Andy Hoffman: Central Banks Have Confused Investors About the Value of Gold

Jon

Introduction: Andrew (“Andy”) Hoffman, CFA joined Miles Franklin, one of America’s oldest, largest bullion dealers, in October 2011 and serves as Marketing Director. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics. Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies. Andy’s articles can be found on the Miles Franklin Blog, at http://www.milesfranklin.com.
Daily Bell: What a month for gold. What’s going on?
Andy Hoffman: Remember, all markets are now manipulated on a 24/7 basis. It is the only way TPTB have been able to maintain their fiat Ponzi scheme this long, by “painting” markets like stocks and precious metals to tell the story they want told. Of course, not all markets – like crude oil and Treasuries – are not cooperating. Nor, for that matter, the physical gold and silver markets, which tell a dramatically different story than the suppressed paper markets. This particular month, the paper-based raids were more aggressive, as TPTB were terrified the Swiss referendum would be passed, forcing the SNB to buy 1,500 tonnes of gold.
Daily Bell: The Swiss gold referendum was soundly defeated. What happened?
Andy Hoffman: In a nutshell, even the “world’s smartest 0.1%” regarding the value of gold have been brainwashed by central bankers and market manipulation into believing the referendum was a bad idea. Heck, these were the same people that allowed constitutional gold backing to be surreptitiously removed, enabling the SNB to sell 1,500 tonnes of their gold at less than $400 per ounce and subsequently, to peg the Franc to the dying Euro in 2011, preceding an historic 16% plunge that is on the verge of getting much worse. The reason given was to improve Switzerland’s competitiveness, but Swiss GDP growth has averaged a paltry 0.4%/quarter since its cost of living is so high, they had a referendum this year about raising the minimum wage to $25/hour! In other words, TPTB still have the Swiss duped – which I assure you, they’ll understand more clearly sooner rather than later.

This post was published at The Daily Bell on December 07, 2014.

SWOT Analysis: The PBOC Circulates Draft Plan to Further Ease Import Restrictions on Bringing Gold into China

Jon

Strengths
Gold trading in China’s largest physical exchange is accelerating. For the first ten months of 2014, the volume of contracts on the Shanghai Gold Exchange was 12,077 tonnes, compared with all of 2013 at 11,614 tonnes. Klondex Mines announced a second toll milling agreement this week for its Midas Mill, where it has spare capacity. Klondex will process high grade ore, in excess of 1.5 ounces per ton from and pay the provider the value of the recovered gold less all toll milling charges. Such deal structures are accretive to Klondex, which essentially is buying gold below the market price and processing it with a positive carry on the profit margin. NGEx Resources announced its maiden resource for its 100 percent owned Filo del Sol project on the Chile-Argentina border of 280.5 million tonnes of copper. With the associated gold content, the copper equivalent grade comes in at 0.66 percent. Many of the older copper discoveries in South America are being depleted and are becoming more arsenic rich. With the size of the alteration zone at Filo del Sol and with the resource drilling only testing a small part of it, NGEx expects that further drilling will grow the resource. Weaknesses
U. S. employment data released on Friday by the Bureau of Labor Statistics calculated the economy created 321,000 new jobs in November, 90,000 more than expectations and thus pushing gold below $1,200 for the close of trading this week. Interestingly, ADP’s Employment Change report released on Wednesday came in at just 208,000 which was a miss versus the consensus estimate of 222,000.

This post was published at GoldSeek on 8 December 2014.

