Monday, April 27, 2015

Bull Market Most Overbought/Leveraged In History

"Submitted by Lance Roberts via STA Wealth Management,

John Mauldin – The Next Great Shock To The World

"...This is going to be a crisis that’s going to show up next decade … and where are they going to get the money?  What’s going to shock people is insurance companies and the big annuity companies that are guaranteeing so much of those funds.  It’s going to be a true crisis. 
And what most people don’t realize is that the insurance industry is a multiple the size of the banks.  It’s far bigger, far vaster and far more important. So this is what the Fed has done is they’ve made it impossible for these guys to make their numbers.  We are going to have to have pension and insurance and all sorts of reforms — that’s the next crisis.”


A Chilling Trip Down The Orwellian Rabbit Hole As Silver Shorts Get Torched

"With gold and silver surging strongly, today a 50-year market veteran takes King World News readers on a trip down the Orwellian rabbit hole as silver shorts get torched.  He also warned that there will be hell to pay for what the Western central planners have done.
John Embry:  “There is a somewhat better tone in the precious metals markets today.  The metals are horribly undervalued at this point.  Silver is bouncing sharply above the $16 level, where there has been a concerted effort to hold it for the last several weeks…."


Sunday, April 26, 2015

50 Tonnes of Gold Withdrawn from Shanghai Gold Exchange in Latest Week

"There were about 50 tonnes of gold bullion taken out of the Shanghai Gold Exchange in the latest week.

That is roughly 1,606,000 ounces in one week.

I include the gold inventories at the Comex warehouses below for the purposes of comparison.  The 'registered' category is what is available for sale at current prices.

These charts below are from the data wrangler Nick Laird at

Wave of Selling Activity at the London PM Gold Fix Still Occurring

"Nice to see that 'the London fix' has been 'fixed.' 


The problem was never just in London, and not just with their 'fix.'

The major source of the problem is much greater, and a the dark heart of it in the bucket shop markets about 3,460 miles to London's west.

This chart is from Nick Laird and his chart and data repository at


Gold, The SDR, & BRICS

"Submitted by Alasdair Macleod via,
Last Monday there was a meeting in Washington hosted by the Official Monetary and Financial Institutions Forum (OMFIF) to discuss the future relationship, if any, of gold with the Special Drawing Rights (SDR).
Also on the agenda was the inclusion of the Chinese renminbi, which seems certain to be included in the SDR basket in this year's revision, assuming that the United States doesn't try to block it.
This is not the first time the subject has come up. OMFIF's chairman, Lord Desai wrote a paper about it after the last Washington meeting on gold and the SDR exactly four years ago. The inclusion of the renminbi in the SDR was rejected in 2010 because of inadequate liquidity and is due to be reconsidered this year.
Desai pointed out in his paper that there are difficulties when it comes to including gold, because (and I think this is what he was trying to say) none of the SDR's paper constituents are convertible into gold, but gold's inclusion in the SDR would make them convertible through the back door. However, Desai seemed keen to re-examine the case for gold.
It should be pointed out that if gold is included in SDRs the arrangement cannot be long-lasting so long as the major central banks insist on printing money as an economic cure-all. However, China's position with respect to gold and her own currency could be a different matter.
The Chinese government has almost certainly accumulated large amounts of gold yet to be included in her reserves, and she has also encouraged her own citizens to own gold as well. We can therefore be certain that China sees a monetary role for gold while at the same time she is pushing for the renminbi to be included in the SDR basket. There is no doubt, if you read the IMF papers from the last SDR review in 2010 that the renminbi does now fulfil the criteria for inclusion today. So the question then is will the advanced nations, which dominate the IMF's membership, permit the renminbi's inclusion, and will the US, which has dragged its heels on giving China and the other BRICS nations a greater shareholding in the IMF, relent and permit these reforms, which were accepted by the other members back in 2010?
The Americans' blocking of reform signals her desire to preserve the dollar's hegemony; but given she lost out spectacularly over the creation of the Asian Infrastructure Investment Bank, IMF reform could become the next serious threat to the dollar's dominance. And if America does not back down over the IMF and the SDR, she will have no fall-back position; China on the other hand still has some aces up her sleeve.
One of them is gold, and another is her role in a rival organisation established by the BRICS. The New Development Bank (NDB) is in the final stages of being set up, driven by frustration at America's attempts to protect the dollar's role and to keep the IMF as an exclusive club for advanced nations. Instead, the NDB could easily issue its own version of the SDR with the gold lining Desai referred to in his original paper.
The reason this would work is very simple. The BRICS members, unencumbered by the cost burden of modern welfare states could exercise the monetary restraint required to tie their currencies to gold, perhaps running a Bretton-Woods-style gold-exchange arrangement between member central banks to stabilise their currencies.
However, the NDB would almost certainly want to see the gold price considerably higher if it is to play any part in a new rival to the SDR. Other BRICS members would be encouraged to make sure they have sufficient gold on board by selling US dollar reserves to buy gold, ahead of any decision to go ahead with a new super-currency.
It would appear the era of the dollar's global domination as a reserve currency is coming to an end, and the stage is now being set for gold to be officially accepted as the ultimate reserve money once again, this time by the next generation of advanced nations."

