Posted at 6:16 PM (CST) by & filed under General Editorial.

The Stench Of Freddie Mac Is Back – $18 Billion In Crony Capitalist Thievery
New York City, New York
November 11, 2015

Washington’s capacity to foster crony capitalist larceny and corruption never ceases to amaze. But according to the Bloomberg story below, Wall Street’s shameless thievery from US taxpayers is about to get a whole new definition.

To wit, Freddie Mac is handing three private equity billionaires $18 billion in deeply subsidized debt financing in order to undertake giant rental apartment deals. According to no less an authority than Morgan Stanley, the subsidy embedded in this cheap financing amounts to 150 basis points or about $250 million per year on the amounts in play.

Yet this largesse will serve no discernible public purpose whatsoever. Indeed, over the 20-year term of these loans the bonanza will amount to about $5 billion, but it will not generate a single new unit of housing. Nor will it provide a single dollar of incremental rent relief to any low or moderate income tenant.

That’s because the purpose of these giant loans is not to fund new construction of rental housing— for which there is currently an arguable shortage. And it’s not even to incentivize owners to convert existing apartment buildings to affordable housing.

Instead, its sole effect will be to put the taxpayers in the business of highly leveraged Wall Street deal making. That is, it will fund what amounts to apartment company LBOs being undertaken by the largest players in the private equity world including Barry Sternlicht’s Starwood Capital Group, Steve Schwarzman’s Blackstone Group and John Grayken’s Lone Star Fund.

Each of these cats are billionaires many times over and their remit most definitely does not include bolstering the social safety net. What they are doing is buying giant apartment companies in high priced takeover deals. These LBOs will shower sellers and speculators with windfall gains, and Wall Street dealers and themselves with prodigious fees now and the prospect of double, triple or quadruple their modest cash equity investments not too far down the road.



Jim Sinclair’s Commentary

Globally everything is improving. Good time to hike rates.

It’s Official: The Baltic Dry Index Has Crashed To Its Lowest November Level In History
Tyler Durden on 11/06/2015 14:41 -0500

2015 has been an ‘odd’ year. Typically this time of year sees demand picking up amid holiday inventory stacking and measures of global trade such as The Baltic Dry Index rise from mid-summer to Thanksgiving. This year, it has not.

In fact, it has plummeted as the world’s economic engines slow and reality under the covers of global stock markets suggests a massive deflationary wave (following a massive mal-investment boom). At a level of 631, this is the lowest cost for Baltic Dry Freight Index for this time of year in history.. and within a small drop of an all-time historical low.

Hard to ignore something that has never happened before as anything but a total disaster for world trade and economic growth.


Posted at 5:10 PM (CST) by & filed under General Editorial.

By Greg Hunter’s

Dear CIGAs,

Financial expert Craig Hemke says not only is the 300 to 1 leverage at COMEX “extreme fraud,”but it also is a sign of record demand for physical gold. Hemke explains, “We have been at this number now for a couple of months. . . . Meaning that for every one physical ounce of supply in the vaults of COMEX, there are 300 beneficial owners. 300 paper ounces have been created. That leverage, that stress is telling us something. You get the anecdotal stories about the empty vaults of London and the stress of the gold that is flowing out of the vaults of London and out of the U.S., out of the UK and into Switzerland. There are stories of the refiners running 24 hours a day, 7 days a week, taking the old 400 ounce gold bar and . . . recasting them into kilo bars and shipping them to the East where the demand is. . . . It’s huge fraud to cover up huge demand. There is no doubt about it.”

Hemke goes on to say, “I think we are finally starting to run out (of physical gold).   There are all these data points, but I can’t look at it and say, therefore, by Thanksgiving, all hell is going to break loose and the system is going to break. I am not going to tell you that, but what I will tell you, I am perfectly comfortable owning gold, and I have been perfectly comfortable accumulating it for the last three years while the price falls because I know this system is eventually going to fail and, when it does, the result is going to be spectacular.”

