Posted at 1:13 PM (CST) by & filed under Jim's Mailbox.

Jim Sinclair’s Commentary

The real facts of the Swiss referendum concerning gold.

Dear Jim,

I hope you are keeping well.

No, they are wrong.

If there is a majority Yes vote for the country as a whole the Initiative, as it stands, becomes part of the constitution on Nov 30. There is one additional condition, there has to be a majority of cantons also. This means that out of 26 cantons, the popular vote must be yes in 14 for the Initiative to pass.

No further ratification is required. The government or parliament cannot change it. Only another public referendum can.  This is real people power and proper democracy which does not exist in any other country as far as I know.

Kindest regards,
Egon

Posted at 12:31 PM (CST) by & filed under Jim's Mailbox.

Jim,

When the stock market goes higher on prospects of continued QE, AND the stock market goes higher on discontinuation of QE… it should set off red flags in your investment decisions.  Namely, STAY AWAY!

Something is not Kosher.

Then to top it off, the Street (who in the past, hung on his every word) ignores former Fed Chairman Greenspan’s warning to get into gold, stat!  Another BIG red flag.

Be smart.
Be safe.
Be in gold.

These are not times for hubris!

CIGA Wolfgang

Post-Election Reality Check

Gold prices end sharply lower as the U.S. dollar soars. U.S. stocks end mostly higher on a rebound in oil prices. Gold last traded at $1,145 an ounce. Silver at $15.44 an ounce.

The mid-term elections are behind us and it appears the political landscape in America is changing.

But how much is really changed?

Historically, political developments have had less impact on the investment world and financial markets than economic developments and fiscal and monetary policy. The key going forward will be the future of those factors.

As expected, last week the Federal Reserve announced it would be ending its open market bond purchases known as Quantitative Easing (QE). The bond-buying campaign helped to fuel one of the largest stock market bubbles in American history.

The impact on the rest of the economy is much harder to assess. Some economists dismiss the purchases as inconsequential. And some say the Fed has exacerbated economic inequalities by helping to lift financial markets while the rest of the economy languishes.

One critic of the impact of QE is former Fed Chairman Alan Greenspan. Greenspan said, "I don’t think it’s possible for the Fed to end its easy-money policies in a trouble-free manner."

Greenspan also said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.

Wall Street is ignoring his warning evidently as, despite many worrying signs, the stock market has once again hit record heights.

Jim,

This is a "Dog bites man" story, not a "Man bites dog" one.

The word "Republicans" should be replaced by the word "Politicians."

Since when have politicians, of EITHER party done what their constituency have voted them in for?

A nation fools, spineless fools is what we have become.  We are following the script of HG Wells’ "Time Machine."  Watch it and see the parallels.  (Warlocks sound the siren, and the populace walks obediently to their death).

With all due respect to my fellow citizens who have been mislead.

CIGA Wolfgang Rech

Victorious Republicans face familiar dilemma
By Richard Cowan and David Lawder

WASHINGTON (Reuters) – Victorious Republicans appeared at odds on Wednesday over how to capitalize on their new control of the U.S. Congress. Some lawmakers were eager to use their new muscle to step up attacks on President Barack Obama, while others talked hopefully of compromises that could lead to rare bipartisan legislation.

The strongly diverging views were an early indicator of the task ahead for House of Representatives Speaker John Boehner and likely new Senate leader Mitch McConnell, who will have to find a way of reconciling moderates and conservatives in their caucuses to show Americans that Republicans can govern and not just obstruct Obama’s legislative agenda.

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Jim,

Hilarious. Saturday Night Live comedy hour has gone 24 hours nonstop in the Main Street Media. No need to wait for Saturday anymore… just turn on the news at any time.

‘On Wednesday, Kseniya Yudaeva, deputy chairwoman of Russia’s central bank, promised to sell the country’s gold to fund imports "if it becomes necessary".’

Really!  What next?

-Announcement that they will sell all their armaments "if it becomes necessary"?

-Announcement that they will withdraw from the Ukraine "if it becomes necessary"?

-Announcement that they will give up drinking vodka "if it becomes necessary".

Yeah, right!

I’m insulted that the press could issue such a mindless and nonsensical release.   Even if true, they (the press) would be playing directly into Russia’s hands.

Think about this for a moment:  Russia accumulated gold at higher prices over the past few years; and they have accumulated US Dollar reserves when the Dollar was cheaper during that same period. 

So what would they do?  Sell gold at a loss?  Or sell US Dollars (which they want to get rid of anyway with the advent of the de-dollarization agenda) at a profit, since it has climbed significantly in the past few months?

What would you do? Sell gold at a loss or Dollars at a profit?

For that matter, I don’t believe they are under pressure to sell anything.

Any school kid knows the answer, so I can’t believe the author would subscribe to his own work. It can only be a planted article by the Western powers that be.

The following excerpt is most likely on the wish list of every Chinaman, Russian, and Indian!  What better way to quietly accumulate the world’s gold supplies at the cheapest price possible, by shaking out the weak hands with such press releases.  A shrewd move indeed!

"Unfortunately for the government the announcement could not have been worse timed. Gold is getting crushed. It hit $1,140 per ounce on Wednesday, down by about 2.3%. At one point it got as low as $1,137, its lowest level since April 2010. Selling into a falling market would fail Investing 101."

