Infographic: Gold History and Mining in the USA

The United States has always had a love affair with the yellow metal. It all started in Stafford, Virginia in 1782, when Thomas Jefferson documented the first gold discovery himself.
Since then, Americans have been searching for gold far and wide. The California Gold Rushbrought hundreds of thousands of people to the West in search of newfound wealth. Years later, many more ventured into Alaska’s wilderness to hit it rich.

This post was published at Gold-Eagle on September 2, 2014.

AAPL’s Worst Dump In 7 Months Sparks Nasdaq Slump

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.
It goes without saying that there is nothing in the financial world more dangerous than easy credit. But when it multiples by 25X in just 14 years in an economy where there is essentially zero market discipline (because all debts are bailed-out and rolled-over when push comes to shove), you are dealing with a monumental catastrophe in the making.

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

“Deflation In Europe Is Just Beginning”… And How To Trade It

Deflation in Europe is Just Beginning
Differently than Russia/West crisis, the problem of deflation in Europe is far more structural of an issue, likely to hold the stage for the foreseeable future.
As often stated, we believe Europe looks like Japan in the early 90′s. Similarly to Japan, Europe has few unmistakable connotations at interplay:
High level of indebtedness, drawing resources away from productive investments into sterile debt service. Overvalued currency, especially to peripheral European countries (30% overvalued against D-Mark, 40% overvalued against the rest of the world). Peripheral Europe is experiencing a currency crisis as if they borrowed in foreign hard currency. Secular trend of falling working population mixed with falling productivity rates. The data released in the past few weeks provided evidence of European growth having grounded to a halt for most countries, including Germany. Italy dipped in triple-dip technical recession, while France slowed down concerningly and even Germany contracted in Q2. All the while, inflation averaged 0.3% for the Euro Area as a whole, well below the ECB target and on a clear downtrend.
In Japan in the early 90′s, it took four years for disinflation to become deflation, under the push of a strong Yen and with the help of an inactive Central Bank dismissing such risk until late.
Likewise in Europe, the EUR is far too strong when measured against GDP growth prospects and productivity trends. A misleading current account surplus of 200bn only managed to make it stronger (overshadowing imbalances across countries in Europe), together with a shrinking balance sheet of the ECB for almost Eur 1 trn on deleverage flows and LTROs repayments.

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

Homebuilder Stocks Getting Hit Again Despite Higher Dow

[note: the DJUSHB Dow Jones Home Construction Index has hit a new low on the day since I posted this report – it’s down almost well over 2% nearly 3% now] Despite what seems to be an inexorably rising stock market, the homebuilder stocks continue their negative divergence from the direction of the general market. In fact, the homebuilder stocks dropped over 1% at today’s market open despite another unexplained ‘pop’ in the S&P 500.
The message of the market is unmistakable: the housing sector is tanking (click to enlarge).
This is despite the fact that 30-yr mortgage rates have come down to their lowest level in a year. That fact that buyers are disappearing is reflected in today’s mortgage purchase applications report from the Mortgage Bankers Association which showed another 2% drop in applications files vs. the previous week and a 12% plunge from a year ago.

This post was published at Investment Research Dynamics on September 3, 2014.

What does a ‘good’ Chinese adjustment look like?

People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich.
– John Galbraith, The Age of Uncertainty
Malinvestment occurs when people do stupid things with free money. One of the characteristics of malinvestment is its dominance; i.e., other investments have little chance of competing. Malinvestments always bust and end in liquidation.
– Joan McCullough, writing yesterday in her daily commentary
Worth Wray and I have been writing for some time now about the problems that are developing in China. Worth is somewhat more pessimistic about the outcomes than I am, but we agree that China is problematic. China is the number one risk, in my opinion, to global financial economic stability, more so than Europe or Japan, which are also ticking time bombs.

This post was published at Mauldin Economics on SEPTEMBER 3, 2014.

Citi Warns Every FX Trade Is The Same Carry Trade Now

In Citi’s Steven Englander’s latest note, he notes that every major FX trade in place right now is a carry trade in one form or another, differing only in their scope and in the risk they entail. This has 5 significant implications…
Via Citi,
This note argues that every major FX trade in place right now is a carry trade in one form or another, differing only in their scope and in the risk they entail. Consider the following trades that encompass the vast majority of FX trades in place:
1) In Asia, long CNH, short USD
2) In G3, long USD, short EUR and JPY
3) In G10 long AUD and NZD, short G3
4) Globally, long EM, short G3
In the short term, we think 2) remains the most robust because acutely disappointing economic outcomes will likely induce ECB and BoJ action. If anything, FX moves are lagging moves in vol-adjusted carry. Fear of more aggressive Fed tightening is the likely driver of higher volatility but this would push spreads further in favor of the USD, offsetting some of the impact of higher volatility. Hence, these carry trades are not as vulnerable as 3) or 4) to Fed-induced volatility. However, we saw earlier this year that long USD against EUR and JPY is sensitive to generalized position unwinds, at least temporarily.
On a 2-4 month horizon 3) and 4) are the most vulnerable because we expect investors to become much less certain that the Fed pricing pace will be as shallow as the market now expects (link), and they would be hit doubly by any backing up of volatility. We look to payrolls and FOMC this week and next as potential triggers for an unwind of these trades, but we think there will be more sensitivity once QE is ended and the unemployment rate falls below 6% — most likely in early November.

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

Gold price suppression needs no whistleblowers; it’s in the open because nobody notices

Over the long Labor Day holiday weekend in the United States GATA's secretary/treasurer Chris Powell sent the following e-mail to many financial journalists and mining company executives in the hope of calling their attention to the latest smoking-gun proof of central bank intervention against the gold market and other markets.
Dear —–:
The Gold Anti-Trust Action Committee is publicizing a document discovered last week on the Internet site of the U.S. Commodity Futures Trading Commission. It suggests that central banks are surreptitiously intervening in all major futures markets operated by CME Group — that is, suggests that all these markets are rigged. This strikes me as a pretty big news story and I've sent it to many major news organizations in the hope of inducing them to pursue it. See what you think. The document and some context for it can be found at GATA's Internet site here:
Of course there were few acknowledgments, but one mining executive did reply cordially, to the effect that 1) conspiracies are hard to keep secret, 2) despite GATA's many years of exposing market manipulation not one disgruntled employee or former spouse or jilted lover has ever come forward to describe how the manipulation works. Until he could see information from someone actually involved in gold price suppression, he wrote, he would remain a skeptic.
Chris Powell replied as follows….

This post was published at GATA

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.