This Won't End Well

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Joseph Warren
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This Won't End Well

After listening to the recent interview with Rob Kirby, I thought I'd start this non-public thread for discussing this topic further.  Kirby mentioned that these insider corporations are 'legally' exempted from proper accounting. This is under the excuse of 'national security'. How convenient. Many pundits have said that the derivatives bets will implode and cause the whole fiat printing scheme to collapse. (The PMs will rocket upward as a consequence.)  How will this collapse occur if there is no proper accounting ?

Research leads me to think that the whole U.S./Western system is completely captured. It started with the monetary and financial system. With these critical systems in their control, all the rest would come. It extended to the political & legal systems, to the media and to education. And, of course, TPTB control the intelligence agencies. Since 9-11 they have been hard at work expanding a global surveillance grid . . . quite useful for blackmailing politicians, etc.  All this is easily verified in mainstream news.

Jim Willie says the dollar collapse will come with its rejection in trade. He also makes some comments about benevolent Chinese determined to save the world. I enjoy Jim's commentary, but the whole 'White Dragon' notion seems rather far fetched. The Chinese government isn't freedom loving or environmentally friendly. And if the 'White Dragons' doesn't control the Chinese government, does that mean they aren't so powerful afterall?Ignoring these questions and given that the Chinese still have considerable holdings in US dollar based assets, would they not seek to do whatever they can to maintain the dollar's value for as long as possible ?  

IMO Rob Kirby may be the most knowledgeable guy out there talking to the public about derivatives. He's said "this won't end well", but I don't think I've heard him say exactly how the collapse of the rigged game will occur. What will be the mechanism for this ? And no one else has put forward a theory on this either, as far as I know.

Your thoughts on this please ?

- JW

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Big fan of Rob here

He knows whereof he speaks, I'm afraid.

I am told he was invited to join Cantor Fitzgerald trading desk in NYC a few months before the events of Sept. 2001; but declined. All I can say is this:

NO ONE, including Rob knows  exactly how this plays out. What I do know is that; in the story about the Boy Who Cried Wolf......the boy was right in the end.

That's my take on Rob. Good guy !

57Goldtop
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Disorderly moves in rates

I've tracked the raw derivatives data at OSFI (and often at OCC) since 08, and sipped many truth serum pints with treasury traders at the Canadian FI's. 

My most recent nights of beers on Bay St. were this summer. It was the most surreal yet, after half a lifetime of knowing these folks:

They were 100% pro-Hillary. I've been on the floor a few times, and the typical 3- or 4-screen desktop had CNBC for sure, perhaps BNN, plus CNN on the walls everywhere (including middle office / back office... what's left of them). Their view of reality is almost entirely formed by the legacy media.

They know the collapse is happening, and they're hedged in similar ways as many readers of this site. They don't see themselves as having any impact on the collapse, in terms of the underlying causes.

They believe they're the last generation of traders in this fiat / fed model.

Quote: "I touch the US Fed more times in a week than I touch toilet paper".

The Canuck system is 75% rate swaps  and 22% FX/Gold derivatives, as at 9/30/16.

For frame of reference, the largest is RBC, with a market cap of $134 Billion CAD, and notional value of derivatives contracts at $12.3 Trillion CAD.

In Q3, RBC increased their derivatives book (notional value) at a rate of $2.667 Billion CAD PER TRADING HOUR. That's the net of some contracts expiring while they write a lot of new ones. 

It's just hedging, to keep the book stable. It's not a problem. The notional value means nothing. It's all about whether you're in the money or not. And they're fine, really. 

Unless rates or gold go up in a disorderly fashion. Then they're fucked. Then we're fucked. Unless the Fed gives them a secret bailout like in 08. That was 114 Billion (see this mainstream analysis that the Fed's bailout represented 7% of the nation's economy).

http://business.financialpost.com/news/fp-street/did-canadian-banks-receive-a-secret-bailout

Joseph Warren
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I thought perhaps I may have

I thought perhaps I may have just missed it, so that's why I asked about potential end game scenarios. This was the main question I wanted to ask Rob during A2A -

" If its true that the insider players aren't subject to having to report true accounting numbers, then how will this system run by criminals ever come down ?"