Hey, but what do I know?

One other point.  In the article the following comment was posed:

"Six months is the critical level to insure the Russian population against the possibility of severe hardship in case the crisis deepens and they are deprived of foreign goods. (Russia imports a large amount of staples including butter, cheese and meat.)"

Butter and Cheese could bring one of the world’s superpowers to its knees?  Heaven help us all if that is the case.  Furthermore, let us not forget that Ukraine is the "breadbasket" of Europe.  Always has been.  I wouldn’t be surprised if Russia receives its products from them… not from Wisconsin or Vermont!

Remember people, this is NOT rocket science. What IS rocket science, is bending and manipulating facts and events to your own benefit, whether it is by Russia or by the USA.  All the ordinary man needs to do is… think!

CIGA Wolfgang Rech

Now We Know Why Russia Has Been Building Up Its Gold Reserves
By Tomas Hirst

Since September 2012 Russia has been quietly building up its gold reserves, hitting 1,149.8 tonnes last month — it’s highest level since 1993.  In the process the country has overtaken both Switzerland and China on its way to amassing the sixth largest gold reserve pile in the world.

This was part of a sensible strategy to diversify its foreign exchange reserves (currently $439 billion in size), which were overwhelmingly held in dollars and euros. Despite the huge increase, gold still accounted for only 9.7% of the country’s total reserves as at the end of June — though recent spending by the central bank to defend the rouble is likely to have increased its share.

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Posted at 12:23 PM (CST) by & filed under In The News.

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Job Cuts Surge 68%, Most In 3 Years; Worst October Since 2009
by Tyler Durden on 11/06/2014 08:12 -0500

Maybe this explains the election results? Challenger reports US companies laid off over 51,000 people in October, the most since May (and 2nd most since Feb 2013). This is a 68% surge MoM (and 11.9% rise YoY) – the biggest monthly rise since September 2011. Retail, Computer, and Pharma industries saw the biggest layoffs. Hiring also collapsed from the record 567,705 exuberance in September to just 147,935 in October. This was the worst October for layoffs since 2009.

Worst rise in layoffs in 3 years…

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Jim Sinclair’s Commentary

The story of this morning well said.

Stocks Spike, Euro Tumbles As Draghi Jawbones Risk Higher Again
Submitted by Tyler Durden on 11/06/2014 09:13 -0500

"The main message is ECB assets are set to expand as others contract,"promises ECB’s Mario Draghi, adding that "ABS buying is to begin shortly." Shrugging off any rumors of mutiny or lack of sovereign QE, the markets bought every stock market and risky bond with both hands and feet. EURUSD plunged under 1.24 – its lowest since August 2012 as peripheral bond spreads tumbled 10-15bps.  US Treasury yields pushed higher and stocks knee-jerked higher. The USD index is now up 1% on the week.

The shine is coming off as reality hits

*DRAGHI SAYS ECB WON’T BUY EU1 TRLN

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EUR tumbles sending bond yields and stocks higher… for now

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and plunging peripheral bond spreads…

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Russia may ban the circulation of the United States dollar.
[ 05 November 2014 14:46 ]

The State Duma has been submitted a relevant bill

Moscow. Farid Akbarov – APA. Russia may ban the circulation of the United States dollar.

The State Duma has already been submitted a relevant bill banning and terminating the circulation of USD in Russia, APA’s Moscow correspondent reports.

If the bill is approved, Russian citizens will have to close their dollar accounts in Russian banks within a year and exchange their dollars in cash to Russian ruble or other countries’ currencies.

Otherwise their accounts will be frozen and cash dollars levied by police, customs, tax, border, and migration services confiscated.

After the law enters into force, it will be impossible to obtain cash dollar in Russia. The ban or termination of the US dollar will not apply to the exchange operations carried out by Russian Central Bank, the Russian government, ministries of foreign affairs and defense, the Foreign Intelligence Service and the Federal Security Service.

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Posted at 11:25 AM (CST) by & filed under In The News.

Ottawa, Beijing strike deal on yuan trading hub
Steven Chase
Published Tuesday, Nov. 04 2014, 11:00 AM EST
Last updated Tuesday, Nov. 04 2014, 5:44 PM EST

Ottawa and Beijing have struck a deal that will see this country designated as a trading hub for China’s yuan currency, a benefit that will lower the cost of doing business for Canadian companies seeking Chinese markets.

The hub, a financial centre sanctioned by China to clear and settle transactions in the Chinese currency, would likely be based in Toronto, sources say.

Some details remain to be worked out but sources say this is expected to be announced during Prime Minister Stephen Harper’s trip to China that begins this week.

It’s a sign that efforts to repair relations between Canada and China are bearing fruit.

This hub would mean a great deal in particular to small or medium-sized businesses looking for competitive advantages in dealing with China.

It’s been estimated by the Canadian Chamber of Commerce that this hub could generate as much as $32-billion in additional exports over 10 years.

It also gives Canada the first yuan hub in the Americas, which will result in a significant advantage in trade finance – one that could prompt multinationals to move treasury operations to Canada.

Ontario Premier Kathleen Wynne welcomed the news Tuesday morning.

