Did The BoJ Quietly Peg The Yen To Gold?

For 14 years, as Japan’s economic demise grew more and more evident, its currency devalued relative to gold (the only non-fiat numeraire). When Abenomics began, the trend began to stabilize… but for the last year or so – as The Fed tapered – JPY and Gold have practically flatlined around 132,000 JPY per ounce. This ‘odd’ stability stands in strangely stark contrast to the volatility and trends in the USD, JPY, and Gold over this period. Even amid the collapse in JPY in recent weeks, it has remained firmly inside a 3% envelope of the ‘peg’.

This post was published at Zero Hedge on 11/12/2014.

Sentiment Is “Off The Charts” Bullish

There have been a litany of articles written recently discussing how the stock market is set for a continued bull rally. The are some primary points that are common threads among each of these articles which are: 1) interest rates are low, 2) corporate profitability is high, and; 3) the global cabal of Central Banks will continue to put a floor under stocks. While I do not disagree with any of those points – it should be remembered that each is artificially influenced by outside factors. Interest rates are low because of Central Bank actions; corporate profitability is high due to share buybacks and accounting gimmickry, l and Central Bank interventions have artificially inflated asset prices.
However, while the promise of a continued bull market is very enticing it is important to remember that as investors we have only one job: “Buy Low/Sell High.” It is a simple rule that is more often than not forgotten as “greed” replaces “logic.” However, it is also that simple emotion of greed that tends to lead to devastating losses. Therefore, if your portfolio, and ultimately your retirement, is dependent upon the thesis of a continued bull market you should at least consider the following charts.
It is often stated that valuations are still cheap. The chart below shows Dr. Robert Shiller’s cyclically adjusted P/E ratio. The problem is that current valuations only appear cheap when compared to the peak in 2000. In order to put valuations into perspective, I have capped P/E’s at 25x trailing earnings which has been the level where secular bull markets have previously ended. I have noted the peak valuations in periods that have exceeded that level.

The next chart is Tobin’s Q Ratio. James Tobin of Yale University, Nobel laureate in economics, hypothesized that the combined market value of all the companies on the stock market should be about equal to their replacement costs. The Q ratio is calculated as the market value of a company divided by the replacement value of the firm’s assets. With the exception of the “tech bubble” we are near the peak of every major bull market in history.

This post was published at StreetTalkLive on 12 November 2014.

Frackquake: 4.8 Magnitude Earthquake Felt Throughout Kansas

While it is unclear if moments ago the Mississippian Lime Play under south Kansas was the first major shale quake to hit Kansas, or this was simply the first yet to be named shale company going Chapter 11, but moments ago the USGS reported that a 4.8 quake located 30 miles SSW of Wichita as well as a various other smaller quakes in north Oklahoma, shook the two states.

This post was published at Zero Hedge on 11/12/2014.

Kiev Preparing For An All Out Offensive Which Will Lead To War – Episode 516

The following video was published by X22Report on Nov 12, 2014
The people in the UK have had enough with austerity. Mortgage application plunge once again, which show Real Estate is in a death spiral. The Western countries are selling gold, meanwhile China and Russia are stockpiling gold. Obamacare was designed as a scam. Obama wants to regulate the internet and control free speech. National guard in Ferguson is on high alert. Brazil is building their own internet without US companies. Ukraine with the US is now training soldiers and getting prepared for a major offensive with the South Eastern people of Ukraine. The people of Libya have captured around 200 planes. Romanian hacker predicts there will be a nuclear attack on Chicago in 2015.

Gold Daily and Silver Weekly Charts – Don’t Fear the Reaper

There was intraday commentary about The Day Money Dies here.
I wrote about it primarily because it was getting a lot of play, and raising some concerns and questions. And as you know I am following what the G20 does this weekend in Brisbane.
I have approached many such meetings with anticipation in the last few years. And mostly nothing of consequences occurs.
Gold and silver were flat in largely lackluster trade.
There was no real delivery movement on the Comex report. The warehouses saw minor withdrawals of bullion.
A friend keeps discussing the ‘delta of delivery’ with me. By this he means the movement of gold from West to East, which is a big change from prior states in the precious metals market, particularly gold.
This is a trend that it would be foolish not to note, and watch. So be advised.

