A New World Order? I Think Not.

For some time now there has been much talk about a New World Order under Anglo/American leadership. I think that’s all it is, just talk. How can the bankrupt U.S. and the Bankrupt U.K. lead the world and what would China and Russia have to say about that?

As it is, the BRICS countries and particularly China are moving to oust the U.S. Dollar as the world’s reserve currency.
The BRICS (Brazil, Russia, India, China and South Africa) are planning to create a development bank in a
direct challenge to the World Bank, which they accuse of harboring a western bias.

Over the past few years, China has reached agreements with several countries to freeze out the U.S. Dollar by settling trade transactions in the currencies of the two trading partners. The latest such agreement was between Australia and China, which makes the Australian Dollar directly convertible into the Chinese Yuan.

Actually, what we are seeing is a world shifting into two competing blocs; the old world under American/ British leadership and the new world of growing economic strength led by China, which just so happens to be the world’s largest creditor nation.

The End of American Hegemony

“Intelligence Chief in U.S. Cyber Attack Warning. Budget Cuts Blamed for Threat to Security.” Headline Story in the Financial Times, Wednesday March 13, 2013.

“Automatic budget cuts threaten to cause ‘insidious’ damage to U.S. intelligence services and leave the country vulnerable to cyber attacks and terrorism, the country’s leading intelligence official said yesterday.”

“James Clapper, director of national intelligence, said that the U.S. risked the same sort of ‘downward spiral’ in intelligence capabilities that it witnessed before the 9/11 attacks on New York and Washington.”

I don’t remember if there were any intelligence budget cuts prior to the 9/11 attack. Certainly, the U.S. intelligence received ample warning prior to the attack both from Mossad and German intelligence, but failed to act on the warning. Indeed, for reasons best known to the authorities, the U.S. Air Force was stood down the day of the attack.

What Mr. Clapper is certainly guilty of is fear-mongering – ‘If you cut the intelligence budget the American people may be subjected to all sorts of dastardly deeds, which we will not be able to protect them from.’

Wake up America, it’s time that you recognized that you are no longer the leader of the pack; you can’t afford to be. It’s always hard to face that reality and I speak from experience.

I was born in India during the Second World War. My father was the commanding officer of an Indian Sikh Regiment and with his regiment he fought at the battle of Imphal, which prevented the Japanese from entering India. He joined  his regiment in 1920 after passing out of the Royal Military Academy, Sandhurst and his regiment fought in many campaigns along the North West Indian frontier bordering on Afghanistan.

India was the jewel of the British Empire and my mother and father, together with my brothers and sisters born in that beautiful country, lived in privileged circumstances being waited upon hand and foot.

It all ended after the Second World War when India was granted its independence in 1947. Thereafter, the British Empire speedily disintegrated. We returned to England and with my father now out of a job, we could no longer afford the luxury of servants.

It was difficult for my parents to accept the new reality, but they did. It was difficult for all of us to recognize that the Great Britain in which we now lived was no longer great.

I followed in my Father’s footsteps and became an Army officer in a Scottish infantry regiment. My last posting was to a South Arabian country, which at that time was a British Protectorate. We were engaged in a mini-war in trying to ensure that a pro-Western government was in place when the British granted independence to the country. British troops left the country without achieving that objective. Upon returning to the U.K., I resigned my commission and emigrated to Canada. Shortly thereafter my regiment the Cameronian Rifles, which had been founded in 1689, was disbanded.

Since that time most of the great British regiments with their unique traditions and myriad battle honors have suffered a similar fate to that experienced by my regiment many years ago.

What confronts American politicians and the American people today is the reality that we British, were forced to recognize 60 years or so ago, that is you can no longer afford to police the world and with increasing budget constraints you will be forced to severely crimp on your military spending. I know through my own experience that this new reality will not be an easy pill for America to swallow.

Why Aren’t the Bankers in Jail?

