Baltic Dry Index. 588 +01 Brent Crude 63.18
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Never
believe anything in politics until it has been officially denied.
Otto von Bismarck.
Suddenly everyone in Germany and Austria wants to spend more time at home admiring their gold. This requires moving it back from America, in the case of Germany, who may or may not still have it, as they don’t seem able to return it PDQ, and moving it back from the Bank of England in the case of Austria, unless by mistake, it became part of “Brown’s bottom,” the sale of “Britain’s” gold in the mid to high $200s in the late 1990s. If it did,
The Old Lady might have a little trouble supplying Austria by 2020. Perhaps the Chinese or Indians might lend us some gold?
Stay long fully paid up physical precious metals held outside of banks and the MF Global financial mafia.
'Curiouser and curiouser!” Cried Chancellor Osborne (he was so much surprised, that for the moment he quite forgot how to speak good English).
Austria plan to repatriate gold not linked to Brexit talk: Nowotny
A decision by the Austrian
central bank to repatriate some gold from London by 2020 is "absolutely
not" related to the possibility that Britain will leave the European
Union, Governor Ewald Nowotny told a news conference on Thursday.
He said it instead reflected a
trend among central banks, including Germany's Bundesbank, to hold more
reserves at home.
Revealed: why Gordon Brown sold Britain's gold at a knock-down price
Last updated: July 5th, 2012
A great deal of Gordon Brown’s
economic strategy would strike a sane man as troubling. Not a great deal was
mysterious. The orgy of consumption spending, frequent extensions of the cycle
over which he would “borrow to invest”, proclamations of the “end of boom and
bust”: these are part of the armoury of modern politicians, of all political
hues.
One decision stands out as
downright bizarre, however: the sale of the majority of Britain’s gold reserves
for prices between $256 and $296 an ounce, only to watch it soar so far as
$1,615 per ounce today.
When Brown decided to dispose of
almost 400 tonnes of gold between 1999 and 2002, he did two distinctly odd
things.
First, he broke with convention
and announced the sale well in advance, giving the market notice that it was
shortly to be flooded and forcing down the spot price. This was apparently done
in the interests of “open government”, but had the effect of sending the spot
price of gold to a 20-year low, as implied by basic supply and demand theory.
Second, the Treasury elected to
sell its gold via auction. Again, this broke with the standard model.
The price
of gold was usually determined at a morning and afternoon "fix"
between representatives of big banks whose network of smaller bank clients and
private orders allowed them to determine the exact price at which demand met
with supply.
---- It seemed almost as if the Treasury was trying to achieve the lowest price possible for the public’s gold. It was.
One of the most popular trading
plays of the late 1990s was the carry trade, particularly the gold carry trade.
In this a bank would borrow gold
from another financial institution for a set period, and pay a token sum
relative to the overall value of that gold for the privilege.
Once control of the gold had been
passed over, the bank would then immediately sell it for its full market value.
The proceeds would be invested in an alternative product which was predicted to
generate a better return over the period than gold which was enduring a spell of
relative price stability, even decline.
At the end of the allotted
period, the bank would sell its investment and use the proceeds to buy back the
amount of gold it had originally borrowed. This gold would be returned to the
lender. The borrowing bank would trouser the difference between the two prices.
This plan worked brilliantly when
gold fell and the other asset – for the bank at the heart of this case,
yen-backed securities – rose. When the prices moved the other way, the banks
were in trouble.
This is what had happened on an
enormous scale by early 1999. One globally significant US bank in particular is
understood to have been heavily short on two tonnes of gold, enough to call
into question its solvency if redemption occurred at the prevailing price.
More
From Wednesday’s LIR.
What does China
know that we don’t? A London Bullion Market default? Fort Knox empty? All the
West’s gold, MF Globalled? Stay long fully paid up physical precious metals.
Gold and silver look set to explode higher.
China sets up giant gold fund to expand its market power
Published: May 27, 2015 12:53 a.m. ET
HONG KONG (MarketWatch) — China has set up its largest
gold-investment fund ever, expected to total 100 billion yuan ($16 billion),
aiming to invest in mining projects in the region and enhance Chinese influence
in global gold markets, local media reports said Wednesday.
The “Silk Road Gold Fund” — led by the Shanghai Gold Exchange and others — is reportedly focused on investing in gold projects as part of China’s “New Silk Road” push to deepen economic ties with other countries in the region, particularly those along the ancient Silk Road trade route linking Eastern and Western Asia. In fact, the fund’s founding late last week took place in Xi’an, the historic starting point of the Silk Road.
