Saturday, 16 April 2016

Weekend Update 16/04/2016 – Gold & Silver Rigged. Volcano Set to Blow.

Brexit Countdown Clock.

Brexit Quote of the Day.
There are three kinds of lies: Dodgy Dave lies, Euro lies, and EUSSR statistics.
With apologies to Benjamin Disraeli.

We open with the worst kept secret for decades. The gold and silver markets are rigged by the big international banksters. But for who? I suspect that in the weeks and months ahead, this scandal will come to rival the Panama Papers. Can Germany afford to bailout DB and dirty diesel polluter Volkswagen? When exactly, does the Chinese volcano blow?

Deutsche Bank Admits It Rigged Gold Prices, Agrees To Expose Other Manipulators

Tyler Durden
Earlier today when we reported the stunning news that DB has decided to "turn" against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to "valuable monetary consideration" said it would expose the other banks' rigging having also "agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement" we said "since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has "turned" that much more curious information about precious metals rigging will emerge, and will confirm what the "bugs" had said all along: that the precious metals market has been rigged all along."

This was confirmed moments ago when Reuters reported that Deutsche Bank has also reached a settlement in US litigation alleging the bank conspired to fix gold prices. In other words, hours after admitting it was rigging the silver market, it did the same for gold.

Some more headlines:
  • Reaches settlement in U.S. litigation alleging it conspired to fix gold prices.
  • Plaintiffs' lawyers, in filing, say Deutsche Bank has signed a settlement term sheet
  • Plaintiffs' lawyers say are negotiating formal settlement agreement that would be presented for judge's approval later
  • Plaintiffs' lawyers say settlement contemplates a monetary payment by Deutsche Bank
  • Gold settlement follows similar accord involving alleged silver price-fixing that was disclosed on Wednesday
Most importantly, as the actual settlement reveals, Deutsche has agreed that in addition to once again providing "valuable monetary consideration" which will be paid into a settlement fund, that like in the silver settlement it will provide "cooperation in pursuing claims against the remaining Defendants."

----As a reminder, this is what we reported just hours ago on an identical settlement involving Deutsche Bank admitting to also rigging silver:
Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks
Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market.
The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.
Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.
Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, Reuters reported citing a court filing by law firm Lowey.
Terms were not disclosed, but the accord will include a monetary payment by the German bank.
It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.
According to Reuters, Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.
As noted above, investors had accused Deutsche Bank, HSBC and ScotiaBank of abusing their power as three of the world's largest silver bullion banks to dictate the price of silver through a secret, once-a-day meeting known as the Silver Fix.
None of this will come as a big surprise to readers, most of whom have been aware that this took place for years.

In steel news, Uncle Sam says that China has agreed to drop its steel export subsidies. Whether it will have any meaningful impact in helping non-Chinese steel producers is debatable. China is still increasing steel production, hitting a record 70.65 million tonnes in March, according to the National Bureau of Statistics, though Q1 16 production was down 3.2% at 192.01 million tonnes, if one accepts the statistics at face value. China’s other steel production advantages include cheap labour, the cheapest electric power costs, low emissions regulation, and lower taxes. Non-Chinese steel manufacturers won’t be breaking out the Pol Roger champagne anytime soon.

U.S. says China to scrap some export subsidies

Thu Apr 14, 2016 4:11pm EDT
China has agreed to scrap some export subsidies on a range of products from metals to agriculture and textiles, the United States said on Thursday, in a step by Beijing to reduce trade frictions with Washington.
China ended a program which provided export subsidies of some $1 billion over three years to Chinese companies in seven economic sectors, the U.S. Trade Representative's office said.

Some industry executives were skeptical about the deal's impact given remaining disputes over other supports that China give to its exporting industries. Steel has been a particular flashpoint.

One source knowledgeable about the agreement said it was not comprehensive enough to do much to help the U.S. steel industry, given its focus was only on specialty steel products.

In part, the dropping of the subsidies is an effort by China to move away from labor-intensive production and emphasize more-sophisticated industries such as semiconductors.

"The Chinese want to become a high-tech country. They want to move up the value chain," said James Lewis, a senior fellow at the Center for Strategic and International Studies.

Chinese agriculture products that will lose the subsidies include apples, beef, mushrooms, pork, tea, tomatoes, beans, ginseng, poultry, seaweed and, garlic, USTR said.

Candidates in the U.S. presidential election, especially Republican front-runner Donald Trump, accuse China of treating the United States unfairly in trade.

But White House spokesman Josh Earnest said the accord "is an example of how committed this administration is to ensuring that we're fighting in the international community for American businesses and American workers."

The United States had complained to the World Trade Organization about the program, alleging unfair practices by China.

The Chinese industries that have received the subsidies under the program include textiles, light industry, specialty chemicals, medical products, hardware, agriculture and advanced materials and metals, including specialty steel and aluminum products, the trade representative's office said.

Since it joined the WTO in 2001, China has frequently drawn complaints that its exports are being "dumped," or sold at unfairly cheap prices on foreign markets.

Chinese Embassy spokesman Zhu Haiquan said Beijing is committed to WTO regulations.

“China has been firmly committed to the WTO rules, continuously expanded its opening-up, deepened the reform of its foreign trade system, improved its foreign trade legal system, reduced trade barriers and administrative intervention,” Zhu said in an email.

U.S. Steel Corp President and Chief Executive Mario Longhi said he was cautious about the latest Chinese move.

“People can say whatever they want, and I think China has been saying a lot of things for the past couple of decades," Longhi told reporters in Washington. "You need to ask yourself what, from a practical perspective, is really happening. We need to see the proof in actions, not just in verbiage."

The U.S. steel industry is under huge pressure this year from cheap imports, a strong dollar, and falling oil prices, which have decimated demand for steel tubes used by the oil and gas industry.

