Gold "Tightness": When There's No More To Sell, There's No More To Buy (At Any Price)

"Submitted by Chris Martenson via PeakProsperity.com,

One of our long-running themes here is that the truly historic and massive flows of gold from West to East is (someday) going to stop, for the simple reason that there will be no more physical bullion left to move. 

It’s just a basic supply vs. demand issue.  At current rates of flow, sooner or later the West will entirely run out of physical gold to sell to China and India.  Although long before that hard limit, we suspect that the remaining holders of gold in the West will cease their willingness to part with their gold. 

So the date at which “the West runs out of gold to sell” is somewhere between now and whenever the last willing Western seller parts with their last ounce.  As each day passes, we get closer and closer to that fateful moment. 

This report centers on preponderance of fascinating data revealing the extent of the West's massive dis-hoarding of physical gold, for the first time, begins to allow us to start estimating the range of end-dates for the flow to the East.

Here’s the punchline: there’s an enormous and growing disconnect between the cash and physical markets for gold. This is exactly what we would expect to precede a major market-shaking event based on a physical gold shortage.

Stopping the Flows

There are only two outcomes that will stop the process of Western gold flowing East, one illegitimate and the other legitimate. 

1. It becomes illegal to sell gold.  This is the favored approach of central planners who prefer to force change by dictate rather than via free markets and free will.   Unfortunately, this strain of political intervention is dominant in the West, particularly in the US and EU.
2. The price of gold dramatically rises. A large increase in the price of gold will (paradoxically) cause greater demand for gold in the West and (sensibly) less demand in the East. This is what should legitimately happen given current supply and demand dynamics. But it may not. 

There’s always a 3^rd option, we suppose: economically carpet-bombing China and India's financial systems to scare/force some gold back out. Consider such an approach along the ‘economic hitman’ lines of thinking. 

This would be done, for example, by having outside interests sell the Rupee furiously, driving down its value and forcing the Indian monetary authorities to defend it by using up foreign reserves to buy the Rupee. Then wait for India to run out of foreign reserves and then casually ‘suggest’ that its government use gold sales to continue defending its currency.  India's leaders would have to find ways to somehow ‘coax’ gold from its citizens.  I think we can all imagine the sorts of draconian rules and penalties that desperate governments would deploy in such a situation.

As a side note, I believe this is the same process that was used to ‘coax’ a lot of gold out of the GLD trust since 2012. After enough bear raids on the price of gold, which began somewhat suspiciously almost exactly on the date that QE3 was announced, Western gold ‘investors’ lost interest in the yellow metal, sold their GLD shares in droves, and hundreds of tons of gold were liberated from that stockpile.

What is truly odd from a chart perspective: this hammering down of gold started just after it had broken to the upside out of a textbook perfect triangle, when it looked seemingly ready to head off to higher values:

But in the days immediately following the QE3 announcement, gold shed $100, then barely recovered, and just wandered lower until it was violently slammed from $1550 to $1350 over one night (of course) in April 2013.

Now this was highly fortuitous for the ever-lucky Federal Reseve. After launching the largest money printing campaign in US history, the Fed did not need gold heading any higher, possibly providing a signal that would cast doubt on the wisdom or possible effectiveness of its easy-money policies. Policies, mind you, that the years since have proven to do little more than enrich the banker class and the 0.1%, as well as lard the system with extraordinary levels of new indebtedness and liquidity.

The Fed Indeed Cares About Gold

Gold, when unfettered, has a habit of sending signals that the Fed really doesn’t like. Therefore the Fed is at the top of everyone’s suspect list when it comes to wondering who might be behind the suspicious gold slams. Whether the Fed does it directly is rather doubtful; but they have a lot of useful proxies out there in their cartel network.

To reveal the extent to which gold sits front and center in the Fed’s mind, and how they think of it, here’s an excerpt from a 1993 FOMC meeting’s full transcript. Note that the full meeting notes from Fed meetings are only released years after the fact. The most recent ones available are only from 2009. Listen to what this FOMC voting member had to say about gold:

At the last meeting I was very concerned about what commodity prices were doing. And as you know, they got lucky again and told us that the rate of inflation was higher than we thought it was.

Now, I know there's nothing to it but they did get lucky. I've had plenty of econometric studies tell me how lucky commodity prices can get. I told you at the time that the reason I had not been upset before the March FOMC meeting was that the price of gold was well behaved.

But I said that the price of gold was moving. The price of gold at that time had moved up from 328 to 344, and I don't know what I was so excited about! I guess it was that I thought the price of gold was going on up. Now, if the price of gold goes up, long bond rates will not be involved.

