Posted at 7:04 PM (CST) by & filed under Bill Holter.

The Rumblings of War

Dear CIGAs,

Shock of all shocks, the IMF announced the Chinese yuan will not be admitted into the SDR until at least Sept. 2016.  http://www.bloomberg.com/news/articles/2015-08-04/imf-says-more-work-needed-before-yuan-reserve-currency-decision  What exactly does this mean?  I can tell you the gold community is so shell shocked and fearful at this point, it “must be bad for gold”, right?  Going back a couple of weeks, China announced they had accumulated another 600 tons or so of gold to the near panic of precious metals investors.  This announcement would be used as another shot at taking price down because the Chinese “don’t like gold as much as we thought”.  This was the prevailing sentiment.

What I think happened was China played “good boy” with the West and lied about their gold holdings.  They announced enough gold to allow them into “the club” but not so much as to “offend” or intimidate anyone in the West.  Their announcement was clearly bogus as they are importing 600 tons every three months …and we are to believe it took them six years?  China had requested both “publicly and officially” to be included in the SDR.  They were publicly humiliated with this move by the IMF.  The Chinese are a very proud people, public humiliation would be last on my list of aggressions toward them!

Make no mistake, they will retaliate.  I believe just as the IMF did this while China is having market problems and during a period of weakness, China will return the favor to the U.S.  …at a very inopportune time for us.  When our markets are convulsing, probably this fall, you can expect one of two responses from the Chinese.  They will either come public with a true and VERY LARGE number for their gold holdings, or they will threaten to and actually dump some Treasury securities/dollar holdings…or both!  I believe their response will be timed to hit us just as in a boxing match, when we are tired, down or vulnerable …for maximum effect.

Whether you want to believe it or not, the U.S. is in a financial war with nearly the rest of the entire world.  To not include a rising China into the SDR makes no sense and is an impossible feat in the long term unless China decides it is not their desire.  I see no upside whatsoever to this action.  Does it “buy time” and postpone the inevitable?  Maybe not.  The action of poking the hornets nest may actually accelerate the collapse!

  There are other possibilities but looking at the two retaliatory options mentioned above, what could result?  First, were China to come clean and “admit” they have 10,000 tons of gold (or MUCH MORE), the yuan would immediately strengthen and move into the dollar’s territory as a settlement currency.  Markets would quickly do the math and understand if China has this much gold …where oh where did it come from?  China could even do an audit publicly and count the bars out in the open surroundings of their Olympic stadium in a “we’ve shown you ours, now you show us yours” fashion!

The other possibility comes with an “option A or B” for the Fed.  If the Chinese decided to sell some of their Treasury holdings, could the Fed sit idly by?  Option A, the Fed could let the market absorb the dumped Treasuries and allow interest rates to rise and watch as bond prices crater.  This is not much of an option, especially in a world where all prices are generated and created “officially”.  On the other hand, option B would be FORCED MONETIZATION!  The Fed could decide they had to buy any and all Treasuries offered by China.  I believe this is exactly what the Fed will decide they MUST do. 

Not coincidentally, the Chinese know this.  They also understand by using this tactic, they will be forcing the Federal Reserve to create an “exit door” especially for …and because of them.  This is the reverse of the old story, if you owe the bank $1 million they own you, if you owe $1 billion then you own the bank.  You see, in this instance the Chinese have a direct lever on our credit markets.  It would be bad enough if they could control our interest rates which they certainly can now influence.  What makes this really bad is they can FORCE the Fed to either monetize or face the immediate collapse of credit markets and thus all markets.  As I mentioned above, the Chinese will not do this until the time is right.  The time will “be right” when our markets display weakness.  They will smile while doing this and politely (publicly) restore honor and dignity.

Before finishing and as long as we are talking about financial “war”, let’s briefly look at Russia.  The U.S. and NATO are now crossing some very red lines in the sand when it comes to both Ukraine and Syria.  Trainings and war games are taking place in western Ukraine while the U.S. is and has authorized airstrikes (with Israeli assistance) against Syria.  Mr. Putin has said in no uncertain terms he will not allow the slaughter of Russians in Ukraine.  He has also stated numerous times he will not stand by idly should allies Syria or Iran be attacked http://www.zerohedge.com/news/2015-08-04/russia-ready-send-paratroopers-syria  .  These are all very real sparks in the dry tinder of current geopolitics. 

The question you need to ask yourself is this,  do you really believe the current fairy tale pricing of assets, ALL ASSETS will hold during a financial war with China?  Or during a real war with Russia?  This is not fear mongering, it is what’s on our dinner table!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
Comments welcome!  [email protected]

Posted at 6:55 PM (CST) by & filed under Jim's Mailbox.

Jim,

You could sense it coming!

The market is poised for a major crash. It just broke thru 17,400 support. If it closes today below this level, look out tomorrow!

Note the lower highs and lower lows,

then read the notes below this chart.

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Then again, the Fed’s Price Protection Team (PPT) stepped in this morning to avert a major downdraft in the market by making a massive bid in S&P Futures.

Biggest “Plunge Protection” Buy/Sell Imbalance For 2015 Halts Market Slide
Submitted by Tyler Durden on 08/06/2015

Despite the ubiquitous pre-open ramp in stocks, it appears ‘investors’ want out in a hurry. With The Dow having fallen 150 points from its overnight highs – testing towards multi-month lows, Nanex points out that suddenly a bid arrived… the biggest buy imbalance of 2015 so far exploded into e-mini S&P futures and managed to save stocks from falling (for now).

