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.
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.
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.
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.
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)
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.
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.
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.
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.