People can talk about gold's price being due to what the Chinese are buying; that's the silliest nonsense that ever was. The price of gold is largely determined by what people who do not have trust in fiat money system want to use for an escape out of any currency, and they want to gain security through owning gold.

A monetary policy step at this time is a win/win. I don't know what is going to happen for sure. I hope Mike is correct that the rate of inflation will move back down to 2.6 percent for the remaining 8 months of this calendar year. If we make a move and Mike is correct, we could take credit for having accomplished this and the price of gold will soon be down to the 328 level and we can lower the fed funds rate at that point in time and declare victory.

(Source – Fed)

There it is, in black and white from an FOMC member’s own mouth spelling out the primary reason why I hold gold: I lack faith in our fiat money system. He nailed it.  Or rather, I have very great faith that the people managing the money system will print too much and ultimately destroy it. Same thing, said differently..."

at http://www.zerohedge.com/news/2015-09-26/gold-tightness-when-theres-no-more-sell-theres-no-more-buy-any-price

Jim Grant Explains How To Hedge Against The Coming Money Paradrop

"Submitted by Christopher Gisiger via Finanz Und Wirtschaft,

James Grant, Wall Street expert and editor of the investment journal Grant’s Interest Rate Observer, warns of ever more extreme central bank policies and bets on the comeback of gold.

The global financial markets are under severe stress. The postponed interest rate hike in the United States, the fast cooldown of the Chinese economy and the crash in the commodity complex are causing a great amount of unease among investors. Fear is growing that the world slips into recession. "Central bank policy is intended to paper over the cracks in the systems. Seven years after the outbreak of the financial crisis we’re paying for this with a lack of growth", says James Grant. The sharp thinking editor of the iconic Wall Street newsletter Grant’s Interest Rate Observer draws worrisome parallels between the command based central planning of the Chinese economy and the economic policies in the West. He also doubts that Fed Chair Janet Yellen is the right fit for the top job at the world’s most powerful central bank. Looking for protection he points to gold and shares of gold miners..."

at http://www.zerohedge.com/news/2015-09-26/jim-grant-explains-how-hedge-against-coming-money-paradrop

Is The Price Of Gold Set To Skyrocket As The West Edges Closer To Collapse?

"With continued volatility in global markets, today one of the top economists in the world sent King World News an incredibly powerful piece warning that the price of gold may finally be set to skyrocket as the West edges closer to collapse.  Below is the fantastic piece from Michael Pento.

By Michael Pento of Pento Portfolio StrategiesSeptember 26 – (King World News) – There has been an unprecedented attack on gold and mining shares over the past three years emanating from financial institutions in order to support the government’s supposed success in bringing the economy back to health. And even though gold mining shares are down 85% during this tenure, the case for owning gold-related investments has never been more compelling…"

at http://kingworldnews.com/is-the-price-of-gold-set-to-skyrocket-as-the-west-edges-closer-to-collapse/

China Is Preparing To Shock The World

"After another wild week of trading in global markets, today one of the top money managers in the world told King World News that China is preparing to shock the world.

Stephen Leeb:  “Someone from the IMF just said that the chances are 99 percent that China will get approved for reserve currency status.  If they do (get approved), how long before China says, ‘Now that we are approved as a reserve currency, now that the world can trade with the yuan, we want to put a little more backbone in our currency, how about backing part of our currency with gold?’  That is definitely going to happen, Eric…

“If you put all this together, Eric, you have a case for gold.  China is going to back their currency with gold.  

I have in front of me on my screen four different assets — gold, oil, stocks, and bonds.  And the date I have (at the beginning of the charts) is 9/30/2007.  Why is that date important?  Because that is when the world changed.  That was the beginning of the Great Recession and everything changed after that point.

Gold Vs. Stocks Since The Great Recession Began

Now, if you asked anybody:  What has been the best performing asset over these past 8 years?  The last answer you are going to get is gold.  Yet gold has outperformed bonds by about 17 percent, stocks by 30 percent, and no one knows it..."

at http://kingworldnews.com/china-is-preparing-to-shock-the-world/

Goldman Warns On Limits Of Central Bank Policy: "The Road To Hell Is Paved With Good Intentions"

"Back in May, we noted that minutes from the ECB’s April 14-15 policy meeting seem to reveal that the central bank is either obtuse or else suffering from a frightening bout of willful ignorance. Here’s are the excerpts which led us to that assessment: 

Since the Governing Council’s previous monetary policy meeting on 4-5 March 2015, the implementation of the ECB’s expanded asset purchase programme (APP) had had a significant impact on euro area financial markets, contributing to further declines in government bond yields.

