In The News Today

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Dear CIGAs,

Today is a day to honor all warriors of all nations who gave their life for their beliefs. It is a day to honor those heroes left behind.



Jim Sinclair’s Commentary

The entire Western World banking system just missed the need for a bail-in by a hairs length.

The next crisis in finance in North America will be a product of the FASB, the Guardians of Auditing, allowing banks to value OTC derivative paper at whatever the bank wishes. This is a camouflaged black hole loss unstated that Western Banking system deposits could fall into to disappear partially or wholly, made up of your deposits. Washington made moves to override the CFTC, mandating proper valuations which the FASB has run away from. Had the banks been required by the CFTC to value these derivatives at anything resembling a real market (there isn’t any markets for the legacy OTC derivatives of 1991 to 2008), we would have had another banking crisis in the USA on Tuesday after Memorial Day. The USA just missed another banking crisis by a hair’s length. Next time it will be closer.

If the banks had to realize the real loss in this paper, now valued way above real worth, facing that loss would vaporize the bank’s entire capital, impacting the next line of financial defense which is the funds of the depositors, seriously reducing to totally wiping out your deposits. This distance between the bail in of Cyprus and of the entire Western financial world stands on the question of honestly valuing OTC derivatives or not lying about the value of the legacy paper banks are carrying. This is the real PONZI of not just the century but all written history in finance. The real number of notional value of OTC derivatives outstanding is not $700 trillion but rather over a quadrillion as it stood and was reported by the BIS printed hear before the BIS reduced the number to $700 trillion by adopting a new computer program for valuation named "Value to Maturity," a total cartoon.

We, the entire Western Financial World, are a bankruptcy just waiting to happen.

Had the CFTC implemented this regulation before it’s alteration, which is in fact a cancelation, you would have been bailed-in. Without this cancellation of this standing regulation, the USA would have had to have Bail-In Tuesday.

This is why I will be speaking in London next week, not because I need to see the place for the 100th time.

5 Biggest Banks Gain another Victory in Control of $700 Trillion Derivatives Market
Tuesday, May 21, 2013

Federal regulators have softened a new regulation intended to make the derivatives market—which helped cause the financial crisis—more competitive among banks. A derivative is a contract whose value is based on other underlying assets, such as stocks, bonds, commodities, currencies, interest rates and market indexes.

Currently, just five banks control 90% of all derivatives contracts: JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs. The Commodity Futures Trading Commission (CFTC) had planned to require firms wanting a price for a derivatives contract to contact at least five banks.

But after lobbying from financial institutions, the CFTC lowered the requirement to two banks. CFTC officials claim the standard will increase to three banks in about 15 months.

The $700 trillion derivatives market allows companies to essentially gamble on deals made on Wall Street. Such activity nearly destroyed insurance giant American International Group before the federal government rescued it.
-Noel Brinkerhoff


Junior mining stocks see record insider buying
Darcy Keith
The Globe and Mail
Published Tuesday, Apr. 30 2013, 4:09 PM EDT

Those looking for even more evidence that corporate executives are smelling bargains in the junior mining sector should consider this: Insider buying on the TMX Venture exchange is near a record high.

INK Research’s Venture indicator is at 715 per cent today, just 20 percentage points below its record peak of 735 per cent set on Oct. 27, 2008. That means there are more than seven stocks listed on the exchange with insider buying for every one seeing selling. It also marks a steep increase since early March, when the indicator was near 400 per cent.

Such a high level of buying interest among officers and directors within their own businesses in the resource sector has correctly foreshadowed a recovery in share prices in the past: That high point of nearly five years ago came about six weeks before the Venture market bottomed on Dec. 5, 2008, points out Ted Dixon, INK Research CEO.

The Venture indicator is based on insider transactions over the past 60 days. But INK also has a Venture indicator that covers just the past 30 days of transactions. It’s more volatile, but gives a better sense of the more recent insider activity.

And right now, that shorter-term indicator is painting a picture of corporate insiders scooping up beaten-down shares with little hesitation. The 30-day Venture indicator is at 1,229 per cent today, after reaching a record high on Monday of 1,305 per cent.


Jim Sinclair’s Commentary

What is good for the Chinese currency is a step backwards for the US dollar.

N.Z., China May Allow Direct Currency Conversion for Trade
By Jun Yang & Tracy Withers – May 26, 2013 11:10 PM MT

N.Z., China May Allow Direct Currency Conversion for Trade
By Jun Yang & Tracy Withers – May 26, 2013 11:10 PM MT

New Zealand and China are in talks about making their currencies directly convertible, aiming to reduce costs as trade between the two countries is targeted to surge 33 percent in the next two years.

The talks were initiated during New Zealand Prime Minister John Key’s visit to China last month, his spokeswoman Lesley Hamilton said by telephone yesterday, confirming an earlier report in the Wall Street Journal. The negotiations are in an early stage and are progressing without a specific timeframe, she said.

