Posted at 7:54 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Step by step, the settlement dollar is challenged.

Beijing, Seoul agree to direct trade in national currencies
4 July, 17:26

China designated a clearing bank in Seoul for yuan transactions in South Korea on Friday, coinciding with a visit by President Xi Jinping, as Beijing promotes greater use of its currency overseas, AFP reports.

China’s central bank has authorised the Bank of Communications, the country’s fifth largest lender, to undertake yuan clearing business in the South Korean capital, the People’s Bank of China (PBoC) said in a statement.

The announcement came as Chinese President Xi Jinping wrapped up a state visit to South Korea on Friday. China is seeking to make the yuan – also known as the renminbi – used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.

A joint communique endorsed Thursday by Xi and his South Korean counterpart Park Geun-Hye also pledged to strengthen efforts to launch direct trading between the yuan and the won.



Jim Sinclair’s Commentary

If you get away with 0.03% why not 30% next time?

Spain Issues Retroactive 0.03% Tax on Bank Deposits to "Boost Economic Growth and Job Creation"

Via translation from Libre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation.

Guru Huky correctly labeled the tax for what it is "More than a tax, this looks like a mini seizure of deposits. Someone likely needs a few million and to balance the books."


Jim Sinclair’s Commentary

A weakening petro dollar.

UPDATE 1-Total CEO calls for bigger euro role in oil payments
Sat Jul 5, 2014 7:12am EDT

(Reuters) – Oil major Total’s chief executive said on Saturday the euro should have a bigger role in international trade although it was not possible to do without the U.S. dollar.

Christophe de Margerie was responding to questions about calls by French policymakers to find ways at EU level to bolster the use of the euro in international business following a record U.S. fine for BNP.

"Doing without the (U.S.) dollar, that wouldn’t be realistic, but it would be good if the euro was used more," he told reporters.

"There is no reason to pay for oil in dollars," he said. He said the fact that oil prices are quoted in dollars per barrel did not mean that payments actually had to be made in that currency.

French Finance Minister Michel Sapin said on Thursday that euro zone finance ministers would discuss ways of boosting use of the euro in international trade in their next monthly meeting on Monday.

"It would be a way to protect businesses when, outside of U.S. territory, they carry out transactions that are perfectly legal in the country they belong to," he said.


Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit
Tyler Durden on 07/07/2014 10:03 -0400

As we remarked two weeks ago, when observing the recent developments surrounding the suddenly all-important South Stream gas pipeline bypassing Ukraine entirely, and instead traversing the Black Sea before crossing Bulgaria, Serbia, Hungary and terminating in the Austrian central European gas hub of Baumgarten, we said that all of Europe is suddenly focused on if and how Russia will make headway with a project that may be the most important one for not only Europe’s energy future but the impact Russia will continue to have over Germany et al. And of course, Ukraine. Because should Russia find a way to completely bypass Kiev as a traditional transit hub for Russian gas, it would make the country, and its ongoing civil war, completely irrelevant not only for Russia, but worse, for Europe, the IMF, and Ukraine’s staunch western "supporters and allies" as well.


Showing just how Europe perceives the Russian "South Stream" threat was a comment from a recent NYT article, in which Günther Oettinger, Europe’s top energy official, was quoted as saying that the Ukraine crisis “has slowed down our progress on South Stream considerably… We can’t just give in to the Russians every time.” Alas, since the Russians control the all important gas, Europe has zero choice.

This explains why even as the western media finally remembered over the weekend there was a Ukraine civil war going on following an advance by the Kiev army to retake some rebel strongholds in the Donbas region, with some wondering what if anything Putin would do in retaliation, what Putin, or rather his envoy Sergei Lavrov were actually doing, was completely ignoring the Ukraine situation (where the West has long since conceded the loss of Crimea to the Kremlin) and instead focusing on securing the successful launch of the South Stream (remember: the second South Stream goes online, Ukraine becomes irrelevant). And since Russia already signed another historic agreement with Austria in June, which positioned the AAA-country (with some surprising emerging bank troubles subsequently) squarely against its fellow European peers, it was the turn of the other South Stream countries, namely Bulgaria.


China opens HK$100 billion door to German investors
The agreement, which allows investments in both Shenzhen and Shanghai, is expected to help both those markets as well as the yuan’s globalisation
PUBLISHED : Monday, 07 July, 2014, 3:38pm
UPDATED : Monday, 07 July, 2014, 6:57pm
Cary Huang

China will allow investors in Germany to spend up to 80 billion yuan (HK$100 billion) in its two stock exchanges — a move that will help boost those fragile markets and further internationalise the Chinese currency.

In a joint press conference with visiting German Chancellor Dr Angela Merkel, Premier Li Keqiang also announced that six documents in economic cooperation would be signed between the two governments during her visit.

Investors in Germany will be allowed to participate in both the Shanghai and Shenzhen bourses through the Renminbi Qualified Foreign Institutional Investor scheme, which was introduced in 2011.

A few other countries, including Britain and France, have a similar arrangement.

Last week, China granted 80 billion yuan to investors in South Korea under the programme during President Xi Jinping’s visit. Analysts said the move would help China’s struggling stock market, and yuan-denominated investment will help the internationalisation of yuan


Virtual Economy’s Phantom Job Gains Are Based on Statistical Fraud
And More Fraud Is in the Works
Paul Craig Roberts

Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.

In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams ( wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.

Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number.

The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey. The U.3 rate automatically declines as people who have been unable to find jobs cease trying to find one and thereby cease to be counted as unemployed.

There is a second official measure of unemployment that includes people who have been discouraged for less than one year. That rate, known as U.6, is seldom reported and is double the 6.1% rate.


Jim Sinclair’s Commentary

How to make friends and influence people.

Merkel says U.S spying allegations are serious
By Andreas Rinke
BEIJING Mon Jul 7, 2014 10:38am EDT

(Reuters) – German Chancellor Angela Merkel said on Monday allegations that a German man had worked as a double agent for U.S. intelligence were serious and, if true, were a clear contradiction of what cooperation between partners is supposed to be about.

The case risks further straining ties with Washington, which have been sorely tested by revelations last year of large-scale snooping on Germany by the U.S. National Security Agency (NSA).

"If the reports are correct it would be a serious case, "Merkel told a news conference in Beijing, standing next to

Chinese Premier Li Keqiang.

"If the allegations are true, it would be for me a clear contradiction as to what I consider to be trusting cooperation between agencies and partners."

The White House and State Department have so far declined to comment on the arrest of a 31-year-old employee of Germany’s BND foreign intelligence agency.

According to intelligence and political sources, the man admits passing documents to a U.S. contact.


Jim Sinclair’s Commentary

Economic war takes many faces.

Russia approves creation of BRICS foreign exchange fund
July 7, 2014 Alexei Lossan, RIR

The Russian Government has approved a draft agreement on the creation of a $100 billion fund by Brazil, Russia, India, China, and South Africa to steady currency markets.

The Russian Government signed a draft agreement on the creation of a $100 billion pool of currency reserves that the BRICS countries are forming to guard against financial shocks. According to the document, the countries’ dollar reserves will remain on the balance sheets of their central banks. However, these reserves can be made available at the request of one of the parties.

