Posted at 11:23 AM (CST) by & filed under Yra Harris.

Dear CIGAs,

The tinder of the financial world has dried under the roaring blaze of asset appreciation. Global bond and equity prices reflect that all is well and the world’s major central banks have control of the world’s finances. But in the parlance of Mao, a single unexpected spark can initiate a huge fire. (Also, it is important to note that Mao never missed a PMI number either.) Financial history is replete with events of which investors and bankers were never aware of the depth. It was only in 2007 that Chairman Bernanke called the housing situation and its financial repercussions, “well contained.” Today, the news brought two events that can have far greater impacts than the markets’ calmness revealed.

NUMBER 1:The situation in Iraq with the seizing of the its second largest city, Mosul, can ignite a wider war then the news and markets believe. The ability of the radical Sunni extremists to easily defeat the Iraqi Army in a key area will bring added pressure on Turkey, and probably Jordan, to raise its level of military involvement to prevent the ISIS group to attain a larger hold over critical OIL areas.F or the Sunni insurgents, OIL means money for supporting its military operations. Also, controlling a large population area like Mosul will bring in “taxes” from shakedown efforts. The ISIS group is also pushing toward an area of Kurdish control,which may initiate military action from the well-financed and trained Kurdish militias. The Iraqi situation can quickly escalate and bring in many regional actors into a potentially volatile situation.

NUMBER 2: S&P placed the Austrian banking system on watch after the state moved on Hypo Alpe Adria debt holders. Following the template established by Dutch finance minister (and Eurogroup president) Jeroen Dijsselbloem after the Cyprus Bank BAIL-IN, Austria has asked subordinated debt holders of Carinthian guaranteed debt, to help pay for winding down the nationalized bank HYPO APLE ADRIA.The established TEMPLATE has been forgotten by investors. Remember that depositors in Cypriot banks were forced to bear some of the costs of winding down insolvent institutions. Austria has just let creditors and depositors know, again, that the EURO stops with them. The amount of the bail-in is only 800 million euros but it is a reminder that risk is not being properly priced.European banks have been large sellers of COCO bonds, which are dependent upon the banks and regulators to determine when a bank is undercapitalized, thus resulting in a bond being converted to equity (and aptly named Contingent Convertible or COCO bond).While all attention is on Spanish, Italian and other peripheral banks, Austria presents the world markets with a credit event.

Earlier this week the brilliant financier Wilbur Ross announced that he sold his large stake in the Bank of Ireland to Deutsche Bank. Mr. Ross acquired his shares in the Bank of Ireland at the height of the Irish banking crisis and made a very large return on his opportune investment. Maybe, Wilbur is aware of the Dijsselbloem template and thought it was time to take the money and seek other venues. At least Wilbur Ross was well remunerated for the risk he took in the Bank of Ireland. Can recent investors in European sovereigns and banks say the same?

***The Reserve Bank of New Zealand, as expected, raised its Official Cash Rate by 25 basis points to 3.25 percent. The language by RBNZ Governor Graeme Wheeler was a bit more hawkish than anticipated and the KIWI rallied against all currencies. Wheeler raised rates even as the KIWI has remained strong, but believes that softening commodity prices will eventually weaken the currency. The RBNZ seemed more worried about rising inflationary pressures and thus deemed a raise in rates to be more important. How refreshing that a central bank doesn’t move its thresholds to fit some illusionary targets?

Posted at 11:45 AM (CST) by & filed under In The News.

U.S. pensions ‘cash negative’ by 2016: Analyst
Sunday, 8 Jun 2014 | 11:17 AM ETFinancial Times

America’s sprawling 401(k) pension system will turn cash flow negative in 2016, threatening disruption for asset managers and selling of equities, according to analysis by Cerulli Associates, a research house.

The $3.5 trillion system attracted fresh contributions of $300 billion in 2012, with $276 billion either withdrawn as cash by retirees or rolled over into individual retirement accounts (IRAs), Cerulli estimated.

However, by 2016 it forecasts that inflows will be $364 billion and outflows $366 billion, with the deficit only widening year on year after that as the core of the baby-boomer generation retires.

