Monday, April 28, 2014

Gold Backwardation Like This Has Never Happened in History-James Turk

"Gold expert James Turk says the Ukraine crisis can affect the price of gold. Turk says, “Whenever there is global tension, people go to safety, and one of the greatest safe havens of all-time has been gold.  It’s been money for 5,000 years, and it’s still money and still a safe haven because it’s money that doesn’t have counter-party risk. . . .  Gold does respond to geopolitical tensions, and I must admit the situation in Ukraine is getting more serious.  I would not be surprised if the tensions continued to rise.”  So, could this be a trigger to cause distress in the global financial community?  Turk contends, “Yes, it really could.  This could blow out of proportion very quickly, and it would be much more serious than what happened in the Balkans where there was a shooting war.  What’s happening here is you are talking about a major economic power and the use of sanctions.  In WWII, one of the causes of friction between the United States and Japan was the economic sanctions the U. S. imposed on Japan because of their incursions in China.  It is eerily similar to what is happening now with Russia, and I think the stakes are just as high when you are talking about two major powers confronting themselves this way.”  
As far as ratcheting up sanctions, Turk worries, “To do it in an environment where economic conditions in both the United States and Europe are very weak is even more worrying.  You just do not have the economic base as you would during a period of strong economic activity.  You have to remember these sanctions can bite home.  People living in glass houses should not throw stones, as the old saying goes.  The issue here is there is so much debt and counter-party risk between various players in the global economy that it has a knock-on effect, and we just don’t know how that knock-on effect is going to play out.  If you look back to 2008, during the financial collapse then, we saw Bear Stearns get into trouble and then some European banks get into trouble and, ultimately, Lehman . . . fell apart and collapsed, and that had a knock-on effect as well.  We just don’t know how it’s going to play out, but it is very worrying to see these threats of economic sanctions and imposition of economic sanctions and this war of words.  It is potentially very serious.” 


Zulauf - Financial System Trapped & Capital Controls Coming

"Today renowned money manager Felix Zulauf warned King World News that the global financial system is trapped and capital controls are coming.  Zulauf, founder of Zulauf Asset Management and 20+ year Barron’s Roundtable panelist, also discussed the difference between the horrendous challenges facing the world in the 1970s vs. today.  Below is what Zulauf had to say in Part II of his powerful interview series.

Eric King:  “Felix, even though what we are going through today is unprecedented, is it going to be much worse than what we saw in 1979/1980?  That was total panic as that (cycle) crescendoed.”

Felix Zulauf:  “In the late 1970s we had a big inflation problem.  We had much more demand than supply, not just in goods and services but also in labor.  Therefore, it was a highly inflationary world which was fed by the central banks, not knowing what they were doing because it was new...."


Global Financial War & Gold Headed To New All-Time Highs

"Today Canadian legend John Ing told King World News that we are witnessing a global financial war and gold is headed to new all-time highs.  Ing, who has been in the business for 43 years, also discussed a major catalyst that no one is focusing on right now.  Below is what Ing had to say.

Ing:  “We’ve had a lot of volatility in the bullion markets, but with all the volatility the markets have gone sideways.  We saw gold down $16 for the week, and this is coming at a time when there is a tug-of-war in the currency markets and the financial markets.  It’s almost like a financial war that’s going on...."


Brand New “Smart Money” Now Betting On Gold & Silver Sector

"Today one of the wealthiest people in the financial world spoke with King World News about brand new “smart money” that is just now entering and betting big on the gold and silver sector.  This is an important interview with Rick Rule, who is business partners with billionaire Eric Sprott, where he discusses this incredibly important development.  Below is what Rule had to say in this fascinating interview.

Rule:  “There is so much going on right now, Eric, it’s amazing.  I’ve been in this place several times before in my career, where you are coming out of a bear market into a bull market.  What’s fantastic for me is being part of the Sprott organization, I have the financial resources and the human resources, and the reputation resources to take advantage of it....

