Thursday, 7 April 2016

The London Gold Dilemma!

Baltic Dry Index. 500 +13        Brent Crude 40.14

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

Brexit odds checker.
Brexit Quote of the Day.
Cameron: He is not only dull himself, he is the cause of dullness in others.

With apologies to Samuel Johnson.

Today gold. Something’s afoot in dodgy old London. The gold market has long been manipulated and rigged by the central banksters, who see gold, real money, money that’s free from debt unlike the central banksters fiat money substitutes, as a threat to their monopoly on fiat money, communist money, something for nothing money. They routinely slam the gold price down via paper gold sales in the futures markets. But lately the central banksters have lost control.  The global public has been a consistent buyer of physical gold, much of it in the form of bullion coins. Physical gold has been draining away from the west and getting squirreled away in the east. India was the main culprit in the past, but last decade China joined the party along with Russia and some of Asia’s “Stans.” The west is rumoured to be heavily short physical gold bullion, relying instead on paper gold via the futures markets to cover the risk.
When rigged fiat money systems fail, as they always do eventually through bankster greed and widespread fraud and criminality, fiat money revulsion is the result, and the public hankers for a return to metallic money, something that’s fungible, with intrinsic value, and a is a reliable store of value.
But London, where almost half the world’s gold trades each year, has long been the home of the “unallocated” gold scam. The buyer purchases “gold” from a London Bullion Dealer, but the dealer doesn’t allocate specific marked bullion bars to the “trade.” The buyer thinks he owns gold and is saving on most of the storage costs. In reality the buyer bought a pig in a poke. The gold is only as good as the bullion brokers ability to stay solvent and find real bullion gold in the market should the buyer ever decide to want to take delivery.
I think that in the next financial “Lehman” crisis, one that will take down the Great Nixonian Error of fiat money, the Great London Unallocated Gold Scam, will blow up badly. There simply won’t be enough bullion available to meet the demand from those who think that they already own gold. Worse, in the next great financial crisis, not all of the bullion players will stay solvent. The great central bankster Ponzi houses, aka central banks,  won’t have anything but paper gold to bail them out, which won’t work.
And so we arrive at today’s gold article oozing snake oil. London sees the problem but doesn’t yet see the answer. Stay long fully paid up gold and silver held outside of the financial system, where it might get “Corzined,” i.e. hypothecated until it’s all gone, as insurance against the “next Lehman.”
A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873

Gold Market Hub Set for Overhaul as Regulators Step Up Scrutiny

April 6, 2016
There’s a competition brewing to figure out how the world’s largest gold-trading hub can get bigger and better.

Much of the $5 trillion in transactions cleared every year in London is done by telephone or in electronic chat rooms and are the same kind of one-on-one deals that gave birth to the marketplace three centuries ago. But traders and bankers say the system may not provide enough transparency to satisfy regulators or attract new business at a time when more gold is being bought and sold in New York and Shanghai.

That’s why the main participant group, the London Bullion Market Association, is evaluating bids to create a trading and reporting platform. At the same time, a different plan is being developed by the World Gold Council, a mining industry group that is working with the London Metal Exchange to come up with new futures contracts, said two people with direct knowledge of the venture. The proposals, if successful, would alter the way gold is bought and sold in the city.

“It’s a pretty big moment for London, and it’s time to choose,” said Mark O’Byrne, a director in Dublin at brokerage GoldCore Ltd. “Everybody wants to bring more players to the table, but there is a risk that through the failure to work together, liquidity is diluted and the market weakened.”

At stake is the largest market for spot and forward contracts, with 4.62 billion ounces cleared among London market makers last year that amounted to almost half of such transactions globally, commodity researcher CPM Group estimates. And the metal is seeing renewed popularity with investors who have added to holdings of the metal after three straight years of losses. Prices rallied 16 percent this year through March, the biggest quarterly gain in almost three decades.

But gold, one of the world’s most-traded commodities and a reserve asset for most of the world’s central banks, has come under greater scrutiny. Markets lacking the transparency of traditional exchanges are getting more attention from regulators after banks were found to have conspired to rig a global benchmark for interest rates during the financial crisis. At the same time, London’s dominance is being challenged by other venues, with new pricing benchmarks for gold in Shanghai and expanded trading in New York.

