Baltic Dry Index. 1173 -08
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
This
sucker’s going down!
Mario
Draghi, with apologies to George Bush the Lesser.
The Scots want to break up the 300 year old Union
with England, the Germans just voted in a party that want to break up the
EUSSR, Marine Le Pen is cruising to the French Presidency and EU exit as
President Hollande’s approval rating slumps to 17 percent, eastern Europe is
reeling from the blowback from Russian sanctions and now this.
Election Throws Sweden Into Turmoil as Nationalists Advance
Sep 15, 2014 10:02 AM GMT
Sweden’s election threw the nation’s political establishment into turmoil as
backing for the anti-immigration Sweden Democrats more than doubled, leaving
the largest Nordic economy facing a hung parliament. The three-party Social Democratic opposition led byStefan Loefvenwon 43.7 percent, versus 39.3 percent for the four-party government of Prime Minister Fredrik Reinfeldt, with all the votes counted. The Sweden Democrats garnered 12.9 percent to become the third largest party.
The result, which sent the krona lower, marks an end to eight years of rule by Reinfeldt’s conservative-led coalition, which delivered successive rounds of tax cuts without adding to Sweden’s debt. The premier said he will hand in his resignation today as the responsibility of forming a new government falls to the Social Democrats, which won the most votes.
“We have a new unique parliamentary situation in Sweden,” Loefven said at an election-night party. He vowed to keep the Sweden Democrats from influence, opening the doors to government parties to “put the interest of Sweden first.”
Traders and investors have been bracing themselves for market turbulence amid signs the election would fail to produce a clear winner.
Sweden’s
krona slid against both the euro and the dollar following the results. It’s
already the worst performing G-10 currency this year after the threat of
deflation forced the central bank to lower rates to 0.25 percent in July.
More
Elsewhere in the sinking EUSSR.
European Banks Get New Capital Hit From Accounting Rule
Sep 15, 2014 9:21 AM GMT
European banks already under
pressure to strengthen capital ratios may have to hold off on distributing
profit to shareholders because of new accounting rules on how loan losses are
calculated.
The accounting requirement under
the International Financial Reporting Standards, which goes into effect in
2018, would lower European banks’ capital levels by an average 2.7 percentage
points, according to a study published Sept. 11 by Standard & Poor’s.
That’s based on a survey showing banks expect their loan-loss reserves to rise
by 50 percent, S&P said.
The new rules demand for the
recognition of losses on loans when firms see early signs of trouble. Banks are
nearing the end of a European Central Bank review of their books to see if
they’re underreporting bad loans. Some firms increased reserves this year in
expectation of the ECB’s findings.
“This new model will be on top of
the cleanup they’re in the middle of doing,” said Jonathan Nus, one of the
S&P study’s authors. “The ECB review will take care of the legacy losses
and this new rule will take care of the future expected ones.”
Standard setters in Europe and
the U.S. pushed for the accounting change after the 2008 financial crisis when
lenders were criticized for being too slow to recognize losses as the global
economy deteriorated.
----While the U.S. rule as proposed is tougher than Europe’s, its impact on capital ratios of U.S. banks will be smaller, according to S&P estimates. Even if loan-loss reserves doubled under the new standard, U.S. capital ratios would fall by 1.2 percentage points, the ratings company found.
European banks have larger loan
portfolios than their U.S. counterparts, S&P said. In Europe, bank lending
fills the majority of corporate-financing needs while U.S. companies borrow
more from securities markets.
More
Only a monetary 'nuclear bomb' can save Italy now, says Mediobanca
Economics Last updated: September 15th, 2014
The OECD has drastically cut its
growth forecast for Italy. The depression will drag on though most of 2015.
The economy will contract by
0.4pc this year. It will remain stuck in the doldrums next year with growth of
just 0.1pc.
If so, Italy’s public debt will
spiral to dangerous levels next year, ever further beyond the point of no
return for a country without its own sovereign currency and central bank.
“This is catastrophic for the
finances of the country. We’re heading for a debt ratio of 145pc next year,”
said Antonio Guglielmi, global strategist for Mediobanca.
“Who knows the maximum number
that the market will tolerate? The number is already scary, but for the time
being Draghi’s poker game is proving successful, and there is now the smell of
QE keep the game going for a bit longer.”
“It is going to take a nuclear
bomb to turn this around. If Draghi ends up doing almost nothing – and there is
a lot of scepticism about the ECB's plans – Italy is dead,” he said.