Stack Smart, Not Hard, Pt. 2: Make the Golden Pendulum Your Ally

Jon

Not much Time Left
First off, the Free Gold giveaway has been great fun all week, but time is running out to enter to win. Remember, if you’ve already entered, you can visit the post, and re-tweet it each day, to earn even more entries. On Tuesday, a winner will be chosen, so we’re getting down to the last 36 hours to participate. If you’ve been thinking about entering, or would like to earn more entries, we’re going down to the final stretch to do so! Good luck to all!
Two Dreaded Words
The two words that I’ve learned to dread more than most, are: ‘Watch this!’
Now, sometimes those can be fantastic words, right?
Sometimes, following those words, we are shown something truly magnificent, surprising, or even hilarious!
But when you have a 2 year-old(like the Watchman has)….those two words can induce some sheer, agonizing, teeth-grinding terror!
Each time I hear it, I smile and nod at my son, while my mind plays through all the possibilities of which physician we might have to visit once this scenario plays out.
You laugh, but adults are the exact same way though, are we not? I’m sure most of you have read stories about those crazed alchemists in the Middle Ages. Those poor, misguided souls, determined to play god, by locking themselves up in the dark tower of some castle or keep, pouring over ancient manuscripts, and even dabbling in forbidden ‘studies’. They’d stare, eyes twitching at the latin or egyptian texts, whiling away the hours, as they determined to turn lead into gold.
Time after time, they miserably failed!
Sometimes, many of them would think they were so close, only to be left with nothing in the end, every time.
Years and years were pitifully wasted this way. Whole lives expired, chasing a terrible and pointless dream.
A few of these folks suddenly realized they chose the wrong career, when something went horribly awry:
We chuckle at these people now, but we’re just as ridiculous!
For modern central bankers are very much like these alchemists, in that they all believe they’ve found a way to ‘turn debt into gold’. Yet, astonishingly, most well-educated individuals in the West, hang upon every word that these fools utter!
And, just like the poor, unfortunate soul in the painting above, I promise you that it will end in a fiery, monetary explosion.
That is, after all, why we’re stacking, is it not?
We’re all being forced to stand in said laboratory, while some ‘sage’ tells us:
‘Watch this!’
Just because we’re all being forced to watch another terrible, alchemical experiment gone wrong, doesn’t mean that we can’t do it safely from behind our silver and golden shields! Right?

This post was published at The Wealth Watchman on DECEMBER 8, 2014.

Hedge Funds Most Long The S&P500, Most Short The 10 Year In Six Months, Still Long Crude

Jon

Once upon a time hedge funds were actual rational, sensible, intelligent creatures whose PMs – rightfully – collected 2 and 20 (i.e., hundreds of millions) for not only outperforming the market but for providing a natural hedge to collapsing asset prices. Since then they have devolved into sniveling, expert network and insider trading-constrained, “beta is the new alpha”, leveraged momentum chasing E-trade babies (which have underperformed the S&P for 6 years in a row).
As such we doubt anyone will find it one bit surprising that as Bank of America observes in its latest weekly hedge fund monitor, “S&P500 longs increase to six month high” with all equities bought. And alongside that, and confirming that the short squeeze in the Treasury market will continue indefinitely, “10-yr contracts were sold at a strong pace to increase net short positioning to largest in six months.” Why? Because that imminent economic recovery which everyone has been betting on since the second half of 2013 is just not coming, seasonally adjusted low-paying temp, retail, teacher and secretary jobs notwithstanding.

This post was published at Zero Hedge on 12/08/2014.

NIRP Arrives In The US: TBTF Banks Tell Customers To Move Their Cash Or Be Charged Fees

Jon

Back in June, the world was speechless when Goldman’s head of the ECB, Mario Draghi, stunned the world when he took Bernanke’s ZIRP and raised him one better by announcing the ECB would send deposit rates into negative territory, in the process launching the Neutron bomb known as N(egative)IRP and pushing European monetary policy into the “twilight zone”, forcing savers to pay (!) for the privilege of keeping the product of their labor in the form of fiat currency instead of invested in a global ponzi scheme built on capital market so broken even the BIS can no longer contain its shocked amazement.
Well, the US economy may be “decoupling” (just as it did right before Lehman) and one pundit after another are once again (incorrectly) predicting that the Fed may raise rates, but when it comes to the true “value” of money, US banks have just shown that when it comes to spread between reality and the economic outlook, the schism has never been deeper.
Enter US NIRP.
As the WSJ reports, far from paying for the privilege of holding other people’s cash (and why would they with nearly $3 trillion in positive carry excess reserves sloshing around) US banks – primarily of the TBTF variety – “are urging some of their largest customers in the U. S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits.”
The banks, including J. P. Morgan Chase & Co., Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp. , have spoken privately with clients in recent months to tell them that the new regulations are making some deposits less profitable, according to people familiar with the conversations.