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*Breaking Alert: US Mint SOLD OUT of Silver Eagles! 2 Million Coin Surplus Sold in Under 2 Hours!
Posted on November 5, 2014 by The Doc

The US Mint has just issued an alert to Primary Dealers across the US that Silver Eagle inventories, which according to the Mint began today at over 2 million ounces, are now SOLD OUT as of 12:30pm EST.

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American Financial Markets Have No Relationship To Reality
Paul Craig Roberts and Dave Kranzler
As we have demonstrated in previous articles, the bullion banks (primarily JP Morgan, HSBC, ScotiaMocatta, Barclays, UBS, and Deutsche Bank), most likely acting as agents for the Federal Reserve, have been systematically forcing down the price of gold since September 2011. Suppression of the gold price protects the US dollar against the extraordinary explosion in the growth of dollars and dollar-denominated debt.

It is possible to suppress the price of gold despite rising demand, because the price is not determined in the physical market in which gold is actually purchased and carried away. Instead, the price of gold is determined in a speculative futures market in which bets are placed on the direction of the gold price. Practically all of the bets made in the futures market are settled in cash, not in gold. Cash settlement of the contracts serves to remove price determination from the physical market.

Cash settlement makes it possible for enormous amounts of uncovered or “naked” futures contracts — paper gold — to be printed and dumped all at once for sale in the futures market at times when trading is thin. By increasing the supply of paper gold, the enormous sales drive down the futures price, and it is the futures price that determines the price at which physical quantities of bullion can be purchased.

The fact that the price of gold is determined in a paper market, in which there is no limit to the supply of paper contracts that can be created, produces the strange result that the demand for physical bullion is at an all time high, outstripping world production, but the price continues to fall! Asian demand is heavy, especially from China, and silver and gold eagles are flying off the shelves of the US Mint in record quantities. Bullion stocks are being depleted; yet the prices of gold and silver fall day after day.

The only way that this makes sense is that the price of bullion is not determined in a real market, but in a rigged paper market in which there is no limit to the ability to print paper gold.
The Chinese, Russians, and Indians are delighted that the corrupt American authorities make it possible for them to purchase ever larger quantities of gold at ever lower prices. The rigged market is perfectly acceptable to purchasers of bullion, just as it is to US authorities who are committed to protecting the dollar from a rising price of gold.

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Saudi Stocks, Currency Tumble As Aramco Pipeline Explodes; ISIS Sabotage Concerns
Submitted by Tyler Durden on 11/05/2014 10:33 -0500

It appears Saudi markets are back in play. As Bloomberg’s Richard Breslow noted this morning, Riyal forwards have jerked notably higher (implying weakness expected) and the Tadawul All Share Index has dropped 7% in the last 2 days after the killing of Shi’ites by unknown parties and now news that a pipeline has exploded. As Breslow warns, "if that indeed signifies the spread of Islamic State into Saudi Arabia, it would be the first time they crossed Saudi borders. That would be a big deal and a major escalation of problems over in that part of the world, far beyond what it would do to capital markets."

Yesterday there were attacks on Shi’ites (as Reuters reported)

Saudi security forces on Tuesday shot dead a member of an armed group that killed five people in an overnight attack on Shi’ite Muslims marking an important religious anniversary, al-Arabiya television reported.

The late Monday assault on a Shi’ite gathering in al-Ahsa district is likely to test already strained relations between Sunnis and Shi’ites across the Middle East because it coincided with the annual Ashoura commemoration of Shi’ite Islam.

The Dubai-based al-Arabiya said security forces who had been hunting suspects in the al-Ahsa attack clashed with and killed "a wanted man" at a rest area in the al-Qassim province, north-west of the capital Riyadh.

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Despite "The People’s Vote", ADP Private Payrolls ‘Prove’ Employment Situation Is Great
Submitted by Tyler Durden on 11/05/2014 08:21 -0500

Isn’t it odd that ‘they threw the bums out’ last night and yet, economic confidence is high, stocks are high, and now, according to ADP, private payrolls are great too? Something doesn’t add up. ADP printed 230k against expectations of 220k, modestly up from a revised 225k in September. Small and Medium-sized businesses added jobs while the largest firms (over 1000 people) slashed jobs (which is great for the stock, right?).

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The breakdown:

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Mark Zandi may not have gotten the memo, but his eagerness to please the Obama administration will no longer bear any fruit. Also, the "folks" no longer believe what he says:

Mark Zandi, chief economist of Moody’s Analytics, said, “The job market is steadily picking up pace. Job growth is strong and broad-based across industries and company sizes. At this pace of job growth unemployment and underemployment is quickly declining. The job market will soon be tight enough to support a meaningful acceleration in wage growth.”

Uhm, no. More from the report:

"Employment continues to trend upward as we begin the last quarter of 2014, driven mostly by small to mid-sized companies,” said Carlos Rodriguez, president and chief executive officer of ADP. “October’s job growth is the highest since June and the second highest gain of 2014.”

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US midterm elections: wave of defeats leave Democrats reeling
‘This is ugly,’ says Democrat party strategist, as Republicans sweep to control of Senate 
Paul Lewis in Denver, Colorado
Wednesday 5 November 2014 11.31 EST

The scale of the Democrats’ defeat in the US midterm elections became apparent on Wednesday, with the party losing control of the US Senate by a wider margin than predicted and their Republican opponents on the verge of securing their largest majority in the House of Representatives since the 1940s.