Gold & Silver May Be Setting Up To Crush The Short

"On the heels of a pullback in gold and silver, today top Citi analyst Tom Fitzpatrick sent King World News an incredibly important series of charts which show that gold and silver may now be setting up to punish the shorts with a major upside advance.  Below are the 3 key gold charts that all KWN readers around the world need to see.

Here is what Fitzpatrick had to say along with his 3 key charts: The past few sessions have seen decent rallies in precious metals following the bullish reversals on Thursday.  While bullish breaks have not yet come through, the price action and setups are warning us that further gains are likely to be seen...."


Thursday, April 24, 2014

Bernanke Talks Up the Bankers' Balance Sheet Boogie Woogie - The Truman Sparks Award

"Sometimes when I just don't have the words someone more articulate than me on the subject says it all.

Confounded Interest
Bernanke: QE Was For “The Man On The Street” 
(Wall Street, That Is!) and Their Electrical Parade
By Anthony B. Sanders

Zero Hedge has an amusing story today based on former Federal Reserve Chairman Ben Bernanke’s speech to the Economic Club of Canada (for a cool $250,000).

* Bernanke Says US Economy Is Heading Towards Complete Recovery

Huh?  The lime colored box shows the rewards of Quantitative Easing to the Man on the Street. In Kingman Kansas, perhaps. Stagnant real household income, employment to population ratio and YoY growth in hourly wage income. And flat-lined mortgage purchase applications.


But for Wall Street, it has been roses, cigars and snifters of cognac.



A Comex Options Expiration 'With a Twist' - Where the Elite Meet to Cheat

"When we were kids, we used to join hands in a line, and then swing hard around a pivot and play 'crack the whip' outside.  Once we got going the people on the end of the line went flying.

If you look at the distribution of calls and puts in silver in particular the 'price discovery' this morning makes some sense.  They were discovering what it would take to shake out the calls and puts for losses before they settled the price where it returned the greatest profit.

Oh no, you obviously do not understand the intricate processes of the market,  say Shill & Troll. This is not cheating. This is hedging. Look at the Dollar and the cross markets. And besides, there has always been cheating so this is nothing new. And you can't stop it, they will always find a way. This is just business. No one made you buy those options.

What we saw this morning is a classic shake-out fake-out.  These guys make carnies look sophisticated.

If it were not for manipulation and a foolhardy few, there might be no interest left for the Comex..."

Lost Decades

"How concerned should investors be about the possibility of have a 10-year stretch with negative equity returns? RPSeawright addresses this all-important question for retirees or near-retirees:
A Journal of Financial Perspectivespaper from last summer considers how unusual it really is for equity markets actually to “lose a decade.” As it turns out, lost decades of this sort are not the exceptional episodes that only very rarely interrupt normal steady economic growth and progress that so many seem to think.
In the paper, Brandeis economist Blake LeBaron finds that the likelihood of a lost decade — as assessed by the historical data for U.S. markets via a diversified portfolio — is actually around 7 percent (in other words, about 1 in 14). Adjusting for inflation (using real rather than nominal return data) makes the probability significantly higher (more like 12 percent, nearly 1 in 8). The chart below (from the paper) shows the calculated return (nominal in yellow, real in dashed) for ten-year periods over the past 200+ years, and shows six periods in which the real return dips into negative numbers.
lost decades Lost Decades
So a “lost decade” actually happens fairly frequently. As LeBaron summarizes:
The simple message here is that stock markets are volatile. Even in the long-run volatility is still important. These results emphasize that 10-year periods where an equity portfolio loses value in either real or nominal terms should be an event on which investors put some weight when making their investment decisions..."


