Baltic Dry Index. 1097 -07
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
We open this morning with a new threat by China in
the South China Sea. Under new rules that come into effect January 1, 2013,
China intends to use the Hainan police to stop and board vessels that “illegally
enter” Chinese waters. The disputed waters lie far to the south of
the island of Hainan, and are claimed by Vietnam and the Philippines, among
others. The waters just happen to be the main oil tanker shipping route to
Japan. Stay long physical precious metals against what is shaping up to be
dreadful 2013.
Chinese police plan to board vessels in disputed seas
BEIJING/MANILA |(Reuters) - Police in the southern Chinese island province of Hainan will board and search ships which illegally enter what China considers its territory in the disputed South China Sea, state media said on Thursday, a move likely to add to tensions.
The South China Sea is Asia's biggest potential military trouble spot with several Asian countries claiming sovereignty over waters believed to be rich in oil and gas.
The shortest route between the Pacific and Indian Oceans, it has some of the world's busiest shipping lanes. More than half the globe's oil tanker traffic passes through it.
New rules, which come into effect on January 1, will allow Hainan police to board and seize control of foreign ships which "illegally enter" Chinese waters and order them to change course or stop sailing, the official China Daily reported.
"Activities
such as entering the island province's waters without permission, damaging
coastal defense facilities and engaging in publicity that threatens national
security are illegal," the English-language newspaper said.
"If
foreign ships or crew members violate regulations, Hainan police have the right
to take over the ships or their communication systems, under the revised
regulations," it added.
----The Philippines, which also has
claims to parts of the South China Sea, said the move could violate
international maritime laws allowing the right of passage and accused Beijing
of trying to escalate tension in the area.
----In Washington, U.S. military officials said the report mentions only police in Hainan province, not military forces, so the intended scope of the policy is not clear.
Hainan's
policy was unlikely to affect the behavior of U.S. vessels operating in
international waters, said the officials.
----Rex Robles, a retired senior Philippine naval officer and security analyst, said China was just testing the reaction.
"Those
warnings are not directed at us. They might be trying to find out how far the
United States would react because this could affect freedom of navigation in
one of the busiest sea lanes in the world. If this is an official policy
announced by Beijing, this is very serious and a cause of concern."
More
In other China news, China is moving towards gold.
Rather optimistically, Jeremy East, global
head of metals trading at Standard Chartered PLC, suggests the move will have
minimal impact on gold prices. Day one perhaps, but longer term I will take the
opposite bet.
"The desire for gold is the most universal and deeply rooted commercial instinct of the human race."
Gerald M. Loeb
November 30, 2012, 3:15 AM
China Moves Forward in Opening Gold Market
China will allow over-the-counter gold trading between banks for the first time Monday, a significant financial reform for the world’s second-largest buyer of the precious metal.The move reflects the Chinese government’s latest effort to develop Shanghai into a major gold trading center, and mirrors similar developments in the country’s currency and oil markets.
The introduction of interbank trading is intended to develop China into a liquid and market such as London, and demonstrates the government’s readiness to open the market to greater participation by international banks, said Jeremy East, global head of metals trading at Standard Chartered PLC STAN.LN -0.07%(STAN.LN).
“From a government perspective, gold is seen as currency, and the government is slowly releasing the controls on currency. We expect the [gold] market will be opened up to more foreign banks,” he said.
Given their trading volumes, Chinese banks already play a significant role in determining international gold prices, so the move will have a limited impact on prices, Mr. East said.
More
In less bullying news, Monday’s Greek rescue deal
looks to be sinking by Friday. No one it seems, now likes what on Monday was
hailed as the real deal. Welcome to the insane asylum called the European
Monetary Union, where paymaster Germany gets to wreak havoc on the inmates. A Greek
exit from the dodgy euro still seems likely to me, December 25th
through December 31.
"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."
William F. Rickenbacker
Greek deal frays as IMF threatens walk-out on debt buy-back impasse
The eurozone's debt relief plan for Greece has hit serious trouble within days as banks and pension funds balk at fresh losses, raising fears that the package could unravel before a deadline in mid-December.
The
International Monetary Fund said on Thursday that it would not disburse funds
under its part of the EU-IMF package unless the eurozone delivers on a bond
"buy-back" scheme, which is supposed to cut Greece’s burden by 10pc
of GDP and is deemed crucial for restoring long-term viability.
If the
IMF withdraws, Finland and Holland will also pull out of the programme.
"This has become a really big problem," said Raoul Ruparel from Open
Europe.
The
dispute comes as Moody’s said the EU-IMF deal to unlock €44bn in bail-out
payments to Athens merely papers over cracks and does little to alleviate
Greece’s "extreme economic and social fragility".
"We
believe that the country’s debt burden remains unsustainable," it said.
Moody’s warned that there can be so lasting solution until EU states and official
creditors agree to write down their holdings, now the lion’s share.
Private
investors are furious at demands that they take a second "haircut" of
70pc on residual holdings, after already taking a 53.5pc loss earlier this
year, while official creditors still refuse all loses.
----Mr Ruparel said the burden will have to fall on foreign pension funds, insurers and banks with some €30bn of bonds, but it is unclear how they can be made to comply. The scheme is supposed to be voluntary. "Most want to hold the debt to maturity and have no interest in crystalising losses," he said.