President Obama’s party awoke on Wednesday to the political equivalent of a pounding hangover; a wave of defeats more numerous and deeper than many Democrats had feared, while Republicans rode a wave of victories that gave them significant momentum going into the 2016 presidential elections.

Republicans gained at least seven Senate seats from Democrats, cementing the GOP’s power base on Capitol Hill.

On a night of few positives for Democrats, Republicans also outperformed them in most of the 36 governors’ races, clinching stunning victories in Democratic strongholds including Massachusetts, Maryland and Illinois.

“This is ugly,” one top Democrat involved in the party’s election strategy told the Guardian in the early hours of Wednesday morning. “It is so much worse than we expected.”

The defeat is a major blow to the president, whose low approval ratings contributed heavily to his party’s electoral drubbing. Obama, an already isolated and unpopular president, must now see out his remaining two years in the White House with his Republican opponents controlling both branches of Congress. The White House said he would speak at a news conference on Wednesday afternoon.

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Jim Sinclair’s Commentary

Be careful of what you wish for as you might get it. The US will have to commit troops in time. Today ISIS hit the house of Saud where it really hurts.

Iraq War II: UK to send new batch of troops to fight ISIS
Published time: November 05, 2014 12:47  
Edited time: November 05, 2014 14:47

As British troops leave Afghanistan, the UK government has said it will dispatch a number of army officers back to Iraq. The officers will assist in a US-led effort to train Iraqi security forces in their ongoing battle against Islamic State jihadists.

Speaking in Baghdad on Wednesday, UK Defence Secretary Michael Fallon said that the UK would be sending an ‘advisory panel’ to Baghdad as well as provide additional training to Peshmerga fighters.

"The UK, as part of the international coalition, is already taking part in airstrikes across Iraq and carrying out training for Kurdish forces in the north of the country" Fallon said.

"It is right that we do more to help Iraqi forces take the fight to ISILon the ground which is why the UK is offering the further training, support and assistance I have outlined today".

Fallon also said that Britain would increase the number of reaper drones to the region in order to provide intelligence,surveillance and reconnaissance to the Iraqi army.

The decision to send troops to the region to fight Islamic State, also known as ISIS or ISIL, follows statements earlier this year by Prime Minister David Cameron, who said he would not put “boots on the ground”after his decision to assist in US-led airstrikes on Islamic State targets.

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Is the CRA creeping your Facebook page?
Fabio Campanella, Special to Financial Post | October 25, 2014 6:30 AM ET

Got a fancy new car? Doing a major renovation to your home? Eating at a lavish new restaurant? Why not let all your friends know what you’re doing by posting this to your social media accounts?

It’s second nature to so many Canadians nowadays to post pics and updates of their daily lives to social media. Generally you’re hoping your friends are following you; secretly you’re hoping they’re envious of the exquisite lifestyle you’re trying to portray. But your friends and followers may not be the only ones peering into your life, the Canada Revenue Agency (CRA) may be checking you out as well.

It’s called: Indirect Verification of Income and it’s an audit technique employed by the CRA. If your lifestyle and reported income don’t match up the CRA may decide to look into your affairs to see what’s actually going on.

So, for example, if you’re driving a luxury car, living in a high-income neighbourhood, sending your kids to private schools, and vacationing in Hawaii’s finest beachfront hotels but only reporting $45,000 of income on your tax return per year then you’re probably a great target for an audit by the CRA.

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Posted at 11:16 AM (CST) by & filed under Jim's Mailbox.

Jim,

As I see it…

Russia and China have a 3 prong game plan for global economic dominance. It must be done “under the radar” and is being duly executed so.

1. Cornering the market on physical gold and silver, thereby denying the Western Powers access to these backstop support vehicles when the time comes to halt any currency crisis.

2. Eliminating the US Dollar as the world’s reserve currency, putting the Dollar and Western nations in the crosshairs of a massive inflationary spiral.

3. Establishing themselves as a dominant global force in the resource arena. Russia developing massive oil and nat. gas resources, China developing mineral and gold resources, and China establishing a foothold in Africa to develop the abundance of resources prevalent on that continent.

This is why you hear so little of gold and silver holdings, changes in dollar holdings, and natural resource accumulation by these 2 powerhouse nations.

He who holds physical (gold, silver, resources, etc.) dominates.

Just my opinion,
CIGA Wolfgang

Dear Wolfgang,

Your opinion is profoundly correct. It is right in front of those that are called experts, yet they are blind to it.

What is left of our military command, many having been forced into retirement, are blind to it. Wall Street would call it heresy.

It is truth!

Regards,
Jim

 

Jim,

German populace is now getting on board. Buying gold coins and creating a shortage. The scent of Weimar is getting stronger.

CIGA Wolfgang Rech

German Euro Sceptic Party Sells €1.6 Million of Gold Bullion In Two Weeks
By Mark O’Byrne

Disillusionment with Europe’s single currency continues to grow with the cracks beginning to show in it’s heartland, Germany, where the third largest political party is now selling gold coins and bars to raise funds.

In a poll in September Alternative for Germany (AfD) were found to be Germany’s third most popular party. The rise of the Alternative for Germany (AfD) party saw it receive 10.6% of the vote in Thuringia and 12.2% in Brandenburg on 14 September. Two weeks earlier it secured its first regional government seats in Saxony.

