Friday, March 29, 2013

Arizona Lawmakers Advance Bill Allowing Gold and Silver as Money; Bureaucratic Nightmare?

"I have encouraging news in the state of Arizona where lawmakers back gold, silver as currency.
The measure is Arizona's latest jab at the federal government, which prohibits states from minting their own money. It also reflects a growing distrust of government-backed money.

The bill, which advanced in a 4-2 vote by a House committee Monday, states that gold and silver should be legal currency not subject to tax or regulation as property. The Republican-led Senate gave the bill its blessing in February in a 17-11 partisan vote.

The bill would let people use the precious metals as money as long as businesses agree to take them. If made law, it would take effect in 2014.

Democrats oppose the measure. They say it would be a bureaucratic nightmare because businesses don't have the equipment to determine the value of gold and silver..."


Marc Faber : U.S. Is Creating Nowhere-to-Hide Bubbles

"March 27 (Bloomberg) -- "Gloom, Boom and Doom Report" Publisher Marc Faber discusses U.S. stocks, fiscal policy and the price of gold. He speaks on Bloomberg Television's "Bloomberg Surveillance." (Source: Bloomberg)Marc Faber : “When you print money, the money does not flow evenly into the economic system. It stays essentially in the financial service industry and among people that have access to these funds, mostly well-to-do people. It does not go to the worker. I just mentioned that it doesn’t flow evenly into the system. Now from time to time it will lift the NASDAQ like between 1997 and March 2000. Then it lifted home prices in the U.S. until 2007. Then it lifted the commodity prices in 2008 until July 2008 when the global economy was already in recession. More recently it has lifted selected emerging economies, stock markets in Indonesia, Philippines, Thailand, up four times from 2009 lows and now the U.S. So we are creating bubbles and bubbles and bubbles. This bubble will come to an end. My concern is that we are going to have a systemic crisis where it is going to be very difficult to hide. Even in gold, it will be difficult to hide.”


The Other Currency War

"Most of the recent “currency war” talk refers to countries trying to lower the value of their currencies to gain a trade advantage and/or make their debts more manageable. But this war has another theater, where a weaker currency is not the main goal.
Start with the premise that when a country conducts most of its trade in another currency, it cedes power to the “reserve currency” issuer. Right now that’s the US. Because oil and most other things are traded in dollars, the world’s central banks have to hold a lot of dollars as reserves. The resulting nearly-infinite global demand for dollars allows Washington to borrow as much as it wants, and to govern without having to make hard spending and tax choices that other countries have to live with. It also allows the US to fund a military that dwarfs everyone else’s and to throw its weight around in ways far out of proportion to its population or moral authority. If you’re a would-be superpower like China, Russia, India or Brazil, “dollar hegemony” is in your way.
So there’s an advantage to be gained by cutting the dollar out of bi-lateral trade in favor of one’s own currency. Here’s how China and Brazil are playing it:
China, Brazil sign trade, currency deal ahead of BRICS summit
BRICS members China and Brazil agreed on Tuesday to trade in their own currencies the equivalent of up to $30 billion per year, moving to take almost half of their trade exchanges out of the U.S. dollar zone.
The agreement, due to last three years and signed hours before the start of a BRICS summit in Durban, South Africa, marked a step by the two largest economies of the emerging powers group to make real changes to global trade flows long dominated by the United States and Europe.
“Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets,” Brazilian Central Bank Governor Alexandre Tombini told reporters after the signing.
Trade between the two countries totaled around $75 billion in 2012. Brazilian officials have said they hope to have the trade and currency deal operating in the second half of 2013.
At the summit in Durban, the fifth held by the group since 2009, Brazil, Russia, India, China and South Africa are widely expected to endorse plans to create a joint foreign exchange reserves pool and an infrastructure bank. They are also due to discuss trade and investment relations with Africa.

According to the IMF, dollars make up about 62% of allocated central bank currency reserves, with the other 38% in mostly euros and pound sterling. The yen accounts for 4%, and the Chinese yuan virtually zero. But China is now the world’s biggest trading power, with Brazil and India not that far behind. So why does the dollar still get to dominate world trade, with all the advantages that confers? Because it’s been that way since World War II, and old habits die hard. But as bi-lateral trade deals like the above become common, countries trading with China and Brazil in local currencies instead of dollars will need large yuan and real reserves and correspondingly fewer dollars.
If central banks start selling dollars to buy other currencies, this will, other things being equal, force down the dollar’s value. Which, ironically, helps the US in the other currency war theater, where victory is defined as a cheaper currency. An orderly transition to a multi-reserve-currency world would make US export industries more profitable and our debts less onerous (at least according to conventional wisdom).
The problem is that markets don’t normally do orderly transitions. They get going in one direction and then, when a critical mass of players decides the trend will continue, they go parabolic. The asset in question soars or falls off the table. So the combination of US policy designed to weaken the dollar and other countries actively trying to supplant the dollar as a reserve currency makes a gradual, smooth decline in the dollar’s value the least likely scenario..."


Central Banks Buying Gold in Record Quantities – Here’s Who & Why

"Here’s a picture of total central bank reserves since the financial crisis hit.
WorldCentralBanksHaveBeenBuyingGoldAggressivelySince2008 01 gold silver general
Whatever gold’s price movements, positive or negative, central bank officials have continued adding a lot of ounces to their reserves but this understates the case…[Why?] because most of the data exclude China, as well as a few other small countries. China last officially reported gold reserves in 2009, so the totals in the chart since then exclude whatever its purchases might have been…
China’s Gold Reserves Substantial
Based on data about gold imports through Hong Kong and the fact that, for the most part, Chinese production doesn’t leave the country, it…[would seem that China's addition to reserves is growing at a rapid rate as the following information attests].
  • The Chinese central bank holds an official 1,054 tonnes of gold in its reserves.
  • Gold imports through Hong Kong in December alone hit a record high of 109.8 tonnes.
  • Imports for 2012 also hit a record high of 572.5 tonnes.
  • If you add 2012 mine production – remember that China is now the world’s largest gold producer – roughly 970 tonnes of gold was delivered to various entities within the country last year.
  • Cumulative imports since 2001 have reached 1,352 tonnes.
  • Since 2001, imports plus production total a whopping 4,793 tonnes.
…Jim Rickards, a highly respected author and hedge fund manager, said last month that China has probably already accumulated between 2,000 and 3,000 tonnes of additional gold reserves…
$2,500-$3,000 Gold by 2014 and to $7,000 in 2015
Jim thinks the next big catalyst for gold will be an announcement from China about its reserve position. Here’s what he told me in late December:..."