Hemke goes on to say, “There is a reason why the futures markets are set up and utilized the way they are. It’s modern alchemy, and it is to suppress or control price, but you have to have this physical metal backing it. It is that that I think we are finally getting to the end of. When the music stops and everybody that has an unallocated account in London or Sydney or has GLD, all these folks who think they own gold, when instead, all they own is a paper obligation with counter-party risk. When the music stops, when the 300 people are circling one chair while the music plays, when they all try to sit on that chair at once and the world realizes there is nowhere near the amount of gold that was supposed to be there, let’s just say the price is not going to be $1,100 an ounce.”

Hemke says what happened in the run-up to the September Fed meeting is happening again. The dollar is rising and commodities are tanking. Hemke explains, “All of these prices are going straight in the toilet because of the rising dollar. They were going straight in the toilet back in August, too. We are right back to where we were in August. So, when we move through November, and we’ll get a GDP revision to the 3rd quarter, which will be down from its paltry 1.5%. . . . By the time we get around to December 16 (the last Fed meeting of 2015), I am quite certain, based on all these economic factors, that the Fed will do nothing again and, all of a sudden, things will look better for commodities, gold and everything else.”


Posted at 3:43 PM (CST) by & filed under Jim's Mailbox.


All the job growth over the past 7 years has come from low paying and part time fast food and bartending employment plus made up seasonal adjustments of the same.

Now, if they can come out with a machine that mixes and serves drinks, the U.S. will have no jobs!

‘As the company’s co-founder Alexandros Vardakostas told Xconomy his “device isn’t meant to make employees more efficient. It’s meant to completely obviate them.” ‘

CIGA Wolfgang Rech

Dear Striking Fast-Food Workers: Meet The Machine That Just Put You Out Of A Job
Submitted by Tyler Durden on 11/10/2015 10:55 -0500

Today, U.S. fast-food workers will strike across 270 cities in a protest for higher wages and union rights that they hope will catch the attention of candidates in 2016 elections, organizers said.

The walkouts will be followed by protests in 500 cities by low-wage workers in such sectors as fast food and home and child care, a statement by organizers of the Fight for $15 campaign said on Monday.

The protests and strikes are aimed at gaining candidates’ support heading into the 2016 election for a minimum wage of $15 an hour and union rights, it said.

The strikes and protests will include workers from McDonald’s, Wendy’s, Burger King , KFC and other restaurants, the statement said.

And while we sympathize with their demands for higher wages, here is the simple reason why they will be very much futile.

Dear fast food workers of the US – presenting you nemesis: the Momentum Machines burger maker.

According to a recent BofA reported on how robotics will reshape the world, San Francisco start up Momentum Machines are out to fully automate the production of burgers with the aim of replacing a human fast food worker. The machine can shape burgers from ground meat, grill them to order with the specified amount of char, toast buns, add tomatoes, onions, pickles, and finally place it on a conveyor belt.

The robot is shown below. It occupies 24 square feet, and is much smaller and efficient than most assembly-line fast-food operations. It provides “gourmet cooking methods never before used in a fast food restaurant” and will deposit the completed burger into a bag. It does all of this without a trace of attitude.




A number of months ago (or last year, can’t be sure), I read that George Soros sold his entire holdings in GLD. Everyone speculated that he was bearish on gold.

Now we know why. He wasn’t necessarily bearish on gold, but most likely on GLD.

I’d bet my bottom dollar he’s long gold in a physical form.

CIGA Wolfgang Rech

JS Kim Issues Critical Warning About Newly Introduced Global Banking “Gold Programs”
Submitted by smartknowledgeu on 11/09/2015

A second example of very likely fraud executed by bankers in gold derivatives markets is the gold GLD ETF (along with the silver SLV ETF). Bankers have always refused and/or failed to provide any proof that their paper gold ETF, the GLD, which they claim to be 100% backed by gold, is actually 100% backed by gold instead of just fractionally backed with gold rehypothecated many times, as is almost certain to be the case. And when bankers attempted to assuage concerns of GLD holders that their paper purchases were actually 100% backed by physical gold held in their vaults, as they claimed, they failed miserably, as the serial number of a bullion bar they claimed was part of the vaulted gold that backed GLD purchases failed to match serial numbers of bullion bars contained on the GLD ETF bullion bar list.


