Sunday Night, Summer Recap

73
Sun, Aug 18, 2013 - 10:37pm

The Summer of 42. A little jazz instrumental version of this classic from the movie "Summer of 42"

Video unavailable

Were any of you around? The world was at war. We were still in the throes of the great depression. FDR had set-up the Japanese Interim camps.... Suffice to say, it wasn't the happiest of times. Let's move forward 70 years and do a quick review of the Summer of 2013 to date.

Yes, summer is quickly coming to an end. Do you feel the nip in the air as Labor Day fast approaches and the Back To School sales are already in high gear? For our purposes here and discussion of economic affairs, I'm calling summer the period between Memorial Day and Labor Day. No, I'm not looking to cheat anybody out a few more BBQ's and a few more days wearing flip flops. (I really don't like those things)

I'd like to briefly recap the events of the Summer of 2013. To quote Mr. Turd Ferguson, “If you been paying attention you don't need a recap” However, I think it might be a useful exercise to look at the events through a larger lens to see the intensification of financial and world political events which have unfolded in the summer of 2013 before we look at what is to come. Sometimes when you are too close, you do not catch their significance. In my estimation it has been an historic and unprecedented summer so far and things look like they will be getting more interesting both in geopolitics and our gold and silver investments.

It will be interesting to see how statist history writes some of these events for future generations but while it's fresh in our memory, let's recap.

The New Police State and The End of The Industrial Age?

Two significant trends began in 2013. With the revelations of the Edward Snowden Affair, we learned how Washington had escalated it's activities on the War on Terrorism from enemies abroad to monitoring the day to day activities of it's citizens. Although some are speculating that much of what has been reported is a con job and your government is not as smart as you think. Fear or fact? https://jonrappoport.wordpress.com/2013/07/20/nsa-genius-spying-eye-or-bumbling-idiot/

Detroit The End of the Industrial Revolution?

The city of Detroit declared bankruptcy, the largest municipal insolvency in American History. Banks, bond insurers and pension systems await the verdict of a Federal Judge. Robert Kiyosaki gives a good interview with Greg Hunter of USA Watchdog. The point I want to draw to your attention is that he believes that bankruptcy of Detroit represents the end of the industrial revolution.

https://youtu.be/0BAtKNlPvME

For those of you who don't know Kiyosaki ,the real estate self help guru is uber-bullish on silver and gold and has been since at least the early 2000's when I heard him speak. I also believe he is the owner of silver mines in China. At least that is what he said some years back. I never paid much attention to him until he began talking silver and then he had my attention.

The Arab Spring Continues.

The west again has it's hands dirty as the US backed interim Egyptian government began a full style military crackdown on thousands of pro-Morsi protestors. The civil war in Syria continues with allegations of chemical warfare, unsubstantiated claims in the alternative blogosphere about nuclear weapons being used and the US debates whether or not to send weapons to the Syrian's insurgents.

While all this happens, it seems the human toll gets lost in the politics. Over 20,000 innocent citizens have had to leave everything they own, get up and get out of dodge and have been crossing the border into Iraqi Kurdistan.

Video unavailable

This kind of puts financial repression in a new light. It's hard to talk about how bad it is if you consider what it must be like to have to leave everything on a moments notice with only your clothes on your back to cross the border into a new country. While we might complain how bad our financial repression is from our arm chair only 20 steps away from a full refrigerator, next time you ask the question how bad can it get, see if you can find an Egyptian who can't find food in the markets, or a Syrian who crossed the boarder to save the life of his family for their perspective.

Bail-In's and Taper Tandrums

Enough of perspective, lets get back to the economics of the day, by far the buzz words for the Summer of 2013 up to this point have been “Bail-Ins” and “Taper”

Taper was the talk of the town this summer. Back in May Bernanke suggested that taper could happen as early as June and then in his June comments put off that decision until September. Ellen Brown www.webofdebt.com indicated that, he wiped out about $3 trillion dollars from the global equity markets with his comments and after the June 18th meeting, gold came crumbling down.

