Down Under!

Fri, Jul 26, 2013 - 12:20pm

A quick bit of 80's Nostalgia:
"Do you come from a land down under?
Where women glow and men plunder?
Can't you hear, can't you hear the thunder?
You better run, you better take cover."
Men At Work

I had written a piece on the effects of economic and political power on our investments for my first piece. However, late last night, I became intrigued by a couple of stories on our US Military actions down under so I've decided to put that piece off to do a bit of speculation on these tantalizing headlines.

Australian War Games: U.S. Military Machine Out Of Control

"The “military machine” of the United States is “out of control” as it is spreading its military tentacles throughout the Asia-Pacific region amid a massive and unprecedented series of war games in Australia, an antiwar activist says. Approximately 20,000 US troops descended on Australia’s east coast for a joint military exercise this week in the biggest such exercise to date."

US, Australian troops build for joint exercise in central Qld

Troop numbers are building in Central Queensland for the biggest bilateral military exercise conducted by Australia and the United States. More than 28,000 troops from the two nations will be involved in Exercise Talisman Sabre over the next three weeks

And this lovely piece of work by the US Military.

US says bombs dropped on Australia reef to avoid boats

The United States military said Monday it had jettisoned four unarmed bombs on Australia's Great Barrier Reef during a training exercise only because civilian boats had strayed into the drop zone.
What's going on here? Well according to Vice Adm. Scott Swift, the U.S. 7th Fleet commander overseeing operation Talisman Saber 2013, the joint war games in the South Pacific are designed to prepare for natural disasters and government relief, or to provide military support, now get this "when a government collapse leads to humanitarian need" Anybody get a feeling that Adm. Swift is a bit of a snake oil salesman MOPING the presence of US troops in one of the most stable countries in the world. I'm fairly certain that the Aussies are quite capable of handling their own humanitarian and disaster relief needs.
Now let's look at some parallel stories over in the Asia-Pacific region. According to the New York Times, only two weeks earlier China announced, an unprecedented naval exercise with the Russian navy in the Sea of Japan, under military deploying antimissile submarines, 7 warships, and an entire flotilla advanced naval weaponry.

China will not stand alone. The Obama administration’s decision to send more military power to Asia is widely interpreted in China as a containment policy, leading in part, some Chinese analysts say, to China’s seeking stronger military and economic relations with Russia, a country it has long regarded with suspicion.

I think we can be certain that China and Russia do not have humanitarian assistance in mind. And back in July, China and India announced for the first time joint naval exercises.

Ok, let's state the obvious: The US doesn't like the idea of China developing unilateral trade agreements with other countries such as Australia, New Zealand, France and a host of South American countries to allow direct conversion and trade with the Chinese yuan. The new BRICS alliance is working overtime to counter the Western elite with a new BRICS bank as a counter move to the IMF. We are seeing an unprecedented financial, military and geopolitical cooperation among the BRICS nations attempting to thwart the continued the Anglo-American financial and military dominance in the Euro/Asian theater.

As Turd has been suggesting, the Chinese are building reserves to build a gold backed currency. I understand that there are some objections to this based upon Chinese liberal monetary policy undermining it's currency. Nobody can claim China is a monetary saint, however, over printing a currency is not the sole criteria for debasement and currency failure. Right now we have Chinese monetary policy being met with broader acceptance of the Yuan contrasting the US Dollar being assaulted from all corners at the world simultaneously as the Fed issues more dollars. The fact that more and more countries are looking at direct trade with China and the Yuan strengthens the currency because at the end of the day it could be argued that there are no strong currencies except those which others are willing to accept.

Now let's add the following article to the equation of speculative reasons why the US might want to keep close tabs on Australia in light of their interest in direct trade with the Yuan. This article was published on Joseph's Farrell's blog so I'm also including his speculation along with the article. I expect that the oil blogosphere is heating up to show how this can't be so and a dozen or more ready to call me a schmuck for remaining on the fence regarding the Peak Oil meme. I get it. We are going dark. And yes, there are smarter, more well informed pundits writing about the situation but us uninformed are a bit slow and enjoying entertaining both ends of the argument.