It has been an abominable few
days for the Italian economy. ISTAT said today that industrial output fell by
1pc in July (m/m), and 1.8pc from a year ago. It is down a fifth since 2008.
Exports from the regions fell
2.5pc in the second quarter (q/q). The figures for the South were nothing less
than catastrophic: Sicilia (-11.1), Sardegna (-11.2), Basilicata (-24.6). It
seems that the Mezzogiorno is falling off the bottom of the Italian economy.
The OECD also slashed France’s
growth by half a percentage point to 0.4pc this year. It cut Brazil by 1.5pc to
0.3pc. The Brazilian miracle is by now a structural wreck.
Yet it is the eurozone that
remains the epicentre of hopelessness. “The recovery in the euro area has
remained disappointing, notably in the largest countries: Germany, France and
Italy. Confidence is again weakening, and the anaemic state of demand is
reflected in the decline in inflation, which is near zero in the zone as a
whole and negative in several countries.”
More
We end for the day with gold. With Uncle Scam
effectively telling Germany you can’t have your gold back earlier in the year, speculation
is rife that the gold price is about to be set in the far east. Gold continues to
flow from west to east. Yet another scandal is coming to London and New York I
think. Cash settled futures and unallocated bullion accounts don’t equal owning
gold as last resort insurance policy. Our world appears to be on the threshold
of cashing in those insurance policies.
China May Boost Gold Reserves Amid Imbalances in Holdings
Sep 16, 2014 3:59 AM GMT
China may join other
emerging countries in boosting gold reserves as the precious metal makes up a
smaller share of its foreign-exchange holdings compared with developed
economies, said a London-based researcher. The country hasn’t announced any changes to state gold reserves since authorities in 2009 said holdings totaled 1,054.1 metric tons. While China holds the world’s biggest foreign-exchange reserves, bullion accounts for 1.1 percent of the total, compared with about 70 percent for the U.S. and Germany, the biggest gold holders, World Gold Council data show.
“It is clear that western central banks over time will be reducing their reserves and China and other Asian countries will be increasing,” David Marsh, managing director at the Official Monetary and Financial Institutions Forum, said in a Sept. 11 interview in Beijing. “Gold will become more traded amongst central banks in the next 30 years because there are colossal imbalances in world gold holdings as a percentage of overall asset reserves.”
Central banks, net buyers of gold for 14 straight quarters, helped limit bullion’s losses last year that were the most since 1981 and may increase purchases to as much as 500 tons this year after adding 409 tons last year, the London-based council said Aug. 14. The precious metal rose 3 percent this year as geopolitical tensions boosted demand for a haven.
----“I don’t know if China has been boosting their official gold reserves,” said Marsh, who co-founded the group that tracks economic and monetary policies. “But I’d rather think over the past six or seven years the Chinese authorities probably have been adding to their holdings in different ways.”
Foreign-exchange reserves of China, the second-biggest economy, have nearly doubled to $3.99 trillion since April 2009 when the nation last announced changes to bullion holdings, according to State Administration of Foreign Exchange data. Last year the country, also the biggest bullion producer, overtook India as the top gold user after price declines spurred buying.
The U.S. holds 8,133.5 tons of gold in reserves, while Germany keeps 3,384.2 tons and Italy has 2,451.8 tons, World Gold Council data show. Russia keeps 1,105.3 tons, or 9.8 percent of its total holdings, according to the data.
More
Singapore and Hong Kong Race For Gold Benchmark - Use Brinks and Via Mat For Storage
Submitted by GoldCore on 09/15/2014 09:50
-0400
Singapore and Hong Kong appear to
be competing for the a new global gold price benchmark. Further details emerged
at the weekend about the planned launch by Singapore of a new 1kg
physically deliverable gold contract for the Asian wholesale gold market. Last
week, CME announced a new 1 kilogramme gold contract in Hong Kong.
The new Singapore
gold contract differs from others in that as well as acting as a price
discovery benchmark for 1kg gold bars in the Asian region, it has been
specifically designed to actually deliver gold to wholesalers, because
settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar
is 32.15 troy ounces.
In June the Singapore Exchange (SGX) indicated that their 1kg gold contract would probably be launched by September, but the launch date has now been pushed back to either October or November. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider.
The
Singapore contract will be in lots of 25 kgs, denominated in US dollars,
and it will trade for three hours in the Singapore morning time.
Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5
hours ahead of the Indian market, but is in the same time zone as both Hong
Kong and Shanghai.
Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added.
Physical settlement is two days after trade date and consists of 99.99 purity 1kg gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list . This means that wholesalers will be able to gauge demand and supply of 1kg bars over the following week.
At a gold conference in Pune, India this weekend, the SGX clarified the new launch date and pointed out how the new 1kg contract could benefit the physical Indian gold market.
At the conference, Derek Neo of the SGX said that the 1kg
gold contract will “benefit Indian traders as they will be able to see the
price trend of gold kilobar when the Singapore market for gold closes at 11.30
a.m” (9am Indian time), and that since India is one of the world’s largest
importers of gold, “the contract is going to provide another avenue to source
quality gold”.
The SGX is exclusively using the vaults of Brinks Singapore as the official vault for the contract’s 1kg gold bars. In Singapore, Brinks have a vaulting facility in the free port of Singapore.
Four international banks that are members of the SBMA will act as market makers for the new gold contract and these banks need to guarantee availability of 1 kg gold bars in order to provide the liquidity to allow the new contract to work as designed. These banks are JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.
Since the SGX 1kg gold contract is traded on the Exchange and is regulated, it will be interesting to see the published trading statistics from the Exchange once the gold contract product is up and running and the volume of 1kg bars that these four bullion banks are providing to the Brinks vault in Singapore.
New Hong Kong Gold Contract
The US based CME Group who run the Comex gold futures exchange in New York and also host the new LBMA Silver Price auction in London have also announced plans for a new 1kg gold product in Hong Kong.
The CME’s new Hong Kong 1kg product is a US dollar denominated gold futures contract. It will trade on the Comex in New York and not in Hong Kong, but it will be settled and deliverable in Hong Kong at exchange-approved vaults. This is significantly different to the SGX physically deliverable 1kg gold contract in Singapore.
More
Hong Kong Gold Bourse Approved to Build Vault in China
Sep 15, 2014 5:01 PM GMT
Hong Kong’s Chinese
Gold & Silver Exchange Society was given permission to set up a precious
metals vault in Shenzhen, China, becoming the first non-mainland bourse granted onshore
commodity warehousing access. Local government authorities and the People’s Bank of China Shenzhen branch approved the exchange’s plan to build the 1,500-ton facility to store gold and silver in Qianhai, a special economic zone on the west of Shenzhen, according to Haywood Cheung, president of the CGSE. Construction will begin next year and take about 18 months, he said.
China, which overtook India as the biggest gold user last year, is starting gold trade in the Shanghai free-trade zone this month as the country seeks to exert its influence over prices while expanding the yuan’s role in global trade. Bullion rose 2.8 percent this year after slumping 28 percent in 2013
More
http://www.bloomberg.com/news/2014-09-15/hong-kong-gold-bourse-approved-to-build-vault-in-china.html
"A nod's as guid as a wink tae a blind
horse"
Scots saying.
At the Comex silver depositories Monday final figures were: Registered 63.72 Moz,
Eligible 118.75 Moz, Total 182.47 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Below, the latest update on a vote that threatens to radically alter the
shape of Europe in the early 21st century.
"Whit's fur ye'll no go past ye."
Scots adage.
Scottish referendum: David Cameron begs Scots not to leave the UK
If you don't like me, I won't be here forever, the Prime Minister tells voters during an impassioned final plea in Aberdeen
David Cameron begged the people
of Scotland not to leave the United Kingdom as he promised them that he “won’t
be here forever”.
In a final plea before Thursday’s
referendum, the Prime Minister warned Scottish voters in a speech in Aberdeen
that separation would be a “painful divorce”.
Mr Cameron was close to tears as
he warned voters that Alex Salmond’s separatist movement had “painted a
picture” of an independent Scotland that was “too good to be true”.
He said the reality would involve
stricter borders which could mean people being forced to “pack their passport
when they’re going to see friends and loved ones”
Mr Cameron also attempted to
placate Scots who dislike him and his government by reminding them that he
would not be Prime Minister forever.
“Don’t think, 'I’m frustrated
with politics right now, so I’ll walk out the door and never come back,’ ” Mr
Cameron told the audience of Conservative activists. “If you don’t like me, I
won’t be here forever. If you don’t like this government, it won’t last
forever. But if you leave the UK, – that will be forever.”
