In The News Today

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Jack Lew: US could default on debt by ‘end of month
3 February 2014 Last updated at 13:12 ET

US Treasury Secretary Jack Lew has warned the US may default on its debt by the end of the month if Congress does not raise its borrowing limit.

Mr Lew said he could rely on emergency measures to pay US debts after the limit is reinstated on 7 February.

But he anticipated the treasury’s reserves would quickly be exhausted as it issues annual income tax refunds.

Congress suspended the debt limit in October as part of a deal to reopen the federal government after a shutdown.

The $16.7tn (£10.2tn) cap will be reinstated on Friday.

"Without borrowing authority, at some point very soon, it would not be possible to meet all of the obligations of the federal government," Mr Lew said at the Bipartisan Policy Center in Washington on Monday.

The treasury secretary said the US treasury department could resort to accounting mechanisms to avoid breaching the limit until the end of February.

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US Mint Bullion Coins Soar to Highs in January Sales
by Mike Unser on February 3, 2014

January sales of American Buffalo and American Eagles exploded with newly dated 2014 bullion coins attracting buyers even as the precious metals market was mixed for the month.

Gold coin sales by the United States Mint jumped the most since April and the bureau’s silver coins moved the quickest in a year.

American Eagle Silver Bullion Coins

January sales of one-ounce, 99.9% pure American Eagle silver coins hit 4,755,000, the highest tally since the same time last year. Introduced in 1986, only three other months — all January’s — scored higher sales:

January 2013 with 7,498,000,

January 2011 with 6,422,000, and

January 2012 with 6,107,000

This year’s 2014 American Silver Eagles debuted on Jan. 13, or about a month after the 2013 American Silver Eagles sold out on Dec. 10. United States Mint distributors could not order as many as they wanted, as sales were rationed. The U.S. Mint allocated how many it sold during the first week to fewer than 3.6 million, and then reduced the amount to less than 600,000 for the second week so it could "begin the process of slowly building weekly inventories." The final week of Silver Eagle sales reached 741,000.

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Jim Sinclair’s Commentary

If taper is data based, you must wonder what data the Fed is reading.

U.S. ISM Factory Index Declines More Than Forecast
By Victoria Stilwell Feb 3, 2014 2:11 PM MT

Factories expanded in January at the weakest pace in eight months as colder-than-usual winter weather slowed demand and production, bringing a halt to recent momentum in U.S. manufacturing.

The Institute for Supply Management’s factory index decreased to 51.3, lower than the most pessimistic forecast in a Bloomberg survey of economists, from 56.5 the prior month, the Tempe, Arizona-based group’s report showed today. Readings greater than 50 indicate growth, and the median estimate was 56.

Stocks plunged after the figures showed a measure of orders declined by the most since December 1980 as a number of companies said adverse weather slowed business. General Motors Co. and Ford Motor Co. said today that fewer Americans ventured out to motor-vehicle dealerships during the coldest January in two decades.

“The exceptionally cold weather and the harsh snow storms — we all move a little bit slower in those periods and the economy is no different,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. Price is the top-ranked forecaster of the ISM index over the past two years, according to data compiled by Bloomberg. Still, “it should be some testament to the economy’s fundamental underpinnings that it was able to expand during such conditions.”

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Listen Carefully to What the Chinese Yuan is Telling Us

Recently, emerging market currencies have been crashing. The Thai Baht has fallen 14% in the past several months, while the Russian Ruble has fallen 18% since 2013. The Turkish Lira has fared even worse plummeting an astonishing 30% since 2013 and the Argentinian Peso is literally in free fall, plunging by 60% in purchasing power since the start of 2013.

Former US Assistant Treasury Secretary Paul Craig Roberts offered a compelling theory this past week that the US Federal Reserve is deliberately attacking emerging currencies through their global monetary policies in an effort to force people to fall back to the US dollar to prevent the US dollar from crashing to its intrinsic value of zero.  In fact, Mr. Roberts has speculated that US bankers are rejoicing in collapsing the currencies of two of the US’s perceived enemies – Russia and Venezuela. However, even if this is the US bankers’ nefarious plan, I have a feeling that it will backfire on them and only usher in the death of the USD more quickly. Why? Two of the pillars slowing down the inevitable collapse of the USD is the petrodollar and its use as a de facto currency in international trade. Every country from Iraq to India to Russia to Iran to China to Australia to Japan to Brazil has already stated their intention to completely cut out the USD from use in bllateral trade agreements as well as oil purchases, and many countries that had tied their currency’s fate to the USD in past years have long severed ties to the USD as well. But let’s look to Zimbabwe, yes that infamous beacon of hyperinflation, as to why the US Federal Reserve’s plan to force emerging markets to adopt the USD may just backfire on them.