Posted at 3:35 PM (CST) by & filed under In The News.

The October Jobs Report – Not Awesome, Just More Of The Same BLS Con
New York City, New York
November 9, 2015

No, it wasn’t a “blow-out” jobs report. Inside the artificially bloated, trend-cycle adjusted headline number was the same old BLS con job and an economically devastating shortfall where it really counts. Namely, the US economy still has 2% fewer breadwinner jobs than it did 94 months ago at the pre-crisis peak in December 2007.

Actually, its worse. As is blindingly clear from the chart below, last month’s purportedly “awesome” jobs report contained 1.4 million fewer breadwinner jobs than existed way back in the very first month of this century!

So that’s not an awesome labor market; its the measure of a sick economy.


Indeed, the October pattern was even worse than normal. To wit, the reported number of high pay, high productivity jobs in mining, energy and manufacturing declined by 4,000, while the count of low-pay, part-time waiters and bartenders soared by 41,000.

Yes, the “Leisure and Hospitality” category of the BLS survey is somewhat broader——it also includes bellhops, hotel maids, parking attendants, hot dog vendors, stadium maintenance crews and the rest of the lodging and entertainment complex. These are all worthy and necessary endeavors, but they are mostly gigs, not jobs.




November 9, 2015
Santiago, Chile

Late last week, a consortium of financial regulators in the United States, including the Federal Reserve and the FDIC, issued an astonishing condemnation of the US banking system.

Most notably, they highlighted “continuing gaps between industry practices and the expectations for safe and sound banking.”

This is part of an annual report they publish called the Shared National Credit (SNC) Review. And in this year’s report, they identified a huge jump in risky loans due to overexposure to weakening oil and gas industries.

Make no mistake; this is not chump change.

The total exceeds $3.9 trillion worth of risky loans that US banks made with your money. Given that even the Fed is concerned about this, alarm bells should be ringing.

Bear in mind that, in banking, there are three primary types of risk, at least from the consumer’s perspective.

The first is fraud risk.

This ultimately comes down to whether you can trust your bank. Are they stealing from you?

MF Global was once among the largest brokers in the United States. But in 2011 it was found that the firm had stolen funds from customer accounts to cover its own trading losses, before ultimately declaring bankruptcy.

It’s unfortunate to even have to point this out, but risk of fraud in the Western banking system is clearly not zero.

The second key risk is solvency.

In other words, does your bank have a positive net worth?

Like any business or individual, banks have assets and liabilities.

For banks, their liabilities are customers’ deposits, which the bank is required to repay to customers.

Meanwhile, a bank’s assets are the investments they make with our savings. If these investments go bad, it reduces or even eliminates the bank’s ability to pay us back.

This is precisely what happened in 2008; hundreds of banks became insolvent in the financial crisis as a result of the idiotic bets they’d made with our money.

The third major risk is liquidity risk.

In other words, does your bank have sufficient funds on hand when you want to make a withdrawal or transfer?

Most banks only hold a very small portion of their portfolios in cash or cash equivalents.

I’m not just talking about physical cash, I’m talking about high-quality liquid assets and securities that banks can sell in a heartbeat in order to raise cash and meet their customer needs to transfer and withdraw funds.

For most banks in the West, their amount of cash equivalents as a percentage of customer deposits is extremely low, often in the neighborhood of 1-3%.

This means that if even a small number of customers suddenly wanted their money back, and especially if they wanted physical cash, banks would completely seize up.

Each of these three risks exists in the banking system today and they are in no way trivial.

