Posted at 9:23 AM (CST) by & filed under In The News.

Gold Stocks: Time to Buy or Will They Get Worse?
Thursday, October 2, 2014
Henry Bonner

Gold has fallen from over $1,300 in mid-August to around $1,210 per ounce as of October 21, dragging many gold-related stocks down with them. Steve Todoruk joined Rick Rule at Sprott Global Resource Investments Ltd. in 2003. Should cautious investors steer clear of the sector for now? Or is this an opportunity to buy gold stocks? In a recent note, Steve weighed in:

While gold has gotten cheaper in recent weeks – partially because of US dollar strengthening — the stock prices of many major miners and small juniors are holding well above their lows of December 2013.

In my view, we are seeing the ‘higher lows’ that we would expect in share prices as we move out of the bear market and into a potential bull market. To the disappointment of many investors, this gradual rise is not the sharp upturn out of a three-year bear market, but rather a slow, frequently-interrupted climb.

For the junior mining stocks, as of October 2nd, Virginia Gold Mines stands around $12.30 (from $11.60 on December 20)2, Mag Silver is at $7.40 (from $5 on December 20)3, Rubicon Minerals Corp. is at $1.30 (from near $0.75 on December 20)4, Premier Gold Mines is at $2.70 (from $1.30 on December 20)5, Detour Gold is at $8.60 (from $3.80 on December 20)6 and Roxgold Inc. is $0.70 (was $0.42 on December 20)7. One reason many of these juniors are holding up is that some of them are potential takeover targets. A cash bid could come along and offer a payout to investors regardless of what happens to the price of gold – which explains why they have retained their value. Of course, not all companies that are potential takeover targets will do well in the coming months or year – and their performance this year is no indication that they will continue to rise.

Some of these companies were able to take advantage of strong prices earlier this year to raise significant amounts of cash in the equity markets. I believe those companies now stand to be better protected to the downside, and may benefit from the ability to spend money advancing their projects.

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Jim Sinclair’s Commentary

She will certainly go to hell for this.

IMF’s Lagarde: Global Recovery ‘Not Good Enough’
Thursday, 02 Oct 2014 01:49 PM

The global economy could be stuck in a weak growth rut for a long time as countries struggle to pull free from a past of high debt and unemployment, the head of the International Monetary Fund said on Thursday.

The economic rebound is even weaker than the IMF predicted six months ago, and countries risk getting stuck in a prolonged period of sluggish growth, especially in the eurozone, Christine Lagarde, the IMF’s managing director, said.

"Yes, there is a recovery but as we all know — and can all feel it — the level of growth and jobs is simply not good enough," Lagarde said in remarks at Georgetown University in Washington. "The world needs to aim higher and try harder."

Lagarde said the IMF pared its expectations for potential growth, or the change in the global economy’s ability to produce.

In its last forecast in July, the IMF said the global economy should expand 3.4 percent this year, with growth speeding up to 4 percent in 2015.

Lagarde, who spoke ahead of the IMF and World Bank fall meetings next week, chronicled a series of "clouds on the horizon" that could hurt the global economy, including central banks’ differing plans to raise interest rates.

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Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force
Submitted by Tyler Durden on 10/03/2014 08:55 -0400

While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% – the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!

And that’s how you get a fresh cycle low in the unemployment rate.

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So the next time Obama asks you if you are "better off now than 6 years ago"show him this chart of employment to the overall population: it speaks louder than the president ever could.

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Jim Sinclair’s Commentary

The jobs number were not a "blow out" as financial TV would have you believe.

4 Of 5 Top Job Additions In September Were Low Or Minimum Wage
Tyler Durden on 10/03/2014 09:55 -0400

Interested why despite the euphoric headline NFP print, a cursory glance deeper inside the payrolls report reveals weakness after weakness, with both participation plunging again and wages the worst since last summer? Here is the answer: 4 of the top 5 largest job additions in September, retail trade, leisure and hospitality, education and health and temp help, were of the lowest quality, and paying, jobs possible. So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal "recoveries" are made of.

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"Hiring Grandparents Only": 230K September Jobs Added In 55-69 Age Group; 10K Lost In Prime, 25-54 Group
Tyler Durden on 10/03/2014 11:00 -0400

The further one digs into today’s "blockbuster" jobs report, the uglier it gets. Because it is not only the participation rate collapse, the slide in average earnings, but, topping it all off, we just learned that the future of the US workforce is bleak. In fact, with the age of the median employed male now in their mid-40′s, the US workforce has never been older. Case in point: the September data confirmed that the whopping surge in jobs… was thanks to your "grandparents" those in the 55-69 age group, which comprised the vast majority of the job additions in the month, at a whopping 230K.This was the biggest monthly jobs increase in the 55 and over age group since February!

What about the prime worker demographic, those aged 25-54 and whose work output is supposed to propel the US economy forward? They lost 10,000 jobs.

Of course, don’t expect any of this to be mentioned on any financial entertainment outlets: it would spoil the party of today’s "surging" jobs day.

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Then again in retrospect, it has never been a stronger labor market. Well, if you are 55 and over that is, the age group that just hit a record 32.6 million in jobs.