Thursday, March 28, 2013

Putin flexes Russia's military muscle in Black Sea exercises

"(Reuters) - President Vladimir Putin ordered the launch of large-scale military exercises in the Black Sea on Thursday, projecting Russian power towards Europe and the Middle East in a move that may vex its neighbors.
Officials suggested the surprise drills were designed to test the reaction speed and combat readiness of Russian forces, but Putin's order also seemed aimed at sending a signal to the West that Russia is an important presence in the region.
Presidential spokesman Dmitry Peskov told reporters that Putin triggered the maneuvers as he flew back overnight from South Africa after a summit of the BRICS emerging economies.
Peskov said 36 warships and an unspecified number of warplanes would take part, but did not say how long the exercises would last.
Putin has stressed the importance of a strong and agile military since returning to the presidency last May. In 13 years in power, he has often cited external threats when talking of the need for reliable armed forces and Russian political unity..."


What We Are Now Seeing Is Unprecedented In World History

"Today Egon von Greyerz warned King World News that the chaos we are seeing right now is unprecedented in world history.  Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, also cautioned “The confluence of these cycles will cause unimaginable turmoil in the future.”  Below is what Greyerz had to say in this remarkable interview:..."


Wednesday, March 27, 2013


Legendary investor Jim Rogers sees now as a great time to load up on gold and silver coins - and he's not alone.

A record 7.5 million ounces of silver coins were sold in January as investors hunted for a safe haven investment.

"You can't get [silver coins]. They sell out," Rogers, who owns a rare 2013 silver coin, said on Yahoo! Finance's "The Daily Ticker." "Several mints have run out of coins because everybody's worried about the future of the world."

And 150,000 ounces of American Eagle gold coins were sold in January, the highest monthly total since July 2010..."


Tuesday, March 26, 2013

World Derivatives Market Estimated As Big As $1.2 Quadrillion Notional, as Banks Fight Efforts to Rein It In

"Here’s how we got those numbers — be sure to differentiate the two values, cash value vs. notional value, as explained below (h/t commenter BeccaM for the link; my emphasis):
Big Risk: $1.2 Quadrillion Derivatives Market Dwarfs World GDP
One of the biggest risks to the world’s financial health is the $1.2 quadrillion derivatives market. It’s complex, it’s unregulated, and it ought to be of concern to world leaders that its notional value is 20 times the size of the world economy. But traders rule the roost — and as much as risk managers and regulators might want to limit that risk, they lack the power or knowledge to do so. A quadrillion is a big number: 1,000 times a trillion. Yet according to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University (and whose speaking voice sounds eerily like John Lennon’s), $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world’s annual gross domestic product is between $50 trillion and $60 trillion. To understand the concept of “notional value,” it’s useful to have an example. Let’s say you borrow $1 million to buy an apartment and the interest rate on that loan gets reset every six months. Meanwhile, you turn around and rent that apartment out at a monthly fixed rate. If all your expenses including interest are less than the rent, you make money. But if the interest and expenses get bigger than the rent, you lose.
You might be able to hedge this risk of a spike in interest rates by swapping that variable rate of interest for a fixed one. To do that you’d need to find a counterparty who has an asset with a fixed rate of return who believed that interest rates were going to fall and was willing to swap his fixed rate for your variable one.
The actual cash amount of the interest rates swaps might be 1% of the $1 million debt, while that $1 million is the “notional” amount. Applying that same 1% to the $1.2 quadrillion derivatives market would leave a cash amount of the derivatives market of $12 trillion — far smaller, but still 20% of the world economy.
To trust that lower number ($12 trillion), a lot depends on what’s being traded. In the example above — an “interest rate swap” — what’s being traded (swapped) is the risk of small interest rate changes on the $1 million you borrowed. It’s never the whole $1 million (the notional value).
But with a CDS — a “credit default swap” as discussed here — what’s traded is a fee paid by one side vs. the whole cost of the default paid by the other side. If I as an “insurer” sold a hedge fund a CDS on $20 million in GM bonds, and those bonds default, I’m on the hook for the whole $20 million, the “notional” value.
As a result, I accept the $1.2 quadrillion notional value number. But I think the $12 trillion cash-at-risk number is way low. And “just” $12 trillion is, as they point out, still 20% of world GDP. Stunning.
And don’t forget, these are 2010 numbers. Banks have grown even fatter since then, even greedier, even riskier. And their push to gut the modest regulations put in place by Dodd-Frank declares their intentions to grow. Whatever the size of this market today, expect it to grow like a weed..."


Marc Faber : you don’t create wealth in a nation by boosting asset prices. You create wealth through employment and capital investment in factories, in infrastructure, in education, and in research and development

"Marc Faber : So if you want to boost equity prices, or asset prices, print that much money. But as I just tried to explain, you don’t create wealth in a nation by boosting asset prices. You create wealth through employment and capital investment in factories, in infrastructure, in education, and in research and development.
 - in a recent interview with McAlvany
Click here to watch the full interview >>>>>> "


Marc Faber : The Government Debt since 2007 has increased by more than 6 Trillion Dollars