Gazprom Delighted By China Announcement Nat Gas Need To Soar By 150% In 6 Years

"It may comes as a surprise to many, if certainly not the country known as Gazpromia, that according to a government statement released on Wednesday, China will raise its natural gas supply to a whopping 420 ­billion cubic meters per year by 2020 on soaring demand due to urbanization, a government statement said on Wednesday. This compares roughly 168 bcm in gas used in 2013, which means somehow China hopes to boost gas production by over 150% in just 6 years.
The increased supply will ­cater to the rising demand for natural gas in people's daily lives, schools, nursing homes, home heating, as well as in buses and taxis, according to a statement published on the central government's website.
According to Global Times, the supply increase is also driven by the nation's efforts to mitigate air pollution stemming from an over-reliance on coal, the statement said. Sounds familiar - only problem is that the same narrative, used in the US time and time again, has achieved virtually nothing in fixing said over-reliance on coal.
Global Times adds that tTo expand natural gas production, investment in gas storage facilities as well as their construction and operation will be open to all market players, the statement said.
And the best news for gas E&Ps: companies will also have the option to issue bonds to raise capital for the construction of storage facilities. The government will offer favorable land policies for ­sto­rage facility projects, the statement said..."


West Hemorrhaging Gold But Here’s Its True Achilles’ Heel

"Today one of the most highly respected fund managers in Singapore warned King World News that the West is continuing to hemorrhage gold, but also cautioned that was not the West’s true Achilles’ heel.  Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, described the great danger for the West, and also discussed the massive demand coming out of the East from countries such as Russia and China.

Eric King:  “The Chinese and the Russians understand what the end game is for Western central planners, which is why they have been buyers of physical gold, and in the case of the Chinese, prolific buyers.  Do you get the feeling that the people in Asia, who have also been large buyers of physical gold, understand where this is headed as well because they’ve seen so many paper currencies in various countries come and go?”

Williams:  “It certainly gives the people in the East a much better foundation in terms of understanding how this is likely to play out vs. people in the West.  You’ve had two generations in the West now who have had nothing but, at least notionally and optically, an increasing standard of living...."


Michael Pento - Fed Strategy To End In Disaster & Turmoil

"Today the man who had his interview censored and entirely erased out of a CNBC segment sent King World News an important piece warning that the Fed’s strategy will end in disaster and turmoil.  This is an incredibly powerful piece with Michael Pento, the man who someone in an ivory tower made the decision to censor.

April 24 (King World News) - Fed Strategy To End In Disaster & Turmoil

The government’s “ingenious” solution to end the Great Recession was to recreate the same wealth effect that engendered the credit crisis to begin with: The definition of the wealth effect is an increase in spending that comes from an increase in the perception of wealth generated from equities and real estate...."


Wednesday, April 23, 2014

David Einhorn: we are in a new Tech Bubble

"Pretty interesting comments from the latest David Einhorn letter.  The savvy hedge fund manager says we are indeed in a new tech bubble and has even formed an entirely new group of stocks in his fund that he has dubbed the “bubble basket”.   Here are some highlights from the letter:
“we have repeatedly noted that it is dangerous to short stocks that have disconnected from traditional valuation methods.  After all, twice a silly price is not twice as silly; it’s still just silly.  This understanding limited our enthusiasm for shorting the handful of momentum stocks that dominated the headlines last year.  Now there is a clear consensus that we are witnessing our second tech bubble in 15 years.  What is uncertain is how much further the bubble can expand and what might pop it.


Central Banks Have Realized Their Worst Nightmares Are Approaching

"Central Bankers will never openly admit that they or their policies have failed. Moreover, they do not rush into sudden tightening (more on this in a moment). But one can begin to notice subtle changes in their language and actions that indicate they have noticed what’s happening in Japan (the failure of the BoJ’s “shock and awe” QE program to generate growth).

Nowhere is this more clear than at the US’s Federal Reserve or Fed. Indeed, starting in August 2013, various Fed officials began questioning the efficacy of QE.

First came the San Francisco Fed with a study revealing that QE generally doesn’t appear to generate economic growth:

Asset purchase programs like QE2 appear to have, at best, moderate effects on economic growth and inflation. Research suggests that the key reason these effects are limited is that bond market segmentation is small.

Moreover, the magnitude of LSAP effects depends greatly on expectations for interest rate policy, but those effects are weaker and more uncertain than conventional interest rate policy. This suggests that communication about the beginning of federal funds rate increases will have stronger effects than guidance about the end of asset purchases.

A few months later, the former Fed official in charge of the Fed’s first round of QE, penned a Wall Street Journal article stating that QE was in fact a Wall Street bailout.