The LBMA’s plans to modernize over-the-counter trading include the building of an online hub where trades between two parties -- without an intermediary exchange -- can be posted and stored in a database. This would allow for more in-depth trade reporting, something the LBMA says would allow for greater transparency, including the publication of a forward price curve.

The association hopes its proposal will affirm the size and liquidity of the market for gold, which may help convince regulators that the precious metal poses less risk for banks to hold than assets trading in smaller, less-liquid markets.
In everyone loves a scandal news, more on the “Panama Papers.” Everyone who was anyone seems to have been at it, hiding money offshore, but of course, only for all the right reasons.

From Kubrick to Cowell: Panama Papers expose offshore dealings of the stars

In current political climate, offshore companies of celebrities including X Factor boss and late film-maker raise questions
Wednesday 6 April 2016
There is nothing illegal about moving money offshore. To begin with, during the 1970s it was a way of moving cash around at a time of widespread currency controls across Europe.

Buying and selling dollars, for instance, was much easier for banks if the trades were done offshore. If you lived in a country where a corrupt or predatory government might seize your assets, then moving your wealth offshore to protect it also made sense.

But the offshore industry has evolved substantially since then. And the secrecy surrounding it has become increasingly unpalatable for world leaders, who have been calling for more transparency. David Cameron and Barack Obama chief among them.

The US president said on Tuesday that “global tax avoidance generally is a huge problem”, adding: “The problem is that a lot of this stuff is legal, not illegal.” Cameron has also criticised complex offshore structures, saying they are “not fair and not right”. The UK prime minister is due to hold an international conference on tax avoidance next month.

The Panama Papers reveal the names of many wealthy and well-known individuals who have had offshore dealings through companies provided by Mossack Fonseca, the law firm at the centre of the leak. That does not mean they have done anything wrong.

But in the current political climate it raises legitimate questions about why they have done so, what benefit they were hoping for, and whether they will continue to use such vehicles in light of our disclosures.

There is nothing to suggest that any of those named below sheltered, or sought to shelter, money or assets offshore to avoid tax or for any unlawful purpose.
We close for the day with shipping news and an update on alternative energy. Mitsui shipping throwing in the towel, has a silver lining for some, though that silver lining might be fleeting, pardon the weak pun. “Clean energy’s” time has just about arrived.

Baltic Dry Index Continues to Soar on Surging Capesize Rates

Tuesday April 5, 2016
Buoyed by higher Capesize rates, the Baltic Dry Index (BDI) rose a further 21 points Monday to reach 471, the joint highest single day gain of the year following a similar 21 point jump last Friday to make it a gain of 57 points (13.8 percent) over the last three sessions.

Average TC spot rates in the Capesize segment Monday grew by $499 to reach average daily earnings of $3,512 per day.

Both Panamax and Supramax segments were also up Monday, reaching earnings of $4,497 per day (+$22) and $5,004 per day (+$23), respectively.

The BDI's continued positive movement came following news on Thursday that Mitsui O.S.K. Lines, Ltd. (MOL), under a major restructing plan, will be eliminating 10 percent of their Capesize fleet and closing down the company's Singapore dry bulk shipping unit.

Commenting on the decision MOL stated "the Company deemed it necessary to conduct an urgent review of its business models due to the prolonged sluggish dry bulker market, and decided to implement a major scale-down of the fleet to minimise its market exposure by free vessels, dissolve MOLBC, and transfer its business operations from Singapore to Tokyo."

MOL says it will reduce its surplus dry bulk tonnage through the cancellation of charter-in contract and selling some ships, gleaning a 10 percent reduction in its Capesize fleet.

On Friday, industry experts told market participants not to be fooled by the surge, warning against placing too much optimism on there being a meaningful recovery.

Shipping's $12 Billion Iceberg

By David Fickling Apr 5, 2016 6:32 AM GST
Here's reason to hope that spring has arrived for the global sea freight industry: The Baltic Dry Index, a measure of shipping costs, is up 62 percent from its record-low reading of 290 on Feb. 11, and just two points below its year-high of 473 on Jan. 4.
That sounds like good news until you consider how far the index has fallen: The benchmark averaged 1,100 in the five years through 2015, and 4,406 in the five years before that.
After the Crash
Still, the improvement's a sign that the demand side of the dry bulk shipping industry may be past its nadir. China's Lunar New Year is always a weak period for the commodities carried on such ships, including iron ore, coal, and grains.
In four out of the past five years, February was the weakest month for Chinese iron ore imports, a trade that increasingly dominates the sector. Even at a time when China's economy is looking frailer, sparks in the country's industrial machine carry enough of a kick to keep the boats afloat.
If shipping only had a demand side, this would be cause for celebration. Unfortunately, there's a supply side too -- and it's a horror show. Thanks to the ongoing need to replace aging ships and the long tail of orders placed in more profitable times, the world's dry bulk shipping fleet is still growing despite losses that should be causing shipowners to throttle back.