The “Silk Road Gold Fund” — led by the Shanghai Gold Exchange and others — is reportedly focused on investing in gold projects as part of China’s “New Silk Road” push to deepen economic ties with other countries in the region, particularly those along the ancient Silk Road trade route linking Eastern and Western Asia. In fact, the fund’s founding late last week took place in Xi’an, the historic starting point of the Silk Road.
More
Next, who facilitated all the alleged wrongdoing at FIFA? Will America’s
“Justice Department” really go after American banks? Or will they get a walk
like America’s water boarders? My money is on a walk. As for the non-American
banks, well lately that’s another thing. Like Heinz, Uncle Scam has 57
varieties of “Super Max” prisons. Of
course, perps are supposedly innocent
until proven guilty in a court of law, but that’s so last century.
Wall Street banks are being drawn into the FIFA bribery probe
Published: May 28, 2015 8:53 a.m. ET
Major
global banks — including Wall Street giants Citigroup and J.P. Morgan — could
be drawn into the sweeping probe into alleged racketeering, wire fraud and
corruption in the soccer world, as investigators trawl through evidence tied to
the FIFA bribery scandal.
A raft of banks have been named in the 164-page indictment that the U.S. Department of Justice released Wednesday, alleging that nine soccer officials from the sport’s top governing body, FIFA, and five sports executives were part of a 24-year corruption scheme involving more than $150 million in bribes.
Among major financial institutions allegedly used to facilitate payments and wire transfers are J.P. Morgan Chase & Co. JPM, -0.41% Citigroup Inc. C, -0.58% Bank of America Corp. BAC, -0.42% HSBC Holdings PLC HSBA, -0.27% HSBC, -0.25% 0005, +0.82% UBS AG UBSN, +0.48% UBS, +0.60% and Julius Baer Gruppe AG BAER, +0.00% according to indictment.
“Part of our investigation will look at the conduct of the financial institutions to see whether they were cognizant of the fact they were helping launder these bribe payments,” Kelly T. Currie, acting U.S. attorney for the Eastern District of New York, said at a news conference on Wednesday, according to media reports. “It’s too early to say whether there’s any problematic behavior, but it will be part of our investigation.”
None of the banks has been accused of wrongdoing. Citi, Bank of America, Citi and HSBC weren’t immediately available for comment. Representatives of UBS and J.P. Morgan declined to comment, while a representative from Julius Baer said he wasn’t able to comment on the case but added that the bank always cooperates with authorities when requested.
According to the FIFA indictment, the U.S. banking sector played a central role in the alleged bribery scheme.
As early as the 1990s, but increasingly in the 2000s and 2010s, “the defendants and their co-conspirators relied heavily on the United States financial system,” the charges state. “This reliance was significant and sustained and was one of the central methods and means through which they promoted and concealed their schemes.”
Many of the transactions involved millions of dollars that would pass through U.S. bank accounts before allegedly being redirected to personal accounts. In one example, transactions totaling $10 million were alleged to have been wired from a FIFA account in Switzerland to a Bank of America account in New York to be credited to accounts held by the Caribbean Football Union (CFU) and CONCACAF, the continental confederation under FIFA headquartered in the United States.
More
Fifa bribes scandal: Police probe the British connection
City of London police are in contact with the FBI over football corruption inquiry
Edward Malnick, Luke Heighton 10:23PM
BST 28 May 2015
British
police are investigating Fifa corruption after links to UK banks and meetings
in London were discovered, the Telegraph has learnt.
Officers from the City of London
are in contact with the FBI regarding the inquiry into World Cup corruption and
have been “assisting” since the “early stages” of the investigation, sources
confirmed.
The US indictment gives details
of a meeting in London where bribes were agreed.
It also alleges that bank
accounts held by HSBC and Barclays were used to transfer funds and gives
details of a payment to “an account of a luxury yacht manufacturer” in the UK.
On Thursday the Government urged
the Serious Fraud Office to investigate British links to the scandal.
---- One of the men arrested by Swiss authorities in Zurich earlier this week – Costas Takkas – is a British citizen and it is likely that police will have examined bank accounts held in his name.
Mr Takkas is a former general
secretary of the Cayman Islands Football Association and, according to
prosecutors, used his global network of bank accounts to funnel bribes for
another football official, who has also been arrested.
More
In El Nino news, are Mexico and America’s Great Rains linked?