This post was published at Zero Hedge on 12/08/2014.

Where is the turning point for gold & silver?

Jon

Precious metals markets are under pressure once again as those long gold look for evidence of a sustained turnaround. ‘Gold as a safe haven asset has been sold off since the S & P broke the 2000 mark,’ said Tony Davis, sector analyst at Atlanta Gold and Coin. ‘But for those looking at metals as a long term investment, these are clearly some of the best levels we have seen in years and the current trends mark a very good opportunity to start building exposure.’
In the shorter-term, bearish trajectory has been driven by the latest round of macroeconomic figures. Non Farm Payrolls for the month of November came in at a very strong 321,000 jobs for the period, far exceeding analyst expectations and removing the need for investors to buy into safe haven assets. But whether or not these types of moves can sustain themselves is another question, and here we look at the longer term historical averages to determine where the key price points can be found in the SPDR Gold Trust ETF (NYSE: GLD) and iShares Silver Trust ETF (NYSE: SLV).

This post was published at TruthinGold on December 8, 2014.

Oil Prices Collapse To New Cycle Lows, Canada Heavy Tumbles Under $50

Jon

The crude carnage continued overnight with oil prices across the entire complex crashing through support to new cycle lows. Despite recent strategic reservce demand in China, the world’s oil glut continues as global growth expectations plunge leaving WTI trading as low as $64.10, Brent $66.77 (narrowing the Brent-WTI spread to $2.68 from $3.23 on Friday), and most stunning of all, Canada Heavy as low as $49.24. Speculators and money managers appear to be BTFD as they increased net long positions last week (amid the price slump) but comments from Kuwait Petroleum’s CEO and Iran officials suggest ‘lower for longer’ on prices will be the norm. As Morgan Stanley notes, “with OPEC on the sidelines, oil prices face their greatest threat since 2009 and appear on track for an extremely volatile 2015″
WTI has retraced the entire dead-cat-bounce from last Monday…

This post was published at Zero Hedge on 12/08/2014.

McDonalds Implodes, Reports Worst US Sales In Over A Decade

Jon

If one ignores all traditional, staple indicators of a growing economy, such as stable (not plummeting) crude demand, stable (not plummeting) holiday spending and stable (not plummeting) McDonalds comp store sales, then indeed the US economy has “decoupled” from the rest of the world, and those who wish to demonstrate the same intellectual capacity as Tim Geithner, will welcome you to the (latest non-)recovery.
And yet for those, who are leery of seasonally-adjusted government data (showing soaring low-wage jobs offset by crashing employment in the energy sector and M&A synergies which mysteriously are never captured), or sentiment surveys and confidence polls (of Wall Street executives and government workers), here is the latest data from McDonalds. Showing the worst US comp store sales in nearly 12 years at -4.6%, one does wonder if following America’s inability to even pay for sub-$1 meals, mass starvation will follow?
McDonalds US comp store sales:

This post was published at Zero Hedge on 12/08/2014.

