Posted at 7:28 PM (CST) by & filed under Jim's Mailbox.

Jim,

Here’s the latest FRED chart showing the St. Louis Adjusted Monetary Base.  It’s only $37 billion away from the $4.0 Trillion mark – and by the time you read this, we could be through it.

CIGA Ed P.

clip_image002

Posted at 7:00 PM (CST) by & filed under In The News.

Take the example of gold. Again, there is a significant increase in its value when it is transformed to the shiny yellow metal, from its original form in the gold mine. Such being the case, how much more necessary it is for the human being to be transformed?
– ‘My Dear Students’, SSB Vol 2, Ch 8, Jun 15, 1989

 

clip_image002

Jim Sinclair’s Commentary

A change in tone for Merkel.

Angela Merkel: Russia Will Stay G8 Member
By Jerin Mathew March 19, 2014 10:26 GMT

German Chancellor Angela Merkel said Russia will continue to be a member of the G8, denying media reports that the country was booted out of the group after it signed a treaty to annex the breakaway region of Crimea.

Merkel noted that there are only plans to suspend the G8 summit in Russia’s Sochi. She was speaking at a joint press conference with visiting Portuguese Prime Minister Pedro Passos Coelho.

"Apart from that, no decisions have been taken," she added.

Italy’s Minister of Foreign Affairs Federica Mogherini noted that the G8 format still remains the same.

"In recent days, partners from the big seven already took the decision on suspending participation in preparing the G8 summit in Sochi. However, this refers to suspending work in the big eight format, but not to the abolishment of the format itself," Mogherini said.

Earlier, French Minister of Foreign Affairs Laurent Fabius said that western states agreed to suspend Russia’s participation in G8.

"As for G8, we decided to suspend Russia’s membership," Fabius said live on radio station Europe-1.

"All seven leading world powers, except Russia, are expected to meet," he added.

More…

Jim Sinclair’s Commentary

Perfect timing when Russians is looking to the East to strengthen its relationships.

N.S.A. Breached Chinese Servers Seen as Security Threat
By DAVID E. SANGER and NICOLE PERLROTHMARCH 22, 2014

WASHINGTON — American officials have long considered Huawei, the Chinese telecommunications giant, a security threat, blocking it from business deals in the United States for fear that the company would create “back doors” in its equipment that could allow the Chinese military or Beijing-backed hackers to steal corporate and government secrets.

But even as the United States made a public case about the dangers of buying from Huawei, classified documents show that the National Security Agency was creating its own back doors — directly into Huawei’s networks.

The agency pried its way into the servers in Huawei’s sealed headquarters in Shenzhen, China’s industrial heart, according to N.S.A. documents provided by the former contractor Edward J. Snowden. It obtained information about the workings of the giant routers and complex digital switches that Huawei boasts connect a third of the world’s population, and monitored communications of the company’s top executives.

One of the goals of the operation, code-named “Shotgiant,” was to find any links between Huawei and the People’s Liberation Army, one 2010 document made clear. But the plans went further: to exploit Huawei’s technology so that when the company sold equipment to other countries — including both allies and nations that avoid buying American products — the N.S.A. could roam through their computer and telephone networks to conduct surveillance and, if ordered by the president, offensive cyberoperations.

More…

Jim Sinclair’s Commentary

Looks to me like the gold price is somewhat higher than $1182 and we might thank China for that.

How China Imported A Record $70 Billion In Physical Gold Without Sending The Price Of Gold Soaring
Submitted by Tyler Durden on 03/22/2014 21:40 -0400

A little over a month ago, we reported that following a year of record-shattering imports, China finally surpassed India as the world’s largest importer of physical gold. This was hardly a surprise to anyone who has been following our coverage of the ravenous demand for gold out of China, starting in September 2011, and tracing it all the way to the present.

clip_image003

China’s apetite for physical gold, which is further shown below focusing just on 2012 and 2013, has been estimated by Goldman to amount to over $70 billion in bilateral trade between just Hong Kong and China alone.

clip_image004

Yet while China’s gold demand is acutely familiar one question that few have answered is just what is China doing with all this physical gold, aside from filling massive brand new gold vaults of course. And a far more important question: how does China’s relentless buying of physical not send the price of gold into the stratosphere.

We will explain why below.

First, let’s answer the question what purpose does gold serve in China’s credit bubble "Minsky Moment" economy, where as we showed previously, in just the fourth quarter, some $1 trillion in bank assets (mostly NPLs and shadow loans) were created  out of thin air.

More…

Posted at 5:41 AM (CST) by & filed under Jim's Mailbox.

Jim,

The Chinese operate the Panama Canal, which is about 80 km.  This new canal would put China in control of two of the most important canals in the world.  An interesting economic projection of power to the USA’s blue water navy presence in SE Asia.

Wonder when China will start operating the Suez Canal??

CIGA Craig

China to bypass Malacca Strait by Kra Isthmus Canal in Thailand
Posted by chankaiyee2 March 16, 2014

The trade route to the Indian Ocean through the Malacca Strait has the problems of pirates, shipwrecks, haze, sediment and shoals.