The Biggest Oil Discovery In 50 Years?

In a virtually uninhabitable section of South Australia, a discovery has been made which could rock the world. Some are calling it the biggest discovery of oil in 50 years. Earlier this year, a company called Linc Energy announced that tests had revealed that there was a minimum of 3.5 billion barrels of oil equivalent sitting under more than 65,000 square kilometres of land that it owns in the Arckaringa Basin. But that is the minimum number. It has been projected that there could ultimately be up to 233 billion barrels of recoverable oil in the area.
It would also mean that Australia now has more "black gold" than the nations of Iran, Iraq, Canada and Venezuela.

About the Author

Green Lantern


Jul 26, 2013 - 12:30pm


DEBT BOMB - The Global Financial Crisis Stripped Bare by Dominic Frisby
Jul 26, 2013 - 12:30pm

Funny - Eating a...

Funny, I was eating a vegemite sandwich when I saw this! Really! Love the stuff.

Jul 26, 2013 - 12:30pm

Well, well, could it be a second?

Timing it's all in the timing.

Jul 26, 2013 - 12:33pm

Ah, another Turdville week comes to a close

Hang in there my Friends, we will win!!!

Just A Regular Guy
Jul 26, 2013 - 12:36pm


Peak oil is BS - flame away..... I wont respond, I cannot be arsed.

With regards to the military exercises, yes, it is kind of strange. Similarly strange are 1000 US Marines stationed in the North Territory and I have YET TO HEAR some kind of rational reason as to why this is. I heard some crap about training in desert warfare? What, the US doesn't have deserts? Oh wait, they're different right? Different sand, sand that is redder in colour and softer on the foot..... sure, and I'm Mother Teresa....

But yes that bomb or bombs..... Seriously wtf..... The US peeps said (in the media here) that they'll send down their divers to go fetch 'em. Why am I so paranoid about that too?


As a post script for you punters, check out LNG:ASX. They're kind of a big deal (to you guys in the US). They're building a plant in Louisiana. I got some cash in the company. It's a spec. punt, but I like my odds at the price I'm paying.

Jul 26, 2013 - 12:37pm

Youtube video link not working for me

Anyone else have this problem?

Jul 26, 2013 - 12:38pm

Oil can be manufactured,

Oil can be manufactured, given a source of cheap, abundant energy. Thorium looks to be a strong potential source, as does "waste" plutonium when used in traveling wave reactors. It's not that peak oil doesn't exist, it's that it is moot. No more important than peak charcoal was to steel manufacture in England. There may be dislocations during the sea change, but it will be anything but a civilization ending event.

argent rampant
Jul 26, 2013 - 12:39pm

Re-post from last thread: Michael Hastings' death...

may not be important, but there is a possibility it is VERY important. Someone needs to keep digging for the truth.

We ought to ask why...

did a seemingly successful young reporter with a wife and young child, who gave up drinking five years ago, ram his car into a tree at 4:30AM?

was he on that road at that time, going where?

was the transmission laying on the ground 150ft behind the car?

did a 2013 Mercedes burst into flame from a front end collision?

did the flames totally consume the car, inside and out?

did the FD arrive so quickly (when was the call received)?

did the PD so quickly rule out foul play when they couldn't even positively ID the body for 3 days?

will it take weeks to get a toxicology report?

does the PD refuse to release the accident report?

does the PD refuse anyone access to the vehicle?

have PD and FD allegedly been told not to comment?

was Hastings' body cremated without asking the family?

did Hastings email friends hours before the event saying he was under FBI investigation?

did he say in that same email that he was working on a very big story and needed to go off the radar for awhile?