This post was published at Jesses Crossroads Cafe on 12 NOVEMBER 2014.

The 1937 Recession

The 1937 Recession
The US Federal Reserve terminated its latest programme of bond purchases at the end of last month. Though Fed officials have been at pains to point out that this did not represent a tightening in monetary policy, but at most a halt in the supply of monetary stimulus, financial market participants are not wholly convinced. They fear the shift in Fed policy is occurring before US economic growth is firmly established. They worry that the US economy will slip back into recession from lack of adequate monetary support. Some of them cite the example of 1937-38 when the US suffered a severe downturn in business activity four years into its recovery from the Great Depression. This they attribute to an untimely tightening in the Fed’s policy-stance. They argue that Ms Yellen and her colleagues could be repeating the mistake of their predecessors eighty years ago.
Nowadays, events in the US economy in the 1930s are seen primarily through the prism of ‘A Monetary History of the United States, 1867-1960′ by Milton Friedman and Anna Schwartz. This is certainly a work that greatly influenced Mr Bernanke in his responses to the policy challenges he faced after 2008. The financial markets largely accept the Friedman/Schwartz view that the troubles of the Great Depression and its aftermath were the consequence of faulty monetary policies. However, we should remember that the Friedman/Schwartz work was not entirely objective; it was produced in support of their thesis that monetary variables are the key to short-term economic fluctuations. It is not surprising, then, that their account of the 1930s experience points to that conclusion. It attaches overwhelming weight to central bank monetary policy in generating and dampening these fluctuations, while overlooking what may be other significant influences. When, in 2008, the global economy plunged into a crisis widely acknowledged as the most dangerous since the 1930s, the Friedman/Schwartz analysis naturally gained influence, as a text relevant to such situations, and with that came the current assumption that central bank monetary policy sufficiently determines whether or not an economy will achieve sustained growth with stable prices. It also seems to many observers, especially in the financial markets where historical analyses are received second-hand, that central banks ought to be on guard to avoid repeating errors they are believed to have committed all those years ago. This is why there is now a strong focus on the Fed’s supposed contribution in precipitating the severe recession of 1937/38.

This post was published at Zero Hedge on 11/12/2014.

Party’s Over: Closing Ramp Fails To Close Stocks Green

With bond traders back in the fray, US equity volumes were… just as shitty (around 35% below recent averages). Futures drifted lower overnight as Japanese election headlines wer dashed and USDJPY dragged stocks lower… then the US cash session opened and we were off to the levitation races (nope, no other catalyst at all). The Dow and S&P were mucvh less exuberant that Trannies and Small Caps and AAPL dragged Nasdaq higher. Treasury yields dropped earlier but bonds sold off in the US session to end the day unch. The USD rallied ( 0.4% on the week) led by EUR weakness. Commodities were weaker across the board but WTI and Brent were cracked again to new multi-year lows (Brent under $80 – lowest since Sept 2010) as Brent-WTI crossed under $3. For the 2nd day in a row, VIX closed higher in the face of mixed equities. After 14 days in a row, the S&P ramped in the last 30 minutes.. but failed to close positive – Dow, S&P red.

This post was published at Zero Hedge on 11/12/2014.