Vasily Yakimkin, a senior lecturer at the Russian Presidential Academy of National Economy and Public Administration (RANEPA), says two substructures are being created under the project. The stabilisation fund with capital of $100 billion would be a direct competitor with the IMF.  China would contribute $41 billion, Brazil, Russia and India, $18 billion each and South Africa $5 billion.  The second substructure would be a new development bank will come into being with a start-up capital of $50 billion, with each country contributing $10 billion. “As expected, the agreements on the creation of these structures will soon be signed at the summit of the heads of the BRICS countries in Brazil on July 15,” Yamikin says. “The structures will start functioning starting in 2015.” He adds that each of the BRICS countries wants to host the headquarters of the new institution.


The Stunner From Today’s Round Table Debate To "Fix" The London Gold Fix
Submitted by Tyler Durden on 07/07/2014 15:54 -0400

As those following the saga of the rigged for decades and soon to be history (in its curent incarnation) London gold fix know, today was the date when the World Gold Council held its "Modernising the London Gold Fix: IOSCO and beyond" round table session.

Specifically, as the WGC explained, "The World Gold Council will be holding a round table debate on the reform of the London Gold Fix and the modernisation of the London gold market. Many aspects of the existing price benchmark process are viewed favourably by market participants, however, other elements are in need of reform if IOSCO compliance is to be achieved. The World Gold Council is seeking views from both users and service providers on the optimal characteristics of any reformed system. We will also debate whether IOSCO compliance is enough or should the industry be seeking to modernise more than just the price benchmark?"

Among the various panels that took place were the following:

What do users want to see in a reformed benchmark?

This session will ask the users of the London Gold Fix what they would like to see in terms of reform. What aspects of the Gold Fix are desirable and what aspects should be changed? What are the optimal characteristics of a reformed system?

Market-led options for achieving IOSCO compliance

This session will discuss options for a reformed or alternative price setting mechanism. It will discuss existing alternative price-setting mechanisms and the pros and cons of each. Service providers will be asked to share their views on any new benchmarks and supporting platforms under consideration that may have arisen due to developments in the silver industry.


Posted at 11:40 PM (CST) by & filed under In The News.

By "Punishing" France, The US Just Accelerated The Demise Of The Dollar
Tyler Durden on 07/04/2014 15:04 -0400

Not even we anticipated this particular "unintended consequence" as a result of the US multi-billion dollar fine on BNP (which France took very much to heart). Moments ago, in a lengthy interview given to French magazine Investir, none other than the governor of the French National Bank Christian Noyer and member of the ECB’s governing board, said this stunner at the very end, via Bloomberg:


Here is the full google translated segment:

Q. Doesn’t the role of the dollar as an international currency create systemic risk?

Noyer: Beyond [the BNP] case, increased legal risks from the application of U.S. rules to all dollar transactions around the world will encourage a diversification from the dollar. BNP Paribas was the occasion for many observers to remember that there has been a number of sanctions and that there would certainly be others in the future. A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles. China has decided to develop the renminbi as a settlement currency. The Bank of France was behind the popular ECB-PBOC swap and we have just concluded a memorandum on the creation of a system of offshore renminbi clearing in Paris. We have very strong cooperation with the PBOC in this field. But these changes take time. We must not forget that it took decades after the United States became the world’s largest economy for the dollar to replace the British pound as the first international currency. But the phenomenon of U.S. rules expanding to all USD-denominated transactions around the world can have an accelerating effect.



Ukraine army regains control of Slavyansk
President Petro Poroshenko orders national flag to fly over rebel stronghold after armed pro-Russian separatists flee
Chris Johnston and agencies, Saturday 5 July 2014 07.13 EDT

Ukrainian troops have regained control of the key eastern city of Slavyansk from pro-Russian rebels in what could mark a turning point in the country’s three-month battle to maintain its independence.

The city, which houses one of Ukraine’s largest weapons storage facilities, fell to the insurgents on 6 April and had become a stronghold for pro-Russian separatists.

Petro Poroshenko, who was elected president in late May after vowing to quickly resolve Ukraine’s worst crisis since independence in 1991, ordered his forces to raise the national flag over the city.

"Local residents are handing over [to government forces] the weapons abandoned by the rebels," he said. "This is the disarmament I was talking about when I unveiled my peace plan for resolving the situation in the east."

Government forces began a fresh offensive against the rebels earlier this week after Poroshenko allowed a ceasefire agreement to lapse. The separatists lost one tank and one other armoured vehicles as they tried to break through Ukrainian lines, prompting them to flee Slavyansk to Kramatorsk, 12 miles south of the city.


Even With Sanctions, U.S. Sales to Russia Hit New High
By Ian Talley
Jul 3, 2014 12:34 pm ET

So much for those sanctions.

U.S. efforts to penalize Russia for its actions in Ukraine appear to have done little to stem exports of U.S. goods to the country.


The U.S. announced targeted sanctions against several Russian companies and individuals in March, but U.S. trade data published Thursday shows exports to the country were the highest on record at $1.2 billion in May.

The sanctions, organized with Europe and other major industrialized nations over Moscow’s alleged actions to destabilize its former client state, sparked investor flight out of Russia, led the ruble to tumble and pushed the economy into a recession. Russian markets have since recovered somewhat, but investors have been wary of an escalation in the sanctions battle.

Demand for U.S. products apparently hasn’t been hit, however, and in fact jumped 21% from the previous month.

The data also showed signs that demand is picking up in two of America’s largest export markets, Europe and China, where weak growth has hobbled the U.S. and global recoveries. Exports to the European Union were up nearly 4%, driven by a surge in buying from the U.K., the Netherlands, Spain and Ireland.


Posted at 12:52 PM (CST) by & filed under In The News.



Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- Payroll Gains Were Bloated by Seasonal-Factor Shenanigans; Unemployment Numbers Remained Inconsistent, Not Comparable Month-to-Month
- June Unemployment: 6.1% (U.3), 12.1% (U.6), 23.1% (ShadowStats)
- Economy Remains in Serious Trouble
- Trade Deficit Should Hammer Second-Quarter 2014 GDP, Subtracting In Excess of 1.0% from Initial Headline Growth Estimate
- Revisions to Real Construction Spending Showed Further Downside to First-Quarter GDP; May Detail Suggested a Negative Contribution to Second-Quarter GDP Growth

"No. 638: June Labor Data, May Trade Deficit, Construction and Median Household Income"


British MPs urge watchdog to probe price-rigging in gold market
By Sam Fleming and Daniel Schäfer in London
July 2, 2014 6:48 pm

British MPs have called on the UK’s financial watchdog to investigate allegations of price-rigging in the London gold market after a senior regulatory executive said that there may have been co-ordinated attempts to manipulate a crucial benchmark.

Members of the influential parliamentary Treasury select committee pressed the Financial Conduct Authority to act after hearing evidence on Wednesday from gold market analysts who believe there is scope to rig the daily price-setting process and that it has probably been exploited frequently.

“If this evidence is even half true, the regulators need to find a way of acting much more quickly,” Andrew Tyrie, chairman of the committee said. “Were they to conclude that their powers are inadequate, they should tell parliament.”

The London gold fix is a twice-daily auction process, controlled by four banks, that is used by everyone from central banks to jewellers and gold miners to set a reference price for bullion. It came under renewed scrutiny this May when the FCA fined Barclays £26m for price rigging by an options trader.

The watchdog so far has not launched a broader probe into the gold fix’s panel members – which includeBarclays, HSBC, Scotiabank and Société Générale and formerly Deutsche Bank.


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

Six months after marijuana legalization: Colorado tax revenue skyrockets as crime falls
Thursday, July 3, 2014 9:40 EDT
By Daniel Wallis

DENVER (Reuters) – At the Native Roots Apothecary, a discreet marijuana shop in a grand old building in Denver’s busy 16th street shopping mall, business is so brisk that customers are given a number before taking a seat to wait their turn.