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Peak Housing 2.0 – Mark Hanson Warns This Bubble Correction Could Be A "Doozy"
Submitted by Tyler Durden on 10/02/2014 20:46 -0400

Via Mark Hanson,

1) “Peak Housing”: The “Return to Normal”

The take-away from last month’s housing data was that “the market was returning to normal”, which despite the persevering weakness, was viewed as a “great thing”. This overly-simplistic and flawed assumption was made, as the all-cash cohort demand dramatically cooled and distressed supply and sales plunged YoY.

What people are suffering from is a lack of a medium-term memory, as what’s happening today happened in 2007/08; “Peak Housing”.

Back in 2007, the speculators (every ma and pa in America) driven by exotic credit stimulus without a “mortgage loan house price governor” — that drove prices over years of tremendous incremental and pulled-forward latitudinous demand — went away over a short period of time leaving the heavy lifting to weak, end-user fundamentals.

Today the unorthodox, new-era buy to rent/flip speculators driven by Fed stimulus without a “mortgage loan house price governor” — that drove prices through years of tremendous incremental and pulled-forward narrow demand — are going away quickly leaving the heavy lifting to weak, end-user fundamentals.

It was the stimulus-driven, unorthodox “things” that drove the “V” bottom in demand and prices yet again, not coincidentally from exactly the time in 2011 that Twist was first announced and yields plunged. Moreover, a rush of incremental and pulled forward end-user demand caused by the nuclear monetary policy that followed, forced end-users to chase spec-vestors. Before you knew it, spec-vestors and end-users were tripping all over themselves piled 30 deep bidding on houses. Prices surged, as the “mortgage loan house price governor” was removed just like from 2003 to 2007.

Although 2003-07 and 2011-13 were basically the same in nature, a big difference is that this stimulus-cycle was much greater in stimulus input over a shorter period of time than from 2003 to 2007. If stimulus “hangovers” are proportional to the amount of stimulus that preceded them, then this one could be a doozy.

Bottom line:  a “Return to Normal” is “Peak Housing” this time around too; a huge headwind — just like the “return to normal in 2007/08″ on the loss of exotic credit — to the consensus estimates of 10% to 20% sales volume gains and 5% to 10% price gains in perpetuity. In fact, organic house prices are already on the down — lagging the persevering demand slump — and likely to drop by 10% to 20% over the next 2 years, down more at the high-end.

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Posted at 2:44 PM (CST) by & filed under General Editorial.

Jim Sinclair’s Commentary

This is done every day in paper gold and silver and is the main tool of bearish manipulation. There may be some hope that payback is pending.

High-Frequency Trader Indicted for Manipulating Commodities Futures Markets in First Federal Prosecution for Spoofing
U.S. Attorney’s Office
October 02, 2014
Northern District of Illinois(312) 353-5300

CHICAGO—In the first federal prosecution of its kind, a high-frequency trader was indicted for allegedly manipulating commodities futures prices and illegally profiting nearly $1.6 million as a result of trading orders he placed through CME Group and European futures markets in 2011. The defendant, Michael Coscia, was the manager and sole owner of the former Panther Energy Trading LLC, of Red Bank, N.J., which he formed in 2007.

Coscia, 52, of Rumson, N.J., a registered commodities trader since 1988, was charged with six counts of commodities fraud and six counts of “spoofing” in a 12-count indictment returned yesterday by a federal grand jury, Zachary T. Fardon, United States Attorney for the Northern District of Illinois, and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation, announced today.

The indictment marks the first federal prosecution nationwide under the anti-spoofing provision that was added to the Commodity Exchange Act by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

Coscia will be arraigned on a date to be determined in U.S. District Court in Chicago.

“Traders and investors deserve a level playing field, and when the field is tilted by market manipulators, regardless of their speed or sophistication, we will prosecute criminal violations to help ensure fairness and restore market integrity,” Mr. Fardon said. “This case reflects the reasons why, earlier this year, we established a Securities and Commodities Fraud Section, which is dedicated to protecting markets and preserving investors’ confidence,” he added.

According to the indictment, high-frequency trading is a form of automated trading that uses computer algorithms for decision-making and placing a high volume of trading orders, quotes, or cancelation of orders in milliseconds. Coscia designed two computer programs he allegedly used in 17 different CME Group markets and three different markets on the London-based ICE Futures Europe exchange, including gold, soybean meal, soybean oil, high-grade copper, Euro FX and Pounds FX currency futures, to implement his fraudulent strategy. It was illegal for traders to place orders in the form of “bids” to buy or “offers” to sell a futures contract with the intent to cancel the bid or offer before execution.

Between August and October 2011, Coscia allegedly defrauded participants in the CME Group and ICE Futures Europe markets. In August 2011, Coscia began a high-frequency trading strategy in which he entered large-volume orders that he intended to immediately cancel before they could filled by other traders, the indictment alleges.