The rescue bid arives…

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Despite the ubiquitous pre-open ramp in stocks, it appears ‘investors’ want out in a hurry. This is not indigenous to the US.

China has pumped trillions into their stock market over the past week as I crumbled about 40%!

China’s Plunge Protection “National Team” Bought 900 Billion In Stocks, Goldman Calculates
Submitted by Tyler Durden on 08/05/2015 – 19:45

In, “The Complete Guide To China’s CNY 4 Trillion Margin Doomsday Machine,” we presented a comprehensive look at the various backdoor channels the country has used to skirt official restrictions on leveraged stock trading. Here, courtesy of BofAML, is a breakdown of these channels and the bank’s best estimates of their size.

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The dramatic sell-off that made international headlines last month and, along with the Greek drama, dominated financial market news, was precipitated by an unwind in these unofficial margin lending channels.

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And of course the Swiss also !!!!!!

The Swiss National Bank Bought Another 500,000 AAPL Shares Just Before 10% Correction
Submitted by Tyler Durden on 08/05/2015 – 17:09

Three months ago we were stunned to learn, and report, that the Swiss National Bank – a central bank – had been one of the biggest buyers of AAPL stock in the first quarter, when it added 3.3 million shares to its existing position, or 60%, bringing the total to 9 million shares, for a grand total of $1.1 billion. Moments ago, the SNB which unlike the Fed and the other “serious” central banks releases a 10-Q divulging its equity holdings, updated on its latest stock portfolio.

We were amused to learn that in the quarter in which AAPL stock almost hit a new all time high, the Swiss money printing authority which reported a record $20 billion loss in the second quarter, and a record $52 billion in the first half, added another 500,000 AAPL shares, bringing its new grand total to a whopping 9.4 million shares, equivalent to $1.2 billion as of June 30 (well below that now following the recent 10% correction).

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Respectfully in Angst,
CIGA Wolfgang Rech

 

Jim,

It appears that JP Morgan is utilizing current accounting gimmicks to reclassify gold. That reeks of DESPERATION by the Comex!

Recently we had an article stating that 25,000 ounces of gold were being withdrawn from the Comex daily.

At that rate, the Comex would run out gold and be in default within 14 days!

(Comex supposedly has only 350,000 oz of deliverable (registered) gold left.

Suddenly, out of the blue…

A fiery horse with the speed of light, a cloud of dust and a hearty “Hi-yo Silver” – the Lone Ranger!

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CIGA Simon Simpleton

JPMorgan Helps Comex Avoid Gold Depletion, Boosts Registered Gold By 78% Overnight
Submitted by Tyler Durden on 08/06/2015 – 12:08

We were less than surprised to see that just 2 days after our report, the Comex once again succeeded in sweeping default fears under the rug by boosting its eligible gold by a whopping 78% overnight, from 362K ounces to 643K, thereby pushing deliverable gold from its all time lows. However, this was not achieved with an infusion of actual new gold into the Comex, but thanks to JPM reclassifying 276K ounces of gold from the Eligible into the Registered category, even as actual eligible gold continues being withdrawn from the Comex.

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Jim,

The glaring event in this Zero Hedge article is in the last sentence:

“Koreans, nervous about the fallout from the crash in China’s stock market, are choosing to diversify into gold and take advantage of lower dollar prices. ”

Will this happen when the US stock market collapses?

CIGA Wolfgang Rech

Gold Bullion Demand In ‘Chindia’ Heading Over 2,000 Metric Tonnes Again
Submitted by GoldCore on 08/06/2015 07:49 -0400

· Gold Bullion Demand In ‘Chindia’ Heading Over 2,000 Metric Tonnes Again

· Shanghai Gold Exchange deliveries at 73.289 tonnes last week

· 3rd largest week of gold withdrawals ever on SGE

· Both China and India heading for over 1,000 metric tonnes in 2015 … again

· India imports 96.1 tonnes in May alone

· ‘Chindia’ imports 296.55 tonnes in May – 14% greater than global production

· South Korean gold demand surges in wake of Chinese crash

· Asian and global gold demand robust contrary to anti-gold narrative

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Chindia Gold Demand

The recent lower prices in gold have not deterred investors internationally from buying gold coins and bars in large volumes again. Indeed the Perth Mint and the US Mint are struggling to fulfill demand for gold coins and bars.

This is particularly the case in the eastern hemisphere – especially in India and China – where demand has again increased significantly on price weakness.

Between them, these two countries are on-track to import 2,000 tonnes of gold this year – that is more than two thirds of the total annual global gold mine production, which is set to be about 2,800 tonnes this year.

More…

Posted at 2:56 PM (CST) by & filed under In The News.

Second Civil War is Brewing in Ukraine – Stephen Cohen
20:59 06.08.2015(updated 21:42 06.08.2015)

From the current looks of the situation in Ukraine, the country is almost certainly on the verge of a second civil war, notes the US historian Stephen F. Cohen.

Cohen believes that the coming war will erupt between the Kiev-based national government, which is supported by Washington, and a growing far-right ultranationalists, which are growing in number in Ukraine.