There are young men in ball caps, nervous-looking professionals in suits, and the frail and elderly. Staff say customers have been flocking to their outlets since Colorado voted to allow recreational pot use for adults from January.

Six months on, Colorado’s marijuana shops are mushrooming, with support from local consumers, weed tourists and federal government taking a wait-and-see attitude.
Tax dollars are pouring in, crime is down in Denver, and few of the early concerns about social breakdown have materialized – at least so far.

“The sky hasn’t fallen, but we’re a long way from knowing the unintended consequences,” said Andrew Freeman, director of marijuana coordination for Colorado. “This is a huge social and economic question.”
Denver, dubbed the “Mile High” city, now has about 340 recreational and medicinal pot shops. They tout the relaxing, powerful or introspective attributes of the crystal-encased buds with names like Jilly Bean, Sour Diesel and Silverback Kush.


The jobs report knows: Americans aren’t planning to take a summer vacation
With just 15% of Americans planning to take an actual vacation, hiring at US hotels and restaurant slows compared with last year
Posted by Jana Kasperkevic
Thursday 3 July 2014 19.55 BST

Buried within Thursday’s jobs report was an interesting titbit: US hotel and restaurants are not preparing for the summer like they did last year.
Economists and lawmakers view the jobs report as good news. The US economy gained 288,000 jobs, and the unemployment rate dropped to 6.1%. One economist even said the report is "as good an excuse as any to enjoy the weekend’s fireworks." Yet as Americans struggle to make do with their stagnant wages and the bills that never seem to stop piling up, one thing has to go: vacations. So as businesses anticipate a slower summer, thousands of restaurant and hotel workers are left without work.

While the leisure and hospitality sector added thousands of jobs these past few months, the overall number is much lower than last year. In the three months leading up to June last year, according to a 2013 employment situation report, about 204,000 jobs were created for hotel and restaurant workers. That number was later adjusted to 137,000, according to the US Bureau of Labor Statistics. The June 2014 report released on Thursday showed 116,000 jobs created by the hotels and restaurants in the past three months – 21,000 fewer than last year.

Whether it’s lack of business in the months leading up to the summer, or fewer reservations for the months ahead, firms are expecting a quieter season.

This should come as no surprise. The first few months of 2014 saw the US economy shrink at a rate not seen since the 2008 financial crisis. While the 2.9% contraction in GDP might have come as a surprise to some economists, average Americans have been tightening their wallets for months.

Trips to the supermarket are getting more and more expensive, with prices of meat up 7.7% and dairy up 4.2%. The monthly rent checks are not shrinking, either. In fact, Goldman Sachs recently noted that rent prices are bound to keep going up in the next few months. Yet the average hourly earnings went up by just 23¢ since the beginning of the year.


China plans investment bank to break World Bank dominance
Published time: June 26, 2014 13:50 
Edited time: June 27, 2014 14:22

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.



June Full-Time Jobs Plunge By Over Half A Million, Part-Time Jobs Surge By 800K, Most Since 1993
Submitted by Tyler Durden on 07/03/2014 09:29 -0400

Is this the reason for the blowout, on the surface, payroll number? In June the BLS reports that the number of full-time jobs tumbled by 523K to 118.2 million while part-time jobs soared by 799K to over 28 million!


Looking at the breakdown of full and part-time jobs so far in 2014, we find that 926K full-time jobs were added to the US economy. The offset: 646K part-time jobs.


Something tells us that the fact that the BLS just reported June part-time jobs rose by just shy of 800,000 the biggest monthly jump since 1993, will hardly get much airplay today. Because remember: when it comes to jobs, it is only the quantity that matters, never the quality.


… just in case there is any confusion why there is zero real wage growth (for two months in a row now), and why it will take a few more months before experts start tossing the word stagflation a little more casually.


Posted at 2:27 PM (CST) by & filed under In The News.

China plans investment bank to break World Bank dominance
Published time: June 26, 2014 13:50
Edited time: June 27, 2014 14:22

China is moving forward with a plan to create its own version of the World Bank, which will rival institutions that are under the sway of the US and the West. The bank will start with $100 billion in capital.

The Asian Infrastructure Investment Bank (AIIB) will extend China’s financial reach and compete not only with the World Bank, but also with the Asian Development Bank, which is heavily dominated by Japan. The $100 billion in capital is double that originally proposed, the Financial Times (FT) reported.

A member of the World Bank, China has less voting power than countries like the US, Japan, and the UK. It is in the ‘Category II’ voting bloc, giving it less of a voice. In the Asian Development Bank, China only holds a 5.5 percent share, compared to America’s 15.7 percent share and Japan’s 15.6 share.

At the International Monetary Fund, China pays a 4 percent quota, whereas the US pays nearly 18 percent, and therefore has more influence within the organization and where loans go.

“China feels it can’t get anything done in the World Bank or the IMF so it wants to set up its own World Bank that it can control itself,” the FT quoted a source close to discussions as saying.

To date, 22 countries have expressed interest in the project, including oil-rich Middle Eastern nations, the US, India, Europe, and even Japan, the FT reported.


Violent clashes as Palestinians demand justice after teenager’s body found
Discovery of body, thought to be Mohamed Abu Khdeir, prompts claims he was killed by Jewish extremists in revenge attack
Peter Beaumont in Shuafat, East Jerusalem
The Guardian, Wednesday 2 July 2014 14.58 EDT

Tensions between Israelis and Palestinians escalated further on Wednesday, with the discovery of a body believed to be that of a 17-year-old Palestinian boy who had been abducted hours earlier from an Arab neighbourhood of East Jerusalem.

The badly burned body, thought to be that of Mohamed Abu Khdeir, was found in an area of forest to the west of the city a day after the funeral of three Israeli teenagers who were kidnapped and killed three weeks ago. The discovery prompted widespread accusations from Palestinians that he had been murdered by Jewish extremists in a revenge attack.

Most prominent to make that charge was Palestinian president Mahmoud Abbas who accused extremist Israeli settlers of "killing and burning a little boy" and demanded Israel "hold the killers accountable … [and] mete out the strongest punishment against the murderers if it truly wants peace".

While the identity and motive of the kidnappers remain unclear, Palestinians were quick to blame "settlers" for the killing – allegations that were not immediately refuted by Israeli political figures.

As news of Khdeir’s disappearance spread, hundreds of Palestinian youths fought running battles for hours with Israeli police who fired plastic coated rounds and stun grenades as pillars of smoke billowed from burning tyres.


History in the making: Is Europe shifting allegiance to Russia?
Published July 2, 2014,
By Zine Larbaoui

A country in the heart of Europe openly defies its partners by aligning with Putin. While European leaders were considering the possibility of imposing additional sanctions against Russia, Austria has rolled out the red carpet Tuesday for…Russian President Vladimir Putin.

On the sidelines of the visit, Austria signed a score of bilateral cooperation with Russian areas such as infrastructure, communications, medicine, innovation …

In addition, the Austrian energy company OMV has also signed an agreement with the Russian gas company Gazprom to confirm its participation in the construction of a gas pipeline, the South Stream. The 2,446 kilometers long pipeline would provide this country in the heart of Europe, Russian gas, bypassing Ukraine, plagued by serious political unrest for several months. Its route crosses the Black Sea south of the Crimea and Bulgaria, Serbia, Hungary and Slovenia, to arrive at Baumgarten, Austria (see map below), where the gas will be dispatched to their client states in central Europe, including Germany.