A strong signal needed to be sent to euro area governments urging them to press ahead with structural reforms and to take measures to improve the business environment. Only with such complementary action could the full benefits of the monetary policy measures be reaped..."

at  http://www.zerohedge.com/news/2015-09-25/goldman-warns-limits-central-bank-policy-road-hell-paved-good-intentions

UMich Consumer Confidence Tumbles To Lowest Since October, Worst Drop In 4 Years

"Despite rising modestly from the preliminary print, UMich Consumer Sentiment for September finalised at 87.2 - the lowest since October 2014. This is now the biggest 8-month drop since 2011. Inflation expectations fell modestly as "hope" fell to the lowest level since September. Household Income gain expectations continue to slide (now just 1%) back to 13 month lows.

The exuberance is over... (unchanged since the end of QE3)

at http://www.zerohedge.com/news/2015-09-25/umich-consumer-confidence-tumbles-lowest-october-worst-drop-4-years

Tracking the Implosion of Brazil; Be Careful of What You Wish; Perfect Storm; Email from Brazil; More Intervention Madness

"Reader Lucas from Brazil writes about the "perfect storm". 

 Hello Mish

Brazilian interest rates are skyrocketing. Rates went up more than 2 percentage points in a month. Bond trading was suspended due to the quick devaluation.

Nobody is talking much about it, but energy corporation Petrobras is down 95% from the peak (in dollars). They have a high dollar exposure, and some estimates say that since June, Real devaluation alone was responsible for a +R$100B increase in debt.

Brazil's majors oil investments are in (really) deep water drilling, and they may be not worthy anymore. Petrobras debt is now equivalent to 8% of the whole country GDP.

And while. our president doesn't have support to do anything.

It's a perfect storm here.

Lucas

Petrobras

In classic bubble action, shares of Petrobas went from $4 to $77 back to $4. Executives no doubt, cashed out at every opportunity.

Brazil Real

The Brazilian Real went from 1.6 to the US dollar to 4.1 to the US dollar. That's a decline of about 54% .

Brazil 1-Year Government Bonds

Since 2007, the yield on 1-year Brazil government bonds went from just over 7% to over 16%..."

at http://globaleconomicanalysis.blogspot.com/2015/09/tracking-implosion-of-brazil-be-careful.html#zBj3SiguBc0PMOPt.99

"Doomsday" Arctic Seed Vault Tapped For First Time In History As Syrian Civil War Threatens Biodiversity

"With Russian boots officially on the ground at Latakia and with rumors circulating that the PLA may arrive within weeks, Syria has officially replaced eastern Ukraine as the most likely theatre for the start of World War 3. 

While we certainly hope that cooler heads will prevail, the determination on the part of Washington, Riyadh, and Doha to oust the Assad regime simply isn’t compatible with Tehran and Moscow’s efforts to preserve the existing global balance of power which means that something will ultimately have to give and if it becomes clear that Iran is set to benefit in any way from whatever the outcome ends up being, expect Benjamin Netanyahu to make another trip to The Kremlin, only next time, he won’t be so cordial. 

For those who - much like a certain CIA “strategic asset” - are looking for signs that Syria’s four-year old, bloody civil war might mark the beginning of the apocalypse, look no further than the Svalbard Global Seed Vault which was tapped for first time in history in response to the uncertain future of Aleppo. Here’sReuters:

Syria's civil war has prompted the first withdrawal of seeds from a "doomsday" vault built in an Arctic mountainside to safeguard global food supplies, officials said on Monday.

The seeds, including samples of wheat, barley and grasses suited to dry regions, have been requested by researchers elsewhere in the Middle East to replace seeds in a gene bank near the Syrian city of Aleppo that has been damaged by the war.

"Protecting the world's biodiversity in this manner is precisely the purpose of the Svalbard Global Seed Vault," said Brian Lainoff, a spokesman for the Crop Trust, which runs the underground storage on a Norwegian island 1,300 km (800 miles) from the North Pole.

The vault, which opened on the Svalbard archipelago in 2008, is designed to protect crop seeds - such as beans, rice and wheat - against the worst cataclysms of nuclear war or disease.

It has more than 860,000 samples, from almost all nations. Even if the power were to fail, the vault would stay frozen and sealed for at least 200 years.

The Aleppo seed bank has kept partly functioning, including a cold storage, despite the conflict. But it was no longer able to maintain its role as a hub to grow seeds and distribute them to other nations, mainly in the Middle East.