Gold Prices Kept Low But Only For Americans

Jon

The SGT Report interviewed GoldCore’s Head of Research Mark O’Byrne over the weekend. The video was released yesterday evening and has already had over 5,300 views.
Click on image or here to watch
Topics covered in the interview included:
Gold performing well in all currencies in 2014 A yes vote to Swiss gold referendum would have been ‘icing on cake’ for gold market Existing fundamentals sound due to India and China demand and Russian, Chinese and other central bank demand Germans can’t get their gold reserves. Do how did the Dutch get their 122 tonnes of gold? Is Germany being prevented from holding gold to prevent independent foreign policy action? The mind boggling scale of the U. S. $18 trillion national debt and over $100 trillion to $200 trillion in unfunded liabilities How humongous is a billion, a trillion and a quadrillion? The illusion of digital ‘wealth’ and the coming wealth transfer when system implodes Here is a transcript of the first 11 minutes of the 26 minute interview.
SGT Report: What I wanted to do gentlemen is start with a headline that we rarely see and it’s this one which I haven’t written yet – “Strong dollar keeps gold prices low for Americans” and the reason I’m saying that is that according to your own blog at Goldcore.com Mark ( GoldCore blog ), gold is up 14.3% in japanese yen this year, 12.3% in euros, 5.8% in British pounds and of course only 0.4% when priced in dollars.
And that’s the real story, isn’t it – gold continues to be real money and act as real money around the globe as fiat currencies are printed and annihilated.
Mark O’Byrne: ABSOLUTELY and I think it speaks to the dollar-centric nature of the world today.
We all look at things in dollars – not just in America, you guys do that naturally enough, but throughout the western world, particularly in the investment and finance sphere, the dollar is still king and everything is looked at in terms of pricing in dollars. That’s created the perception that gold has been weak this year when in reality, it has been anything but.
It’s actually slightly higher in dollar terms ytd in 2014. So it’s performed quite well versus other things, obviously not the stock markets which have roared ahead again but it has performed very well in all the other major fiat currencies.

This post was published at Gold Core on 8 December 2014.

TWO COMEX GOLD DEPOSITORIES: Registered Inventories Decline 25% In One Day

Jon

In a surprising update, there were two large gold withdrawals from the Comex on Friday. Not only were these large withdrawals, they came from Brinks and Scotia Mocatta’s Registered inventories. Even though the Comex holds a total of 7.7 million ounces of gold, only 10% of this amount is stored in the registered category.
On Thursday, Brinks held 257,290 oz of gold and Scotia held 339.993 oz in their registered inventories. Then on Friday, when CME Group released an update on its Comex gold warehouse stocks, Brinks registered inventories declined 62,259 oz and Scotia Mocatta fell 87,849 oz.
In one day, Brinks registered gold inventories fell 24% and Scotia Mocatta’s dropped 26%. While both of these depositories experienced a large percentage decline of their registered gold inventories, it impacted Brinks a great deal more than Scotia.

This post was published at SRSrocco Report on December 6, 2014.

The Bells Will Be Silent

Jon

Still too Much Debt A faint breeze blew through the US stock exchanges on Friday. A few leaves fluttered. But Diary readers want to know: When is the next hurricane coming?
Alas, we get the newspaper no earlier than anyone else. It always has yesterday’s news… not tomorrow’s. That leaves us wondering and guessing and trying to figure out what comes next.
The storm that raged in 2008 was fundamentally deflationary. It was so predictable that we didn’t need tomorrow’s headlines; the weather forecast was obvious.
After decades of taking on debt, Americans started to stagger under the weight of their debt-service costs. When house prices fell, their knees buckled and their backs broke.
Households cut spending and reduced borrowing. But they are still heavily in debt. In 1971 – before the big credit bubble began inflating under the new fiat currency regime – American households had $5 of income for every $4 of debt.
Now, for every $5 of household income they have $12 of debt. That’s down from the ‘peak debt’ of 2007 – at $13 for every $5 of disposable income – but still much more than the historic average.

This post was published at Acting-Man on December 8, 2014.

Macroeconomics Finally Gets Interesting

Jon

‘The future is already here – it’s just not very evenly distributed.’
– William Gibson, Hall of Fame science fiction writer
Since I began writing this letter some 15 years ago, I’ve always done an annual forecast letter, generally in the first week of January. That letter is typically the most-read issue of the year, and I spend more time thinking about it than any other letter. I typically take the last week of the year off from writing just to concentrate on my research, and I often begin to compile my reading material the first week in December, which the calendar tells us is now. Helping me this year will be my associate Worth Wray and a few members of the Mauldin Economics team, and of course my many friends and readers.

This post was published at Mauldin Economics on DECEMBER 7, 2014.