Coscia devised this strategy to create a false impression regarding the number of contracts available in the market, and to fraudulently induce other market participants to react to the deceptive market information he created, the indictment states. His strategy moved the markets in a direction favorable to him, enabling him to purchase contracts at prices lower than, or sell contracts at prices higher than, the prices available in the market before he entered and canceled his large-volume orders, it adds. Coscia then allegedly repeated this strategy in the opposite direction to immediately obtain a profit by buying futures contracts at a lower price than he paid for them, or by selling contracts at a higher price than he paid for them. Each such trade allegedly occurred in a matter of milliseconds. As a result of the aggregate of those fraudulent high-frequency trades, Coscia illegally profited approximately $1,592,867 over approximately three months, the indictment alleges.

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Posted at 2:26 PM (CST) by & filed under Jim's Mailbox.

Jim,

Here is an update on this significant case that is pending before the ECJ. If the ECJ overrules the German Constitutional Court, I recall people saying some months ago that this would create a constitutional crisis in Germany.

CIGA Craig

Craig,

Legally the ECB cannot do QE.

Jim

ECB OMT Challenge to Be Heard by EU Top Court on Oct. 14
By Aoife White and Karin Matussek Sep 23, 2014 3:51 AM MT

European Union judges will review oral arguments in a German challenge to a European Central Bank bond-buying plan next month.

The European Court of Justice, the EU’s highest tribunal, will consider arguments in the case filed by a lawmaker and a group of German academics at an Oct. 14 hearing, the court said on its website.

Germany’s Federal Constitutional Court put the fate of the ECB’s Outright Monetary Transactions initiative, credited with easing the euro debt crisis, partly in the hands of the Luxembourg-based ECJ in February. The German court expressed doubts about the legality of the measure in a six to two vote and asked the EU judges to clarify some issues.

After a ruling from the EU court, the case will be sent back to the German judges who have to make a final ruling on the national cases pending over the issue.

The German court said in its February judgment that the OMT is likely to violate EU rules because it amounts to economic policy that is outside the ECB’s mandate. The plan may also be seen as monetary financing of governments, which the EU treaties ban, according to the German judges.

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Dear Jim,

For all the cities who are in bankruptcy or considering it, this judge has just set the direction for reducing government pensions for city workers. This is big!!! Stockton has considered a reduction in retirement fund payments of up to 60%. This will certainly impact Detroit, Mi and Riverside, Ca. The contracts that increased these payments over the years are no longer applicable and they can be altered to suit the needs of the local governments to split the default between the debtors and the employees. This is one more hit against the middle class and pulls money out of circulation.

CIGA Larry

Judge rules Stockton can sever CalPERS pensions; Wall Street approves
By Dale Kasler
Published: Wednesday, Oct. 1, 2014 – 12:12 pm

A bankruptcy judge handed CalPERS and organized labor a decision they’ve long feared Wednesday, declaring the city of Stockton has the right to reduce pension payments and even sever ties with the powerful pension fund.

The verbal ruling from U.S. Bankruptcy Judge Christopher Klein was groundbreaking. It pierced CalPERS’ aura of invincibility and made clear, for the first time, that public employee pensions in California aren’t sacred. Two years after Stockton filed for bankruptcy protection, buried under more than $200 million in bond debt, a judge has declared that a municipality can walk away from its obligations to the California Public Employees’ Retirement System.

Klein’s ruling was prompted by a legal protest from Franklin Templeton Investments, which is due to be repaid just $4 million on a $36 million loan it made to the city during better economic times. Franklin wants a better deal from Stockton even if it comes at the expense of the pensions.

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Jim,

This is a significant decision that will likely be used in many other muni BK cases.

CIGA Craig

Bankruptcy Judge in California Challenges Sanctity of Pensions
By Mary Williams Walsh
October 1, 2014 9:15 pm

A federal bankruptcy judge on Wednesday upended the widely held belief that public workers’ pensions have a special status in California that makes them impossible to cut, further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy.

The ruling, which came during a hearing on a plan by the City of Stockton to exit bankruptcy, did not order the city to cut its pension plan or take any specific action. The judge said that he needed more time to reflect on Stockton’s situation and that he would decide Oct. 30 whether the city could emerge from its two-year bankruptcy or whether it still had more work to do.

But the decision, by Judge Christopher M. Klein of the Eastern District of California, dealt a blow to California’s giant state-led pension system, known as Calpers, which has been leading efforts to preserve defined-benefit pensions nationwide.

He did not dispute that Stockton would be billed $1.6 billion to leave Calpers and said such a termination fee “can be seen as a golden handcuff.”But in bankruptcy, he said, Stockton could legally refuse to pay the bill because it arose from the city’s contract with Calpers, and contracts are broken routinely in bankruptcy.

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

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October 2, 2014 
Santiago, Chile

In 1324, Mansa Musa, the tenth emperor of the Mali Empire, set off from Western Africa on his pilgrimage to Mecca.

This was no Spartan journey. He was accompanied on his way by a procession of 60,000 men and 12,000 slaves, each of whom carried up to four pounds in gold bars.

Musa is might just have been the richest person of all time, with an accumulated wealth estimated at $400 billion valued in today’s increasingly worthless dollars.

But it wasn’t just kings and emperors who held gold. Gold has been the most widely-used medium of exchange in world history… across all points of the globe.

Ibn Battuta was a 14th century traveler and explorer whose famous grand adventure spanned 75,000 miles over the course of 24 years, much like Marco Polo’s.