BOT stresses growing role of yuan
Erich Parpart
The Nation

BANGKOK: — The Chinese yuan is becoming more and more important in world trade, so investors are well advised to use the currency in future trade and investment to lower the risk of fluctuations, the Bank of Thailand said yesterday.

Chantavarn Sucharitakul, assistant governor for the Financial Markets Operations Group, said the use of the yuan as a trade and investment currency was noticeably increasing because of the size and growth potential of the Chinese economy and Beijing’s policy to encourage the use of the yuan in world trade.

"Investors have more interest in using the yuan to trade and invest, as seen by the move of the United Kingdom, which has offered itself as the centre for trade that uses the yuan, or the Russians, who have agreed to use domestic currencies for their bilateral trade," she said.

The use of a domestic currency for transactions between countries will provide more options in trading for other regions.

There are many factors that are needed for a currency to become a proper international currency, such as its flexibility, robust cash flow within the capital market and debt in the financial market in order to keep the cost of transactions as low as possible.



Russia Delivers 2nd Batch of Jets To Iraq As USA Unloads 4000 Hellfire Missiles
Tyler Durden

The battle for favoritism among the ‘apparent’ leaders in Iraq continues. Russia just delivered the second batch of Sukhoi fighter jets (which will be flown by Iraqi pilots and "are ready to provide air support to the armed forces"), and the US unloaded 4,000 additional Hellfire missiles to support Iraq’s fight against the Islamist insurgents. While this morning the intelligentsia of mainstream media proclaimed "the situation in Iraq is calming down" predicated on the fact that oil prices were lower and stocks at record highs, we suspect the additional war material  to Iraq will do nothing but increase the determination of the "Islamic State" to increase its Caliphate.

As Bloomberg reports, the proxy war favoritism continues in Iraq…

The U.S. readied to sell Iraq thousands of missiles and a second batch of Russian Sukhoi combat jets arrived in Baghdad as foreign powers moved to help Iraqi forces battle an al-Qaeda offshoot.

The U.S. State Department has told lawmakers informally that the Obama administration wants to sell Iraq more than 4,000 additional Hellfire missiles to support its fight against the Islamist insurgents, according to people familiar with the plan.


Paul Craig Roberts – The Entire U.S. Gold Hoard Is Now Gone
June 27, 2014

Today former US Treasury official, Dr. Paul Craig Roberts, told King World News that the entire United States gold hoard, including gold supposedly held at the Fed for other countries, is now gone.  This is very bad news for Germany and other countries which have trusted the Fed to safely store their gold.  Below is what Dr. Roberts had to say in this remarkable interview.

Eric King:  “Dr. Roberts, I know you’ve seen the report on Bloomberg about Germany (all the sudden) supposedly being happy with storing their gold at the New York Fed.  It seemed to be a propaganda piece.  What was your take when you saw that?”

Dr. Roberts:  “Clearly what that means is that the United States doesn’t have the gold and cannot deliver it — and has forced Germany to come to terms with that, and to stop asking for it since it can’t be delivered….


Posted at 3:08 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We are looking for your feedback as to where to hold our next Q&A Sessions. We are currently looking at holding sessions in the following cities:

  • August 2nd – Hamptons NY, or Kentucky/Tennessee.
  • Mid to end of September – St Louis, MO or Nashville, TN.
  • Mid October – Jackson Hole, WY or Sioux Falls, SD.
  • Mid November – San Francisco, CA.

If you are interested in attending any of these sessions, please email us at [email protected] and let us know in the subject line which session you are interested in attending.

Thanks for your feedback and we look forward to seeing you there!

Dan Duval
JSMineset Editor

Posted at 2:54 PM (CST) by & filed under In The News.

Ukraine’s putsch regime will be a burden to EU – expert

Discussing the impact of the free-trade agreements signed by the EU outgoing leaders with Ukraine, Georgia and Moldova at the EU summit in Brussels last Friday. Who stands to gain and who stands to lose from the step hailed as an outstanding achievement by the parties to the agreements? Jurgen Elsässer, political analyst and Editor-in-Chief of the monthly Compact, based in Germany shared his opinion on the issue with the Voice of Russia.

It is an achievement in a way that they could convince the leaders of these countries to sign a treaty, which will be a kind of suicide for these countries, because the economies of these three countries are too weak to resist the onflow of the heavy economies of the Central and Western Europe. But on the other side, it is a failure of the European diplomacy, because it will deteriorate the situations in these countries and this can be a burden for the foreign policy and for the neighbourhood in the east periphery of the EU.

But what kind of obligations does the EU take on under these agreements?

The EU has to open its market for the export of these countries. But at the same time, the agreement will allow the EU observers to interfere in the internal affairs, in the legislation of these countries and, therefore, erect the kind of soft dictatorship in the economic affairs and legislation in these countries.

And this is irreversible, as far as I understand, isn’t it?

As the examples of other countries in the Balkans and elsewhere have shown, this cannot be reversed. So, the sovereignty of these countries is undermined by the EU soft power.

As you’ve mentioned the Balkans, I remember that when the issue of Serbia closing a similar kind of agreement was on the agenda, the EU made a condition for Belgrade to put its domestic situation into order. So, how come they have signed this kind of agreement with Ukraine, a country where civil war is under way?



Fighting steps up after Ukraine calls end to truce
Forces use artillery against pro-Russia rebels
By Gregory L. White
July 1, 2014, 7:24 a.m. EDT

MOSCOW — Ukrainian forces used aircraft and artillery against pro-Russian separatists in the east of the country early Tuesday, as fighting intensified after President Petro Poroshenko declared an end to a 10-day unilateral cease-fire that had failed to stop the violence in the region.

“The active phase of the antiterrorist operation resumed this morning,” Parliament Speaker Oleksandr Turchynov told legislators in Kiev on Tuesday. “Our armed forces are striking the bases and staging areas of the terrorists.”

The decision to use the army represents a gamble by Poroshenko that Russia won’t send in its troops, massed for months on the other side of the border, and that Kiev’s ragtag forces can oust the increasingly well-armed militants.

Fighting was reported in several areas across the region, including at posts along the Russian border that Ukrainian forces had lost to separatists in recent weeks, as well as near the international airport in Donetsk, the region’s largest city. Separatist officials also confirmed the fighting had picked up across the region.

Four civilians were killed and five wounded in the city of Kramatorsk, near the rebel stronghold of Slovyansk, when a bus was hit by shell fire early Tuesday, officials from the regional government in Donetsk said, according to the Interfax news agency. It wasn’t clear which side fired the shots. A military spokesman said one serviceman had been killed and 17 wounded in the last 24 hours in the region, Interfax reported. Shelling overnight also brought down the television tower near Slovyansk, officials said.


Bodies of Missing Israeli Teens Found in West Bank Field
Karl Vick/Tel Aviv

After 18 days of searching, Israeli soldiers find the remains of the three kidnapped youths, not far from where they were last seen

The bodies of three Israeli teenagers kidnapped while hitchhiking this month were found on Monday afternoon in a field a few miles south of where they were last seen, the Israeli military said.

