Baltic Dry Index. 1967 +25
LIR Gold Target by 2019: $3,000.
Money has no country.
Jules Bertillon. A House of All Nations. 1938. Christina Stead.
The monthly Coppock Indicators finished July:
DJIA: +264 Down. NASDAQ: +427 Down. SP500: +275 Down.
The bull market (or bear market rally) that commenced on Nasdaq on 30/4/09 at 1717 has ended. (30/5/09 SP 500 at 919, 30/5/09 DJIA 8500.) While the indicators can flip flop at market turns, this action is rare on the slow monthly indicators. July seems to have confirmed June’s reversal and end of the bull market.
Last week the Weekly Leading Index (WLI) of the Economic Cycle Research Institute (ECRI) came in at -10.7. Negative growth for the eighth straight week and almost certainly signalling a double dip recession ahead. While the index has missed occasionally in the past, it has never missed from a reading as low as -10.7.
Next up China. If China went out and bought up gold bullion, the price of gold would rise and the price of JP Morgan, HSBC and the other gold shorts fall. But China recognizes that it’s hopelessly underweighted in bullion, as compared to the the G-7 countries. Below the Journal covers part of how China deals with swapping “useless pictures of dead white Americans” for real wealth. It seems pretty obvious to me that at some point ahead we re-monitise gold. China seems to see this too.
Confirmation that a major problem has developed between fiat currencies and gold bullion, came with last month’s strange BIS swap of dollars for gold. According to the BIS, they did this for a commercial bank yet their own rules state that the deal only for and with central banks. The suspicion is that one of the EU central banks was desperate for dollars, for some reason and didn’t (or couldn’t) want to conduct a similar transaction with the ECB. Why not do it with China? Probably because under the fantasy rules of the BIS, the gold won’t leave the vault of the originating central bank, but will stay on their books though hypothecated, first to a commercial bank, who will also keep it on their books as if it existed covering their gold obligations to clients, while the BIS will also now list the gold on their books. China would have asked for the gold to be physically transferred across to China, never to be seen in the west again.
Stay long gold and silver. Who knows if the originating central bank really had all the gold in the first place. Nothing good comes from all this deception and lies, except to enrich the great vampire squids and their cronies at the expense of everyone else. We won’t end the teens on the same system
"The London Banker Henry Fauntleroy forged to keep his bank solvent. He was executed for it in 1824."
Charles P. Kindleberger. Manias, Panics and Crashes.
JULY 31, 2010
China's Ore Demand Flies Under the Radar
Shipments of Mineral-Rich Matter Obscure Its Higher Needs
A boatload of sandy, gray muck set out from Alaska a week ago, bound for China. Buried inside the detritus were tiny flecks of gold that China National Gold Group Corp. plans to extract.
The shipment is one of many filled with mineral-rich matter that are sailing into Chinese ports and forming a key, but little-noticed, part of efforts to sate the nation's demand for raw materials.
The Alaskan gold won't appear in China's official imports report or in trade data from major commodity exchanges or bullion markets. China's purchases of copper scrap and investments in oil-sands projects in Canada also fly under the radar, publicly disclosed but not widely watched.
Observers say the low-grade ore making its way to China's shores adds to evidence that Chinese demand for raw materials is greater than standard indicators show, and greater than many investors realize.
Investors instead closely track China's consumption of widely sought commodities, like gold bullion, refined copper and crude oil. Signs that its hunger is rising or falling can move those markets, and help define its broader economic growth.
During this year's first half, for instance, China's refined copper imports fell 13.5%, a decline of 239,000 tons from the same period last year—an apparent sign of weaker demand. But China raised imports of copper scrap and concentrate, which needs further processing. The 362,000 tons of added copper was enough to turn China's imports to a net gain, according to Barclays Capital.
In the case of copper, China's purchases of alternative supplies could change the perception of whether demand is weak or strong, said Kevin Norrish, director of commodities research at Barclays.
Investors who only look at refined copper imports "miss the whole picture," Mr. Norrish said.
The purchases also demonstrate Chinese producers' willingness to expend time, energy and money extracting ore from tons of sand, rocks and dirt.
Processing gold concentrates isn't an easy undertaking. In North America, many smelters were closed down, with few new start-ups as a result of high capital expenditures and stringent environmental regulations. At issue is the usage of cyanide, a chemical used to dissolve gold from the crushed ore, which is toxic to humans and the environment.
China is one of the few countries where smelting capacities are growing. The country now has an annual capacity of processing 600 metric tons of gold, exceeding the gold it produces at home.
And, with many empty boats making their way back to China after dropping off exports to the West, shipping costs are cheap. They are currently hovering around the lowest level in more than a year.
"All the good assets are locked up. They're trying to get around that," said Derek Scissors, who tracks China's commodities purchases for the Heritage Foundation. "What they're doing is picking the available fruit, and it has a mar on it. Other people don't want to eat it, and the Chinese say, 'fine.' "
In the case of gold, China National Gold is expected to extract more than 25 tons of gold over the course of the 12-year pact with Coeur d'Alene Mines Corp., which operates the Alaska mine.