Why aren’t most of the important banking leaders in jail? We’ve had the subprime theft, the MF Global theft, the Libor theft and the HSBC money laundering scam, and nobody of any importance has gone to jail for what amounts to trillions of dollars of theft or money laundering. By comparison, Bernie Madoff’’s theft of something like $50 billion (U.S.) was chump change for which he was jailed for 150 years; Raj Rajaratnam received an 11-year jail term for insider trading and Allen Stanford for an alleged Ponzi scheme involving $7 billion (U.S.) was sentenced to 110 years in jail. In December 2012, it was proven in a U.S. federal court that HSBC had laundered billions of dollars of drug money. According to U.S. Senate and Justice Department reports, HSBC “had failed to monitor over $670 trillion (U.S.) in wire transfers and over $9.4 billion (U.S.) in purchases of physical U.S. dollars from HSBC Mexico from at least 2006 to 2009.” Moreover, “HSBC’s Mexico bank had a branch in the Cayman Islands which had no offices or staff, but held 50,000 client accounts and $2.8 billion (U.S.) in 2008.” It was revealed that “senior HSBC bank officials were complicit in the illegal activity.”

At a Senate Banking Committee hearing in which she was questioning federal bank regulators, Massachusetts Senator Elizabeth Warren said “No one individual went to trial, no individual was banned from banking and there was no hearing to consider shutting down HSBC’s activities here in the United States.”

The Senator then said, “So what does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this?”
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In March 2013, Eric Holder, US Attorney General, gave Elizabeth Warren her answer regarding why the Justice Department decided not to pursue any criminal prosecution of HSBC -”I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy.”

That’s it then, the big banks can get away with any criminal act, because they are too big to prosecute: whereas the lesser financial wrongdoers can be sent to jail, in Madoff’s and Stanford’s cases, for more than 100 years. Where’s the justice in that?

The following are a couple of articles by Matt Taibbi of Rolling Stone magazine, which are a very good read on this disturbing subject.

http://www.rollingstone.com/politics/news/gangster-bankers-too-big-to-jail-20130214
http://www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-20110216

Why can’t the vast majority of people see what is really happening in
the real world and what might be the implications for them?

I have never understood why the vast percentage of the population can’t see how bad things are in the real world. Take Cyprus for example. There was plenty of time in which it should have been apparent to any Cypriot, indeed to anyone with money in a Cypriot bank, that the Cyprus banks were effectively bankrupt. Knowing that, why would anyone leave their money in a Cypriot bank? “Ah, you say, what would one do with the money once you had taken it out of the bank? Well, I think that if you really think this through you’d come to the conclusion that the only secure money is gold and silver and I mean coins and bullion, not a paper claim to it. We’ve seen what can happen to your paper claim; take MF Global as an example.

Unfortunately, the vast majority of people simply don’t think things through to their logical conclusions. They place an inordinate amount of trust in their leaders and, generally speaking that trust is misplaced.

So let me try and put this into some perspective for you using an open mind and my knowledge of financial and economic history and damn the leaders who are lying to you. In several of our writings we have warned “It’s the Debt, Stupid” that is the cause of all our problems. This debt bubble of  unprecedented worldwide proportions is currently in the process of blowing up. It is much bigger than the debt bubble of the 1920s which, after it deflated, brought about the worldwide depression of the 1930s and subsequently the Second World War.

Today, politicians and central bankers are desperately trying to keep this enormous debt bubble from bursting. The methods which they are using are printing money on a massive scale; increasing government debt; and in Europe, imposing ridiculous austerity measures in the countries that require debt bailouts, and in some cases imposing unelected leaders to govern the country. These are desperate measures which denote desperate times.

Canadian Banks Control the Canadian Investment Industry and That’s Bad.

This is a rant against Canadian banks, which through the acquiescence of the Canadian Government, have been given carte blanche to effectively control the entire investment industry in Canada and the Canadian stock exchanges.