"David McAlvany : As you say, things are not evenly distributed. The misery index has, over the 5-year period from here going back to about 2007, gone from 7½ to 9½ . We have had, as you said, median household income decline from just shy of $55,000 to $50,000. People’s primary asset, the median existing home, has declined. When we look at consumer confidence, this is where we see something of a divergence. Where do you see this divergence between the S&P and consumer confidence taking us?
Marc Faber : In principle, it is possible that as a result of rising stock prices and recovering real estate prices, confidence will increase somewhat, but I have to go back to what life is for the typical household, and what life is for the holders of capital, in other words, the 1%, or ½% of the population. For the typical middle class, the standard of living is not going up because the insurance costs are going up, healthcare costs are going up, taxes are going up. Everything is going up in price, but employment has improved.
But then, if we decompose the improvement in employment, and we analyze what kind of jobs people get, then the jobs that are being created are mostly low-paying jobs, and the jobs that were lost were high-paying jobs, so I don’t think we should just look at the number of jobs.
In the meantime, I also need to mention that the government debt since 2007 has increased by more than 6 trillion dollars, and we have deficits of around 1 trillion dollars. Having these deficits will become, one day, a problem. They may not seem a problem now because the Fed basically finances the deficit through the purchases of assets, but will they be able to do it forever? That is the big question mark.
- in a recent interview with McAlvany"


Monday, March 25, 2013

Guest Post: Why The Government Is Desperately Trying To Inflate A New Housing Bubble

"...Many people claim the Federal government and Federal Reserve are trying to inflate a new housing bubble to trigger a new "wealth effect," i.e. people seeing their home equity rising once again will feel encouraged to borrow and blow money like they did in 2001-2008.

But if we look at current income (down) and debt levels (still high), there is little hope for a renewed wealth effect from housing. That leaves us with this conclusion:

The Federal government and Federal Reserve are trying to inflate another housing bubble to save the "too big to fail" banks from a richly deserved day of reckoning."

As The Wealthy Panic We Will See Tsunamis In All Key Markets

"Today 40-year veteran, Robert Fitzwilson, wrote the following piece exclusively for King World News.  Fitzwilson, who is founder of The Portola Group, warned investors, “If the wealthy panic as a group, we will see the equivalent of 50-foot financial tsunamis in virtually all markets.”


Sunday, March 24, 2013

Texas Wants Its Gold Back From The Fed

"Texas Moves to Repatriate its Gold from the Federal Reserve

This is one of the most interesting stories I have read regarding the precious metals market in quite some time.  It appears that Texas Rep. Giovanni Capriglione has a bill in play that would move the state’s gold from New York (where its under the “safekeeping” of the ultra shady Federal Reserve) to a depository within the state of Texas itself.  The reason this would be such a big deal if it happens, is because a lot of the gold bought and sold globally is not very likely not actually owned by those that “buy” it.  From my perspective, pretty much the only countries that actually buy gold and bring it within their borders are China, Russia and Iran.  Most other nations that claim they “bought” gold, most likely hold a certificate that states they have gold in London or New York.  So in other words, they have no gold.  It looks like Texas is wising up..."


Unsecured Depositors Of The World, Unite... And Get The Hell Out Of These Countries

"Based on the most recent data, JPMorgan notes that the share of large or uninsured deposits is likely to be close to half of total deposits in the European Union. With deposits already flowing out of some of the peripheral EU nations...

(as we warned here)

we thought it appropriate to point out just which nations have the largest share of uninsured deposits (and are not yet under the ECB's 'standard of living' capital controls). It seems - among many others - that despite France throwing in the towel on the 75% income tax, there is another good reason for the wealthy to leave..."


U.S. National Debt & Trade Deficit Destroying Economy

"There are two great debts the American people have, yet there is only one debt that the nation talks about. These twin debts are the national debt–money borrowed from the nation against itself compiled with money borrowed from other nations–and the trade deficit–money given to other nations for imported products and services that will, at some point, come back to buy out the United States..."


Jim Rogers Warns of Big Shortages in Commodities Coming soon

"On his own investment strategy, Rogers said he was short 30-year U.S. Treasury bonds, saying the bond market will “soon come to an end.” He said his portfolio held “no stocks” and consisted of natural resources such as commodities, as he anticipated big shortages in the future. “I can’t conceive any better industry than agriculture right now.” - in a recent interview with Atlanta bizjournal"


Nouriel Roubini : Instability in the Middle East is an issue

"Nouriel Roubini : “Instability in the Middle East is an issue: and the instability is not just tension between Israel and Iran – that if there were to become violent they could spike global oil prices to double the current level and tip the global economy into recession. If you look at the Middle East, all from Maghreb, Algeria to Afghanistan and Pakistan, there is geopolitical tension that could have economic consequences.” - in a recent interview with CNN Money"


Friday, March 22, 2013

Interest Rates Will Rise Before the Fed Funds Rate Rises….

"Good read here from Learnbonds on the likelihood of a substantial jump in interest rates well before the Fed raises rates. This is important for understanding investor psychology and how you have to approach the market like a chess player.  That is, you have to anticipate the many variables that go into cause and effect and then anticipate how the market might respond to various actions.  The more moves you can think ahead the better off you are..."


Marc Faber : The Market will push Interest Rates Higher


Jim Rogers : Politicians Are Debasing Our Currency

"Jim Rogers : "Debasing your currency sometimes works in the short term, it has never worked in the long term and does not even usually work in the medium term. Lots of politicians like to do it because it is an easy way." - in a recent CNN interview"


Nouriel Roubini ‏: The collateral damage for the EZ of waking insured deposits is serious in the future


Celente - The Financial System Is Collapsing Before Our Eyes

"Today top trends forecaster Gerald Celente told King World News that the financial system is breaking down and collapsing right before our eyes.  Celente had correctly forecast back in 2012 that a bank holiday would occur in Europe, and also said events continue to spiral out of control going forward.  Celente is the founder of Trends Research, and the man many consider to be the top trends forecaster in the world..."


Thursday, March 21, 2013

Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers

"Why is the global economy in so much trouble?  How can so many people be so absolutely certain that the world financial system is going to crash?  Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail.  In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts.  So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts.  Overall, there is about 190 trillion dollars of total debt on the planet.  But global GDP is only about 70 trillion dollars.  And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars.  So we have a gigantic problem on our hands.  The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives.  We are living in the greatest financial bubble in world history, and it isn't going to take much to topple the entire thing.  And when it falls, it is going to be the largest financial disaster in the history of the planet.
The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed.  As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point.  A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes..."