New Zealand’s exports to China jumped 32 percent in the first quarter, surpassing shipments to Australia for the first time, led by dairy products, logs and meat. The currency talks are underway as New Zealand targets NZ$20 billion ($16.2 billion) in two-way annual trade with China by 2015 from about NZ$15.2 billion in the year ended March.

“By having direct convertibility, that would reduce the transaction cost of doing business with China,” said Jane Turner, economist at ASB Bank Ltd. in Auckland. “It reduces the cost of hedging and the risk of currencies moving against you, and you can become more competitive in your pricing.”

The People’s Bank of China today raised the daily yuan fixing to 6.1811 per dollar, the strongest level since a peg ended in July 2005. The currency fell 0.09 percent to 6.1274 per dollar at 12:52 p.m. in Shanghai. The New Zealand dollar fell to 80.77 U.S. cents at 4:52 p.m. in Wellington.



Russia, Kazakhstan and Azerbaijan boost gold reserves in April
by: Clementine Wallop and Rhiannon Hoyle
From: Dow Jones
May 27, 2013 3:04PM

RUSSIA, Kazakhstan and Azerbaijan boosted their gold holdings in April, a month that saw prices plunge to two-year lows in a pullback that raised questions over the metal’s safe-haven status but also offered an opportunity to buy into the market at lower levels.

The International Monetary Fund today issued its monthly gold-buying report, which represents the activities of almost all central banks and is closely watched by gold investors, showing the three former Soviet republics increased their holdings by a cumulative 75 per cent more in April than they did in March.

Official purchasing has provided important support for gold prices over the past few years. According to the World Gold Council, central bank buying represented 11.3 per cent of all gold demand in the first quarter of this year.

Gold prices shed as much as 17 per cent in April and ended the month 7.5 per cent lower. It is currently trading around $US1390 a troy ounce, down almost 12 per cent since the start of the year.

Despite overall net buying, central bank activity was also an important factor in gold’s plunge, especially the news April 10 that Cyprus was considering selling 10 tons of gold from its central bank reserves to raise cash. Cyprus’s move to sell its gold stoked fears other debt-laden European nations–including Italy, which has the world’s fourth-largest gold reserves–could follow suit.


Gold Advances as Central Bank Purchases Counter Decline in ETPs
By Glenys Sim – May 27, 2013 4:23 AM MT

Gold rose, extending gains after the best week in a month, as buying by central banks and signs of increased physical demand countered continued outflows in investor holdings. Silver, platinum and palladium advanced.

Spot gold gained as much as 0.6 percent to $1,395.38 an ounce before trading at $1,394.15 by 6:18 p.m. in Singapore. Prices advanced 2 percent last week, the best showing since the five days to April 26, on speculation the U.S. Federal Reserve will maintain asset purchases and as China manufacturing slowed.

Russia and Kazakhstan expanded gold reserves for the seventh straight month in April, when prices tumbled into a bear market, International Monetary Fund data show. The volume for the Shanghai Gold Exchange’s benchmark cash contract jumped to a three-week high on May 24, while assets in gold-backed exchange-traded products dropped for a 15th week last week.

“We expect the trend of central bank buying to continue, especially in the emerging economies,” said Alexandra Knight, an economist at National Australia Bank Ltd. in Melbourne. “While expectations are for lower prices at the end of the year, physical demand, especially in Asia, has been very supportive.”

Gold is 17 percent lower this year as some investors lost faith in the metal as a store of value, reduced holdings in ETPs and shifted into riskier assets including equities. Asian stocks dropped for a fifth day today as China’s President Xi Jinping signaled a tolerance for slower economic growth. Markets in the U.S. and U.K. are shut today.


Jim Sinclair’s Commentary

Canada to punish elderly slackers?

Proposal before OMERS would require employees to work longer to get full pension
Martin Mittelstaedt
Published Friday, May. 24 2013, 7:16 PM EDT

Ontario municipal pension fund giant OMERS has received a proposal from some of its employer members to increase the amount of time it would take for workers in the plan to gain a full pension from 35 years to 38 years.

The proposal will be voted on at the end of June, but would require significant backing from union representatives at the Ontario Municipal Employees Retirement System to be approved.

Under the proposal – made by representatives from the Electricity Distributors Association, the Association of Municipalities of Ontario and the City of Toronto – the so-called multiplier of 2, now used to calculate when a person would be entitled to full benefits, would be cut to 1.85 starting in 2015.

“This is just one of the proposals that has been tabled,” John Pierce, vice-president of public affairs at OMERS, said Friday. He declined to predict whether the measure had enough support to be approved.

OMERS has an annual process of reviewing benefits and pension fund premium payments.

The pension fund has previously had proposals from employers to end inflation protection enjoyed by members, but the requests have not been approved because of the need for benefit reductions to pass with two-thirds support. Votes at the plan are divided equally between employers and worker representatives, making it difficult to get the needed support to approve cuts, which are usually anathema to union members.