Its rate of accidents is twice as high as the Suez Canal and four times higher than the Panama Canal.

An alternative shorter route is to build a canal at Kra Isthmus, Thailand. It will save shipment costs and time as the route is shortened by 1,000

China’s huge state-owned LiuGong Machinery Co. Ltd and XCMG, and private Sany Heavy Industry Co Ltd have taken the lead to set up a preparations group for the construction of Kra Isthmus Canal.

The 100 km artificial link to the Indian Ocean will benefit not only China and ASEAN, but also Japan and other countries’ world trade.

More…

 

Jim,

I wonder how many weeks/months after Pakistan is in receipt of the $1.5B for it to renege on its promise to block the IP…

Saudi grant kills Iran-Pakistan pipeline
By Syed Fazl-e-Haider

A US$1.5 billion donation to Pakistan from Saudi Arabia is hotly being debated in the country’s parliament, political circles and among the analysts. The main question being under what deal Riyadh disbursed the crucial amount to help the cash-strapped country make short-term economic gains? What has Pakistan guaranteed or promised to do in return? Many believe Saudi Arabia killed many birds with one stone.

Saudi Arabia did what the US could not do to keep Pakistan away from a $7.5-billion gas pipeline project with Iran. In a tit-for-tat deal, Saudi Arabia might have persuaded Islamabad to cancel the Iran-Pakistan (IP) pipeline project, which is vital to end energy shortages that are crippling Pakistan’s economy.

Pakistan’s oil minister Shahid Khaqan Abbasi, after receiving funds from Saudi Arabia last month, reportedly said work on the pipeline was not possible because of sanctions imposed by the United States and the European Union on Iran over its nuclear program. Iran has warned that Islamabad is contractually obliged to complete the project which would allow Tehran to export gas to its southeastern neighbor.

More…

Jim,

To me Putin’s demands seem very reasonable and very conciliatory as they would allow Ukraine to be independent, but be a buffer zone between Russia and the EU. I strongly suspect there is a Gazprom carrot as well as financial aid in the Russian Easter basket.  If the illegitimate interim government and the west resist these demands, then they are bloody fools and deserve the harsh consequences.

CIGA Craig

Moscow Demand

The government in Moscow is demanding that its neighbor adopt a federal constitution that guarantees political and military neutrality, grants powers to the regions, and make Russian a second official language. There’s no indication it would be acceptable to the Ukrainian government, which took power after Yanukovych was toppled amid protests last month, or to its Western supporters.

More…

Posted at 1:14 PM (CST) by & filed under In The News.

clip_image002

 

Official gold market to open in South Korea
Posted on : Mar.21,2014 16:39 KST
By Cho Ki-won, staff reporter

On Mar. 19, two gold bars were brought to Ilsan in Gyeonggi Province and deposited in the safe of the Korea Securities Depository (KSD), an organization that stores gold for the gold market. In order for the gold market to open, there needs to be actual gold to be bought and sold, and this was the first gold bullion to arrive at the safe.

The gold bars, which have a purity of 99.99%, weighed 1kg each, and a security label was attached to the bottom bearing the mark of the Korean Mint. The bars had been produced by a Korean metal refinery.

“One importer has asked us to store 15 gold bars. Once they are certified by the Mint, those bars will be placed here as well,” said Seong Bo-kyung, head of the gold storage payment team for the depository.

The KSD announced that, once the gold commodities market takes off, it is expecting to handle an average of 4-7 tons, or 4000-7000 gold bars, each day.

The general public is now able to trade in gold on the market, just as they can with stocks. This is made possible by the KRX gold market, which will open on Mar. 24. The market enables ordinary investors to buy and sell gold through accounts with securities companies or futures trading companies.

More…

Chinese Gold Demand 488 MT YTD, Up 29 %

Although  last week only 34 metric tonnes of gold were withdrawn from the vaults of the Shanghai Gold Exchange (SGE), down 6.52 % from the prior week, year to date there has been a staggering 488 metric tonnes withdrawn, up 29 % to compared to last year. Year to date demand will probably come on par with last year when we enter april, as withdrawals exploded in April 2013. What will happen after April is hard to say, this year’s average daily withdrawals stand at 6.7 metric tonnes, last years daily average was 6 metric tonnes (2197 mt / 365). It will all depend on how much floating supply there is left…

At the current pace, 6.7 metric tonnes a day, China will be roughly importing 1700 metric tonnes this year to meet SGE demand. My research has exposed that SGE withdrawals equal Chinese wholesale demand. Not often, but sometimes we can read other analysts or media share the same findings. From the Chinese media (dated January 10, 2014):

China’s explosion in demand for physical gold in 2013 left a deep impression on international investors. The Shanghai Gold Exchange withdrawals for the year up till 27 December 2013 exceeded 2180 tons. Considering the exchange’s position as a hub for domestic gold circulation, in conjunction with a system that forbids withdrawn gold from re-entering inventory, to a large extent the withdrawals number can be treated as the best benchmark for physical gold demand in the Chinese market. Not to mention that the entire 2013 global mined gold production does not exceed 2700 tons. China’s massive demand has to a large extent remade the world’s gold circulation system. Newly mined and stocked gold is moving through trade links in London – Switzerland – Hong Kong – into China in a large scale orientation towards the East. The impact of China’s demand on international gold price will inevitably increase.