Very few people ever give thought to the soundness of their bank, ignoring the blaring warning signs that are right there in front of them.

Every quarter the banks themselves send us detailed financial statements reporting both their low levels of liquidity and the accounting tricks they use to disguise their losses.

Now we have a report from Fed and the FDIC, showing their own concern for the industry and foreshadowing the solvency risk I discussed above.

Every rational person ought to have a plan B to hedge these risks. And I would propose three methods:

1) Transfer a portion of your funds to a much safer, stronger banking jurisdiction, preferably one with zero net debt.

2) Hold physical cash. Physical cash serves as a great short-term hedgeagainst all three risks, with the added benefit that there’s no exchange rate risk.

All you have to do is go to your nearest ATM machine, take out a small amount at a time and build up a small pool of cash savings.

3) Hold gold and silver.

While physical cash is a great short-term hedge against risk in the banking system, gold and silver are excellent hedges against long-term risks in the monetary system and global financial system as a whole.

There may be a time where we are faced with the consequences not only of a poor banking system, but also of decades of wanton debt and monetary expansion.

At that point, the only thing that will make any sense at all is direct ownership of real assets. 

Until tomorrow, 


Simon Black


Posted at 3:14 PM (CST) by & filed under In The News.




Jim Sinclair’s Commentary

Publicly issued economic data is concocted crap, period.

CEO Of World’s Largest Shipping Company: “Global Growth Is Worse Than Official Reports”
Tyler Durden on 11/08/2015 16:33 -0500

Last week we reported that, as measured by its three primary means of transportation, global trade is in nothing short of freefall: to wit – “China Container Freight At Record Low; Rail Traffic Tumbles, Trucking Slows Down.” The slowdown in this most important metric of global growth (or lack thereof), one which unlike asset prices can not be manipulated by central banks through “printing” was confirmed when Maersk, the world’s biggest container shipping company, reported it would cut shore-side headcount by about 4,000, a reduction of about 17%.

As reader Joe points out, they also declined to execute options for additional 19,000 TEU mega ship new-builds and a couple of smaller 3,600 TEU feeder vessels, and will postpone a decision on building some large 14,000 TEU vessels. He adds that industry analysts have been critical of Maersk’s counter-intuitive expansion over the past few years in a recessionary climate, during which the container carriage capacity that Maersk brought on line is credited with driving ocean transport rates down.

It is unclear whether Maersk was able to capture additional market share with their larger and likely more efficient mega-ships by driving less efficient operators out of business, or if the recession killed off their competitors. What is certain is that Maersk’s pricing strategy merely accelerated the “deflationary” climate experienced across the globe over the past several years, as companies have rushed to cut prices in an attempt to put competitors (who have survived this far thanks to global ZIRP policies which have pushed debt to unprecedented levels around the globe) out of business.

What is also clear is that Maersk is not just making it up. In fact, according to Maersk CEO, Nils Smedegaard Andersen, the reason why companies that are reliant on global trade, such as his, are flailing is simple: global growth is substantially worse than the official numbers and forecasts. To wit: “The world’s economy is growing at a slower pace than the International Monetary Fund and other large forecasters are predicting.”

Quoted by Bloomberg, Andersen says that “we believe that global growth is slowing down,” he said in a phone interview. “Trade is currently significantly weaker than it normally would be under the growth forecasts we see.”

Impossible, you say, the IMF would never lie or be overly optimistic in a transparent attempt to boost consumer optimism, and thus spending. Actually, it would.


Posted at 10:00 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

This past Friday the BLS released another “whopper” set of employment numbers. The economy supposedly created 271,000 new jobs. I was fortunate to be able to speak with John Williams (I encourage you to subscribe to his service at and asked him two questions. First, with the current backdrop of an extremely weak global economy, how was this whopping big number generated? Mr. Williams believes the “seasonal adjustment” has been an extreme outlier this month and last, a seasonal adjustment of near 70,000 jobs were added. This would have left the jobs number at close to 200,000 jobs. I also asked what the “birth death” model added and he responded 165,000 jobs. If you do the math, between the unusual seasonal adjustment plus the birth-death model addition, 235,000 of the 271,000 in job gains are “fictional”!