We've heard about the CFTC, new Asian phyz exchanges, derivatives imploding, lawsuits, lack of metal for delivery, etc, etc.  Many times we've heard "the system could come apart over the weekend. We're right on the brink."

How ?  By what mechanism ?  (I'm not even asking about the timing.)

P.S. - for awhile we heard a lot about the "WW3 war reset". That seems to have quieted down with Trump's election. The war drums beat less loudly toward Russia.

I really don't even have any theories how this all may play out. 

Joseph Warren
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@57GoldTop

that's one thing I contemplated. These U.S. Insiders may be able to exempt themselves from accounting, but what about the rest of the world ?  Or, will they just send keystoke created 'money' overseas to prop the whole system up when needed ?  

If they can convince or compel all the banksters to cooperate, this thing can go on a long time as it steals the population's real wealth.

IMO we need a flock of black swans to start crapping on their plans - right now !

Black swans & prayer is all I got.

57Goldtop
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Deleveraging or Printing explosion?

Since Rob K. was on Bay St, I'll stick with the Canadian scenario. Here's my view:

If they have to keep the derivatives positions safe during a disorderly move in rates/FX/Gold, then the central banks have to create massive amounts of fiat on the spot. Is that really a problem?

I've said on these pages before: it ain't over until the people panic.

If the people rush to get their remaining fiat out of the banks all at once, then the implosion likely comes in the form of capital controls and withdrawal limits. Cash can be taken out of use in a very short time (weeks), and the largest banks have war-gamed this scenario. They also stress-tested this summer for a 50% drop in Vancouver house prices, along with a 40% drop in Toronto. That would result in a cash panic. The only way to stop those dominos is capital controls/withdrawal limits/cash-less. The central banks would/could/will end up owning a shit ton of real estate.

Silver66 - can you do a paragraph on "long slow deleveraging for dummies"? Or Argentus? At times that seems more likely than collapse. For instance, in Q2, the Canuck banks' overall derivatives position (notional value) decreased by 5.9 Billion CAD per trading hour. As I said in a previous post, it came screaming back up like a submerged beach ball the following quarter. 

They could let the contracts mature/decay to an inconsequential amount in a year or two if they didn't add billions more in hedges every hour. I have no clue what the implications would be.

But the deleveraing scenario would seem to tie directly to eroding the derivatives position. I think?

Perhaps Turdville's biggest Leafs fan can educate us... if he's not too busy shoveling snow.

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57Goldtop

I have people to shovel the snow...LOL and yes this year is going to be different.

As both you and AM know my energies are focused on another very significant endeavor (to which I have a new development to share with you) and as such I choose not to write a long response on deleveraging. That being said I will defer to someone I consider an authority and post his research. My copy has been well marked up

http://www.valuewalk.com/wp-content/uploads/2014/10/ray_dalio__how_the_economic_machine_works__leveragings_and_deleveragings.pdf

I would also suggest that the weekly commentary by Tim MacIlvany that AM posted a while ago with Carmen Reinhart would be a good listen. I have passed on to several people

Here is an IMF paper by Reinhart

https://www.imf.org/external/pubs/ft/wp/2015/wp1507.pdf

As for the banks being able to manage derivatives, note what is happening in India with cash and see the Canadian Mint discussing mint chips that they recently sold. Their war gaming is prudent and not mis guided.

http://www.mint.ca/store/news/nanopay-acquires-mintchiptm-from-the-royal-canadian-mint-26400032?cat=News+releases&nId=700002&nodeGroup=About+the+Mint

Silver66

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57Goldtop
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ask for a paragraph...

...get 260 pages. Jeez, every time I get something to read from you my brain hurts a bit more.

Unless I misunderstood it, Dalio asserts that QE in '09 brought on a "beautiful deleveraging". So far, at the time of writing presumably in '14. It makes sense.

I'll look deeper, since I don't doubt what we've seen these past 6 or 7 years.

I may be foolish enough to say, "but this time it's different". The historic examples don't seem to involve most of the planet at the same time with a global player underneath the economic engine. That global player sure has some challenging things happening at home and abroad. And a population with decaying:

  1. capacity for productivity
  2. appetite for economic independence
  3. civil rights
  4. opportunities for personal prosperity

Joseph Warren, if "beautiful" deleveraging continues (as written about in Silver 66's Dalio link) without reversing of the first 3 points above, reversal of point 4 doesn't mean much imho. I agree that it's slow and steady theft.