When QE Leads To Deflation: A Look At The "Confounding" Global Supply Glut

"On Saturday we once again explored the question of whether central banks are creating deflation. The idea that post-crisis DM monetary policy may be causing disinflationary pressures to build is somewhat counterintuitive on its face but in fact makes quite a lot of sense. Here’s how we explained it:
The premise is simple. By keeping rates artificially suppressed, the central banks of the world effectively make it impossible for the market to purge itself of inefficient actors and loss-making enterprises. As a result, otherwise insolvent companies are permitted to remain operational, contributing to oversupply and making it difficult for the market to reach equilibrium. The textbook example of this dynamic is the highly leveraged US shale complex which, by virtue of both artificially low borrowing costs and the Fed-driven hunt for yield, has retained access to capital markets in the midst of the oil slump and has thus continued to drill contributing to the very same price declines that put the entire space in jeopardy in the first place.
Expanding upon that a bit, we might say this: those who have access to easy money overproduce but unfortunately, they do not witness a comparable increase in demand from those to whom the direct benefits of ultra accommodative policies do not immediately accrue. Meanwhile, as WSJ notes, governments are reluctant to spend in the face of heavy debt burdens and increased scrutiny on fiscal policy in the wake of the European debt crisis while China, that all important source of voracious demand, is in the midst of executing the dreaded “hard landing.” Here’s more:..."


The "War On Cash" Migrates To Switzerland

"Submitted by Pater Tenebrarum via Acting-Man blog,

Banks Increasingly Refuse Cash Withdrawals – Switzerland Joins the Fun

The war on cash is proliferating globally. It appears that the private members of the world’s banking cartels are increasingly joining the fun, even if it means trampling on the rights of their customers.
Yesterday we came across an article at Zerohedge, in which Dr. Salerno of the Mises Institute notes that JP Morgan Chase has apparently joined the “war on cash”, by “restricting the use of cash in selected markets, restricting borrowers from making cash payments on credit cards, mortgages, equity lines and auto loans, as well as prohibiting storage of cash in safe deposit boxes”.
This reminded us immediately that we have just come acrossanother small article in the local European press (courtesy of Dan Popescu), in which a Swiss pension fund manager discusses his plight with the SNB’s bizarre negative interest rate policy. In Switzerland this policy has long ago led to negative deposit rates at the commercial banks as well. The difference to other jurisdictions is however that negative interest rates have become so pronounced, that it is by now worth it to simply withdraw one’s cash and put it into an insured vault.
Having realized this, said pension fund manager, after calculating that he would save at least 25,000 CHF per year on every CHF 10 m. deposit by putting the cash into a vault, told his bank that he was about to make a rather big withdrawal very soon. After all, as a pension fund manager he has a fiduciary duty to his clients, and if he can save money based on a technicality, he has to do it..."


