‘Ironically, America has never been as powerful financially as it is now’ Video interview: In this first of a series of London interviews that Lars Schall conducted for Matterhorn Asset Management this summer, Lars met up with Ambrose Evan-Pritchard to discuss geo-politcal tensions in the world, China’s challenges, threats to the global economy and the expectations for gold. GoldSwitzerland is very grateful to be able to present the views of this brilliant mind. On July 25 he wrote: ‘In the 30 years or so that I have been writing about world affairs and the international economy, I have never seen a more dangerous confluence of circumstances, or more remarkable complacency’.
The IMF’s latest international gold reserves data, updated yesterday, shows that in July, Russia raised its official gold reserves to 5.5 million ounces (1,104 tonnes). This confirms data released last week by the Central bank of the Russian Federation, which reported an increase of over 300,000 ounces from June’s 5.197 million ounces figure. IMF data is reported with a one month lag. The latest IMF data also shows that in July, the National Bank of Kazakhstan added 45,000 ounces to its official gold reserves, taking its total holding to 5.1 million ounces. According to the World Gold Council, over the last six months, Russia has now increased its gold reserves by 54 tonnes. In the same period Kazakhstan has purchased 12 tonnes. Russia now has the world’s 6th largest gold reserves, officially higher than both Switzerland’s 1,040 tonnes and China’s 1054.1 tonnes. As a comparison, in the second quarter of 2009, Russia only had 550 tonnes of gold in its official reserves meaning that their reserves have nearly doubled in just over 5 years. The ongoing accumulation of official gold by Russia appears to be part of a reserve diversification strategy. Gold is held by central banks as one of their reserve assets alongside foreign exchange assets including US Dollars and Euros, and also IMF Special Drawing Rights (SDRs). Some Russian analysts point to the threat of continued western sanctions on Russia as a renewed catalyst for the Russian central bank diversifying out of dollars and euros by increasing its gold reserves. Gold now accounts for over 12% of Russian official reserves and could reach 15% by year end if the current trend continues.
This post was published at Gold Core on 26 August 2014.
German economy ‘losing steam’ as business confidence plunges again … Survey of optimism among companies adds to gloom enveloping Europe’s biggest economy … Germany’s businesses are rapidly losing confidence in the prospect of a recovery in the eurozone, in a further blow to the single currency’s biggest economy. Companies’ assessment of the business climate is now at a 13-month low, having deteriorated for four successive months, according to a survey of 7,000 firms conducted by the Munich-based IFO think tank. – UK Telegraph Dominant Social Theme: Something must be done to save Europe and the euro. Free-Market Analysis: What does the future hold? More and more money stimulation it would seem. China – the BRICS – and the US are printing endless gouts of money, and now it appears as if the European Union is headed in the same direction. In fact, the EU cannot simply print, as the Germans stand in the way. But according to this article and others, the German economic situation is declining, so perhaps there will be less pushback to plans to stimulate. Certainly, without German economic vitality, the eurozone is even worse off than it’s been in the past. Here’s more: The study is the latest blow to Angela Merkel’s hopes of Germany leading the eurozone out of its current economic malaise. Separate data for investor confidence and inflation have also shown activity slowing down. The economy contracted in the second quarter of the year, and another quarter of decline would tip it into recession.
It is unclear exactly why stock futures, bonds – with European peripheral yields hitting new record lows for the second day in a row – gold, oil and pretty much everything else is up this morning but it is safe to say the central banks are behind it, as is the “de-escalation” algo as a meeting between Russia and Ukraine begins today in Belarus’ capital Minsk. Belarusian and Kazakhstani leaders will also be at the summit. Hopes of a significant progress on the peace talks were dampened following Merkel’s visit to Kiev over the weekend. The German Chancellor said that a big breakthrough is unlikely at today’s meeting. Russian FM Lavrov said that the discussion will focus on economic ties, the humanitarian crisis and prospects for a political resolution. On that note Lavrov also told reporters yesterday that Russia hopes to send a second humanitarian aid convoy to Ukraine this week. What he didn’t say is that he would also send a cohort of Russian troops which supposedly were captured by overnight by the Ukraine army (more shortly). Asian equity markets haven’t really followed suit the US/European rally with bourses in Japan, Hong Kong, and China down 0.6%, 0.4% and 1%. The Dollar is softer against the Yen which perhaps added some pressure on Japanese equities. There isn’t much Asian headlines this morning and we suspect parts of the market (HK/China) are still busy with the ongoing earnings season. Asian credits are doing better in relative terms led by sovereigns. Indonesia’s USD bonds continued its march higher (helped by Treasuries) whilst its 5yr CDS spreads are marked 4bps tighter overnight. Asian stocks fall with the Kospi outperforming and the Shanghai Composite underperforming. MSCI Asia Pacific down 0.2% to 148.4. Nikkei 225 down 0.6%, Hang Seng down 0.4%, Kospi up 0.3%, Shanghai Composite down 1%, ASX up 0%, Sensex up 0%. 2 out of 10 sectors rise with health care, energy outperforming and utilities, telcos underperforming
This post was published at Zero Hedge on 08/26/2014.