“Between the official government and the growing ultranationalist movement whose most powerful representative is the political and military organization known as the Right Sector, which some people say are neo-fascists as some of their batallions wear swastikas and some praise the nazi-regime. The pivot of their ideological thinking is an ethnically cleansed, purified Ukraine, above all without any Russians or Russian influence,” said Cohen.

One of their demand from official Kiev government is to resume the offensive in the East of Ukraine and make no compromises with Moscow, which is basically the Minsk accords.

“In the last few weeks it seems quite certain that the Ukrainian President, Petro Poroshenko, is seeking to comply with the Minsk Agreement, as he understands that this is the only way for him to retain his presidency,” added the historian.

However, Cohen noted that as the ultra-right forces grow in strength they would not sit by and permit Poroshenko conduct peace negotiation with the representatives of Donbass, considering that there are ultra-rights within the Ukrainian parliament itself.

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Jim Sinclair’s Commentary

As Bill Holter said this evening from the watchtower, the Chinese can make a Fed rate rise happen, if they care to, when they care to.

Anyone want to reconsider China’s desire to be part of the SDR?

GDP Shocker: Atlanta Fed Sees Q3 Growth At A Laughable 1%
Submitted by Tyler Durden on 08/06/2015 13:44 -0400

The Atlanta Fed’s Q1 and Q2 GDP forecasts were virtually spot on with what the BEA ultimately reported. Which is why if its accuracy persists, not only the Fed, but Wall Street strategists suddenly have a very big headache on their hands.

Moments ago, the Atlanta Fed just released its much anticipated first estimate for Q3 GDP. It was a doozy, at just 1.0%, or more than 2% below the consensus sellside estimate.

If this is confirmed, not only are all rate hike bets off, but one may as well start the countdown to the recession, and more importantly, QE4.

From the Atlanta Fed:

Latest forecast — August 6, 2015

The first GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2015 was 1.0 percent on August 6. The model projects that lower inventory investment will subtract 1.7 percentage points from third quarter real GDP growth. Real GDP grew 2.3 percent in the second quarter according to the advance estimate from the U.S. Bureau of Economic Analysis.

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In short, if confirmed, not only is this a disaster for the economy, but an even bigger disaster for the Fed which has now pegged itself into a rate hike hole, and can only unpeg it by destroying what little credibility it has left.

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Jim Sinclair’s Commentary

Economic wars will now become hot wars.

Pentagon Outranged by Chinese Anti-Ship Missiles, Scrambles to Save Face
22:25 06.08.2015(updated 23:33 06.08.2015)

Desperate to compete with China’s long-range anti-ship missiles, the US Navy is considering one of two options: forge ahead with the expensive, but state-of-the-art LRASM, or upgrade the Cold War-era Tomahawk, a missile never intended for naval warfare.

Beijing unveiled its DF-21D Dong Feng “carrier killer” missile in 2014. Rumored to be capable of traveling at Mach 10 – or ten times the speed of sound – with an effective range of 1,200 miles, the Navy has expressed concern that the weapon could pose a major threat to US aircraft carriers in the event of conflict.

On Wednesday, US Deputy Chief of Naval Operations Joseph Aucoin outlined the Pentagon’s plan for how best to counter the Dong Feng.

One option is the Tomahawk missile. Introduced in the 1970s, that weapon is now produced by US defense contracting firm Raytheon. While it has proven remarkably reliable during its nearly 40 years of service, much of the Tomahawk’s success is based on stationary, land-based targets.

Except for a single model now out of service, the Tomahawk is not designed for mobile, floating targets, and would have to receive a significant upgrade before they could be any match against the Chinese Navy.

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New Jersey legislator seeks federal loans to bail out state pensions
By Hilary Russ

(Reuters) – A top New Jersey Democrat wants the federal government to create a low-interest loan program to rescue states with big public pension problems.

State Senate President Steve Sweeney called on Wednesday for a nationwide pension debt restructuring plan under which the U.S. Federal Reserve would offer low-interest loans to state governments to pay down unfunded pension liabilities.

The country has racked up nearly $1 trillion of unfunded liabilities altogether in its state-run retirement systems, according to the latest estimate from Pew Charitable Trusts. Other projections have put the number even higher.

New Jersey’s badly underfunded pension system was cast further into the spotlight last year when Governor Chris Christie, now a 2016 Republican presidential candidate, slashed the state’s contribution because of a revenue shortfall.

Labor unions sued, saying the cuts violated a promise Christie himself made, in 2011 pension reforms, to ramp up to full contributions.

But Christie won the battle in the state’s highest court. The decision provided breathing room for the stressed state budget, but the pension problem lingers long term.

New Jersey would have to pay $6 billion on average annually for 30 years to pay off its existing $51 billion unfunded liability, the third largest in the nation, Sweeney said.

But under his proposal, the Garden State could take out a $50 million federal loan at a low 1 percent interest rate, putting the proceeds into its retirement system. If that happened in fiscal year 2017, it would cut annual pension contributions, including the loan repayment, in half to about $3 billion, he said.