More…

Russia hints at tit-for-tat response to EU sanctions over Crimea
Moscow says it has right to ‘comparable response’ after 12 more people targeted following annexation of Crimea
theguardian.com, Saturday 22 March 2014 11.35 GMT

Russia’s foreign ministry said Moscow has the right to a tit-for-tat response to the second wave of sanctions imposed by the EU over its annexation of the Ukrainian region of Crimea.

The EU imposed an new set of sanctions on Friday, adding 12 Russians and Crimeans to a list of people targeted by EU asset freezes and travel bans. There are now 33 on the list.

"It’s a pity that the European council made a decision that is divorced from reality," the ministry’s spokesman Alexander Lukashevich said on Saturday.

"We believe it is time to return to the platform of pragmatic co-operation that reflects the interests of our countries.

"However, of course, the Russian side reserves itself the right to give a comparable answer to the actions taken."

In a separate statement, the ministry said Moscow hoped the decision to send monitors to Ukraine would help resolve what it called an "internal Ukrainian crisis".

More…

Russia’s Shifting of Border Force Stirs U.S. Worry
By MARK LANDLERMARCH 21, 2014

WASHINGTON — The White House cast doubt Friday on the Kremlin’s claims that thousands of troops massing on the border of southeastern Ukraine are merely involved in training exercises, deepening fears that Russian aggression will not end in Crimea.

“It’s not clear what that signals,” the national security adviser, Susan E. Rice, said to reporters in a briefing at the White House. But she added, “Obviously given their past practice and the gap between what they have said and what they have done, we are watching it with skepticism.”

At the Pentagon, senior officers and analysts said they were monitoring the Russian infantry, airborne, air defense and other reinforcements with growing alarm, uncertain of President Vladimir V. Putin’s ambitions.

Pentagon officials do not believe that a new Russian move into Ukraine is imminent. But one of their big worries is that American and NATO officials would have virtually no time to react if it did happen. All told, officials said, there are more than 20,000 troops near the border.

More…

Jim Sinclair’s Commentary

I believe a subscription to GEAB opens a window of understanding not available elsewhere. Herein is the real facts behind the Ukraine theater.

GEAB N°83 is available! Global systemic crisis-escalation in the US reaction for survival: trigger a cold war to make it easier to annex Europe
- Public announcement GEAB N°83 (March 16, 2014) -

Layout of the full article: 
1. BUILD A TRAP TO DIVERT EUROPE AWAY FROM IT’S OWN DESTINY
2. MASS ATTACKS ON EUROPE
3. CAUSE A NEW IRON CURTAIN TO FALL ON EUROPE
4. FORCE EUROPE TO CHOOSE SIDES
5. FIND THE INTRINSIC RESOURCES IN EUROPE TO FREE ITSELF FROM THE TRAP – Eight strategic recommendations

This public announcement contains sections 1 to 3.

BUILD A TRAP TO DIVERT EUROPE AWAY FROM IT’S OWN DESTINY

When, in November 2013, Russia asked the EU for tripartite negotiations on the Ukraine’s free trade agreements with its two neighbours in order to find areas of common ground for all parties directly concerned (1), what was at stake was stability, integrity and independence for the Ukraine and that it should remain as the natural link between Europe and Russia.

But neither Baroness Ashton, nor Mr. O’Sullivan (2), in charge of the European External Action Service, nor Mr. Fule who, at the head of the Directorate General for Enlargement, spends his time trying to integrate everything that moves in Eastern Europe (3), didn’t want that. On the contrary, they have forced the Ukraine to “choose sides” (4), thus creating the conditions subsequent to the inevitable events which we know: the Ukraine has in fact chosen… and the country, logically, has entered a dramatic and bloody process of decision which is only just begun. Baroness Ashton and Mr. O’Sullivan have literally set a trap for the Ukraine… and Europe.

Five months later and the damage is huge: over 100 dead (5), the Ukraine is left with an unelected government brought to power by extreme right-wing factions (6), relations between the EU and Russia are broken, the Ukraine and Russia are on the verge of a war that isn’t far from being a war between Europe and Russia (7), the Russian military have retaken control of their Crimean assets, the US fleet is cruising in the Black Sea waters (8), the US army has set itself up in Europe again (in Poland, Lithuania and Romania (9)), the media, excited by blood, are a pure propaganda machine determined to push politicians and citizens into war, the EU-Ukraine free trade Treaty is about to be signed, against Russian interests, by Washington and a non-elected Ukrainian government (10) (if the same method is used for the TTIP, Washington and Baroness Ashton will have signed it in April at the latest), the West is preparing to deny the legitimacy of the Crimean referendum which will aggravate the crisis and continue to ask questions on the West’s democratic struggle… (11)

More…

Jim Sinclair’s Commentary

Tit for tat has many price tags on it.