El Nino Shows Global Reach With Australia-to-Mexico Fallout
3:05 AM BST May 28,
2015
A strengthening El Nino will bring a drier winter to Australia’s east, while
the west is set for a wetter period, the country’s forecasters said, adding to
warnings the pattern may have a global impact from the rice lands of the
Philippines to the food markets of Mexico.The period from June to August is likely to be drier-than-normal in southern and inland Queensland, northern and eastern New South Wales and eastern Victoria, the Melbourne-based Bureau of Meteorology said in a monthly update on Thursday. Southern Western Australia, the country’s top wheat producer, is set for more rain than normal, it said.
An El Nino was declared this month by Australia, and forecasters worldwide are seeking to map the probable impact of the pattern that can bake Asia, bring wetter weather to South America and crimp the frequency of Atlantic hurricanes. While the strength of the event doesn’t always correspond with its impact on Australian rainfall, it increases the risk of drought, according to the bureau. This year’s El Nino, which is intensifying, is the first since 2010.
----El Ninos are caused by periodic warmings of the equatorial Pacific and can roil agricultural markets as farmers contend with drought or too much rain. Commodity prices including foodstuffs typically rise in the wake of an event, according to a working paper published by the International Monetary Fund in April, which examined the impact on 33 countries.
In the Philippines, timely imports will be important to ease El Nino’s effect on rice and agriculture, National Economic & Development Authority Deputy Director General Manny Esguerra said at a briefing in Manila on Thursday. The effect on growth depends on how prolonged the event is, Esguerra said.
The Southeast Asian country, which has already reported damage to rice and corn crops from this year’s El Nino, imports rice as local output falls short of demand. The event may spur a rapid rise in Philippine food prices, the IMF said on Tuesday.
----Of the 26 El Ninos since 1900, 17 have resulted in widespread drought in Australia, according to the bureau. The Australian Bureau of Agricultural & Resource Economics & Sciences is set to update its wheat forecast in June.
The Atlantic hurricane season will be less active than usual this year as the El Nino helps limit storm development, U.S. government forecasters said on Wednesday. The season may produce six to 11 named storms through Nov. 30 and three to six of those storms may become hurricanes, according to the U.S. National Oceanic and Atmospheric Administration.
The El Nino will probably reverse a slide in agricultural prices in Mexico and boost the local inflation rate in as little as six months, according to BNP Paribas SA. Vietnam’s coffee is at most risk from the pattern due to the inconsistent nature of rainfall, according to Commodity Weather Group LLC.
The Bloomberg Agriculture Subindex, which tracks farm commodities from sugar and coffee to corn and wheat, slumped 29 percent in the past year. The gauge is about 62 percent below the record reached in May 1997. The 1997-1998 El Nino was the strongest on record, according to the National Oceanic and Atmospheric Administration.
More
"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. 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 Thursday final figures were: Registered 60.86 Moz, Eligible 117.85
Moz, Total 178.71 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, just why was the ECB leaking sensitive
confidential information to the select few, crony insiders in London? Cui bono?
ECB Asked by EU Ombudsman to Explain Closed-Doors Speech
3:28 PM BST May 28,
2015
The European Central Bank should explain why market-sensitive information
was disclosed to a limited audience in a speech on May 18, the European Union’s
ombudsman said.“I should be grateful if the ECB could provide a more detailed account of the incident in question and in particular of the measures it has taken to avoid a similar incident,” the ombudsman, Emily O’Reilly, said in a letter to ECB President Mario Draghi published on her office’s website. “For obvious reasons, your reply should in principle be public.”
A spokesman for the ECB said it will respond to the request and that the answer will be public.
The ombudsman’s letter relates to a dinner speech by ECB Executive Board member Benoit Coeure after a restricted-access event in London, which was co-hosted by a research group funded by hedge fund Brevan Howard Asset Management. He said the central bank planned to accelerate bond purchases in May and June to avoid falling short of its quantitative-easing target during the summer lull. The euro fell and bonds and stocks rallied when the ECB published the speech online the next day.
“The ECB has explained that the delay between the delivery and publication of the speech in question resulted from an ‘internal procedural error’ and that the ECB had taken steps to ensure that there would be no repeat of the problem,” O’Reilly said. “I would be grateful to receive a reply from the ECB within the next fortnight.”
The EU ombudsman investigates complaints about maladministration in EU institutions, bodies, offices, and agencies, according to a document published on its website explaining its functions. The letter doesn’t say who filed a complaint against the ECB.