China Surges, Japan Closes Green On Horrible Econ Data; Oil Tumbles To Fresh 5 Year Lows

Jon

Without doubt, the most memorable line from the latest quarterly report by the BIS, one which shows how shocked even the central banks’ central bank is with how perverted and broken the “market” has become is the following: “The highly abnormal is becoming uncomfortably normal…. There is something vaguely troubling when the unthinkable becomes routine.”
Overnight, “markets” did all in their (central banks’) power to justify the BIS’ amazement, when first the Nikkei closed green following another shocker of Japanese econ data, when it was revealed that the quadruple-dip recession was even worse than expected, and then the Shanghai composite soaring over 3000 or up 2.8% for the session, following news of the worst trade data – whether completely fabricated or not – out of China in over half a year. Perhaps the biggest surprise out of the broken, rigged market is that the massively overbought Dollar is actually listening to the BIS and as of this moment is at overnight lows, dragging European stocks (despite yet another miss of German industrial production printing at 0.2%, vs Exp. 0.4%, and the prior revised from 1.4% to 1.1%, something which normally would be super bullish) and US futures to session lows too: because it is truly shocking to see rationality in the “market” these days.
And speaking of China, it too is now caught in one of those New Normal infinite loops, with DB saying that the probability of a rate cut and liquidity flood by the PBOC – the primary driver for the recent market surge – has been slashed as a result of the market surge as China would be leery to fan the flames of the euphoric market any further. In other words, courtesy of the reflexive nature of central planning, the market has frontrun PBOC action so much it has effectively made such action impossible.
The Nikkei 225 closed slightly higher ( 0.08%) as upside was capped with continued weakness in the JPY against the greenback, despite the final reading of the Japanese GDP Q/Q number -0.5% vs. Exp. -0.1% (Prev. -0.4%) confirming that the Japanese economy contracted. The Hang Seng ( 0.5%) and Shanghai Comp ( 2.9%) whipsawed in yet another volatile session, the latter breaking above 3,000 for the first since 2011 as Chinese Trade Balance (USD) (Nov) M/M 54.47bln vs. Exp. 43.95bln (Prev. 45.41bln) printed a record surplus aided of by lower oil prices. However, the export and imports component was weak as speculation mounts on further PBoC stimulus.

This post was published at Zero Hedge on 12/08/2014.

China Net Gold Import 1,212t Jan – Nov

Jon

Withdrawals from the Shanghai Gold Exchange (SGE) – currently the best indicator of Chinese wholesale demand – keep up a strong pace.
In week 48 (November 24 – 28) SGE withdrawals accounted for 54 tonnes, year to date 1,867 tonnes have been withdrawn.

Corrected by the trading volume of the SGE contracts that are available for foreign traders (to take delivery, withdrawal from the vaults and export from the Shanghai Free Trade Zone), the weekly withdrawals in the mainland were 46 tonnes at minimum in week 48; year to date the bottom limit is at 1,841 tonnes.
Putting 1,841 tonnes in our basic equation (import = SGE withdrawals – scrap – mine), we can estimate mainland China has net imported 1,212 tonnes of gold up until November 28. Seasonally December and January are the strongest months for Chinese demand; I wouldn’t be surprised if total Chinese net gold import reaches 1,350 tonnes in 2014.

This post was published at Bullion Star on 8 Dec 2014.

We’ve Habituated to a Rigged, Fraudulent Market

Jon

Fraud generates risk, and risk eventually breaks out in the “safest” parts of the financial plumbing, the ones nobody gives a second thought to because they’re “low risk.”
Let’s go all the way back to the last time a central banker actually spoke the truth in public: December 5, 1996, 18 long years ago. It was on that day that Federal Reserve Chair Alan Greenspan gave a typically dry speech that hinted stocks could actually become overvalued (gasp!) due to irrational exuberance and subsequently plummet when rational valuations returned:
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade? Global stock markets promptly sold off hard at the shocking revelation that stocks might actually become subject to unexpected and prolonged contractions. This sharp reaction to a fundamental truth about markets–that they are prone to the irrational exuberance of participants, and the computer trading programs keyed to this momentum magnify the irrationality–caused central bankers to avoid any upsetting truth from then on.