Last year the London Stock Exchange made a bid to merge with the Toronto Stock Exchange. This would have been a great marriage for Canadian public companies and in particular listed Canadian precious metals companies, including the junior companies, which would have been privy to a huge London based financing pool. This was denied by the greed of the Canadian bankers, who in a move designed to sway public opinion in their favor, made a counter bid under the ‘Maple’ (Leaf ) banner, appealing of course to Canadian patriotism. Conservative Finance Minister, Jim Flaherty, approved their bid and the Canadian Stock Exchanges are now owned, for the most par t, by the Canadian banks and as a consequence London based financing has all but been eliminated.
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Canadian banks are the predominant players in the investment business. They have over the past twenty-seven years changed the brokerage model from one in which stockbrokers advised their clients on an individual basis, to one where stockbrokers are now simply ‘money gatherers’ for centralized investment managers. The banks are promoting this model throughout the Canadian investment industry.

What this means is that the Canadian venture companies and in particular junior mining companies are essentially not recognized as appropriate investments for the banks’ investor clients.

Canadian banks are in the process of destroying the venture capital markets in Canada. This country was built on venture capital investment.

To this end, I would encourage the four western Canadian provinces to wrest control of the Canadian venture stock exchange from the Canadian banks. Furthermore, I think it is necessary to return to the original brokerage concept where brokers are free to give investment advice to their clients based upon the clients’ needs and risk tolerance level.

Unless this is done the venture stock market in Canada is doomed to fail.

Western Canada, as it has been for the past 150 years, is still controlled by the central Canadian banking fraternity although the wealth of Canada has now moved from Ontario and Quebec to Alberta and British Columbia.

Free Markets? I don’t think so.

There are no such things as free investment markets anymore. These markets are all controlled by central bankers, principally, the Federal Reserve. We know that Ben Bernanke and his predecessor Alan Greenspan considered that it was of the utmost importance to maintain stock prices at high levels. They are on record as saying so and we have quoted them in this vein previously. However, as a reminder to our readers of how important the stock market is in their eyes let’s hear from the Maestro and his henchman, “I want to follow in the footsteps of Alan Greenspan”, Ben Bernanke.

“I think we are underestimating and continue to underestimate how important asset prices, very specifically equity values are, not only for shareholders and the like, but for the economy as a whole.” Alan Greenspan, December 3, 2010.

“Global stock markets have rallied so far and so fast this year that it is difficult to imagine that they can proceed further anywhere near their recent pace. But, what if, after a correction, they proceeded inexorably higher? That would bolster global balance sheets with large amounts of new equity value and supply banks with new capital that would allow them to step up lending. Higher share prices would also lead to increased household wealth and spending, and the rising market value of existing corporate assets relative to their replacement cost would spur new capital investment.
Leverage would be materially reduced. A prolonged recover y in global equity prices would thus assist the lifting of the deflationary y forces that still hover over the global economy”. Alan Greenspan, June 25, 2009.

Now it’s Ben Bernanke’s turn – “And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending; increased spending will lead to higher incomes and profits that in a virtuous circle will further support economic expansion.” Ben Bernanke, November 4/ 2010.

“Monetary policy works for the most par t by influencing the prices and yields of financial assets, which in turn affect economic decisions and thus the evolution of the economy.” Ben Bernanke May 2004.

It has been the huge monetary stimulus that the Federal Reserve has employed since 2008 under such pseudonyms as Tarp, Quantitative Easing, and the like, which has been fed into the banks, to achieve the desired Fed outcome; that is rising equity values. At present, the Federal Reserve has committed to force feed the banks $1 trillion (U.S.) a year through its purchase of U.S. Treasury and Mortgage Backed Securities from these institutions.

Then of course, there is the President’s Working Group on the Markets, also more commonly known as The Plunge Protection Team, whose job it is to arrest any significant decline in stock prices.

Under these circumstances, the U.S. stock market is no longer a free market comprised of buyers and sellers interacting without outside influence. It boggles my mind as to why anyone would want to invest in such a rigged market.
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“Ah”, I hear you say, “why wouldn’t you buy stocks in a market that is rigged to rise higher in price?”

Well, I have an answer for that. As many of my readers will know I fervently believe that all markets are governed by natural law and not man’s law. By natural law I mean that within any market there is freedom of interaction between buyers and sellers without outside influence or interference. Ultimately, it is the natural law of the markets that wins and the longer the interference in the natural process of the markets, the greater the subsequent counteraction in prices.