Above 6,000 German companies to be hit by sanctions on Russia- export body
Published time: March 21, 2014 14:21

Should economic sanctions be extended against Russia, more than 6,000 German exporters doing business with Russia would suffer, the Federation of German Wholesale, Foreign Trade and Services (BGA)warned on Friday.

"About 6,200 German companies are engaged in Russia, some of them very strongly," Anton Boerner, head of the BGA exporters’ body, told the Dortmunder Ruhr Nachrichten newspaper. "For them, economic sanctions would be a real catastrophe."

If the conflict between Russia and the West escalates, oil prices may go up, Boerner said. But Moscow is unlikely to completely stop energy deliveries to Germany, as it takes about 30 percent its exports.

German Chancellor Angela Merkel said on Friday that Europe could use US shale energy to compensate for possible delivery disruptions from Russia. Merkel also added that the US needed to develop its export infrastructure first.

In the ongoing tensions between Russia and the West Angela Merkel has always insisted that Germany would "make clear that we are ready at any time" to increase sanctions against Russia "if there is a worsening of the situation".

More…

Jim Sinclair’s Commentary

This has a major impact along with the cost of energy on Kiev’s ability to pay the $35 billion plus in debt by 2015.

Russia may revoke fleet hosting deal with Ukraine, demand $11 bn back – Medvedev
Published time: March 21, 2014 09:48
Edited time: March 21, 2014 12:04

Russia may revoke a deal with Ukraine, which gave Kiev a considerable discount on gas in exchange for hosting the Russian Black Sea fleet. The Russian PM said this would oblige Kiev to return $11 billion which Russia paid to lease the bases.

The deal, which was signed in 2010 in Kharkov, extended permission to Russia to keep the Black Sea fleet at its base in Sevastopol for 25 years after 2017, when the current agreement was due to expire. In exchange Moscow offered Ukraine incentives, including a discount on the price of gas and a waiver for some payments to Russia.

“We started doing this [not requiring the payments from Ukraine – RT] immediately, even though the remaining time for hosting the base under the older document was quite long,” Medvedev pointed out. “So Ukraine in fact saved about $11 billion in unpaid payments while the budget of the Russian Federation sustained damages for the same amount.”

Medvedev said that now, with Crimea joining Russia, the Kharkov agreement is no longer applicable and should be ended. In that case Russia may seek the return of the $11 billion through the relevant courts.

“Of course these are harsh measures, but on the other hand there is no agreement, and there is the payment we did. Our Ukrainian partners must understand, that one doesn’t get paid for nothing,” Medvedev said.

More…

Russian troops overrun Ukrainian airbase in Crimea
Shots fired and armored vehicles smash through wall of Belbek compound before base commander is detained
Reuters in Belbek
theguardian.com, Saturday 22 March 2014 16.23 GMT

Russian troops forced their way into a Ukrainian airbase in Crimea with armoured vehicles, automatic fire and stun grenades, injuring a Ukrainian serviceman and detaining the base’s commander for talks.

A Reuters reporter said armoured vehicles smashed through a wall of the compound and he heard bursts of gunfire and grenades.

Colonel Yuliy Mamchur, the commander of the Belbek base, said a Ukrainian serviceman had been injured and that he himself was being taken away by the Russians for talks at an unspecified location.

Asked if he thought he would return safely, he said: "That remains to be seen. For now we are placing all our weapons in the base’s storage."

Belbek was one of the last military facilities in Crimea still under Ukrainian control after Russia’s armed takeover and annexation of the peninsula, which has a majority ethnic Russian population and is home to one of Russia’s biggest naval bases.

More…

 

China Takes Sides: Sues Ukraine For $3bn Loan Repayment
Submitted by Tyler Durden on 03/22/2014 18:38 -0400

It is widely known that Russia is owed billions by Ukraine for already-delivered gas (as we noted earlier, leaving Gazprom among the most powerful players in this game). It is less widely know that Russia also hold $3b of UK law bonds which, as we explained in detail here, are callable upon certain covenants that any IMF (or US) loan bailout will trigger. Russia has ‘quasi’ promised not to call those loans. It is, until now, hardly known at all (it would seem) that China is also owed $3bn, it claims, for loans made for future grain delivery to China. It would seem clear from this action on which side of the ‘sanctions’ fence China is sitting.

Via RBC Ukraine (Google Translate),

In 2012, The State Food and Grain Corporation and the Export-Import Bank of China agreed to provide Ukrainian corporation loan of $ 3 billion, which was planned to be on the spot and forward purchases of grain for future delivery to China.

Minister of Agrarian Policy and Food of Ukraine Igor Schweich confirmed that China has filed a lawsuit against Ukraine in a London court for the return of a loan of $3 billion.

The Ukraine minister disagrees with China’s case:

More…

Posted at 5:29 PM (CST) by & filed under In The News.

Sanctions effect: Russia to change its economic partners…for the better
Published time: March 21, 2014 15:34

Western sanctions might push Russia to deepen cooperation with BRICS states, in particular, to strengthen its ties with China, which will possibly turn out to be a big catastrophe for the US and the EU some time later.

