Wednesday, 23 February 2011

A Libyan Disaster.

Baltic Dry Index. 1279 -16

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

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton

This morning Libya stands at the brink of disaster. Italy and continental Europe, stand facing the loss of up to 1.4 million barrels of crude oil a day. If Libya collapses will Italy collapse with it? Will the ECB be up to the task if Italy collapses? Will Gaddafi unleash civil war on a Libyan people yearning to be free? Will any outside power be tempted to intervene? Today and tomorrow, appear to be the critical days.

FEBRUARY 23, 2011

Dictator Loses Grip in Desert

On the ground in the eastern chunk of this oil-rich desert nation, the signs of rebellion are plain to see in the armories of a military base near Baida: Weapons crates lie busted open and empty. Rifles are missing from their racks. Left behind are helmets and gas masks and cleaning kits—things that can't shoot.

For four days, rebels newly armed with anti-aircraft guns and Kalashnikovs battled forces loyal to Libyan strongman Col. Moammar Gadhafi and commanded by one of his sons. After days of firefights, feints and an ambush on unarmed local sheiks, the regime forces surrendered their hold on the vital local airport Tuesday morning—placing nearly all of eastern Libya outside Col. Gadhafi's control.

----- On Tuesday, Libya's top policeman, a longtime Gadhafi loyalist, joined the string of diplomats, soldiers and others to abandon their leader of 42 years. In a video aired on the Al Jazeera news channel Tuesday, Interior Minister Abdel Fattah Younes al-Abidi announced his support for anti-Gadhafi protesters and called on Libya's armed forces to switch loyalties. It was unclear how much influence he has over the key security forces considered die-hard loyalists to the regime, such as the armed revolutionary committees or the military units controlled by Col. Gadhafi's family members.

----The events threw one of the region's major oil economies into turmoil. Libya's ports—including Zawia, Tripoli, Benghazi and Misurata—have been closed, traders in the country said. Foreign oil companies, including Italy's Eni SpA and Spain's Repsol YPF, said they had suspended some operations.

With Col. Gadhafi inciting more clashes and the streets around Tripoli still heavily patrolled by uniformed security forces, many Libyans feared that the nation could fracture on tribal or regional lines.

"We've been calling for an end to Gadhafi's rule for years," said Hafed Al-Ghwell, a U.S.-based Libyan opposition activist. "But what we've always feared is the day after. Right now it looks like the worst-case scenario is coming true—that Libya becomes like Somalia, with every strongman with a gun ruling his own fiefdom."


In other news, China seems to want to fast track the Yuan in world trade. But is a Beijing controlled fiat Yuan any improvement on a Washington controlled fiat dollar? Why would communist politicians in Beijing run a fiat currency any better than Washington politicians have run fiat dollar over the last 40 years?

"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."

Oakley R. Bramble

Yuan convertibility may quicken - PBOC official

Published: Tuesday, 22 Feb 2011 | 1:13 AM ET

By James Pomfret and Farah Master

HONG KONG, Feb 22 (Reuters) - The pace of the yuan's convertibility may accelerate as global demand grows for trade settlement in the Chinese currency, a Chinese central bank official said.

"If you look at the history and the progress of international use of our renminbi (yuan), you find that sometimes demand grows very quickly," said Xing Yujing, deputy director general of the monetary policy department of the People's Bank of China. "If there's demand from the market in order to facilitate trade and investment, the change may be quicker than we imagined before," Xing told an economic conference held by Goldman Sachs in Hong Kong on Tuesday.

China is seeking to promote the use of the yuan overseas as part of a longer-term plan to make it an international reserve currency along with the U.S. dollar, analysts say. Beijing's promotion of Hong Kong as an offshore yuan trading hub has resulted in a flurry of yuan-denominated corporate bonds also known as dim-sum bonds, banks creating new structured products, and more Chinese importers settling trade in renminbi. Speaking at the same event, Hong Kong Monetary Authority Deputy Chief Executive Peter Pang said the growth potential for foreign direct investment (FDI) flowing into China from yuan bond issuance in Hong Kong was huge and could double from last year.

Next, Danish shipping giant Maersk plans the ultra ships of the China to EU trade. Thankfully China doesn’t export bananas, or Europe would be swamped with 860 million bananas every time one of these behemoths docks. At over two bananas per EU citizen, the price of bananas would slump. When 18 million flat screen TVs won’t do much for that European market either. One wonders what will be shipped back in these Maersk “mega containers”.

