Monday 5 December 2016

Italy v EU. Trump v China.



Baltic Dry Index. 1198 +02   Brent Crude 53.89

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

Eurasian Snow cover. (How bad will winter be?)

"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

All too predictably in 2016, yesterday brought about yet another political earthquake, this time in Italy. Though the ECB will be out steadying Italian bonds today, and indirectly Italy’s bankrupt banks, longer term, Italy appears ungovernable, unfit for membership of the wealth and jobs destroying German currency union, and at some point next year likely headed for a general election that sweeps populist anti-establishment parties into power. Anyone with any sense will switch money out of Italian banks into Swiss, German and US banks.

Below, Bloomberg covers the beat.

Renzi Quits as Italy Referendum Defeat Deepens Europe’s Turmoil

by John Follain and Chiara Albanese
December 4, 2016 — 5:06 PM EST December 4, 2016 — 8:42 PM EST
Italian Prime Minister Matteo Renzi quit in the early hours of Monday after losing a referendum he’d called to push through constitutional changes, threatening renewed political and financial turmoil for Europe.

Opponents of Renzi’s proposal to rein in the power of the senate won Sunday’s referendum by 60 percent to 40 percent, with almost all votes counted. Renzi said he’ll turn in his resignation to President Sergio Mattarella later in the day and signaled that he won’t stay on to help stabilize a caretaker administration. The euro fell to a 20-month low.

“In Italian politics, no one ever wins,” Renzi told supporters, his voice breaking and a tear on his cheek as he thanked his wife for her support. “I did everything I thought possible in this phase, but we were not convincing.”

The 41-year-old premier became the second European leader this year to be toppled by a populist revolt that is propelling Donald Trump into the White House and Britain out of the European Union. The result leaves Mattarella seeking a new government chief who can provide a firebreak against the insurgents; polls show an early election would see the anti-euro Five Star Movement swept into power.

A survey by EMG released Sunday showed Five Star winning a second-round ballot by 53 percent to 47 percent against Renzi’s Democratic Party and by 57 percent to 43 percent against the center-right bloc. Five Star had demanded a snap election if Renzi is defeated as it looks to force another referendum -- this time on taking Italy out of the euro.

Still, a poll last month showed only 15.2 percent favored leaving the single currency and 67.4 percent were self-described single-currency believers.

Possible successors who might be asked to lead a caretaker government include Finance Minister Pier Carlo Padoan, Senate Speaker Pietro Grasso and Culture Minister Dario Franceschini. The country’s mainstream parties have been preparing contingency plans to ensure a government would keep functioning if Renzi was forced out.

The result is “a negative outcome for both political stability and the economy in Italy,” said Wolfango Piccoli, co-president of research firm Teneo Intelligence. “However, it will not pave the way for immediate worst-case scenarios such as snap elections.”

Banca Monte dei Paschi di Siena SpA will be in focus when trading opens Monday. The lender is in the middle of a 5 billion-euro ($5.3 billion) capital raising. Its stock has fallen 83 percent this year and a third of its loan book has soured.

Italian bonds may feel a shock too. They rallied in the final days of the campaign, with the spread between the country’s 10-year debt and similar dated German bunds narrowed by 24 basis points to 162 points.
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In other news, President-elect Trump seems to be picking a deliberate fight with China. Nothing good comes out of the world’s leading debtor fighting with the world’s leading creditor. Stay long fully paid up physical gold and silver, taking advantage of India induced sell-offs. Our precarious world on the Great Nixonian Error of fiat money, communist money, is about to become volatile. Fiat money is backed by nothing but the trust of people to continue to trust it and use it as a medium of exchange and a store of value. After 45 years of relative calm on fiat money, that calmness seems about to disapper.

Trump Takes On China in Tweets on Currency, South China Sea

by Ros Krasny
December 4, 2016 — 6:25 PM EST December 4, 2016 — 11:59 PM EST
Donald Trump took on the Chinese government via social media on Sunday, rejecting criticism of his decision to take a phone call from Taiwan’s president at the risk of triggering a backlash from Beijing.

The U.S. president-elect told his 16.6 million Twitter followers that he wouldn’t be told by China who he should or shouldn’t talk to, and reiterated some of the grievances about China used in his winning presidential campaign. The yuan reacted by declining for the first time in three days.

“Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the U.S. doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!” Trump tweeted.

The offshore yuan traded in Hong Kong fell 0.2 percent to 6.8835 per dollar, taking its decline since Trump’s surprise presidential election victory to 1.2 percent. The yuan traded in Shanghai, where moved are limited to 2 percent on either side of a daily central bank reference rate, was little changed. Trump has threatened to brand China a currency manipulator and slap 45 percent tariffs on the Asian nation’s exports.

