Tuesday, 1 February 2011

Goodbye Friday.

Baltic Dry Index. 1107 -30

LIR Gold Target by 2019: $30,000. Revised due to QE.

“We welcome change and openness; for we believe that freedom and security go together, that the advance of human liberty can only strengthen the cause of world peace. There is one sign the Soviets can make that would be unmistakable, that would advance dramatically the cause of freedom and peace. General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and eastern Europe, if you seek liberalization, come here to this gate. Mr. Gorbachev, open this gate. Mr. Gorbachev, tear down this wall”.

Ronald Reagan. 12 June 1987

In Egypt the end nears. On the streets of Cairo, the growing crowds have started baying for “goodbye Friday”. Friday prayers bring most of the nation together and the population seems to be expecting the end by then. Significantly, the Army yesterday announced that it will not fire on the Egyptian people. While that appears to be good news it also emboldens those with an interest in generating anarchy and chaos. The longer the disruption to the economy goes on, the worse off those at the bottom of society become. The higher the price of remaining goods become, the greater the chance for societal disintegration. We open with the WSJ on Mubarak’s to little too late gambit. Below, Mr. Mubarak’s Erich Honecker moment. Egypt’s “anti-fascist protection barrier” existed only in the public’s mind, enforced by thuggery, torture and bribery. America’s Egyptian renderers, would do well to be shredding documents and torching buildings, what comes next in revolution, is usually a settling of scores.

Talat Sadat, the nephew of Anwar Sadat, the assassinated leader Mr Mubarak succeeded as president in 1981, predicted that action by the armed forces against their commander-in-chief was imminent. The army, he said, would soon put Mr Mubarak “in hospital, in prison, or on an aeroplane”.

FEBRUARY 1, 2011

Mubarak Offers to Negotiate

Foes Spurn Feeler; U.S. Seeks Formula For Regime's Exit

Egyptian President Hosni Mubarak, seeking to salvage his 29-year rule, made his first offer to discuss reforms with opposition groups, as protesters gathered for a massive march to force him to resign and his Western allies discussed plans for his exit.

Opposition parties said they wouldn't negotiate as long as Mr. Mubarak remains in office.

Mr. Mubarak's army, long the final arbiter of power in Egypt, vowed not to harm protesters descending on central Cairo for what they billed as a "million-man march" on his palace.

The U.S. and its allies have started discussing how Mr. Mubarak might step aside or at least not run in national elections set for September, according to Western diplomats.

Participants in a private meeting Monday morning at the White House's Roosevelt Room said a long discussion of Mr. Mubarak's future left them with the understanding that the White House sees no scenario in which Mr. Mubarak remains in power for long. White House officials said they made no explicit predictions about Mr. Mubarak's future.

At the meeting, National Security Council official Dan Shapiro opened the discussion by saying time was of the essence. Already, demands for Mr. Mubarak's removal have escalated into demands that he be tried, and experts told White House officials that the prospects for violence were increasing.

NSC officials, pressed by participants, said they had no contingency plans for a sudden collapse of the Mubarak government. The administration has so far stopped short of calling for Mr. Mubarak to step down.

The Obama administration dispatched a former ambassador to Egypt, Frank Wisner, to Cairo to press for democratic reforms, officials said, another sign the U.S. was taking a more hands-on role in trying to end the crisis.



Egypt crisis: Army rules out force as Hosni Mubarak clings to power

President Hosni Mubarak of Egypt was clinging to power on Monday night as the army gave a boost to protesters by stating it would not use force against them.
By Colin Freeman, Cairo and Richard Spencer in Cairo and Bruno Waterfield in Brussels 11:25PM GMT 31 Jan 2011

The army issued a statement promising it would not fire on demonstrators planning “million-strong marches” in the capital Cairo and Alexandria today, acknowledging that the crowds had “legitimate grievances”.

In reply, Mr Mubarak ordered his new vice-president to make concessions to demonstrators. Omar Suleiman, the former security chief appointed as Mr Mubarak’s deputy on Saturday, went on state television to announce negotiations for constitutional reform.

There was no immediate sign that Mr Mubarak was in a mood to concede to the demonstrators’ central demand that he hand over power, despite calls from world leaders, including those of America, Britain and the European Union, for an orderly transition.

He ordered a closure of railway lines and Egypt Air flights to prevent people flocking to the planned marches and swore in a new cabinet, including a general, Mahmoud Wagdy al-Solaya, to replace the hated interior minister, Habib al-Adly, who was sacked on Friday.

On Monday night, Egypt’s last remaining internet service provider went down. Protesters had been using sites such as Twitter to organise themselves.

Western diplomats who have talked to officials close to the president said Mr Mubarak seemed determined to stay on.