There are more questions, I'm sure, but isn't this list enough to arouse the curiosity of SOMEONE besides a single San Diego TV station? Oh, and Hastings' last published item was about [the Obama] government spying. The final paragraphs read:

"...Transparency supporters, whistleblowers, and investigative reporters, especially those writers who have aggressively pursued the connections between the corporate defense industry and federal and local authorities involved in domestic surveillance, have been viciously attacked by the Obama administration and its allies in the FBI and DOJ.

Jacob Appplebaum, a transparency activist and computer savant, has been repeatedly harassed at American borders, having his laptop seized. Barrett Brown, another investigative journalist who has written for Vanity Fair, among others publications, exposed the connections between the private contracting firm HB Gary (a government contracting firm that, incidentally, proposed a plan to spy on and ruin the reputation of the Guardian’s Greenwald) and who is currently sitting in a Texas prison on trumped up FBI charges regarding his legitimate reportorial inquiry into the political collective known sometimes as Anonymous.

That’s not to mention former NSA official Thomas Drake (the Feds tried to destroys his life because he blew the whistle ); Fox News reporter James Rosen (named a “co-conspirator” by Holder’s DOJ); John Kirakou, formerly in the CIA, who raised concerns about the agency’s torture program, is also in prison for leaking “harmful” (read: embarrassing) classified info; and of course Wikileaks (under U.S. financial embargo); WikiLeaks founder Julian Assange (locked up in Ecuador’s London embassy) and, of course, Bradley Manning, the young, idealistic, soldier who provided the public with perhaps the most critical trove of government documents ever released.

The attitude the Obama administration has toward Manning is revealing. What do they think of him? “Fuck Bradely Manning,” as one White House official put it to me last year during the campaign.

Screw Manning? Lol, screw us.

Perhaps more information will soon be forthcoming. "

Or perhaps not...

Jul 26, 2013 - 12:43pm

Life is a vegemite sandwich

But who was the strange lady who made you nervous? Did she perchance hail from another colonial territory?

Just A Regular Guy
Jul 26, 2013 - 12:50pm


Yea I heard, not long after the Russian's had done a deal for BP, that the Brit's put out a press statement saying they can manufacture diesel in labs with bacteria... whoops :) With my decent knowledge of biology I could see this as plausible!

Jul 26, 2013 - 12:51pm

well, quite

"It's not that peak oil doesn't exist, it's that it is moot. No more important than peak charcoal was to steel manufacture in England. There may be dislocations during the sea change, but it will be anything but a civilization ending event." If long-haul [and short-haul] foreign holidays for numpties came to an end would life really be any less civilised?

argent rampant
Jul 26, 2013 - 1:35pm

@TMosley & Cononish1314

I agree with you, it is not an immediately cataclysmic event, it will play out over a long time period and we will adapt. However, neither should we think that it won't seriously affect every aspect of our modern cilization. How many things can any of us name in modern America, or elsewhere, that will not be affected, or eliminated, by a sufficient increase in the cost of petroleum?

Strongsidejedi Cononish1314
Jul 26, 2013 - 1:43pm

@cononish - yes

"who was the strange lady who made you nervous? Did she perchance hail from another colonial territory?"

Answer: yes, and she took me in and gave me breakfast!

Jul 26, 2013 - 1:52pm

Argie Rampant

I was being somewhat frivolous and [culture shock] ironic. However I'll need to admit that this new Aussie field [unlike the shale stuff] could be a wee bit of a game changer. Which could mean that it results in a mass brawl on the halfway line with Beijing's finest and my prediction still stands.