Bail-In has been all the rage since the Cyprus bail-ins. This summer Santa went on his 2013 Bail-In tour. When he first appeared in New York, he told investors they had two years to get their money out of the system and then it became his summer theme that people should get out of the system NOW. I can't account for his urgent change in tone but certainly we do know for a fact that the bail-in model is based on an agreement between the Bank of International Settlement, aka The Tower of Basil, and endorsed at a 2011 G 20 summit.

In June, the EU agreed to a new banking system in which their uninsured depositors would face losses. https://www.nytimes.com/2013/06/27/business/global/europe-agrees-on-new-banking-rules.html

Now Let's Briefly Look at the Future

The big news for gold investors is the gold news flow is starting to turn positive and I'm sure by now you've listened to your favorite TA analyst either on Turdville or around the blogisphere and the rumor mill is that we could start seeing some bullishness out of the metals at least for a time. If you're not reading AM's The Setup Forum regularly, you might consider it especially if you are not receiving all the information that Turd is putting out in the Vault. There are some very smart individuals calling the direction of the market and looks like end of August, we could see a nice move in the metals.

I mentioned the other day that Forbes Magazine has had a sustained flow of articles bashing gold and then all of a sudden JP Morgan puts out a buy signal for gold and curiously the news flow has changed.

Time To Buy Gold Again?

https://www.forbes.com/sites/sharding/2013/08/16/time-to-buy-gold-again/

The Turd has been talking about JPM's going bullish on gold but I don't recall if it has been mentioned here in the forums so for your reading pleasure. I'll just leave you with the articles and await the communities speculation as to why it's happening. I know the Turd probably has a few words to say about it.

https://www.businessinsider.com/jpmorgan-buy-gold-2013-8

https://blogs.marketwatch.com/thetell/2013/08/16/j-p-morgan-is-bullish-on-gold-even-after-paulson-dumped-holdings/

As Turd was saying the other day in my mining blog, weve seen an sizeable increase demand and buying in India and China after the release of numbers by the World Gold Council. Here is a good article on those numbers as well as a little film for your viewing pleasure.

https://www.goldmadesimplenews.com/interviews/world-gold-council-q2-2013-gold-demand-11430/

https://youtu.be/sAVDRKExaYQ

The metals while seasonally fickle, have had some very nice run-ups in late summer/early. Here are some seasonal charts that tell the story up until 2012. .

Gold Seasonal charts

https://www.seasonalcharts.com/classics_gold.html

Silver Seasonal Charts

https://www.seasonalcharts.com/classics_silber.html

We can look forward to India's festival season which is a popular time to get married with the five day Diwali festival in November when Indians flock to gold shops. Consumer demand in-tact? Check.

Russia Buying Gold

Russian continued their buying spree until mid-June when Russia all of a sudden stopped it's gold purchasing with economists pointing to it as a sign of continued disinterest in gold. Well than came July, when Russia began accumulating again 0.3 metric tons to 996.4 tons.

There is also no question that the appetite for Gold for Chinese middle class remains high up 157% as they account for quarter of the global gold demand based on the numbers put out by the China Gold Association.

Some of you might have seen this article by Jim Rickards predicting that China's gold purchases would reach 5000 metric tons by 2014. If not, here it is for your consideration.

https://www.arabianmoney.net/gold-silver/2013/07/27/china-to-report-gold-reserves-of-5000-tonnes-next-year-says-jim-rickards/

And one more interview by Rickards who suggests that China's accumulation of Gold to go on the gold standard is a bunch of hype and they are accumulating Gold to make the Yuan more attractive so it is included in the new emerging world currency the SDR.

https://www.forbes.com/sites/kitconews/2013/08/12/rumors-of-a-chinese-gold-standard-are-overblown-cpms-christian-and-author-jim-rickards/

I'm not sure if Rickards comments were a direct response to Zerohedges article of 8/04 but here it is for you to review and I'll let you choose which side of this debate you favor.

https://www.zerohedge.com/news/2013-08-04/did-china-just-fire-first-salvo-towards-new-gold-standard

I think that's enough for your consideration and impetus for a healthy discussion with JPM going gold positive, the ongoing saga of negative Gofo rates and backwardation. And I know that Turd has some interesting stuff to present both the forum community and the Vault community. When Turd says it should be an interesting week, I have no reason to doubt him.