Yesterday it was China slamming America’s superpower status (and thus dollar reserve currency status) when in Sina News it stated the following: Their various reconnaissance aircraft have been wandering around foreign airspace for decades and watching the military secrets of other countries like a disgusting thief spying over his neighbor’s fence. However, when the neighbor comes back with a big stick, the thief will turn tail and run away, blaming the neighbor. When you show people weakness, they will bully you. When you show people strength, they will respect you. We [the newspaper] believe the Chinese Air Force and Naval aviation should maintain a high level of vigilence and morale in southeast coastal region to prevent the further US action. America has lost face and does not want to show the world they are sick. They have been lording over other countries for so long, and they will never let it go after they eat this loss.
This post was published at Zero Hedge on 08/24/2014
The following video from CrushTheStreet.com quickly runs through the fundamental reasons why silver is about to engage in a huge price surge due to physical shortage. Many of these statistics have previously been echoed by Ted Butler. As the narrator admits, it’s not a matter of if, but when.
Over at ZeroHedge, Jim Kunstler’s latest post on his forecast for 2014 is a MUST READ!! Readers should greatly benefit from his astonishingly honest take on everything from the shale oil sham to last year’s gold slam. He even gets into Obamacare, Bitcoin the Euro crisis and the middle east.
Excerpt: Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations.
James Rickards, author of Currency Wars, gave the following presentation at The Future of Money 2.0 in Bratislava, Slovakia on September 26, 2013. A week later, Rickards gave the same presentation, though significantly abbreviated, at the Casey Research Summit in Tucson, Arizona. In the presentation, he covers:
US Defense Department’s exercises in financial warfare.
Historical currency devaluations by countries to gain trade advantages.
Historical examples of re-establishing a gold standard after a currency collapse.
The current situation of Inflationary and Deflationary forces working against each other – an unstable situation.
QE, Operation Twist, etc. have had no affect because money velocity is not responding. 2014 may bring efforts to put money directly into the hands of the people (e.i. Tax Cuts).
Complexity Theory may provide a better model for the Fed, as it shows that the economic system has become increasingly more interconnected across sectors. It actually predicted the 2008 collapse and, unfortunately the model is even more densely integrated today, indicating a worse crash ahead.
The potential remedies the Fed or the IMF might enforce in response to the next collapse.
Here’s some level-headed thinking from Jim Rickards, who was proven to be correct on his call that the Fed would not taper. While the Fed would certainly like to taper, they’ve always stated that they would do so on the condition that the economic data continues to be strong. But the economic reporting has been terrible, so the Fed didn’t taper and won’t until those reports show viable strength. Jim also discusses what differences, if any, the upcoming Fed-chair change may make (none), gold’s future price expectations (higher) and his new book, The Death of Money (due out in April, 2014).
The following video from OneTruth4Life explains how America’s founding fathers created a sound money system, framed within Article I, section 8 of the Constitution. It goes on to describe, in full detail, what’s happened since then – anti-Constitutional acts by certain government leaders and bankers, which debased the currency at various moments in history. These acts seem to become more blatant as history proceeds, and have led to, or have been the primary motive for most, if not all, the military conflicts. Furthermore, it will be the primary factor that will have brought the nation to its own doom at some point in the near future.
Grant Williams is a strategy adviser for the hedge fund, Vulpes Investment Management in Singapore, as well as the blogger behind the popular Things That Make You Go Hmmm…. In the following video, Williams reviews the disconnects between the economic realities that exist in today’s world and the rosy pictures painted by governments, central banks and the main stream media.
Williams’ problem #1: The disconnect between fundamentals and equity prices.
Williams’ problem #2: The paradox behind China’s mysterious GDP growth during a time of reduced manufacturing, shrinking demand for raw materials and declining imports/exports
Williams’ problem #3: How is France able to sell its sovereign bonds at such low interest rates when all indications of its own economy are performing like those of the European periphery?
Williams’ final problem: The difference between the “Gold Price” and “The Price of Gold”
In the end, the laws of mathematics cannot be subverted by governments or central banks. Central banks’ zero percent interest rate policies are damaging:
In the short term through the confiscation of savings and the forcing into riskier investments in the search for yield
In the long term by suppressing market volatility, which must be reconciled at some point
Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere.