I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time…

It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program [QE] wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash..."


This Is How Empires Collapse

"Submitted by Charles Hugh-Smith of OfTwoMinds blog,
This is how empires collapse: one complicit participant at a time.

Before an empire collapses, it first erodes from within. The collapse may appear sudden, but the processes of internal rot hollowed out the resilience, resolve, purpose and vitality of the empire long before its final implosion.
What are these processes of internal rot? Here are a few of the most pervasive and destructive forces of internal corrosion:

1. Each institution within the system loses sight of its original purpose of serving the populace and becomes self-serving. This erosion of common purpose serving the common good is so gradual that participants forget there was a time when the focus wasn't on gaming the system to avoid work and accountability but serving the common good.

2. The corrupt Status Quo corrupts every individual who works within the system.Once an institution loses its original purpose and becomes self-serving, everyone within either seeks to maximize their own personal share of the swag and minimize their accountability, or they are forced out as a potentially dangerous uncorrupted insider.

The justification is always the same: everybody else is getting away with it, why shouldn't I? Empires decline one corruptible individual at a time.
3. Self-serving institutions select sociopathic leaders whose skills are not competency or leadership but conning others into believing the institution is functioning optimally when in reality it is faltering/failing.

The late Roman Empire offers a fine example: entire Army legions in the hinterlands were listed as full-strength on the official rolls in Rome and payroll was issued accordingly, but the legions only existed on paper: corrupt officials pocketed the payroll for phantom legions.

Self-serving institutions reward con-artists in leadership roles because only con-artists can mask the internal rot with happy-story PR and get away with it.

4. The institutional memory rewards conserving the existing Status Quo and punishes innovation. Innovation necessarily entails risk, and those busy feathering their own nests (i.e. accepting money for phantom work, phantom legions, etc.) have no desire to place their share of the swag at risk just to improve sagging output and accountability.

So reforms and innovations that might salvage the institution are shelved or buried.

5. As the sunk costs of the subsystems increase, the institutional resistance to new technologies and processes increases accordingly. Those manufacturing steam locomotives in the early 20th century had an enormous amount of capital and institutional knowledge sunk in their factories. Tossing all of that out to invest in building diesel-electric locomotives that were much more efficient than the old-tech steam locomotives made little sense to those looking at sunk costs.
As a result, the steam locomotive manufacturers clung to the old ways and went out of business. The sunk costs of empire are enormous, as is the internal resistance to change.

6. Institutional memory and knowledge support "doing more of what worked in the past" even when it is clearly failing. I refer to this institutional risk-avoidance and lack of imagination as doing more of what has failed spectacularly.

Inept leadership keeps doing more of what once worked, even when it is clearly failing, in effect ignoring real-world feedback in favor of magical-thinking. The Federal Reserve is an excellent example.

7. These dynamics of eroding accountability, effectiveness and purpose lead to systemic diminishing returns. Each failing institution now needs more money to sustain its operations, as inefficiencies, corruption and incompetence reduce output while dramatically raising costs (phantom legions still get paid).

8. Incompetence is rewarded and competence punished. The classic example of this was "Good job, Brownie:" cronies and con-artists are elevated to leadership roles to reward loyalty and the ability to mask the rot with good PR. Serving the common good is set aside as sychophancy (obedient flattery) to incompetent leaders is rewarded and real competence is punished as a threat to the self-serving leadership.

9. As returns diminish and costs rise, systemic fragility increases. This can be illustrated as a rising wedge: as output declines and costs rise, the break-even point keeps edging higher, until even a modest reduction of input (revenue, energy, etc.) causes the system to break down:

A modern-day example is oil-exporting states that have bought the complicity of their citizenry with generous welfare benefits and subsidies. As their populations and welfare benefits keep rising, the revenues they need to keep the system going require an ever-higher price of oil. Should the price of oil decline, these regimes will be unable to fund their welfare. With the social contract broken, there is nothing left to stem the tide of revolt.