Everywhere he traveled– North Africa, Middle East, Central Asia, India, Southeast Asia, China – gold was either the dominant currency or an easily accepted medium of exchange.

This barbarous relic has stood the test of time across cultures around the world for millennia as a form of wealth.

Most people in the West have completely lost sight of this.

They view the value of gold through the lens of paper currency, i.e. an ounce of gold is ‘worth’ 1,215 US dollars.

This is a deeply flawed perspective.

Looking at the gold price moving up and down in US dollars is something like sitting in a rowboat on choppy waters believing that it’s the beach that’s moving up and down.

Einstein might say that it’s all relative, but only one has any real stability.

But perspectives can and do change.

There once was a time when most people believed that the entire universe revolved around the Earth.

This was flawed (and arrogant) view, and it was eventually corrected.

Thinking that the global economy revolves around the US dollar is just as flawed and arrogant. And it will soon be discredited just the same.

History tells us that dominant monetary systems invariably have an expiration date.

From the Byzantine solidus to the British pound, this is especially true when a superpower enters into decline and plays destructive games with its currency.

Today’s system where an unelected central banking elite conjures trillions of dollars and euros out of thin air is no different. It has an expiration date too.

Change is never easy. People don’t like it, and will resist change even if their current situations are terrible. Inertia is the most powerful force in the universe after all.

Desirable or not, it’s happening. The US dollar’s days are numbered.

Now, gold, with its millennia-long history is making a comeback. We’re not just talking about it as a store of wealth or a speculation, but as a regular form of currency.

Moving us back in this direction, Singapore Exchange launched a new arrangement this week where institutional-sized gold contracts will settled not in cash, but in 1kg bars of gold.

This means that each of these contracts is intended to deliver and store gold in Singapore on behalf of large financial institutions, central banks, and even governments.

Sure, Singapore wants to advance itself as THE gold hub of Asia. We’ve been writing to our premium members about this for years

But more importantly, it’s quite telling that major insiders within the financial system itself are pursuing this contract.

They’re effectively setting up a new system, in Asia, to afford governments and central bankers the opportunity to trade in their US dollars for something real.

Just like yesterday’s post about the renminbi / euro convertibility, this is truly a canary in the coalmine moment for the future of the US dollar… as well as gold’s emerging role in the financial system of tomorrow.

Until tomorrow, 
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Simon Black 
Senior Editor, SovereignMan.com

 

JPMorgan Chase Says More Than 76 Million Accounts Compromised in Cyberattack
By Jessica Silver-Greenberg and Matthew Goldstein
October 2, 2014 12:50 pm

A cyberattack this summer on JPMorgan Chase compromised more than 76 million household accounts and seven million small-business accounts, making it among the largest corporate hacks ever discovered.

The latest revelations, which were disclosed in a regulatory filing on Thursday, vastly dwarf earlier estimates that hackers had gained access to roughly one million customer accounts.

The new details about the extent of the hack — which began in June but was not discovered until July — sent JPMorgan scrambling for the second time in just three months to contain the fallout.

As the severity of the hack became more clear in recent days and new information was unearthed, some top executives flew back to New York from Naples, Fla., where many had convened for a leadership conference, according to several people briefed on the matter.

Hackers were able to burrow deep into JPMorgan’s computer systems, accessing the accounts of more than 90 servers — a breach that underscores just how vulnerable the global financial system is to cybercrime. Until now, most of the largest hack attacks on corporations have been confined to retailers like Target and Home Depot.

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Jim Sinclair’s Commentary

The most endangered species is on two, not four, legs. It is the pensioner.

Federal Judge: Stockton pensions can be cut in California bankruptcy
Thursday, October 02, 2014

UT San Diego reports:

Public-employee pensions are not protected when a city goes belly-up, according to a ruling Wednesday by the judge overseeing Stockton’s much-watched federal bankruptcy case. Judge Christopher Klein’s few words have re-energized the state’s disheartened pension-reform movement – and left the nation’s most-powerful pension fund reeling.

One can’t go a day in Sacramento without hearing about a “historic” piece of legislation or a “groundbreaking” decision, but the Stockton case – held in a downtown Sacramento courthouse – could change everything on the pension front. Klein said in the verbal ruling that pensions are just another contract: “Impairing contractual obligations – that’s what bankruptcy is all about.”

Until now, there has been no way for California cities to get out from underneath the overly generous pension promises they have made to public employees over the past 15 years, the result in part of a pension-increasing bonanza spurred by 1999 legislation championed by the California Public Employees’ Retirement System.

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‘Internal affair’: Beijing warns foreign countries not to meddle in Hong Kong
Published time: October 02, 2014 08:41
Edited time: October 02, 2014 12:34

China’s foreign minister made it clear Beijing would not allow other countries to meddle into its ‘internal affairs’, responding in this way to US Secretary of State’s call for Beijing to grant Hong Kong the “highest possible degree of autonomy.”

The American and the Chinese heads of foreign offices exchanged their views on the massive protests in Hong Kong before their talks at the US State Department on Wednesday.

"Hong Kong affairs are China’s internal affairs,” Chinese Foreign Minister Wang Yi said. “All countries should respect China’s sovereignty. And this is also a basic principle governing international relations. I believe for any country, for any society, no one will allow those illegal acts that violate public order.”

