Lawrence Williams: India unlikely to relax gold import restrictions yet

Despite the import restrictions, Commerzbank reports that the All India Gems & Jewellery Trade Federation estimates that gold imports will increase again to 40-50 tonnes in August because jewellery manufacturers will have been building up stocks in the run-up to the festival season. Even so, the Federation expects physical gold premiums in India to climb to $20-25/oz, as compared with a figure of $8-10 at present.  There thus remains strong pent up demand and this year’s monsoon, which has an impact on gold purchases from rural communities, has proved to be far better than expected after a late start to the rains. 
So overall India looks set to try and keep its current relatively tight rein on gold imports.  The central bank has a target of keeping the deficit below 2% of GDP this year and would probably be unable to achieve this if the gold import duties were removed.  One suspects the government may have the longer term intent of relaxing the impositions, but that time could still be many months ahead.

This post was published at Mineweb

Gold loan companies roll out discounts to reel in customers

Gold loan companies are having a field day. Tweaking their existing schemes 
and chalking out new strategies, gold loan companies are going all out to
 woo customers in time for the festive season, amidst stiff competition from
 commercial banks. 
In South India, Kerala-based non banking finance companies (NBFCs) are
 expected to continue dominating the $20 billion (Rs 1,250 billion) gold
 loan market, staving off competition from commercial banks even though 
India's central bank, the Reserve Bank of India (RBI), relaxed certain rules 
last month.
 
Muthoot Finance, Manappuram General Finance, Muthoot Fin Corp, Mini Muthoot 
and Kosamattom Finance have all mastered the art of selling gold loans in 
their home market Kerala, which consumes over 20% of the total gold sold in
 India.

This post was published at Mineweb

John Embry: Manipulation causes contrast between gold/silver and platinum/palladium

Sprott Asset Management's John Embry, interviewed by Jeff Rutherford over at Sprott Money News last Friday, says market manipulation explains the fall in gold and silver prices amid the rise in platinum and palladium prices.
He also notes how counterintuitive the fall in gold and silver prices is amid the various worsening international problems. Embry's interview is 8:34 minutes long and can be heard at the Sprott Money Internet site.

This post was published at Sprott Money

State Treasurers Panic as Big Bank Liquidity Rules Set for Release Today

The continuing perversions and disfigurement of an entire nation’s financial system to accommodate insanely complex mega banks – the same ones who brought the country to the brink of financial collapse six years ago – takes center stage in Washington, D. C. again today.
Because Federal regulators do not want to have egg on their face if one of these global behemoths has to be rescued by taxpayers again, the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency are set to release new liquidity rules today. The rules will redefine the types of liquid assets these giant Wall Street banks must hold to meet the new Basel III Liquidity Coverage Rule set by the international banking body known as the Basel Committee on Banking Supervision, a group made up predominantly of global central banks.
The Federal regulators are expected to adopt rules that put a heavy reliance on banks holding short-term U. S. Treasury securities, one of the most liquid security classes around the world, in order to meet a bank run or credit crunch lasting 30 days.
The state treasurers’ panic over the rule is justified. According to press reports, the Federal regulators may exclude municipal bonds issued by states, counties, cities and school districts from the category ‘high quality liquid assets’ (HQLA) which could be easily liquidated should a mega bank experience a run on its assets. These municipal bonds fund critical projects like roads, schools, and bridges. Given the deteriorating infrastructure of the nation, these new rules may critically impact the economic interests of the U. S. while regulators show growing fealty to the wishes of foreign central banks.

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

How is Doug Casey Preparing for a Crisis Worse than 2008?

He and His Fellow Millionaires Are Getting Back to Basics
Trillions of dollars of debt, a bond bubble on the verge of bursting and economic distortions that make it difficult for investors to know what is going on behind the curtain have created what author Doug Casey calls a crisis economy. But he is not one to be beaten down. He is planning to make the most of this coming financial disaster by buying equities with real value – silver, gold, uranium, even coal. And, in this interview with The Mining Report, he shares his formula for determining which of the 1,500 “so-called mining stocks” on the TSX actually have value.
The Mining Report: This year’s Casey Research Summit is titled “Thriving in a Crisis Economy.” What is the most pressing crisis for investors today?
Doug Casey: We are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different and longer lasting than what we saw in 2008 and 2009. Investors should be preparing for some really stormy weather by the end of this year, certainly in 2015.
TMR: The 2008 stock market embodied a great deal of volatility. Now, the indexes seem to be rising steadily. Why do you think we are headed for something worse again?