"This has significant implications for asset managers and other financial services providers," said Bing Waldert, a director at Cerulli. "It is going to be a disappointment for a lot of fund managers that have put a lot of effort into the DC [defined contribution pension fund] market.

"For asset managers, the consistent contributions are particularly appealing and provide a source of positive flows even in poor markets when a firm may experience outflows from other segments of the industry."

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Why Mosul’s fall is a signature moment in Iraq (+video)
By Dan Murphy, Staff writer / June 10, 2014

The Iraqi government has lost control of its third-largest city to Al Qaeda-inspired insurgents, a crushing defeat for not only Prime Minister Nouri al-Maliki’s security policies but for Iraqi politics as a whole.

The scale of the catastrophe, as troops loyal to Mr. Maliki flood north and troops controlled by the Kurdish Regional Government rush west and south, can’t be overstated. Chicago is the United States’ third-largest city. Munich is Germany’s. Osaka is Japan’s.

And unlike the Anbar towns of Fallujah and Ramadi, almost exclusively Sunni Arab and in the heart of what has long been one of Iraq’s most restive provinces, Mosul is an ethnically and religiously mixed town of Sunni and Shiite Arabs, Kurds and Turkmen, Christians and Muslims. US forces won, lost, and won control again of Fallujah in fierce battles during the early years of the America-led war in Iraq. But a city like Mosul is something else again.

It’s well known that Mosul has been a target for the Islamic State in Iraq and the Levant (ISIS). The city is the capital of northern Nineveh Province, the western side of which has a roughly 300-mile-long frontier with Syria. During the height of the US war in Iraq, insurgent rat-lines riddled the border, and in the past few years, with what was once Al Qaeda in Iraq merging with Sunni Arab insurgents fighting in the Syrian civil war to become ISIS, the cross-border flow of men and weapons has ramped up again.

Much of Nineveh, like Anbar, is sparsely inhabited desert where the central government’s writ is nominal. Smaller cities in the area’s east, like Tal Afar, have repeatedly fallen to insurgents over the past decade. But Mosul is a crown jewel, a center of transportation and commerce. Holding it was a government priority. Losing control, if only briefly, is a powerful indication of government failure and something that is likely to spur insurgent recruitment. What must have looked like a hopeless cause to many passive Sunni Arab supporters of the insurgency just started looking a lot more hopeful.

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BNP, Big Brother And The US Dollar
By Charles Gave

France’s biggest bank, BNP Paribas, and the US government have gotten into a fight—a fight which threatens to cost BNP US$10bn in fines and possibly even its US banking license. As usual, the official causes of the fight have very little to do with the real ones. The official narrative goes like this: the US government placed embargos on a number of countries, including Sudan, Cuba and Iran. Between 2002 and 2009, BNP’s subsidiary in Geneva, which specialized in commodity financing, dealt with companies that traded with these countries—which was perfectly legal in Switzerland, France and the European Union.

Since most commodities are quoted in US dollars, the transactions were settled in dollars, which meant that trades involving companies that dealt in the embargoed countries were settled through the New York branch of BNP. BNP’s New York branch had no idea who the final beneficiaries of the payments were since the trades were booked through the account of BNP’s Swiss subsidiary. BNP New York relied on BNP Geneva to comply with the law as it stood at the time (until November 2008, it was legal under the US Treasury’s ‘U-turn exemption’ for European banks to settle dollar transactions though their New York branches on behalf of all but a few Iranian counterparties). As a result, as far as BNP is concerned, French law, European law, Swiss law and US law were all respected, and there is no case to pursue.

Except the US authorities now seem to be arguing that since all dollar transactions are ultimately settled through bank branches domiciled in the US, the US government has the right to know the identity of all final beneficiaries—a right which, with the mass digitalization of all transactions, is becoming increasingly easier to exercise. In other words, the US government now demands oversight over any and all dollar transactions whenever and wherever they take place.

You do not need to be a paid-up member of the buried Krugerrand club to understand that this could have wide-ranging investment implications. Specifically:

1. This is an enormous power-grab by the US authorities which in essence are telling other countries that US laws and fiscal systems now rule the world.