– Bertrand Russell
The currency wars being waged among the world’s nations at this time are going to continue for quite some time, according to Jim Rickards, author of Currency Wars. In this DJ FX Trader podcast posted at the Wall Street Journal, Rickards explains how nations around the world will likely continue their currency devaluations in order to gain an edge in their international trading.
Pierre Poilievre, Canadian MP, makes a plea for his nation not to follow in the footsteps of countries like the United States, where people have been encouraged to go into debt which will be impossible to repay, or like Europe, which is now ensnared in welfare programs that are impossible to stop without complete social upheaval.
Official US Debt is now larger than its economy. Through current or future taxation, the US citizen is on the hook for this debt.
The US is on the cusp of funding 100% of the Chinese Military – just with interest payments alone!
The direction the US is going reflects the socialist policies already in place in Europe, where Greek citizens are taking to the streets to demand their government not halt the flow of welfare checks they have become so dependent upon.
Now ask yourself this question: If there is an elite group (such as the Illuminati) holding key positions of power within government, corporate and banking institutions, and they are indeed conspiring to subjugate America, what would be their next step?
If those bastards are so powerful that they were able to pull off the 9-11 event and keep their positions intact, then you also must consider what else they might be capable of doing. Like, what would happen to the national psyche if a major US city, like Phoenix, for example, were to be suddenly vaporized in a Nagasaki-esque manner? (This is what S.K. Bain has fictionalized in his book.)
Absolute fear would grip the nation immediately. Martial Law would be declared. The new authorities already granted to the president under his own executive order would be cited and all resources would be seized by the government. Dissenters would be shipped off to all the FEMA concentration camps that have been prepared over the last few years. The internet would be cleansed of all ‘unpatriotic bloggers’ while the ‘controlled’ main-stream-media tells the public that the Iranians are to blame. Religious leaders are quick to point out that Muslims are not only anti-Jew, but anti-Christian as well. It would be enough impetus to garner support for invading yet another middle eastern nation, and possibly lead to World War III if China and Russia run to the aid of Iran.
So the next question you’ve got to ask yourself is when would this elite group initiate their next move? As the world economy spins toward ultimate depression, printing presses are already running at full tilt and there’s no real political will to tackle the underlying problems of the Fiscal Cliff – only moves to delay the inevitable collapse are given any attention. Meanwhile, the national debt surges due to continued unbalanced government spending. At some point, all these monetary shenanigans will become too obvious to the average citizen and a diversion will be needed to distract public focus.
A final question to ponder is whether or not the agenda requires the Constitutional Second Amendment to be abolished prior to the more drastic event, or whether a more severe tragedy might actually aid in it’s own destruction? As long as people continue their ignorance of freedom and refuse to accept responsibility for their own lives, they’ll happily increase their dependency on government wealth redistribution. Lady Liberty’s lamp flickers in the wind.
Lauren Lyster puts the tough questions to Eric Sprott regarding gold and silver and whether or not investment in such is warranted, given the lackluster performance over the past year. Sprott responds by pointing out that given the increases in quantities of the metal that have been purchased recently, it’s highly likely that central banks have been leasing their physical gold into the marketplace in order to suppress the price.
In the last 12 years, the annual physical gold demand has increased by 2500 tonnes/year. But the supply of gold has remained flat. Where does the new metal come from to meet this new demand?
Some rather prominent central banks have recently been subjected to questions asking about the validity of their gold claims held in foreign vaults (i.e. Germany and Austria).
The discussion continues to include:
The Fed is buying 90% of US Treasuries. Japan and other central banks are practicing similar policies. Central banks of the world are trying to keep interest rates low for extended time frames, “which is ludicrous.”
Sprott expects silver to outperform gold in the next decade and points out the investment ratios he’s seeing from the entities making purchases of these two precious metals.
Lauren Lyster defines Hard Money and it’s relation to old and new central banking policies.
Author of Currency Wars, Jim Rickards explains that the Fed’s easing programs have thus far failed to create their desired inflation, which, in their view, is required to boost US exports. Although Japan will be allowed to weaken their currency, all the other currencies of the world will be strengthened as the US strives to further weaken the US dollar. Of course, gold is still the currency of choice to preserve wealth.
Expanding the discussion, Lauren Lyster interviews Jim Rickards, where he clarifies the Fed’s tactics:
The economy has failed to recover despite the Fed’s actions so far because the consumer has not been willing to spend or invest. Hence money velocity has remained nil.
The Fed is trying to induce more spending by: (1) Forcing a negative interest rate as an incentive for more borrowing, and (2) Scaring the public into buying stuff through the threat of future inflation.
The inflation, they hope, will be the result of all the currency wars with other nations, especially China – cheapening the dollar will make imports more expensive.
“It’s a race between the Fed trying to achieve their goals and the whole system imploading because of a loss of confidence in the dollar.”