“We expect Trump to name China a manipulator very early in his new term,” said Cliff Tan, East Asian head of global markets research at Bank of Tokyo-Mitsubishi UFJ in Hong Kong. “Some might see the U.S. drawing a line for the yuan at 7 against the dollar as the U.S. begins what will likely be a protracted and multi-year negotiation process. But if the Chinese economy is still slowing, others will conclude the yuan has to weaken beyond 7 eventually. In the end, we think fundamentals will win.”

Over the weekend China complained to the U.S. after Trump flouted almost four decades of diplomatic protocol by directly speaking with the leader of Taiwan, which Beijing considers a rogue province. China urged U.S. authorities to adhere to the so-called one-China principle and “prudently” handle issues related to the self-governed island.

The relatively measured response suggests China wants to keep the incident from escalating into a full-blown crisis.
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China newspapers say call with Taiwan's Tsai shows Trump's inexperience

Sun Dec 4, 2016 | 9:44pm EST
Chinese state media on Monday continued to play down the protocol-bending phone call last week between U.S. President-elect Donald Trump and Taiwan's president, with editorials in two newspapers saying the move showed Trump's inexperience.

China's national English-language newspaper, the China Daily, said the 10-minute call "exposed nothing but the inexperience Trump and his transition team have in dealing with foreign affairs".

"The action was due to a lack of a proper understanding of the sensitive issues in Sino-U.S. relations and cross-Strait ties," it said.

The Friday call was the first by a U.S. president-elect or president since President Jimmy Carter switched diplomatic recognition from Taiwan to China in 1979, acknowledging Taiwan as part of "one China".

China's Foreign Ministry said on Saturday it had lodged "stern representations" with what it called the "relevant U.S. side," urging the careful handling of the Taiwan issue to avoid any unnecessary disturbances in ties.

China considers Taiwan a wayward province and has never renounced the use of force to bring it under its control.

Chinese Foreign Minister Wang Yi on Saturday pointedly blamed Taiwan for the exchange, rather than Trump, calling it "a petty action".

The China Daily said that for Taiwan President Tsai Ing-wen, the call "achieves nothing substantial, only pride in making what is an illusionary 'groundbreaking move', and temporarily diverting public attention on the island away from her bad performance".

"It would be a mistake for Tsai and her party to over-interpret the significance of the call," it said. Her attempts to "stir up tension... will ultimately backfire".

The Global Times, a hawkish tabloid under the ruling Communist Party's top newspaper the People's Daily, called Trump "bluffing and unpredictable", but said he did not have plans to overturn America's international relationships.

"It seems that Trump is still taking advantage of his perceived fickleness and unpredictability to make some choppy waves in the Taiwan Straits to see if he can gain some bargaining chips before he is sworn in," it said.

The Global Times added targeting him would be inappropriate since he is not yet president.

"He has zero diplomatic experience and is unaware of the repercussions of shaking up Sino-U.S. relations," it said.

Instead, China could send a message to Trump by punishing Taiwan, wooing away one or two of the island's diplomatic allies or beefing up military deployments against Taiwan, it said.
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"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

At the Comex silver depositories Friday final figures were: Registered 33.25 Moz, Eligible 145.36 Moz, Total 178.61 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, yet more unintended consequences from India’s botched attempt at outlawing high value cash Rupee notes. In the war against cash, returning the voters to serfs again, nothing has gone to plan in India. Below, how India shot itself in both feet.
"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

