-debt market for 18 years.

While a new law aims to restructure some Puerto Rico public-corporation debt outside of a bankruptcy filing, Prepa’s $8.6 billion alone exceeds the $8 billion of general obligations and water-and-sewer debt in Detroit’s record bankruptcy and Jefferson County, Alabama’s $4.2 billion failure.


Portugal Contagion Spreads: Espirito Santo To Default On Portugal Telecom Loan, Business Lending Drops Most On Record
Tyler Durden on 07/15/2014 08:27 -0400

Despite reassurances from US asset-gatherers and TV ‘personalities’ that Portugal must be fixed (because US equities are up), it is anything but. Today’s triple whammy from the ‘recovered’ Portugal starts with Banco Espirito Santo bonds and stocks hitting new record lows (down over 10% more on the day). The contagion has rippled across to Rioforte, which controls Grupo Espirito Santo’s non-financial arm – and is likely to default on a EUR 847 million payment to Portugal Telecom. And just to add further salt to that wound, Portuguese business lending in May collapsed at a record pace (down 8.23%). But apart from that, yeash Portugal is all fixed and their sovereign bonds are worth every penny…

Step 1 – Banco Espirito Santo bonds and stocks continue to collapse…



Posted at 9:12 AM (CST) by & filed under Jim's Mailbox.


This is a game changer! It sounds like President Xi Jinping is feeling more powerful every day.

Putin is setting the stage perfectly for his new Chinese best friend


China pushes for developing world’s rights as BRICS summit opens
BEIJING Tue Jul 15, 2014 9:58am EDT

(Reuters) – China will dedicate itself to "perfecting" the role developing countries play in international affairs to give them better representation and a greater say, President Xi Jinping said ahead of a summit of BRICS nations in Brazil.




As the US chooses to isolate itself, Russia achieves its objective of putting a wedge between the US and EU. I can’t believe Exxon, Chevron, etc. are thrilled with these planned sanctions.

CIGA Craig

U.S. preparing unilateral sanctions on Russia

The United States is considering imposing unilateral sanctions on Russia over its threatening moves in Ukraine, a shift in strategy that reflects the Obama administration’s frustration with Europe’s reluctance to take tougher action against Moscow, according to U.S. and European officials.

Until now, the U.S. has insisted on hitting Russia with penalties in concert with Europe in order to maximize the impact and present a united Western front. The European Union has a far stronger economic relationship with Russia, making the 28-nation bloc’s participation key to ensuring sanctions packages have enough teeth to deter Russia.


Posted at 7:20 PM (CST) by & filed under General Editorial.

My Dear Extended Family,

Manipulation such as the sale of $1.3 billion dollars worth of paper gold at an illiquid time period today is not to protect the dollar or bull the general equity market. It is to make money for the manipulators that want here to cover their shorts and initiate to expand their long positions. That sale was a pure construct as there was no news to sustain the sell or to initiate it in the time span of its occurrence.

Long term cycles in gold are in the process of turning long term positive. That is fact. There is a strong possibility that this is the last take down before gold trades at a new highs. I feel this is the situation.

The economic dislocation internationally in banking exposure to its risk profile is at levels greater than 2007-2008, and is the subject basis of the letter attached here from the "Sovereign Man" as an example of what success can be expected from the certain program of Bail-In for the entire Western financial system.

Clearly we are witnessing the popular delusions and madness of the crowd in general markets and today in the reverse in the gold price. This will make new highs after the failure of this clearly false price construct of this morning’s illiquid time period.


Sovereign Man
July 14, 2014
Istanbul, Turkey

It’s been over a year since the banking system in Cyprus officially went bust.

On Friday, March 15, 2013, practically everyone in the country went to bed thinking that everything was just fine.

Many had probably gone to the bank that very day to do business, or logged on to an Internet banking platform.

Yet the very next morning, they woke to a completely new reality: the nation’s banks were broke, and the government was in no position to rescue them.

All the promises they had been told about government guarantees and having a ‘well-regulated’, sound banking system turned out to be lies.

The government proclaimed a bank holiday, and banks remained closed for the next several days. Accounts were frozen and ATM withdrawals were limited to only 100 euros a day.

Eventually the plan materialized: substantial portions of deposits over 100,000 euros would be confiscated in exchange for equity in the banks.

