In The News Today

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Russia Adds 12.7 Tonnes To Gold Reserves In August, Totals 1,015 Tonnes
September 29, 2013

It is getting kind of a cliché: the monthly gold reserve accumulation mainly by Russia and China continues non stop. The most up-to-date chart (see below, courtesy of Sharelynx) shows that Russia has been accumulating gold bullion for 6 straight years. What’s more, from a shorter term point of view, this appears to the be the 11th month of gold accumulation.

Recent official data from the International Monetary Fund provided some more details, not only about Russia but also Kazakhstan and Turkey. In particular, Bloomberg notes that “Russian assets gained 12.7 metric tons to 1,015.5 tons, International Monetary Fund data showed today. Kazakhstan’s reserves rose 2.5 tons to 134.5 tons and Turkey added 23.4 tons to 487.4 tons, the data showed.”

Earlier this week, Marc Faber explained what’s behind the trend of PHYSICAL gold moving from West to East: “In the East, we have a tradition of owning physical gold, but what is new is the Chinese government encouraging citizens to own gold. I believe that in the face of political instability and a lack of faith in the U.S. dollar, Asians will continue to accumulate physical gold and silver.”



Jim Sinclair’s Commentary

The gold shorts. Clearly cats can be bothersome to the extreme, but we will get our day in the sun.

When a cat annoys a dog.

When a dog annoys a cat.



Jim Sinclair’s Commentary

So you think Congressmen and Senators are smart enough to realize this?

If Republicans Want To Shut Down Washington, They’ll Have To Ask China’s Permission First
9/29/2013 @ 11:14AM

In their never-say-die efforts to defeat Obamacare, Tea Party Republicans brought the federal government a giant step closer to shutdown last night. What they seem not to have considered is how America’s foreign creditors will react.

Although China, Japan, and other major creditor nations have no dog in the Obamacare fight, they have a strong interest in preserving America’s basic financial, economic, and social stability. From their point of view, the Tea Party contingent is not following the script and a corrective may be necessary.

If the creditor nations were to sell just a small proportion of their American assets, they could send Wall Street into a tailspin, with unpleasant implications for the net worth of many Republicans.

They are unlikely to push things that far but even if they were merely to slow the pace of their buying, bond yields would rocket and stocks could fall 15 percent in the space of a couple of weeks. A key thing here is that American asset valuations are at historic highs — the Standard & Poor’s 500 is on a P/E of 19 and long-term bond yields are still near their lowest in decades.


Retirement Savings Accounts Draw U.S. Consumer Bureau Attention
By Carter Dougherty – Jan 18, 2013 12:01 AM ET

The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.

“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,” bureau director Richard Cordray said in an interview. He didn’t provide additional details.

The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.

The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co. (JPM),Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans.

The Securities and Exchange Commission and the Department of Labor are the main regulators of U.S. retirement savings vehicles and funds. However, the consumer bureau — established by the 2010 Dodd-Frank Act — sees itself as a potential catalyst for promoting a coherent policy across the government, the people said.


Jim Sinclair’s Commentary

QE to infinity.

Wall Street’s top five banks face $1bn earnings cut
By Camilla Hall and Tom Braithwaite in New York
September 29, 2013 7:29 pm

More than $1bn has been wiped off earnings estimates for Wall Street’s five biggest banks in the past month on growing fears of a sharp decline in trading revenues coupled with increased legal costs.

JPMorgan Chase has borne the brunt of forecast cuts, with consensus estimates of net income down $526m to just under $5bn. Its growing legal bills alone are expected to add $2bn in costs when it kicks off the banks’ earnings season on October 11.

But the depressed forecasts have extended to all banks with big fixed income trading operations, after several warnings of slow activity throughout the last three months. Hopes of a final trading flurry in the last few weeks of the quarter have been dashed, with fixed income trading revenues particularly hurt.

“September hasn’t delivered,” said Paul Gulberg, analyst at Portales Partners in New York. “It wasn’t there to fulfil the expectations and save the day.”

Analysts reduced their expectation of net income by $210m for Citigroup, $128m at Bank of America, $123m atGoldman Sachs and $97m at Morgan Stanley, according to Bloomberg data. Those forecasts strip out the distorting effect of an accounting rule that forces companies to take profits or losses from changes in the value of their own debt.


Jim Sinclair’s Commentary

Have you protected yourself yet? Probably not!

Senior bank debt holders fear Cyprus-style pain
Matthew Attwood
30 Sep 2013

Bond investors fear that holders of unsecured senior bank bonds could follow holders of Cypriot senior bank debt and suffer losses in the wake of the European Central Bank’s asset-quality review of European banks.


Jim Sinclair’s Commentary

This statement by a central bank is extremely important and most unusual.

Banca d’Italia says gold reserves key to cenbank independence
Mon Sep 30, 2013 1:23pm EDT
By Jan Harvey and Clara Denina

ROME, Sept 30 (Reuters) – Keeping gold reserves is a key support to central banks’ independence, an official from Banca d’Italia told a bullion industry conference on Monday, dampening talk that it might sell some of its holdings.

Speculation has emerged since the financial crisis hit the euro zone that Banca d’Italia might be pressured to leverage or even sell some of its huge gold reserves – the fourth largest among the world’s central banks – to help prop up its economy.

Regulations covering central bank independence restrict them from using bullion reserves this way, but concerns grew after an assessment of Cypriot financing needs prepared by the European Commission showed Cyprus under pressure to sell gold to raise around 400 million euros (341.1 million pounds) to help finance its bailout.

In a keynote address to the London Bullion Market Association’s annual conference, Salvatore Rossi, director general of the Italian central bank, told delegates that gold plays a special role in central banks’ official reserves.

"Not only does it have the vital characteristic of allowing diversification, in particular when financial markets are highly integrated, in addition it is unique among assets in that it is not issued by any government or central bank, so its value cannot be influenced by political decisions or by the solvency of any institution," he said.


Jim Sinclair’s Commentary

Good for gold!

China PBOC Says To Ease Gold Imports/Exports Restrictions
Sunday, September 29, 2013 – 23:13

BEIJING (MNI) – The People’s Bank of China announced Monday a draft version of new rules governing the import and export of gold, which aim to relax government controls over trading of the precious metal.

In a statement on its website, the PBOC said it will allow more banks, gold producers and other qualified companies to get a license to import and export physical gold.

Currently, only nine banks and some PBOC-owned coin companies have the right to import and export gold. They have to register each transaction with the central bank and these are limited by annual quotas.

The PBOC said bank members of the Shanghai Gold Exchange and gold producers with annual gold output of over 10 tons are now qualified to apply for a gold import and export license but that it may still apply a quota.

"The central bank is relaxing controls over gold imports and exports. This will help to promote gold trade," said Jiang Shu, a Shanghai-based gold analyst with Industrial Bank.