In The News Today

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John Hathaway and Doug Groh: Buy Gold Like It’s 1999
August 5, 2014

The Gold Report: In a 4th of July investor letter, you wrote that the precious metals complex, both mining shares and bullion, appear to be in the process of completing a major bottom, and you’re more comfortable with the proposition that the downside potential has been fully exhausted. What are the signs that it’s really turning this time?

John Hathaway: The gold futures chart is showing that we are in the process of a reverse head-and-shoulders pattern, which is a sign that a bottom has been completed. It means that downward momentum has been exhausted. This bottom will be confirmed when gold trades above $1,400/ounce ($1,400/oz), which is a stretch from where we are. At least we can say fairly credibly that it’s shaping up to be a bottom, but we may test it over the summer.

Source: International Strategy Investment Group LLC

TGR: Are statistics on money flows telling you that investors are starting to get interested again?

JH: Yes. If we look at the SPDR Gold Shares Exchange-Traded Fund (GLD:NYSE), which is one proxy for money flows into the gold space, the outflows that have been predominant over the last couple of years have pretty much run their course. Now, we’re starting to see assets build in the SPDR Gold Shares ETF. At Tocqueville, our fund has seen steady inflows all year, in some cases, very substantial inflows. I don’t know if what we’re seeing is comparable to other managers in the precious metals space, but our experience this year has been positive.

Source: MeridianMacro

TGR: Headlines about conflicts in the Ukraine, Iraq and Gaza have bumped gold prices visibly lately. Can these events act as long-term fundamental supports or do they represent short-term volatility that will fade just as quickly as the headlines?



Rick Rule: Three Reasons to Start Buying Resource Juniors
Friday, August 1, 2014
Henry Bonner

Gold has declined slightly, from around $1,320 to $1,300, in the last few weeks. Rick commented that this was normal for a recovery in resource stocks. You expect gradual rises and subsequent consolidations. Today, he lays out his three big drivers for a recovery in the ‘junior’ resource stocks.

Rick, are we still on our way towards a recovery? What catalysts might take the market higher?

“The market for junior resource stocks, as you can see from the performance of the TSX.V, the ASX, and the LSE AIM, marked a bottom around a year ago. They’re in a gradual recovery now, and I believe the uptrend will continue, albeit marked by the same volatility that we’ve seen in the market so far. We’ve experienced three advances and subsequent declines this calendar year – and that’s normal for the early stages of a resource recovery. These advances need to consolidate, which they have already done nicely.

“There are three key drivers to this advancement. First, there’s the incredible amount of capital that the junior market raised five or six years ago and the fact that sooner or later, investors will realize that they’re playing with ’25-cent dollars,’ as many juniors are trading well below the value of their cash and other assets. Second, there are the extraordinarily low valuations attributed to some of the best companies in the sector. Third, there is the increasing pace of mergers and acquisitions. This is a good thing, as horizontal mergers decrease G&A expenses, while in ‘top-down’ mergers, larger mining companies buy up select juniors to add to their exploration and development pipeline.

“Besides these three points, there is also the fact that we are in a nascent boom in the discovery cycle. There has been an increasing pace of new discoveries, and the market certainly appreciates genuine discoveries.


Jim Sinclair’s Commentary

The Brics united financially. This will have an effect on the dollar later in 2014.

Russia, India to ink $40 bn gas deal: Reports
August 5, 2014, 6:28 am

Russian President Vladimir Putin and Indian Prime Minister Narendra Modi are expected to announce a massive natural gas deal during their summit later this year, Indian media reports said Monday.

Russian and Indian officials are negotiating a $40 billion gas pipeline project from Russia to India, oil ministry officials told Indian daily Hindustan Times.

“Russia so far has directed majority of its oil and gas supplies to the West… however, the scenario may be quiet different in the coming years especially in the wake of its gas pipeline to China and the one now proposed till India,” an Indian government official said.

Russia is a source of a third of all natural gas used in Western Europe. However, with the economic sanctions imposed by the US and the EU over the Ukraine crisis, Russian authorities are keen to diversify its gas routes.


Jim Sinclair’s Commentary

This is very scary stuff.

One Person Tested For The Deadly Ebola Virus In Columbus
By 10TV Web Staff Tuesday August 5, 2014 12:18 PM

COLUMBUS, Ohio – Columbus Public Health confirms a person is undergoing testing and has been quarantined for the deadly Ebola virus.  A spokesperson says they’re working with the CDC to learn the preliminary results of those tests.

CPH says the person recently traveled to West Africa, where an outbreak has left nearly 900 people dead.