2. Combine this latest action by the US government with measures such as the Foreign Account Tax Compliance Act, and it is obvious that the US government is intent on eradicating all bank secrecy around the world. In any dollar transaction, there will now be not two, but three, parties: the buyer, the seller, and the US government.

3. Given that most democracies are built on the principle of ‘no taxation without representation’, these moves are likely to trigger a backlash against the US. Today, some two-thirds of global trade is denominated in dollars, and roughly the same proportion of central bank reserves are held in the US currency. In the light of the latest massive regulatory overreach by the US government, does anyone care to bet that those two-thirds proportions will rise over the next decade?

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Posted at 11:33 AM (CST) by & filed under Jim's Mailbox.

Jim,

Macro-Prudential Progress is just a fancier and less transparent name for Management of Perception Economics (aka MOPE). El-Erian needs to make sure he is non-branded a conspiracy theorist for such non-Cabal writing.

CIGA Craig

What If the Fed Has Created a Bubble?
Jun 10, 2014 7:03 AM EDT
By Mohamed A. El-Erian

Investors might be surprised to learn that they have a lot riding on something that they pay very little attention to: macro-prudential regulation, or what central banks and other government agencies do to reduce the risk of systemic financial disasters.

The aim of such regulation is to lower both the probability and potential costs of financial accidents. It does so by enhancing the resilience of the system, establishing circuit breakers to prevent problems in one area from contaminating others and, at the extreme, containing the detrimental impact on the broader economy when failures occur.

Essentially, the Fed has been pushing stock and bond prices up to "bubblish" levels, in the expectation that they will inspire the kind of consumer spending, physical investments and hiring required to subsequently justify them. The hope is that the convergence will occur in the context of full employment and inflation near the Federal Reserve’s target of 2 percent. So far, though, the wedge between asset prices and economic reality remains large, as last week’s juxtaposition of new stock-market highs and still-anemic wage-inflation data demonstrated.

The danger is that the economic recovery will ultimately fail to validate artificially high asset prices, leading to significant financial instability and adverse “spillback” for the economy. The more comfortable the authorities are in their ability to counter — and, if necessary, contain — such potential instability, the greater their appetite for maintaining the stimulus that markets so love.

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Posted at 11:06 AM (CST) by & filed under In The News.

And It’s Gone!
Author : Bill Holter
Published: June 10th, 2014

I know that you’re probably wondering about the title “…And It’s Gone.”  I wanted to write further about the “missing metals” in China and how quickly we could see the machine go into reverse because of the leverage, size and amount of players involved.  After writing the title and thinking about how to start off I realized that it could and does apply to so many different facets in the world today, and not just the financial world.  To refresh your memory and give you a 90 second chuckle, here is the South Park video that made the phrase “…And it’s gone” so famous.

In the non-financial category you must include common sense, integrity, work ethic and the rule of law amongst others.  They are all gone.  Maybe not completely because there are still some smart, hardworking and honest people out there but when you look at the “top,” yeah, it’s pretty much all gone.  When I say the “top,” I am talking about the places that wield the power and make the decisions.

I could have used this title for the recent revelation by Christine LaGarde that the IMF may someday move from Washington to Beijing.  The title fits Crimea, it fits the depositors in Cyprus, and it fits the proposed use (or lack of) of dollars that Gazprom will be using for settlement.  I could have certainly used it for the coming “bail ins” all over the world.  And it also fits the Chinese businessman who opened his 1 ton crate of gold from Ghana only to find worthless steel.

OK, yes, apparently “it” is gone, “it” being the collateral.  All along I have said that the entire system which is “credit based” is a daisy chain and that no link, anywhere could “break” …or the whole system would break.  The situation in China’s Qingdao port looks to be the link that is breaking.  If there are 80,000 tons of aluminum and 20,000 tons of copper missing here, what about other ports?  Then of course the thought process leads your mind to the banks and the lenders themselves.  These institutions are not just Chinese banks.  If you recall, JP Morgan offloaded their commodities arm to Mercuria back in March.  Swiss based Mercuria was a big lender to this market; good timing by Morgan and Mercuria now holds part of the bag?  Citigroup was also another big lender in this market, can they or do they have the strength to eat loans that were made in retrospect with “less” or even no collateral?