On March 18, the spokesperson for the Kremlin, Dmitry Peskov, claimed in a BBC interview that Russia would switch to new partners in case of economic sanctions being imposed by the European Union and the United States. He highlighted that the modern world isn’t unipolar and Russia has strong ties with other states as well, though Russia wants to remain in good relations with its Western partners, especially with the EU due to the volume of deals and joint projects.

Those “new partners” are not really new since Russia has been closely interconnected with them for almost 13 years. This is all about the so-called BRICS organization, consisting of Brazil, Russia, India, China and South Africa. BRICS represents 42 percent of the world’s population and about a quarter of the world’s economy, which means that this bloc of states is an important global actor.

The BRICS countries are like-minded in regard to supporting the principles of international law, the central role of the UN Security Council and the principles of the non-use of force in international relations; this is why they are so actively performing in the sphere of settling regional conflicts. However, the cooperation between Brazil, Russia, India, China and South Africa goes beyond political aspects and is also demonstrated by dynamic trade and multiple projects in different areas. Today, in total, there are more than 20 formats of cooperation within the BRICS which are intensively developing. For example, in February the member-states came to an agreement about 11 prospective directions of scientific and technical cooperation, from aeronautics to bio- and nanotechnology. In order to modernize the global economic system, at the center of which stand the US and the EU, the leaders of Brazil, Russia, India, China and South Africa have created the BRICS Stock Alliance and are creating their own development bank to finance large infrastructure projects. On the whole, despite fierce criticism of BRICS as an organization with no future, it is developing and increasing cooperation with its members and, in fact, BRICS is showing pretty good results.

More…

Gold Completes Golden Cross
Submitted by Tyler Durden on 03/21/2014 12:41 -0400

For the first time in 13 months, gold’s 50-day moving-average is above its 200-day moving-average. This so-called "golden cross" occurred in Feb 09 before gold surged over 100% in the following years (but also occurred ‘falsely’ in September 2012.

clip_image002

Some technicians are reflecting on the last big run that gold had…

clip_image004

More…

Jim Sinclair’s Commentary

Breakfast staples face surging prices.

Hold the bacon: Breakfast staples face surging prices
Published: Friday, 21 Mar 2014 | 1:33 PM ET

Breakfast is now being served with a side of sticker shock.

The price of bacon is surging and the cost of other morning staples, like coffee and orange juice, is set to rise because of global supply problems, from drought in Brazil to disease on U.S. pig farms.

And it’s not just the first meal of the day that’s being affected. The cost of meats, fish and eggs led the biggest increase in U.S. food prices in nearly 2 1/2 years last month, according to government data. An index that tracks those foods rose 1.2 percent in February and has climbed 4 percent over the last 12 months.

While overall inflation remains low, the increases in food prices are forcing shoppers to search out deals and cut back.

More…

Dying Memphis Neighborhood Foretells Next U.S. Crisis: Mortgages
By Bob Ivry Mar 20, 2014 10:00 PM MT

When Rebecca Black bought the three-bedroom house at 698 Hazelwood Road in southwest Memphis in May 2005 and moved in with her two teenage sons, it was a quiet community. Children played in the street and neighbors tended their yards. She could afford the $57,000 mortgage if she skipped oil changes for the car and served the boys store-brand groceries.

Then trouble came.

Her next-door neighbor died, and his family lost the house. Across the street, there were two foreclosures. One morning, the abandoned house three doors down had gang graffiti spray-painted on the side. A girl in the neighborhood pulled a gun on Black’s son.

Excerpted from the book “The Seven Sins of Wall Street: Big Banks, Their Washington Lackeys and the Next Financial Crisis,” published by PublicAffairs Books.

In 2010, it was Black’s turn to go. She’d gotten one of those 2–28 mortgages that slowly strangled so many borrowers — two years of a low, fixed interest rate followed by 28 years of rising payments — and she’d reached her limit.

More…

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China
Submitted by Tyler Durden on 03/21/2014 09:41 -0400

If it was the intent of the West to bring Russia and China together – one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse – in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."

For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead… and quite a few steps east.

While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may regain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.

Here is what will likely happen next, as explained by Reuters:

Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow’s seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia’s biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

More…

Putin looks to Asia as West threatens to isolate Russia
By Timothy Heritage and Vladimir Soldatkin

MOSCOW (Reuters) – When President Vladimir Putin signed a treaty this week annexing Crimea to great fanfare in the Kremlin and anger in the West, a trusted lieutenant was making his way to Asia to shore up ties with Russia’s eastern allies.

Forcing home the symbolism of his trip, Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow’s seizure of the Black Sea peninsula from Ukraine would be counter-productive.

The underlying message from the head of Russia’s biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.

The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.

More…

 

US to hold major war games in Poland – ambassador
Published time: March 21, 2014 15:42

The US military are planning large scale war games in Poland, which would involve troops from several eastern European states, the American ambassador to the country, Stephen Mull, said.