Why Is JP Morgan Accumulating The Biggest Stockpile Of Physical Silver In History?

"Why in the world has JP Morgan accumulated more than 55 millionounces of physical silver?  Since early 2012, JP Morgan’s stockpile has grown from less than 5 million ounces of physical silver to more than 55 million ounces of physical silver.  Clearly, someone over at JP Morgan is convinced that physical silver is a great investment.  But in recent times, the price of silver has actually fallen quite a bit.  As I write this, it is sitting at the ridiculously low price of $15.66 an ounce.  So up to this point, JP Morgan’s investment in silver has definitely not paid off.  But it will pay off in a big way if we will soon be entering a time of great financial turmoil.
During a time of crisis, investors tend to flood into physical gold and silver.  And as I mentioned just recently, JPMorgan Chase chairman and CEO Jamie Dimon recently stated that “there will be another crisis” in a letter to shareholders…"


The Global Economy is Weakening Warns Dr. Faber

"The global economy is not strengthening. It is weakening," "China is weakening. The U.S. economic statistics recently have been on the weak side." China's economy grew 7 percent in the first quarter, its worst showing in six years. The Fed made a mistake in cutting short-term interest rates to almost zero, Faber said. "The monetary policies as conducted by the Fed have created a lot of unaffordability in the system," Dr. Marc Faber told CNBC recently..."


US Factories Crushed By Strong Dollar

"Government statistics are always suspect, for at least one obvious reason: Modern economies are way too big and complex to measure in real-time. So virtually every number is revised in the months after its release, frequently to the point of saying something very different. But by then lots of new data has come out and no one cares about the old numbers.
So to the extent that any government report is trustworthy, it’s the trend and not the data point that matters. And lately a whole slew of data points have been coalescing into downtrends that should be taken seriously. Today’s example is durable goods, which measures the health of US factories making big, long-lasting things like cars, planes and refrigerators. Bloomberg this morning put out a good analysis showing how “core” capital goods orders — for things that don’t bounce around by double-digit rates every month — is now firmly in a downtrend, featuring the following charts:

Core goods shipments
Cap goods orders
Capacity utilization 2015
The obvious explanation is that the dollar’s exchange rate is way up, making US goods more expensive and foreign goods cheaper and leading the rest of world to buy less from us. Domestic factories are seeing their order books shrink and are as a result producing less. They’re also hiring fewer and/or firing more workers. And the downtrend seems to be gaining momentum. Core orders in particular turned down in mid-2014 and are now in free-fall..."

The Ugly Truth About What Is Really Happening Around The World

"On the heels of another chaotic trading week in world markets, today one of the top economists in the world sent King World News an incredibly powerful piece discussing the ugly truth about what is really happening around the world.  Below is the fantastic piece from Michael Pento.
April 25 – (King World News) – Just like in the world of fashion, economic terminologies come in and out of vogue. One such economic term trending recently is Secular Stagnation.  First proposed by Keynesian economist Alvin Hansen back in the 1930s, Secular Stagnation was coined to explain America’s dismal economic performance—in which sluggish growth and employment levels were well below potential…."


Friday, April 24, 2015

How Neoliberalism Survived the Financial Meltdown - 'Old As Babylon, Evil As Hell'

""Professor Philip Mirowski author of Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, explains the intellectual history of Neo-liberalism, what Neo-liberals believe, making capitalists think differently, the role of think tanks in Neo-liberalism, the mythology of market supremacy..."

The Neo-Liberal general action pattern:
1. Create a fog of confusion about a social policy issue, its sources, and its nature.

2. Propose 'new markets' to fix the problems created by gaps or flaws in existing markets which are the language by which to define the public policy issue.