Please understand that this situation is going to bring trust into the equation and just as any receding tide does, all of the bad deals and frauds will be exposed.  I could have titled this piece “show me the money” because this is where all of this will lead.  “Receipts” everywhere will be questioned and not just for aluminum and copper.  There will be questions raised between banks, between sovereigns and of exchanges themselves.  “Trust me” will not cut it anymore and we will soon find out who really has what.

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Jim Sinclair’s Commentary

The inviting question is why in the world does a weatherman or RR retirement officer need to carry a gun? What is going on here?

Federal Agencies with Guns: Weather Service, Social Security, Railroad Retirement Board

Thousands of federal government employees are armed with handguns and even semiautomatic and automatic weapons as part of their jobs for agencies that are not traditional law enforcement operations.

These gun-toting civil servants include those performing missions that involve Social Security, delivering the mail, predicting the weather, and overseeing railroad pensions. Others authorized to carry firearms conduct audits for the U.S. Department of Agriculture.

The Social Security Administration has sought to purchase 174,000 rounds of hollow-point bullets, while at least nine agencies have their own SWAT (Special Weapons and Tactics) teams, including the Office of Personnel Management, the Department of Labor, the National Aeronautics and Space Administration, theDepartment of Health and Human Services, the Food and Drug Administration, the Consumer Product Safety Commission, and the Fish and Wildlife Service.

With the increase of federal regulatory criminal laws being passed, the number of law-enforcement personnel attached to agencies has gone up as well. But the traditional law enforcement agencies like theFederal Bureau of Investigation and the Marshals Service have been unable to handle all of the demand to execute potentially dangerous investigations, searches and arrests, leading officials at these other departments to develop their own police forces, according to an analysis by Candice Bernd of Truthout.

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Jim Sinclair’s Commentary

A complete shortage in the physical gold cannot be avoided.

Indian, Chinese Central Banks on track to absorb 90% of Gold mine output
Jun 10, 2014 06:35 GMT

MUMBAI (Scrap Register): Indian and Chinese central banks on track to absorb the equivalent of 90% of all mined gold production this year, said ETF Securities in its Precious Metal Weekly.

China, India and central banks absorbed just over 80% of global mine supply in 2 013 according to recent data. Recent data indicates that these three entities alone are likely to absorb the equivalent of nearly 90% of mine production in 2014m said ETF Securities.

Demand from India is likely to increase with the curtailing of the 2013 import restrictions . Central banks purchased 122 tons of gold in Q1 which is essentially unchanged year-on-year and China’s imports of gold from Hong Kong are up 18% year-on-year as of April . On a similar note, sales of US mint silver coins are on pace in 2014 to surpass the record 35 million ounces sold in 2013.

The US mint must purchase its silver from US sources and the amount of silver mined in the US in 2013 was only 35 million ounces. Most of the demand for silver is for industrial purposes and inventories are the lowest in decades – the majority in ETFs.

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Precious Metals Jump As China Unwind Fears Spread
Submitted by Tyler Durden on 06/10/2014 08:38 -0400

While we have become conditioned to accepting the morning meltdown in gold and silver prices that occurs with all too frequent visible-handedness around 8amET, this morning’s mini melt-up is odd for 2 reasons: 1) It’s Tuesday, which means sell everything that’s not stocks; and 2) as we explained here and here, the unwind of the China CFDs could well lead to a notably higher gold (and silver) price as the forward hedges are lifted.

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As we noted here, if we are right that somehow China managed to push gold lower via gold CFDs, then the unwind pushes gold higher:

Here’s how that might work:

In the gold markets, the paper or synthetic ‘demand/supply’ dominates pricing as opposed to the non-precious metals which have at least a grain of fundamental sense to them still

Throughout 2012/2013 – as the gold CFDs were booming, Chinese demand for physical gold was soaring as the price plunged (due to the forward hedging required in the CFD transactions which pressured gold swaps/futures lower and thus dominated pricing)

As CFD unwinds hit en masse, these flows must unwind (cover hedges and ensure the underlying physical is there… and if not buy it)

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China’s "Evaporated" Collateral Scandal Spreads To Second Port
Tyler Durden on 06/10/2014 08:18 -0400