China still has other forms of support for industry in place, including relatively cheap and easy credit from state banks, state-regulated power prices that have often favored industry, and low prices for other inputs such as water.

"While it is clearly an important result, it is only one feature in a universe of other measures that China foresees for its steel sector," said Karl Tachelet, trade director at European steel industry body EUROFER.

Below, the reality of the real China.

Shanghai wealth management firm comes crashing to earth as executives arrested

Fri Apr 8, 2016 8:07pm EDT
Zhongjin Capital Management made a splash in the past couple of years in Shanghai. The wealth management firm’s imposing branch office on Shanghai’s historic Bund pulled in many eager investors seeking the double-digit returns it promised on short-term financing products. It had a big profile, sponsoring popular Shanghai TV dating program "Saturday Date" and signed up domestic billiards star Pan Xiaoting as a spokesperson.

But this week, the image of riches and success that it had cultivated came crashing down. Police said they arrested 21 executives linked to Zhongjin Capital on April 5 on suspicion of "illegal fundraising," a loosely defined term applied to irregular behavior in China's energetic but opaque shadow banking sector.

The only person named by Shanghai police so far has been top executive Xu Qin, who local media said had been arrested at the Shanghai airport on his way to get married in the Vatican.

Xu has been described by domestic media as a high roller, who is under 30 years of age.

Chen Jiajing, the 29-year-old chairwoman of Zhongjin's parent Guotai Investment Holdings, cannot be located. Public statements issued this week by two Hong Kong-listed companies in which Guotai is a major stakeholder indicated they had been unable to reach her.

Zhongjin employees told Reuters that other senior managers had been arrested during a raid on company offices. They were interrogated, allowed to use the bathroom only if they had a police escort, then hauled off, the staff said.

Calls to Zhongjin and Guotai headquarters in Shanghai went unanswered. Both company websites were inaccessible on Friday. The authorities did not provide further information about the case, and what the investigation's focus is.

"The really strange part was that our business hit a new all-time high on April 5, but the next day the offices were closed," one employee who gave her name as Jiang said in a phone interview, adding that investors had been paid off on schedule the day prior to the arrests, but were unable to withdraw funds that were scheduled to mature on April 6.

The Curious Story Of The Chinese Tycoon Found "Chopped Up Into 100 Pieces" In A Vancouver Mansion

Tyler Durden
Two days ago we introduced you to "the rich kids of Vancouver" for whom the most important decision in any given day is whether to spend half a million dollars on a new Lamborghini or on an investment such as "two expensive watches or some diamonds."
We now introduce you to someone who may be one of these rich kids' dad. Or rather was, because Gang Yuan, a 42-year-old mining tycoon is no longer alive. His corpse was found chopped into 100 pieces in his Vancouver home.
According to a civil lawsuit, Yuan came to Canada in 2007 with permanent resident status and made his money by investing in real estate and Saskatchewan farmland, in the process becoming the owner of a at least one abandoned multimillion-dollar Vancouver home... and much more.
As The Province reports, Yuan has been linked to a government corruption scandal in southwestern China. He is also a shining example of how most of the billions in hot money flooding Vancouver real estate funds are sourced: illegally. This story helps to shed some light on the origin of at least a modest amount of that money.

The scandal led to a 19-year jail term for Yunnan province official Lin Yunye.  Yunye was jailed last November for selling $234 million in state mining assets to a number of businessmen from whom he accepted tens of millions in bribes - including gold bars, luxury watches and rhinoceros horns.

But we’ll leave the last word on wobbly smoke and mirrors China, to America’s best economic commentator, David Stockman. China’s Ponzi Scheme is still in deep trouble and getting in deeper.

More Bull

by David Stockman • April 14, 2016
The robo-machines were raging yesterday based on precisely nothing except banging 2080 on the S&P cash and a teapot’s worth of short-term trading momentum. But a 1% or $300 billion gain in the stock market apparently needs some fig leaf of rationalization. So the lazy hacks who cover the casino’s daily hijinks for the mainstream media came up with some doozies.

To wit, JPMorgan purportedly had a bang up quarter and surprised to the upside and China’s export machine came roaring back. This was supposedly some kind of all clear signal. According to the bulls, the market can’t rise without “participation” by the financials and China is still the mainspring of global growth.

I won’t bother to say, not exactly. You could have learned by the second paragraph that “up” was actually “down”.

---- On the matter of China’s booming exports—-no dice. The Chinese do have a habit of moving their New Year’s holiday week around from one year to the next——so this time the “up is down” thing  operated with a vengeance. The financial pundits said March exports were up by 11.5%, implying that China had regained its traction.

Not exactly. The chart below shows that March exports were the lowest in five years, and that the first quarter as a whole was the worst since late 2008.

Q1 exports were down by nearly 10% and the slump was manifested in every one of its major customer regions. Exports to Japan were down 5.5% while shipments to South Korea were off by 11.2%, EU countries by 6.9%, the US by 8.8% and Brazil by 47.2%.
In fact, exports are falling throughout east Asia, meaning that the world’s great post-bubble deflation is gathering force. South Korean exports have been down for 15 consecutive months, for example, and were off 10% in March from prior year.
By all accounts, Singapore is the trading hub for the Asian mercantilist exporters as a group. Its export trends leave little to the imagination. Shipments early this year were down more than 20% from early 2014 levels.
Undoubtedly, that’s why its normally circumspect central bankers sounded the alarms last night and reverted to easing measures not employed since the fall of 2008.  Singapore based lending has literally ground to a halt. So the idea that there is anything vaguely resembling an “all clear” signal coming out of Asia is not exactly what the incoming data calls to mind.

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