Number of dry bulk carriers in service 9,484

About 2.8 million deadweight tons have been added to the fleet since December alone -- equivalent to about one new Capesize bulk carrier every five days. Thanks to those super low iron ore prices, scrap is cheap, making it less attractive to clear the oversupply by demolishing ships. About 163 dry bulkers have been taken to the scrap yard so far this year, according to IHS Global, but there are still 9,484 in service.

Wind and Solar Are Crushing Fossil Fuels

Record clean energy investment outpaces gas and coal 2 to 1.

April 6, 2016 — 10:00 AM BST
Wind and solar have grown seemingly unstoppable.
While two years of crashing prices for oil, natural gas, and coal triggered dramatic downsizing in those industries, renewables have been thriving. Clean energy investment broke new records in 2015 and is now seeing twice as much global funding as fossil fuels.
One reason is that renewable energy is becoming ever cheaper to produce. Recent solar and wind auctions in Mexico and Morocco ended with winning bids from companies that promised to produce electricity at the cheapest rate, from any source, anywhere in the world, said Michael Liebreich, chairman of the advisory board for Bloomberg New Energy Finance (BNEF).  
"We're in a low-cost-of-oil environment for the foreseeable future," Liebreich said during his keynote address at the BNEF Summit in New York on Tuesday. "Did that stop renewable energy investment? Not at all."
Any sudden event which creates a great demand for actual cash may cause, and will tend to cause, a panic in a country where cash is much economised, and where debts payable on demand are large. In such a country an immense credit rests on a small cash reserve, and an unexpected and large diminution of that reserve may easily break up and shatter very much, if not the whole, of that credit.

Walter Bagehot. Lombard Street. 1873

Replace “cash, debts, and credit” in the above quote with “gold”  and you get a pretty 
good idea of London’s dilemma. Oh what a tangled web we weave …..

At the Comex silver depositories Wednesday final figures were: Registered 32.45 Moz, Eligible 122.99 Moz, Total 155.44 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, more on the Germany v IMF fight over Greece’s next bailout, that promises to make the Greeks join the Syrian refugees try to flee northwards from Greece. But has paymaster Merkel met her match in the IMF’s Lagarde?

Greece: Endgame for the IMF-EU Feud over Greece's Debt

Greece hasn't been saved just yet, and the conflict between the International Monetary Fund and Europe is once again intensifying. Greece's former minister of finance Yanis Varoufakis expects a showdown between the IMF and Germany.
April 03, 2016 – 12:42 PM
Though talks are now taking place mostly behind the scenes, negotiations over another bailout program for Greece have not come to an end. On Saturday, Wikileaks published the transcript of an internal International Monetary Fund (IMF) phone conference.
A discussion between high-ranking IMF officials reveals the bitter divide between the lenders and how they're still far from reaching a sustainable solution for the financial crisis in Greece. Yanis Varoufakis, Greece's former minister of finance, sees parallels to the situation one year ago, when he was negotiating a credit line with the IMF, the European Commission and Euro zone member states. In an op-ed for SPIEGEL ONLINE, he describes his fears of a showdown between Greece and its lenders this summer.
The feud between the International Monetary Fund (IMF) and the European side of Greece's troika of creditors is old news. However, Wikileaks' publication of a dialogue between key IMF players suggests that we are approaching something of a hazardous endgame.

Ever since the first Greek 'bailout' program was signed, in May 2010, the IMF has been violating its own "primary directive": the obligation not to fund insolvent governments. As a result, the IMF's leadership has been facing a revolt from its staff members who demand an exit strategy arguing that, if the EU continues to obstruct the debt relief necessary to restore the solvency of the Greek government, the IMF should leave the Greek program.

Five years on, this IMF-EU impasse continues, causing a one-third collapse of Greek GDP and fuelling hopelessness to a degree that has made real reform harder than ever.