India’s Cash Crackdown Hits Gold Pawners

Indians struggle to find valid currency to repay their loans.
by Bruce Einhorn and Anto Antony
November 30, 2016 — 7:00 PM EST November 30, 2016 — 7:00 PM EST
Abin Baby, an unemployed teacher from the town of Thodupuzha in the southern Indian state of Kerala, was in a bind. He needed money to cover some emergency expenses, but since he was out of work, he couldn’t easily get a loan from a bank. So in August he took a 14-gram gold bangle and used it as collateral for a six-month loan of 27,500 rupees ($402) from Muthoot Finance, one of the leading providers of gold-based loans in India.
Such loans are a primary way to borrow money in rural India, where gold is an especially popular gift at festivals and weddings and millions of poor people don’t use the banking system. The interest rate on Baby’s loan was 18 percent. Not having many options, he decided getting the loan was worth the expense. The transaction happened “quickly and smoothly compared to the banks,” he says.
The gold-loan business has suddenly gotten bumpy. Prime Minister Narendra Modi’s decision last month to invalidate all 500-rupee and 1,000-rupee notes has Indians scrambling to get their hands on valid currency. Because almost three-fourths of payments for gold-loan interest and principal are made in cash, as opposed to, say, bank transfers, the shortage of legal tender is hurting lenders. Modi’s move, known as demonetization, is designed to crack down on tax evasion by forcing people to tender their cash to the bank, where it can be recorded.
“Demonetization will be a blow” for the gold-loan business, says Payal Pandya, an analyst with Centrum Wealth Management in Mumbai, who estimates the companies may have to slash projections of loan growth for the year by 5 percentage points to 7 percentage points. The stock price of Manappuram Finance, a lender that has 66 tons of gold in collateral, dropped 25 percent in the 15 trading days following Modi’s announcement, while Muthoot’s fell 16 percent. Loan repayments declined in urban and rural areas, says V.P. Nandakumar, Manappuram’s chief executive officer. A shortage of cash is also putting the squeeze on India’s $40 billion market for jewelry: Transactions will shrink as much as 30 percent because of the shortage of notes, according to a Nov. 23 report by Ambit Capital analysts.
Modi’s timing is especially bad for PC Jeweller, a New Delhi-based manufacturer and retailer. The company gets more than 90 percent of its revenue from wedding-related sales, according to Chief Financial Officer Sanjeev Bhatia, and the currency shortage is taking place in the midst of wedding season. “Whatever sales we should have been doing at this point of time—perhaps we are doing 40 percent of that,” Bhatia told analysts on a conference call on Nov. 24.
Almost all of India’s gold is imported, and successive administrations concerned about its impact on the country’s currency and trade balance tried for years to weaken gold’s prominence in the economy. Starting in the fiscal year ended March 2009, India’s consumer price index rose by 8.9 percent or more a year for five consecutive years; gold imports increased in turn, from $17 billion in 2008 to $56 billion in 2012, putting pressure on the current-account deficit. In response to that soaring demand, the government of Modi’s predecessor, Manmohan Singh, raised taxes on imported gold three times in 2013, to 10 percent. The country remains the world’s second-largest gold consumer after China—it now has more than 20,000 tons of the precious metal.
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"The paper standard is self-destructive."

Hans F. Sennholz

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this 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?

Physicists decipher electronic properties of materials in work that may change transistors

Date: December 2, 2016

Source: University of Texas at Dallas

Summary: Physicists have published new findings examining the electrical properties of materials that could be harnessed for next-generation transistors and electronics.

University of Texas at Dallas physicists have published new findings examining the electrical properties of materials that could be harnessed for next-generation transistors and electronics.
Dr. Fan Zhang, assistant professor of physics, and senior physics student Armin Khamoshi recently published their research on transition metal dichalcogenides, or TMDs, in the journal Nature Communications. Zhang is a co-corresponding author, and Khamoshi is a co-lead author of the paper, which also includes collaborating scientists at Hong Kong University of Science and Technology.
In recent years, scientists and engineers have become interested in TMDs in part because they are superior in many ways to graphene, a one-atom thick, two-dimensional sheet of carbon atoms arranged in a lattice. Since it was first isolated in 2004, graphene has been investigated for its potential to replace conventional semiconductors in transistors, shrinking them even further in size. Graphene is an exceptional conductor, a material in which electrons move easily, with high mobility.
"It was thought that graphene could be used in transistors, but in transistors, you need to be able to switch the electric current on and off," Zhang said. "With graphene, however, the current cannot be easily switched off."
Beyond Graphene
In their search for alternatives, scientists and engineers have turned to TMDs, which also can be made into thin, two-dimensional sheets, or monolayers, just a few molecules thick.
"TMDs have something graphene does not have -- an energy gap that allows the flow of electrons to be controlled, for the current to be switched on and off," Khamoshi said. "This gap makes TMDs ideal for use in transistors. TMDs are also very good absorbers of circularly polarized light, so they could be used in detectors. For these reasons, these materials have become a very popular topic of research."
One of the challenges is to optimize and increase electron mobility in TMD materials, a key factor if they are to be developed for use in transistors, Khamoshi said.
In their most recent project, Zhang and Khamoshi provided the theoretical work to guide the Hong Kong group on the layer-by-layer construction of a TMD device and on the use of magnetic fields to study how electrons travel through the device. Each monolayer of TMD is three molecules thick, and the layers were sandwiched between two sheets of boron nitride molecules.
The behavior of electrons controls the behavior of these materials," Zhang said. "We want to make use of highly mobile electrons, but it is very challenging. Our collaborators in Hong Kong made significant progress in that direction by devising a way to significantly increase electron mobility."
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https://www.sciencedaily.com/releases/2016/12/161202103257.htm?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+sciencedaily%2Fmatter_energy%2Fgraphene+%28Graphene+News+--+ScienceDaily%29

The monthly Coppock Indicators finished November

DJIA: 19124  +53 Up NASDAQ:  5324 +41 Up. SP500: 2198 +58 Up.

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