Wednesday, March 20, 2013

ART CASHIN: If America Is Anything Like History's Great Civilizations, Then This Is The Beginning Of The End

"In an interview with Charlie Rose last week, GMO's Jeremy Grantham reminded us that civilizations have historically collapsed after around 250 years.

Now, UBS's Art Cashin is talking about the same thing.
"Martin Armstrong has just issued a 46 page report titled 'The 224 Cycle of Political Change. Is 1789 – 2013 Really Here?'" writes Cashin in a note this morning..."


Jim Rogers : A Financial Storm is coming, protect yourselves.

""I don't trust the data from any government, including the U.S., Jim Rogers said. "We know that governments lie to us. Everybody's printing money, but it cannot go on. This is all artificial." Rogers, who for years has been an outspoken critic of the Feds policies of "Quantitative Easing" says all the money printing is creating false hope that we are in the middle of some kind of super bull market. But in reality, he says, "we're living in a fool's paradise."


Tuesday, March 19, 2013

This False Stock Market Bubble Will Burst, Major Banks Will Fail & the Financial System Will Implode! Here’s Why

"At some point we are going to see another wave of panic hit the financial markets like we saw back in 2008.  The false stock market bubble will burst, major banks will fail and the financial system will implode..."


Monday, March 18, 2013

JPMorgan: Opening "Pandora's Deposit Box" Means "More Extreme Deposit Flights In Future Crises"

"There are three key highlights in yet another take on Cyprus, this time from JPMorgan's Robert Henriques: the first, and most obvious, is that "more extreme scenarios of burden-sharing will not necessarily reinforce investor confidence" - that much is clear; the second, as we pointed out over the weekend, is that what happened in Cyprus is a "the death knell for an EU Common Deposit Guarantee scheme, which was to be an integral part of the Banking Union proposals" - so much for the key part of European monetary and fiscal integration. But the third, and most important, is that "we would expect future crises to be exacerbated by more extreme deposit flight. This would likely mean the ECB would have to increase its presence as liquidity provider of last resort, which, under normal circumstances, would lead to increased asset encumbrance and lower recoveries for senior debt." The problem for Europe, as diligent readers know too well already, is that asset encumbrance is already at record high levels, meaning the ability to find "free" assets used to create new loans will be next to impossible..."


Crisis They Can’t Avoid-Paul Craig Roberts

"Former Assistant Treasury Secretary Dr. Paul Craig Roberts says there is another financial calamity coming to the U.S.  Dr. Roberts says, “It is a crisis they can’t avoid.  One way or another it’s going to bite very hard, whether it comes through the dollar or the bonds.”   Dr. Roberts says all the ongoing financial problems we face today are a result of little or no regulation.  Dr. Roberts makes his case in a book titled “The Failure of Laissez Faire Capitalism and Economic Dissolution of the West.”  Dr. Roberts contends, “What you are looking at is a deregulated financial system, and the result was fraud, crisis and collapse. . . . The end result of financial deregulation is crony capitalism.”  Look no further than the continuing bank bailouts with massive money printing and zero percent interest rates as the reason for the coming catastrophe of spiking interest rates.  Roberts asks, “How can the dollar be anything but a bubble because the Fed is creating a trillion new dollars every year, but the demand for dollars is not growing by a trillion dollars a year.”  Roberts goes on to predict, “Sooner or later, the printing has to affect the dollar’s value.  If the dollar drops . . . we have inflation . . . you can’t have inflation and zero percent interest rates.”  Join Greg Hunter as he goes One-on-One with economist Paul Craig Roberts..."


Jim Rogers On the Moody's downgrade of the UK economy from AAA to AA1

"I'm a little surprised it took Moody's so long to get around to lowering the credit rating. The UK, the US, and other countries are in serious trouble, and the world seems to know it. It's just the rating agencies that don't know it. I suspect sterling will continue to go down in real terms against real assets. "


Jim Rogers : Money Printing is Going to End very, very badly

"Jim Rogers : “This is the only time in recorded history that all major central banks are printing money at the same time and everybody’s trying to debase the value of the money. I suspect it’s going to end very, very badly in the end, but in the meantime a lot of people are having a lot of fun.” - in CBS"


Eurozone Bailout Cyprus after Greece, Portugal and Ireland. Who is next?

"Nouriel Roubini : EZ bailout #4: Cyprus after Greece, Portugal and Ireland. Who is next? Spain has already access to EFSF/ESM for its banks Rather than PSI (bail-in of unsecured creditors of banks & sovereign) or OSI we got HSI(Household Sector Involvement) in Cyprus crisis resol - via twitter"


Former US Treasury Official - Fed Desperate To Avoid Collapse

"Today a former Assistant Secretary of the US Treasury told King World News, “... the dollar is the vulnerable spot in the Fed’s policy management, and the popping of the bubble is likely to come from the dollar.”  Former Assistant of the US Treasury, Dr. Paul Craig Roberts, also warned King World News that a financial collapse is coming, and the Fed is desperately manipulating the gold price in an attempt to avoid the collapse..."


Former US Treasury Official - US Financial System To Collapse

"Today a former Assistant Secretary of the US Treasury warned King World News, “This type of situation is extremely dangerous.  The world has never seen it before.”  Former Assistant of the US Treasury, Dr. Paul Craig Roberts, also told King World News that JP Morgan now threatens the stability of the entire global financial system.  And if the Fed loses control and we collapse, “Nothing and no one would be safe anywhere."