Back in February 2015, when I first met Poul Thomsen (the IMF's European chief) in a Paris hotel, a fortnight after assuming Greece's finance ministry, he appeared even keener than I was to press for a debt write off: "At a minimum", he told me "€54 billion of Greece's debt left over from the first 'bailout' should be written off immediately in exchange for serious reforms."

This was music to my ears, and made me keen to discuss what he meant by "serious reforms". It was a discussion that never got formally off the ground as Germany's finance minister vetoed all discussion on debt relief, debt swaps (which were my compromise proposal), indeed any significant change to the failed program.

What new light does the leaked dialogue between Thomsen and Delia Velculescu (the IMF's Greek mission chief) throw on this saga? It reveals the following state-of-play, as assessed by the IMF:

----To recap, the Wikileaks revelations unveil an attrition war between a reasonably numerate villain (the IMF) and a chronic procrastinator (Berlin). We also know that the IMF is seriously considering bringing things to a head next July by dangling Greece once more over the abyss, exactly as in July 2015. Except that this time the purpose is to force the hand not of Alexis Tsipras, whose fresh acquiescence the IMF considers in the bag, but of the German Chancellor.
Will Christine Lagarde (the IMF's Managing Director with ambitions of a European political comeback) toe the line of her underlings? How will Chancellor Merkel react to the publication of these conversations? Might the protagonists' strategies change now that we have had a glimpse of them?
While pondering these questions, I cannot stem the torrent of sadness from the thought that last year, during our Athens Spring, Greece had weapons against the troika's organised incompetence that I was, alas, not allowed to use. The result is a Europe more deeply immersed in disrepute and a Greek people watching from the sidelines an ugly brawl darkening their already bleak future.

Brexit Quote of the week.

Cameron: The gods too are fond of a joke.

With apologies to Aristotle

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

A step towards new, faster-charging, and safer batteries

Date: April 5, 2016

Source: Department of Energy, Office of Science

Summary: Researchers found a simple solution to the limited durability in aluminum-ion batteries – an electrode composed of graphite. In this work, the internal gaps in the foam allowed faster motion of the ions inside the negative electrode that enhance the rate of charging.
Researchers found a simple solution to the limited durability in aluminum-ion batteries -- an electrode composed of graphite, which is made of sheets or a foam of carbon atoms. In this research, the internal gaps in the foam allowed faster motion of the ions inside the negative electrode that enhance the rate of charging. Also, the electrodes are connected by a safe salt that is liquid at room temperature, rather than a flammable liquid as in conventional lithium-ion batteries.
This research provides a new approach to enable fast-charging, bendable, and durable aluminum-ion batteries and could lead to more affordable, safer batteries. Promising applications include electronics that are bendable and charge in less than one minute as well as grid-scale batteries that demand materials deliver power at the rated levels after being repeatedly charged and discharged.
Grid-scale energy storage to manage our electricity supply would benefit from batteries that can withstand repeated cycling of discharging and charging. Current lithium-ion batteries have lifetimes of only 1,000-3,000 cycles. Now a team of researchers from Stanford University, Taiwan, and China have made a research prototype of an inexpensive, safe aluminum-ion battery that can withstand 7,500 cycles. In the aluminum-ion battery, one electrode is made from affordable aluminum, and the other is composed of carbon in the form of graphite.
A safe salt that is a liquid at room temperature (called an ionic salt) connects the two electrodes. Previous electrodes in aluminum batteries significantly degraded following charge-discharge cycling. The long-lasting performance of this new battery is a result of the stability of the new graphite electrode. Also, this aluminum battery is safer because the ionic salt is not flammable like the liquid used in conventional lithium-ion batteries. Impressively, this aluminum battery prototype did not release large amounts of energy uncontrollably when a researcher drilled a hole through it. Based on a "pouch cell" research prototype, the aluminum battery demonstrated sufficient stored energy for common applications such as charging a cellphone and lighting.
This work was supported by the U.S. Department of Energy (DOE) Office of Science, Office of Basic Energy Sciences (novel carbon materials development and electrical characterization); Ministry of Economic Affairs and Ministry of Education in Taiwan; Stanford University; Industrial Technology Research Institute of Taiwan; National Natural Science Foundation of China; China Scholarship Council; and the Hunan University Fund. 

The monthly Coppock Indicators finished March

DJIA: 17685.09 -18 Down. NASDAQ:  4869.85 +33 Down. SP500: 2059.74 -22 Down. 

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