I know that I have shown this char t on at least a couple of occasions, but for the benefit of new readers and there are many of you, I want to show it again, because it clearly demonstrates how the Federal Reserve has tried to support stock prices through its interest rate policy and, although not shown on this graph, quantitative easing.

These monetary efforts by the Federal Reserve have not allowed the winter stock bear market to follow its natural course of price decline, which is to mirror the price action of the preceding autumn stock bull market which saw stock prices rise by 1,500%. When the natural course of the winter bear market overcomes the Federal Reserve’s efforts to circumvent the process, the effect on stock prices is likely to be calamitous and ‘Dow 1,000’ will not be a silly number. It is my belief that the return of the stock bear market is now at hand and in that case the Federal Reserve will be unable to interfere in the process; interest rates are already at zero and banks are receiving $1 trillion (U.S.) per annum through quantitative easing.

If you think that the takedown in the gold price that occurred on three days in this past week was not manipulation then I think that it would be hard for me to convince you that our leaders, for the most par t, don’t give a damn about us. Here’s the spot gold price char t, because a picture speaks a thousand words.
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Spot Gold, daily price chart.
see chart at: http://www.longwavegroup.com/publications/economic_winter/2013/_pdf/Economic_Winter_V50_I1-Musings-of-a-Curmudgeon.pdf

The price of gold closed on April 11th at $1,560.74 (U.S.). On April 12th,it closed at $1,478.35 (U.S.) and on the following trading day April 15th the gold price closed at $1,352 75. (U.S.). The following day it made a low price of $1,322.43 (U.S.), but closed that day above the closing price of the previous day, which was a Key Point Reversal low on the Daily char t. Overall that’s a price collapse of 15.25% over three days.

Do you really believe that over those three days there was a massive selling of physical gold? Of course there wasn’t. The Cyprus bank heist had just taken place and the prospects for the Euro survival were looking bleaker than ever. We know why stock market prices are manipulated to the upside. But why at this particular juncture was the price of gold trashed?

In my opinion, Andrew McGuire, who used to work at the LBMA (London Bullion Market Association) and as a result has a thorough knowledge of how it operates, has in my opinion, given the best reason for the manipulative sell-off in the paper price of gold. According to McGuire, the reason was because the LBMA was threatened by an imminent default on account of not being able to deliver physical gold, which was in huge demand. He said “We had already seen COMEX inventories plunging. In 90 days, COMEX inventories saw an incredible decline. So, immediately available physical gold was disappearing. People around the world don’t understand what has been happening since Cyprus. Entities went to the LBMA and said, ‘We don’t trust anybody anymore. We want our physical metal.’ They were told that they would be cash settled instead by a bullion bank. The Western governments have been trying to plug holes, and the reason for it has to do with the default that was taking place at the LBMA.”
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“This is why the smash has been orchestrated because of the run that has been taking place on physical metal. So, Western governments had to do this because of an imminent run on the unallocated LBMA system. The LBMA bullion banks had become so mismatched at one point on their trading positions vs. real world demand that they had to orchestrate this smash. This orchestrated smash in gold and silver was nothing short of a bailout for the bullion banks. So there is a run on physical gold that is taking place and the Ponzi scheme the West is running is being threatened because of it. “

This makes sense to me.

We know that the demand physical gold and silver is enormous and as the unraveling of fiat currencies gathers pace that demand will grow to a fever pitch.

This is the latest blog from John Ward. It covers the gold price manipulation. Within the writing he refers to at Zero Hedge, which I encourage you to read.

http://hat4uk.wordpress.com/2013/04/22/gold-silver-the-metal-v-paper-discrepancy-now-lacks-any-credibility/

Fraud, theft and market manipulation is the way that many western banks now conduct business and they are above the law. You must act to safeguard yourself from what can only be a very disturbing and frightening future.