In other words, the violence in and around Aleppo now poses a threat to global food supplies by curtailing the production of seeds for drought-resistant crops.

As far-fetched as that might sound on the surface, the threat is apparently real enough to have prompted the first withdrawal in history from a seed bank built into the side of a frozen mountain. Here's more on the Svalbard "doomsday" vault from the official website:

Worldwide, more than 1,700 genebanks hold collections of food crops for safekeeping, yet many of these are vulnerable, exposed not only to natural catastrophes and war, but also to avoidable disasters, such as lack of funding or poor management. Something as mundane as a poorly functioning freezer can ruin an entire collection. And the loss of a crop variety is as irreversible as the extinction of a dinosaur, animal or any form of life.

Remote by any standards, Svalbard’s airport is in fact the northernmost point in the world to be serviced by scheduled flights – usually one a day.Its remoteness enhances the security of the facility, yet local infrastructure in the nearby small Norwegian settlement of Longyearbyen is excellent. The Vault is thus accessible, and seeds can easily be transported to and retrieved from Svalbard.

The Seed Vault has the capacity to store 4.5 million varieties of crops. Each variety will contain on average 500 seeds, so a maximum of 2.5 billion seeds may be stored in the Vault.

Currently, the Vault holds more than 860,000 samples, originating from almost every country in the world. Ranging from unique varieties of major African and Asian food staples such as maize, rice, wheat, cowpea, and sorghum to European and South American varieties of eggplant, lettuce, barley, and potato. In fact, the Vault already holds the most diverse collection of food crop seeds in the world.

The focus of the Vault is to safeguard as much of the world’s unique crop genetic material as possible, while also avoiding unnecessary duplication. It will take some years to assemble because some genebanks need to multiply stocks of seed first, and other seeds need regenerating before they can be shipped to Svalbard.

A temperature of -18ºC is required for optimal storage of the seeds, which are stored and sealed in custom made three-ply foil packages. The packages are sealed inside boxes and stored on shelves inside the vault. The low temperature and moisture levels inside the Vault ensure low metabolic activity, keeping the seeds viable for long periods of time.

And here's a look at the outside and inside of the repository that would be tapped in the event a cataclysm threatens global food supplies:..."

at http://www.zerohedge.com/news/2015-09-24/doomsday-arctic-seed-vault-tapped-first-time-history-syrian-civil-war-threatens-biod

Forget The New World Order, Here's Who Really Runs The World

"For decades, extreme ideologies on both the left and the right have clashed over the conspiratorial concept of a shadowy secret government pulling the strings on the world’s heads of state and captains of industry.

The phrase New World Order is largely derided as a sophomoric conspiracy theory entertained by minds that lack the sophistication necessary to understand the nuances of geopolitics. But it turns out the core idea — one of deep and overarching collusion between Wall Street and government with a globalist agenda — is operational in what a number of insiders call the “Deep State.”

In the past couple of years, the term has gained traction across a wide swath of ideologies. Former Republican congressional aide Mike Lofgren says it is the nexus of Wall Street and the national security state — a relationship where elected and unelected figures join forces to consolidate power and serve vested interests. Calling it“the big story of our time,” Lofgren says the deep state represents the failure of our visible constitutional government and the cross-fertilization of corporatism with the globalist war on terror.

“It is a hybrid of national security and law enforcement agencies: the Department of Defense, the Department of State, the Department of Homeland Security, the Central Intelligence Agency and the Justice Department. I also include the Department of the Treasury because of its jurisdiction over financial flows, its enforcement of international sanctions and its organic symbiosis with Wall Street,” he explained.

Even parts of the judiciary, namely the Foreign Intelligence Surveillance Court, belong to the deep state.

How does the deep state operate?

 A complex web of revolving doors between the military-industrial-complex, Wall Street,  and Silicon Valley consolidates the interests of defense contracts, banksters, military actions, and both foreign and domestic surveillance intelligence.

According to Mike Lofgren and many other insiders, this is not a conspiracy theory. The deep state hides in plain sight and goes far beyond the military-industrial complex President Dwight D. Eisenhower warned about in his farewell speech over fifty years ago.

While most citizens are at least passively aware of the surveillance state and collusion between the government and the corporate heads of Wall Street, few people are aware of how much the intelligence functions of the government have been outsourced to privatized groups that are not subject to oversight or accountability. According to Lofgren, 70% of our intelligence budget goes to contractors.