Wang added he believed the current Hong Kong leadership was able to handle the large-scale sit-ins by itself.

The remark was made after US Secretary of State John Kerry reiterated Washington’s support for “universal suffrage” in Hong Kong, the main demand put forward by protesters in the Asian financial hub.

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Hong Kong Police Draw Line on Occupation of Buildings
By Bloomberg News  Oct 2, 2014 7:10 AM ET 

Oct. 2 (Bloomberg) — Bloomberg’s Andrew Davis reports on the seventh day of pro-democracy protests in Hong Kong as students demand the resignation of Chief Executive Leung Chun-ying. He speaks on “Bloomberg Surveillance.”

Hong Kong police said they would not tolerate attempts by pro-democracy protesters to surround or invade public buildings, as Chief Executive Leung Chun-ying faced calls to open a dialogue with students who are seeking his resignation.

Pressure on Leung mounted after students last night staged what may have been their biggest sit-ins since demonstrations began Sept. 26, with close to 200,000 people gathering in three main protest areas, according to one student leader’s estimate. As of 7 p.m., hundreds of protesters were confronting police outside Leung’s office in Admiralty, while others gathered on roads in some of Hong Kong’s busiest districts.

“Some organizers have threatened to escalate their actions by surrounding government buildings,” Hui Chun-tak, chief superintendent of the police public relations branch, told reporters today. “Police will not tolerate any illegal surrounding of government buildings. The police urges protesters to remain calm and show restraint.”

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Jim Sinclair’s Commentary

This is quite important.

Chinese renminbi is now directly tradable with the euro
October 2, 2014

The Chinese central bank, People’s Bank of China, issued a press release announcing the authorization of direct trading between the renminbi and the euro on the inter-bank foreign exchange market.

This is huge. The euro is the second most traded currency in the world, after the US dollar.

The European Union is already China’s biggest trading partner and this is a major step in further increasing trade and investment ties with the EU as there is now a direct exchange rate between the two currencies, without the need to use the US dollar as the conduit.

The renminbi is quickly marching down the path of internationalization as the Chinese currency is now directly exchangeable with the US dollar, Australian dollar, New Zealand dollar, Japanese yen, British pound, Russian ruble, and Malaysian ringgit.

The use of renminbi in international trade settlement nearly tripled in value worldwide over the past two years according the The Society for Worldwide International Financial Telecommunications (SWIFT), and over one third of financial institutions around the world already use renminbi for payments to China and Hong Kong.

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Jim Sinclair’s Commentary

This speaks negatively to the Petro dollar.

Putin says Russia wants to move to national currencies in trade
Thu, Oct 02 06:05 AM EDT

MOSCOW, Oct 2 (Reuters) – Russian President Vladimir Putin said on Thursday that Russia wants to shift to national currencies in trade deals with China and other countries, implying a shift away from the U.S. dollar.

"In the future we aim actively to use national currencies in energy resources trade to settle… international trade accounts, with China and other counties," Putin told an investment conference. "In using national currencies, we see a serious mechanism for curbing risks." (Reporting by Alexander Winning, Darya Korsunskaya and Polina Devitt, writing by Gabriela Baczynska, editing by Jason Bush)

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Jim Sinclair’s Commentary

This also speaks to the Petro dollar negatively.

Russia, Iran to boycott US dollar in bilateral trade

The move away from the U.S. dollar is yet another reaction to Western sanctions placed on Russia since it annexed Crimea from Ukraine in March.

Russia and Iran have agreed to use their own national currencies in bilateral trade transactions rather than the U.S. dollar.

Iran’s IRNA news agency reported that the plans were announced in a meeting on Tuesday in Tehran by Iranian business magnate and head of the Iran-Russia Joint Chamber of Commerce, Asadollah Asgaroladi.

An original agreement to trade in rials and rubles was made earlier this month in a meeting between Russian Energy Minister Alexander Novak and Iranian Oil Minister Bijan Namdar Zanganeh.

Similarly, Russia and China also agreed to trade with each other using the ruble and yuan in early September, following a Russian deal with North Korea in June to trade in rubles.

The move away from the U.S. dollar is yet another reaction to Western sanctions placed on Russia since it annexed Crimea from Ukraine in March.

In response to sanctions on Russia by the European Union, Russia has also threatened to cut off Europes gas supply and close its air space to European airlines. Russia has also boycotted European food imports, in a move likely to affect farmers in the EU.

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Posted at 10:39 AM (CST) by & filed under In The News.

Why China thinks gold is the buy of the century
(. . . In one easy lesson*)
by Michael J. Kosares

(Excerpts)

How formidable?  Consider this:

- China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves.

- It could purchase the total global gold reserve (31,866 metric tonnes) with 32% of its foreign exchange reserves.

- It could purchase all the gold stored by Exchange Traded Funds (+/- 1750 metric tonnes) with less than 2% of its foreign exchange reserves.

- At $4900 per troy ounce, the value of U.S. gold reserves would match China’s U.S. Treasury holdings of roughly $1.28 trillion.