Here is what Dr. Roberts had to say in the second and final part of this extraordinary interview:  “I can point out three giant bubbles that threaten the remains of the American economy ... When these bubbles pop, the consequence is obvious:  The wipeout of the remaining wealth from bond and stock collapses, and a very strong domestic inflation from the rise in the import prices.”
Dr. Paul Craig Roberts continues...
“The United States is now an import dependent country.  It doesn’t produce its own manufactured products, clothes, shoes.  These import items dwarf the import of oil or energy.  So what is the potential for happening when these bubbles burst is widespread unemployment, and a rapid increase in inflation, before which the economic policy has no known solution. 
... It is frightening, and it shows the extent to which the economic policy of the United States is misused in support of four or five big banks that are ‘too big to fail’ ... We now have one bank, JP Morgan, which has derivative exposure equal to the (entire) world’s GDP....
“Unless these derivatives all net-out in some way, the bank (JP Morgan) has no way of covering its exposure ... When you have your top policymakers so utterly incompetent, well, then you are going to be in a huge mess ... So they’ve gone from one crisis to putting in place the foundation of a much bigger crisis.
There is no way for them to avoid it unless people think that dollars can be printed indefinitely without any effect on the value of the dollar.  But of course the demand for dollars is not growing in keeping with the supply.  So we have a potential massive crisis waiting to happen, but you can never predict what sets something like that off.”

Friday, March 15, 2013

One Of Legendary Jim Sinclair’s Boldest Predictions Ever

"Today legendary Jim Sinclair made one of his boldest predictions ever regarding the gold market when he spoke with King World News. Also, Egon von Greyerz, who is founder of Matterhorn Asset Management, told KWN that central banks “... are creating the most ideal conditions for the biggest bull market ever in gold.” We will get to Sinclair’s bold prediction, but first here is what Greyerz had to say in his remarkable interview: “Debt is going up everywhere. Central banks are printing unlimited amounts. They’ve gone from $2 trillion to $12 trillion if you take all of the central banks’ balance sheets in the last 10 years. $10 trillion has been created by central banks.”

Egon von Greyerz continues:
“Government borrowing is growing in all major economies. Not only is government debt exploding, but in the US there is the illusion that corporate balance sheets are very strong. Well, as a matter of fact US corporate debt is at an all-time high. It’s at 80% of GDP. 
That’s the highest ever...."

Eric Sprott - The Current Financial System Will End In Ruin

"Today billionaire Eric Sprott told King World News that the current financial system will end in ruin. Sprott also stated, “It’s unfortunate for those of us in the precious metals sector that, in essence, we are fighting the Fed all of the time ... but I have no doubt that we will win.” This is the first in a series of interviews with Sprott that will be released today which reveals, despite mainstream propaganda, the reality of the increasingly desperate situation Western central planners face. Below is what Sprott, who is Chairman of Sprott Asset Management, had to say.
Eric King: “Dr. Paul Craig Roberts (Former Assistant Secretary of the US Treasury - interview to be released in a couple of hours on KWN) spoke with King World News earlier today about the fact that the Fed has produced a perfect storm which could consume the US and perhaps the entire Western world. What’s in front of us, the financial collapse, can you talk about how you see that playing out?..."

Obama: Iran 'Year or So Away From Nuclear Weapon', US Will 'Use All Options'

"ABC News
Obama: Iran a Year Away From Nuclear Weapon
By Devin Dwyer
March 15, 2013

In an interview with Israeli TV ahead of his visit to the region next week, President Obama says he believes Iran is "over a year or so" away from being able to develop a nuclear weapon and that the U.S. will use "all options" to stop it.

"Right now, we think it would take over a year or so for Iran to actually develop a nuclear weapon, but obviously we don't want to cut it too close," Obama told Israeli Channel 2.

"They are not yet at the point I think where they've made a fundamental decision to get right with the international community," he said, "but I do think that they're recognizing that there's a severe cost for them to continue on the path that they're on and that there's another door open."

Read the entire article here..."


Thursday, March 14, 2013

Currency War : It’s a peculiar time in world history

"Jim Rogers : “How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns,” said Rogers. “When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.” - in PeakProsperity..."


GATA: How Gold Markets Are Manipulated

"Chris Powell, Secretary at Gold Anti-Trust Action Committee claims that Western central banks are manipulating gold markets in order to rig currency markets..."


Wednesday, March 13, 2013

Spain's Budget Deficit Grew by 35.4% in January to 1.2% of GDP; Spain's Tax Revenue Drops 20% in Face of VAT Hikes

"Here's a story you can expect to see in the Wall Street Journal or Financial Times tomorrow. You can read it here today.
Via Google Translate, El Economista reports Spain's Budget Deficit Grew by 35.4% in January to 1.2% of GDP.
The government deficit in terms of national accounts in January reached 12.729 billion euros, equivalent to 1.2% of GDP, representing an increase of 35.4% over January 2012.
According to the budget execution data published in January by the Ministry of Finance website, the cash deficit in January came to 15,252,000, which are the result of a fall in net income of 37% (5.789 billion) and a expenses increased by 15.4% (21.041 billion)..."

Marc Faber: Endless Government Manipulation - McAlavany Interview

"Topics discussed :
-Stocks moving higher but NO bargain
-Manipulated markets require diversification
-Gold near a tradable low..."


Rob Arnott - We Are Now In A Very Dangerous Environment

"Today King World News interviewed the man who oversees more than $130 billion, and who has won an unprecedented six Graham & Dodd Awards. Rob Arnott, Chairman of Research Affiliates, spoke with KWN about what is fueling the global markets, and also warned investors we are in a, “... very dangerous environment.” Here is what Arnott had to say: “The main thing that is pushing the market higher is liquidity. You’ve got the Fed monetizing the nation’s debt, buying practically all of the new bond issuance by the federal government.”
Rob Arnott continues:
“With the Fed monetizing the debt they run a risk of debasing the currency, but meanwhile that money has to go somewhere. People don’t want to put the money to work in start-ups and developing new enterprises. So what we have is the effort to prop things up is really just propping up the stock market, not the macro economy.
It’s wonderful when you see this kind of thing happening to just say, ‘Well, I’m going to be along for the ride and then I will get out of harms way before things unravel.’ But how do you do that?...."

Tuesday, March 12, 2013

Risky Repercussions from Cyprus

"Nicolas Véron says the discussion about forcing losses on Cyprus bank depositors could spread fears of bank runs elsewhere in Europe..."