Moreover, while Wall Street and the federal government suck money out of the economy, relegating tens of millions of people to food stamps and incarcerating more people than China — a totalitarian state with four times more people than us — the deep state has, since 9/11, built the equivalent of three Pentagons, a bloated state apparatus that keeps defense contractors, intelligence contractors, and privatized non-accountable citizens marching in stride.

After years of serving in Congress, Lofgren’s moment of truth regarding this matter came in 2001. He observed the government appropriating an enormous amount of money that was ostensibly meant to go to Afghanistan but instead went to the Persian Gulf region. This, he says, “disenchanted” him from thegroupthink, which, he says, keeps all of Washington’s minions in lockstep.

Groupthink — an unconscious assimilation of the views of your superiors and peers — also works to keep Silicon Valley funneling technology and information into the federal surveillance state. Lofgren believes the NSA and CIA could not do what they do without Silicon Valley. It has developed a de facto partnership with NSA surveillance activities, as facilitated by a FISA court order.

Now, Lofgren notes, these CEOs want to complain about foreign market share and the damage this collusion has wrought on both the domestic and international reputation of their brands. Under the pretense of pseudo-libertarianism, they helmed a commercial tech sector that is every bit as intrusive as the NSA. Meanwhile, rigging of the DMCA intellectual property laws — so that the government can imprison and fine citizens who jailbreak devices — behooves Wall Street. It’s no surprise that the government has upheld the draconian legislation for the 15 years.

It is also unsurprising that the growth of the corporatocracy aids the deep state. The revolving door between government and Wall Street money allows top firms to offer premium jobs to senior government officials and military yes-men. This, says Philip Giraldi, a former counter-terrorism specialist and military intelligence officer for the CIA, explains how the Clintons left the White House nearly broke but soon amassed $100 million. It also explains how former general and CIA Director David Petraeus, who has no experience in finance, became a partner at the KKR private equity firm, and how former Acting CIA Director Michael Morell became Senior Counselor at Beacon Global Strategies.

Wall Street is the ultimate foundation for the deep state because the incredible amount of money it generates can provide these cushy jobs to those in the government after they retire. Nepotism reigns supreme as the revolving doorbetween Wall Street and government facilitates a great deal of our domestic strife:

“Bank bailouts, tax breaks, and resistance to legislation that would regulate Wall Street, political donors, and lobbyists. The senior government officials, ex-generals, and high level intelligence operatives who participate find themselves with multi-million dollar homes in which to spend their retirement years, cushioned by a tidy pile of investments,” said Giraldi.

How did the deep state come to be?

Some say it is the evolutionary hybrid offspring of the military-industrial complex while others say it came into being with theFederal Reserve Act, even before the First World War. At this time, Woodrow Wilson remarked,

“We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”

This quasi-secret cabal pulling the strings in Washington and much of America’s foreign policy is maintained by a corporatist ideology that thrives on deregulation, outsourcing, deindustrialization, and financialization. American exceptionalism, or the great “Washington Consensus,” yields perpetual war and economic imperialism abroad while consolidating the interests of the oligarchy here at home.

Mike Lofgren says this government within a government operates off tax dollars but is not constrained by the constitution, nor are its machinations derailed by political shifts in the White House. In this world — where the deep state functions with impunity — it doesn’t matter who is president so long as he or she perpetuates the war on terror, which serves this interconnected web of corporate special interests and disingenuous geopolitical objectives.

“As long as appropriations bills get passed on time, promotion lists get confirmed, black (i.e., secret) budgets get rubber stamped, special tax subsidies for certain corporations are approved without controversy, as long as too many awkward questions are not asked, the gears of the hybrid state will mesh noiselessly,”according to Mike Lofgren in an interview with Bill Moyers.

Interestingly, according to Philip Giraldi, the ever-militaristic Turkey has its own deep state, which uses overt criminality to keep the money flowing. By comparison, the U.S. deep state relies on a symbiotic relationship between banksters, lobbyists, and defense contractors, a mutant hybrid that also owns the Fourth Estate and Washington think tanks.

Is there hope for the future?

Perhaps. At present, discord and unrest continues to build. Various groups, establishments, organizations, and portions of the populace from all corners of the political spectrum, including Silicon Valley, Occupy, the Tea Party, Anonymous, WikiLeaks, anarchists and libertarians from both the left and right, the Electronic Frontier Foundation, and whistleblowers like Edward Snowden and others are beginning to vigorously question and reject the labyrinth of power wielded by the deep state.

