Posted at 6:31 PM (CST) by & filed under In The News.

Gold Shortage, Worst In 21st Century, Sends 1Y GOFO To Lowest Ever… And India Just Made It Worse
Submitted by Tyler Durden on 11/28/2014 13:59 -0500

While we have covered the aberration that is a negative gold GOFO rate previously and in extensive detail in this post, an abridged version of what negative GOFO means comes courtesy of Deutsche Bank’s recent discussion on what a successful Swiss gold referendum. To wit: "It is interesting to note that benchmark gold-dollar swap rates have recently traded negative, meaning investors are paying to borrow gold. This is unusual as gold is traditionally used as a source of collateral for cash financing…. [A] number of factors may play a role, such as excess dollar liquidity or an increased demand for collateral on the back of the global regulatory developments." In short a gold shortage at the institutional, read commercial and central bank, level. And not just a shortage but the biggest shortage in history, judging by today’s latest plunge in the 1 Month GOFO which just dropped to -0.5% and , worse, 1 Year GOFO that just hit its lowest print in the 21st century, and is also about to go negative: something that has never happened before further suggesting the gold shortage could go on for a long, long time!

Negative GOFO

To be sure, GOFO has printed negative in the past, although the two most prominent historic plunges were due to acute events which promptly renormalized, and were not the result of what has now become a chronic gold collateral shortage via the swaps market.

The best known example of a complete collapse in the GOFO rate, is the September 1999 Washington Agreement on Gold, which was an imposed "cap" on gold sales (mostly European in the aftermath of Gordon Brown’s idiotic sale of UK’s gold) to the tune of 400 tons per year. The tangent of the Washington Agreement is quite interesting in its own right. Recall the words of Milling-Stanley from the 12th Nikkei Gold Conference:

"Central bank independence is enshrined in law in many countries, and central bankers tend to be independent thinkers. It is worth asking why such a large group of them decided to associate themselves with this highly unusual agreement…At the same time, through our close contacts with central banks, the Council has been aware that some of the biggest holders have for some time been concerned about the impact on the gold price—and thus on the value of their gold reserves—of unfounded rumours, and about the use of official gold for speculative purposes.

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Will $60 Oil Be The Black Swan?
November 28, 2014

If it is, I don’t know of anyone who saw that coming.   I have been asserting over the past month or so that the plunge in the price of oil is the best indicator that the global economy – including and especially the U.S. economy – is collapsing.

There had been a bubble of sorts blown up in the shale oil industry.   Billions in junk bonds have been issued against what is turning out to be the latest of Wall Street’s financial engineering Ponzi schemes.   But what everyone seems to be overlooking is that the banks and private equity firms themselves are going choke on the billions in bank debt issued by the collapsing shale oil industry.

This is a must-read commentary posted The Automatic Earth Blog:  The True State Of The Economy.

It is highly probable, in my opinion, that the crash in the price of oil not only is a signal that the U.S. economy is in trouble, it could well be the unforeseen “Black Swan” that pulls the rug out from under Wall Street and the financial markets.

I would suggest that this is why the Fed and the U.S. Treasury’s Working Group on Financial Markets – aka the plunge protection team – has been waging a relentless war on gold and silver and has been working overtime to keep the stock market from crashing.

A plunging oil price is not hurting Russia at all.  In fact, if you read this article –  Grand Master Putin’s Golden Trap – you see why the crashing oil price is likely the end of the petrodollar and U.S. global economic hegemony.

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India scraps restrictions on gold imports

India has scrapped controversial restrictions on gold imports that have triggered a spike in smuggling and crippled the country’s jewellery industry.

On Friday the Reserve Bank of India reversed rules that force agencies importing the precious metal to set aside a fifth of all shipments for re-export, reports Avantika Chilkoti in Mumbai.

The restrictions were put in place in the middle of last year as a currency crisis swept through emerging markets and the Reserve Bank of India scrambled to control the current account deficit.

The move comes despite the recent increase in gold imports.

Official data show gold imports reached 106.3 tonnes, or $4.2bn, this October, almost four times the shipments in the same period a year earlier.