Switching gears but still looking at macro economics, the Baltic Dry Index just hit the lowest level ever for the month of November. (While editing, this story came out). It confirms what we knew and tells us global trade is quite weak and shrinking. This is important because it flies in the face of the Fed looking at “BOGUS” employment numbers and deciding to raise rates next month. I do want to remind you, two weeks ago on Monday and Tuesday we heard two separate trial balloons for negative interest rates …and then BAM! …Janet Yellen and company strongly hint they will raise rates! So which is it? Will they raise rates, lower them or do nothing?

My opinion is this, the Fed will either leave rates the same or even be forced to lower them into the depths of negative territory. No matter how many “fabricated” reports come out, it will not in any way change the reality that Main St. economy is weak. False reporting to try and fool the masses is one thing …but the truth is the truth no matter how many times or to what extent you tell the lie. I believe the Fed would truly like to raise rates but they are petrified what they might unleash with a rate hike. Interest rates have been zeroed out since 2009 and now the talk of negative rates. The Fed has lost all credibility, “talking” about raising interest rates is as close to the real thing as I believe they will get. The Fed “needs” to raise interest rates to have any credibility at all. Problematically, if the Fed actually does do anything at all, raise OR lower rates, they will probably spark a panic.

Going further into opinion and theory, I believe what we may be seeing now with such fabricated economic numbers accompanied by the Fed talking hawkish is the “set up” for an excuse. Geopolitical events between the U.S. and Russia/China have been heating up rapidly. Are we seeing a lead up to something very bad financially or geopolitically? Are we being fed prior “cover” to create the ability to say “our policies were clearly working, the Fed was even going to raise interest rates but (this or that came up) and disturbed the recovery”?

The weak U.S. and global economy is fact, the ability to raise interest rates I believe is fiction. Interestingly, we are heading into December which each year is THE largest delivery month for COMEX gold. We are entering this timeframe with a registered gold inventory lower than any time in memory. Less than $200 million can now clean out ALL registered gold stocks on COMEX. This, at a time the U.S. has pushed both Russia and China very hard. As I have maintained for months now, do not be surprised if a “truth bomb” is dropped on the American population. This may be the only way a war can be avoided, show the American people the truth and take any public support for aggression away. Reveal the truth and our markets will be crippled. Cripple our markets and the ability to make war will largely be neutered. I believe we are very close to a point in time where the bleak reality can no longer be hidden and the attempts to hide it will become desperate. Truth will reveal an entirely different world than what many believe we are in!

Standing watch,

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

Posted at 9:03 AM (CST) by & filed under

Dear CIGAs,

Renowned money manager Eric Sprott is still very bullish on physical gold and silver. Why? Sprott proclaims, “The U.S. is broke. We know they’re broke. . . . About a thousand professors have signed up and told Congress you’ve got to deal with this issue, and it is immediately ignored, but it is by far the biggest issue. It’s not just government. It’s corporate pension plans, and state pension plans and all these unfunded obligations where everyone thinks they are going to receive something only to find out that they are not going to receive something. . . . The math is pretty simple. The U.S. is broke, and I don’t want to single out the U.S. Lots of countries are broke. I am sure Japan is broke, and I am sure there are European countries that are broke. We can’t keep extending and pretending and suggesting everything is great. Unfortunately, someone is going to pay the price, and I am not sure when the price is going to be paid. The analogy I use is we all knew ten years ago that Detroit was broke. . . . It was so mathematically certain that you knew what was going to happen. The same thing will happen to the United States.”