Mark-To-Market Manipulation Hides $90 Billion Losses For UK Banks

"Some have attributed the resurrection of the financial markets (or more appropriately the banks) from the March 2009 lows to the IASB/FASB changes to factual to fantasy accounting. The Telegraph reports today that from PIRC's and the Bank of England's Financial Policy Committee that while banker bonuses continue to rise (for now), 'hidden' losses among UK banks could total GBP60 Billion (USD 90 Billion). HSBC topped the list with GBP10.4 Billion in bad debts that have yet to be written off and while the 'accounting' bodies are suggesting they will address criticism of this farce, as one analyst notes, they "can still make unprofitable lending appear profitable." Regulators expect to hear plans from lenders on how they intend to fill these holes before the end of the month to coincide either with the FPC’s meeting on March 19 or a statement scheduled for March 27. While outright recaps are unlikely, banks are expected to
restructure and set out plans to raise their capital levels over the next
couple of years. More fantasy..."


Marc Faber Worried about a Deflationary Collapse

"The March 2013 Monthly Market Commentary (MMC) was published on the MMC subscribers only section and emailed on 1-Mar-2013.

"I do not believe in a deflationary Collapse but I am afraid of it"

I worry about the time when the current asset inflation will give way to a serious asset deflation, which will inevitably happen sometime in the future. As an observer of markets I am, therefore, concerned that the decline in gold prices could be telling us that we are about to enter a period of asset deflation.

I should like to make two points very clear. I am not sure when the asset deflation will start. Most likely, different asset classes will deflate at different times and with different intensity. The second point I wanted to make is the following. In a deflationary environment (whenever it will happen), financial assets (stocks, government and corporate bonds especially high yield bonds) would likely be the most vulnerable assets. In fact, in a deflationary collapse, I would envision money to flow into a sound currency and move out of “funny” paper monies. Therefore, I continue recommending the gradual accumulation of physical gold.

Similarly, most societies die because of their ill-conceived fiscal and monetary policies, and not because of their economic problems...."


Housing Market-It’s all Manipulation-Fabian Calvo

"Real Estate investor Fabian Calvo says, “Trust me; there are enough troubled assets for the Fed to be buying much more than $40 billion a month. . . It’s all about manipulation.” Calvo says, “In essence, they are creating another bubble. I believe in 24 to 48 months, they are going to pull the rug out again, and we’ll see prices go down when rates go up.” Calvo predicts, “The Fed balance sheet will likely be $5 trillion in toxic assets by the end of 2014.” Calvo thinks what is going on behind the scenes will one day come to light, and it won’t be pretty. Calvo thinks the mortgage rate forecast will eventually go up, but the Fed will suppress rates as long as it can. Calvo says, “It’s kind of like Enron. When it falls apart, then you realize what level of corruption and deceit was really taking place. . . . It’s a trillion times worse than Enron.” Join Greg Hunter as he goes One-on-One with Fabian Calvo of"


Silver To Eclipse $100 On Skyrocketing Chinese Demand

"With gold and silver rebounding today, acclaimed money manager Stephen Leeb told King World News that silver is now setting up to eclipse $100. “Silver under $30 is a joke,” Leeb said. Leeb believes that China, which has been the primary driver in the gold market, is now going to push silver over $100 as their consumption of silver is poised to skyrocket. Here is what Leeb had to say in this powerful, exclusive interview: “Yesterday headlines were saying there is massive demand for photovoltaics in Japan and China. There is also massive demand for silver in the Middle-East for this type of energy infrastructure.”
Stephen Leeb continues:
“King World News was way ahead of the curve on this because I have been discussing photovoltaics here for quite some time and this is just now starting to hit the mainstream media a little bit. But another circumstance that is of great concern in the Middle-East is the water tables have really crashed. They can’t effectively drill for water anymore.
So in the Middle-East they are going to have to go for desalinization of the ocean and guess what that takes? That takes a lot of silver for photovoltaics energy infrastructure...."


Monday, March 11, 2013

Presenting The Currence Crises, Devaluations And Regime Changes Since The Collapse Of The Gold Standard

"One of the often repeated "truisms" of modern economics, is that the advent of central banking, and the end of the gold standard ushered in a far more stable, safe and secure financial system. Facts notwithstanding (because hard as we try, we can't find a historic episode where the entire developed world had to coordinate to fund, guarantee and backstop a $30+ trillion global bail out - using even more money created out of thin air, i.e., debt - to prevent the nearly $1 quadrillion derivative complex from collapsing, not to mention the failure of every single modern financial institution, during the gold standard), the reality is just slightly different. As the following table from Bloomberg's Joseph Brusuelas shows, modern "stabilty" is certainly in the eye of the beholder, in this case manifesting itself in countless periods of uni- and multi-lateral currency devaluation, beggar thy neighbor, and currency, trade, and various other types of war.

Here is Brusuelas' personal take on the past 80 years of "stable" central banking and floating exchange rate history:

Tensions between policymakers due to volatility in foreign-exchange markets pale in comparison to those induced by the policies of the Great Depression. That period saw tariff and non-tariff barriers imposed by countries attempting to arrest the economic slide that characterized the global economy in 1929-1939. The coordination between the large global central banks that are engaging in competitive QE has avoided the outbreak of protectionism that was observed during the 1930s. In Thucydides’ History of the Peloponnesian War, he stated: “The strong do what they can and the weak suffer what they must.” As the large central banks attempt to boost their economies via QE, small and developing countries will likely have to adjust by accepting faster inflation or accommodate to these policy changes by accepting currency appreciation.

Currency warfare summary table:

Keep an eye on the 2007-??? line item. If history is any indication, what follows next will hardly be pleasant for anyone involved.

Source: Bloomberg Brief"


Embry - I Believe Global Silver Stockpiles Are Now Exhausted

"...Embry had this to say regarding silver: “It’s astounding that the price of silver has fallen from $35 to $28 with the nature of the tight physical market. I think silver is in enormously short supply.
The combination of the industrial and medical uses, in combination with silver’s monetary attributes, is going to lead to the demand overwhelming available mine supply. We also have the massive short positions in silver and there is very little inventory available. The JP Morgan silver short position is the primary reason why the silver price continues to be held at levels that are unrealistically low..."