AfD are not anti-EU per se and have distanced themselves from other eurosceptic parties. They see a future for Germany in the EU and embrace common markets but wish to see the European Monetary Union (EMU) and the euro itself wound up and a return to the Deutschmark.

In the past two weeks, in a bid to gain as much state funding as possible they have entered the gold bullion market with quite a degree of success. In Germany, the federal government will match, up to a value of €5 million, any funds raised privately by a political party. In a bid to get the full allocation of state funding, AfD have started to sell gold bullion online.

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Posted at 1:31 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

John Williams shares his latest.

- The Happy News Begins to Falter 
- Third-Quarter GDP Growth Faces Downside Revision, Given Deteriorating September Trade and Construction Reporting 
- Trade Deficit Widened Sharply 
- Quarterly Construction Spending Growth Turned Negative from Positive 
- Risk of Unexpectedly Weak October Payrolls 
- Craziness in the Financial Markets Cannot Prevail, Assumed Underlying Reality Is Not There or Will Prove Fleeting

"No. 671: September Trade Deficit and Construction Spending " 
Web-page: http://www.shadowstats.com

How The BEA Goosed 3rd Quarter GDP——With A Phony 74% Leap In Defense Spending
by Contributor • November 3, 2014
By James Pethokoukis

And from this a thousand conspiracy-themed blog posts will be born. Here is Capital Economics on the surprisingly strong (3.5% vs. 3.0% forecast) third-quarter US GDP report:

– The reported leap in third-quarter defence spending, which added 0.7 percentage points to annualised  GDP growth was, as far as we can tell, largely due to a failure of the BEA’s seasonal adjustment  process. As a result, we expect defence spending to plunge this quarter, subtracting a similar amount  from fourth-quarter GDP growth.

– All of the upside surprise in third-quarter GDP growth (the 3.5% outturn was well above the consensus  forecast of 3.0%) can be explained by the 4.6% increase in government spending, which added 0.8  percentage points (ppts) to overall growth. Moreover, nearly all of that boost was due to a 21% leap in Federal defence consumption. That’s the largest increase since the second Iraq war in  early 2003. Drilling down further, more than two-thirds of the rise was due to a 74% annualised leap in  defence spending on support services for installation, weapons and personnel. This is unusual given that  spending on such services typically makes up just 25% of total defence spending.

– Some of the rise in the third quarter could be due to the escalation in military action in the Middle  East, but most of it appears to be due to a failure of the seasonal adjustment process. Looking at the  averages over the past five years, defence support services spending has increased by 38% annualised in  the third quarter only to fall by an average of 34% annualised in the fourth quarter. (See Chart 2.) The BEA all-but confirmed this problem when in an email it told us that it is “trying to determine if any  methodology changes are necessary”.

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German Precious Metal Dealers Report Huge Run on Silver Coins
Montag, 3. November 2014, 10:31 Uhr | Eingetragen von Goldreporter

Brisk sales not only on silver coins (subject to differential taxation in Germany), but increased demand also for higher taxed silver bullion.

Precious metal dealers in Germany have literally been run down after the latest slump in gold and silver. Wholesalers already expect deferred deliveries.

The latest plunge in gold and silver late last week has led to a sharp increase in demand by German precious metals investors, which also continued on Saturday. There was a particularly strong demand for silver coins. “On Thursday and Friday people had to draw numbers in order for us to control the run”, reports Andreas Heubach, CEO of Heubach Edelmetalle in Nuremberg. “On both days we sold each around 40,000 silver ounces – incredible”, he said. “Demand is back – and hysteria as well”, he evaluated.

Tremendous Run
“The run is tremendous, even today on a Saturday”, Christian Brenner, CEO of Philoro Edelmetalle GmbH in Leipzig and Berlin reports. Despite the high counter trade level in September, demand has increased by 100 percent, online-trade even soared by 300 percent.

“Run is not the right expression“, says René Lehmann of Münzland in Dresden. “We’ve seen up to 80 percent of our regular customers taking advantage of the slide to build up more positions. On those two days, on Thursday and Friday, we made approximately 50 percent of our monthly revenue”, he reports toGoldreporter. Maple Leaf (1 oz.), 1 kg Lunar and ½ oz. Great White Shark were particularly in demand, since Münzland had a special offer on them. In gold especially 1 oz. Maple Leaf and 1 oz. bars have been purchased. The ratio of buyers to sellers has generally been at 50 to 1.

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US Mint Bullion Coin Sales Rally in October
by Mike Unser on November 4, 2014

American Eagle bullion coin sales scored multi-month highs in October

Demand for United States Mint bullion products again soared in October — even as gold and silver prices tumbled — with silver coin sales the strongest since January 2013 and gold coin sales the highest since January 2014.

A sales summary across U.S. Mint bullion products for last month and for the first ten months of this year follows.

American Eagle Silver Bullion Coins

American Silver Eagles surged by 5,790,000 coins last month, advancing 39.9% over September sales of 4,140,000 coins and hurdling the year ago level of 3,087,000 coins by 87.6%. October sales were the strongest since January 2013 when U.S. Mint authorized purchasers ordered 7,498,000. Overall, the month ranks fourth highest in the 99.9% pure silver coin’s 29-year history.