Poland, the Czech Republic, Hungary, Slovakia, Bulgaria, Romania and the Baltic states (Lithuania, Latvia and Estonia) will be participating in drills, together with the Americans, Mull told Radio ZET.

Lask airbase in central Poland has been selected as the venue for the military exercise, the ambassador said, refraining from saying when it was scheduled for.

Mull’s announcement comes just three days after US Vice President Joe Biden’s visit to the Polish capital of Warsaw.

Biden’s trip was aimed at reassuring that America remains a “steadfast ally” to Poland and the Baltic States after they expressed anxiety over the events in the Crimea, which signed a treaty of accession to the Russian Federation on Tuesday.

More…

NATO starts air drills close to Ukraine’s borders

Published time: March 11, 2014 15:58
Edited time: March 13, 2014 08:32

NATO has begun wargames in Poland as recently dispatched US jets are set to take part in the exercises. Poor weather has delayed naval maneuvers in the Black Sea, with the US saying both drills were planned before the outbreak of unrest in Ukraine.

The air drills began on Tuesday at the Lask Air Base in central Poland. Polish President Bronislaw Komorowski was present as the exercises commenced, standing by as four Polish F-16s lifted off. A US Hercules transport plane landed with support staff, while at least 12 US F-16 fighter jets and 300 personnel are due to arrive by Thursday.

Komorowski, without directly naming Crimea, said "events to the east" provided a reason to protect military spending in an age of austerity.

"I hope events to the east of the Polish border, which is also NATO’s border, will encourage tough decisions regarding Polish security," Reuters cites him as saying.

The decision to deploy the US jets followed a phone conversation between US Defense Secretary Chuck Hagel and his Polish counterpart Tomasz Siemoniak on Sunday. Washington insisted the air exercise was planned long in advance, though Siemoniak maintains the exercise was to have been smaller, only involving transport aircraft.

More…

 

Jim Sinclair’s Commentary

Bail-in is guaranteed, yet you do nothing!

Banking union to treat all institutions in EU the same regardless of size
Friday, March 21, 2014

Under the EU banking union, troubled banks in small countries like Ireland will get the same treatment as those from bigger countries.
By Ann Cahill
European Correspondent

During a marathon 16 hours of negotiations aimed at finalising the union, EU member states and the European Parliament decided on rules such as who decides to wind up or restructure a bank and how such a move would be funded.

Germany had been anxious to ensure other countries’ financial institutions could not claim their banking funds, but in a phone call at around 5am yesterday, Wolfgang Schäuble, the finance minister, agreed to the deal.

Taoiseach Enda Kenny welcomed the agreement. He said: “We are moving towards the game of putting structures in place for restructuring, by which matters of recapitalisation can be considered, and which can be applied on case by case basis from the end of the year.”

Michel Barnier, the internal market commissioner, put together the initial package and said if had been in place when the crisis hit, no more than 30 EU banks would have needed restructuring.

Plans for a single banking union were put together two years ago when fears for the euro and the EU’s 6,000 banks were still acute and countries wanted to break the link between sovereigns and banks to ensure taxpayers were not forced to bail out the financial institutions.

There were four women and one man negotiating for the parliament with eurozone president Jeroen Dijsselbloem for the member states. As a result of the parliament’s demands, the process of deciding if a bank needs restructuring will be more independent of politicians as the ECB, in charge of bank supervision, will trigger the process.

More…

Russia completes Crimea annexation
By VLADIMIR ISACHENKOV | Associated Press – 3 hrs ago

MOSCOW (AP) — President Vladimir Putin completed the annexation of Crimea on Friday, signing the peninsula into Russia at nearly the same time his Ukrainian counterpart sealed a deal pulling his country closer into Europe’s orbit.

Putin said he saw no need to further retaliate against U.S. sanctions, a newly conciliatory tone reflecting an apparent attempt to contain one of the worst crises in Russia’s relations with the West since the Cold War.

Putin hailed the incorporation of Crimea into Russia as a "remarkable event" before he signed the parliament bills into law in the Kremlin on Friday. He ordered fireworks in Moscow and Crimea.

At nearly the same time, in a ceremony in Brussels, Ukraine’s new prime minister pulled his nation closer to Europe by signing a political association agreement with the European Union — the same deal that touched off the political crisis that drove President Viktor Yanukovych from office and sent him fleeing to Russia.

Russia rushed the annexation of the strategic Black Sea peninsula after Sunday’s hastily called referendum, in which its residents overwhelmingly backed breaking off from Ukraine and joining Russia. Ukraine and the West have rejected the vote, held two weeks after Russian troops had taken over Crimea.

More…

Jim Sinclair’s Commentary

Nice way to nail speculators trying to push a currency in a manner not policy.

Tumbling Chinese yuan sets off ‘carry trade’ rout, triggers derivatives contracts
The yuan has lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation
By Ambrose Evans-Pritchard
5:54PM GMT 20 Mar 2014

China’s yuan has suffered its biggest one-week fall in 20 years, nearing key trigger levels that threaten a wave of forced selling and mounting stress for those with dollar debts.