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JPMorgan Helps Comex Avoid Gold Depletion, Boosts Registered Gold By 78% Overnight
Submitted by Tyler Durden on 08/06/2015 12:08 -0400

Earlier this week, when observing the most recent drop in Comex registered gold as a result of a reclassification by the gold vaults of JPM and Brink’s of 25,386 ounces of registered gold into eligible (alongside the withrawal of 200,752 ounces of eligible gold from JPM), we wondered if Comex “may be on the edge” since after the adjustment, Comex registered gold had dropped to a never before seen low of just over 10 tons, resulting in record high gold coverage ratio of 124 ounces in outstanding gold open interest for every ounce of physical.

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To be sure, we had no explanation for the drop, but we did muse that “the mainstream press will once again start paying close attention to the total, and especially registered, gold held at the Comex: at a pace of 25K a day, the gold vaults that make up the CME’s vaulting system would be depleted in just under two weeks of daily withdrawals.”

And while the mainstream press has certainly not opined on the peculiar events at the Comex, we have been paying particularly close attention to the daily Comex gold updates, and is probably why we were less than surprised to see that just 2 days after our report, the Comex once again succeeded in sweeping default fears under the rug by boosting its eligible gold by a whopping 78% overnight, from 362K ounces to 643K, thereby pushing deliverable gold from its all time lows.

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However, this was not achieved with an infusion of actual new gold into the Comex, but thanks to JPM reclassifying 276K ounces of gold from the Eligible into the Registered category, even as actual eligible gold continues quietly hemmorhaging out of the Comex.

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August 6, 2015
Vilnius Lithuania

Here’s a great example of how an important rule that may affect your life gets BURIED within a giant piece of legislation—

At first glance the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 doesn’t seem like it should have any impact on foreign bank accounts.

But in fact it does significantly.

This piece of legislation signed into law last week, changes the filing deadline for an FBAR by over two months.

If you’re not familiar, the Report of Foreign Bank and Financial Accounts, commonly known as the FBAR, is a form that US taxpayers must submit to report foreign bank and financial accounts.

In general, any US citizen, resident, corporation, partnership, LLC, etc. which either has a financial interest in, or signature authority over, a foreign financial account or accounts, must file the FBAR. Given that the aggregate total across all the accounts was at least $10,000 at any point during the previous calendar year.

Curiously, the FBAR is not filed to the IRS. It goes to the Financial Crimes Enforcement Network (FinCEN), and is submitted electronically via form FinCEN 114.

The FBAR filing deadline used to be June 30th every year, meaning that you had until June 30th to report all your financial accounts for the previous calendar year.

Now, HR 3236 changes the filing date to April 15th of each year to coincide with the US tax filing deadline.

This is pretty important news if you have a foreign bank account given that there are steep penalties for not filing.

But you won’t ever hear about it. At least not from the government.

Important changes like this are quietly passed and buried under hundreds of pages of legislation.

Yet they just expect you to know about it. As the old saying goes, ‘ignorance of the law is not an excuse.’

It’s as if these politicians honestly believe that people are sitting around watching CSPAN all day and reading the text of all the laws being debated.

And often times, the rules and regulations aren’t even passed by Congress.

In the Land of the Free, executive agencies have the authority to create their own rules, all of which have the same weight and effect as the laws passed by Congress.

And the volume is astounding.

Just yesterday, in fact, there were over 300 pages of new rules and regulations published in the Land of the Free, and nearly 80,000 published last year.

These rules govern things like what we can and cannot put in our bodies, how we can educate our own children, and what we’re allowed to do with our own property.

It’s impossible to keep up with all of this. And yet these rules often come with severe administrative, civil, and even criminal penalties for non-compliance.

You, at this exact moment as you read these words, are in violation of probably half a dozen regulations that you’ve never heard of, buried deep within over 175,000 pages of rules.

It’s all part of how the government in the Land of the Free has turned everyone into a criminal for simply existing.

Which means that if you ever get on the bad side of some bureaucrat, or anyone ever decides to go after you, they’ll easily be able to find dozens of charges to bring up against you.

And it’s not going to stop.

You can see in this bizarre video that the government is practically BRAGGING about how much they regulate you.

This is what freedom means today in America.

And while I can understand that there are a lot of nice conveniences to living in America, it’s time to be honest with yourself and to acknowledge that freedom is no longer one of those conveniences.

Until tomorrow,
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Simon Black
Founder, SovereignMan.com

Posted at 12:41 PM (CST) by & filed under In The News.

Jim Sinclair’s Commentary

Mr. Williams shares the following with us.

- June Trade Deficit Deterioration Suggests Small Downside Revision to Second-Quarter GDP Growth
- “Soft” June Construction Spending Was in Context of Upside Revisions and Rising Inflation
- Consumer Conditions Appear to Be Weakening Anew

“No. 740: June Trade Deficit, Construction Spending and Consumer Conditions”
Web-page: http://www.shadowstats.com

 

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Trump Warns The Fed “Is Creating A Bubble That Could Explode”
Submitted by Tyler Durden on 08/05/2015 14:17 -0400
Paul Volcker’s “policy and demeanor were very solid,” explains Donald Trump in a brief Bloomberg interview, point out that the inflation-taming Fed head  is a role model for the type of central banker he would pick. While admitting he “has always done well in a low rate environment,” Trumps slammed the current Fed’s ZIRP for “creating a bubble.. and the bubble could explode.” Trump had  – as usual – plenty to say on topics from Ex-Im Bank (against it as not “free enterprise”), to campaign financing (favoring full transparency of money in politics) careful to brag – jabbing at The Kochs – that “I don’t need anybody else’s money.”