Sunday, March 10, 2013

Nouriel Roubini : We Risk QE Wars and Stagnation

"Most observers regard unconventional monetary policies such as quantitative easing (QE) as necessary to jump-start growth in today's anemic economies. But questions about the effectiveness and risks of QE have begun to multiply as well. In particular, 10 potential costs associated with such policies merit attention.
First, while a purely "Austrian" response (that is, austerity) to bursting asset and credit bubbles may lead to a depression, QE policies that postpone the necessary private- and public-sector deleveraging for too long may create an army of zombies: zombie financial institutions, zombie households and firms, and, in the end, zombie governments. So, somewhere between the Austrian and Keynesian extremes, QE needs to be phased out over time. - excerpt from an article in The Guardia..."


Gold & Silver Keys To Currency Depreciation & Economic Chaos

"Today Michael Pento writes for King World News to explain exactly why “Investors need to own precious metals now more than ever as a means of protecting their portfolios during times of currency depreciation and economic chaos.” Below is Pento’s tremendous piece:

“When central bankers dedicate their existence to re-inflating asset bubbles, it shouldn’t at all be a surprise to investors that they eventually achieve success. Ben Bernanke has aggressively attempted to prop up the real estate and equity markets since 2008. His efforts to increase the broader money supply and create inflation have finally supported home prices, sent the Dow Jones Industrial average to a record nominal high and propelled the bond bubble to dizzying heights...."


Friday, March 8, 2013

Nouriel Roubini: Italy a Tsunami Risk

""In Italy there's the beginning of a political storm. The result of the Italian elections signal that the majority of people are against austerity and not just in Italy also in Lisbon half a million people were in the streets and 25 percent unemployment in Greece and Spain, 50 percent amongst young people and there is restlessness," Roubini told CNBC in an interview today..."


China Preparing To Impose Bretton Woods II Gold Standard

"With continued volatility in the gold and silver markets, today acclaimed money manager Stephen Leeb told King World News the Chinese accumulated a remarkable 1,500 tons of gold last year, and they are preparing to demand a second Bretton Woods type meeting. This is a stunning interview because it lays out how the bulls will win the gold war, and how China will force that victory. Here is what Leeb had to say in this exclusive interview, which is his most powerful ever: “The flow of power and gold is going from West to East. China may have accumulated a staggering 1,500 tons of gold last year alone. China’s growth is now picking up steam as well. What is really stunning is how much the yuan has increased in terms of international transactions.”
Stephen Leeb continues:
“The usage of the yuan in international transactions has been increasing at an unbelievable 170% per year. That’s how fast the yuan has been increasing in terms of international transactions. So goes the gold, so goes the power, and you can see it in the prominence the yuan is gaining.
The Chinese definitely have a plan here and that is to get control of gold....
“We are headed for another Bretton Woods. It is unsustainable for currencies to continue to lose their purchasing power while median incomes, especially in the US, continue to go down in the West.
At a certain point the Chinese will say, ‘It’s time to have another equivalent of Bretton Woods.’ That will challenge the BIS, and quite possibly lead to some sort of gold standard. What Bretton Woods did was reestablish the gold standard as the Second World War was coming to an end..."

Biggest Wealth On Planet Now Entering Gold & Silver Markets

"Today one of the wealthiest people in the financial world spoke with King World News about the shocking things that he witnessed at PDAC, and how the biggest money on the planet is now looking to get into the gold and silver sector. Regarding PDAC he stated, “What was of interest to me was the level of panic present at the place.” Rule also let KWN readers know invest to make fortunes right now in the gold and silver markets..."


Wednesday, March 6, 2013

Silver & Gold To Spike As Oil To Surge A Stunning 63% - 82%

"Despite the recent wild trading action in gold, silver, and oil, today top Citi analyst Tom Fitzpatrick issued a bullish call for these three key markets and put together several fantastic charts illustrating the reasons for his bullish call. Fitzpatrick believes that the price of oil is set to surge a stunning 63% to 82%, while gold is set to advance $270, and silver back to its all-time highs..."


Embry - Massive Silver Short Positions To Force COMEX Default

"Today John Embry told King World News that in the silver market there will be a force majeure on the COMEX because of the massive short positions held by JP Morgan. But first, here is what Embry, who is chief investment strategist at Sprott Asset Management, had to say regarding gold: “I’ve been following the gold scene for 30 years, and I believe it’s been subject to a suppression scheme for probably the last 25 years. But I have never seen anything quite like what’s gone on lately.”
John Embry continues:
“The question I ask myself is, ‘What is going on?’ The very same factors that have driven the Dow to all-time highs, which is basically just excess liquidity in the system, should, in a real world, have driven gold and silver to record highs. 
Instead they are both under enormous downside pressure in the paper markets, despite the fact that the physical markets remain very firm....
“Then the question I ask myself is, ‘What is bothering the powers that be to the extent that they would do this, and become so blatant that anybody with an IQ over (that of) a geranium can see what’s going on?”
Eric King: “John, what do you think that reason is?”
Embry: “I think there are one of two reasons really. The pat reason is that the system is in such tough shape, and they are trying to sell the public on the fact that it isn’t. Therefore, the canary’s in the coal mine, gold and silver, which basically tip the public off that things are bad if they are rising, they have to be kept under control.
But I think there is another factor: I do believe the powers that be are clever enough to know what’s coming and that is going to be a massive explosion in the gold and silver prices before this is over. And probably sooner rather than later.
So the people that have been front and center in the suppression, the bullion banks, I think are trying to position themselves differently so they are not going to be terribly vulnerable when the price explodes. And it’s working. You see the amazing shift in the Commitment of Traders Report, where more and more of the speculators are going short, and the commercials are getting the opportunity to cover. So I think that might be a motivation too.”