Year-to-date sales stand at 38,041,000 coins for the second quickest pace ever, and are down just 2.9% from the January to October 2013 period when sales reached 39,175,000 coins. Last year, American Silver Eagles hit an all-time record at 42,675,000 coins. This year’s Silver Eagle sales total is already higher than annual sales of all but 2 years since the coins debuted in 1986.

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Factory Orders Slide 2nd Month In A Row (Did It Snow In September?)
Tyler Durden on 11/04/2014 10:11 -0500

Factory orders in September printed a drop of 0.6% MoM following August’s 10.0% revised tumble off the spurious spending in July. This is the first 2-month-in-a-row drop in factory orders since January – amid the economy-crushing polar vortex.

Did it snow in September?

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Jim Sinclair’s Commentary

Some are waking up to reality.

Singer’s Elliott Says U.S. Growth Optimism Unwarranted as Data ‘Cooked’
By Kelly Bit  Nov 4, 2014 10:43 AM ET 

Paul Singer’s Elliott Management Corp. said optimism on U.S. growth is misguided as economic data understate inflation and overstate growth, and central bank policies of the past six years aren’t sustainable.

The market turmoil in the first half of October may be a “coming attractions” for the next real crash that could turn into a “deep financial crisis” if investors lose confidence in the effectiveness of monetary stimulus, Elliott wrote in a third-quarter letter to investors, a copy of which was obtained by Bloomberg News.

“Nobody can predict how long governments can get away with fake growth, fake money, fake jobs, fake financial stability, fake inflation numbers and fake income growth,” New York-based Elliott wrote. “When confidence is lost, that loss can be severe, sudden and simultaneous across a number of markets and sectors.”

Better-than-forecast economic data and improving earnings reports have helped the Standard & Poor’s 500 Index rebound 8 percent from a six-month low on Oct. 15. U.S. stocks have more than tripled from their 2009 low when including dividends, and government bonds as measured by the Bank of America Merrill Lynch Treasury Index have rallied 26 percent in the past six years.

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Jim Sinclair’s Commentary

Could happen.

GOP Senate Takeover Would Put Fed Under Microscope
By Dow Jones Business News,  November 04, 2014, 07:52:00 AM EDT
By Victoria McGrane

WASHINGTON–A Republican takeover of the U.S. Senate on Election Day would promise increased political turbulence for the Federal Reserve.

Financial executives say a GOP-led Senate would ratchet up congressional scrutiny of the central bank’s interest- rate policies as well as its regulatory duties as overseer of the nation’s largest financial firms. Republicans haven’t controlled the Senate since before the 2008 financial crisis and recession, which put a spotlight on the Fed and its powers.

"If the Republicans take control of the Senate and thus have control of both the House and the Senate–two words for the Federal Reserve: Watch out," said Camden Fine, president of the Independent Community Bankers of America.

Leading the GOP wish list in dealing with the Fed would be legislation to open the central bank to more scrutiny of its interest-rate decisions, using congressional audits of monetary-policy matters that Fed officials strongly oppose. Many Republican lawmakers also want to require the Fed to use a mathematical rule to guide interest-rate decisions or shift its focus more directly to inflation rather than inflation together with unemployment. All of that would come on top of heightened bipartisan scrutiny of the Fed’s regulatory moves.

Many Republicans oppose the unconventional efforts the central bank has taken to bolster the U.S. economy over the past several years. The Fed last week announced the end of its long-running bond-buying stimulus program, known as quantitative easing. But that won’t quell GOP criticism, since many Republicans want Fed officials to move quickly now to raise interest rates from near zero and shrink the central bank’s balance sheet, which has climbed to near $4.5 trillion.

The GOP is widely expected to retain control of the House, where the Fed has already been the focus of legislation it sees as hostile. Under a Republican-led Senate, Alabama Sen. Richard Shelby would likely become the next chairman of the Senate Banking Committee, which oversees the Fed.

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Posted at 7:19 PM (CST) by & filed under In The News.

Silver Fraud?
Author : Bill Holter
Published: November 3rd, 2014

Thursday and Friday were very bad days for gold, silver and the shares.  The explanation on Wednesday afternoon and Thursday was because the Fed discontinued QE 3.  Along came Friday and guess what, the QE baton was passed to Japan as they announced an increase in their QE operation to roughly the round number of $1 trillion per year.  With this amount of QE, the Bank of Japan will now be purchasing every single bond issued and then some.  Outright monetization has arrived in Japan!

  This was seen all around the world as "good" for stock markets as they rallied to new highs (Japan rallied to 7 year highs)!  …but bad for precious metals?  Yes I understand, this is "good" for the dollar on a relative basis to other fiat currencies (especially the yen) but how is the news of outright and full on monetization in the 3rd largest (and Western) economy bad for "stuff"?  The answer to this question is "it’s not …but it has to be seen this way".

  THE worst performing market (excluding the ruble) was silver, down some 7% or so after the Fed announcement from Wednesday afternoon to Friday’s close.  We have seen this before in late 2008, April of 2011 and 2013.  Maybe someone can rationally explain to me "why" silver would do this with the current backdrop?

  We know the cost of production for silver is north of $20 per ounce, one big producer, First Majestic even announced they are withholding nearly 1 million ounces of production due to current prices ($19 when they made the announcement).  I bring this point up because it is not like all of a sudden the supply increased and a producer or producers had "extra" millions of ounces to unload.