Trump on Paul Volcker:

“((HEILEMANN: You think back on all the Fed chairs of the past. Who do you think has been the best?)) ….

TRUMP: I liked Paul Volcker a lot. I thought he was a terrific guy in so many different ways, and he had a good pulse and he had a good — to me he had — he was doing what had to be done…. From that standpoint I like low interest rates. From the country’s standpoint I’m just not sure it’s a very good thing, because I really do believe we’re creating a bubble.

((HALPERIN: You said you liked Paul Volcker. And do you like the rule named after him as part of Dodd-Frank, the Volcker Rule?))

TRUMP: Well I’m not sure if he likes it, but if he’s — you know what, honestly, Mark, if he’s happy, I’m happy. He was a terrific guy. I’ve met him a few times. And I thought he was terrific. But I think his policy and his demeanor there was something very solid about him. His demeanor were very good.”

On the Ex-Im Bank:

“I don’t like it because I don’t think it’s necessary. It’s a one-way street also. It’s sort of a feather bedding for politicians and others, and a few companies.And these are companies that can do very well without it. So I don’t like it. I think it’s a lot of excess baggage. I think it’s unnecessary. And when you think about free enterprise it’s really not free enterprise. I’d be against it.”

On his favorite Treasury Secretary:

“I don’t think I have an opinion on that. I think we’ve had some good ones. We’ve had some bad ones, but I really wouldn’t have an opinion on that. We’re going to — I know they’re talking about right now lots of beautiful pictures on beautiful bills, and we’re going to see whether or not that works out, but I have no real opinion on that. I think actually Federal Reserve right now in this world the way we built it up, and probably has more of an impact than almost any other position, other than the couple of biggies.”

More…

 

Housing 2006 Redux – Mortgage Fraud And Speculation Come Roaring Back
Submitted by Tyler Durden on 08/05/2015 13:59 -0400

Submitted by mhanson.com’s Mark Hanson via Contra Corner blog,

Introduction:

To preface this report, I consider the subject matter and my findings, herein, to be as important to contemporary housing and residential credit forecasting, as my early work in 2005/2006 on Bubble 1.0.

These data go a long way in identifying the “missing energy / link” driving what I have coined a “demand-less house-price surge” and explaining what the recurring annual rate plunges to historical lows; institutional speculators tripping all over themselves for sub 3% cap-rates on single-family rental houses; boomerang buyers; boomers longing for “vacation” condos on beaches; and a deluge of foreign demand with H1B and EB5 visas can’t.

Bottom line: “Second / Vacation” home demand has surged more than any other housing segment over the past three years.The overwhelming market opinion is that aging, equity-market affluent baby-boomers are all rushing in at the same time to buy their dream “vacation” home.  But, this is misguided, as the data, herein, reveal the truth; there is no indication true “2nd/vacation” home demand is surging at all.

In fact, the data fully supports my thesis that this housing market is spun out of control from rampant speculation, process incompetence, relationship-driven dissonance, and outright fraud, or an exact repeat of 2005 to 2007.

Fraud in lending – occurs late-mid to late cycle when demand is stalling and can’t get a boost organically or fundamentally – is simply another form of stimulus and “transitory” by nature. It’s not durable. In fact, just like stimulus, pervasive fraud leads to a slingshot effect when the drivers suddenly turn counter-cyclical on some sort of catalyst.

Excessive speculation and fraud are driving house demand and certainly prices. “Vacation”, “second”, and “investment” properties are all part of the same speculative “trade”, but by different parties. And just like in 2006, the distinction between the property types has become de minimis.  As prices continue to increase past the ability for the incremental buyer to afford, either leverage-in-finance or fraud, must fill in the buyer qualification/house price divergence.

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5 Extraordinary Things That Will Shake Up Precious Metals

By Stefan Gleason 08/04/15 – 11:14 AM EDT

NEW YORK (TheStreet) — These are extraordinary times for the precious metals markets. And not just because of the headline price action. Underlying developments in the supply-and-demand fundamentals for physical gold and silver are extraordinary in their own right.

If recent trends could be summed up in one word, it would be bifurcation. On one hand, the paper market (i.e., futures contracts) continues to be heavily pressured in a bearish direction by extraordinary levels of institutional short-selling. On the other, the physical market is heating up with robust investor buying and increasingly bullish long-term supply/demand prospects.

It’s been extraordinarily difficult for some investors to keep their conviction and hold on to real value while paper markets relentlessly discount it. But most bullion investors recognize the extraordinary buying opportunity at hand. That’s evidenced by the fact they are rushing to buy, not sell, gold and silver bullion products at discounted prices.

1. Investment Demand for Gold and Silver Coins Surges

The first (and perhaps most important) extraordinary development now taking place in precious metals markets is a surge in demand for bullion coins, bars, and rounds. The U.S. Mint suspended sales of Silver Eagles for most of July because it couldn’t keep up with demand. The Mint’s sales of Gold Eagles in July reached their highest monthly total in more than two years.

Australia’s Perth Mint reports its inventories are being cleared out by surging demand, especially from Asia. “Everything we get in is going straight out the door as soon as we refine it,” said Perth Mint Treasurer Nigel Moffatt in a Bloomberg interview.