India overtook China to regain its position as the world’s largest consumer of gold in the third quarter of this year, according to the World Gold Council, with demand reaching 225 tonnes in the three-month period.

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Posted at 2:30 PM (CST) by & filed under Jim's Mailbox.

Jim,

All of us gold bugs have been wondering when the move by countries with gold reserves to repatriate their gold would begin. It sure looks like the movement is upon us. This should cause the whole bankster’s gold scheme of manipulation and control to spin out of control.

CIGA Larry

Swiss, French call to bring home gold reserves as Dutch move 122 tons out of US
Published time: November 28, 2014 05:25

The financial crisis in Europe is prompting some nations to repatriate their gold reserves to national vaults. The Netherlands has moved $5 billion worth of gold from New York, and some are calling for similar action from France, Switzerland, and Germany.

An unmatched pace of money printing by major central banks has boosted concerns in European countries over the safety of their gold reserves abroad.

The Dutch central bank – De Nederlandsche Bank – was one of the latest to make the move. The bank announced last Friday that it moved a fifth of its total 612.5-metric-ton gold reserve from New York to Amsterdam earlier in November.

It was done in an effort to redistribute the gold stock in “a more balanced way,” and to boost public confidence, the bank explained.

“With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the bank said in a statement. “In addition to a more balanced division of the gold reserves…this may also contribute to a positive confidence effect with the public.”

Dutch gold reserves are now divided as follows: 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.

More…

Posted at 9:21 AM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Good news? Good at the start, but awful at the end.

Oil prices plunge after Opec meeting
27 November 2014 Last updated at 12:19 ET

The price of oil slumped after the Opec oil producers’ cartel decided not to cut output at its meeting in Vienna.

Opec’s secretary general Abdallah Salem el-Badri said they would not try to shore up prices by reducing production.

"There’s a price decline. That does not mean that we should really rush and do something," he said.

Following the announcement Brent crude fell below $72 a barrel, hitting lows previously seen in August 2010.

The 12 Opec members decided to maintain production at 30 million barrels per day as first agreed in December 2011.

"We don’t want to panic. I mean it," said Mr el-Badri. "We want to see the market, how the market behaves, because the decline of the price does not reflect a fundamental change."

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Jim Sinclair’s Commentary

Shale oil and fracking killed the energy industry.

Excerpt GEAB 89 : The oil industry crisis

The current fall in oil prices squarely caused by this strategy of despair is in the process of smashing the oil/gas industry. The Ukrainian crisis, far from allowing the West to get its hands on Russia, is in the process of forcing it to rethink its dependence on Europe as a customer for its gas (71).

clip_image001

Chart 7 – Russian gas exports, by country, 2012. Source: EIA

All these radical changes in oil geopolitics are both the cause and consequence of a crisis that is often ignored: that of the oil industry. One thought it had been saved thanks to shale oil; it will lose because of shale oil.

Now, many businesses are in fact fleeing shale oil extraction: whether due to poor profitability, as in Texas (72), in the US Northeast (73), or again in Poland (74); because of protests against its extraction in England (75) and in Romania (76); or because of sanctions against Russia (77) … There are countless victims. Oil at $80 a barrel is beginning to spread panic and an article has already announced the first signs of a drilling slowdown (78). The biggest companies are themselves obliged to sell many assets to bail themselves out (79); their production has fallen drastically whilst the investment needed is increasingly significant (compare the chart below); all the oil businesses are increasingly indebted (80); oil operations (shale in particular) suddenly risks being no longer profitable if the price of a barrel settles below $80 long-term, funding is increasingly difficult in these times of economic scarcity, etc.

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Jim Sinclair’s Commentary

More dollar substitution.

Turkey and Russia discuss Customs Union collaboration
Published time: July 21, 2014 10:03

Stalled progress towards EU membership has shifted Turkey’s economic interest, and it is now looking for closer cooperation with Russia’s Customs Union, Economic Development Minister Aleksey Ulyukayev said.

Ulyukayev discussed the plan with Turkish Economy Minister Nihat Zeybekci at the G20 trade ministers meeting in Sydney, Australia, over the weekend.