- At $4700 per troy ounce, the value of the world’s gold reserves would match China’s total foreign exchange reserves of roughly $4 trillion.

- To put it another way, China could pay double the current price for the world’s total gold reserve and still have nearly $1.5 trillion in foreign exchange reserves.

- China sits atop the list of the world’s foreign exchange holdings. The United States ranks thirteenth at $133 billion.  For the United States to ascend to the top of the rankings, it would need to revalue its $319 billion gold reserve to almost $4 trillion – or raise the value to just under $15,300 per troy ounce.

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Jim Sinclair’s Commentary

The physical market is alive and well.

The U.S. Mint Sells Over 750,000 Silver Eagles In One Day
Filed in Precious Metals by SRSrocco on September 30, 2014

The market reacted to the big drop in the paper price of silver by a huge increase in Silver Eagle purchases.  September was turning out to be a much stronger month compared to July and August even before the last update of the month.

On Monday, the U.S. Mint reported 3,375,000 sales for the month.  Then this evening, I checked to see if they had updated their figures.. which they did in A BIG WAY.

In one day, the U.S. Mint sold 766,000 Silver Eagles, more than all the Gold Eagles sold to date.  Actually, is was more than double the 379,000 oz of Gold Eagles sold this year.

If we look at the chart below, sales of Silver Eagles in September, were double that of July and August:

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Silver Eagle sales were quite strong in the beginning of the year and started to slow down in June.  However, the manipulated lower price of silver motivated investors to ramp up the purchases making September one of the three strongest months of the year.

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Only January and March were stronger than the 4,140,000 Silver Eagle sales in September.  The total for the first three-quarters of the year is 32,251,000.

If Silver Eagle sales are exceptional strong in September, it would it also be true for Canadian Maples, Chinese Pandas, Philharmonics and Perth Mint Silver sales.

While its frustrating to see the price of silver at these lows, I still believe there isn’t a better deal out there than exchanging fiat Dollars for ounces of silver.

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How Bad Could It Get? US Government Order Of 160,000 HazMat Suits Gives A Clue
Submitted by Tyler Durden on 10/01/2014 11:17 -0400

Now that Ebola is officially in the US on an uncontrolled basis, the two questions on everyone’s lips are i) who will get sick next and ii) how bad could it get?

We don’t know the answer to question #1 just yet, but when it comes to the second one, a press release three weeks ago from Lakeland Industries, a manufacturer and seller of a "comprehensive line of safety garments and accessories for the industrial protective clothing market" may provide some insight into just how bad the US State Department thinks it may get. Because when the US government buys 160,000 hazmat suits specifically designed against Ebola, just ahead of the worst Ebola epidemic in history making US landfall, one wonders: what do they know the we don’t?

From Lakeland Industries:

Lakeland Industries, Inc. (LAKE), a leading global manufacturer of industrial protective clothing for industry, municipalities, healthcare and to first responders on the federal, state and local levels, today announced the global availability of its protective apparel for use in handling the Ebola virus.  In response to the increasing demand for specialty protective suits to be worm by healthcare workers and others being exposed to Ebola, Lakeland is increasing its manufacturing capacity for these garments and includes proprietary processes for specialized seam sealing, a far superior technology for protecting against viral hazards than non-sealed products.

"Lakeland stands ready to join the fight against the spread of Ebola," said Christopher J. Ryan, President and Chief Executive Officer of Lakeland Industries.  "We understand the difficulty of getting appropriate products through a procurement system that in times of crisis favors availability over specification, and we hope our added capacity will help alleviate that problem.  With the U.S. State Department alone putting out a bid for 160,000 suits, we encourage all protective apparel companies to increase their manufacturing capacity for sealed seam garments so that our industry can do its part in addressing this threat to global health.

Of course, purchases by the US government are bought and paid for by taxpayers. For everyone else there’s $1200 mail-order delivery:

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That said… 160,000 HazMats for a disease that is supposedly not airborne? Mmmk.

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Posted at 10:37 AM (CST) by & filed under Jim's Mailbox.

Jim,

By hook or by crook this government intends to strip from our middle class every dollar they can. You don’t have to shrink the Social Security checks. You just withhold payment on your children’s student loans.

CIGA Larry

It happens: Seniors with student debt – and smaller Social Security checks

CHICAGO – It’s a rude awakening for a growing number of seniors: They file for Social Security, then discover that the federal government plans to take part of their benefit to pay off delinquent student loans, tax bills, child support or alimony.

This month the U.S. Government Accountability Office (GAO) released findings on the problem of rising student debt burdens among retirees – and how the government goes after delinquent borrowers by going after wages, tax refunds and Social Security checks.

Under federal law, benefits can be attached and seized to pay child support and alimony obligations, collection of overdue federal taxes and court-ordered restitution to victims of crimes. Benefits also can be attached for any federal non-tax debt, including student loans.

It seems the student loan crisis isn’t just for young people. The GAO found that 706,000 of households headed by those aged 65 or older have outstanding student debts. That’s just 3 percent of all households, but the debt they hold has ballooned from $2.8 billion in 2005 to about $18.2 billion last year. Some 27 percent of those loans are in default.

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Jim,

Take 2 aspirin and call me in the morning!