Private mints are swamped as well, pushing out delivery for weeks while scrambling to obtain raw silver for minting so they can keep the manufacturing process running at full tilt.

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Jim Sinclair’s Commentary

James Turk recounts history and events that are happening in the gold market today have not been seen at any time in the past. Backwardation without historical precedence.

Prolonged Gold Backwardation Has Never Happened in Monetary History-James Turk

By Greg Hunter On August 5, 2015

By Greg Hunter’s USAWatchdog.com

Renowned gold expert James Turk says prolonged gold backwardation like we are seeing now, where the spot price is higher than the future price, has never happened before. Turk contends, “No, never, and I am a student of monetary history as well, and I have never seen it happen like this in monetary history. Typically, when a backwardation would occur under the classic gold standard, for example, the banks that would have fractional reserve banking would go under. There would be a banking collapse. So, typically, if there was a backwardation, it would only last for a few days as it did in 1999 and in 2008. So, we have an unusual situation where we have heavy government involvement where they are trying to keep the gold price under wraps so they can maintain this policy of zero interest rates. They are thinking they are going to jumpstart the economy, but the economy is not being jumpstarted. All it’s doing is deferring the ultimate collapse and the governments’ ability to repay all the debt that they owe.”

Turk, a best-selling author who co-wrote a book called “The Money Bubble,” says what is happening now is nothing short of an historic bubble getting ready to pop. Turk explains, “In other words, just as we look back to the South Sea bubble and the Mississippi bubble, people are going to look back to today and say this is the money bubble. People are using what they think is money, but what they are using is really a money substitute. That’s the theme of the book that John Rubino and I wrote. We have lost sight as to what money truly is. It is a physical asset without counter-party risk and that is gold and silver.”

Turk thinks this bubble will end like all bubbles. Turk predicts, “This money bubble is going to pop. It has to because there is just too much debt in the world. That debt has to be reconciled and, ultimately, when you are reconciling debt, it gets back to the point about collateral on the balance sheets. There is just not enough good collateral to support all of this paper money circulating out there.”

It comes as no surprise that Turk thinks the premier collateral is gold. Turk goes on to say, “That’s what you are going to want, and that is ultimately what’s going to reemerge in global commerce. . . . It’s ultimately going to go back to gold.”

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Posted at 12:33 PM (CST) by & filed under Jim's Mailbox.

Hello Jim,

The IMF decision to postpone China’s inclusion into the ‘Club’. Certainly wreaks of Washington’s intervention on behalf of Wall Street and the gang of banksters.

I know that since march of 2013 you have been hesitant to give any kind of time frame for gold’s breakout. In the world of gold you are still our beacon in a dark place cloaked in manipulation, lies and deceit. I’ve thought for a long time it would be this autumn.

What are your thoughts on this time frame?

Regards,
CIGA Eldon

Dear Eldon,

Not accommodating China’s wishes suggested by the IMF for the Yuan today was a huge error. We are almost there in terms of the timing you seek. The economic global war is raging out there right now.

Since March of 2013 gold has been in the cartel’s control. They will lose and the next move in gold is to a new high.

Respectfully yours,
Jim

 

Jim,

Why don’t they call it like it is?

BLACKMAIL!

I guess there is no longer “Blackmail” but simply “Business Acumen.”

Just like there is no longer “Default” but simply “Restructuring.”

The new Nomenclature Rules: Do No Harm.

CIGA Wolfgang Rech

First Ex-Im Casualty: Boeing Loses Deal Due To “Credit Woes”
Submitted by Tyler Durden on 08/05/2015 – 09:00

Boeing, whose Chairman Jim McNerney says the demise of the Export Import bank amounts to “craziness”, lost a contract worth several hundred million dollars last month, after the buyer backed out citing credit concers related to the expiration of the Depression-era institution’s charter.

Now, Boeing and GE alike are threatening to move American jobs overseas if Congress fails to renew the authorization for what some commentators call “a vast, well-funded network of consultants, lobbyists and big-government interest groups.” 

More…

 

Dear Mr. Sinclair,

Respected Sir,

I am writing to you from the land of perennial inflation… where inflation under 10% is considered “normal.” This is good old India.

In the USA, so many millions of people have their heads buried in the sand that they cannot see inflation even though it is now omnipresent there in rents, medical bills, college education costs… although food inflation still seems tame, maybe because after paying all these bills people have less money left to pay for food ?

But if you look at everyday retail chains that are frequented by millions you can easily see that food prices have gone up by 20-25% at least, at Starbucks and Chipotle just to name two popular brands.

And now, finally, the mainstream media is slowly starting to mention the rising inflation in the USA

http://finance.yahoo.com/news/rents-haircuts-americans-start-feel-165500571.html

Once food prices start rising faster, we are on to runaway inflation in the USA too.

Best regards,
CIGA Ruchir

 

Jim,

As Paul Harvey used to say: “And now for the real story…”

It’s not that the Yuan is not widely used or freely traded enough, but rather it takes away some of the dominance of the US Dollar as the primary reserve currency of the world.

Most everyone I know was expecting major turmoil in the markets, especially gold, come this September/October.  It all ties in with the acceptance of the Yuan in the IMF and the FULL disclosure of China’s gold holdings. That may now be postponed.