The talks focused on how the two countries can transition to using national currencies, instead of the dollar and euro, in trade.

"We have discussed the possible forms of cooperation, including the formation of a free trade zone between the Customs Union and Turkey. We have agreed to create a working group and to begin a more detailed discussion of these possibilities and prospects in September," Ulyukayev said on the sidelines of G20, RIA Novosti reported.

The free trade zone so far consists of Russia, Belarus, and Kazakhstan, and is meant to rival the European Union. At present, Turkey has a free trade zone agreement with the European Union.

Turkey, with a population of 76 million, has a $1.1 trillion economy driven by strong industry and service sectors with automotive, construction, and electronics on the rise.

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Jim Sinclair’s Commentary

The more pressure on the euro, the greater the pressure to bring home euro gold.

Swiss, French call to bring home gold reserves as Dutch move 122 tons out of US
Published time: November 28, 2014 05:25

The financial crisis in Europe is prompting some nations to repatriate their gold reserves to national vaults. The Netherlands has moved $5 billion worth of gold from New York, and some are calling for similar action from France, Switzerland, and Germany.

An unmatched pace of money printing by major central banks has boosted concerns in European countries over the safety of their gold reserves abroad.

The Dutch central bank – De Nederlandsche Bank – was one of the latest to make the move. The bank announced last Friday that it moved a fifth of its total 612.5-metric-ton gold reserve from New York to Amsterdam earlier in November.

It was done in an effort to redistribute the gold stock in “a more balanced way,” and to boost public confidence, the bank explained.

“With this adjustment the Dutch Central Bank joins other banks that are keeping a larger share of their gold supply in their own country,” the bank said in a statement. “In addition to a more balanced division of the gold reserves…this may also contribute to a positive confidence effect with the public.”

Dutch gold reserves are now divided as follows: 31 percent in Amsterdam, 31 percent in New York, 20 percent in Ottawa, Canada and 18 percent in London.

Meanwhile, Switzerland has organized the ‘Save Our Swiss Gold’ referendum, which is taking place on November 30. If passed, it would force the Swiss National Bank to convert a fifth of its assets into gold and repatriate all of its reserves from vaults in the UK and Canada.

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Posted at 12:58 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- No Economic Boom in Durable Goods Orders or Housing Activity 
- Real Durable Orders Goods Set Early Pace of Flat-to-Down Activity for Fourth-Quarter 2014 
- New-Home Sales Revised Lower in Third-Quarter; October Broad Sales Activity Remained Stagnant 
- Consumer Confidence and Sentiment Remain at Levels Consistent with Historical Recessions

"No. 678: October Durable Goods Orders, New-Home Sales, November Consumer Conditions" 
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

A daily occurrence in gold and silver.

CFTC tells CME Group to work more on ‘spoofing’ detection
By Tom Polansek
CHICAGO Mon Nov 24, 2014 6:51pm EST

Nov 24 (Reuters) – CME Group Inc, the world’s largest futures market operator, should continue to develop strategies to detect an illegal manipulative trading practice known as "spoofing," the U.S. Commodity Futures Trading Commission said on Monday.

Spoofing involves rapidly placing orders to create the illusion of market demand. Unsuspecting traders are then tricked into buying or selling at artificial prices, only to later find that the orders were canceled.

The practice gained notoriety last month after high-frequency trader Michael Coscia was charged with manipulating commodity futures prices in the first U.S. federal criminal prosecution of spoofing.

The CFTC recommended CME further address its surveillance of spoofing after the agency’s Division of Market Oversight reviewed rule enforcement at the New York Mercantile Exchange and Commodity Exchange Inc from July 1, 2012 to June 30, 2013. The exchanges are owned by Chicago-based CME.

CME said it was reviewing the CFTC’s findings.

"A number of the items noted in its reports have already been addressed and remediated," a spokeswoman said.

During the review period, the exchanges’ "messaging" research program, which CME initiated in January 2013 to identify spoofing and other problematic messaging behaviors, did not result in the initiation of any spoofing cases, the CFTC said. Of 10 cases opened during the period involving potential spoofing, eight were initiated from complaints.

