Today's Assignment

Tue, May 7, 2013 - 9:51am

While we watch the morning raid and hope for a recovery FUBM, here's a video for you to consider.

A link to this was sent to me yesterday. The lady that gives the presentation is named Christine Hughes. She's the President of something called Otterwood Capital Management, which appears to be a money manager or hedge fund, based in Toronto. I don't completely agree with all of her analysis...and that's OK. Since when does everybody agree on everything? But I've determined that this video is worth your time to watch.

Though her analysis of gold is faulty because she is simply looking at the paper price and paying no mind to the physical market fundamentals, I want you to watch this for the greater, macro discussion.

Christine does an excellent job of breaking down into understandable terms the fallacy of the current BankofJapan and Shinzo Abe yen devaluation plan. After watching this video, not only will you understand why Japan is doomed, you'll also be able to apply much of the same rationale to the United States.

Further, think about the warnings from Jim Willie of the "Treasury Market Tower of Babel" and how global, sovereign debt is going to create a "black hole" that will eventually suck in almost all available capital as rates collapse to zero and even go negative.

So, don't just absorb the information presented here. Chew on it. Digest it. Really think about the global implications, not just Japan, as the entire globe rushes to debase and devalue. Furthermore, if this path to the future is so obvious, what do you expect the Creditor Nations of China, Russia, India and others to do? Just sit idly by or would you expect them to have their own plan? If Christine Hughes can see this coming from her office in Toronto, we must assume that President Xi can see it from Beijing, too.


About the Author

turd [at] tfmetalsreport [dot] com ()


May 7, 2013 - 9:58am

Silver rocks


May 7, 2013 - 9:58am



boom! second place is the first loser!

May 7, 2013 - 10:01am


turd again??

May 7, 2013 - 10:08am
May 7, 2013 - 10:09am

Fifth (As in Beethoven)

By my count....Thanks for the concession to Asian time!!

May 7, 2013 - 10:09am


Eh 8th will have to do...

Mr. Fix
May 7, 2013 - 10:11am

Seventh heaven......

It's off to work I go, long-time customer has a broken air conditioner, and the new compressor just came in.

Today I'm going to "pretend" to be an auto mechanic.

See you all later.

May 7, 2013 - 10:17am

Today's raid

So are they covering shorts this morning, or are they still trying to quell physical demand? Or are they lowering the price so they can get more gold out of GLD for their fiat?

I get confused. And with all the counterfeit metals springing up in the lower denominations, I hesitate to add to the stack except for old coins and think I might spend my fiat prepping other items instead for a while. But I sure would like to have a few more ounces of gold.

I agree with Mr Fix that the counterfeiting is part of the plan.

May 7, 2013 - 10:17am
May 7, 2013 - 10:24am

Repost from other thread This

Repost from other thread

This should be being discussed today - structural change rather than short term economic outlook. China will do what is best for itelf make no mistake.Recommend reading the whole article

China signaled it will propose plans this year to allow freer flows of its currency in and out of the nation as part of measures to loosen control over the yuan and interest rates.

The plan on yuan capital-account convertibility will also include a way to let individuals make overseas investments, the State Council said in a statement yesterday after a meeting led by Premier Li Keqiang on the focus of economic reforms in 2013. Other measures include improving controls on risks from local- government debt, expanding trials of value-added taxes on companies and pushing forward changes to the country’s household-registration system.

Enlarge image

China's Central bank Governor Zhou Xiaochuan said last month after the nation reported slower-than-forecast first-quarter expansion that China needs to sacrifice short-term economic growth for structural adjustments. Photographer: Nelson Ching/Bloomberg

Future changes may include raising or removing quotas on foreign investment in the nation’s bond and stock markets and giving Chinese companies more freedom to borrow overseas, said Chen Bingcai, a former official with the nation’s foreign- exchange regulator. Li in March pledged to open the economy to more market forces and strip power from the government as part of efforts to restructure growth.

“The general principle of the opening-up is to be gradual, starting from long-term investment to short-term capital flows and from a quota-management system to a free flow of money,” said Chen, now a Beijing-based researcher with the Chinese Academy of Governance.

The State Council statement didn’t give additional details on the capital-account plan.

May 7, 2013 - 10:24am


You may very well be right. IMHO they won't give up. They are shameless and have infinite amounts of digital dollars from The Fed. And if they lose control of PM's, then the game is up for them. I'm afraid that the "Don't fight the Fed" arguement is alive and well, otherwise the enormous physical demand should have done more on the upside. We need the system to start to collapse so that they have bigger priorities. Not so far away now.

I also agree that the counterfeit coins are another tactic within their strategy. they will do whatever it takes to control PM's until they have to fully commit to more important matters, like a collapse in the equity markets or high yield?

May 7, 2013 - 10:30am


Response to prior thread which has no comments box:

"One of the most nefarious issues with the downward drift of the paper price is that it keeps the casual observer out of the metals."