Maybe the black swans don't land as long as so many people have Societal Stockholm Syndrome? I'm surrounded by people who like things as-is, despite the fact that they couldn't possibly retire, ever. 

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Joe, thank you for posting this

This won't end well?  That's the question I've been asking for the past two years.   Who's right and who's wrong?

Reminds me of when I was still writing speeches -- was supposed to come up with the interest rate six months out for the CEO of a major financial institution -- to be shared with the state's business leadership at their annual big thing.

Then like now I scurried around, talking to all the best minds I could find -- none of whom despite all their charts and stats and great knowledges knew what interest rates would do; all they could do was be in consensus that everything was wonderful and high interest rates would continue well into the future.  Believe it or not, I intuited a number -- and it was counter to theirs, way lower.  The big guys were not happy.  I was all alone out there and that's a lonely place to be. 

Six months later, on a plane somewhere, I saw a headline -- with my unlikely number.  I was right and my timing was right -- and the "brains" were wrong.

Fast forward.  Same as then have now found great resources and same as then nobody really knows anything.  No one will say in February x, y and z will happen.  Despite having heard a ton of horrible prognostications in the past two years the sky hasn't fallen and in fact against all odds we have a leader with a great attitude and great work ethic capable of hoping for good and doing good.  I like that he doesn't use alcohol or drugs as I don't either.  (They're traps.)

But unlike the 80s my world is now much bigger with family and friends and a great constitutional republic, all of which I care deeply about. 

For what it's worth I'm remembering that the outer world reflects my inner world.  Not to take anything away from anyone, but if the guy speaking is angry or depressed, not at peace with himself and/or advocating violence, it diminishes what he says.  Are the speakers happily married or in a long-term stable committed relationship?  Do they get along with their kids and their neighbors?  Are they doing, or attempting to do, good for others?   One guy everyone tells me is a genius said recently he wanted to "have more gold than anyone else" -- without adding a qualifier along the lines of, "to build orphanages in India," etc. 

They say worry is praying for what we don't want. 

This is a time for courage and love, and sticking as close to Source as possible and to be as kind and loving as I can and to help others -- help ever, hurt never, as my teacher used to tell us.   Believe me, I am no saint, and fall short of the mark most of the time.  

I appear to be one of the woo-wooier posters here.

Blessings to everybody --

Joseph Warren
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. . . way of looking at the world

Back in the late 70s and into the 1980s a prof out of SMU named Ravi Batra wrote several books. One book was titled 'The Great Depression of 1990'. It sold well, . . . until 1990 rolled in and it was obvious that his prediction was wrong. That said, he did predict the fall of the USSR back in 1978. At the time, that was an outrageous position to take regarding the world's other super power. 

What I found most interesting about Batra's books was that he introduced the social cycle theory of an Indian philosopher by the name of Sarkar. Basically, Sarkar said that societies are ruled, in turn, by people of a certain inherent natural mindset. There are the warriors, intellectuals, and the acquisators. The fourth group are the laborers. These have neither the intellect nor the ambition to ever rule society.

Batra gives historical examples of how rulership cycled from warriors, to intellectuals, to acquisators, to a period of chaos (the age of the laborers) . . . and back to the warrior class again. 

America has been an acquisator society since the beginning. Money rules. We take that for granted. Its the environment in which we live, like the air that we breathe. But not all societies, at all times have been acquisator societies. (Such as the warrior society of Japan during the time of the samurai.)

It seems that the entire world is being held down by an overwhelming burden of debt owed to bankers. But, what if people no longer granted legitimacy to that made up outta thin air debt ?  What if this society shifted out of this current acquisator phase of viewing the world ?

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JW

What about nationalizing the Fed? Take all assets for the taxpayer?

Then the system would go down!

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Frodo: "I wish it need not have happened in my time," Gandalf: "So do I. And so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us." J.R.R. Tolkien (1892 - 1973) The Fellowship Of The Ring

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One more thing: gold

Remember when we were told that Shanghai was going to make the price of gold honest because the SGE was only going to deal in physical gold?   