In the meantime, Green Lanterns super powers are waning and has to go get some rest to deal with a late summer cold/flu. Last week a computer virus, and this week a body one. And oh yeah, it's a nasty one!!

About the Author

  73 Comments

murphy
Aug 19, 2013 - 8:24am

from WSJ

The part in bold is interesting.

J.P. Morgan faces six separate investigations from the U.S. Justice Department, according to the filing, three of which hadn't previously been disclosed.

The bank also said in the same filing that it is responding to questions from an antibribery unit of the Securities and Exchange Commission about its hiring practices in Hong Kong. The agency asked the bank to provide information about J.P. Morgan's "business relationships with certain clients," according to the filing. The New York Times NYT -1.30% reported Saturday that the SEC was specifically looking into the bank's hiring of Chinese officials' children and how those hires may have helped the U.S. bank win business.

DeaconBenjamin
Aug 19, 2013 - 8:31am

JP Morgan faces US probe over alleged hiring of Chinese princeli

US authorities have opened an investigation into whether JP Morgan Chase & Co hired the children of powerful Chinese officials to help it win business in China, according to the New York Times. Investment banks have a long history of employing the children of China's politically connected. While close ties to top government officials is a boon to any banking franchise across the world, it's especially beneficial in China, where relationships and personal connections play a critical role in business decisions. The approval process for a stock offering in China, for example, is one area that has come under criticism inside and outside the country for being opaque and prone to cronyism. A report posted in the New York Times' online Saturday edition cited a confidential US government document as its source for the story on the China hiring probe. The Times said JP Morgan hired Tang Xiaoning, the son of Tang Shuangning, a former Chinese banking regulator. Tang Xiaoning is now the chairman of the China Everbright Group, a state-controlled financial conglomerate. https://www.theguardian.com/business/2013/aug/18/jp-morgan-china-bribery...

BagOfGold
Aug 19, 2013 - 8:44am

WOW!...

I won!...I really won!...I can't believe I won!...It was a really tough & gruelling contest!...What can I say but...

Thanks Green Lantern

Bag Of Gold

¤
Aug 19, 2013 - 8:50am

Gold Lending Rates Drop Further On Supply Concerns

Gold Lending Rates Drop Further On Supply Concerns

Submitted by Tyler Durden on 08/19/2013 - 07:58

Gold traded near a two-month high after holdings in the largest ETP posted the first weekly expansion this year and markets digested the very robust global physical demand data reported last week . Demand from China and India is projected to to soar to 1,000 tonnes each in 2013 and mixed U.S. data has boosted gold’s safe haven appeal. Gold forward offered rates (GOFO), remain negative and are becoming more negative. This shows that physical demand is leading to supply issues in the highly leveraged LBMA gold market. GOFO rates are those which contributors may use to lend gold on a swap for dollars, according to the London Bullion Market Association and the negative gold interest rates show a preference to own gold over dollars by bullion banks.

Negative 1, 2 and 3 month GOFO rates mean that bullion banks lent their customers, including other bullion banks, gold to obtain a positive return, thereby increasing the "paper" gold supply. Some may now may be struggling to get their gold back which may explain the significant decline in COMEX gold holdings of certain bullion banks (see commentary). This is creating significant supply demand issues in the physical gold market which should lead to higher gold prices....(cont.)

https://www.zerohedge.com/news/2013-08-19/gold-lending-rates-drop-furthe...

sengfarmer
Aug 19, 2013 - 9:08am

flyinkle.....Blue Sky

I posted a reply on the other thread.

GL, I knew better than to take a stab at the contest :).


Aug 19, 2013 - 9:23am

Sengfarmer, We are good. You

Sengfarmer,

We are good. You are long time to contributor with good contributions and you made some good points. Let's keep the discussion active, even heated ok, but the name calling to a minimum. We are on the same team.