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Jim Sinclair’s Commentary

The story is spreading. Good to see.

French Political Leader Wants Gold Back In France
By Neils Christensen of Kitco News
Wednesday November 26, 2014 11:51 AM

(Kitco News) – France could be next on the list of countries that wants to take its gold back, if the leader of a far-right political party has her way.

Tuesday, Marine Le Pen, leader of the Front National party of France, who is also the front runner to potentially be France’s new president, penned an open letter, in French, to Christian Noyer, governor of the Bank of France, requesting that the country’s gold holdings be repatriated back to France.

Not only does Le Pen want to see the gold back in France but she also recommended that the central bank take advantage of the recent price drop and buy more gold, boosting reserves by another 20%. She also recommends that the central bank never sell its gold reserves.

Finally, Le Pen also asked that an independent body be allowed to audit the country’s current holdings of 2,435 metric tons.

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Jim Sinclair’s Commentary

This is only a start. Suits over manipulation will grow significantly.

Goldman, BASF, HSBC accused of metals price fixing: U.S. lawsuit
By Jonathan Stempel
NEW YORK Wed Nov 26, 2014 5:22am EST

(Reuters) – Goldman Sachs Group Inc (GS.N), Germany’s BASF SE (BASFn.DE) and two other big platinum and palladium dealers have been sued in the United States in what the plaintiff’s law firm called the first nationwide class action over alleged price-fixing of the metals.

In a complaint filed on Tuesday in the U.S. District Court in Manhattan, units of Goldman, BASF, HSBC Holdings Plc (HSBA.L) and South Africa’s Standard Bank Group Ltd (SBKJ.J) were accused of having conspired since 2007 to rig the twice-daily platinum and palladium "fixings" and the prices of futures and options based on those fixings.

The plaintiff, Modern Settings LLC, a Florida-based maker of jewelry and police badges, claimed metals purchasers lost millions of dollars.

The defendants illegally shared customer data, used that information to engage in "front-running" of expected price moves, and manufactured phantom "spoof" orders, according to the plaintiff.

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Posted at 12:01 PM (CST) by & filed under Jim's Mailbox.

Jim,

This yesterday…

Q3 GDP Revised Above Highest Estimate, Prints 3.9%
Submitted by Tyler Durden on 11/25/2014 – 08:44

This, today…

UMich Confidence Misses By Most In 13 Months
Submitted by Tyler Durden on 11/26/2014 – 10:04

Chicago PMI Suffers 4th Biggest Drop Since Lehman
Submitted by Tyler Durden on 11/26/2014 – 09:54

Core Durable Orders Drop Most Since Polar Vortex, Core CapEx Lowest Since May

Initial Jobless Claims Spikes Above 300k To 3-Month Highs, Biggest Miss In 11 Months
Submitted by Tyler Durden on 11/26/2014 – 08:36

Does anyone still put faith in the government’s trash talk? Devious behaviour, manipulation, and verbal spin knows no bounds.

The truth will prevail… it always does. Remember that.

Joseph Goebels:

"If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

This is a case of “verbal” economic prosperity, not “actual” economic prosperity.

CIGA Wolfgang Rech

Posted at 3:07 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Gross Domestic Product Upside Revision Was Nonsense 
- Initial Gross Domestic Income Reporting Suggested Major Revision Shenanigans that Boosted Headline GDP 
- Underlying Reality Remains Down-Trending Stagnation in Broad Economic Activity

"No. 677: Third-Quarter 2014 GDP, First Revision" 
Web-page: http://www.shadowstats.com

 

Jim Sinclair’s Commentary

The last man standing will be gold.

More Central Bank Monetary Heroin Will Spark Currency Race To The Bottom, Global Implosion
by David Stockman • November 25, 2014

The global financial system has come unglued, and the opening waves of competitive currency devaluations by Japan and China are bound to wash up on U.S. shores, according to David Stockman, White House budget chief during the Reagan administration.

In a column on his Contra Corner blog, Stockman said spend-thrift central bank policies globally – from the U.S. to Europe and Asia – have set up a bout of industrial deflation that is bound to be devastating.