10. Economies of scale no longer generate returns. In the good old days, stretching out supply lines to reach lower-cost suppliers and digitizing management reaped huge gains in productivity. Now that the scale of enterprise is global, the gains from economies of scale have faltered and the high overhead costs of maintaining this vast managerial infrastructure have become a drain.

11. Redundancy is sacrificed to preserve a corrupt and failing core. Rather than demand sacrifices of the Roman Elites and the entertainment-addicted bread-and-circus masses to maintain the forces protecting the Imperial borders, late-Roman Empire leaders eliminated defense-in-depth (redundancy). This left the borders thinly defended. With no legions in reserve, an invasion could no longer be stopped without mobilizing the entire border defense, in effect leaving huge swaths of the border undefended to push back the invaders.

Phantom legions line the pockets of insiders and cronies while creating a useful illusion of stability and strength.

12. The feedback from those tasked with doing the real work of the Empire is ignored as Elites and vested interests dominate decision-making. As I noted yesterday in The Political Poison of Vested Interests, when this bottoms-up feedback is tossed out, ignored or marginalized, all decisions are necessarily unwise because they are no longer grounded in the consequences experienced by the 95% doing the real work.

This lack of feedback from the bottom 95% is captured by the expression "Let them eat cake." (Though attributed to Marie Antoinette, there is no evidence that she actually said Qu'ils mangent de la brioche.)

The point is that decisions made with no feedback from the real-world of the bottom 95%, that is, decisions made solely in response to the demands of cronies, vested interests and various elites, are intrinsically unsound and doomed to fail catastrophically..."


The Renminbi Will Replace The Dollar

"“In China they do have the resources, the population, the trade, and the liquidity to replace the U.S. dollar. It will not happen over night. It will happen over time. In the end, you better own renminbi and cut back on the U.S. dollar...the renminbi can and will go up a lot over the next few decades.” - in"


Presenting The Massive Tech Bubble In One Astounding Chart

"The chart below illustrates the massive tech bubble in one astounding chart created by SentimenTrader."



“Axis Of Power” As Countries Move To Link Currencies To Gold

"On the heels of continued uncertainty around the globe, today an acclaimed money manager spoke with King World News about a new “axis of power,” as Russia and China move to link their currencies with gold, and both countries continue to form an alliance with Germany.  Below is what Stephen Leeb had to say..."


Collapse Of Western Ponzi Scheme To Send Gold Skyrocketing

"Today one of the most highly respected fund managers in Singapore told King World News that the collapse of the Western Ponzi scheme will send the price of gold skyrocketing.  Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also discussed the coming implosion of the Western scheme as well as how the Russians and the Chinese positioning themselves ahead of this collapse.

Eric King:  “Grant, as you know James Turk told KWN that gold is in the deepest backwardation we’ve seen in 8 months.  What’s happening in the gold market?”
Williams:  “Eric, this gets back to the difference between physical metal and paper.  We’ve seen this increasing demand for physical gold out of Eastern countries in the last 18 months, particularly China, and that demand for physical is showing itself on a short-term basis in the negative (GOFO) rates we are seeing...."


Friday, April 18, 2014

We Could Be In Trouble If Global Growth Stays This Low Much Longer

"When it comes to the state of the global economy, there’s both good news and bad news to report. On a positive note, Credit Suisse economists forecast that global GDP will increase 3.3 percent this year, an improvement over last year’s 2.9 percent expansion. The bad news? Even at that improved level, growth is merely hovering near the 40-year average of 3.4 percent. Since we’re technically in a recovery, the economy should be growing faster than average, and the fact that it isn’t indicates potential GDPis lower than in other recoveries.
Neal Soss, Credit Suisse’s Vice Chairman of Global Fixed Income and Economics Research, says that it’s not unusual to have periods of sluggish growth after a major financial crisis, as governments, businesses, financial institutions, and consumers retrench. The danger arises if that retrenchment phase drags on for too long. At that point, mediocre growth can start to feel more permanent, and businesses will feel a declining incentive to invest in the possibility of expansion. What’s more, the skills of the long-term unemployed can atrophy to the point that they verge on being permanently unemployable. “The downside to an episode of this sort – if that sluggish growth continues – isn’t just the slower growth itself. It’s that the potential of the economy will deteriorate,” he says.