The discovery brought to a tragic close the intense search and nationwide vigil for Eyal Yifrach, 19; Naftali Fraenkel and Gilad Shaer, both 16, all students at Jewish religious schools located on the occupied West Bank. It also shifted to the foreground the question of how Israel will respond to the deaths, which Prime Minister Benjamin Netanyahu blames on Hamas, the militant Islamist group. After news that the bodies had been found in an open field north of Hebron, Netanyahu summoned senior ministers to an emergency meeting of the so-called security cabinet.

Netanyahu made some brief remarks at the beginning of the meeting. “They were kidnapped and murdered in cold blood by animals,” he said, according to Haaretz. “In the name of the whole of Israel, I ask to tell the dear families — to the mothers, the fathers, the grandmothers and the grandfathers, the brothers and sisters — our hearts are bleeding, the whole nation is crying with them. We will bring the boys to be buried according to Jewish rites.”


Jim Sinclair’s Commentary

Retirement account holders take notice.

Wyden Targets Tax Changes for $9 Billion Highway Infusion
By Laura Litvan and Richard Rubin  Jun 24, 2014 3:27 PM ET

The Senate Finance Committee this week will begin consideration of a $9 billion infusion to keep the U.S. Highway Trust Fund running through the end of the year.

The legislation by Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, will pay for the proposal by raising a heavy-vehicle use tax and making other tax and compliance changes related to retirement accounts and mortgage interest. He plans to bring the bill before his committee on June 26.

Current funding expires at the end of September. The Department of Transportation is projecting the part of the Highway Trust Fund that pays for road and bridge projects will run short of cash in July or August as fuel taxes haven’t kept pace with construction needs. Wyden said he’s trying to avoid the transportation equivalent of a government shutdown.

“In a fragile economy, I don’t want to take that risk,” he told reporters.


Thumbing Its Nose at U.S., Russia Sends Military Experts to Iraq
The Atlantic Wire
By Adam Chandler June 29, 2014 11:51 AM

After the United States delayed a sale of fighter jets to Iraq, Russia sold planes to the Iraqi government. Now they’ve sent military experts to Baghdad.

Gen. Anwar Hama Ameen, who heads the Iraqi air force, explained that the secondhand jets would quickly be deployed in the government’s fight against the Sunni extremist group ISIS.

In the coming three or four days the aircraft will be in service to support our forces in the fight.”

Ameen also said that the presence of Russian military experts would be short-lived. Nevertheless, here’s how Rod Nordland characterized the development:

The move was at least an implicit rebuke to the United States, where concerns in Congress about the political viability of Prime Minister Nuri Kamal al-Maliki’s government have stalled sales of advanced jet and helicopter combat planes to Iraq."


Jim Sinclair’s Commentary

The Yuan internationalizes.

China to Set Yuan Clearing Banks in Luxembourg, Paris
By Dow Jones Business News, June 29, 2014, 11:55:00 PM EDT

In its continued push to make the yuan a global currency, China’s central bank said Sunday it plans to designate clearing banks for its currency in Paris and Luxembourg, as the two financial centers battle with London to become the leading European offshore yuan-trading city.

The People’s Bank of China announced the move in two separate statements Sunday. It didn’t say when it would designate the clearing banks.

The French and Luxembourg central banks said Sunday they had signed agreements with PBOC allowing for greater cooperation in the oversight of their domestic yuan market.

The weekend moves are the latest salvos in the race to win a major share of business in cross-border transactions in the Chinese currency. Singapore and Sydney are also vying for a significant share of the global yuan market, which is expected to expand rapidly along with China’s fast-growing economy.

On June 18, the PBOC appointed China Construction Bank Co., one of the country’s top-four state-owned banks, to clear yuan-related transactions in London. It became the first yuan clearing bank in a European country.


Posted at 1:00 PM (CST) by & filed under In The News.

Italian government explains how we can all become $250,000 richer
by Simon Black on June 30, 2014
Rome, Italy

As of today, I am $250,000 richer than I was last week. And thanks to the magic of economics, I didn’t even have to do anything.

You see, following the lead of the Italian and British governments, I’ve taken the liberty of ‘rebasing’ my net worth.

In their case they decided to include proceeds from hookers, coke addicts, and meth heads in their GDP calculations, thereby increasing the sizes of their economies overnight.

So the other day in Singapore as I was filling out an application for a new account at a private bank, there was a box where they wanted me to write in my net worth.

I decided that I would include the "street value" of some of my vital organs; after all, a kidney in a wealthy country like Singapore can fetch over $250,000.

(There was actually a case back in 2008 of a retail tycoon in Singapore who was arrested for trying to buy a kidney for roughly USD $250,000…)

The banker didn’t find my logic particularly convincing, something about ‘not being able to get that past compliance…’ Yet amazingly the market has given these bankrupt European countries a pass on their equally ridiculous idea.


Jim Sinclair’s Commentary

The enemy of my enemy is my friend?

Israeli leader calls for independent Kurdistan
By Associated Press June 29 at 4:22 PM

TEL AVIV, Israel — Seizing on the mayhem in Iraq, Israel’s prime minister on Sunday called for the establishment of an independent Kurdistan as part of a broader alliance with moderate forces across the region, and asserted that Israel would have to maintain a long-term military presence in the West Bank to keep a jihadi juggernaut from powering its way to the outskirts of Tel Aviv.

Prime Minister Benjamin Netanyahu laid out his positions in a policy speech that marked one of the most detailed responses by a world leader to the lightning territorial gains made in recent weeks by Sunni extremists fighting in Iraq, and it underscored how profoundly events can ripple across an increasingly interlocked Middle East.

Netanyahu suggested that the territorial gains made this month by the Al Qaida-inspired jihadi group called the Islamic State in Iraq and the Levant could endanger neighboring Jordan, with which Israel has a peace agreement it considers vital to its security. The group has recently captured wide swaths of Iraq including the important cities of Mosul and Tikrit and several border crossings with Syria, and on Sunday formally declared a caliphate, or an Islam-ruled state, on territory it controls in both countries.

The offensive by the Islamic State’s militants “can be aimed toward Jordan in the shortest time,” Netanyahu warned. Without stating outright that the Western-leaning Jordanian monarchy could fall, Netanyahu suggested as much by saying that the new developments meant a need for Israel to hold on to the West Bank border with the Hashemite kingdom, along the Jordan River.

“We must be able to stop the terrorism and fundamentalism that can reach us from the east at the Jordan line, and not in the suburbs of Tel Aviv,” he said, implying that from Jordan radicals could sweep through the West Bank, whose borders reach within 20 miles (30 kilometers) of Tel Aviv. The metropolis of some 2 million is the business and cultural center of the Jewish state, and the engine of its increasing prosperity.


Gazprom says gas transit via Ukraine may be stopped completely
June 27, 16:55

Gazprom has started pumping gas into European gas storage facilities and it plans to pump 5 billion cubic meters

MOSCOW, June 27./ITAR-TASS/.Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely.

“What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Gazprom CEO Alexei Miller told a briefing on Friday.

Ukainian gas transportation system

Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.

“The train has already departed. It seems it departed yesterday,” Miller said.

“It belongs to no one. The GTS has no owner,” he said. “The GTS of Ukraine does not belong to Naftogaz but to the Ukrainian government. Before discussing things with someone regarding modernization and cooperation, it should appear on the balance sheet of this or that economic entity.”



Another JP Morgan Banker Dead

(Joseph P. Farrell) Surprise surprise! There’s been yet another banker death, and once again, this victim is a JP Morgan banker. On this time, rather than jumping off buildings or in front of trains, the victim, 56 year old Ohio resident Joseph Giampapa, was struck by a hit and run driver while he was bicycling. But that’s not all. Here’s the report of the Columbus Dispatch:

Notice anything peculiar about that singularly uninformative news article?