Of course. That is precisely their intention.

May 7, 2013 - 10:32am

how many people who bought AAPL at $600-700 are down

worse than gold from the peak?. That's a lot of people.

May 7, 2013 - 10:35am

3rd -- Japan in TROUBLE!! (and the rest of the world, too...)

and now I'll go Feed The Turd!

I haven't watched all the video yet, but 'the elephant in the room' that most all of the financial analysts don't consider about Japan is the ongoing Fuk-us-hima planetary disaster -- which remains nearly completely 'unfixed' -- and 'un-fixable!' -- 2 years after. (With the Japanese not seeming to have a CLUE how to stop the radiation, and refusing to let other countries help.)

Japan may soon be revealed as a 'walking dead' country, with a dying economy... 'exporting' radiation to North America via the jet stream and the ocean (and the soon-arriving tsunami debris).

Other countries are starting to test Japanese products for radiation, and refusing to import goods with high readings, or banning some food products outright. Not the USA! Hillary Clinton has signed a pact to import Japanese food without testing.

Today: Study indicates vast area of 60-million people contaminated from Fukushima disaster

Words cannot express this sadness...

May 7, 2013 - 10:37am

Christine Hughes

I watched the video yesterday. She thinks that there will continue to be downward pressure on the price of gold until the Bank of Japan's policy of devaluing the Yen is no longer seen as "good." How long will that be? Months? Years? She doesn't say. She just thinks that this policy is only hastening Japan's day of reckoning. Interesting that she also believes Japan is doomed regardless of what they do.

May 7, 2013 - 10:39am


Thanks TF. Sounds like Ms. Hughes and Kyle Bass are on the same page as far as Japan is concerned.

Negative interest rates are just a slow-motion version of Cyprus, IMO.

May 7, 2013 - 10:41am

What I am doing today

Fulfilling birthday present for MrsF. Will be checking in from time to time, though.

May 7, 2013 - 10:44am

@luv2stack You are dead wrong


You are dead wrong about Japan not letting other countries help with Fukushima. 100% completely and utterly wrong. I am so sick of some of the shit that comes out it's unreal !

May 7, 2013 - 10:46am

Does Anyone actually believe that Japan's

..Policy is good now? Problem is, in these centrally-planned markets nothing makes any sense any longer. This is not a case of "The markets can stay irrational longer than you can stay solvent" but one of "The markets don't work any longer and anything can happen". None of this makes any sense. Especially, Japan wants to print itself into oblivion rather than FINALLY addressing its zombie Banks problem (Sound familiar?) and we have to wait until this policy is regarded as "Not good" before it will be PM positive? Sheesh...............

May 7, 2013 - 10:48am

A Slow Start A Fast finish thread RIP..

Or it might just be me. Again?

May 7, 2013 - 10:49am

Interesting Interpretation..not analysis

She's got some interesting things to say. She obviously does not believe in market manipulations. But it's not her comments on gold that show this, it's her comment that "...the bond market will react much sooner than this..." That's way off. We are at the point where the CBs ARE THE BOND MARKET. There will NOT come a day when GBs will show a rise in rates while the CBs are printing money and buying gov't debt. This must continue until the day when the CBs' currency is completely discredited in a long or short inflation event.

Her next big mistake is the interpretation that gold is dumped as people look for yield. Of course, maybe I'm making the mistake that most investors can't do math. Or maybe it's my bigger mistake that most investors don't know a darn thing about monetary history. Well, then maybe this is MY thesis versus her's.

Gold is not being dumped. I'm in the camp that says gold is moving from west to east and 100,000 Chinese housewives will have the last laugh. The drop in gold is a paper event - a manipulation. If it wasn't, then why the drop in JPM gold holdings and retail shortages? Those who gamble in the COMEX will lose. Those who buy phyzz will survive.

I really pity the Japanese. These people are so F***ed over because they followed our lead in the worst possible ways - they exchanged many of their virtues for too many of our vices. At least they made their own choice.

OK. I responded with a sermon to the choir and elders.

May 7, 2013 - 10:49am

good video, thanks for this

Only 2 comments above me as I type this, but I just watched the video... I may be relegated to page 2 by the time I submit this comment! Turd, thanks for posting the clip, good stuff and clearly explained.

How deliberate is Japan's action in terms of undercutting US QE? In Confucianism, one way to get back at an enemy is to take however long is required to convince that enemy that you are no threat. Let them believe you are an ally. Have that enemy trust you more and more and have them allow you to accept some responsibilities for tasks that enemy needs done, small things at first but gradually becoming more and more important. Become subservient to the enemy. Become his trusted servant. One day, that now-trusting enemy will be realise that they are now dependent on you. That's when you make your move.

just to remind everyone: Japan became the trusted ally and 4th largest trading partner of the nation that dropped 2 A-bombs on it. This won't end well. You can bet that people high up are already fully prepared. We know what we can do.