Can these groups — can we, the people — overcome the divide and conquer tactics used to quell dissent? The future of freedom may depend on it."

at http://www.zerohedge.com/news/2015-09-24/forget-new-world-order-heres-who-really-runs-world

These Central Banks Policies are a living Disaster

"Trade and current account deficits are symptoms of over-consumption . The currency goes down and the consequence is people consume less .Everyone says they have to depreciate so exports can pick up , but exports to whom ? The customers are dead or about to go dead . I really think that these central banks policies are a living disaster " - via asianinvestor.net..."

at http://www.marcfabernews.com/2015/09/these-central-banks-policies-are-living.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MarcFaberBlog+%28MARC+FABER+BLOG%29#.VgUa4svzq00

The accounting scam that is hiding billions of losses in the US banking system

"Sovereign Valley Farm, Chile

September 24, 2015

There's not a doubt in my mind that one of the greatest scams in the world is modern banking.

When you think about it, every element of the system is stacked against us.

By making a deposit we are loaning our hard-earned savings to a bank, for which they pay us a whopping 0.1% interest.

In some parts of the world now they even charge us interest for the privilege of loaning them our money.

Banks then take our hard-earned savings and gamble it all away in the latest investment fad, no matter how stupid and destructive it might be.

When they screw up, they're deemed ‘too big to fail', and the government steps in to indebt future generations who won't even be born for decades in order to bail out the banks' stupidity.

Banks are also unpaid government spies and are required by law to rat us out to federal agents should they decide in their sole discretion that what we are doing with our own money is “suspicious”.

Banks have no loyalty to the customer. They serve their government masters first and foremost.

Should some government bureaucrat so much as make a phone call, they will freeze you out of your life's savings in a heartbeat.

And hardly a month goes by where a bank isn't indicted on some criminal charge to defraud their customers.

They've admitted to rigging bond markets, interest rates, foreign exchange rates, and selling their customers' data to high-frequency traders.

And for their misdeeds they get a few slaps on the wrist and a fine that fills the government's coffers.

Too big to fail, too big to jail. It would almost be funny if it weren't so obscene.

Yet despite every shred of evidence that this system is at odds with customers' best interests, very few people ever question the sanctity of their banks' credibility and financial condition.

It's just assumed that banks are stable, sound, and conservative.

Nothing could be further from the truth.

In today's podcast I highlight an extremely clever accounting trick that banks have been using for the last few years to hide the true nature of their finances.

Here's the short version: Banks have the ability to choose how they treat their bonds for accounting purposes.

If they classify their bonds as “available for sale”, or AFS, the bank is forced to disclose any losses under ‘comprehensive income', which negatively affects their capital levels.

But banks don't want to do that. They're gearing up to take a HUGE bath as the values of their bond portfolios collapse.

And rather than show the world how pitifully capitalized they really are, banks have opted to reclassify huge sections of their bond portfolios into a different category called “hold to maturity”, or HTM.

HTM assets don't require banks to write off any losses against their capital reserves.  Accounting - So the banks just get to keep pretending that they're safe.

So far US banks have rotated hundreds of billions of dollars worth of bonds from AFS into HTM. And they're just getting started.

It's an unbelievable accounting scam. And everyone's in on it. All the big banks. The regulators. The government. The Fed.

You'll be amazed to see the data I present in today's podcast; one of the largest banks in the US, for example, went from having 0.0% of its assets as AFS, to having nearly 50%.

Poof. And just like that, the bank's financial condition is tip-top..."

at http://www.valuewalk.com/2015/09/accounting-scam-banks/

Is The Greatest Wealth Transfer In History Starting As Gold And Silver Shorts Run For Cover?

"With the price of gold surging nearly $25 and silver up 2.5 percent, today King World News answers the question:  Is the greatest wealth transfer in history starting as the gold and silver shorts run for cover?  This piece also includes two key illustrations that all KWN readers around the world must see.

September 24 (King World News) – This astonishing chart from SentimenTrader shows that the Rydex Precious Metals Assets now show an extreme level of pessimism that rivals that seen when the price of gold was trading near $250 an ounce in the 1999 – 2001 time frame (see chart below).

---

King World News note:  What is also quite remarkable is that sentiment in the gold market has actually been worse with gold trading above $1,100 than it was was gold was trading near $250 (see the stunning chart below).