Aug 19, 2013 - 9:23am

Sengfarmer, We are good. You

Sengfarmer,

We are good. You are long time to contributor with good contributions and you made some good points. Let's keep the discussion active, even heated ok, but the name calling to a minimum. We are on the same team.

sengfarmer
Aug 19, 2013 - 9:33am

GL

Fair enough. I know I tend to get carried away. I am known around here as a grumpy old bastard that questions everything, and I know it fits. :)

Chibster
Aug 19, 2013 - 9:59am

Gold, the Titanic & Lifeboats - Why it's Important to Own Physic

This was the video I couldn't post earlier on my droid. It's called

Gold, the Titanic & Lifeboats - Why it's Important to Own Physical Gold

(disclaimer: I am not affiliated with any company but the message is correct)

Gold, the Titanic & Lifeboats - Why it's Important to Own Physical Gold
Kcap
Aug 19, 2013 - 10:01am

FOFOA again

Damn, another awesome set of posts...and FREE.........and once again, "all you need to know"...(wink to jy)

https://www.fofoa.blogspot.com/

Kcap


Aug 19, 2013 - 10:04am

My hiney hurts

Why do I have a strange feeling that I am being taken to the woodshed by the manipulators again this morning. Perhaps they went long just to hold the price down selling real metal.

lnardozi Green Lantern
Aug 19, 2013 - 10:09am

re: Ok, #11 or #12. The first

Could it be because they've taken delivery of all the physical on hand and now they want the COMEX to break down? After all it doesn't matter how many paper orders there are as they'll be settled in paper - but they could be stopped by JPM who'd get the physical and then pay out in worthless paper. I tried to upload my singing, some guys in a black helicopter came and took it - they told me they wanted to use it to scare sharks with. Oh well, nothing ventured...

John Galt Kcap
Aug 19, 2013 - 10:21am

@ Kcap re: FOFOA

Thanks for sharing that FOFOA link. I was actually doing a good bit of reading there over the weekend.

For some reason FOFOA seems to ruffle some feathers over here, and perhaps it's because he's not a big proponent of investing in silver. However, FOFOA is calling for a $55,000 gold price reset (as does Santa) and his discussion of how the flow of gold tonnage amongst big players is fascinating to read. Physical gold in volume, according to FOFOA, carries a higher price than the gold any of the rest of us would pay at retail, and this seems consistent with some of the things Jim Willie has been talking about for some time, namely that gold by the ton is trading at $2000 per ounce or higher.

Anyone with an open mind would do well to also read additional perspectives such as these.

Monedas
Aug 19, 2013 - 10:26am

Slam and Eggs !

It must be Monday Morning .... no "Slam Sandwich" on Fry Day .... hoarders take warning .... May Day, May Day ! The Manipulators are sooooo predictable .... sooooo childish ? Monedas 1929 Comedy Jihad Ancient Hoarder/ Mariner World Tour devil

lakedweller2 Monedas
Aug 19, 2013 - 10:36am

Monedas - Ex Wife

That is funny...it must be true

Kcap
Aug 19, 2013 - 10:38am

@JG

Well said.

FOFOA is a mind unto his own. It is an excellent resource, regardless if people agree with everything or not...but when it comes to removing our own personal biases to learn that from which is taught from the mind of others, when people are up for the challenge, there is much to absorb.

Kcap

philipat
Aug 19, 2013 - 10:43am

Relax

Nothing EVER goes up in a straight line. Physical demand remains huge, COMEX and LME inventories remain severely depleted, GOFO rates are still declining and we are now in real backwardation. Something is about to break. Remember, we are up almost $200 from what is now definitely the (Double) bottom. The monkeys will still play around to present an illusion of being still in control but they have no real ammunition left. Do you really believe that at $10 correction, predicated on concerns about "The Fed Minutes" (aka "The Taper Caper") is of any concern in relation to the new fundamentals?