This post was published at Gold-Eagle on September 3, 2014.

The World Financial System Is Rife With “Stimulus” Junkies

China’s Services PMI for August veered upwards, but that’s not the news. Noting that China’s massive but fracturing bubble in unused luxury apartments (upwards of 70 million are empty) is a serious headwind, analysts for HSBC were quick to plead for more stimulus:
The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery.’
Stunning. Even the comrades in Beijing know that China’s credit tsunami has unleashed a dangerous speculative mania throughout the land that has no parallel in human history. For crying out loud, total credit outstanding (which Beijing’s red capitalists are pleased to call ‘social financing’) has exploded from $1 trillion at the turn of the century to $25 trillion today.

This post was published at David Stockmans Contra Corner on September 3, 2014.

Subprime Blows up on Retailer, CEO Warns on ALL Subprime, Hits Auto Sales

Selling strung-out American consumers something they can’t afford, can’t get financed elsewhere because they already bought things they couldn’t afford and ruined their credit in the process, and overcharging them for the privilege is one of the most irresistible money makers. These customers are captives. And it boosts sales like nothing else. It’s called subprime lending. It’s risky, as certain lenders, now defunct, found out during the financial crisis.
Now Conn’s Inc., a rapidly growing chain of 89 retails stores selling appliances, electronics, furniture, and mattresses, issued a warning on subprime. A broad warning. It has been offering in-house financing to customers who can’t afford the product and don’t have the credit score to finance it elsewhere.
Business has been booming. In the second quarter ended July 31, same-store sales rose 12% ‘on top of an 18% increase in the prior year and 22% two years ago,’ as CEO Theodore Wright proudly pointed out during the earnings call. The company opened an additional 14 stores in 11 markets over the last five months, and total revenues in the quarter jumped 30% from a year ago to $353 million.
‘The retail segment had another outstanding quarter with higher gross margins, expanded operating margins, and the twelfth consecutive quarter of increasing same store sales,’ Wright said. ‘We are reaching customers that were underserved before, giving low-income consumers the opportunity to purchase quality, durable, branded products for their homes at affordable monthly payments.’
So 77% of its retail sales were financed in-house, with the company borrowing the money to lend it to its customers so that they can buy its products. Conn’s is profiting not only from the sale but also from the loan. Subprime is irresistibly profitable. The portfolio’s average FICO score is 592, with 15% of the portfolio being below 550 (below 640 is considered subprime). It has worked wonderfully before. It has led the housing industry to great success. And the auto industry has come to depend on it. Nothing can go wrong.

This post was published at Wolf Street by Wolf Richter ‘ September 3, 2014.

Gold & Silver Trading Alert: Gold’s Plunge, Dollar, and CCI

Briefly: In our opinion no speculative positions in gold, silver and mining stocks are now justified from the risk/reward perspective. However, day-traders might consider a small speculative long position in silver.
The precious metals sector moved sharply lower yesterday – in tune with its medium-term trend. The decline was to a large extent connected with the breakout in the USD Index. It seems that it is the U. S. dollar that will determine the short-term moves in PMs and miners in the coming days and in today’s alert we focus on this relationship. The CCI Index seems to be in a particularly interesting position as well and this is something that gold & silver traders should be aware of.
Let’s start with the USD Index chart (charts courtesy of

This post was published at SilverSeek on September 3rd.

Best And Worst Performing Hedge Funds In August And Year-To-Date 2014

Superficially, there are two amusing observations to make about a New Normal in which the S&P, courtesy of its Chief Risk Officers Yellen, Draghi and Kuroda, continues to vastly outperform virtually all hedge funds for a 6th year running: the first is that one of the very few funds in our universe which is doing better than the broader market is named Tulip Trend Fund, which in itself speaks volumes, while the other fund that is creating outsized “alpha” is Bill Ackman’s Pershing Square, which has made the bulk of its gains on the back of the Allergan deal where he frontran the investing public, knowing full well Valeant would make a hostile bid, a transaction which the SEC better strike as illegal or else the farce of a market will get even more farcical.

This post was published at Zero Hedge on 09/03/2014.

Just How Bad Is Europe’s Banking System? ESI Bonds Bid At Just 2% Of Face

Just three months ago, everyone was a believer: bonds traded well above par, Europe’s recovery was on track, and Portugal’s banking system was a shining example of how Europe’s bailout program worked (andGoldman was pitching SPVs full of this crap to any and all greater fools). Today – the ugly truth is exposed as Bloomberg reports, Espirito Santo International debt attracted potential buyers at just 2% of face value. Of course, the words “contained” are trotted out to explain how this is a one-off and not at all representative of the rest of the European banking system. But… Howard Marks’ Oaktree Capital seems to disagree – “We continue to think Europe will provide a substantial quantum of attractive investment opportunities for all of our strategies and in particular distressed debt,” as a record amount of bad loans are being offloaded by European banks ahead of the stress tests.