3. Build the solution as a platform to encourage phony 'entrepreneurs' to come in and expand and embed the market solution, perspective and terminology into the social structure.  Provide little to no regulatory oversight so that monopolies and predatory pricing policies protected by monopoly enrich a powerfully dominant few..."


Puerto Rico Warns Of Imminent Government Shutdown Due To "Liquidity Crisis"

"Two months ago, when Puerto Rico’s third largest bank failed costing US taxpayers some $750 million in the process, we noted that Doral Bank wasn’t alone in the world when it comes to having an NPL ratio bordering on 40%:
“It appears that at least in some ways, "Puerto Rico is indeed Greece,” we said. 
Less than 60 days later it appears that Puerto Rico is indeed Greece in a lot of ways because as Reuters reports, the U.S. territory faces a looming government shutdown thanks to “the absence of liquidity to operate.” 
Puerto Rico's top finance officials said the government of the U.S. territory will likely shutdown in three months because of a looming liquidity crisis and warned of a devastating impact on the island's economy.

In a letter to leading lawmakers, including Governor Alejandro Padilla, the officials said a financing deal that could potentially salvage the government's finances currently looked unlikely to succeed. It warned of laying off government employees and reducing public services

"A government shutdown is very probable in the next three months due to the absence of liquidity to operate," the officials said. "The likelihood of completing a market transaction to finance the government's operations and keep the government open is currently remote."


Crude Drops After US Rig Count Decline Extends To Record 20 Weeks

"For a record-breaking 20th week, US rig counts declined. Total rigs dropped 22 to 932 (the 4th smallest drop since Nov 2014) while oil rigs fell 31 to 703 (down over 56% from the highs). With the very modest production drop (all due to Alaska with the Lower 48 flat) it appears any slowdown in drilling rigs has not dampened enthusiasm to pump, baby, pump. WTI initially popped but is fading now...",


Hopium: How Far Can Irrational Optimism Take The U.S. Economy?

"If enough people truly believe that things will get better, will that actually cause them to get better?  There is certainly something to be said for being positive and thinking that anything is possible.  And as Americans, optimism seems to come naturally for us.  However, no amount of positive thinking is ever going to turn the sun into a block of wood or turn the moon into a block of cheese.  Any good counselor will tell you that one of the first steps toward recovery is to stop being delusional and to come to grips with how bad things really are.  When we deny reality and engage in irrational wishful thinking, we are engaging in something called “hopium”.  This is a difficult term to define, but the favorite definition of hopium that I have come across so far goes like this: “The irrational belief that, despite all evidence to the contrary, things will turn out for the best.”  In hundreds of articles, I have documented how the U.S. economy is mired in a long-term decline which is about to get a lot worse.  But most Americans see things very differently.  In fact, according to a brand new CNN/ORC poll, 52 percent of Americans describe the U.S. economy as “very” or “somewhat good”, and more than two-thirds of all Americans believe that the U.S. economy will be in “good shape” a year from right now.  But if you asked most of those people why they are so optimistic, they would probably mumble something about “Obama” or about how “we’re Americans and we always bounce back” or some other such gibberish.  Well, it’s wonderful that so many people are feeling good and looking forward to the future, but are those beliefs rational?
We witnessed a perfect example of this “hopium” on Wednesday.  Sales at McDonald’s restaurants have been in decline for quite a while, and the numbers for the first quarter of 2015 were just abysmal…"