Well, you probably noticed, that since this blog is titled “Yet Another JP Morgan Banker Death”, that there was no mention of Mr. Giampapa’s connection to that bank, which is mighty strange, since there are indicators that he was a bankruptcy attorney and vice president for JP Morgan:


Isis announces Islamic caliphate in area straddling Iraq and Syria
Jihadist group challenges al-Qaida as it changes name to Islamic State and pledges to free Palestine in video

Mark Tran and Matthew Weaver, Monday 30 June 2014 06.33 EDT

Islamist militants have declared an Islamic "caliphate" in an area straddling Iraq and Syria, trumpeting the declaration in several videos.

One slick video, mostly in English, features a bearded fighter with an AK-47 on his back, explaining the new caliphate.

"This is not the first border we will break, we will break other borders," a jihadist from the Islamic State in Iraq and the Levant (Isis) warned in the video called End of Sykes-Picot, a reference to the agreement between France and Britain that divided up the Ottoman empire territories after the first world war.

Later the fighter pledges that jihadists will free Palestine. "We are not here to replace an Arab cahoot with a western cahoot. Rather our jihad is more lofty and higher. We are fighting to make the word of Allah the highest," the spokesman said.

He is filmed showing abandoned Iraqi army badges and vehicles left by fleeing soldiers. "There is no army in the world that can withstand the soldiers of Islam," he said.

The video features about a dozen men in a cell said to be captured troops and border police. A building, said to be a police station, is shown being blown up, as well as US-made Humvees captured from the border police. "Look how much America spends to fight Islam, and it ends up just being in our pockets," the spokesman taunted.


‘Euphoric’ capital markets are out of step with reality, warns BIS
By Sam Fleming and Claire Jones
Last updated: June 29, 2014 10:05 pm

The Bank for International Settlements has warned that “euphoric” financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.

While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are “extraordinarily buoyant”, the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world.

Leading central banks should not fall into the trap of raising rates “too slowly and too late”, the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.

In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.

“Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on,” it said.


Argentina at Brink of Default as $539 Million Payment Due
By Camila Russo Jun 30, 2014 4:10 AM MT

Argentina is poised to miss a bond payment today, putting the country on the brink of its second default in 13 years, after a U.S. court blocked the cash from being distributed until the government settles with creditors from the previous debt debacle.

The nation has a 30-day grace period after missing the $539 million debt payment to seek an accord with a group of defaulted bondholders led by billionaire Paul Singer’s NML Capital Ltd. and prevent a default on its $28.7 billion of performing global dollar bonds. Both Argentina and NML have said that they’re open to talks.

A decade-long battle between Argentina and holdout creditors from the country’s $95 billion default in 2001 is coming to a head. The U.S. Supreme Court on June 16 left intact a ruling requiring the country pay about $1.5 billion to holders of defaulted debt at the same time it makes payments on restructured bonds. Argentina last week transferred funds to its bond trustee to pay the restructured notes, only to have U.S. District Court Judge Thomas Griesa order the payment sent back while the parties negotiate.

The judge’s decision “closes Argentina’s options to finally force it to negotiate,” said Jorge Mariscal, the chief investment officer for emerging markets at UBS Wealth Management, which oversees $1 trillion. “Argentina should now stop using these delay tactics and get serious.”


Jim Sinclair’s Commentary

The value of the dollar depends on confidence in the dollar and its leadership.



Iraq Crisis-$150 to $200 Oil Might Seem Cheap-Chris Martenson
By Greg Hunter On June 30, 2014

Chris Martenson is an economic researcher and futurist who produced a popular video seminar called “Crash Course.”   Back in early 2008, he explained the “interconnected forces in the economy, energy and the environment.”  Now, he has produced a new “Accelerated Crash Course,” and this theme is playing out in places like Iraq.  Martenson says, “If you want to understand what is going on in Iraq, you have to understand what is going on with energy in this part of the game. . . .The U.S. media goes out of its way to pretend this is just some random thing that happened.  A bunch of crazy people came out of Syria and are causing trouble. . . . The post reconstruction effort in Iraq, if it wasn’t designed to fail, it was the biggest bungling job of all of history.  We dismantled key institutions, we dismantled their army and left the country a hollowed out shell.  Guess what, now that’s breaking.”  Martenson goes on to point out, “Here’s why it affects us.  Oil and oil infrastructure is fragile stuff.  A refinery is thousands of moving parts and miles of tubes and pipes.  One mortar lobbed in there and that whole refinery gets shut down. . . . The idea we can have full blown Sunni, Shia, Kurd conflict where they’re going to duke it out for power, and have all that oil infrastructure remain untouched, I think is a fantasy.”

So, what happens to oil prices if Iraqi oil is taken off the market because of war?  Martenson says, “If that goes away, oil prices are set at the margin.  That 2.5 million barrels going off line brings us to $150 oil.  If something worse happens, Saudi Arabia gets involved or the Strait of Hormuz gets closed down, then we’re talking about numbers like $200 a barrel, and that might even seem cheap.  We don’t know how high oil could go if this turns into regional conflict.  That is the risk, and it’s on the table now.”

Martenson goes on to say, “Once you let this genie out of the bottle and you unleash inter-fighting and bad blood, there is no predicting what could happen.  I think it’s been a huge mistake to sow chaos and discord.  How many countries did we do this to?  We broke Libya in exactly the same way. . . . Now, that place has zero oil exports because the country is completely wrecked by sectarian violence.  The same thing has happened Egypt.  We got rid of the standing government, it’s a mess.  Syria is a mess.  Iraq, now it’s a mess.  I look at this and I see mess, mess, mess.  Maybe that is the plan, and that plan is always how we, the West, can better control the oil interests of these countries.  This is critical . . . Europe is desperately needing oil and natural gas at this point in time.  The U.S. is still a net importer of natural gas and still imports 7 million barrels of crude oil a day of the 15 that we burn.  Look at all the countries wading into the Middle East, and all of them are net oil importers . . . . So, this is a real scramble for resources.  All wars have been resource wars, and when I look at the geopolitical landscape, the Middle East and in Eastern Europe, I say this story has already started to unravel; and if you don’t understand resources, then this story won’t make a lick of sense.”


Russia, China may reach $200 billion in trade earlier than 2020

Russia-China trade may reach $200 billion earlier than 2020, Russian Deputy Prime Minister Dmitry Rogozin said on Monday.

"We have a task set by the leaders of Russia and China to raise the volume of our trade and economic relations to $200 billion by 2020," Rogozin said at a meeting of Russian and Chinese vice-premiers with governors and business circles from both countries at the first Russia-China EXPO that had opened in Harbin.

"But I believe that if we proceed at such high rates and develop large, primarily infrastructural projects to help unite energy of Russia and China, then we believe that this figure can be achieved before that time," Rogozin said.

Cooperation between Russia’s Global Navigation Satellite System (GLONASS) and China’s Beidou was among the projects both countries had discussed at the exhibition, Rogozin said.

"GLONASS and Beidou fit together well. Owing to the specifics of our systems and the location of satellites, we have no rivals in the Northern Hemisphere, especially in northern latitudes," the Russian vice-premier said.




Jim Sinclair’s Commentary

The Yuan is on the march to significant international status.

China signs yuan accords with France, Luxembourg

China’s central bank said it has signed agreements for yuan clearing arrangements with France and Luxembourg, with the aim of promoting greater use of its currency overseas.