This post was published at Zero Hedge on 09/03/2014.

Where To From Here?

I know this super highway. This bright familiar sun. I guess that I’m the lucky one…
~ Steely Dan
The financial markets were certainly correct in dismissing that rather abysmal first quarter 2014 GDP print, no? After all, the current 4.2% GDP growth snapback revision in Q2 is proof positive Q1 was just a one-off fluke. Right?
The fact is: for a good five years now, economic pundits have been both hoping for, and then repeatedly disappointed by, the US economy’s inability to achieve “escape velocity’.
From the ‘misery loves company’ department, the “good” news is that the other major global economies have experienced relatively worse economic outcomes than the US. So, in the land of global perceptual relatives, the US economy remains one of the lead sled dogs.
But, until proven otherwise, we remain in a slow growth macro environment, as has been the exact character of this historically subdued growth cycle since its start coming out of the 2008 crisis.
Is it all bad, though? Of course not. There is some good along with the bad, yet there also exists some outright ugly. It’s the balance, rhythm and interplay between The Good, The Bad and The Ugly over time that shape both the headline economic stats as well as theoretically support financial asset prices. Indeed, the manner in which this unprecedented global slow growth cycle has impacted global flows of capital has been much more responsible for raising the prices of financial assets prices than any actual economic realities.
So what lies ahead for the US economy? And for the financial markets? Are things going to get better or worse from here?

This post was published at PeakProsperity on September 3, 2014,.

WHY BURGER KING’S EXPATRIATION IS THE MORAL THING TO DO

It was announced last week that Burger King had bought a famous Canadian restaurant franchise known as Tim Horton’s to reduce the amount of taxes they “owe” to the US government. An upcry arose!
As usual the mainstream media and the people who watch it have the story totally wrong. Burger King is not giving US taxpayers a “raw deal” by looking to move abroad so as to save on profits which are not repatriated. Instead, the iconic fast food burger chain is doing the moral thing by moving its tax-base outside the war-mongering, highly socialist US federal government’s reach.
The mainstream media will never give you this side of the story. This obvious trend towards expatriation terrifies the talking heads. You have to come to alternative media sources like The Dollar Vigilante (TDV) Blog and others to get the truth. As Howard Kurtz writes at Fox News,
I feel confident in saying that most Americans are disgusted by the perfectly legal practice of US companies avoiding taxes by incorporating in another country.
If this is the case, it is because Americans love bombing other countries. They lust for blood. I can think of no other logical explanation Americans would want the machine in Washington to continue being fed. Burger King is not the first company to make the moral decision to leave the US tax farm. Many American companies are going abroad – as many as 70. These so-called “inversions”. Even the most American of investors stand behind the inversion. Iconic American billionaire, Warren Buffet, coughed up $3 billion so the hamburger chain could buy the Canadian donut outfit Tim Hortons. Buffett did this just one month after Obama denounced ‘inversion’ tactics as an ‘unpatriotic tax loophole’, ordering regulatory changes to undermine them.

This post was published at Dollar Vigilante on September 2, 2014.

Saxo Bank Warns Swiss Franc Tail Risk Is Concerning

In a nutshell: The chance of EURCHF breaking the peg at 1.2000 have increased from 10% to 25-30% based on European Central Bank monetary policy, geopolitical risk and a lack of policy choices for the Swiss National Bank. This means that the weighted risk is now 9 figures – significantly up from 2 figures when I did a similar calculation back in 2011/12. ((1.2000-.9000= 30 figures) x 30% = 9 figures of risk) . This means that being long EURCHF no longer is a safe bet and although the 70% chance of the floor being both defended and protected is still high, the tail-risk involved is becoming to concerning.

This post was published at Zero Hedge on 09/03/2014.