How has the economy stayed afloat even though the U.S. is broke? Sprott, who manages nearly $7.5 billion in total assets, contends, “I take it back to NASDAQ 2000 when we had our crash, and there really should have been a normal secular bear market. Along comes the government and their ‘cash for clunkers’ and ‘home buyer tax credit’ and HARPS and TALF and too-big-to fail and printing and ZIRP. This was an elongated process of trying to hold it together. All of this was supposed to have a huge impact on the economy, and yet, we have had negligible growth. In the meantime, all the debts have soared. You have student loan debt, and now students can’t afford to buy a home, so they are all living with their families. You have so many people on food stamps, and you have people taking advantage of the disability fund . . . in the latest statement, it goes broke in a year. . . . This is symptomatic of the problems.”

On The Fed’s constant indecision on whether or not to raise interest rates, Sprott says, “You’re getting a rope-a-dope. One minute you think one thing, and the next minute you think the other. I am having a tough time thinking rates are going to go up (in December). One of the things that all central banks are doing is losing credibility, that people really believe that they know what they are doing. We saw what has happened in Japan the last 25 years, and we see what’s happening in Europe which is what’s happening in the United States. Economic growth, if there is growth, is so anemic . . . and I believe it’s getting worse as this year progresses.”

On his physical gold and silver investments, Sprott says, “I don’t lose any sleep over the price of gold going down in the sense that I believe what I believe. I believe it’s been manipulated. It’s very much about currency and economics of the Keynesian scheme that we’re going to spend money, print money and it’s all going to work. It’s not working. I don’t want to wait and find out the day it falls apart because when it falls apart someday, then it will be too late. I want to be positioned beforehand. I can remember shorting stocks before March of 2000. It was a bit of a rough ride for three months, but my gosh, when it rolled over . . . you have to be a little bit early on things. I believe the last four years have been orderly and created to be difficult. I think gold would have gone up, but they could not stand for it to go up because they were printing money. If you are printing money and gold goes up, everybody figures it out. . . . I’ve been around for a while, and I have the patience to hang in there. I have been a buyer of gold stocks, and so I am hopeful this will end up being a very, very rewarding trade.”


Posted at 2:01 PM (CST) by & filed under In The News.

China Buys Another 14 Tons Of Gold In October As FX Reserves Unexpectedly Rebound
Submitted by Tyler Durden on 11/07/2015 09:03 -0500

Overnight, China’s PBOC released its updated October reserve asset data via the State Administration of Foreign Exchange. There was one surprising and one less surprising disclosure.

The less surprising one was that, as we forecast in July when the PBOC admitted that during a 6 year silence in which it did not report any gold purchases and during which it had been feverishly accumulating gold, that “now that the seal has been finally broken after so many years, and since today’s update indicates that Chinese gold numbers are clearly goal-seeked with a specific policy purpose – to boost confidence – we await for the PBOC to start leaking incremental gold holding data every month which will bring us ever closer to what China’s true gold holdings are.”

Today we got yet another confirmation of this when China reported that its total gold holdings as of October 31 had risen to a record $63.3 billion, up $2.1 billion from $61.2 billion at the end of September, and an increase of 14 tons based on the month-end LBMA gold fix price, to 1,722 tons. This represents the fifth consecutive month in a row in which China has added to its gold.


This was not surprising: we expect China to continue to “announce” monthly additions of 10-20 tons of gold indefinitely, not only because the PBOC/SAFE/CIC fungible gold inventory is far greater and as a result this is merely the PBOC deciding to slowly reveal its true holdings (especially since the price of gold continues to slide even on months when China and/or Russia are aggressively buying physical), but because in China’s attempt to get an IMF stamp of approval it wants to show a diversified asset base.

The more surprising finding in the reserve data is that while consensus was expecting China’s FX reserves to dip once more, from the $3.51 trillion reported at the end of September, especially with an unprecedented intervention spree by the PBOC after the Golden Week and in the last days of the month, China returned to its old bag of tricks of massaging FX data when instead it reported that FX reserves had increased to $3.53 trillion.