The People’s Bank of China (PBoC) said it would designate Chinese banks as the yuan clearing institutions in the two European countries later, according to statements issued on Sunday.

China earlier this month named the Bank of China as the clearing bank for yuan dealings in Frankfurt, Germany, and the China Construction Bank in London. A top Australian official said last week that China will designate a clearing bank in Sydney.

The moves come as China seeks to make the yuan — also known as the renminbi — used more internationally in keeping with the country’s status as the world’s second biggest economy behind the United States.

China keeps a tight grip on the value of its currency and limits capital flows into and out of the country, but officials have pledged to make the exchange rate more flexible.

Yuan clearing in France and Luxembourg would allow companies and financial institutions to use the currency for cross-border transactions, as well as promote liberalisation of trade and investment, the PBoC said.

European countries are competing to become the dominant hub for yuan business in the continent.


Jim Sinclair’s Commentary

Who are the players? What are the alliances?

Israeli PM Netanyahu endorses Kurdish independence citing chaos in Iraq
Published time: June 29, 2014 17:39
Edited time: June 30, 2014 12:56

Citing the “collapse” of Iraq amid the ISIS insurgency and sectarian violence, Israeli Prime Minister Benjamin Netanyahu has endorsed the de-facto independence of Iraqi Kurds. Netanyahu has also called to support the “Kurdish aspiration for independence.”

The hawkish Israeli leader said on Sunday that Kurds are “fighting people that has proved its political commitment, political moderation, and deserves political independence,” Reuters reported.

Speaking to Tel Aviv University’s INSS think-tank, Netanyahu described the situation in Iraq and the Middle East in general as a “collapse,” due to strife between Sunni and Shiite Muslims.

Amid the recent insurgency of the Islamic State in Iraq and the Levant (ISIS/ISIL) militants, Kurds have seized the opportunity to bring a long-sought independent state of Kurdistan closer to reality. Kurdish Peshmerga armed forces have been guarding their provincial borders from ISIS, but also seized the contested Iraqi city of Kirkuk, proclaiming it part of their territory.


US, Philippines start naval drills near China-claimed waters
June 26, 2014 11:21 AM

The United States and the Philippines kicked off joint naval exercises Thursday in the South China Sea near waters claimed by Beijing, amid tense territorial rows between China and its neighbours.

Filipino military officials said the week-long manoeuvres, involving three US warships and more than a thousand servicemen, would address Manila’s "capability gaps" as well as testing its newest military vessels.

The Philippines is engaged in a bitter territorial dispute with China over parts of the South China Sea, which Beijing claims almost in its entirety.

China has increasingly asserted its claims to the sea, which are believed to harbour vast oil and gas deposits, and parts of which are also claimed by Vietnam, Malaysia, Brunei and Taiwan. Beijing placed an oil rig in disputed waters last month, sparking deadly anti-China riots in Vietnam.

Philippine officers said the annual war games, involving more than a thousand US personnel and about 400 Filipino counterparts, would test the Philippines’ two newest warships — a pair of decommissioned US coastguard cutters that were reconfigured into frigates.


Iraqis caught in a state of fear between Isis and Shia militias
Residents of Baquba, an hour from Baghdad, are on the frontline of a sectarian showdown that is fast becoming another civil war
Martin Chulov in Baghdad
The Guardian, Sunday 29 June 2014 15.12 EDT

An hour from Baghdad where the battle lines are drawn, residents of Baquba say they’re caught between two terrifying options. Just to the north are Isis, the Sunni militant group bent on destroying Iraq and the Shias who govern it. To the south are Shia militias who have responded with vehemence and are transforming the frontlines into a sectarian showdown that pays no heed to the state.

"We have Da’ash on one side," said Abu Mustafa, a Baquba resident, using the colloquial word for Isis. "And we have Asa’ib ahl al-Haq on the other. I don’t know who to be more scared of."

Asa’ib ahl al-Haq is the most powerful Shia militia in Iraq, and perhaps the most potent in the land. A direct proxy of the Iranian general Qassem Suleimani, who has extraordinary influence across Iran’s sphere of influence, Asa’ib is untouchable in Baghdad and feared around the country.

Asa’ib, like Isis, has made Baquba and the area that surrounds it one of the most important flashpoints in Iraq. Whoever controls this lethal city will secure an approach to the capital an hour south, and a foothold in the east within striking distance of the Iranian border.

"The police are the most powerful people in this city," said Abu Mustafa. "But only because they are all militias anyway."


King Abdullah calls up Saudi armed forces on high preparedness. Egyptian troops ready to fly to kingdom
DEBKAfile Exclusive Report June 26, 2014, 6:49 PM (IDT)

Thursday, June 26, the day before US Secretary of State John Kerry was due in Riyadh, King Abdullah summoned a National Security Council meeting “upon the current security events in the region, especially in Iraq,” and ordered “all necessary measures to protect the kingdom against terrorist threats.” This meant a general call-up of military units for a high level of preparedness.

DEBKAfile’s military sources disclose that Egypt is assembling an expeditionary commando force to fly to Saudi Arabia and bolster its border defenses.
This flurry of Saudi-Egyptian military steps comes in the wake of intelligence gathered by Saudi reconnaissance planes showing Iraqi Al Qaeda-linked Sunni fighters (ISIS) heading for the Saudi border and aiming to seize control of the Iraqi-Saudi crossing at Ar Ar (pop: 200,000).

ISIS and its Sunni allies are still on the march after capturing Iraq’s border crossings with Syria and Jordan earlier this week.

On Wednesday, Kerry warned Mideast nations against taking new military action in Iraq that might heighten sectarian divisions.
By then, he had been overtaken by a rush of events, as DEBKAfile reported this morning.

When the first of the 300 military advisers US President Barack Obama promised the Iraqi government arrived in Baghdad Wednesday, June 25, Iranian and Saudi Arabian arms shipments were already in full flow to opposing sides in embattled Iraq, DEBKAfile’s military sources report.


Jim Sinclair’s Commentary

Everything economic dances on the head of a pin named interest rates.

BIS Damps $2 Trillion Emerging Market Company Debt Spree
By John Glover  Jun 29, 2014 6:30 AM ET

More than $2 trillion of foreign borrowing by emerging-marketcompanies since 2008 is leaving them vulnerable to a sudden drop in funding at the first sign of trouble, according to the Bank for International Settlements.

Bond investors willing to lend generously when conditions are good can pull out in a crisis or when central banks tighten monetary policy, analysts led by Claudio Borio, head of the monetary and economic department, wrote in the BIS annual report. Emerging-market companies that lose access to external debt markets may then be forced to withdraw bank deposits, depriving domestic lenders of funding as well, they said.

Low interest rates and central bank stimulus in developed nations, combined with a retreat in global bank lending, have encouraged emerging-market borrowers to raise debt abroad, according to the Basel, Switzerland-based BIS, which hosts the Basel Committee on Banking Supervision that sets global capital standards. Demand for higher-yielding securities also helped suppress borrowing costs for riskier issuers.

“Like an elephant in a paddling pool, the huge size disparity between global investor portfolios and recipient markets can amplify distortions,” the analysts wrote. “It is far from reassuring that these flows have swelled on the back of an aggressive search for yield: strongly pro-cyclical, they surge and reverse as conditions and sentiment change.”