Written by: Ian A. Gordon

Ian A. Gordon, The Long Wave Analyst www.longwavegroup.com
Disclaimer : This information is made available by Long Wave Analytics Inc. for information purposes only. This information is not intended to be and should not to be construed as investment advice, and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific reader. All readers must obtain expert investment advice before making an investment. Readers must understand that statements regarding future prospects may not be achieved. This information should not be construed as an offer to sell, or solicitation for, or an offer to buy, any securities. The opinions and conclusions contained herein are those of Long Wave Analytics Inc. as of the date hereof and are subject to change without notice. Long Wave Analytics Inc. has made every effort to ensure that the contents have been compiled or derived from sources believed reliable and contain information and opinions, which are accurate and complete. However, Long Wave Analytics Inc. makes no representation or warranty, express or implied, in respect thereof, takes no responsibility for any errors and omissions which may be contained herein, and accepts no liability whatsoever for any loss arising from any use of or reliance on this information. Long Wave Analytics Inc. is under no obligation to update or keep current the information contained herein. The information presented may not be discussed or reproduced without prior written consent. Long Wave Analytics Inc., its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein. In addition, the companies referred to herein may
pay a fee to Long Wave Analytics Inc. to be listed on www.longwavegroup.com. Copyright© Longwave Group 2013. All Rights Reserved.
“Those who cannot remember the past are condemned to repeat it.” Santayana

Gold – Supply and Demand – James Rickards Explains the differences between Paper Gold and Physical Gold

James Rickards, author of The New York Times bestseller Currency Wars, States that the main difference between physical and paper gold is the behavior in terms of people’s response to market developments.

Taken from Business Insider:

JIM RICKARDS: Here’s The Difference Between ‘Paper’ Gold And ‘Physical’ Gold

When gold crashed on Monday, dragging market prices down to a low of $1321.50 an ounce from levels around $1560 only days before, holders of physical gold saw the value of their holdings decline as well.

However, we’ve seen a lot of claims that somehow there’s a difference between the market for physical gold (people buying gold bars or gold coins) and that for “paper” gold (which refers to gold futures traded on the COMEX or shares of GLD, the gold ETF).

Jim Rickards, a prominent gold bull and author of the book Currency Wars, told Business Insider that the disconnect between the two markets evidenced by the crash on Monday is not one of price, but “in terms of behavior, in terms of people’s responses to market developments.”

So, what does that mean exactly?

Rickards uses a classic “weak hands, strong hands” analogy to compare physical gold buyers and paper gold buyers.

According to Rickards, the “weak hands” in the gold market were the over-leveraged buyers of gold futures and ETFs that caused prices to plummet in the recent sell-off.

“If you’re an un-levered buyer of bullion – say, 10% of your investable assets – you kind of watched the headlines and watched the ticker [as gold crashed] on Thursday, Friday, and Monday, but it didn’t affect you,” says Rickards.

Below, Rickards expands on the analogy and explains where the hedge funds fit in:

Gold ownership is now divided between strong hands and weak hands. The strong hands are Russia, China, some of the other central banks, and anybody else who is buying gold for cash in physical form, without leverage.

The weak hands are retail jumping into GLD, at a top, using margin, futures players, and people who don’t really understand gold. There are a lot of trend followers out there who started following gold on a trend basis, but didn’t really understand anything about gold, or how it works, etc.

The hedge funds turn out to be weak hands, not strong hands. The reason is they’ve got redemptions. Hedge funds don’t have permanent capital. They may have monthly redemptions, or quarterly redemptions, or one-year lockups, or whatever it is, but it’s not permanent capital.

When they get the drawdowns, and they start getting redemption notices, guess what? They have to sell to get cash to meet the redemptions. And that feeds on the selling.

So, there is a lot of dynamic that is not unique to gold, because it would be true of any over-leveraged situation, there are a lot of new players who don’t understand gold, and then there were a couple of very specific events that started the unwinds.

But it looks like it’s found its level. The last weak guy puked, and now we’ll go from here.

In short, the basic idea is that while holders of physical gold were affected by the sell-off in that it lowered the value of their holdings, they weren’t put in a position where they needed to immediately liquidate at the first sign of trouble.