IMHO.

philipat
Aug 19, 2013 - 10:52am

FOFOA and ScrewYou Files

Again, IMHO, Freegold is unrealistic intellectual masturbation dressed up as intellectual superiority. The fact is, Gold IS money. And has been for 5000 years.

Kcap
Aug 19, 2013 - 11:02am

@philipat

Yes, Gold is money and has been for 5000+ years...and there is evidence among Annunaki tablets that it has been for much longer than that.

Freegold won't be a plan. It won't be a cause. It is a symptom...a result. And it would bode best for us stackers if it did play out that way. We really don't want TPTB in control of the PoG, do we?

Kcap

philipat
Aug 19, 2013 - 11:08am

TPTB

Let them eat Poo??

Or even PoG, after your edit!!

Patrancus
Aug 19, 2013 - 11:12am

its time to roll out those

lazy, hazy crazy days of summer, those days of soda, and pretzels and beer.

Nat King Cole. Those Lazy,Hazy,Crazy Days Of Summer.( Live In Colour). HD.
¤
Aug 19, 2013 - 11:14am

The Total Global Public Debt Is....

Solution to the Economic Problems of the World! Pivotfarm's picture Submitted by Pivotfarm on 08/19/2013 09:25 -0400

$51, 323, 233, 866, 518. That’s the current global public debt that exists all countries together.

Next year it will rise to$54, 020, 847, 580, 179. At least, that’s the figure that is calculated as of this very second. Every second the clock notches up millions more. Rising debt means greater interference by the state and meddling in our affairs. The state thinks that because there is rising debt (which was created by their policies, anyway) they have the right to intervene in our everyday lives, for some strange unfathomable reason. But, what if we hold part of the solution in our own hands today? It’s sitting right under your noses or even under you and could be the answer to a part of our problem at least.

Spare Change

Spare Change


Spare Change

  • In the UK, Lloyds TSB announced last year that there was an average of £320 million just sitting around gathering dust in homes in the country, either as loose change that is always on the person, money that has fallen down the back of the sofa or that has been saved up for a rainy day in some jar on the top of a kitchen cabinet somewhere.
  • Men have an average of £18.18 and women much less with £10.19.
  • 3% of the British have more than £100 in spare change just waiting around on the sideboard somewhere.
  • That means that valuable money is either not earning interest (although with interest rates so low, who would want to) or it is being wasted, idly collecting dust and getting old.
  • The US Treasury has also estimated that the average US household has about $90-100 just left unused at home.
  • The US alone would be able to scrape together about $15 billion if they were to get that money out there right now!
  • In one year in the US on average you could find about $1, 000 in change that has fallen out of the pocket of someone onto the sidewalk. But, how many of us pick up the dimes that fall on the ground?

Money

Lost Money


Lost Money

  • M0: But just how much money is there in the world anyhow all together, all currencies included? Estimates of what is known as M0 values it at to over $5 trillion. But it’s nothing as it is only the aggregate of coins and notes. But, it’s not the total money that we have available to us and at our disposal.
  • M1: That’s because the central bank has the ability to make money and doesn’t need printing at all for it to come to life in our currencies. Then, commercial banks use that money to create more money.
  • But, money is created virtually every day with Mr. A that takes $100 to pay into his bank account. He can then withdraw if he wishes the full sum of $100. But Ms. B needs a loan from that same bank and is granted $50 (and the bank uses the money that Mr. A doesn’t need or hasn’t withdrawn).
  • So now we have a situation where one person deposited $100, but we have now created a total sum of $150 since Mr. A can withdraw that full sum and Ms. B will have to pay back the $50-loan. Money is so easily created via Fractional Reserve. All of that spendable money that is created by that type of banking, then we get M1, which stands at $25 trillion today.
  • M2: This includes savings accounts on top of that amongst other things (money that we can’t get our hands on right away). That works out to about $60 trillion.
  • M3: The global money all mentioned above and long-term investments that is not available very easily. It works out to: $75 trillion. That’s the world money supply.