Note: they don’t tell you HOW or WHY it might “rattle the financial markets!”

I’m sure the Chinese are not happy campers this morning. Pity… now China will have to continue accumulating gold at these artificial prices, moving out of US Treasuries and the Dollar without disclosing it.

Although we may not be privy to such policy, someone does know. The Shadow Knows! (for those old enough to remember the TV show of the 1950′s).

To me, The Shadow is none other than the Market itself.

When supply dwindles, the Market will expose any actions through price movements, and castrate the activities of naked shorting of paper gold.

CIGA Wolfgang Rech

IMF signals delay on adding China to currency basket
By PAUL WISEMAN and MARTIN CRUTSINGER,

AP Economics Writer
Wednesday August 05, 2015 08:06

WASHINGTON (AP) — The staff of the International Monetary Fund is recommending that China wait until at least October 2016 to join an exclusive club of the world’s top currencies.

China wants its currency, the yuan, included in a basket of currencies used in IMF operations along with the U.S. dollar, euro, British pound and Japanese yen. It was hoping the yuan could be added this Jan. 1. The IMF board will consider later this month the staff’s recommendation for a delay until Oct. 1 of next year.

China believes it deserves to be included because it boasts the world’s second-biggest economy. But the yuan is not as widely used or freely traded as the other four currencies.

The IMF staff said in a report released Tuesday that it was also worried that adding a new currency Jan. 1 might rattle financial markets on the first day of trading next year.

There have been estimates by some private economists that the Chinese economy will get a major boost if its currency is added because the IMF seal of approval will encourage more foreign participation in China’s financial markets.

More…

Posted at 12:28 PM (CST) by & filed under In The News.

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Jim Sinclair’s Commentary

Jack those rates Chair Yellen.

US Recession Imminent As Factory Orders Plunge For 8th Consecutive Month
Tyler Durden on 08/04/2015 10:06 -0400

For the 8th month in a row, US factory orders fell YoY. Down 6.2% in June, this is the longest streak of declining factory orders outside of a recession in history. MoM, factory orders rose 1.8% – as expected – the most since May 2014 but historical orders and shipments were revised lower. Much of the MoM gain was driven by a 21% rise in defense aircraft shipments. Inventories contonue to rise leaving inventories-to-shipments ratios at cycle highs.

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Would have been considerably worse if not for a 21% rise in Defense aircraft orders… thank the Keynesian gods for war!!!

More…

 

Prepare for Massive Rally – SocGen’s Edward’s Gold price forecast foresees spot rates hitting upwards of $9,900 per ounce.
Submitted by IWB, on August 4th, 2015

Gold is about to experience a massive price rally, erasing its recent lackluster performance for investors smart enough to act now. At least, that’s the latest gold price forecast of Albert Edwards, head strategist at Societe Generale.

Gold certainly isn’t everyone’s favorite commodity at the moment. And the belief that the Federal Reserve is set to raise interest rates as early as September doesn’t help matters. Because gold doesn’t return interest or pay dividends like some other assets, higher interest rates make them even less desirable. This has put the “safe-bet” into an awkward market position, and convinced a great many analysts and traders that it’s to be avoided.

Edwards, however, sees the current market weakness of the yellow metal as only the prelude to a massive price rally. In a report obtained by Newsmax, the economist points out the financial fragility of Western central banks. He alleges that they have set themselves up for a crisis on a far larger scale than the one in 2008.

More…

Posted at 11:19 AM (CST) by & filed under Bill Holter.

Dear CIGAs,

It is not often I write something as important as what follows.  It was said after the last crash that “no one could’ve seen it coming”.  This was not so back then and is not so today.  If you were looking for the truth in 2007, the average investor had ample warning from many sources warning of what was to come.  The warnings are now much louder, far easier to hear and coming from some mainstream and even “official sources”.  Are you listening?
After the biggest financial and social crash in history occurs, “they” will say you were warned!  Who are “they” and how exactly were we warned?  For several years and in particular the last 12 months, the IMF (International Monetary Fund) and the BIS (Bank for International Settlements) have been issuing warning after warning.  They have truly warned us as I will show you.  Do I believe they did this out of the goodness of their hearts?  No, I believe it has been in “c.y.a” fashion followed by their laughter because the sheep have and will sleep through it all until it’s too late.

Thanks to Larry White from www.Lonestarwhitehouse.blogspot.com a full listing of the recent warnings has been compiled and logged.  I had seen each one of these over the last year and have even commented on a couple of them but it never really registered with me there were so many.  Normally I try not to “link” articles to death, this one is different because it is important you see how many and just how in depth the warnings have been!  I will asterisk the three most important articles in my opinion, there have been 16 such warnings over the last 12 months! 

July 2014 – BIS  –BIS Issues Strong Warning on “Asset Bubbles”

July 2014 – IMF –Bloomberg: IMF Warns of Potential Risks to Global Growth

October 2014 – BIS –”No One Could Foresee this Coming”

October 2014 IMF Direct Blog — What Could Make $3.8 Trillion in global bonds go up in smoke?

October 2014 IMF Report –”Heat Wave”-Rising financial risk in the U.S.