Here’s what I think the financial system will look like in the future

Thousands of years ago whenever the Pharaohs of Ancient Egypt passed away, they were buried with all of their gold in a specially constructed tomb.
The idea was to ward off thieves with booby traps and other perils so that these perceived demigods could enjoy their riches for eternity.
It worked. In the case of Tutankhamen, his gold was untouched by both thieves and desperate government tax collectors for thousands of years.
In the Pharaohs’ day, gold was money. Today, it might be even more important than ever.
As advanced as our modern civilization may be, we’ve been playing with fire for more than a century. Every single experiment with unbacked paper money throughout history failed.
And though today’s economists like to think that ‘this time is different,’ our own experiment with paper money will share the same fate.
It’s already moving in that direction. The bubble in fiat currency is now so large that it has simultaneously created all-time highs in nearly every major financial asset class, particularly stocks and bonds.
Bear in mind that these are not tangible assets, but rather ‘paper assets’ – nothing more than claims on promises made by others (stockbrokerages, politicians, etc.)
So in other words, the explosion in the supply of paper money has created dangerous bubbles in paper assets. Funny how that works.
And at this point there are no good options remaining to gracefully end the experiment.
Any direction that central bankers go risks inflation, deflation, hyperinflation, or the collapse of financial markets.
If they print, they create inflation. If they don’t print they get deflation.

This post was published at Sovereign Man on November 12, 2014.

The Flipside To Rigged FX Markets: “The Most Consistent Thing Is Losing”

As today’s latest example of pervasive, apparently endless criminality at the world’s largest banks, where once again the shocked public is exposed to a culture of sociopathic, unchecked greed and perpetual raping of clients, showed, one is either part of the all too literal “cartel”, or one loses money.
However, for those who are unfamiliar with the nuances of FX trading, one doesn’t even have to be on the other side of the world’s most criminal, above the law, cartel of bankers to have no P and only L: the fundamental premise of currency trading, whereby one can and will be stopped out thanks to leverage as high as 50x – by others but mostly by one’s own brokers as we learned today courtesy of JPM, Citi, RBS, HSBC and UBS – is the very same reason why as retail FX trader Dan Gratton, a 71-year-old retiree who lives on Social Security in Kingman, Arizona has found out: “Probably the most consistent thing is losing.”
He is referring to FX trading, adding that he’s been a student of the the Market Traders Institute Inc., the oldest and largest currency trading “school” for two years and had hoped that taking its home-study classes and watching webinars would help him succeed with forex trading. Not only has that not happened, but Dan has lost tons of money in his pursuit to get rich quick, thanks to the same leverage that allows him to dream of big paydays just around the corner.
But at least Dan spending for “class” upon “class” in hopes of honing his FX trading skills, has made the owner of the Market Traders Institute, shown below, insanely wealthy and with lots of credibility-building computer screens.
As Bloomberg reports, most retail currency investors lose money most of the time, according to the industry’s own data. Reports to clients by the two biggest publicly traded over-the-counter forex companies — FXCM Inc. (FXCM) and Gain Capital Holdings Inc. — show that, on average, 68 percent of investors had a net loss from trading in each of the past four quarters. These kinds of losses make for investor churn.

This post was published at Zero Hedge on 11/12/2014.

The St.Louis Fed Explains Why Banking Panics Are More Likely Under A Gold Standard

The U. S. and many other economies left the gold standard more than 40 years ago, yet advocates periodically call for its return, saying that it would curtail or prevent inflation. In these brief clips from the St. Louis Fed video series, David Andolfatto, a vice president and economist explains the gold standard noting “most economists believe a return to the gold standard would not be a wise policy,” and “under the gold standard, banking panics are more likely to occur,” and then pointing out somewhat stunningly that“however, the fiat system employed by the Federal Reserve has been largely successful in maintaining low inflation and price stability.” Enjoy…

This post was published at Zero Hedge on 11/12/2014.

America Watches In Stunned Disbelief As Afghanistan Jails Two Failed Bank Executives

Spot the banana republic:
Nation #1 spends and issues tens of trillions in taxpayer funds and debt, crushing the growth potential of future generations, just to bail out a banking sector full to the brim with criminal “riggers” (as today’s settlements once again prove), where bubble mania was so pervasive not a single bank would have survived absent a global central bank bailout, and where bank executives wouldn’t bend over for anything less than a million. Nation #2 just sentenced two senior officials of a bank that collapsed under (a measly by New Normal standards) $1 billion in debt to 15 years in prison each for embezzlement and fraud. Nation #1 is, of course, the US (or any other western nation). Nation #2 is Afghanistan.
Which one is the banana republic again?
AP reports that the scandal in 2010 shook confidence in Afghanistan’s tiny banking sector, and the loss accounted for around 5 percent of the country’s economy, making it the biggest banking collapse in history. By comparison, just the derivative book of JPMorgan alone is 4 times the size of US GDP.
Like in the US, the government had no choice but to bail out the bank and brought in receivers who, officials say, have traced most of the missing funds.