The virus can be transmitted through close contact with the blood, secretions, organs or other bodily fluids of infected animals.

According to the CDC, symptoms include sudden onset of fever, intense weakness, muscle pain, headache and sore throat. This is followed by vomiting, diarrhea, rash, impaired kidney and liver function, and in some cases, both internal and external bleeding.

No licensed vaccine for Ebola is available. Several vaccines are being tested, but none are available for clinical use.

Meanwhile, the second American aid worker diagnosed with Ebola in Africa arrived back in the U.S. Tuesday afternoon .  59-year-old Nancy Writebol arrived in a plane specially-equipped to contain infectious diseases.  She will be treated in the same hospital isolation unit as Dr. Kent Brantly, the other infected American.


Jim Sinclair’s Commentary

More scary stuff.

Ebola outbreak: BA suspends flights to Sierra Leone and Liberia over virus
British Airways says the ‘deteriorating public health situation’ relating to the Ebola virus is why they have suspended flights until August 31
By Colin Freeman, and Raziye Akkoc
4:23PM BST 05 Aug 2014

British Airways cancelled its flights to Sierra Leone and Liberia, cutting off the only direct flights between Britain and the Ebola-infected area of west Africa.

The carrier, which operates a direct flight four times a week from London to Sierra Leone and onto Liberia, announced on Tuesday it was suspending flights "due to the deteriorating public health situation in both countries".

It follows warnings at the weekend from the World Health Organisation the epidemic, which has killed nearly 900 people since February, was spreading faster than it could be controlled.

Health officials are believed to be particularly concerned about Liberia, where staff are understood have fled hospitals in some areas because of fears they themselves could become infected.

A statement from British Airways sent to travel companies on Tuesday said: "British Airways services from London Heathrow to Freetown and Monrovia will be temporarily suspended from tomorrow, 6 August until 31 August 2014, due to the deteriorating public health situation in both countries."


Jim Sinclair’s Commentary

This is a very serious development being ignored by MSM.

Bond Liquidity Falls 70% in Europe as Sales Soar: Credit Markets
By John Glover August 05, 2014

Bond dealers made money manager Gary Kirk’s job much more difficult when he tried to sell debt securities at the end of the first half. After they gave him “excuse after excuse” he gave up.

“It was way more difficult than it should have been,” according to TwentyFour Asset Management LLP’s Kirk, who said banks offered prices well below what he expected or said they no longer did business in the notes. “Extracting a bid out of anyone was very, very difficult.”

Credit market liquidity has dropped by about 70 percent since the 2008 crisis and continues to decline even as soaring issuance boosts the total size of the market, according to Royal Bank of Scotland Group Plc. A European corporate bond issue now trades once a day on average, compared with almost five times a day a decade ago, according to RBS.


Jim Sinclair’s Commentary

Don’t discount geopolitics as cold war can go hot in an instant.

Russian bomber conducts practice strikes on U.S. missile defenses in Asia
By Bill Gertz – The Washington Free Beacon – – Friday, April 5, 2013

A Russian bomber recently carried out simulated cruise missile attacks on U.S. missile defenses in Asia, raising new questions about Moscow’s goal in future U.S.-Russian defense talks.

According to U.S. officials, a Russian Tu-22M Backfire bomber on Feb. 26 simulated firing air-launched cruise missiles at an Aegis ship deployed near Japan as part of U.S. missile defenses.

A second mock attack was conducted Feb. 27 against a ground-based missile defense site in Japan that officials did not identify further.

The Pentagon operates an X-band missile defense radar on the northern tip of Japan that is designed to monitor North Korean missile launches and transmit the data to missile-firing ships.

The bomber targeting comes as Russia is building up forces in the Pacific by modernizing submarines and building a spy ship specifically for intelligence-gathering against U.S. missile defenses.


U.S. General Is Killed in Attack at Afghan Base; Others Injured

KABUL, Afghanistan — For the first time since Vietnam, a United States Army general was killed in an overseas conflict on Tuesday when an Afghan soldier opened fire on senior American officers at a military training academy.

The slain officer, Maj. Gen. Harold J. Greene, was the highest-ranking member of the NATO-led coalition killed in the Afghanistan war, and his death punctuated the problems vexing the Americans as they try to wind down the 13-year-old conflict, contending with a political crisis that has threatened to splinter the Afghan government and leave it unable to fend off the Taliban.

The general was among a group of senior American and Afghan officers making a routine visit to Afghanistan’s premier military academy on the outskirts of Kabul when an Afghan soldier sprayed the officers with bullets from the window of a nearby building, hitting at least 15 before he was killed.