CIGA Dr. K

First Ebola victim in America was sent home with antibiotics
The patient, who contracted the disease in Liberia, presented himself at a hospital in Dallas, Texas but was given antibiotics and told to go home. Now, health officials have launched a desperate search for others he could have unwittingly infected
By Nick Allen, Dallas
6:21AM BST 01 Oct 2014

The first person to be diagnosed with Ebola in America was initially sent home with antibiotics after doctors failed to recognise the symptoms of the deadly disease.

A desperate search has now been launched to find other people in Dallas, Texas who the man could have infected.

The patient had arrived in Dallas on a flight from Liberia and later presented himself at the hospital because he was feeling ill.

He was told to go home and take the antibiotics, but two days later his condition had deteriorated so badly that an ambulance had to be called.

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Posted at 10:22 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

If tomorrow’s MSM is silent then ebola is here.

North Texas Hospital Evaluating Patient For Potential Ebola Exposure
Updated | September 29, 2014 10:58 PM September 29, 2014 9:06 PM

DALLAS (CBSDFW.COM) – A North Texas hospital has a patient in isolation as they evaluate them for potential exposure to the Ebola virus.

Officials with Texas Health Presbyterian Hospital in Dallas released the following statement Monday night:

“Texas Health Presbyterian Hospital Dallas has admitted a patient into strict isolation to be evaluated for potential Ebola Virus Disease (EVD) based on the patient’s symptoms and recent travel history. The hospital is following all Centers for Disease Control and Texas Department of Heath recommendations to ensure the safety of patients, hospital staff, volunteers, physicians and visitors. The CDC anticipates preliminary results tomorrow.”

It is unclear what specific symptoms the patient has or what the patient’s travel history was.

CBS 11 News spoke with Dallas County Health and Human Services Director Zachary Thompson who confirmed the patient had been in an area where the Ebola virus exists. “Looking at the travel history is the first indicator and then the next step is [treatment or non-treatment] once we get lab results,” he said.

Thompson definitely felt that there should be a heightened sense of awareness in North Texas, based on what has happened internationally. “With what we’ve seen in the media and how deadly the Ebola virus is, it is a concern.”

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Posted at 5:13 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

In case you haven’t checked it out in a while. http://www.usdebtclock.org/

Jim Sinclair’s Commentary

Every step forward for the Yuan is a long term backwards for the dollar.

Yuan to Start Direct Trading With Euro as China Pushes Usage
By Bloomberg News Sep 29, 2014 5:06 AM MT

China will start direct trading between the yuan and the euro tomorrow as the world’s second-largest economy seeks to spur global use of its currency.

The move will lower transaction costs and so make yuan and euros more attractive to conduct bilateral trade and investment, the People’s Bank of China said today in a statement on its website. HSBC Holdings Plc said separately it has received regulatory approval to be one of the first market makers when trading begins in China’s domestic market.

The euro will become the sixth major currency to be exchangeable directly for yuan in Shanghai, joining the U.S., Australian and New Zealand dollars, the British pound and the Japanese yen. The yuan ranked seventh for global payments in August and more than one-third of the world’s financial institutions have used it for transfers to China and Hong Kong, the Society for Worldwide International Financial Telecommunications said last week.

“It’s a fresh step forward in China’s yuan internationalization,” said Liu Dongliang, an analyst with China Merchants Bank Co. in Shenzhen. “However, the real impact on foreign exchange rates and companies may be limited as onshore trading volumes between yuan and non-dollars are still too small to gain real pricing power.”

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Jim Sinclair’s Commentary

Nice to see a more accurate report on the size of the OTC derivative pile.

The Economy: “Derivatives Market a $1.2 Quadrillion Time Bomb”
Sunday, October 14, 2012 22:40
by The Independent Report

“The US economy is run like a casino and Wall St. is the house. Collateralized debt obligations (CDOs), credit default swaps (CDS) and derivatives are Wall Street’s casino games. Naturally, the games are always rigged in favor of the house.

Financial jargon is often arcane and perplexing to the average person. While even casual observers have surely heard of derivatives, most are unlikely to know what exactly they are. Derivatives, or swaps, are basically bets between companies and banks that are designed, in essence, to be insurance policies. The problem with derivatives is that since they often involve highly leveraged bets, they can be very dangerous. A small change in market conditions can mean huge losses. Such losses can occur because derivatives use extraordinary leverage, or borrowing. Derivatives allow investors to earn large returns from small movements in the underlying asset’s price. However, investors can also lose large amounts if the price of the underlying asset moves against them significantly.

In fact, derivatives were used to conceal credit risk from third parties while protecting derivative counterparties, which contributed to the financial crisis in 2008. That threat still lingers today. If interest rates were to rise unexpectedly, for example, it could result in a financial bloodbath on Wall Street.

Derivatives are used to make the really big money on Wall St. They can be many things, but are basically contracts or bets that derive their value from the performance of something else — an interest rate, a bond or stock, a loan, a currency, a commodity, virtually anything. For traders, derivatives are a perfect product. They can also be highly lucrative to financial institutions. Over the last five years, banks earned an estimated $20 billion selling derivatives just to school districts, hospitals, and scores of state and local governments across the country. Yet, as Warren Buffett famously stated, derivatives are “financial weapons of mass destruction.”