Libya seeks to continue contacts with Russian oil companies
June 30, 18:04 UTC+4

MOSCOW, June 30. /ITAR-TASS/. Libya does not intend to revise contracts with Russian companies that got concessions to develop oil fields, Russian Ambassador to Libya Ivan Molotkov has said. “These are Gazprom Neft and Tatneft that worked on the Libyan oil market,” Molotkov told ITAR-TASS on Monday.

“At present, oil production has practically stopped. It reaches at least 200 million barrels per day. Major oil fields are controlled by armed groups that prevent oil production,” he said.

“The situation in Libya is similar to Iraq’s. I believe that the crisis in Libya will last for years,” Ivan Molotkov told ITAR-TASS.

“The parliamentary elections were held on June 25. We hope that they will play a stabilising role and give the country breathing room. The elections were recognised invalid. No results are available yet,” he said.

Libyans “should adopt the constitution, elect a new parliament and form a new government”, Molotkov said.


Serbia’s South Stream section will be built on schedule — Russian diplomat
June 30, 16:59 UTC+4

MOSCOW, June 30. /ITAR-TASS/. The Serbian section of the South Stream gas pipeline is being built on schedule, Russia’s Ambassador in Belgrade Alexander Chepurin has said. “Serbia has not created any obstacles,” Chepurin told ITAR-TASS on Monday.

Russia’s Energy Minister Alexander Novak met with Serbian Minister of Energy and Mining Aleksandar Vucic in Moscow on June 20. “Serbia confirmed that it was ready to carry out the project according to schedule,” Chepurin said.

“The construction installation works will start in compliance with the results of the tender that will be announced shortly,” he said.

“Foreign investments are one of Serbia’s priorities,” Chepurin said.

At the same time, he said, “Serbia’s accession to the EU won’t solve deep problems. For 15 years Serbia has implemented two major projects: Fiat’s Italian assembly plant in Kragujevac and Russia’s Gazprom Neft’s oil refinery in Novi Sad.”


Jim Sinclair’s Commentary

Also to trade in Yuan.

Shanghai may launch gold trading bourse in Q4
2014-06-30 08:47Shanghai DailyWeb Editor: Qin Dexing

Shanghai may launch the international trading board for gold in the city’s pilot free trade zone in the fourth quarter of the year, while gold consumption edged up 0.8 percent in China during the first quarter, local media reports said last week.

The new bullion trading board in the FTZ may attract foreign market players as China hopes to raise its influence on global gold prices. The FTZ may draw 1,000 tons of gold.

Physical gold consumption rose to 323 tons in the first quarter from a year earlier, local media reports said, citing Shanghai Gold Exchange data, the world’s biggest market for physical bullion.

Xu Luode, secretary-general of the bourse, said earlier the international board will adopt Shanghai Gold, a spot gold trading mechanism similar to the Loco London Gold.


Italy promises to facilitate South Stream project implementation
June 30, 17:49 UTC+4

ROME, June 30. /ITAR-TASS/. Italy has always regarded the South Stream project plans to pipe Russian gas across the floor of the Black Sea to Bulgaria and then ashore for onward transit to Greece, Italy and Austria as a strategic project for Europe and will facilitate its implementation during its presidency of the European Union, Italy’s state secretary for European affairs, Sandro Gozi, said in an exclusive interview with ITAR-TASS on Monday. “The South Stream project has always been and remains most important for Italy, and we have a strong interest in implementing it, first of all, as it is one of those projects aimed to diversify transit routes,” Gozi said.

“We assume that in order to strengthen a single European energy market, it is absolutely necessary to diversify infrastructure connecting it with various suppliers,” he said. “And we believe that the same approach should be applied to everyone”.


Iranian diplomat considers Moscow-Tehran policy towards Syria right
June 30, 18:42 UTC+4

MOSCOW, June 30./ITAR-TASS/. Iran’s top diplomat has said the policy of Moscow and Tehran towards the Syrian crisis was right. Russian and Iranian high-ranking diplomats have discussed the situation in the Middle East due to the events in Syria and Iraq. “Relations between Iran and Russia are on the good level. Despite progress in bilateral relations, the situation in the region leaves much to be desired,” Iranian Deputy Foreign Minister Hossein Amir Abdollahian said on Monday.
“Certain countries of the region support Takfirists (radical Islamists),” he said.
“These countries should take a constructive position or they will reap the rewards of their policy,” the Iranian diplomat added.
“The situation in the region develops quickly and requires intensive discussions. I believe that we’ll discuss the processes in the region in a sincere atmosphere,” Russian Deputy Foreign Minister Mikhail Bogdanov said .


Russia Reveals "Plan B": Gazprom Says Gas Transit Via Ukraine May Be Stopped Completely

A few days ago, when we wrote our "explainer" on the need for Russia to have an alternative pathway for its gas, one which bypasses Ukraine entirely and as the current "South Stream" framework is set up, crosses the Black Sea and enters Bulgaria before passing Serbia and Hungary on the way to the Central European energy hub located in Baumgarten, Austria, we said that "one short month after Putin concluded the Holy Grail deal with Beijing, he not only managed to formalize his conquest of Europe’s energy needs with yet another pipeline, one which completely bypasses Ukraine (for numerous reasons but mostly one: call it a Plan B), but scored a massive political victory by creating a fissure in the heart of the Eurozone, after Austria openly defied its European peers and sided with Putin."


Today we find just what said Plan B is.

As Itar-Tass reports, citing Gazprom CEO Alexei Miller, "Russia’s gas giant Gazprom does not rule out gas transit via Ukraine may be stopped completely." 
"What happened once is a tendency, nothing happens incidentally. In 2009, gas supplies were stopped completely — so, we know precedents,” Miller told a briefing on Friday.
Clearly, this is bad news for Ukraine: Gazprom not interested in participation in Ukraine’s gas transportation system (GTS), “train has departed”, CEO said.


The USD Is Tumbling; Near 2 Month Lows
Tyler Durden on 06/30/2014 11:06 -0400

Equities have flip-flopped this morning, giving up the new normal opening-squeeze higher gains as USDJPY fades. Bonds are rallying. But it is the USD Index that is the most notable this morning as it tumbles back towards 2-month lows in a hurry… This is the biggest 2-day plunge in 3 months.


Pushing the USD to 2-month lows…



Central Bankers, Worried About Bubbles, Rebuke Markets

FRANKFURT — An organization representing the world’s main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.

Investors, desperate to earn returns when official interest rates are at or near record lows, have been driving up the prices of stocks and other assets with little regard for risk, the Bank for International Settlements in Basel, Switzerland, said in its annual report published on Sunday.

Recovery from the financial crisis that began in 2007 could take several more years, Jaime Caruana, the general manager of the B.I.S., said at the organization’s annual meeting in Basel on Sunday. The recovery could be especially slow in Europe, he said, because debt levels remain high.

“During the boom, resources were misallocated on a huge scale,” Mr. Caruana said, according to a text of his speech, “and it will take time to move them to new and more productive uses.”

The B.I.S. provides financial services to national central banks and also acts as a setting where central bankers can discuss monetary policy and other issues like financial stability or bank regulation. The board of directors includes Janet L. Yellen, chairwoman of the Federal Reserve; Mario Draghi, president of the European Central Bank; and the heads of central banks from Japan, China, India and many other countries.

The organization, which reflects a widespread view among central bankers that they are bearing more than their share of the burden of fixing the global economy, often uses its annual reports to send a message to political leaders, commercial bankers and investors. But the B.I.S.’s language in the 2014 edition was unusually direct, as was its warning that the world could be hurtling toward a new crisis.