May 7, 2013 - 10:49am

I think that there will be more and more or these happening

Especially in the City of London and on Wall Street and the Hamptons.

A daily thorough check over of the limo might be in order. Also a daily search of nearby woods for grenade launchers near the old homestead might also be in order.

Wouldn't won't the little dears and the wifey to be in any danger.

Just a guess.

May 7, 2013 - 10:51am

imho, Japan will head into

imho, Japan will head into the wipe clean slate first and exit it first just like they did back in the 1930s with exactly the same policies they followed then. Just google it.

Nevermind, here you go. The Finance Minster was eventually assassinated by army officers as he wanted to decrease military spending.

Takahashi Korekiyo and Fiscal Stimulus in Japan in the 1930s

Japan’s experience during the 1930s is something that is not often discussed. For example, did Japan get out of the Great Depression before the war? In fact, it did, and used Keynesianism before Keynes’sGeneral Theory.

A number of countries escaped the depression or the high involuntary unemployment and economic weakness after their contractionary phases of the Great Depression: Sweden, the US (to some extent), Germany, and Japan. In the 1930s, Sweden was an example of monetary and fiscal stimulus to escape the depression.* The US under Roosevelt was a moderate example of stimulus, but far too timid. It has been known for a long time that Germany and Japan escaped the depression by large-scale fiscal stimulus in the 1930s, but of course when you point this simple fact out (and stress that it is not in any way support for fascism), it provokes a cacophony of nonsense from Austrians and libertarians.

The Japanese recovery was masterminded by Takahashi Korekiyo, Japan’s Finance Minister, often referred to as the Japanese “Keynes” (Cha 2003).

Japan abandoned the gold standard on December 13, 1931, and escaped the death grip of deflationary shocks transmitted internationally by adherence to the gold standard. Japan then devalued its currency, and implemented effective foreign exchange controls. The yen was devalued by about 40% (Cullen 2003: 251), and most of this devaluation occurred in 1932 and 1933. After 1933 the value of the yen stabilized (Cha 2003: 130). By 1934, the yen started to appreciate against the US dollar (Drysdale and Gower 1998: 223). One of the reasons why devaluation was implemented was that the yen had been significantly overvalued in the 1920s (Teranishi 2005: 130-133), and this had seriously harmed Japanese exports and caused trade deficits in the 1920s.

Japan then engaged in large government deficit spending to stimulate the economy:
Modern Alchemy
May 7, 2013 - 10:52am

Japanese Whoville and Debt:GDP

Doubling the monetary base in 2 years! Wow! Doesn't that mean all the little Japanese Whos will have more money in their pocket to spend!? (sarc just in case you cant tell)

GDP: This insight came from a conversation that happened a few weeks ago with a friend. The Debt to GDP ratio can look better in 2 different ways. (I know this is over simplifying the matter) you could lower debt or you could raise GDP. This brought us to the topic of the US GDP and it raising. I asked the question, If we as a nation use more oil than we can get domestically, why would we sell any of the oil that we do produce? If we will in fact buy it back from other countries and then some, why not just keep what we make? I think the answer to that is pretty simple; It looks good from a GDP and export standpoint. It looks like we actually produced something we can export that other countries want and wow, look at our GDP, we have a strong base for our wares so we as a country can afford our debt levels. What I don't think is being said is that we buy more of what we export than we sell. Its all just a gemmic to boost the debt:GDP so we can have a higher national credit card level.
Question is, how many other resources and goods do we sell as a country (to boost GDP) and then turn right around to buy them back? (more expensively even when you consider transportation and import fees) And as a second thought, how many other countries are doing similar accounting tricks?

May 7, 2013 - 10:54am


Korea, China, Indonesia were different factors in the equation for Japan then?

PS. I hope you are paid in Dollars?

The Green Manalishi
May 7, 2013 - 10:58am

200 Week MA - Gold

We had a little bounce of this earlier, will it hold?

May 7, 2013 - 11:00am

What Mrs. F doesn't know ...

is that you are gonna declare a force manure due "crazy stuff" happening and devalue that coupon to 10 minutes.

May 7, 2013 - 11:01am

@ Philipat Contest Closed

I think the reason the box is gone is that the contest is now closed to new entries.


May 7, 2013 - 11:02am


They are the Keynesians. They believe this is good a long as it needs to be.

As I alluded to in my post's a matter of your world view, isn't it? If you think that wealth can come from a printing press, then you print. If you think wealth only comes from discovery and productivity (and energy capture - HT to SRS), then all the paper in the world won't solve a solvency problem. A liquidity problem...sure, for a short time.

That's why my assumption about investors understanding math and history may be my great failing. Even though history shows that Keynes was wrong, it may be a pointless remark. There is a small probability IMHO that the fall in gold may be solely due to weak (ie stupid) hands dumping and nothing else as they chase 'yield'. If that is the case, the Chinese and Russians will benefit as they apply a little common sense and BTFD. However, I still put the price smash squarely in the hands of the banksters.


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