(Just imagine—Bank of America, RBC, or Lloyds takes your money and gives you stock certificates that subsequently plummet in value!)

And for everyone else, severe capital controls were instituted—some of the worst in decades.

After more than a year, some capital controls have been lifted. Though it’s still not possible to transfer money out of Cyprus without the central bank’s approval.

And what does the banking system have to show for sixteen months of capital controls, bailouts, and deposit confiscation?

It turns out that banks in Cyprus are still pitifully capitalized.

The country’s largest bank, the Bank of Cyprus, was at the epicenter of the calamity last year. And they still face a mountain of bad loans.

A staggering 55% of the bank’s loan portfolio is delinquent. And now they’re having to sell stock in order to raise an additional billion euros in capital.

Bear in mind, the shareholder equity for the bank right now is only 2.7 billion to begin with. So they’re having to increase that by a whopping 37%!

Needless to say, this is not something that a healthy bank in a healthy banking system has to do.

Wealth tax next?

There are two key lessons here:

1) Banks and governments will –never– tell you the truth about the system. They will lie all the way through to a full collapse.

2) A banking relationship cannot be taken for granted. It’s important to conduct due diligence, just as you would with any important financial decision.

We’re led to believe that banks are prudent and safe institutions. That they’re insured by the government. That they’re “risk-free”.

Subsequently, most people expend more energy in choosing a brand of toothpaste than in selecting the financial steward who controls their life’s savings.

Remember: this decision doesn’t have to be limited by national borders.

Just as you might move somewhere for more lucrative job opportunities and better schools for your kids, you can also move savings to a place with better financial opportunities and stronger banks.

It’s hard to imagine you’ll be worse off holding some funds at a foreign bank that’s 20 times more liquid and 4 times more solvent than where you bank now.

But if the worst happens and you get Cyprus’d tomorrow morning, it could turn out to be one of the smartest financial decisions you could make.

And unless the past several years have given you 100% confidence in your government and banking institutions, this is an important step I recommend you consider.

Until tomorrow,
Simon Black

Posted at 12:02 PM (CST) by & filed under In The News.

Russia Considering ‘Surgical Strike’ on Ukraine – Report

MOSCOW, July 14 (RIA Novosti) – Moscow is considering “surgical retaliatory strikes” on the Ukrainian territory after the standoff has led to first civilian victims among Russians on Russia’s territory, a Kremlin source told Kommersant Monday.

“Our patience is not boundless,” the source told the newspaper, stressing that “this means not a massive action but exclusively targeted single strikes on positions from which the Russian territory is fired at.”

The Russian side “knows for sure the site where the fire comes from,” the source said.

The proposed plan echoes a statement by a deputy speaker of Russia’s upper house, Yevgeniy Bushmin, who told RIA Novosti Sunday that using precision weapons in response to Ukraine’s shelling would prevent further Kiev’s attacks of Russia’s territory.

«There is a feeling that if before firing was not aimed against Russian border guards, now provocations have been on the rise as there is no other means of forcing us to join in the standoff with Ukraine’s security troops," said Bushmin who represents Rostov Region in the Federation Council.



Banco Espirito Santo Bonds Sink to Record After Stake Sold
By John Glover Jul 14, 2014 1:09 AM MT

Banco Espirito Santo SA’s subordinated bonds fell to a record after a parent company said it had to sell 4.99 percent of the lender to meet debt commitments.

Espirito Santo Financial Group said it reduced its stake in the Lisbon-based bank to 20.1 percent to meet a margin call on a loan taken out during the bank’s 1.04 billion-euro ($1.42 billion) rights offering in June. Banco Espirito Santo’s 7.125 percent notes due November 2023 fell 2.9 cents to 84 cents on the euro to yield 9.58 percent, according to data compiled by Bloomberg.

The sale comes as Chief Executive Officer Ricardo Salgado, the 70-year-old great-grandson of the bank’s founder was replaced by Vitor Bento after the Bank of Portugal urged the country’s second-biggest lender by market value to make changes to its executive management. Markets were roiled last week after a company within the Espirito Santo group missed payments on short-term debt, prompting Standard & Poor’s to downgrade the bank.