With no new fiscal or monetary stimulus on the horizon, there is concern among economists that world leaders are running that very risk. “Most of the world is allergic to explicit fiscal stimulus and the public sector balance sheet leverage it implies,” Credit Suisse’s fixed income analysts wrote in their most recent quarterly global economics survey, “Speeding Up to Average.” European officials have imposed stringent austerity requirements on Greece, Spain, Portugal, and Ireland in exchange for their various bailouts. A combination of tax increases and spending cuts over the last four years have reduced the U.S. budget deficit from 10 percent of GDP in 2009 ($1.4 trillion) to a projected 3 percent ($514 billion) this year. Japan’s consumption tax rose from 5 percent to 8 percent without any accompanying monetary stimulus, a reflection of how eager Japanese policymakers are to shrink both the deficit and the public debt, which is twice the size of the economy. Meanwhile, Chinese authorities are trying to rein in local government spending by reducing credit availability, while Brazil pledged to cut its budget by $18.5 billion in February to meet a budget surplus target of 1.9 percent..."


Princeton Study Confirms 'US Is An Oligarchy'

"Submitted by Mike Krieger of Liberty Blitzkrieg blog,
Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts. Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association, and a widespread (if still contested) franchise. But we believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened.

From a recent study titled Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens by Martin Gilens of Princeton University and Benjamin I. Page of Northwestern University
In response to the publication of an academic study that essentially proves the United States is nothing more than an oligarchy, many commentators have quipped sentiments that go something like “so tell me something I don’t know.” While I agree that the conclusion is far from surprising to anyone paying attention, the study is significant for two main reasons..."


The Elites Fear What Will Crash The Global Financial System

"Today one of the legends in the business spoke with King World News about what the elites fear is going to crash the American economy and the global financial system.  Keith Barron, who consults with major companies around the world and is responsible for one of the largest gold discoveries in the last quarter century, also discussed the massive demand for gold from China as well as what to expect from the gold market in the future.

Barron:  “The flow of gold into China is massive and it hasn’t abated.  If anything, it has picked up speed.  If you look at the growth in Chinese gold demand over the past few years, it won’t be long before we see almost the entire annual gold production in the world going to China....

“This has huge implications for the futures markets such as COMEX.  Will they be able to continue delivering gold in that environment?  The other big concern for various countries and entities around the world is:  If they loan or lease their gold out, will they ever get it back again?  Countries and individual entities are becoming less willing to lend or lease their gold because they are losing faith that they will ever get it back.  This will cause additional stress in the already strained delivery system as we advance through this bull market in gold.

If we look back, it’s almost a year ago to the day when the bear raid started on the gold ETFs.  Basically the bullion banks were raiding the last major depository of gold in the world outside of central banks.  The ETFs were being raided because they were arbitraging the price.  Bullion banks were getting anywhere between a $50-$70 premium for each ounce of gold they sold to Shanghai.

So for a number of months the bullion banks withdrew gold from the ETFs, they shipped the gold to Switzerland, where it was recast, and then the gold was shipped to Hong Kong and Shanghai to satisfy the massive Chinese buying.  Also, I believe that lat year European Central Bank President Mario Draghi was pressured into saying the ECB was going to sell Cyprus’ gold.  This is what started the waterfall decline.  But this smash had the effect of knocking all the gold out of the weak hands.  

So the weak hands are out of this market, but I don’t think the central planners are ever going to be able to pull that stunt again.  I believe that if they ever tried it again the queues around the world to buy gold would be even longer than they were in 2013.  For now the Chinese continue to buy all the physical gold they can get their hands on.  As fast as the gold is produced, it goes right out of the refineries to the Far East.”


Former White House Official - Western Default, China & Gold

"Today King World News interviewed the former White House official who was Special Assistant to the President of the United States for Economic Policy and a former member of the U.S. President’s Working Group on Financial Markets, also known as the Plunge Protection Team, or PPT.  While in the White House, Dr. Philippa “Pippa” Malmgren served as financial market advisor in the White House and functioned as the direct liaison between the White House and the Federal Reserve. 