If you’re wondering where you stand in the rankings with regard to how much of the $75 trillion belongs to you, then go to Global Rich List and.....(cont.)

https://www.zerohedge.com/contributed/2013-08-19/solution-economic-probl...

philipat
Aug 19, 2013 - 11:20am

@Patrancus

Part of the American dream. Now over. Sad.

But you do have Food stamps and Obamacre?

Patrancus
Aug 19, 2013 - 11:25am

What is over

is the ability for a good portion of American people to get off their dead asses and do something about it.

cid:387DAF65F0DC426EA0442598136BAF49@richard

philipat
Aug 19, 2013 - 11:29am

@DPH

And I would suggest that the "Cash/Under the Mattress/Grey/Bitcoin" part of the economy will only continue to grow. Given "Bail-ins" and the complete inability to understand the security of any Financial Institution from its Balance Sheet (As a result of "Off Balance Sheet SIV's, SPV's etc., Officially sanctioned "Mark to Myth" accounting, Under-capitaised FIDC schemes etc.) why would anyone want to leave excess spare cash in a Bank at zero interest? Better to keep it under the mattress?

Or even better, resulting from a tragic boating accident?
Lamenting Laverne
Aug 19, 2013 - 11:32am

I am looking for an article

I am desperately looking for an article that was published on ZH during the Cyprus events or shortly after. It was a story about core euro banks having large time deposits in cypriot banks and the claim was that the delay in starting the bail in process was to give those banks time to withdraw when the time deposits expired.

I simply cannot find the article in the archives, and wonder if it has been scrubbed. I am also looking for the article that described precisely how the ECB tried to make ECB owned greek bonds senior to other bonds, and how the retroactive collective action clauses were decided/envoked.

If anyone has been smarter than me and catalogued the news during cyprus, and is able to point to the correct title or maybe even a link, I would be super super grateful.

philipat
Aug 19, 2013 - 11:47am

@Patrancus

Because they are living off benefits and food stamps and other welfare Gubmint progs? IMHO, this is NOT accidental. The Dems get all these votes, which are now over 50% of the electorate. The only problem with that is, in the words of Margaret Thatcher, "The only problem with socialism is that, eventually, you run out of other peoples money"

But don't bother me with this intellectual stuff. I'm too busy watching "Dancin' with the Stars" and lookig at Kim Kardashian's ass, and eating cheap cheesy twirls from WalMart, made in China.

The "Work Ethic" has long gone and, in any case, it doesn't matter because Globalisation and fascism has allowed all the Corporations to move all the jobs overseas anyway.

Either way, the American dream is over. IMHO.

Mantis
Aug 19, 2013 - 11:52am

boo

missed my chance to guess why jpm are long. i declare the contest over too quick.

Great article though btw GL.

I'd ave said, 'JPM have issued their buy call, because they reckon they've now successfully passed the short buck, positioned themselves long and now trying to move the market up.'

But why are they trying to move the market up now? I've always assumed they are not motivated by profit but instead motivated to keep the fiat ponzi going (which involves suppressing metals). Probably they know they can't hold it down for ever so ready to profit from the next serious price rise. No doubt to be followed by more grinding price suppression at a higher level


Aug 19, 2013 - 11:55am

@Lamenting Laverne & the suctioncups

Was it this one by Charles Hugh-Smith?

https://www.zerohedge.com/news/2013-04-08/guest-post-real-cyprus-template-one-youre-not-supposed-notice

Amazing wasn't it how they all got their money out, even though they had to .... errm ... "anticipate it" .... months ahead of the event?

This article looks different from the one I remember, possibly because the illustrative graphs are missing now. You might find a better copy at oftwominds blog.

John Galt
Aug 19, 2013 - 11:57am

@ philipat re: disappearing work ethic

The "work ethic" is indeed long gone, and we can certainly thank our long transition into state socialism for that.

Mrs. Galt wryly observed recently that there are two types of people who hang out in the downtown near where we live. One half, she said, were welfare recipients who find it more lucrative to cash government checks than actually work. The other half are the Mexicans who are brought here as migrant workers to do the work that the welfare recipients refuse to do.

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