The Greatest Wealth Transfer In History 

As I said in a KWN piece last week:  “This is all part of a longer-term bottoming process in the gold market.  It’s impossible to know if the bottom has already been made, but there is no question that when gold enters the next leg higher in this secular bull market, fortunes will be made on the upside in gold, silver, and the high-quality mining shares.  Likewise, fortunes will be lost as paper assets such as bonds implode as one of the greatest wealth transfers in world history unfolds.”

at http://kingworldnews.com/is-the-greatest-wealth-transfer-in-history-starting-as-gold-and-silver-shorts-run-for-cover/

Richard Russell – WARNING: The Retail Public Is About To Become Frightened And Panic Will Take Hold

"With global markets still tumbling, the Godfather of newsletter writers, 91-year-old Richard Russell, warned that the retail public is about to become frightened and panic will take hold.

September 24 (King World News) – Richard Russell:  “The initial shock hasn’t dawned on the public yet, but it will. The reality is that the U.S. is sinking back into recession. I think we have reached the inflection point, and the bad news is coming out. This will obviously terrify the Fed, which has been trying with all its might to push up core inflation to the much desired 2%. Soon I think the newspapers will start breaking the disturbing news: the fact that the US has sunk back into recession after six years of pumping by the Fed. So what’s next?

The Feds raising rates is out of the question. What’s more likely is the return of QE, because the Fed is terrified of the current position in which deflation is taking over from the much desired inflation. It would not surprise me to see QE4 established as the Fed addresses the deflationary trend..."

at http://kingworldnews.com/richard-russell-warning-the-retail-public-is-about-to-become-frightened-and-panic-will-take-hold/

Shock And Fear Is Coming – What Every Person Must Know Ahead Of This Collapse

"Today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events warned King World News that shock and fear is coming.  He also discussed what every person must know ahead of this collapse.

September 25 – (King World News) – Egon von Greyerz:  “So here we are, Eric, at the moment when the world and especially the Western world will have the most unpleasant wake-up call.  What started in 2008 was a warning that was heeded by very few people…"

at http://kingworldnews.com/shock-and-fear-is-coming-what-every-person-must-know-ahead-of-this-collapse/

NSA to snoop on Iranian president at UN meeting: NBC News report

"The US National Security Agency (NSA) is most likely to spy on Iranian President Hassan Rouhani and his delegation during the UN General Assembly meeting in New York this week, according to a new report.

The top US spy agency would likely apply a “full court press” that includes intercepting cellphone calls and bugging hotel rooms to spy on foreign leaders, including Rouhani, NBC News reported on Wednesday, citing former intelligence analysts.

The Iranian president will arrive in New York on Thursday to address the 70th annual session of the General Assembly.

The American news network obtained a top-secret report on a previous NSA operation against the delegation Iran sent to the United Nations in 2007.

According to the document, the NSA bugged the hotel rooms and phones of former Iranian President Mahmoud Ahmadinejad and his entire delegation, and US spy agents listened to their thousands of conversations.

NBC News reported that the agency monitored in-person conversations, Skype calls and video conferences by the use of a secret technology called “Blarney”.

An “EXCEL spreadsheet guru” compiled information on all delegates as well as the schedules of Ahmadinejad and then-Iranian Foreign Minister Manouchehr Mottaki, including names, titles and passport numbers, according to the report.

“Collection information and identifications of the various hotel rooms and cell phones were also updated as soon as they were discovered,” the three-page document shows.

Having used the latest in “Human Language Technology”, teams of five or six analysts from three different sections were on duty for 19 hours a day to keep track of those talks and map out the deepest web of Iranian politics and personal connections, according to the report.

Once a secretive federal court gave the “OK” for the “special collection”, the agency “had to ensure that the proper procedures would be in place … to efficiently tackle the anticipated influx of traffic,” NBC wrote.

The NSA declined to comment on the document or the surveillance of the 2007 Iranian delegation."

at http://www.presstv.ir/Detail/2015/09/23/430431/US-Iran-UN-United-Nations-summits-NSA-espionage-spy-President-Hassan-Rouhani-Mahmoud-Ahmadinejad

Shrinking Supply of Available Gold In London For World Demand - Timely Caution

"It is reasonable to estimate that London, in all the vaults, has only about 900 to 250 tonnes of gold available for physical delivery, which is a shockingly low figure given the current demand from 'The Silk Road' nations alone that is running about 1,700 tonnes per year.  And even that 250 number is questionably high, depending on the status of the gold in the Bank of England.

The objective is to attempt to determine how much available physical gold for delivery can be wrung out of London and New York, in excess of what can be had from scrap, minining and leasing. We are calling that 'the gold float,' and it is feeding the demand for bullion in Asia.  At that point we might estimate when the pressure on price becomes irresistible.

We are thinking months, not years, at least with things as they are.