The White House on Monday
reiterated Barack Obama’s call for Scotland to remain part of a united Britain.
The President’s spokesman said Mr Obama wanted the UK to remain “strong,
robust, united, and an effective partner”.
----The Prime Minister also hit back at claims made by the First Minister that he has conducted a “scare-mongering” campaign by calling on business leaders to speak out against independence.
“To warn of the consequences is
not to scare-monger, it is like warning a friend about a decision they might
take that will affect the rest of their lives, and the lives of their
children,” Mr Cameron said. “I say all this because I don’t want the people of
Scotland to be sold a dream that disappears.”
He urged voters across the
country not to “lose faith” in what the UK can achieve if it stays together,
adding: “So as you reach your final decision, please, please don’t let anyone
tell you that you can’t be a proud Scot and a proud Brit.
MoreNarrow No victory in referendum would raise 'questions' about UK, says Chatham House
Security thinktank says UK would still be diminished if Scots reject independence on Thursday
A narrow victory for the No
campaign in the Scottish referendum would raise “major questions” about the
future of the United Kingdom, a security thinktank has warned.
Chatham House said that a vote by
a majority of Scots in favour of staying within the Union would still diminish
the UK.
Four million Scots are voting on
Thursday whether to leave the United Kingdom. Polls so far have a narrow lead
for the pro-Union No campaign.
In a report published on Monday,
Chatham House said: “A No vote would also have significant implications for
future UK foreign and defence policy.
“A ‘No’ vote would not end the
matter or represent a return to the status quo ante.
“A No vote in which 45 per cent
or more of the population in Scotland vote for independence would still raise
major questions about the long term future of the union.”
A large number of people voting
to leave the UK - despite a No victory - could also lead to the Government
being forced to relocate the Trident nuclear submarine fleet.
Trident is currently based in
Scotland. However Alex Salmond, the First Minister, has repeatedly said that
Trident could not remain in an independent Scotland.
The report said: “The referendum
has highlighted the strong and widely felt Scottish opposition to the basing of
Trident in Scotland.”
----The report – which was based on anonymous briefings with Parliamentarians in London and Edinburgh – warned that independence could not be completed within 18 months because of the complexity about unwinding the 300-year old Union.
The report also said that – after
independence – any Government which was only formed because it had the backing
of Scottish MPs would be “seriously undermined”.
It found that the May 2015
general election could have to be delayed until 2016 because it would pose a
“major distraction” from the negotiating process between Edinburgh and London.
http://www.telegraph.co.uk/news/uknews/scottish-independence/11098108/Narrow-No-victory-in-referendum-would-raise-questions-about-UK-says-Chatham-House.html
Ditching Monarchy Is Step Too Far for Scots Nationalists
Sep 16,
2014 12:01 AM GMT
After Elizabeth I died childless in 1603, her distant relative James VI of
Scotland came down to take the throne and unite the two crowns, becoming James
I of England. He never came back. More than four centuries later, Scottish National Party leader Alex Salmond says that if his campaign for independence prevails in this week’s referendum, he would keep Queen Elizabeth II, the 12th monarch of the United Kingdom, and she would be “proud to be Queen of Scots.”
For Scottish nationalists who say they are on the cusp of achieving their ambition of unraveling the U.K. political union that dates back 307 years, ditching the monarchy is a step too far. Rather than a republic, they want to keep the queen as head of a newly independent state.
“It would be a very smooth transition as she is already the Queen in Scotland,” said Robert Hazell, director of the constitution unit at University College London. “It’s a country she knows very well and loves very well.”
The monarchy is the most enduring symbol of union between England and Scotland along with the pound sterling, which the nationalists also want to retain.
The current queen has a home built by Queen Victoria in northeast Scotland, Balmoral Castle. Her mother, also Elizabeth, was related to the Scottish Royal House with the family seat at Glamis Castle. The queen’s eldest son and heir, Prince Charles, is often pictured in a kilt.
With the outcome of this week’s referendum impossible to predict, the queen’s status is one of the few things that wouldn’t be up for negotiation should politicians end up sitting down to hammer out a divorce settlement. The argument rather is over how the Queen might feel about the carving up of a country she’s ruled for more than six decades.
More
"Awa' an bile yer heid"
Scots greeting for Cameron.
The monthly Coppock Indicators finished Aug.
DJIA: +152 Down. NASDAQ: +312 Down. SP500: +231 Down.
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