“A weak financial position of several group entities is compounding challenges to the bank’s franchise and poses increased risks to BES’s financial position,” S&P said in a July 11 report. “We cannot, at this point, fully capture this in our forecast of the bank’s solvency, and therefore believe that it constrains our assessment of BES’ risk position.”


The Head Of ‘The Central Bank Of The World’ Warns That Another Great Financial Crisis May Be Coming
July 13th, 2014

Most people have never heard of Jaime Caruana even though he is the head of an immensely powerful organization.  He has been serving as the General Manager of the Bank for International Settlements since 2009, and he will continue in that role until 2017.  The Bank for International Settlements is a rather boring name, and very few people realize that it is at the very core of our centrally-planned global financial system.  So when Jaime Caruana speaks, people should listen.  And the fact that he recently warned that the global financial system is currently “more fragile” in many ways than it was just prior to the collapse of Lehman Brothers should set off all sorts of alarm bells.  Speaking of the financial markets, Caruana ominously declared that ”it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally” and he noted that “markets can stay irrational longer than you can stay solvent”.  In other words, he is saying what I have been saying for so long.  The behavior of the financial markets has become completely divorced from economic reality, and at some point there is going to be a massive correction.

So why would the head of ‘the central bank of the world’ choose this moment to issue such a chilling warning?

Does he know something that the rest of us do not?


China-Singapore RMB cash transfer begins
Updated: 2014-07-10 13:34

GUANGZHOU – Cross-border cash transfer of the yuan between China and Singapore began on Wednesday in Guangzhou.

The transfer by the Guangdong provincial office of the Industrial and Commercial Bank of China (ICBC) will reduce exchange costs and risk for banks in Singapore and Southeast Asia, said Niu Gang, general manager of ICBC operations. .

Singapore was the first country to sign a yuan clearance agreement with China and has massive volume of cross-border yuan businesses, said Wang Jingwu, head of the Guangzhou branch of the People’s Bank of China (PBOC).

In the first five months this year, yuan settlement between China and Singapore reached 421 billion yuan ($68.4 billion ), of which 17 percent was traded between Guangdong and Singapore, said Wang.

The PBOC, China’s central bank, will actively support yuan cross-border transfer on a regular basis and maintain an orderly flow of currency between China and Singapore, said Li Huifeng, deputy head of the PBOC currency, gold and silver bureau.

ICBC, the world’s biggest bank in terms of assets, had yuan clearance business worth more than two trillion yuan in Singapore last year.


Jim Sinclair’s Commentary

Doubled year over year.

China-Europe yuan settlement grows fast in May

BEIJING, July 12 (Xinhua) — The China-Europe settlement of Chinese currency renminbi, or the yuan, saw fast growth in May, according to a report unveiled Saturday by the Bank of China.

The yuan settlement amount between China’s mainland and four European countries — Germany, Britain, Luxembourg and France — doubled from a year earlier, with their total taking up a share of 8 percent in China’s overall cross-border yuan settlement, the report showed.

In spite of the strong growth in Europe, Asia continued to take the lion’s share. Hong Kong, Macao, Taiwan, Singapore, Japan, the Republic of Korea and Vietnam jointly took up 77.5 percent of the total, the report showed.

In May, total cross-border yuan settlement amounted to 594.2 billion yuan (96.67 billion U.S. dollars), surging 52.6 percent year on year.

"The yuan has been used abroad more extensively, with more reasonable regional distribution," the report said.

Last month, China’s central bank appointed clearing banks for yuan businesses in London and Frankfurt, and signed two memorandums of understanding on renminbi clearing with the central banks of Luxembourg and France.


BIS chief fears fresh Lehman from worldwide debt surge
Jaime Caruana says investors are ignoring prospect of higher interest rates in the hunt for returns
By Ambrose Evans-Pritchard
8:10PM BST 13 Jul 2014

The world economy is just as vulnerable to a financial crisis as it was in 2007, with the added danger that debt ratios are now far higher and emerging markets have been drawn into the fire as well, the Bank for International Settlements has warned.

Jaime Caruana, head of the Swiss-based financial watchdog, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield.

“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,” he told The Telegraph.

Mr Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since then.

Credit spreads have fallen to to wafer-thin levels. Companies are borrowing heavily to buy back their own shares. The BIS said 40pc of syndicated loans are to sub-investment grade borrowers, a higher ratio than in 2007, with ever fewer protection covenants for creditors.