  Over just the last two weeks, the physical silver market has clearly tightened.  As the price was dropping, our suppliers went from no "wait" to a waiting period of 1-2 weeks on many products from generics to Maple Leafs… and this was as of Friday morning, let’s see what happens this week with the further push down in prices, will the delivery periods extend further?  I would also add that premiums demanded for physical silver product had been rising slightly prior to Wednesday and jumped markedly on Friday, will we again see a $9 COMEX price yet none to be had physically at $15? 

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How The BEA Goosed 3rd Quarter GDP——With A Phony 74% Leap In Defense Spending
by Contributor • November 3, 2014
By James Pethokoukis

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And from this a thousand conspiracy-themed blog posts will be born. Here is Capital Economics on the surprisingly strong (3.5% vs. 3.0% forecast) third-quarter US GDP report:

– The reported leap in third-quarter defence spending, which added 0.7 percentage points to annualised  GDP growth was, as far as we can tell, largely due to a failure of the BEA’s seasonal adjustment  process. As a result, we expect defence spending to plunge this quarter, subtracting a similar amount  from fourth-quarter GDP growth.

– All of the upside surprise in third-quarter GDP growth (the 3.5% outturn was well above the consensus  forecast of 3.0%) can be explained by the 4.6% increase in government spending, which added 0.8  percentage points (ppts) to overall growth. Moreover, nearly all of that boost was due to a 21% leap in Federal defence consumption. That’s the largest increase since the second Iraq war in  early 2003. Drilling down further, more than two-thirds of the rise was due to a 74% annualised leap in  defence spending on support services for installation, weapons and personnel. This is unusual given that  spending on such services typically makes up just 25% of total defence spending.

– Some of the rise in the third quarter could be due to the escalation in military action in the Middle  East, but most of it appears to be due to a failure of the seasonal adjustment process. Looking at the  averages over the past five years, defence support services spending has increased by 38% annualised in  the third quarter only to fall by an average of 34% annualised in the fourth quarter. (See Chart 2.) The BEA all-but confirmed this problem when in an email it told us that it is “trying to determine if any  methodology changes are necessary”.

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Jim Sinclair’s Commentary

Never mind the bad news according the majority.

ISM Manufacturing Surges To 3 Year Highs; Ignores PMI, Construction Spending Plunge
Tyler Durden on 11/03/2014 10:12 -0500

US manufacturing both declined (PMI) and rose (ISM) in October as the divergence  between the two soft-survey-based data streams is as ridiculous as it was in the second half of last year. ISM printed a cycle high 59.0 (highest since March 2011) smashing the 56.1 expectations (the biggest beat since July 2013). While the headline print was exuberant, New orders fell, as did new export orders. Construction spending fell for the 2nd month in a row, dropping 0.4% against expectations of a 0.7% rise.

Doesn’t seem like the US decoupling is taking hold domestically… 4th miss in a row for Construction spending and 2nd monthly drop.

*CONSTRUCTION SPENDING IN U.S. DECLINES TO WEAKEST SINCE MARCH

*U.S. SEPT. PUBLIC CONSTRUCTION SPENDING FALLS 1.3% FROM AUGUST

*U.S. SEPT. PRIVATE NON-RESIDENTIAL CONSTRUCTION FALLS 0.6%

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Islamic State advances on Homs in serious threat to Assad
As the world focuses on Kobane, jihadists have pressed deep inside Syria – advancing on both Idlib and Homs
By Ruth Sherlock, Gaziantep and Magdy Samaan
3:32PM GMT 03 Nov 2014

Islamic State of Iraq and the Levant has capitalised on the jihadist domination of northern Syria, seizing two gas fields and pressing a major assault on an air force base close to the central city of Homs.

While US-led air strikes have focused on defending the border town of Kobane from a few hundred Isil fighters, the extremist group has pushed south, expanding its grip on terrain that is strategically vital in the battle for control of the country.

On Monday, Isil posted photographs on social media showing the group’s flag flying over Jahar gas field, alongside images of seized vehicles, weaponry and corpses of the Syrian regime soldiers who had controlled the field.

The group captured the Sha’ar gas plant last week.

"So after the Sha’ar company and the positions surrounding it became part of the land of the Caliphate, the soldiers advanced, conquering new areas, and all praise is due to Allah," Isil said in the message.

Even more concerning for the regime, the jihadists have now moved to assault Tayfur military airbase – perhaps the biggest and most valuable military stronghold still in the possession of the government in Damascus.

The advances by Isil follow gains made in north-west Syria in recent days by Jabhat al-Nusra, the other main jihadist group, which unlike Isil remains affiliated to Al-Qaeda. It has obliterated large parts of the remaining “moderate” rebel forces backed by the United States in an advance across Idlib province, leaving most of northern Syria in the hands of one or other of the two groups. Isil’s advance on the Tayfur base would represent a major push south.

An earlier propaganda video about the base on Syrian State television showed SU-22M4, SU-22M2 and MiG-29 fighter planes, as well as air defence radars. It is also said to house surface-to-air missile systems.

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Monetary Fallacy? Deep Divisions Emerge over ECB Quantitative Easing Plans
By Anne Seith

To prevent dangerous deflation, the ECB is discussing a massive program to purchase government bonds. Monetary watchdogs are divided over the measure, with some alleging that central bankers are being held hostage by politicians.