We all remember when the Reserve Bank of Zimbabwe’s Gideon Gono praised Ben Bernanke for the similarities between his QE monetary policy and Ben’s QE policy of the US Federal Reserve. Recall that Albert Einstein said that doing the same thing over and over again and expecting a different outcome is the definition of insanity if you want to predict the outcome of the USD.  In hindsight, Mr. Gono acknowledges that while things looked better in the short-term in Zimbabwe for a while, that his QE policies in the end turned out to be brutally disastrous, causing in his country the following ills that his country still has not recovered from 5 years later: frequent power outages, a shortage of skilled labor, a persistent liquidity problem in their banking system, a rapid rise in production costs which killed their manufacturing sector, endemic greed-induced and exploitative renter’s markets, and much more.

So what does it say now that the brains behind a79,600,000,000% monthly inflation rate in the Zimbabwe dollar (a rate that caused a USD $40 meal to cost $Z 100 billion! ) is now dumping USDs from their economy? Is the US headed for a fate of printing USD $100 billion notes too? While that scenario is far fetched at this point, people fleeing out of emerging market currencies into the Chinese yuan, and NOT the USD as the Feds are trying to engineer, is not.  Just last week, Gideon Gono announced that his country will now be accepting Chinese Yuan, Japanese Yen, Indian Rupees and the Australian dollar in an effort to lessen their country’s dependency on the USD.  Of course, the smartest people would consider dumping the USD in Zimbabwe (one of two currencies now accepted in addition to the S. African rand) for the Chinese Yuan. Given that the worst offender of hyperinflation does not even want the USD now, I think the Federal Reserve may succeed not in forcing people out of emerging currencies into the USD, but into Chinese Yuan. Emerging markets businessmen conducting import/export business already increasingly need Yuan to conduct business so why would they not convert more of their domestic currencies into Yuan instead of USD? And this is what I think will happen, so in the end the US Federal Reserves’ plan may just backfire and induce a flight into Chinese Yuan.

Consequently when the architect of the worst fiat currency disaster in modern history wants to trade in USD for Chinese Yuan, we should listen very carefully to what the Yuan is telling us.  Already, in just one month to start 2014, the Nikkei 225 has given up 9-full months of returns artificially spurred by Abenomics QE and has crashed 2,300+ points, with the Nikkei 225 shedding another -4.2% today in Asia. Other QE inflated stock market bubbles will pop at some point in 2014 as well. Yes, you’re probably being bombarded as I speak by messages from US stock market pushers not to worry about the setback in US stock markets to begin 2014 and that all will be okay, but I’m here to tell you that you better worry because risk is enormous and upside very constrained at this point. And when all these unsustainable bubbles built on the backs of irrational and foolish Central Bank QE policy around the world pop, that’s when the real money will flow into gold and silver.

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Click the above word "gold" above to watch the video about the meaning of the Chinese Yuan, Part 2

Even though the US S&P 500 had a huge artificial rally last year on the backs of trillions of dollars of US Central Bank dollar creation, and gold and silver had the worst performance year of this entire gold & silver bull by far in 2013, here are the figures for the growth of a $500,000 investment in the CIO Newsletter v. Our Global Benchmark Indexes from June 15, 2007 to January 27, 2014. (One bad year in gold and silver, nor does one good year in US stock markets, make a trend!) The trends will revert to normal again this year in 2014

On Feb 4, 2014, at 4:18, "SmartKnowledgeU"

 

China imported 76 tonnes of gold in December

Frank Knopers 3 februari 2014

China has increased it’s gold imports in December, according to the latest figures published by the Hong Kong Census and Statistics Department. Gross gold imports through Hong Kong amounted to 126,64 tonnes, an increase of 18% compared to the month of November. Net import – deducting the amount of gold shipped back from China to Hong Kong – increased from 76,39 tonnes in November to 94,54 tonnes in December. This is an increase of more than 23% on a month to month basis.

The increased imports in December could be explained by an increase in inventory due to the Chinese New Year. On the last day of January, Chinese celebrated the Year of the Horse. Many Chinese regarded this as a good time to buy some gold. Prices were also down in December, adding to the demand.

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Gross gold imports from Hong Kong to China in 2013 and 2012

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Gross versus net gold imports from Hong Kong to China

China doubles gold imports

China imported twice as much gold through Hong Kong in 2013 as they did in 2012. Last year, total net import amounted to more than 1.128 tonnes of gold, more than double the 557,7 tonne imported in 2012. Gross imports rose from 834,4 tonnes in 2012 to a record 1.496,82 tonnes in 2013, an increase of almost 80%.

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