Jul 26, 2013 - 2:13pm

A Brewing Storm in the

A Brewing Storm in the Western Pacific Walden Bello Foreign Policy In Focus July 26th, 2013 A storm is brewing in the Western Pacific. As the Asia-Pacific region descends into a period of destabilizing conflict, the Philippines is quickly becoming a frontline state in the U.S. strategy to contain China—the central thrust of the Obama administration’s so-called “Pivot to Asia.” In the most recent development, the Philippine government has offered the United States greater access to its military bases. China’s controversial moves in the Western Pacific have served as a convenient excuse for heightened U.S. military presence in the region. In particular, Beijing’s claim of the whole South China Sea (now also called the West Philippine Sea) as Chinese territory has allowed the United States to portray itself as indispensable for protecting the region’s smaller countries from Chinese hegemony. A one-time U.S. colony and ally, the Philippine government has been especially receptive to Washington’s siren call. July 24 marks the first anniversary of Beijing’s creation of “Sansha City” to “administer” the whole West Philippine Sea and the islands and terrestrial features it claims. Among these are the Spratly Islands, nine of which are claimed and occupied by the Philippines, along with Scarborough Shoal, Ayungin Shoal, Panganiban Reef, and Recto Bank, all of which are claimed by the Philippines. The last few months have seen a series of provocative Chinese moves. These include the occupation of Scarborough Shoal, or Bajo de Masinloc, by up to 90 Chinese ships, which have barred Filipino fishers from the area; an increased Chinese military presence at Ayungin Shoal; and a Chinese general’s brazen presentation of the so-called “Cabbage Strategy.” The thrust of the Cabbage Strategy, Major General Zhang Zhaozhong explained, was to surround Bajo de Masinloc, Ayungin Shoal, and other Philippine territories with a massive Chinese naval presence to starve Filipino detachments and prevent reinforcements from reaching them. The Nine-Dash Line Maritime Grab - See more at:

Jul 26, 2013 - 2:15pm

Aussie comedic interpretation of 2008 Bear Stearns

This bit needs 10 minutes, but if you are not familiar with the 2008 global market failure, you should probably watch this. I am uncertain of the air date of the comedic bit. However, it must predate the bankruptcy of Bear Stearns because the actors refer to Bear Stearns and their failed hedge funds.

Jul 26, 2013 - 2:16pm

China, Russia working to

China, Russia working to undermine dollar’s central role Clearly, China is less than enthusiastic about the dollar’s status as the main global reserve currency. The People’s Bank of China (the Chinese central bank) said back in 2009 that a global dominance of a single national currency translates into higher risks of contagion. Russia is not happy about the dollar’s ubiquitous role, either. The Russian government wants the world to have more reserve currencies, and believes that the rouble could be among those currencies. The two emerging economies, Russia and China, have now pooled their efforts in order to make their dreams of a stronger rouble and yuan come true. China reportedly planning to back the yuan with gold Recent media reports suggest that Beijing is considering backing the yuan with gold. This decision, if taken, will likely affect China's economy and may trigger a new wave of the global economic crisis. For Russia, however, such a scenario may have its benefits. The currency wars raging around the world are just the tip of the iceberg, the famous US trader Russ Winter says. China has launched a series of manoeuvres to wrest away from the dollar its current status as the planet’s main reserve currency. In accordance with a long-standing Chinese tradition, the strategy of that war is based on deception. Latest news The "Yuan Belt" in Asia currently includes seven countries. Russia, Iran, Angola, Sudan and Venezuela have agreed to accept payments for oil supplies in the Chinese currency. More than 5 million barrels of oil shipments are now being paid for in yuans. On 12 July 2013 it was reported that the volume of direct trade in the yuan-yen currency pair had doubled in the year since such trade was launched. In March 2013 China signed an agreement with Brazil to open a swap line worth 30bn dollars. Three months later China signed a similar agreement with the UK. In April, China and Australia signed a "currency pact". On 3 July the European Central Bank also announced an agreement to open a large swap line with the People's Bank of China. On 4 July Singapore began to provide yuan clearing services. The two allies’ plan is as follows: first they want to put a tight noose around the dollar’s neck, and then, when a convenient moment comes, kick the chair from under the United States.

Jul 26, 2013 - 2:21pm

@TF - from GLD's own website

@TF - you probably already know this. But, I am not an investor in GLD and just found this interesting tid bit.