This post was published at Charles Hugh Smith on DECEMBER 07, 2014.

China Fixes Yuan At Strongest Since March As Trade Surplus Hits Record Highs

Jon

Chinese imports and exports dramatically missed expectations this evening but it is imports that was thereal driver that pushed the trade surplus to $54.47 billion (higher than the $43.95 billion expected) record highs. Exports rose just 4.7% YoY (against expectations of an 8.0% rise and previous 11.6% rise) for the slowest growth since April. Imports utterly collapsed; plunging 6.7% YoY (against expectations of a 3.8% rise and prior 4.6% YoY rise). This is the biggest drop since March and 4th largest plunge since Aug 2009. Of course, in any real world this means ‘the rest of the world’ should be suffering from huge drops in exports… but we are sure, by the magic of fradulent invoicing that will not be the case. The PBOC may have got a glimpse and fixed CNY at its strongest since March and highest premium to the market since August.
Both imports and exports miss dramatically

This post was published at Zero Hedge on 12/07/2014.

There Has Never Been A Greater Portion Of America Living On Food Stamps

Jon

Friday’s jobs data proves it – America is back baby!!! Or is it all totally manipulated statistical shenanigans? A quick glimpse at the following charts two rather uncomfortably ‘non-recovery-like’ lines – of structural unemployment and the percent of the US population of Food Stamps – would suggest that for much of America, the recovery never happened… and in fact has got worse…

h/t @Not_Jim_Cramer and @M_McDonough

This post was published at Zero Hedge on 12/07/2014.

Another Fabricated Jobs Report – Paul Craig Roberts

Jon

Friday’s payroll jobs report is another government fairy tale or, to avoid polite euphemisms, another packet of lies just like the House of Representatives Resolution against Russia and every other statement that comes out of Washington.
Washington is averse to truth. Washington can only lie.
First let’s pretend that the 321,000 new jobs that the government claims the economy created in November are true, and let’s see where these jobs are.
Specialty trade contractors, which I think are home and office remodelers, accounted for 20,000 jobs. I doubt that people are putting money into houses and buildings that are worth less than the mortgage.
Manufacturing accounted for 28,000 – a very high monthly figure for recent years, one that is unbelievable in view of the rise in the trade deficit and declines in consumer spending on furniture (-3.8%), major appliances (-8.3%), women’s apparel (-17.7%), and household textiles such as towels and sheets (-26.5%), and when US business investment consists of corporations repurchasing their own stocks.
The rest of the claimed jobs are in private domestic services, that is, they are third world jobs. Retail trade claims 50,200 and transportation and warehousing claims 16,700. These numbers are impossible to believe in view of the closings of middle class department stores and Black Friday and Cyber Monday sales flops.

This post was published at Paul Craig Roberts on December 7, 2014.

Nikkei Slides Back Below 18,000 On Deeper-Than-Expected Recession, Record Bankruptcies

Jon

Remember when that absolute disaster of a Q3 GDP print hit Japan and the world of talking-heads proclaimed… “yeah, but.. capex revisions and stuff and things will make it all better” or some such nonsense? Well that’s exactly what it was – utter nonsense. Going entirely the opposite direction to expectations of a revision up to -0.5% QoQ, Japanese GDP was revsied even lower to -1.9% QoQ (from -1.6% QoQ initial) confirming the quadrupled-dip-recession. Add to that the fact that Abenomics has ushered in record bankruptcies this year as small- and medium-sized businesses have been crushed by soaring import costs amid the collapsing JPY and you have a recipe for domestic disaster… andhaving rallied in anticipation of the exuberant revisions in Friday’s US session, Japanese stocks are sliding quickly off the 18,000 level.
Quadruple-dip recession… well played Abe…

This post was published at Zero Hedge on 12/07/2014.