“In short, there is a tidal wave of industrial deflation coming down the pike — owing to two decades of world-wide central bank financial repression that has fueled vast mal-investments in mining, manufacturing, transportation and trade,” he said.

“That, in turn, will trigger a monetary race to the bottom by the central banks — a race that is already under way owing to Japan’s Halloween Massacre of the yen. Soon the rest of East Asia — and especially China — will have to join the exchange rate plunge or find their export based economies hitting the shoals,” Stockman predicted.

Stockman was especially critical of fresh vows by the European Central Bank (ECB) and China last week to pump in even more monetary stimulus to keep their economics from sliding into recession, a step he said that amounted to “monetary heroin” and that pushed the S&P 500 up a leg to 2,070.

He said Europe’s real GDP is no higher today than it was in the third quarter of 2006, even while Europe’s consumer prices have risen by nearly 20 percent during the same period. From that standpoint, he suggested the ECB’s effort to pump more inflation into the system to avoid deflation is likely to harm the Continent’s economy even more.

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Jim Sinclair’s Commentary

When politics such as a price sanctions meet the marketplace, there are many different results.

Nigeria Raises Rates, Devalues To Defend Collapsing Currency As Oil-Price Blowback Spreads
Tyler Durden on 11/25/2014 09:14 -0500

Having exposed the demise of various oil-producing nations’ currencies previously, it is noteworthy that Nigeria folded today and devalued the Naira peg to the USDollar by over 8% from 155 to 168 and widened its ‘intervention’ bands from 3% to 5% (the upper band is where the market is trading). Furthermore, the central bank raised rates from 12% to 13%.

All oil-producing nations are seeing dramatic pressure on their currencies since oil topped…

clip_image001

Forcing Nigeria to devalue…

clip_image002

The adjusted peg appears to ‘try’ to cap the collapse of the currency at current levels after the old peg-band was crushed a few weeks ago… and Nigeria is rapidly running out of reserves to defend its currency.

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Posted at 3:01 PM (CST) by & filed under Jim's Mailbox.

Jim,

Does anybody out there, ANYBODY, believe in the numbers coming from the government?

If they do, then PT Barnum was correct. "There’s a sucker born every minute."

Declining imports do not correlate with increased consumption. For that matter, retail sales of late do not appear to correlate with increased consumption either.

In fact, look at Tiffany’s earnings release this morning. It was poor in Japan, indicating the pain is beginning to extend to the upper class. This could be the beginning of leaks in the dam. Quick, get the little Dutch boy to pug ‘em.

“Tiffany third-quarter sales fall on weak demand in Japan

Tiffany’s net income fell 60% to $38 million, compared with $95 million in the third quarter last year. But the company reported a pre-tax loss of $94 million due to debt repayment.”

As far as I’m concerned, they have lost all credibility.  Their integrity is as foreign as the wars we fight.

CIGA Wolfgang Rech

Q3 GDP Revised Above Highest Estimate, Prints 3.9%
Submitted by Tyler Durden on 11/25/2014 – 08:44

Just as the OECD cut US GDP further, here comes the BEA with an impressive first revision to the Q3 GDP, which succeeded in fixing all those things that were lacking in the first report which said GDP had grown 3.5% in the quarter. Moments ago, the revised number slammed expectations of a modest decline to 3.3%, rising by3.9%, above the highest Wall Street estimate (range was 2.8% to 3.8%), with the boost coming from all those components that disappointed in the first go around, namely Personal Consumption (which rose from 1.8% to 2.2%), contributing 1.51% of the final GDP print, inventories subtracting far less, or just -0.12% compared to -0.57%, and fixed investment revised to 0.97% from 0.74%. Finally, while exports were revised modestly lower, a small decline in imports also offset the net decline in trade contribution.

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Jim,

One great thing… it’s now become national debate in regards to bringing a sovereign’s gold home. People are getting educated by all of this and the average person is starting to think about purchasing the real metals.

CIGA David M.