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Pending Home Sales Drop In August (After Record Surge In New Home Sales)
Tyler Durden on 09/29/2014 10:10 -0400

Following last week’s explosion higher in new home sales (despite surging record high prices), it is somewhat intriguing that pending home sales would tumble over 4.1% YoY, and drop 1.0% MoM (missing expectations of a 0.5% drop) and the 2nd biggest drop in 2014.

The ‘stunning’ rationale for this miss, provided by NAR’s chief economist, is… "fewer bargain-priced homes’ (which is odd given record prices and record surge in new home sales), and a "rising rate environment" (except rates are collapsing), with hope for the future based on the "employment outlook for young adults improving and their incomes rising" (more lies) and a "shift to more traditional first-time buyers who need mortgages" (except mortage apps are at 20-year lows).

Just last week, New home sales rose the most since 1992:

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Jim Sinclair’s Commentary

The age of Miracles is not over.

Despite 2nd Slowest Income Growth In 2014, Spending Rises Most Since March Driven By Subprime, Car Sales
Submitted by Tyler Durden on 09/29/2014 08:38 -0400

Mission releverage accomplished. Personal Income rose 0.3% in August (very slightly below Bloomberg’s median estimate), the 2nd slowest growth of the year.Personal spending however jumped 0.5%, beating the 0.4% expectations, and its equal best growth since March. What was spending focused on? Why autosales, which accounted for about half of the spending. And what funded this spending? Why subprime car loans of course; it sure wasn’t the real disposable income per capita which was a paltry $37,684 in August.

This is how the income and spending looked like:

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2nd miss in a row and 2nd lowest growth in income this year.

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But spending jumped (thank you Subprime bubble 2.0)

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Finally, following several revisions and even more months of constant increases in the US savings rate, August finally saw a drop, from 5.6% to 5.4%, just as Goldman hinted to the Department of Commerce should happen late last week.

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White House Intruder Got Farther Than First Reported, Official Says
By MICHAEL D. SHEARSEPT. 29, 2014

WASHINGTON — An armed man who jumped the White House fence this month made it far deeper into the president’s home than previously disclosed, overpowering a Secret Service agent inside the North Portico entrance and running through the East Room before he was tackled, according to a congressional official familiar with the details of the incident.

The man, Omar J. Gonzalez, who had a knife, was finally stopped as he tried to enter the Green Room, the official said. Earlier, Secret Service officials had said Mr. Gonzalez, 42, had only made it steps inside the North Portico after running through the front door.

The new development, first reported by The Washington Post, will create an explosive hearing on Tuesday when a bipartisan panel of lawmakers intends to grill Julia Pierson, the director of the Secret Service, about whether a lax and undisciplined culture inside the long-heralded agency has badly eroded its ability to protect the president and his family, several members of Congress said Monday.

It has been unheard of in recent decades for an intruder to enter the White House, even if only a few steps inside what is supposed to be one of the most secure buildings in the world. The fact that Mr. Gonzalez was able to pass by the staircase in the Entrance Hall that leads to the White House family quarters — and get as far as the East Room, the site of presidential speeches, news conferences and bill signings — stunned Washington.

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Jim Sinclair’s Commentary

China never slowed down their buying of gold.

China gold demand surging again
Author: Lawrence Williams|
29 September 2014 13:3

Shanghai Gold Exchange figures suggest demand is near 2013 levels.

LONDON (MINEWEB) – We cannot emphasise more strongly that gold followers should ignore the mainstream media reports, based on Hong Kong gold export figures to mainland China, that Chinese gold demand has plummeted by anything between 30% and 50% this year. As we pointed out in an article last week, Hong Kong is now no longer the principal port of entry for gold into the Chinese mainland.

When it was still so, gold exports into China were extremely high at the beginning of the year, but since then the Hong Kong figures have tailed off as China effectively opened up gold import routes through other entry points – notably Shanghai and Beijing , resulting in the Hong Kong net gold exports falling back month by month from a peak of 111 tonnes in February to a mere 21 tonnes in August. This is thus no longer an indicator of overall Chinese gold demand.

That this does not represent the overall Chinese picture is apparent from the withdrawals of physical gold from the Shanghai Gold Exchange (SGE). True these withdrawals are also down this year suggesting a more gradual slowdown in Chinese demand, NOT a precipitous fall as suggested by the mainstream media. However, recently SGE gold withdrawal figures have been particularly strong again – a fact apparently ignored by most gold commentators.

Indeed the past four weeks’ withdrawals from the SGE have totalled over 170 tonnes – this suggests an annual rate of over 2,200 tonnes although weaker figures from March up until August will mean this level will not be reached for the 2014 calendar year, but it may well get much closer to last year’s 2,197 tonnes withdrawn from the SGE than previously estimated.

We would suggest that this year’s figure may well get close to 2,000 tonnes given the lower gold price has been stimulating demand at a time of year when it is traditionally strong anyway. We can thus anticipate continuing demand at high levels and China maintaining its place as the world’s largest gold importer – even disregarding the assumed-probable additional gold imports to swell the country’s gold reserves.

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