I wish to acknowledge up front the debt that is owed to Ronan Manly and Nick Laird especially for the data contained herein, as well as Koos Jansen for his ground breaking work in estimating Asian gold demand, and Bron Sucheki for his participation..  I have listed some of the pertinent published articles below. 

It is regretful that one can only provide estimates.  But that is the nature of this beast that operates with secrecy of supply and distortion of actual demand. 

What manner of business is this to enable price discovery in a public market, by covering so many fundamentals with secrecy?  Where is the mining community in all this?

The LBMA is said by those who are in a position to know these things to be running 90:1 or more leverage to each of its unallocated ounces of gold, which according to Jim Rickards is all of them.

The potential claims per deliverable ounce at the Comex right now is at an historic nosebleed high by of about 255:1, supposedly because the owners which to avoid a 'short squeeze' in bullion, although the party who said this did not say 'where.'  London probably, maybe Switzerland.

Peter Hambro says that "there is not enough physical about. There are endless promises."

In a nutshell, we now know that physical gold for global delivery, of which the London vaults are a major supplier, are rather tight, especially given the increasing demand for physical bullion in the East.

There is plenty of room for questioning the numbers and casting doubt on them, while hiding behind a curtain of exchange secrecy.  One might suppose that the gold bullion bank apologists will be hard at it soon enough again.

They too often do not help to advance the understanding of the public,  preferring to selectively twist the data to say 'all is well.'   They deride the supply problems that people in the industry are encountering, always saying they are not real.  And they like to include all the gold that exists in the warehouses for their calculations, whether someone else already owns it and is clearly not interested in selling at these prices.

More details would be useful, because if we could obtain a better idea on the extent of central bank leasing, we would be better able to estimate the risks and the relative fragility in the highly leveraged and hypothecated supply of gold in New York and London.

One would think from the known data that the unallocated gold in London is counter-claimed many times, and even the allocated and custodial gold is likely to have multiple claims upon it.   So the actual 'gold float' is probably quite a bit less than 1,361 tonnes.  Each of us has our own favorite ballpark number ranging from 900 to 250 tonnes and less, not fully accounting for leases and leverage on the remaining stock.

Nick Laird had a secondary outlier estimate which he expressed in colloquial Australian, which I dare not repeat here.  But it was quite low.  lol. Maybe four months worth of float left.

And it would certainly be nice to have more information about silver, especially since to my knowledge the central banks have dealt their own supply away some years ago and there are quite a few indications of tightness of supply, although not in the Comex yet.

I do consider this analysis to be a work in progress,    Nick Laird and Ronan Manly are the key data organizers I believe, with help from Koos Jansen and Bron Suchecki, and the odd bit from Jesse the consulting detective.    So I would look to their sites for explication of their methods and sources. Ronan Manly in particular is a public source and he goes into quite a bit of detail.

Given the struggle it has been to obtain the data, and the refusal of central bank personnel to discuss their own supplies on orders from above, there may surely be gaps and errors in this, but not for lack of effort.

If I have any major concern it is that the management, the exchanges and the regulators, will allow the traders to sleep walk themselves into a rather serious situation.  And don't we know how little self-restraint these traders have been showing.

The remedy for this situation is not even more leverage, or more hypothecation of the unallocated stock, or even more leasing by the central banks, or more programs in India to dampen demand. 

The longer they allow this price rigging and leveraging up, the slower productive mines will come on line, and the worse the tightness on the remaining physical supply will become.  But as they say in New York and London, 'nothing is broken yet.'

The market solution for this tightness of supply is HIGHER PRICES and not increasingly ludicrous jawboning, spin, and bear raids.

And if higher prices might inconvenience the policy and perception management aspirations of the Wall Street financiers, their enablers and associated hirelings, well then too bad. Try to behave more responsibly, and stop attempting to make the rest of the world pay for your excessive gambling losses and poor judgement.


Related:
On the LBMA and Their Unallocated Holdings
Lions and Tigers and Deriding the Tightness of Gold Supply
How Many Good Delivery Bars Are In the London Vaults - Ronan Manly
Central Bank Gold at the Bank of England - Ronan Manly* (detailed sourcing of this data)
The London Bullion Market and International Gold Trade - Koos Jansen
Detailed London Charts and much data gathering - Nick Laird (available to the public)

Here are a few additional charts from Nick Laird's site at goldchartsrus.com to break out a bit more detail and to provide some context for the estimated physical supply compared to physical demand.

at http://jessescrossroadscafe.blogspot.com.tr/2015/09/shrinking-supply-of-unallocated-gold-in.html