I don't know where they got this information but it certainly wasn't from doing basic fact checking.  If they'd taken a moment to go to the SGE website they would have noticed the SGE's mention of building up their gold derivative position.

So much for no paper at SGE!  In fact, the SDR basket is becoming even more circular now so that can will continue to be kicked quite a bit longer down the road.  The guys promoting "mathematical certainty" of collapse aren't capable of nuances.

My new caveat:  If somebody's selling something -- products, ads on their websites, membership subscriptions, anything -- everything they say I now take with a great big grain of salt.  Not a black mark against them by any means, just an acceptance that selling is selling.

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Chicken Little

I like Kirby even though he now owes  me 30 large. About this time last year Kirby did an interview on USA Watchdog in which he proclaimed that the sky would fall no later than April 2016. Being prudent and intending to give Kirby plenty of time to be right, I purchased S&P put options good until October 15. That really worked out well.

Not that it matters. That loss, in combination with others, would have mightily contributed to a decent retirement had I refrained from hedging. At this point obtaining a decent retirement nest egg will merely require a freaking miracle......

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@ Cha Cha Mars

"I like that he doesn't use alcohol or drugs as I don't either."

.

See ? That's your problem. If you really want to understand modern economics, you have to use both.  laugh

The people that are running the show are obviously screwed up, big time.

Joseph Warren
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AlienEyes wrote: "I like that

AlienEyes wrote:

"I like that he doesn't use alcohol or drugs as I don't either."

.

See ? That's your problem. If you really want to understand modern economics, you have to use both.  laugh

The people that are running the show are obviously screwed up, big time.

And to make it to the very top, - you may need to be a psychopath, coke fiend and pedophile.

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AngryCitizen wrote:What

AngryCitizen wrote:

What about nationalizing the Fed? Take all assets for the taxpayer?

Then the system would go down!

According to Sarkar's theory, eventually the greed of the acquisator class corrupts all society, top to bottom. (They know the price of everything and the value of nothing.)  Their greed for money is so overwhelming that they impoverish the rest of the population. This leads to complete chaos (the Laborer age). Later, those from the Warrior class step in to right the situation. (The Warrior class not only includes those in the military & police, but those in the skilled trades. They are people who get on in the world using their physical abilities and adventurous spirit.)  The dawn of a new Warrior age often brings a golden age of exploration & discovery with it. Batra speculated that in our times there might be a new emphasis on the space program. 

That's Sarkar's theory, anyway. 

P.S. - given that the acquisators rule this society, its understandable that they would purge many military officers with 'the wrong attitude'.  I suspect that there are still many officers of the Warrior mentality at the grades of Major/Navy Lt Commander and below, and among senior NCOs.

We live in 'interesting' times.

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This won't end well... Thanks JW

I think this is a great question or thought analysis.

I love to read all opinions on these matters as it makes me feel more well rounded. Still trying to figure out if I'm a donut or donut hole...

I agree that the great USSA is "owned" by a very small group of individuals that mean us (the lil people) great harm. The problem is they don't see it as harm since "they" think they are saving us from ourselves...

Many moons ago, the Right decided to build up the MIC while allowing the Left to crank up "social-engineering." I now believe that they were working together to create what we have now; a selfish, lazy, ignorant, country that has "me" at the center of everything. Gee, isn't greed grand!?!?!

I get angry when I think of how generations before me squandered what this country had going for it. The Uncivil War between the States ended the great experiment that started in 1776. We had a good 80-90 year run. Once the States lost, the Feds took over and they have been taking more and more ever since.

So, where does it end? I firmly believe that when the Powers to Be are ready to crash this shit show they will. What happened in 2008 was not something they expected and because of the great "Will of the people" cough cough cough to save our banks and currency, they got handed a freebie.

That freebie has allowed them to better prepare for the next stage of our ruin.

1) Transfer of wealth away from the people... Inflate baby, inflate!!!!!!!!!!

2) Removal of "real" money from the hands of the people (digitize baby!!!)

3) Continue swelling the ranks of the desperate

4) Continue militarizing our "homegrown" militia (police) so that they can better protect the "Assets" of the USSA from the people who think they own them (citizens).