Starting back in May of 2013, we first predicted that China’s "Lehman event", even more troubling than the recent advent of Chinese corporate bankruptcies and perhaps even its housing crisis, namely the "discovery" that behind China’s virtually-infinite rehypothecation machine – the backbone of its shadow funding markets – the amount of actual physical commodities is severely limited and misrepresented, meaning that for every paper claim on an underlying "funding" metal, there are pennies on the dollar, or renminbi as the case may be, of actual underlying collateral. Or, as MF Global’s Jon Corzine may say, "it evaporated." A year later, this too prediction has come true, and overnight none other than Goldman laid out a checklist of just how the recent revelation that not all bonded warehouses at the port of Qingdao, China’s third largest, will become the catalyst to further CCFD unwinding.

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Russia, Ukraine, EU gas talks fail to reach deal
Published time: June 10, 2014 01:16
Edited time: June 10, 2014 04:41

Russia, Ukraine and the EU have failed to reach an agreement during gas talks in Brussels. Negotiations will continue on Tuesday or Wednesday, EU Energy Commissioner Guenther Oettinger said after the fifth round of the three-party talks.

Oettinger specified that there are some remaining open issues and different positions between the parties.

He indicated that talks will continue tomorrow as Ukrainian and Russian delegates talk with their governments and decide if they want to continue the negotiations.

"The talks will continue either Tuesday evening or Wednesday morning," Commission spokeswoman Sabine Berger told Reuters.

Russia, Ukraine and the EU for the first time discussed the price for the supplied Russian gas to Ukraine, including payments for June-August, Russia’s Energy Minister Aleksandr Novak said after the three-party gas talks ended.

Russia has proposed "a very constructive plan, which we believe all stakeholders could and should accept,” Novak said, including the repayment schedules for the remaining debt Ukraine owes Gazprom.

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Jim Sinclair’s Commentary

Would this not have been the US and Saudi a year ago?

Russia, Saudi FMs discuss ways to resolve Syrian crisis

The foreign ministers of Russia and Saudi Arabia have discussed way to settle crisis in Syria by telephone, the Russian Foreign Ministry said, Interfax reports.

"On June 9, a telephone conversation was held between Russian Foreign Minister Sergei Lavrov and the Foreign Minister of the Kingdom of Saudi Arabia Saud Al-Faysal on the Saudi initiative," the ministry said in a statement.

"The conversation focused on several pressing issues of the regional and international agenda. The task of finding a political and diplomatic solution to the Syrian crisis, as well as other conflicts in the regions was in focus," the ministry said.

"When discussing the status and prospects for the Russian-Saudi bilateral relationship, the parties stressed their readiness to intensify it, including the trade, economic and energy cooperation which has a solid potential for growth," the Russian Foreign Ministry said.

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World War II: The Unknown War
Paul Craig Roberts

In my June 6 column, “The Lies Grow More Audacious,” I mentioned that Obama and the British prime minister, who Obama has as a lap dog, just as George Bush had Tony Blair as lap dog, had managed to celebrate the defeat of Nazi Germany at the 70th anniversary of the Normandy invasion without mentioning the Russians.

I pointed out the fact, well known to historians and educated people, that the Red Army
defeated Nazi Germany long before the US was able to get geared up to participate in the war. The Normandy invasion most certainly did not defeat Nazi Germany. What the Normandy invasion did was to prevent the Red Army from overrunning all of Europe.

As I have reported in a number of columns, many, if not most, Americans have beliefs that are notfact-based, but instead are emotion-based. So I knew that at least one person would go berserk, and he did. JD from Texas wrote to set me straight. No one but “our American boys” won that war. JD didn’t know that the Russians were even in the war.

JD had the option of consulting an encyclopedia or a history book or going online and consulting Wikipedia prior to making a fool of himself. But he chose instead to unload on me. JD epitomizes US foreign policy: rush into every fight that you know nothing about and start new ones hand over fist that someone else will win.

It occurred to me that World War II was so long ago that few are alive who remember it, and by now even these few probably remember the propaganda version that they have heard at every Memorial Day and July 4th occasion since 1945. Little wonder that neither Obama nor Cameron or their pitiful speech writers knew nothing about the war that they were commemorating.