After posting my missive in the other thread about the huge gap between GLD investment inflows in 2004-2006 and the substantial delay in changes in the gold price, it is clear that the GLD clearly states that this gap is in London, on the LBMA, and admit to the delays.

The paragraphing below is mine.


quote: Gold bar list and Inspectorate certificates

All of the Trust’s gold is held by the Custodian, HSBC Bank USA, N.A. ("HSBC"), in their London vault except when the gold has been allocated in the vault of a sub-custodian. In such cases HSBC has agreed that it will use commercially reasonable efforts to promptly transport the gold from the sub-custodian’s vault to the HSBC’s London vault, at HSBC’s cost and risk.

The sub-custodians that HSBC use are Bank of England and London Bullion Market Association (“LBMA”) market–making members that provide bullion vaulting and clearing services to third parties. ...

The ounces of gold listed on the daily barlist may differ from the ounces of gold listed as owned by SPDR® Gold Trust ("Trust") on the website due to timing differences in trading and settlement.

The barlist includes ounces of gold on a settlement date basis, while ounces shown on the website are on a trade date basis.

Effective June 1, 2011, the Trust has entered into an agreement with HSBC Bank USA, N.A., the Trust’s Custodian, which will ensure that all of the Trust’s gold is held in allocated form at the end of each working day.

Jul 26, 2013 - 2:35pm

Inspectorate Certificates March 15, 2013 - "gold inventory" at "close of business on February 22, 2013" "this account held title to 105,840 London Good Delivery, large Gold Bars of a purity between 99.50% and 99.99% and a weight of 42,423,511.826 fine troy ounces of Gold." published July 26, 2013 - "Client Gold Stock Holdings Total Allocated Bar Count: 74,517 Total Allocated Fine Weight : 29,892,679.507 "Gold Stock List as of C.O.B 25-Jul-2013" __________________________________________________________ Um, am I reading these documents correctly? GLD had 42,423,511.826 fine troy ounces of gold on Feb 22, 2013. GLD now has 29,892,679.507 fine troy ounces allocated. Are 13 million ounces unallocated? Or, did 13 million ounces LEAVE GLD?

Jul 26, 2013 - 2:44pm
Jul 26, 2013 - 2:57pm


It's gone.

argent rampant
Jul 26, 2013 - 3:02pm

Ah.. shooting holes in the ocean (photo in GL's post)

with the venerable .50 cal! Four generations of sailors have done that. We never get tired of the fun it brings.

Jul 26, 2013 - 3:19pm
Jul 26, 2013 - 3:24pm
Jul 26, 2013 - 3:32pm
Jul 26, 2013 - 3:33pm


Woohoo, another unspectacular COT report. Slightly less bullish for gold, same as last week for silver. Bring on next week!

Jul 26, 2013 - 3:33pm

El Alamein Friday

Seems pretty decent so far, despite an earlier monkeyblip?

Jul 26, 2013 - 3:40pm

JPMorgan To Exit Physical Commodity Business

After weeks of emptying of their Gold vaults and making headlines in recent days over their oligolopolization of commodity warehousing, it seems the threat of a probe has excited Blythe and her colleagues to dump while the dumping is good:


Options include sale, spin-off, or strategic partnership as they re-confirm that they are "fully committed to traditional banking activities," as they look to drop the holdings of commodities assets and the physical trading business. We can only assume that "physical commodities" include the company's extensive inventories of tungsten (as well as the vault housing it), and not so extensive stores of gold and silver. That said, we are confident that the collapse in represented (but not warranted) JPM Comex gold vault holdings to a record low, and this news is completely

And gold is up over 10$ on the news the big question is who is next as they all run out of gold!!!!

Jul 26, 2013 - 3:52pm


I must say this is indeed quite a story! beers on ice, deckchair readied....

Jul 26, 2013 - 3:57pm

Big hedge fund dogs trying to exit GLD?

Hedge funds looking like the chump for the big dog banks. Speaking of big dogs trying to get out with their big oversized bone.

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