The jitters come amid reports of fire-sales of Hong Kong property by Chinese investors desperate to raise cash, some slashing their prices by 20pc for a quick sale. A liquidity squeeze in mainland China has already led to the collapse of Zhejiang Xingrun real estate this week with $570m of debts, the biggest property failure so far.

The yuan weakened sharply on Thursday to 6.23 against the dollar and has now lost 3pc since January, a clear break with China’s long-standing policy of slow appreciation.

Geoffrey Kendrick, from Morgan Stanley, said the currency has broken through the 6.20 level where a cluster of structured products are triggered. These are known as losses on target redemption funds. The losses have already hit $3.5bn.

The latest move creates a potential “non-linear movement” that could push the yuan rapidly to the next level at 6.38, where estimated losses would reach $7.5bn, and from there jump to 6.50.

More…

Jim Sinclair’s Commentary

The Ukrainian situation as seen from Beijing.

How Crimea plays in Beijing
By Pepe Escobar

"We are paying very close attention to the situation in Ukraine. We hope all parties can calmly maintain restraint to prevent the situation from further escalating and worsening. Political resolution and dialogue is the only way out."

This, via Chinese Vice Foreign Minister Li Baodong, is Beijing’s quite measured, official interpretation of what’s happening in Ukraine, tailored for global consumption.

But here, in a People’s Daily editorial, is what the leadership is really thinking. And the focus is clearly on the dangers of regime change, the "West’s inability to understand the lessons of history", and "the final battlefield of the Cold War."

More…

Sanctions tit-for-tat: Moscow strikes back against US officials
Published time: March 20, 2014 15:37 
Edited time: March 20, 2014 17:40

Russia’s Foreign Ministry has published a reciprocal sanctions list of US citizens, consisting of 10 names, including: House of Representatives Speaker John Boehner, Senator J. McCain; and advisers to President Obama D. Pfeiffer and C. Atkinson.

These officials, along with another five named by the Foreign Ministry, are banned from entering the country.

The move comes in response to US sanctions imposed against Russian officials after the March-16 referendum in Crimea, which Washington considered “illegitimate.”

“In response to sanctions imposed by the US Administration on 17 March against a number of Russian officials and deputies of the Federal Assembly as a “punishment” for support of the referendum in Crimea, the Russian foreign Ministry announces the introduction of reciprocal sanctions against a similar number of US officials and lawmakers,” reads the statement published on the Foreign Ministry’s website.

The Ministry reiterates that Russia has “repeatedly” stressed using sanctions is a “double-edged thing”and it will have a “boomerang” effect against the US itself.

“Treating our country in such way, as Washington could have already ascertained, is inappropriate and counterproductive,” the statement said.

More…

Jim Sinclair’s Commentary

Good news for gold.

India allows more banks to import gold in easing of curbs
BY SIDDESH MAYENKAR AND NEHA DASGUPTA
MUMBAI Wed Mar 19, 2014 5:11pm IST

(Reuters) – India has allowed five domestic private sector banks to import gold, in what industry officials say could be a significant step towards easing of tough curbs on the metal imposed last year to cut the country’s trade deficit.

The move could boost gold supplies and bring down premiums for the metal in the world’s second-biggest consumer after China.

The Reserve Bank of India (RBI) has allowed gold imports by HDFC Bank (HDBK.NS), Axis Bank (AXBK.NS), Kotak Mahindra Bank (KTKM.NS), Indus Ind Bank (INBK.NS) and Yes Bank (YESB.NS), officials at the respective banks told Reuters.

Two industry sources confirmed the names of the banks. They and the bank officials did not want to be named as they are not authorised to speak to media.

India enforced the so-called 80/20 rule in July, making it mandatory to export a fifth of all gold imports. Under that rule, only six banks and three state-run trading agencies that had facilitated export of gold or jewellery in the past three years were allowed to import. The six banks were mostly state-run lenders.

The RBI has now permitted gold imports within prescribed limits by the private banks even though they had not facilitated any exports of metal or jewellery in the past three years.

More…

Putin’s quiet Latin America play
By Kristina Wong

Away from the conflict in Ukraine, Russian President Vladimir Putin is quietly seeking a foothold in Latin America, military officials warn.

To the alarm of lawmakers and Pentagon officials, Putin has begun sending navy ships and long-range bombers to the region for the first time in years.

Russia’s defense minister says the country is planning bases in Cuba, Venezuela, and Nicaragua, and just last week, Putin’s national security team met to discuss increasing military ties in the region.

“They’re on the march,” Sen. Joe Donnelly (D-Ind.) said at a Senate hearing earlier this month. “They’re working the scenes where we can’t work. And they’re doing a pretty good job.”

Gen. James Kelly, commander of U.S. Southern Command said there has been a “noticeable uptick in Russian power projection and security force personnel” in Latin America.

“It has been over three decades since we last saw this type of high-profile Russian military presence,” Kelly said at the March 13 hearing.