Propaganda has always been with us. The difference is that in the 21st century Americans have nothing but propaganda. Nothing else at all. Just lies. Lies are the American experience. The actual world as it exists is foreign to most Americans.

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Posted at 1:04 AM (CST) by & filed under In The News.

My Dear Extended Family,

I am writing you from Dubai on my way to Tanzania. There are three important meetings that I need to attend. Further to that, progress at my business interests in Tanzania require my presence.

I am in touch with the markets, and will be posting daily.

Respectfully,
Jim

 

Obama Unveils Student Loan Debt Bubble Bailout
Tyler Durden on 06/09/2014 13:37 -0400

"The challenges of managing student loan debt can lead some borrowers to fall behind on their loan payments and in some cases even default on their debt obligation," notes the always astute White House… and so it’s time to do something about that… by bailing the bad debtors out with US taxpayers money. As we have been vociferously warning, not only has the student loan debt bubble expanded massively (as the easiest credit substitute for real-world working and unemployment) but delinquencies on the ‘easily available’ credit is soaring with "consequences such as a damaged credit rating, losing their tax refund, or garnished wages." Consequences, as we have been taught now, are not acceptable for this administration and so President Barack Obama will issue an executive action on Monday aimed at making it easier for young people to avoid trouble repaying student loans.

As we noted previously, the amount of heavily delinquent student loans has just hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter.

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So: when does the Fed finally admit i) there is a student loan problem and ii) the only way to solve said problem is to promptly monetize it?

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Jim Sinclair’s Commentary

Big Brother is watching everything.

The U.S. Treasury Department Is Sharing Bank Data With Intelligence Agencies, But With Limits
By Kathleen Caulderwood
June 09 2014 11:54 AM

Even though the U.S. Treasury Department allows intelligence agencies such as the CIA and NSA to access Americans’ banking information, there are a few limits.

At the end of last week, the Treasury described how it does give some bulk information to the National Counterterrorism Center (NCTC), but that it requires agencies to make “best efforts” to tap information only for specific cases and destroy any irrelevant data obtained in error, according to a Bloomberg analysis of a document detailing a 2010 agreement between the Treasury’s Financial Crimes Enforcement Network and the NCTC, which coordinates government anti-terrorism intelligence efforts.

“Make no mistake, financial intelligence is essential to what we do. We cannot map illicit financial networks or identify targets for actions without financial intelligence,” David Cohen, Under Secretary for Terrorism and Financial Intelligence (TFI) at the Treasury, said on June 2, citing feats that include stemming the flow of funds to Al-Qaeda and imposing economic pressure on Iran as examples of success.

“Nonetheless, as President Obama recently emphasized, we must remain sensitive to the risk of government overreach and guard against the possibility of impairing our core liberties in pursuit of security,” he said.

Banks have actually been reporting data to the government for decades in an attempt to curb money laundering, but in recent years the information obtained has been used in terrorism cases.

Every year, U.S. banks file 15 million currency-transaction reports, which involve any movement of $10,000 or more into or out of American accounts. They also file 1.5 million suspicious activity reports to law enforcement agencies.

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Negative Interest Rates Signal Final Currency War-Andy Hoffman
By Greg Hunter On June 8, 2014

Financial analyst Andy Hoffman says the negative interest rates installed last week by the European Central Bank will eventually mean depositors will pay the banks in Europe to hold their money.  Hoffman explains, “I believe that will happen in time . . . inevitably there are only so many tools in the arsenal of the central bank.  They can print money and lower interest rates . . . all that stuff.  Now, the ECB, like the Bank of Japan, and the Fed are at the bottom of the barrel. . . . What they are trying to get them to do is for the banks to take the money out and lend it. . . . Of course, it’s ridiculous because they are not going to lend anything.  They are insolvent.  That’s why the ECB is also reinstating . . . their Long Term Refinancing Operation to liquefy banks like Deutsche Bank and Portugal’s Espirito Santo because they are in big trouble.  So, will it get down to depositors?  Well, you have two choices.  Either eat those losses, and I just mentioned, they are already drowning in insolvency, or pass them along to depositors.  Yes, I think in the coming months, you will see banks with negative deposit rates. . . . I would take my money out.”