********December 2014 – BIS –BIS Issues a new warning on markets

December 2014 – BIS —BIS Warnings on the U.S. Dollar

February 2015 – IMF – Shadow Banking — Another Warning from the IMF – This Time on “Shadow Banking”

March 2015 – Former IMF Peter Doyle – Don’t expect any warning on new crisis -Former IMF Peter Doyle: Don’t Expect any Early Warning from the IMF -

*******April 2015 IMF – Liquidity Shock –IMF Tells Regulators to Brace for Liquidity Shock

May 2015 BIS – Need New “Rules of the Game” –BIS: Time to Think about New Global Rules of the Game?

June 2015 BIS Credit Risk Report –BIS: New Credit Risk Management Report

June 2015 IMF (Jose Vinals) –IMF’s Vinals Says Central Banks May Have to be Market Makers

*******BIS June 2015 (UK Telegrahph, no blog article) –The world is defenceless against the next financial crisis, warns BIS

July 2015 – IMF – Warns US the System is Still Vulnerable (no blog article) –IMF warns U.S.: Your financial system is (still) vulnerable

July 2015 – IMF – Warns Pension Funds Could Pose Systemic Risk (no blog article) –IMF warns pension funds could pose systemic risks to the US

And there you have it in black and white!  You have been warned!  MANY TIMES in fact…and from the most inside and official of sources!  Yet on a daily basis we hear from our own mainstream press, Washington and Wall St. …don’t worry be happy!  These are very real articles with well thought out and cogent logic.  They are not to be ignored!

One piece by the BIS last October talked about the “no one could have seen it coming” meme we heard so often back in 2008-09.  THEY see it coming and have been telling you for over a year!  Please understand this, the BIS is the central bank for central banks.  No one knows the inside situation (particularly in derivatives) better than they do.  If you don’t believe me or others who have worked so hard to get the warnings out, listen to what both the BIS and IMF are telling you.  They have gotten out in front of this and will only say “we tried to warn you” after the fact.

As a chuckle to finish, below is a photo of me and CIGA Dave in front of the BIS headquarters after deciding to heed their warnings personally!
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Standing Watch,

Bill Holter
Holter-Sinclair collaboration
Comments Welcome!  [email protected]

Posted at 10:20 AM (CST) by & filed under Jim's Mailbox.

Jim,

A telling sign of the mindset of our government and the media…

No default, only restructuring mentioned! (bailouts with taxpayers dollars).

Does it ever end?

CIGA Wolfgang Rech

Wolfgang,

Nothing ever defaults anymore no matter whose money does the bailout. They simply restructure.

Why get all those default derivatives up in smoke?

Jim

Puerto Rico debt crisis deepens
By Michelle Kaske

Puerto Rico fell deeper into the fiscal abyss after it defaulted for the first time and halted deposits into a fund that pays its general obligation bonds — as the commonwealth pushes for what could be the biggest-ever municipal debt restructuring.

More…

 

Jim,

All I hear about is debt. Day in and day out.

And how future generations will be left to pay for today’s sins.

We must remember, debt is NOT an entity unto itself. Someone is profiting; be it major corporations, banks, politicians, etc.

Some is siphoning the lifeblood of our economy out of the system (and living high on the hog, I’m sure).

The government’s $18 trillion in outstanding debt.

The Student Loan Debt Bubble.

The Housing Debt Bubble, here and in Canada of late.

The Social Security and Medicare black hole.

The Sub Prime Auto Debt Bubble

The solution to future generations inherited debt load is to simply to print trillions in fiat currency and buy back debt. This will absolve our children from mortgaging their future and the burden carrying and repaying this enormous debt.

Instead it will place the onus on our own generation. We should have to deal with massive inflationary spirals to cleanse the system once and for all. The rich won’t be hurt by the ensuing inflationary pressures: the middle and lower class will.

However, we are deserving of such pain for our indifference to the corruption taking place in our entire system of Democracy.

CIGA Wolfgang Rech

Jimmy Carter Rages At What The U.S. Has Become: “Just An Oligarchy With Unlimited Political Bribery”
Submitted by Tyler Durden on 08/03/2015 18:41 -0400

As for today’s political incumbents: they now have their careers for as long as they want and are willing to do the biddings of their masters. And, then, they retire to become, themselves, new members of the aristocracy, such as the Clintons have done, and such as the Obamas will do. (Of course, the Bushes have been aristocrats since early in the last century.)

Furthermore, the new age of aristocratic control is not merely national but international in scope; so, the global aristocracy have probably found the formula that will keep them in control until they destroy the entire world.

The Times study shows that the Republican Party is overwhelmingly advantaged by the recent unleashing of big-corporate money power. All of the evidence suggests that though different aristocrats compete against each other for the biggest chunks of whatever the given nation has to offer, they all compete on the same side against the public, in order to lower the wages of their workers, and to lower the standards for consumers’ safety and welfare so as to increase their own profits (transfer their costs and investment-losses onto others); and, so, now, the U.S. is soaring again toward Gilded Age economic inequality, perhaps to surpass the earlier era of unrestrained robber barons. And, the Times study shows: even in the Democratic Party, the mega-donations are going to only the most conservative (pro-corporate, anti-public) Democrats. Grass-roots politics could be vestigial, or even dead, in the new America.

And the public seem to accept this modern form of debt-bondage, perhaps because of the ‘news’ they see, and because of the news they don’t see (such as this).

More…