This post was published at Zero Hedge on 11/12/2014.

Three super safe and private facilities to store gold abroad

At USD $1160, a lot of gold owners are looking at the paper price right now and panicking.
The conventional wisdom is that, because it takes fewer pieces of paper to buy an ounce, gold is a bad ‘investment’.
This isn’t the right idea. It shouldn’t be viewed as an investment at all.
Gold isn’t something that you buy with paper currency hoping to sell it later on down the road for even more paper currency.
Rather, the entire point of gold is to trade paper currency for something that can hold its value over the long-term, yet is still liquid, divisible, and universally recognizable.
There are almost zero assets that fit the bill. Gold is one of the few.
Gold is real. It has its own challenges (including counterfeit, manipulation, etc.) that make it far from perfect. But it’s physical, tangible, and cannot be conjured out of thin air by central bankers.
What’s more, it’s one of the only <em>private</em> forms of money remaining, and it’s a great way to transport a substantial amount of savings abroad without anyone knowing.
I’ve long been an advocate of moving a portion of one’s savings overseas.
After all, what’s the sense of leaving 100% of your assets within a country ruled by a morally and financially bankrupt government that treats you like a dairy cow?
Moving some of your gold abroad to a jurisdiction that prides itself on maintaining a high level of financial security and privacy protects you against legal thievery your government might commit against you.
Sure, it’s a risk that might never come to fruition. But you won’t be worse off for having stashed some of your gold away privately in a safe, stable jurisdiction.
Consider these three to start:

This post was published at Sovereign Man on November 12, 2014.

SocGen Warns: “Now May Be The Time To Focus On The Short Side”

As US QE has come to an end, depriving the world of US$1 trillion printed dollars a year, SocGen’s Andrew Lapthorne warns, there are still plenty of things for investors to be concerned about. Indeed with asset prices where they are, investment returns look paltry from here on, as not only is there a long list of macroeconomic issues to worry about, but bottom-up firm level indicators are also flashing red. Valuations, as measured by median price to cash flow ratios, are near historical highs…

This post was published at Zero Hedge on 11/12/2014.

Japan’s QE-Driven Inequality Will Continue to Grow

Monday the Bank of Japan announced that it will be buying Japanese equity ETFs as well as property funds (REITs) to boost demand for risk assets. The BoJ has done this before but the timing of this announcement suggests a new push to accelerate monetary easing. This action is coming on the heels of the Government Pension Investment Fund’s (GPIF) recent announcement that it will increase its allocation to Japanese and foreign shares to 25% from 12%.
The yen continued to sell off as a result of this accelerated easing and is now hovering around a 7-year low.

This post was published at FinancialSense on 11/12/2014.

Treasury Issues $24 Billion In Boring 10 Year Auction At Lowest Yield Since June 2013

While there was some selling of 10 Year paper following today’s earlier 52-Week Bill auction which came in week, today’s refunding of $24 billion in 10 Year paper was a snoozer. Closing moments ago at a 2.365% high yield (33% allotted at high), this was a 0.1% bp tail to the 2.364% When Issued. It was almost nearly identical to last month’s 2.381% auction, although the small decline in yield means this was the lowest yield for the On The Run security since last June. The internals were also tame, with the Bid To Cover of 2.52 a carbon copy of last month’s 2.52, if a little weaker than the TTM average. Finally, 42% of the allotment went to Dealers, or 4% above the 12 month average, while Indirects took down 44.7%, again nearly an identical amount to last month’s 44.4$, and Directs, traditionally the domain of Pimco, were left with 13.4% of the auction. It is unclear if the Total Return Fund was the big bidder here now that Gross is long gone.