5) Demonize Alternative sources of knowledge and keep the throttle going on the social engineering...

and so forth and so on...

Why?

Once money can no longer be removed from the bank, it ceases to exist in real time. The problem with currency is that is can be printed to oblivian and people get wise. Paper printing moves inflation to hyper inflation fairly quickly once you unleash actual paper into the market.  Digital money just gets poofed into existence when needed. 

We have had extraordinary inflation in the financial world, but we call that asset growth! Hey, I'm up 20% this year in my portfolio!!!!! Again, cough cough... Why was it up? Earnings are down; prices are up, but expenses are up more. Net profit and earnings per share are shit. But I'm up 20%!!!! That is where the real inflation from the worlds $45 Trillion has gone. Up up up and away!!!!!!

While the peasants inflation has been marginalized "As if" it doesn't exist. Mother Fellon reminds us that we haven't "met" our annual 2% inflation yet so we are all good!!!! I mean can't you just feel that devaluation at the grocery store!!!!

Healthcare, Rent, taxes, Auto's, REAL food have gone up more than 40-50% over the last 8 years. That's 5% per year and I'm being nice! Kissing your standard of living away day by day!!! Why, well someone has to pay for those extra 50 million people who gave up looking for work! Right???

Does this end? Can it?

What does removal of "real" currency do to the world? It puts all control in the hands of those who control it's location. The banks will have finished off the enslavement of the people once this is completed. You will not be able to BUY or SELL anything without the strong arm of the bank and its police force (Government) scrambling for its piece of the transaction. There will be no more benign purchases between friends... One step closer to total totalitarianism...

The SDR's are the next stop. The US petrol$ will cease to be the only reserve. Things from all over the world will just cost us a whole lot more... Can the US feed itself? Can it? Will we be buying grain from Russia? Crap everything is a gimmick...

We have a lot of hate in this country with out a whole lot of love and understanding. The Great Depression of the 30's was hard, but we were all family. The Great Depression (Err they called it recession) that started in 2008 has been papered over more ways than one till it no longer matters.

If you lose 50% of your standard of living would that be catastrophic? Would it really? Humans are flexible, we adjust and that is what the Powers to Be are counting on... So what if you NOW have to eat spam, I mean who really cares!?!? There is so much suffering, who are you to complain!! And that is what you will hear repeatedly while "some" will try to SCRAP back a piece of the pie they once had...

Imagine a world where we still have most everything, but no more or limited extras. Enslavement is complete, we are just being tempered into the next stage of restraints...

Anyway, rambling on and on. Sum total... Eventual Venezuela while we take our Japanese time getting there... Maybe we will just be happy being like Mexicans who knows...

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Rob Kirby's

Talk with TF ended with a reminder of India's problems right now....when we lose the reserve currency status, it will go "Indian" real fast here....The question would soon come up about the numbers willing to take back what was taken away...Will there be enough to make a difference?

Re: Starker,

I think we're finding that earth-like planets are not common out there, and it will be a hard life in space, traveling to our  own solar system's planets, never mind outside it. Living on mars is not as easy as the movie made it look, I'm betting....As bad as it is here, I'll stay. I don't think space travel will be happening soon. Maybe we won't make it off Earth before we destroy ourselves....

Just say'n.

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Frodo: "I wish it need not have happened in my time," Gandalf: "So do I. And so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given to us." J.R.R. Tolkien (1892 - 1973) The Fellowship Of The Ring

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ChaCha Mars wrote: Remember

ChaCha Mars wrote:

Remember when we were told that Shanghai was going to make the price of gold honest because the SGE was only going to deal in physical gold?   

I don't know where they got this information but it certainly wasn't from doing basic fact checking.  If they'd taken a moment to go to the SGE website they would have noticed the SGE's mention of building up their gold derivative position.

So much for no paper at SGE!  In fact, the SDR basket is becoming even more circular now so that can will continue to be kicked quite a bit longer down the road.  The guys promoting "mathematical certainty" of collapse aren't capable of nuances.

My new caveat:  If somebody's selling something -- products, ads on their websites, membership subscriptions, anything -- everything they say I now take with a great big grain of salt.  Not a black mark against them by any means, just an acceptance that selling is selling.