So, where do you put money when bank deposits turn negative?  Hoffman, who has 15 years’ experience as a Wall Street analyst, contends, “Some people say gold is a barbarous relic and you can’t eat gold.  One of their favorite reasons why you shouldn’t own it is that it pays no interest.  Now, paying no interest is paying higher than a bank account is going to be paid.  We say at Miles Franklin that gold and silver is not an investment.  It’s your money.  It’s the way you used to think of money.  You didn’t worry that your bank would be insolvent . . . that the bank would be bailed in or bailed out with your taxpayer money.  Now, people are saying is it really safer to have my money in a bank?  Isn’t it safer to have gold and silver?  I think more and more people around the world . . . are going to realize gold and silver are real money.”

Hoffman also warns, “This is a major alarm bell for everyone and a major inflection point.  Now, the central banks have dared go where even the Bank of Japan has not gone, which is to take rates to a negative level.  You can’t go lower than negative.  You go too negative, and people realize it doesn’t work, and people realize there is nothing left.  Let’s face it, the European economy by all quantitative measures is at its low point since the EU started in 1999.  In our lifetime, we have record unemployment and record debt.  What these countries are trying to do is destroy their currencies in what I call the ‘Final Currency War.’  People are anticipating that all countries, including the Fed, are going to be doing their own QE (money printing) programs.  This ‘Final Currency War’ is being fought with currency against currency.  Where it is being lost by all the central banks is against items of real value, which is why food prices are soaring around the world.”  Hoffman goes on to say, “More importantly, it’s items that we need versus items we want.  The fact that an iPhone is going down in price doesn’t matter because you don’t need it.  You don’t need to own a home; you just need shelter over your head.  In things you need like food, energy, education, health care, insurance, you name it, those things are going up in value.  The more they print, the more they are going to drive up prices of things you need.  This is going to cause a further circle of doom.”

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This Will Bring The Entire Global Ponzi Scheme To Its Knees

Today a man who has been involved in the financial markets for 50 years spoke with King World News about what he warns will bring the entire global financial system to its knees.  Below is what John Embry had to say in this fascinating and timely interview.

Eric King:  “John, what did you make of the former Greek prime minister’s comments to Ben Davies?”

Embry  “I’m surprised Papandreou was that candid in answering Ben’s question.  Ben is one of the smartest guys I know and so I was pleased that he was able to get Papandreou to admit that there had already been discussions about creating a new world reserve currency….

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Ron Paul on Obama’s foreign policy: ‘Disobey us and we will bomb you’
Published time: June 09, 2014 15:47

Former White House hopeful and longtime lawmaker Ron Paul says United State President Barack Obama’s recent major foreign policy speech was a “disappointment” to anyone holding out for change from the current administration.

Responding to the president’s recent address at the US Military Academy at West Point, New York, the former congressman for Texas wrote on his website this week that Obama has refused to acknowledge any precedents concerning the impact of American interventionism, and instead plans on continuing a policy that attempts to extend Washington’s reach over the rest of the world, notwithstanding neither hypocrisy nor consequences.

Paul, a staunch anti-interventionist, was reflecting Sunday about the president’s remarks from late last month in which Obama applauded the idea of American exceptionalism and insisted that, “because of American diplomacy and foreign assistance, as well as the sacrifices of our military — more people live under elected governments today than at any time in human history.”

“[W]hat makes us exceptional is not our ability to flout international norms and the rule of law; it is our willingness to affirm them through our actions,” Obama said at the military’s academy’s May 28 graduation ceremony.

Paul, however, said the Obama administration picks and chooses when and where to flout those norms and otherwise involve itself in foreign affairs.

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Posted at 2:04 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Inflation is a friend to gold.