Maersk claims new 'mega containers' could cut shipping emissions

Danish firm signs a deal for 10 of the world's biggest ships that it says will save fuel and lower emissions

Monday 21 February 2011 16.21 GMT

Think of a 400m-long row of 20-storey high office blocks cruising the ocean at the speed of Usain Bolt. Or a container ship as long as the Empire State building and as wide as an eight-lane motorway that is able to carry more than 860m bananas or 18m flat-screen televisions in 18,000 containers.

The sheer scale and capacity of what will be the largest vessels afloat – the first 10 of which were ordered on Monday by Danish shipping firm Maersk – is likely to change international shipping in the same way that the super-jumbo is revolutionising air transport or high-speed rail has changed the way people travel across continents.

While at 400m long and 73m tall the new "Triple-E" container ships will be only marginally longer and taller than the current biggest class of vessel, the 160,000-tonne ships will be able to carry nearly 20% more containers than previously because of their width. Maersk has signed a $1.9bn (£1.17bn) contract with Korean shipbuilders Daewoo for the first 10, with an option for 20 more. The first order will be completed in two to four years.

The company hopes to be able to cut the cost of transporting a container from China to Europe by 26%. "These are probably the largest ships you will see built for some years. We could have made them longer but ports would have had to be enlarged. We could not make them wider because port cranes can only reach across 23 or 24 containers," said Maersk chief executive officer Eivind Kolding in London.

But the ships, which are nearly twice as large as the majority of the world's 9,000 container ships, were designed solely for the China-Europe route. Only Felixstowe in Britain, and Rotterdam and Bremerhaven in mainland Europe will have the facilities to handle them, along with Port Said in Egypt and just four ports in the east, including Shanghai and Hong Kong.


In comparison to everything else, what happens next in Libya is all that really matters. If Libya descends into anarchy, the world loses about 1.4 million barrels a day of quality oil exports. A great scramble for replacement oil will get underway. Europe gets a mass migration refugee disaster right in its backyard. America gets an unstable Middle East crisis from Atlantic Morocco all the way out to Bahrain. If a repressive murderous dictatorship like Gaddafi’s can be tossed aside, what hope for the less repressive western Kings and Sheiks’ of the oil producing Middle East? Property in Dubai anyone? Libyan dinars?

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

At the Comex silver depositories Tuesday, final figures were: Registered 41.91 Moz, Eligible 60.44 Moz, Total 102.35 Moz.


Crooks and Scoundrels Corner.

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

Today, the view of the Middle East crisis from Moscow. Decades of trouble ahead. Stay long precious metals. If President Medvedev is even halfway right, our western oil security is compromised and our economies built on cheap energy will implode.

"The paper standard is self-destructive."

Hans F. Sennholz

Medvedev sees `fires for decades' in Arab world

By DAVID NOWAK, Associated Press

MOSCOW – Russian President Dmitry Medvedev on Tuesday predicted decades of instability in the Arab world if protesters whom he called fanatics come to power, adding no such scenario will be permitted at home.

Medvedev's words fall in sharp contrast with the European Union, which said in a statement on Monday that it "deplores the violence" and "repression" against the pro-democracy protesters by authorities in one of the troublespots, Libya.

Speaking at a security meeting in the Caucasus city of Vladikavkaz, Medvedev didn't name countries, but he was referring to the crisis in the Middle East and North Africa — which has brought down governments in Tunisia and Egypt and sparked protests in Libya, Yemen, Bahrain, Iran, Morocco and Jordan.

"These states are difficult, and it is quite probable that hard times are ahead, including the arrival at power of fanatics. This will mean fires for decades and the spread of extremism," Medvedev said in televised comments.

Any attempts to repeat the unrest in Russia would be quashed, he said.

"They have prepared such a scenario for us before, and now more than ever they will try and realize it. In any case, this scenario won't succeed," he said, without identifying the people he considers could threaten the Kremlin.

Russia has crushed Islamist separatists in two wars in Chechnya in the last 15 years, and continues to battle a lingering insurgency in the wider Caucasus region. The region is the epicenter of terrorism in Russia, with most of the high-profile attacks in recent years claimed by or attributed to Caucasus rebels.

In the past Medvedev also has warned domestic political opponents that they won't be permitted to "rock the boat," and he has continued the policy of his tough predecessor, Vladimir Putin, in sanctioning the violent dispersal of anti-government protests.

Opposition activists have been beaten and imprisoned under their rule. Putin, who wields greater power despite holding lower rank, warned demonstrators in a September newspaper interview that "you will be beaten upside the head with a truncheon. And that's it."

"If ever there was an area in which to do the exact opposite of that which government and the media urge you to do, that area is the purchasing of gold."

Robert Ringer

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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