“President Mubarak still regards himself as playing a clear role in the future government of Egypt and he is not persuaded of the need to leave,” said one. The statement by the army was in line with most analysts’ opinion that it would not give orders to shoot on peaceful protesters – and that junior officers might in any case not obey such orders.


In other news, Australia’s main coal mining region is bracing for another cyclone. The same La Nina weather system has also been disrupting tin production in Indonesia, adding to the commodities inflation sweeping the planet. Below that, West Texas Intermediate, continues diverging from Brent. Normally WTI as a light sweet crude should be trading at a premium to Brent, it’s now trading at a discount of about $8.00. No one quite knows why that is, though there’s plenty of guessing going on. My guess is that it’s partly technical, relating to US market, and partly the result of western quantitative easing causing paper money to chase tangible assets with long term value. Stay long precious metals. With food and fuel inflation stalking the world, we are likely to see more Egypt’s yet.

"The first requisite of a sound monetary system is that it put the least possible power over the quantity or quality of money in the hands of the politicians."

Henry Hazlitt

Australia's Dalrymple coal terminal stays shut due to cyclone

By: Reuters 31st January 2011

SYDNEY/PERTH - Australia's largest export terminal for coking coal, Dalrymple Bay, will remain closed to shipping as it braces for the second cyclone within a week.

The closure is another blow to the Queensland coal industry, which is still recovering from summer floods that forced mines to close and destroyed roads and rail lines.

Dalrymple first suspended operations on Sunday morning due to Cyclone Anthony, which crossed the coast that evening. A much larger cyclone, called Yasi, is predicted to hit the same stretch of northeast coast by Thursday.

Dalrymple Bay terminal is located in the Port of Hay Point which said Monday that it had re-opened after Cyclone Anthony, but was monitoring Cyclone Yasi.

"We're unsecuring the minimum infrastructure in those three ports to make the re-securing of it in anticipation of Cyclone Yasi as streamlined as possible," said Jeff Stewart-Harris, deputy chief executive of North Queensland Bulk Ports, which operates several ports including Abbot Point, Hay Point and Mackay.

The cyclones would likely affect fuel imports into the Mackay region and grain exports out of Mackay, Stewart-Harris said.

No sugar export ships are currently in Mackay and none are expected in next few days. Mackay is Australia's biggest sugar export port and can handle up to three-million tons a year. A spokesperson said majority of sugar from last harvest has already shipped.

Gladstone Port, Queensland's second largest coal port, was still operating on Monday, a spokeswoman said.

Australia, the world's largest coal exporter, accounts for about two-thirds of global coking coal trade, with around 90 percent of that coming from Queensland state. Coking or metallurgical coal is used for steelmaking.


In an Oil Price Gap, the Scent of Tar Sands

By CLIFFORD KRAUSS January 31, 2011.

In case you haven’t noticed, oil prices in the United States differ from those in the rest of the world. Usually the variance is just a few dollars, but over the last few weeks the difference between West Texas Intermediate prices and Brent crude, which is sourced in Europe’s North Sea, has widened to about $10.

That means that while Americans are buying oil at just over $90 a barrel, the price Europeans and Asians are paying is already over $100. And if the turmoil in Egypt spreads to its oil fields and the Suez Canal, a major transit point for European supplies, that spread could expand even more.

But so far the spread, which began widening before demonstrators took to the streets of Cairo, has little to do with the Middle East. It is mostly about a big buildup of crude in the Cushing, Okla., oil depot. Cushing is flush partly because demand in the United States is only slowly recovering. But most of all, it is a result of increasing imports of refined synthetic oil produced from Canadian oil sands, now the single most important source of imported oil.
Canadian oil producers love the way that Americans are growing increasingly dependent on them as opposed to our trading partners in the Persian Gulf. It is no coincidence that while most of the world’s stock exchanges experienced declines on Friday related to the crisis in Egypt, the Canadian stock market rallied. Particularly strong were the oil sands company stocks.

The shifting oil trade and the Egyptian crisis come as the controversy over the Keystone pipeline is heating up. The State Department needs to decide whether to grant approval to the pipeline, which is designed to substantially expand the flow of Canadian synthetic crude to the United States.


We end for the day with the curtain lifted slightly on how diplomacy really works. Countries and governments have flexible interests, individuals and out of power political parties have principles. Of course, there’s a lot of reason to doubt al-Megrahi’s conviction at all. One let off, one convicted on the same iffy evidence looks all too political, to me. Al-Megrahi then lived in a privately furnished suite in a Scottish prison. Perhaps WikiLeaks can come up with the original deal that brought him to trial at all. The whole article is well worth reading.

Deals are like sausages, it is better not to see them being made.

With apologies to Otto von Bismarck.