Fed’s Bullard says inflation is now rising
By Greg Robb

WASHINGTON (MarketWatch) – There is evidence that inflation is now "moving higher," said James Bullard, the president of the St. Louis Fed, on Monday. This is a significant shift in Bullard’s outlook. Only last month, Bullard said that inflation was stable and any uptick in price levels was just a forecast. Last year Bullard was very concerned about low inflation, even dissenting from a Fed policy statement over concern the central bank wasn’t doing enough on the issue. "With inflation still below target, albiet rising, and unemployment still high, but falling, the Fed faces a classic monetary policy challenge…how quickly should the committee move to return monetary policy to normal given improving labor market conditions?" Bullard asked. In his prepared remarks, Bullard did not venture an answer his own question about the pace of policy tightening, saying only that the debate is likely to "garner significant attention" as the economy continues to improve. Bullard is not a voting member of the Fed policy committee this year.

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Jim Sinclair’s Commentary

The trend continues.

Russian companies prepare to pay for trade in renminbi
By Jack Farchy and Kathrin Hille

Russian companies are preparing to switch contracts to renminbi and other Asian currencies amid fears that western sanctions may freeze them out of the US dollar market, according to two top bankers.

“Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies and to set up accounts in Asian locations,” Pavel Teplukhin, head of Deutsche Bank in Russia, told the Financial Times.

Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”.

“Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.”

The move to open accounts to trade in renminbi, Hong Kong dollars or Singapore dollars highlights Russia’s attempt to pivot towards Asia as its relations with Europe become strained.

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Posted at 1:52 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

My security officer.

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Jim Sinclair’s Commentary

All this pleases is the black market. The spin should be delivered at the Comedy Shop.

Thailand freezes prices of goods for 6 months

‘Thailand’s Commerce Ministry said on Friday that prices of many consumer goods would be capped for six months to November. The measure is aimed at holding down living costs and boost the economy and confidence. “Producers of 205 categories of necessary consumer goods are happy to freeze prices for six months,” Reuters quoted the ministry’s permanent secretary, Srirat Rastapana, as saying. Rastapana is acting minister under a military government that seized power on May 22. The move was announced after a meeting with companies and trade associations. ‘

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US offering new aid to Georgia, Moldova as West lures ex-Soviet republics toward Europe
June 7, 2014 | 11:14 a.m. EDT

KIEV, Ukraine (AP) — The United States is offering new financial assistance to Moldova (mawl-DOH’-vah) and Georgia, two former Soviet nations the West seeks to lure toward Europe.

Vice President Joe Biden announced the aid in Kiev during meetings with both nations’ presidents on the sidelines of the new Ukrainian president’s inauguration.

Both Moldova and Georgia are pursuing association agreements with the European Union amid a regional crisis over Russia’s actions in Ukraine.

The White House says an additional $8 million will help Moldova "advance its European aspirations." The U.S. is also sending $5 million to Georgia to help economically vulnerable people living near Russian-controlled breakaway regions.

The aid follows President Barack Obama’s announcement that the U.S. will work to boost the military capacity of non-NATO countries near Russia, including Moldova and Georgia.

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Posted at 1:45 PM (CST) by & filed under Jim's Mailbox.

Jim,

The US/EU upping the pressure on Gazprom/Russia just ahead of Tuesday’s drop dead date for settling the Ukie NG prices.

CIGA Craig

Bulgaria halts work on gas pipeline after US talks
8 June 2014 Last updated at 17:30

Bulgaria is to halt work on its Russian-backed South Stream gas pipeline following criticism from the EU and US.

Prime Minister Plamen Oresharski announced that he had "ordered all work to be stopped".

"We will decide on further developments following consultations with Brussels," he said after meeting with US senators.

The Gazprom-financed pipeline would ship gas to western Europe via the Balkans, thus avoiding Ukraine.

The European Commission had sent Bulgarian authorities a letter at the start of the month, asking them to suspend work on the project.

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Jim,

I trust what ITAR-Tass says more than any of what our media has to say. CIGA Larry

Gazprom signs agreements to switch from dollars to euros
June 06, 16:07 UTC+4

MOSCOW, June 06./ITAR-TASS/. Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company’s head Alexander Dyukov told a press conference.

"Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on," he said.

Dyukov said nine of ten consumers had agreed to switch to euros.

ITAR-TASS reported earlier that Gazprom Neft considered the possibility to make payments in roubles under contracts. Some contracting parties agree to switch from dollars to euros and Yuans.

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