More…

 

Russia demands Ukraine pay back $11 billion
March 20, 2014 8:09 PM

Moscow (AFP) – Prime Minister Dmitry Medvedev on Friday demanded Ukraine pay back $11 billion that he said Kiev had saved through discounted gas prices in return for hosting a Russian naval base in Crimea.

Ukraine owes the money because Crimea is now part of Russia and the two countries’ 2010 lease agreement was now "subject to annulment," Medvedev said at a meeting of the Security Council.

"The Ukrainian state saved some $11 billion dollars and accordingly the Russian budget has a missed profit of the same $11 billion," he warned.

Soon after coming to power in 2010, then president of Ukraine, Viktor Yanukovych, agreed to extend the lease on Russia’s Black Sea fleet in Crimea that was due to expire in 2017 for 25 years, until 2042.

In return, Moscow agreed to cut natural gas prices for Ukraine by $100 for every 1,000 cubic metres.

According to Moscow, Ukraine has been receiving the discount since 2010 even though the new lease agreement was not to enter force before 2017.

More…

Posted at 5:22 PM (CST) by & filed under Jim's Mailbox.

Jim,

The days of wine and roses might just be coming to a close. The Fed and BIS are losing control of their gold inventories and a day of reckoning is getting ever closer. Andrew has identified a real squeeze point for the flow of gold.

CIGA Larry

Maguire – An LBMA Default Was Delayed, But It’s Coming

Today London metals trader Andrew Maguire told King World News that an LBMA default was delayed by Western central planners, but it is coming, despite the West’s frantic efforts to avoid it.  Below is what Maguire had to say in Part I of an incredibly powerful series of interviews that will be released today.

Maguire:  “The net result of all of this (gold) leasing activity means that the bullion which is still showing on the central banks’ books as an asset has more than one claim on it.  Worse, the bullion banks don’t have the gold to repay them….

More…

Jim,

The timeline for "freedom" fighters appears to be accelerating in Turkey.

CIGA Craig

Turkish attempt to ban Twitter appears to backfire

By Associated Press, Published: March 20 | Updated: Friday, March 21, 3:43 PM

ANKARA, Turkey — Turkey’s attempt to block access to Twitter appeared to backfire on Friday with many tech-savvy users circumventing the ban and suspicions growing that the prime minister was using court orders to suppress corruption allegations against him and his government.

Turkey’s telecommunications authority said it had blocked access to the social media network hours after Prime Minister Recep Tayyip Erdogan threatened to “rip out the roots” of the website. Tweets have proliferated with links to recordings that appear to incriminate him and other top officials in corruption.

More…

Posted at 12:49 PM (CST) by & filed under General Editorial.

Dear CIGAs,

We are looking for your feedback as to where to hold our next Q&A Session. This session will be held the weekend of April 26th in either Greenwich, CT or Burlington, VT.

If you are interested in attending either session, please email your preference location to Anna at [email protected].

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

Dan Duval
JSMineset Editor

Posted at 12:39 PM (CST) by & filed under General Editorial.

My Dear Friends,

Yesterday, Thursday the 20th, the Obama Administration stepped up the sanctions against Russia over Crimea. The sanctions still focus on selected banks and targets in terms of people.

This is a very dangerous "tit for tat" approach. An eye for an eye only ends up with a blind world.

The dollar reacted because that market (dollar) knows Russia has a nuclear economic weapon it can let loose on the West. The US dollar depends on its universal use in settling energy contracts.

This is known as the Petro Dollar and is the true dollar standard. When Nixon came off the gold standard for the dollar he adopted the energy standard for the dollar. Should Russia move away from utilization of the US dollar as the standard, the US dollar will crash into the .71 to .72 level on the USDX.

Western Sanctions against Russia is a game of "Financial Chicken" that the US dollar cannot win.

Sincerely,
Jim

Visa, MasterCard Freeze Cards at Sanctioned Russian Banks

MOSCOW, March 21 (RIA Novosti) – US-based Visa Inc. and MasterCard Inc. have stopped processing payments by cardholders at Russian banks targeted by the United States for financial sanctions on Thursday, a number of Russian banks said Friday.

The news signaled the first impact on ordinary Russian citizens by a series of Western sanctions against Russia over the ongoing situation in Ukraine, the greatest geopolitical showdown between Russia and the West since the end of the Cold War.

Earlier sanctions had been restricted to targeting high-level officials.

Several banks reported that customer cards were being declined for payment and that they had received no advance notification of the changes. Customer deposits remained unaffected.

Visa confirmed Friday that it had blocked cards issued by four Russian banks for use on its payment network for online or retail purchases.

Visa said the list of the banks facing sanctions announced by the US Treasury on Thursday includes Rossiya Bank, SMP Bank, Sobinbank and Investcapitalbank, the latter two being part of Rossiya Bank.

“The management of Rossiya Bank understands the difficulties experienced by clients in this situation, and assures them that everything possible is being done to help,” Rossiya Bank said in a statement on its website.

The bank added that customers could still withdraw cash from the bank’s ATMs without difficulties, as well as those owned by partner banks.

Sobinbank said that its call centers had been swamped by customers who were abroad and suddenly found their cards were not working.

More…