WikiLeaks: Britain secretly advised Libya how to secure release of Lockerbie bomber

Ministers secretly advised Muammar Gaddafi’s Libyan regime how to secure the successful early release of the Lockerbie bomber, documents obtained by The Daily Telegraph have disclosed

By Christopher Hope and Robert Winnett 9:00PM GMT 31 Jan 2011

A Foreign Office minister sent Libyan officials detailed legal advice on how to use Abdelbaset al-Megrahi’s cancer diagnosis to ensure he was released from a Scottish prison on compassionate grounds.

The Duke of York is also said to have played a behind-the-scenes role in encouraging the terrorist’s release.

The Libyans closely followed the advice which led to the controversial release of Megrahi – who was convicted of the murder of 270 passengers on Pan Am Flight 103 – within months of the Foreign Office’s secret intervention.

The disclosure seriously undermines British Government claims that is was not complicit in the release of al-Megrahi, and that the decision to free the convicted terrorist was taken by the Scottish Executive alone.

It will also lead to renewed pressure from senior American politicians on David Cameron to release all internal documents detailing Britain’s role in the scandal. Last summer, the Prime Minister pledged to release the relevant information – but the publication has yet to occur sparking fears that a cover-up may have been ordered.



Below, was the case about to unravel on appeal?

Pan Am Flight 103


"The international monetary order is more precarious by far today than it was in 1929. Then, gold was international money, incorruptible, unmanageable, and unchangeable. Today, the U.S. dollar serves as the international medium of exchange, managed by Washington politicians and Federal Reserve officials, manipulated from day to day, and serving political goals and ambitions. This difference alone sounds the alarm to all perceptive observers."

Hans F. Sennholz

At the Comex silver depositories Monday, final figures were: Registered 43.51 Moz, Eligible 61.06 Moz, Total 104.58 Moz.


Crooks and Scoundrels Corner.

The bent, the seriously bent, and the totally doubled over.

No crooks or scoundrels today, just an alarmist picture from America of what might happen there if the Fed’s addiction to quantitative easing crashes the currency and with it the global economy as we know it. Thinking the unthinkable, in the aftermath of the chaos of hurricane Katrina.

"The fate of the nation and the fate of the currency are one and the same."

Dr. Franz Pick

10 Things We Can Learn From Egypt About Preparing for Economic and Societal Collapse

Posted By Mac Slavo On January 31, 2011 @ 3:12 pm In Emergency Preparedness

As riots spread across the world, having started first in Europe and now engulfing the Middle East, most people in the U.S. outright reject the possibility that the same could happen right here at home. But the fact of the matter is that we remain in economic crisis and there is a real possibility of a total collapse of the system [1] we have come to know.

If the system does happen to collapse, be it because of a hyperinflationary currency meltdown [2], political uprising or anything in between, here are ten things you can expect to happen, just as they are happening in the Middle East today:

1. There will be a general break down in law and order. Law enforcement will not be policing your neighborhood. This will likely lead to a community response and vigilante groups setting up neighborhood security details. The law and justice will be determined by those walking your streets with sticks and guns, so be sure to mind your P’s and Q’s. (LINK [3])

2. Food and water will become scarce. The average American has about three days worth of food in their home, and likely very little water, as most are dependent on their local city for this essential commodity. As with any major disaster, like hurricanes or earthquakes, panicked people will immediately make a run for the grocery store, either before or at the onset of crisis, looking to acquire any non-perishable goods. They’ll buy everything they can in one trip, which leaves less food for the next guy. Our just-in-time inventory management systems ensure that there will be no reserves in the back of the grocery store, so once the store shelves are cleared, it will be a while before they are restocked. (LINK [4])

3. Looting will be rampant. Until all of the food, water, diapers and HDTV’s have been cleared from store shelves, looters will be breaking into retail businesses in search of goods. In Egypt, most of the population is not armed. In the U.S., however, it’s a different story and the general rule on looters is: shoot them. Regardless of whether you are trying to acquire food for your baby or a free Xbox, you will be considered a looter if you enter a private business. (LINK [5]; New Orleans LINK [6])

4. If the rioting and looting gets bad enough, expect full deployment by the military. As we are currently seeing in Egypt, and like we saw in New Orleans during the Hurricane Katrina saga, government is prepared to restore order by whatever means are available. There will be heavily armed soldiers, tanks and unmanned aerial vehicles patrolling your city. (LINK [7])



"Of all the contrivances for cheating the laboring classes of mankind, none has been more effective than that which deludes them with paper money."

Daniel Webster

The monthly Coppock Indicators finished January:

DJIA: +161 Down 10. NASDAQ: +228 Down 10. SP500: +161 Down 4.

The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. December is the seventh down month, but the downward momentum has virtually stopped. I would put on (purchased) synthetic double options here for a breakout in either direction. Professional traders would adopt much more risky granted option strategies.

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