Here Comes France: Right-Wing Leader Marine Le Pen Demands Central Bank Repatriate French Gold
Submitted by Tyler Durden on 11/25/2014 – 10:31

First Germany, then the Netherlands, perhaps Switzerland this weekend, and now the French right-wing Front National, which shockingly came first in May’s European parliament elections, and whose leader Marine Le Pen is currently polling in first place in a hypothetical presidential election (in both a first and run off round), ahead of president Hollande, has sent a letter to the governor of the French Central Bank, theBanque de France, demanding that France join the list of nations which have repatriated, or at least tried to, their gold.

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Posted at 3:16 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

When geopolitics and markets collide, bad things can happen.

Brent Plunge To $60 If OPEC Fails To Cut, Junk Bond Rout, Default Cycle, "Profit Recession" To Follow
Submitted by Tyler Durden on 11/24/2014 10:11 -0500

While OPEC has been mostly irrelevant in the past 5 years as a result of Saudi Arabia’s recurring cartel-busting moves, which have seen the oil exporter frequently align with the US instead of with its OPEC "peers", and thanks to central banks flooding the market with liquidity helping crude prices remain high regardless of where actual global spot or future demand was, this Thanksgiving traders will be periodically resurfacing from a Tryptophan coma and refreshing their favorite headline news service for updates from Vienna, where a failure by OPEC to implement a significant output cut could send oil prices could plunging to $60 a barrel according to Reuters citing "market players" say.

By way of background, the key reason OPEC is struggling to remain relevant is because, as the FT reported over the weekend, "US imports of crude oil from Opec nations are at their lowest level in almost 30 years, underlining the impact of the shale revolution on global trade flows. The lower dependence on imports from the cartel, which pumps a third of the world’s crude, comes amid advances in hydraulic fracturing that has propelled domestic US production to about 9m barrels a day – the highest level since the mid-1980s."

The US "shale miracle" is best seen on the following chart showing the total output of the US compared to perennial crude powerhouse, Saudi Arabia:

clip_image001

It is this shale threat that has become the dominant concern for OPEC, far beyond whatever current US national interest are vis-a-vis Ukraine, and Russia’s sovereign oil revenues, and as reported previously, Brent has to drop below to $75 or lower for US shale player to one by one start going offline.

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Jim Sinclair’s Commentary

Paul Craig Roberts on the Swiss Gold vote.

Swiss Gold Referendum: What It Really Means
By Dr. Paul Craig Roberts
Global Research, November 24, 2014

In a few days the Swiss people will go to the polls to decide whether the Swiss central bank is to be required to hold 20% of its reserves in the form of gold. Polls show that the gold requirement is favored by the less well off and opposed by wealthy Swiss invested in stocks. http://snbchf.com/gold/swiss-gold-referendum-latest-news/ These poll results provide new insight into the real reason for Quantitative Easing by the Federal Reserve and European Central Bank.

First, let’s examine the reasons for these class-based poll results. The view in Switzerland is that a gold backed Swiss franc would be more valuable, and a more valuable franc would increase the purchasing power of wage earners, thus reducing their living costs. For the wealthy stock owners, a stronger franc would reduce Swiss exports, and less exports would reduce stock prices and the wealth of the wealthy.

The vote is clearly a vote about income shares between the rich and the poor. The Swiss establishment opposes the gold-backed franc, as does Washington.

A few years ago the Swiss government, after experiencing a strong rise in the exchange value of the Swiss franc as a result of dollar and euro inflows seeking safety in the Swiss franc, decided to expand the Swiss money supply in line with the foreign currency inflows in order to stop the rise of the franc. The liquidity supplied by the central bank creating new francs has stopped the rise of the franc and supports exports and stock prices. As a vote in favor of a gold backed franc is not in the interest of the elite, it is unclear that the vote will be honest.

What does this tell us about the Federal Reserve’s policy of Quantitative Easing, which is an euphemism for printing an enormous amount of new dollars?

The official reason for QE is the Keynesian Phillips Curve claim that economic growth requires mild inflation of 2-3%. This false theory was put to death by the supply-side policy of the Reagan administration, but the misrepresentation of the Reagan administration’s policy by the Establishment has kept the bogus Phillips curve theory alive.http://www.paulcraigroberts.org/2014/11/14/global-house-cards-paul-craig-roberts/

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