So many disappointments on the topic of 'this is going to make gold trading honest'.

I think the Singapore PM Exchange is up and running and as far as I know it's still using only fully allocated/segregated bullion.    Which therefore means there isn't a paper price.   So what's the actual price on that exchange?   I wouldn't know since I don't trade there but my guess is pretty darn close to Comex or whatever. 

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@AngryCitizen re: a Warrior age & exploration

regarding space exploration, I believe the point that Batra was making (in explaining Sarkar's work) is that all civilizations do not organize themselves around the notion of money making/accumulation as the primary focus and driving force. This is difficult for us to wrap our heads around who live in this time and age.

But just think of it. Those of us who come to this PM orientated site understand that the fiat 'money' is an un-Constitutional fraud.  They have stolen the spending power of the dollar by 98% over the last century.  We know the banksters bail themselves out with a few keystrokes. We know they also enrich themselves by creating these bogus illusions and then charging the public interest on that 'debt'. We know that the banksters never actually 'loaned' anything that was real & tangible. Their currency isn't backed by gold & silver. They also inflate the price of their real and paper assets using those same instruments. (And suppress the price of real money).

IMO it is absolutely insane that the population would allow their real wealth, labor and lifetime savings to be stolen from them by the socio-path acquisator money junkies who never seem to have enough. But, this has happened before and is happening today.

A new American Warrior age, I speculate, might be lead by someone with the leadership qualities and martial spirit of a George Washington and the deep understanding and humanity of a Thomas Jefferson. He might declare a Jubilee on made-up-outta-Nothing 'debt' and throw the banksters in prison. He may then put the nation on the path to doing something useful, including guaranteeing individual Liberty and maybe even space & ocean exploration with all the technological innovations which would come from those adventures.

As it stands now, most of those who understand the current situation realize the so-called 'debt' is at a level which can never be paid. Like with Greece and so many third world nations, the consequences of trying to pay the counterfeiters would likely be devastating. And there are those who suggest that a World War III may even be instigated to clean the 'debt' slate !  That is pure insanity.

I read aomewhere that J.D. Rockefeller commissioned a study to determine why someone would risk their own life to save a stranger. Rockefeller just didn't get it. He was an acquisator and kept a ledger with every penny he spent accounted for. He had the heart of a bookkeeper combined with that of a hawker of patent 'medicines'. Such individuals can not fathom the actions of men who see themselves & the world quite differently.

So what now ?  Maybe we need to think completely outside the old box.

P.S. - please pardon me for going on & on. I've had too many cups of coffee this morning. Oh, well.

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@ SGE website re gold derivatives to help benchmark

Thank you for commenting, Happy.  SGE launched in April.  Here's what I posted here at TFM back in August -- with as I recall zero responses from the community:    The launch of Shanghai Gold Benchmark Price will facilitate the development of China's gold derivatives market which will also have a big impact on the price of gold related financial products, wealth management products and derivatives." 

Here's my post to Alasdair MacLeod along with his response in which IMHO he missed the point entirely about SGE & paper gold:  

ChaCha:  In SGE's own published documents, they refer to derivatives and state they're already at 4% -- the camel's nose under the tent?  The Shanghai Gold Exchange April 2016 White Paper, page 4:  "At present, China's gold derivatives market is lacking in an authoritative and equitable gold benchmark price which is denominated in RMB.  The launch of Shanghai Gold Benchmark Price will facilitate the development of China's gold derivatives market which will also have a big impact on the price of gold related financial products, wealth management products and derivatives."  Saw a 96% settlement figure recently www.usagold.com/cpmforum/2016/06/17/96-of-trades-on-the-shanghai-gold-exchange-settled-in-physical-metal/.   Why we'd expect the Chinese to be any more honest than anyone else is a good question since China joined the international banking system during the Opium Wars.

AMacLeod:  China wishes to develop international liquidity in the yuan, which is why she is broadening the range of instruments, with both gold and oil futures priced in her own currency. I wouldn’t look at it as purely a means of printing paper gold to control the physical price – far from it. The Chinese see gold and oil as the two most important global markets. Read it as a vote of confidence in gold.

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