This post was published at Zero Hedge on 11/12/2014.

Bet Against the Debt or Lose Your Cash | Gregory Mannarino (Part 1)

The following video was published by FinanceAndLiberty.com on Nov 12, 2014
Former Bear-Stearns stock and equities trader Gregory Mannarino joins us to expose the disturbing truth of our financial system’s design based not on building wealth creation for citizens, but based on making us debtors. Mannarino spells out what you can do to bet against the debt, which asset is best to protect your family, and why you need to prepare for a worst-case scenario. Mannarino even outlines how you can learn to take advantage of the runaway stock market if you want to benefit from the imbalances in today’s financial markets.

Cartels R Us: Tab for Rigging Foreign Exchange $3.3 Billion and Rising

Two U. S. and three foreign banks have been charged with rigging the foreign exchange market where $5.3 trillion changes hands daily and have settled civil claims for $3.3 billion. (The charges are very similar to those in the rigging of the international interest rate benchmark known as Libor.) Additional charges and settlements by other regulators are expected to follow before the end of the year.
The U. S.-based Commodity Futures Trading Commission (CFTC) levied a total of over $1.4 billion in fines against JPMorgan, Citigroup, UBS, HSBC and RBS. The same five banks were fined $1.7 billion by the U. K.’s Financial Conduct Authority (FCA). Swiss regulator FINMA charged only UBS with a fine of $139 million and included rigging of precious metals trading along with rigging foreign exchange.
While the details that were released are skimpy and the Financial Conduct Authority is already being criticized in London for essentially allowing the banks’ lawyers to conduct their own investigations and hand over their findings to the regulator, no bank comes out looking worse than JPMorgan – which has serially promised to beef up its internal controls and compliance while serially being charged with ongoing, serious crimes.
The FCA said the foreign exchange market rigging occurred between January 1, 2008 through October 15, 2013 while the CFTC fines and investigation covered a shorter period from 2010 through 2012, according to documents released by the regulators this morning. The important takeaway from these dates is that the corrupt banking culture that crashed global economies in 2008, and then received taxpayer bailouts to resurrect these same institutions, still poses a serious financial threat to investors and taxpayers.
Both the U. S. and U. K. regulators faulted JPMorgan for inadequate internal controls and supervisory failures. The CFTC wrote that JPMorgan ‘lacked adequate internal controls in order to prevent its FX traders from engaging in improper communications with certain FX traders at other banks. JPMC lacked sufficient policies, procedures and training specifically governing participation in trading around the FX benchmarks rates and had inadequate policies pertaining to, or insufficient oversight of, its FX traders’ use of chat rooms or other electronic messaging.’

This post was published at Wall Street On Parade on November 12, 2014.

Swiss regulator fines UBS for silver price manipulation so this is now a matter of fact not speculation

The Swiss Financial Market Supervisory Authority found evidence of ‘serious misconduct’ by UBS employees in trading precious metals and most markedly in silver in an investigation of the bank’s foreign exchange and precious metal trading operations, it emerged today.
Traders have used electronic chat media to front run silver prices. That is to say traders have been illegally employing their knowledge of an upcoming silver transaction to profit from price-sensitive orders.
Like forex manipulation
‘The behavior patterns in precious metals were somewhat similar to the behavior patterns in foreign exchange,’ said Mark Branson, Finma CEO. ‘We have also seen clear attempts to manipulate fixes in the precious metals markets.’
Regulators in Switzerland, the UK and US ordered UBS and four other banks to pay about $3.3 billion to end an investigation into the rigging of foreign-exchange rates and precious metal markets. Nobody is going to lose their jobs over silver price manipulation but ‘bonuses for foreign exchange and precious metals employees globally will be capped at 200 per cent of their basic salary for two years’.

This post was published at SilverSeek on November 12, 2014 –.