Monday, March 4, 2013

China Can Now Buy World’s Gold Reserves Twice Over

"For many years King World News has been reporting on China’s insatiable appetite for gold. Well, amazingly China’s foreign currency reserves can now buy the entire world’s gold supply twice over. The stunning graphic below depicts this truly astonishing fact.

The graph also depicts the combined gold reserves of India, Russia and Brazil. What is fascinating about this 10-year chart is not only the fact that China can buy the entire world’s gold reserves twice over, but also to see the explosion in China’s reserves. According to Bloomberg, China’s foreign currency reserves have surged more than 700% in just the last 9 years alone. This chart illustrates a key point and a very frightening one for the gold bears, that China’s demand for gold will remain insatiable for many, many years to come:


12 Things That Just Happened That Show The Next Wave Of The Economic Collapse Is Almost Here

"The following are 12 things that just happened that show the next wave of the economic collapse is almost here...
#1 According to TrimTab's CEO Charles Biderman, corporate insider purchases of stock have hit an all-time low, and the ratio of corporate insider selling to corporate insider buying has now reached an astounding 50 to 1....
While retail is being told to buy-buy-buy, Biderman exclaims that "insiders at U.S. companies have bought the least amount of shares in any one month," and that the ratio of insider selling to buying is now 50-to-1 - a monthly record.
#2 On Friday we learned that personal income in the United States experienced its largest one month decline in 20 years...
Personal income decreased by $505.5 billion in January, or 3.6%, compared to December (on a seasonally adjusted and annualized basis). That's the most dramatic decline since January 1993, according to the Commerce Department.
#3 In a stunning move, Michigan Governor Rick Snyder says that he will appoint an emergency financial manager to take care of Detroit's financial affairs...
Snyder, 54, took a step he avoided a year ago, empowering an emergency financial manager who can sweep aside union contracts, sell municipal assets, restructure services and reorder finances. He announced the move yesterday at a public meeting in Detroit.
If this does not work, Detroit will almost certainly have to declare bankruptcy. If that happens, it will be the largest municipal bankruptcy in U.S. history.
#4 On Friday it was announced that the unemployment rate in Italy had risen to 11.7 percent. That was a huge jump from 11.3 percent the previous month, and Italy now has the highest unemployment rate that it has experienced in 21 years.
#5 The youth unemployment rate in Italy has risen to a new all-time record high of 38.7 percent.
#6 On Friday it was announced that the unemployment rate in the eurozone as a whole had just hit a brand new record high of 11.9 percent.
#7 On Friday it was announced that the unemployment rate in Greece has now reached 27 percent, and it is being projected that it will reach 30 percent by the end of the year.
#8 The youth unemployment rate in Greece is now an almost unbelievable 59.4 percent.
#9 On Saturday, hundreds of thousands of protesters filled the streets of Lisbon and other Portuguese cities to protest the austerity measures that are being imposed upon them. It was reportedly the largest protest in the history of Portugal.
#10 According to Goldman Sachs, bank deposits declined all over Europe during the month of January.
#11 Over the weekend, the deputy governor of China's central bank declared that China is prepared for a "currency war"..."


Sunday, March 3, 2013

China "Fully Prepared for Currency War" Says China's Central Bank Deputy Governor

"Given the world's central bankers are already in a currency war, a policy statement made by a deputy-governor of China's central bank should not come as a surprise (except for the fact it was publicly and bluntly stated).

Please consider China well-prepared for currency war: official.
China is fully prepared for a looming currency war should it, though "avoidable," really happen, said China's central bank deputy governor Yi Gang late Friday.

A currency war could be avoided, Yi said, if policymakers in major countries observed the consensus, reached at the recent G20 meeting, that monetary policy should primarily serve as a tool for domestic economy.

"China is fully prepared," Yi said. "In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

The 10 Minute Gold Standard

"Far too many people believe that gold serves no useful purpose. I am therefore publishing this response to The 10 Minute Gold Standard: It’s Much Easier than You Think by Nathan Lewis. Mr. Lewis, a professed advocate of the gold standard, argues that even if we have a “gold standard”, we don’t need actual gold. Indeed, according to David Ricardo (quoted in the article), gold’s only job is to regulate the quantity of paper.

Mr. Lewis notes that when the Fed buys bonds it increases the quantity of dollars and when it sells bonds it decreases the quantity. This is true enough, but it’s not the quantity of dollars per se that is causing our ongoing capital crisis, or if you prefer, our solvency crisis. But I get ahead of myself.

The 10-Minute proposal is simple: the Fed should tweak its central planning. Instead of buying bonds to control the interest rate, it should buy bonds to control the gold price. However the unstated assumption, that the price of gold is based on the quantity of dollars, is false.

Gold is money, and paper (the dollar) is credit. The ratio of credit to money is not constant. Nor is the price of credit, which depends on its quality. Trying to control the gold price by this indirect proxy would be like trying to steer a car by opening and closing the windows.

The fatal flaw in the proposal is that paper cannot perform certain functions that can only be performed by gold. One is to extinguish debt. Paper currency is itself a credit instrument. The dollar is the liability of the Fed. Paying in paper transfers a debt, but the debt itself does not go out of existence. Since interest is constantly accruing, total debt rises exponentially..."


Jim Sinclair - We Are Witnessing A Historic Low In Gold

"Today legendary trader Jim Sinclair spoke with King World News about the gold and silver smash. Below is what Sinclair, who has been actively trading the markets for over half a century and whose father was business partners with legendary trader Jesse Livermore, had to say about what has taken place in the gold market.
Jim Sinclair: “Historically we are at an extreme low. But more so than that, when you are short you have a price objective. If you are a government you have a price objective. That price objective being reached might change the pattern of your trading.
The pattern of what’s taking place in this down market is absolutely clear: At periods every day like clockwork, when the lowest volume of trading historically takes place, the largest amount of offerings have come into the marketplace (for gold), creating a drubbing, a down (move). 
Every time there is a major move in a market there will be hangers on, and they are the ones that tend to lose on both sides...."