Under the
buy-back plan, investors sell their bonds back to Greece at a 70pc discount -
last week’s market price. Greece in turn borrows the money from the eurozone
bail-out funds.
The
Institute of International Finance (IIF) said it would be an outraged if its
members are forced to take further losses.
More
http://www.telegraph.co.uk/finance/financialcrisis/9712612/Greek-deal-frays-as-IMF-threatens-walk-out-on-debt-buy-back-impasse.html
In other EMU news “the prospect of an immediate recovery” from Spain’s “prolonged recession,” remains remote, according to the OECD. So remote, in fact, the OECD sees more chance of Spain plunging into an even deeper recession than recovering. Spain will need its own bailout in 2013. Welcome to the Great Euro Experiment gone wrong.
Debt crisis: quick Spanish recovery 'remote' says OECD
Spain is engulfed in a long recession with little hope of a quick recovery, a respected international think-tank has said.
2:47PM GMT 29 Nov 2012
Spain
must quickly fix its banks to avert the "substantial risk" of being
cut off from external financing and plunging into an even deeper recession, the
Organisation
for Economic Cooperation and Development said in a report on Thursday.
"The
economy is undergoing a prolonged recession," it added, citing the 2008
global financial crisis and the bust of a Spanish housing boom. "The
prospect of an immediate recovery remains remote."
Addressing
Spain's 25-percent unemployment rate, the highest since the return to democracy
after the death of General Francisco Franco in 1975, the OECD urged drastic
labour market changes.
It called
for cutting compensation for unfair dismissal, considering abolishing an
extension of industry-wide collective bargaining, and more training and
job-search help for the young.
Spain's
economy has been shrinking for 15 months, with output slumping 0.3pc in the
third quarter, official data show, and the recession is expected to last right
through 2013.
More
http://www.telegraph.co.uk/finance/financialcrisis/9711926/Debt-crisis-quick-Spanish-recovery-remote-says-OECD.html
"All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity."Irwin A. Schiff
At the Comex silver depositories Thursday final figures were: Registered 34.22
Moz, Eligible 107.16 Moz, Total 141.38 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Citigroup on
the failure of the great elitist European Bilderberger project, The Disunited
States of Europe. Stay long physical gold and silver. According to Citigroup’s
analysis, Europe’s future is anything but rosy.
"We are in a world of irredeemable paper money - a state of affairs unprecedented in history."
John Exter
Citigroup sentences to Europe to faster economic death
Last updated:
November 29th,
The closer you read Willem Buiter's imperial uber-blick of the world
economy, the more astonishing it becomes.Citigroup's end of year forecast – Prospects for Economies and Financial Markets in 2013 and Beyond – is in essence a celebration of American revival and ascendancy. It sentences Europe to slow economic death.
The growth gap in 2012 between the US (+2.2) and the eurozone (-0.4) is the 2.6pc, the biggest since 1993.
Professor Buiter – Citi's chief economist – said this is not a one-off. The differential will widen to 3.4pc in 2014 and continue at extreme levels into the latter part of the decade.
The compound effects of this for year after year are dramatic. Europe will be left behind as an outpost of stagnation in a G2 world dominated by the US and China, with a string of emerging powers gaining ground but still far behind.
Euroland's nominal GDP will slip from 78pc of US levels this year to 66pc by 2025. India will overtake Germany by 2020. (German growth will be: 2013 (0.5), 2014 (0.3), 2015 (0.9). 2016 (1.1) — in other words, slow asphyxiation along with the rest of EMU).
On US
decoupling:
"We
expect very different recovery paths, reflecting differing policy choices in
managing the deleveraging process, plus underlying differences in terms of the
supply-side and energy availability. US real GDP per head probably will rise
about 9-10% above the 2007 level by 2017 – clearly outperforming Japan’s
"lost decade" (real GDP per head rose by 5% from 1992-02).
"By
contrast, in the euro area, we expect continued recession in 2013 and 2014 and
prolonged weakness thereafter — with ongoing financial strains and, over the
next few years, Grexit (Greek exit) plus a series of sovereign debt
restructurings. In the euro area and UK, real GDP per head will probably remain
3-4% below the 2007 level even in 2017 — markedly underperforming versus
Japan’s "lost decade".
----Italy will slide slowly into the abyss, with further contraction in 2013 (-1.2) and again in 2014 (-1.5), and near zero growth from then on. Spain is not much better. Portugal will contract 4.6pc next year. They will all need debt restructuring. France is dead until 2016.
So there
you have it, the "flawed EMU structures" have doomed Europe to a
generation of depression. The euro itself has become a force of economic
destruction.
More
"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
Another
weekend, another week closer to Christmas, and another week closer to America’s
“fiscal cliff.” Here in Europe, Greece,
Ireland and Portugal have already gone over their fiscal cliffs, with Spain and
Italy about to, to be followed by France mid-2013, on present suicidal
policies. Of course, none of this might matter if China goes overboard in
January and starts harassing/policing international shipping in the South China
Sea. Will China or America blink first? Have a great weekend everyone.
The monthly
Coppock Indicators finished October:
DJIA: +92 Up. NASDAQ: +99 Up. SP500: +102 Up. Still time for the
Santa Clause rally?