Dr. Malmgren formerly headed the Global Asset Management business for Bankers Trust in Asia, out of Hong Kong, and was also Chief Currency Strategist for Bankers Trust Company, and former Head of Global Investment Strategy at UBS.  Dr. Malmgren was also a senior consultant to Deutsche Bank, and currently advises the largest sovereign wealth funds, hedge funds, and pension funds in the world.

Eric King:  “The last time we spoke you discussed gold (when the gold price was being crushed in mid-2013). The gold market, they (central planners) have had a lockdown on gold.  You talked about the governments coming in and doing that from time-to-time.  At one point (in your previous interview) you were talking about the government manipulation in gold and you said:

“There are times when the presence of extremely large players, like governments, will move the price 
way more than normal.  You just have to whisper at it (the price of gold), and you can move 
it big time.  Are governments good at that?  Yes, they are good at that.”

Eric King:  “Of course you were part of the President’s Working Group on Financial Markets, so nobody knows this stuff better than you.  But the gold market, they (the governments) are still in there as the central banks are expanding their balance sheets, trying to hold (the price of) gold down.”

Dr. Malmgren:  “You know it’s interesting, I think at the end of the day what really matters is that emerging markets like China, Russia, they are definitely increasing their holdings of gold.  And I find it quite extraordinary how they can increase their holdings of gold so dramatically and yet the price goes down...."


Thursday, April 17, 2014

Everyone's Talking About This Bullish Trend, But Art Cashin Warns It's Hyperinflationary

"There's just a general higher level of interest in loan activity and lines of credit," he said.
The implications of this are potentially huge – to the economy; to the stock market; to Fed policy; and perhaps, most importantly, to inflation.  In a fractional banking system, money gets velocity when it's lent.  High velocity risks hyperinflation.  We'll discuss more fully next week.
Cashin has long warned that an increase in the velocity of money could quickly turn hyperinflationary..."


Unprecedented $5 Trillion Liquidity Monster To Be Unleashed?

"Today one of the legends in the business warned that for the first time banks are beginning to push what could be a staggering amount of reserves into the financial system.  50-year veteran Art Cashin, who is Director of Floor Operations at UBS ($650 billion under management), also warned the implications of this are “huge” because it will have a massive impact on major markets, Fed policy, inflation, and may possibly lead to hyperinflation..."


Friday, April 11, 2014

Marc Faber : 2014 Crash will be worse than 1987's

"Marc Faber, editor and publisher of the Gloom, Boom & Doom Report, says a 30 percent crash is coming in the next 12 months. With CNBC's Jackie DeAngelis and the Futures Now Traders..."


Gold Delivery Strains Reappear & What Might Destroy COMEX"

"Today an outspoken hedge fund manager out of Hong Kong spoke with King World News about delivery strains in the gold market reappearing and what might destroy the COMEX.  William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, also discussed the major problems the entities managing the gold market are now facing.  Below is what Kaye had to say in this timely interview.

Kaye:  “Gold is still trading in a very narrow range.  I find this to be interesting, especially with all these heightened geopolitical tensions, as well as the recent FOMC minutes, which showed a scaling back in the timetable for any possible future tightening of monetary policy....

“All these things are positive for gold, but we really have not yet seen that much of a move since the beginning of the year.  Gold is now up a little over $100.  So we’ve essentially traded up from the low $1,200s to the low $1,300s, and gold is down from earlier in the year when it nearly reached the $1,400 mark.

You might recall that I was warning KWN readers in early March that the gold market was primed for a bit of short-term weakness.  That concern has now been addressed as gold has consolidated and filled a gap that existed since the outbreak of hostilities in Ukraine.

I believe that for readers who don’t feel they are fully invested in gold or silver, today’s prices are still very attractive.  It’s advantageous for long-term investors to continue to accumulate physical metal at these levels.  From a trading perspective, I now think the risks are pretty evenly balanced, but the footprints of official intervention continue to be present in the gold market.  So the risk still exists that we could see a further move to the downside.”