"The Chinese government has a very strategic plan, looking toward its future natural-resource needs," said Dennis Wheeler, Coeur d'Alene's chief executive. "They are going about the execution of the plan."
Mr. Wheeler declined to disclose what China National paid, but called it the best offer "in overall commercial terms." China National said it did the deal "to earn profits from processing."
While China National's anticipated imports are the equivalent of just 2.4% of China's official gold reserves, other firms are chasing similar deals.
Last week, Australian miner Conquest Mining Ltd. said 14 China-based smelters showed interest in buying concentrate that it is producing in North Queensland, expected to yield about 105,000 ounces of gold annually.
We end for today with the sun, sunspots, and solar flares. Yesterday morning just before 9 a.m. GMT the sun put on an impressive solar display, one headed in the earth’s direction. Below, SpaceWeather covers the event. Are we heading towards another “Carrington Event” shortly ahead? The experts say probably not, but the experts are relatively still in the dark, when it comes to predicting the sun, to use a bad pun.
COMPLEX ERUPTION ON THE SUN:
On August 1st around 0855 UT, Earth orbiting satellites detected a C3-class solar flare. The origin of the blast was sunspot 1092. At about the same time, an enormous magnetic filament stretching across the sun's northern hemisphere erupted. NASA's Solar Dynamics Observatory recorded the action:
The timing of these events suggest they are connected, and a review of SDO movies strengthens that conclusion. Despite the ~400,000 km distance between them, the sunspot and filament seem to erupt together; they are probably connected by long-range magnetic fields. In this movie (171 Å), a shadowy shock wave (a "solar tsunami") can be seen emerging from the flare site and rippling across the northern hemisphere into the filament's eruption zone. That may have helped propel the filament into space.
In short, we have just witnessed a complex global eruption involving almost the entire Earth-facing side of the sun.
A coronal mass ejection (CME) produced by the event is heading directly for Earth: SOHO movie. High-latitude sky watchers should be alert for auroras when it arrives on or about August 3rd.
The “Carrington Event,” September 1, 1859.
http://science.nasa.gov/headlines/y2008/06may_carringtonflare.htm
At the Comex silver depositories Friday, final figures were: Registered 51.97 Moz, Eligible 58.12 Moz, Total 110.09 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today it’s the crooks and enablers falling out, over the spoils from what should
be illegal front running trading in US stock markets. The illegal making of bogus bids and offers too, not that anyone is willing to police US stock markets anymore. The great vampire squids aren’t willing to let the hired brains get more than a bone and crumbs from enormous loot siphoned off those money managers foolish enough to get involved with trading US stocks. Below, Forbes takes up the avarice that is undoing the west.
"No one ever made enough money."
Jules Bertillon. A House for All Nations. 1938. Christina Stead.
High-Frequency Programmers Revolt Over Pay
Emily Lambert, 07.28.10, 02:36 PM EDT
Computer jockeys setting up own shops in bids to make millions.
Pity the programmers toiling away at Wall Street's secretive high-frequency trading shops--places like Goldman Sachs ( GS - news - people ), Citadel and Getco. They wrote algorithms that take advantage of fleeting trading opportunities and bring in up to $100,000 a day. In return, they received a fraction of the pay doled out to their bosses.
Now some programmers feel used and are instigating a revolt.
They are doing so by striking out on their own or forming profit-sharing arrangements. Jeffrey Gomberg, 32, worked for a trading firm that paid him a low-six-figure income after four years on the job. His trader colleagues, by contrast, made millions manipulating the algorithms he'd written.
Last year Gomberg and a fellow programmer quit their jobs and cut a deal with HTG Capital Partners of Chicago, whose programmers typically trade on regulated futures exchanges. HTG supplies office space, technology and access to exchanges. Gomberg keeps 40% to 80% of net profits, with the percentage rising as his profits do. More importantly, says Gomberg, the programmers retain ownership of the code they write.
“We designed this deal so we wouldn't lose intellectual property,” he says. “If it doesn't work out, we can go somewhere else and take all the software [that we developed]. That's really the key.”
HTG's owner, Christopher Hehmeyer, says he gets three to five inquiries a week from high-frequency programmers looking for better gigs. Many callers are immigrants or were hired out of college for $80,000 to $150,000 a year. If a programmer brings money with him, and puts up at least $250,000 to become an HTG partner, Hehmeyer hikes his percentage of the take.
Another high-frequency programmer, who spoke on condition that his name not be used, quit two firms that he believed were underpaying him. He says one group was generating $100,000 a day from his high-frequency trading software and paying him $150,000 a year.
The programmer's bosses offered him an office and a $45,000 raise, but he left instead. He found a partner, and together they began trading on their own. The programmer now pockets more than half of any profits his software generates. The programmer says he's making about the same money he did at the job he left. But at his old job he'd topped out in pay while now he says the sky's the limit.
“I'm on my way to making a ton,” he says.
http://www.forbes.com/2010/07/28/high-frequency-trading-personal-finance-programmer-pay.html
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.
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