The ECB said that it had originally planned to release Coeure’s remarks on the day of the event. It also said the speech was covered by Chatham House Rules, meaning it wouldn’t normally be published.
More
Chatham House Rule
When a
meeting, or part thereof, is held under the Chatham House Rule, participants
are free to use the information received, but neither the identity nor the
affiliation of the speaker(s), nor that of any other participant, may be
revealed.
Solar & Related Update.
With events
happening fast in the development of solar power, I’ve added this new section.
Updates as they get reported.
Big Subsidies Make Solar Power Attractive for Home Developers
Solar-battery systems help ‘to create sizzle’ for Sacramento development
By Rebecca Smith and Cassandra Sweet May 28, 2015 4:04 p.m. ET
Sacramento developer Mark Wiese
added solar-battery systems to a 34-home project his Pacific Housing Inc. built
“to create sizzle.” Now he aims to put the green solution into a 91-home
development for lower-income buyers.
Most public money Mr. Wiese
received to defray the cost of adding solar-battery combinations came from a
California program that subsidizes self-generating power. But for the next
development, where homes will sell for about $200,000, he plans to tap a 30%
federal tax credit to help pay for solar-battery systems in addition to local
rebates.
Ken Munson, chief executive of Sunverge
Energy Inc. which builds the systems Pacific Housing uses, says battery costs
have plunged nearly 60% since 2009.
“We expect it to go down by a
third in the next couple of years,” he said.
Mr. Wiese anticipates paying as
little as $10,000 for the new systems—less than half what they cost a year ago.
He thinks he will be able to offset those costs with subsidies. But even if a
builder tacked a $10,000 system of solar panels plus batteries onto a new home,
it would add very little expense. It would cost $76.50 a month if financed at
4.5% interest for 15 years, for example.
In
Sacramento, where Mr. Wiese is building, the local utility plans to roll out
variable demand-driven electricity rates in the summer of 2018. The rates are
expected to range from 8 cents to 30 cents a kilowatt-hour. At such prices, a
home that generates excess power and sells it back to the grid when prices are
high—but charges up its batteries free using solar panels or during low-cost,
low-demand times—could largely cover the cost of an unsubsidized system.
http://www.wsj.com/articles/big-subsidies-make-solar-power-attractive-for-home-developers-1432843497
My own view is that
we've come too far to turn back the clock on solar power. But that said, we
need to get rid of the subsidies, rebates, mandates, and the like. We need to
stop politicians and bureaucrats misdirecting resources, and misallocating
capital into pet projects. Solar PV will come in due time because the power
source is free, almost universal, requires no moving parts, and compared to
today's power production sources, is clean, especially of particulates. The
increasingly large problem in mega cities.
Edison, Bell, Parsons, Westinghouse, Ford, Daimler and Siemens, to name just a few, didn't need or ask for subsidies. Get rid of the malinvestment due to well-intentioned but wrong subsidy, and the market will function just fine. EVs that make sense will appear in due time. Effective and efficient solar PV will be developed and implemented as it becomes cost effective. Right now we stand only at the start of our new Carbon Age. But unlike every other "New Age" before it, Stone, Bronze, Iron, Coal, Canal, Steam, Railway, Electric, Auto, Silicon, this Carbon Age is being pre-empted by subsidies driven by politicians and special interests who think that they know the future and its costs better than the inventors, scientists and technicians working in the field. "Bronze" would never have followed "Stone" had that happened earlier. If there's a natural profit in solar PV, some entrepreneur will find it, develop it and make that profit.
Edison, Bell, Parsons, Westinghouse, Ford, Daimler and Siemens, to name just a few, didn't need or ask for subsidies. Get rid of the malinvestment due to well-intentioned but wrong subsidy, and the market will function just fine. EVs that make sense will appear in due time. Effective and efficient solar PV will be developed and implemented as it becomes cost effective. Right now we stand only at the start of our new Carbon Age. But unlike every other "New Age" before it, Stone, Bronze, Iron, Coal, Canal, Steam, Railway, Electric, Auto, Silicon, this Carbon Age is being pre-empted by subsidies driven by politicians and special interests who think that they know the future and its costs better than the inventors, scientists and technicians working in the field. "Bronze" would never have followed "Stone" had that happened earlier. If there's a natural profit in solar PV, some entrepreneur will find it, develop it and make that profit.
Have a great
weekend everyone.
"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
The monthly Coppock Indicators finished April
DJIA: +112 Down. NASDAQ: +198 Down. SP500: +150 Down.