An “Austrian” Bill Gross Discusses Credit Creation

This month’s Bill Gross letter, notably shorter than usual, is as close to the bond manager discussing an Austrian economics worldview as we will likely ever see him: in brief, it’s all about the credit/money creation, with an emphasis on the use of proceeds of said creation under ZIRP, i.e., malinvestment , or as Gross puts it: “credit growth is a necessary but not sufficient condition for economic growth. Economic growth depends on the productive use of credit growth, something that is not occurring.”
From Pimco’s Bill Gross:
For Wonks Only
A credit-based financial economy (as opposed to pure cash) depends on an ever-expanding outstanding level of credit for its survival. Without additional credit, interest on previously issued liabilities cannot be paid absent the sale of existing assets, which in turn would lead to a vicious cycle of debt deflation, recession and ultimately depression. It is this expansion of private and public market credit which the Fed and the BOE have successfully engineered over the past five years, while their contemporaries (the ECB and BOJ) have until now failed, at least in terms of stimulating economic growth.
The unmodeled (for lack of historical example) experiment that all major central banks are now engaged in is to ask and then answer: What growth rate of credit is enough to pay prior bills, and what policy rate/amount of Quantitative Easing (QE) is necessary to generate that growth rate? Assuming that the interest rate on outstanding debt in the U. S. is approximately 4.5% (admittedly a slight stab in the dark because of shadow debt obligations), a Fed governor using this template would want credit to expand by at least 4.5% per year in order to prevent the necessary sale of existing assets (debt and equity) to cover annual interest costs. That is close to saying they would want nominal GDP to expand at 4.5%, but that’s another story/ Investment Outlook.
How are they doing? Chart 1 shows outstanding credit growth for recent quarters and all quarters since January 2004. The chart’s definition of credit includes the standard Fed definition of private non-financial credit (corporations, households, mortgages), public liabilities (government debt), as well as financial credit. The current outstanding total approximates $58 trillion and has been expanding at an average annual rate of 2% for the past five years, and 3.5% for the most recent 12 months.

This post was published at Zero Hedge on 09/03/2014.

Will asian gold demand continue?

To give you an idea of how important gold is considered in Malaysia, the prime minister was delivering the keynote speech in a recent gold conference.
Can you imagine David Cameron or Barack Obama giving a keynote entitled ‘Gold: Sustaining Future Growth’ It just wouldn’t happen.
The episode has got me thinking about the vastly different attitudes to gold between East and West – and that’s what I want to look at today…
Looking at worldwide gold demand trends, two things are pretty clear. Asian demand is increasing and Western demand is falling.
In fact, world gold mine production (averaging about 2,800 tonnes per year over the last five years) only just manages to cover Asian demand. In the chart below (from Nick Laird at Sharelynx), we see Asian demand in red. It has risen almost inexorably since the early 1980s, while Western demand (the blue line) has been falling since 2003.

This post was published at TruthinGold on September 3, 2014.

Scotland Independence Risk Sees British Pound Dive

Scotland Independence Risk Sees British Pound Dive
Mel Gibson in Braveheart
Sterling fell sharply yesterday as traders became nervous of a possible vote for Scottish independence. The referendum on Scottish independence from the United Kingdom takes place on Thursday 18th September.
While the referendum and the potential impact of an independent Scotland have been on the horizon for some time, the approaching vote in two weeks is causing upheaval for the British pound in currency markets, and also more general macro uncertainty in the regional economic and monetary system.

This post was published at Gold Core on 3 September 2014.

Bill Holter-US Broke-Crash Mathematical Certainty

The following video was published by Greg Hunter on Sep 2, 2014
Bill Holter of MilesFranklin.com says a crash of the financial system is on the way. Holter says, ‘I believe that many things that are real will be revalued many multiples higher. Silver and gold I see being revalued eight to ten times higher or more if we have a closure of the banking system and the stock market, a reset so to speak . . . How likely is a crash in the financial system? Holter thinks, ‘From a probability standpoint, whether it’s tomorrow morning or next week, or next month, or next year, mathematically, ask yourself this question: Is the U. S. broke? The answer is yes, the U. S. is broke. There is no way the U. S. can pay the promises, the interest and etcetera on everything that is out there. I’ve seen a number of $240 trillion in total promises and debt. There is no way that can be paid. So, from a mathematical standpoint, sooner or later, there is going to be an all-out collapse. That is a mathematical equation. It is no longer if, it is only a question of when.’

Indian physical demand seen high

Indian gold imports and premiums are likely to surge during the rest of the year as buying picks up for the wedding and festival season, the head of the country’s biggest gold refiner said on Tuesday.
Premiums could jump to $10-$12 an ounce over the global benchmark from the current levels of $4-$5, said MMTC-PAMP Managing Director Rajesh Khosla.
Imports could climb to 60-70 tonnes per month for the rest of the year from about 40 tonnes in July, Khosla said, adding that August imports were probably around 63 tonnes.
India has not yet released its trade figures for August.

This post was published at TruthinGold on September 2, 2014.