At first glance, there’s little evidence of the sensitive deals being hammered out in the Market Operations department of Germany’s central bank, the Bundesbank. The open-plan office on the fifth floor of its headquarters building, where about a dozen employees are staring at their computer screens, is reminiscent of the simple set for the TV series "The Office". There are white file cabinets and desks with wooden edges, there is a poster on the wall of football team Bayern Munich, and some prankster has attached a pink rubber pig to the ceiling by its feet.

The only hint that these employees are sometimes moving billions of euros with the click of a mouse is the security door that restricts access to the room. They trade in foreign currencies and bonds, an activity they used to perform primarily for the German government or public pension funds. Now they also often do it for the European Central Bank (ECB) and its so-called "unconventional measures."

Those measures seem to be coming on an almost monthly basis these days. First, there were the ultra low-interest rates, followed by new four-year loans for banks and the ECB’s buying program for bonds and asset backed securities — measures that are intended to make it easier for banks to lend money. As one Bundesbank trader puts it, they now have "a lot more to do."

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Posted at 1:46 PM (CST) by & filed under In The News.

Canada halts visas for residents of Ebola-hit nations
October 31, 2014 5:04 PM

Ottawa (AFP) – Canada on Friday announced it was suspending visa applications for residents of Ebola-hit nations in a bid to prevent the deadly virus from crossing its borders.

Immigration Canada said authorities would not process any visa applications from individuals who had been in an Ebola-affected nation "within three months prior to the date of the application."

"Canada has been a leader in the international efforts to respond to the Ebola outbreak in West Africa," said Chris Alexander, Canada’s immigration minister.

"The precautionary measures announced today build on actions we have taken to protect the health and safety of Canadians here at home."

A statement said immigration authorities would also not issue new visa applications or process existing applications from foreign nationals intending to travel to an Ebola-affected nation.

The rule did not affect applications for visa renewals of foreign nationals who are already in Canada, the statement said.

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Jim Sinclair’s Commentary

This is the Blackest of Swans.

Japan defence ministry makes largest-ever budget request
29 August 2014 Last updated at 06:45 ET

Japan’s defence ministry has made its biggest ever budget request, amid severe tensions with China over a maritime dispute in the East China Sea.

The ministry is seeking 5.05 trillion yen (£29.4bn; $48.7bn) for the year – a 3.5% rise.

If approved, it would mark the third year the defence budget had been increased, after a decade of cuts.

Earlier this month, the ministry described the security environment around Japan as "increasingly severe".

Beijing and Tokyo are engaged in a bitter dispute over islands known as Senkaku in Japan and Diaoyu in China.

In its annual white paper, the ministry spoke of "great concern" over China’s activities in the East China Sea and also cited North Korea as a security threat.

According to its budget request, the ministry wants to purchase 20 maritime patrol aircraft.

It also wants to buy five crossover aircraft, which have both airplane and helicopter functionalities, three drones and six stealth fighters.

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The BOJ Jumps The Monetary Shark—–Now The Machines, Madmen And Morons Are Raging
by David Stockman • October 31, 2014

This is just plain sick. Hardly a day after the greatest central bank fraudster of all time, Maestro Greenspan, confessed that QE has not helped the main street economy and jobs, the lunatics at the BOJ flat-out jumped the monetary shark. Even then, the madman Kuroda pulled off his incendiary maneuver by a bare 5-4 vote. Apparently the dissenters——Messrs. Morimoto, Ishida, Sato and Kiuchi—-are only semi-mad.

Never mind that the BOJ will now escalate its bond purchase rate to $750 billion per year—-a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US scale GDP. And that comes on top of a central bank balance sheet which had previously exploded to nearly 50% of Japan’s national income or more than double the already mind-boggling US ratio of 25%.

In fact, this was just the beginning of a Ponzi scheme so vast that in a matter of seconds its ignited the Japanese stock averages by 5%. And here’s the reason: Japan Inc. is fixing to inject a massive bid into the stock market based on a monumental emission of central bank credit created out of thin air. So doing, it has generated the greatest front-running frenzy ever recorded.

The scheme is so insane that the surge of markets around the world in response to the BOJ’s announcement is proof positive that the mother of all central bank bubbles now envelopes the entire globe. Specifically, in order to go on a stock buying spree, Japan’s state pension fund (the GPIF) intends to dump massive amounts of Japanese government bonds (JCB’s). This will enable it to reduce its government bond holdings—built up over decades—– from about 60% to only 35% of its portfolio.

Needless to say, in an even quasi-honest capital market, the GPIF’s announced plan would unleash a relentless wave of selling and price decline. Yet, instead, the Japanese bond market soared on this dumping announcement because the JCBs are intended to tumble right into the maws of the BOJ’s endless bid. Charles Ponzi would have been truly envious!

Accordingly, the 10-year JGB is now trading at a microscopic 43 bps and the 5-year at a hardly recordable 11 bps. So, say again. The purpose of all this massive money printing is to drive the inflation rate to 2%. Nevertheless, Japanese government debt is heading deeper into the land of negative real returns because there are no rational buyers left in the market—-just the BOJ and some robots trading for a few bps of spread on the carry.

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