“Any man who thinks he can be happy and prosperous by letting the Government take care of him; better take a closer look at the American Indian.” Henry Ford

Dear friend and client of AFE,

Please find a brief market update.

The socialist experiment at work in an economy

For those of you who think that 48 million Americans on food stamps and half the people in the US receiving some sort of government handout is okay, here is a fun anecdotal story:

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Quick Numbers in Regards To The Recent Price Smash

The drop in gold price has already smashed listed gold companies to the point that the combined market cap of the world’s top 10 producers is now the same as Qualcomm with the likes of Barrick Gold now trading at prices last seen in 1992.

There are only 12 trading days since 2000 where gold has dropped more than 4% in a day, and half of those were in 2008. This type of hyper-fearful panic only occurs once every few decades. Panics like this also mark major bottoms, even in a bear market.

In the 33 months after the 2008 drop in gold price of 27.2%, gold went on from around $700 up to $1900. The current pullback is about 29% from the last high. If we measure from the intraday bottom of $1321 and see the same kind of major upleg, it could take gold past $2700. After such extreme selling, price virtually always double over the subsequent 12 months to 3 years.

The main drivers of the gold market are the same today that they were in 2000 when this bull market started, and regardless of the in-correct assumption by some market commentators that things are somehow different, gold should remain in demand for years to come.

To be clear, we at AFE are not perma-bulls on gold. We are invested in physical, probably to a higher degree than most investors, however when we are at what appears to be the top of the secular bull, we will trim positions and diversify out of metal. Regardless of the last few weeks price actionwe do not believe this bull is over yet.

With kind regards,

Alex Stanczyk
Chief Market Strategist
Anglo Far-East

Currency Wars – Gold is Money – Texas wants it’s Gold back

James Rickards, Senior managing director of Tangent Capital, talks about  Gold confiscation in the past and the reason of why Texas wants it’s gold back to the south.

Taken from Bloomberg:

Dear friends and clients of AFE,

Yesterday Jim Sinclair spent over 5 hours in a question and answer session in New York City. He covered the implications of Cyprus proposing to confiscate as much as 10% of depositor wealth directly from bank accounts, as well as his views on a wide variety of subjects related to gold.

Mr. Sinclair is a 50 year veteran of the gold markets, and one of the most respected voices in the gold community. While we do not always agree 100% with Mr. Sinclair’s views, my personal observation is that he is genuinely concerned for the well-being of others when it comes to wealth preservation through gold.

What follows is a summary of what Mr. Sinclair had to say on these issues. Please bear in mind that this is being re-constructed from hand notes. If a phrase appears in quotes, it is verbatim, otherwise I am paraphrasing.

*****

According to Jim Sinclair:

The announcements that Cyprus put forward a proposal to force depositors to pay for bank bailouts directly has created a global uproar, and the backlash will have a substantial effect on the gold market. Sinclair considers this a major turning point in the gold market, and herald’s gold’s next major up leg.

Sinclair’s comments on various gold related subjects:

There are three phases left in this bull market. Now-2014, 2015-2017, 2018-2021

COMEX:

“As long as the price is made in the paper markets, the supply is infinite”. “Gold will only recognize its true value when the physical price (versus paper) is making the market”.

GOLD WINDFALL TAX:

In this environment taxes are going up across the board, it is difficult to project what the government will do on that.

CONFISCATION:

During the last confiscation in the 1930’s gold was the QE at the time. Nixon needed to expand the money supply and had to use gold to do it because QE wasn’t available to him at the time. I do not consider another confiscation likely.

GOVERNMENT CONFISCATION OF MINING RESOURCES:

“Yes it could happen. It depends on the wisdom of managers to share the bounty with the government as to whether they are a partner or not”.

PERSON ASKS QUESTION AND PREFACES WITH “I AM IN THE IF YOU DON’T HOLD IT YOU DON’T OWN IT CAMP, WHATS YOUR VIEW OF HOLDING GOLD OVERSEAS”:

“According to the way I have done it, I don’t have an ounce of gold here, its all in Africa.” “Gold you have should be stored internationally”. “For storage you don’t want anything cheap or easy, that doesn’t exist”.