11 Signs That We Are Entering The Next Phase Of The Global Economic Crisis

"Well, the Nasdaq finally did it.  It has climbed all the way back to where it was at the peak of the dotcom bubble.  Back in March 2000, the Nasdaq set an all-time record high of 5,048.62.  On Thursday, after all these years, that all-time record was finally eclipsed.  The Nasdaq closed at 5056.06, and Wall Street greatly rejoiced.  So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later.  Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong.  Just like the last two times, what we are witnessing is an irrational financial bubble.  Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst.  And even now there are signs of economic trouble bubbling to the surface all around us.  The following are 11 signs that we are entering the next phase of the global economic crisis…
#1 It is being projected that half of all fracking companies in the United States will be “dead or sold” by the end of this year.
#2 The rig count just continues to fall as the U.S. oil industry implodes.  Incredibly, the number of rigs in operation in the United States has fallen for 19 weeks in a row.
#3 McDonald’s has announced that it will be closing 700 “poor performing” restaurants in 2015.  Why would McDonald’s be doing this if the economy was actually getting better?
#4 As I wrote about the other day, we could be right on the verge of a Greek debt default.  In fact, we learned on Thursday that the Greek government has been “running on empty” for months…"

China, India & Brazil to become The New Economic Powers

"Marc Faber : The world has become or has always been very complex. The major trends in the world have been and continue to be the shift in the balance of economic power from the old world -- in other words, Western Europe and the US -- to the new world, which are essentially emerging economies, notably of course China, India, Brazil and other emerging economies.
It does not mean that the west is going down in absolute terms, but in relative terms for sure when you consider the 19th century and the 20th century until about 1950. Between 1780 and 1900, colonialism in India led to a terrific de-industrialisation. The economy became less and less important as an industrial power.
The same went for China and this has changed now starting about 20 years back, and countries like India and China are becoming relative to the rest of the world and relative to the western countries, which are much more important economically. This leads to tensions. We have tensions in the Middle East. We have tensions regarding Ukraine and we have territorial disputes in Asia because for the old world, it is very difficult to understand and appreciate the changes that are occurring. They still think they can come in with aircraft carriers or with bombers and scare everybody. But that is no longer the case."


Man Who Predicted Collapse Of Euro Against Swiss Franc Warns World In For Another Major Surprise

"Today the man who remarkably predicted the collapse of the euro against the Swiss franc warned King World News that the world is in for another major surprise.
Egon von Greyerz:  “There is clearly apathy in the gold market now.  Gold has essentially gone sideways for the last couple of years.  Gold was at these levels in June of 2013.  So for two years gold has been trading sideways with some volatility…."


Man Asked To Speak To Chinese Officials Warns Elite Have The World Headed For Disaster

"Today a legend who was recently asked by the Chinese government to give a speech to government officials in China sent King World News a powerful piece that warns the elite now have the world headed for disaster.
April 24 (King World News) – The United States needs a wake-up call and the loss of leadership and credibility on economic issues is exacerbated by the dysfunction and divisive nature on Capital Hill. Also, no longer is the US a reliable partner internationally (redlines are blurred). Respect, compromise or reasoning have been lost in the ideological battles as the priority of politicians seems more ideological than issues driven today.
World's Financial Elite Ignoring Thousands Of Years Of History
The world’s financial elite ignore thousands of years of history that proves money printing never works, and everyone celebrates every round of quantitative easing with new market highs. The era of quantitative easing has spawned an extraordinary financial bubble that shares the same characteristics as the housing bubble whose origins began with the same central banks determined to give everyone a house. This bubble, like others will end badly.
Despite signs of growth, the Fed seems to be keeping yields at less than one percent and the divide between American and European rates is at the widest since the seventies. Germany’s bunds currently yield 0.10 percent, and only Greece has a higher yield than the US. Risk has been mispriced as money flooded into the dollar. No longer is there a risk premium for moral hazard. Meantime, the over-indebted global economy is stuck in neutral despite the unprecedented financial engineering by central banks that created a huge global asset bubble.
The resulting currency war already claimed its first casualty when the Swiss removed their currency cap in January. We believe this disconnect between rates and the economy is the product of the central bank’s ironclad control of the economy. Furthermore, the Fed has yet to exit from its unconventional monetary policy which included an era of cheap and abundant dollar liquidity through trillions of bond purchases after more than six years of near-zero interest rates. This cannot last, and because of the mounting deficits of the last few years, America’s net debt has exploded to 100 percent of GDP..."