Though American officials said General Greene was not believed to have been specifically targeted, his violent death at the hands of an Afghan soldier, not an insurgent, was a reminder of the dangers faced by even the highest-ranking, and best protected, officers in Afghanistan.


Jim Sinclair’s Commentary

Nothing like volatility to suggest incredibility.

Non-Manufacturing ISM Soars To 9-Year Highs Months After Hitting 4-Year Lows
Tyler Durden on 08/05/2014 10:10 -0400

US Services PMI fell from June’s 61.0 level to 60.8 (slightly below the flash print of 61.0 suggesting modest weakness in the latter end of the month) ending a two-month streak of post-weather exuberance asnew orders and jobs data slowed, and Markit warns "growth may have peaked." Factory Orders rose 1.1% for the biggest beat in 9 months. ISM Services smashed expectations and surged to Nov 2005 highs (from 4-year lows just 4 months ago – volatile?) with most sub-indices improving except new export orders fell to 4-month lows.

US Services PMI dropped modestly:


“While the economy looks set to continue to expand at robust pace in the second half of the year, these summer months may turn out to represent the peaking in the rate of growth.”

So just to baffle everyone with endless BS, moments later ISM Services smashed expectations to its highest since Nov 2005 – a few short months after plunging to 4-year lows.


Jim Sinclair’s Commentary

Economic war can hurt, turning cold war into hot war.

Medvedev: Russia to consider retaliation to EU sanctions
Published time: August 05, 2014 08:29
Edited time: August 05, 2014 16:33

Moscow will consider possible responses to the EU sanctions against Russian airlines, Prime Minister Dmitry Medvedev has said.

“A topic I would like to discuss concerns the consequences of the decision a number of governments have taken in relation to our carriers. We need to discuss possible retaliation,” the Prime Minister said at a meeting with Russia’s Transport Minister Maksim Sokolov and the deputy director of Aeroflot, Vadim Zingman.

On Tuesday, Vedomosti daily reported Russia was considering limiting, or even completely blocking European flights to Asia that cross Siberia, in response to EU sanctions that caused Aeroflot subsidiary Dobrolet to suspend flights on Monday.

Another newspaper source close to the negotiations said the recent halt of Dobrolet flights, as well as Ukraine’s fees for Russian flights to Crimea, have accelerated the talks. Discussions started shortly after the EU introduced its first round of sanctions against Russia.


Jim Sinclair’s Commentary

Looks like the FDIC is getting ready for an event pre 2019.

FDIC: Big banks’ living wills not credible and need to be revised staff

So-called living wills submitted by big banks are "not credible" and have to be revised by next July, federal regulators said on Tuesday.

The Dodd-Frank financial reforms require certain big banks to submit plans detailing how they would wind themselves down in the event of a crisis. The 11 institutions subject to the rule submitted first-round plans in 2012 and revisions in 2013.

The Federal Deposit Insurance Corp. said each bank had specific shortcomings, and that all banks had a few in common—among them unrealistic assumptions and a failure to identify necessary changes in their structures.

Based on its review, the FDIC said "the plans submitted by the first-wave filers are not credible and do not facilitate an orderly resolution under the U.S. Bankruptcy Code."

The regulator gave the banks til July 1, 2015 to file plans that "demonstrate that the firms are making significant progress to address all the shortcomings identified in the letters," among other requirements.


Jim Sinclair’s Commentary

It’s 2007 all over again.

Moody’s changes outlook for UK banking system to negative from stable
Global Credit Research – 05 Aug 2014

London, 05 August 2014 — The outlook for the UK banking system has been changed to negative from stable. This outlook change reflects our view that the improved operating environment and banks’ stable financial fundamentals will not fully offset the negative credit implications of the finalisation of the UK resolution and bail-in regime and the related ‘ring-fencing’ framework, says Moody’s Investors Service in a new report published today. The report focuses on the rating factors impacting the six largest rated UK institutions, which account for 93.6% of active current accounts.

The new report: "Banking System Outlook: United Kingdom", is now available on Moody’s subscribers can access this report via the link provided at the end of this press release.

"The key driver of the change in outlook to negative for the UK banking system is that the UK government is now able to finalise the secondary legislation to implement the structural reforms relating to the UK resolution and bail-in regime and the related ring-fencing framework" says Carlos Suarez Duarte, a Moody’s Vice President – Senior Analyst and author of the report. The UK resolution and bail-in regime and the structural ring-fencing of systemically important retail/SME deposit-taking entities are designed to prevent the use of taxpayer funds to support failed institutions and to facilitate the going-concern loss-absorption of creditors, including senior unsecured bondholders.