GOLD/SILVER RATIO:

“Ratios are all 20/20 vision in hindsight. Keep what you have don’t sell gold for silver or vice versa”.

CORRUPTION IN THE FINANCIAL SYSTEM:

“The financial system we live in now is comparable to Sodom and Gomorrah, only Sodom and Gomorrah was probably a lot more fun”. “Finance is now a criminal enterprise”.

FDIC:

“FDIC gives us comfort, but does not function in a systemic crisis”.

IRA’s CASH OUT OR KEEP:

“Cash out, take the tax hit”. “If QE fails the next large pool of money they have easy access to are pensions and IRA’s.”

IRA/401k CONFISCATION:

If the USD goes to 72.00 or below, the Fed may cease QE and go directly after pensions and IRA’s

HYPERINFLATION:

“If it happens it will be short lived and violent. Approximately 3 months in time frame”.

RESERVE CURRENCY:

“We will have a virtual reserve currency”. “The new reserve currency will be a worldwide M3 ratio versus gold held by central banks. This will be marked by the market versus the government”.

GOLD PRICE MANIPULATION.  ARE THE MEN IN THE ESF, CFR, ETC MANIPULATING THE GOLD PRICE LOWER?:

“As we would be if that was our job and motive”. “My dogs could figure out this is a manipulation”. “Economics schools today teach that gold is competitive to the control of currency”.

ON STATES MAKING GOLD LEGAL TENDER:

“States making gold legal tender is fine, but if there is no system to support a transaction it’s not practical”.

GOLD PRICE DROPPING AS IT DID IN 1980:

“We will not see a price drop like we did in the 80’s, the entire paradigm is different”.

REASONS TO BAIL OUT OF GOLD:

“The only argument I can see to bail out of gold would be the legitimate end of QE”.

ON TIMING AND PRICE:

“Anything below 3500 is a buy. Anything above 4400 is a sell”.

RAISING CAPITAL FOR MINING COMPANIES:

“Any attempt to raise money issuing stock in these capital markets is a suicidal move”. Jim goes on to explain additional capital raising with TRX will be by sales of gold not stock.

PETRODOLLAR:

“Attacking Iran is attacking other nations, big nations”. “This does not look attractive today.” “China recently surfaced two submarines in a US Navy Carrier group, undetected. This means they can also surface off the coast of the US undetected and fire nuclear weapons if they wanted to”. “The use of the dollar in trading energy (oil) is paramount to the strength of the dollar.” “The move in energy trading is away from dollars”.

3 PHASES OF A BULL MARKET:

“By all historical measurement’s, we should be approaching the final phase of this bull market”. “Keep in mind we are living in a false economic world today”.

NUMISMATICS:

Unless there is a ready market to buy it back, you are probably better off buying well known coins.

CHINA:

“I think China will shoot for a 15% reserves position in gold”.

*****

Please keep in mind that while we have published these comments for the benefit of our clients, there are some areas we may disagree on (for example, confiscation of gold).

If you are unclear about any of these subjects, we are happy to discuss them.

With kind regards,

Alex Stanczyk
Chief Market Strategist
Anglo Far-East

Gold Price – China – Hong Kong Gold Exports to China ascend to 832.162 tonnes in 2012

Since 2011, demand of gold from china made Hong Kong Exports of gold hits records with more than 832 tonnes of gold shipped to mainland.

Taken from Reuters:

UPDATE 1-Hong Kong-to-China 2012 gold flow hits record high

* Hong Kong exports 832.162 T gold to China in 2012

* Hong Kong imports 274.684 T gold from China

By Rujun Shen

SINGAPORE, Feb 5 (Reuters) – Hong Kong’s net gold flow to mainland China jumped 47 percent in 2012 to a record high of 557.478 tonnes, indicating robust demand in China, which vies with India to be the world’s top gold consumer.

Hong Kong shipped 114.372 tonnes of gold to China in December, also a record high for monthly exports. The former British colony received 19.644 tonnes of gold from the mainland in that month.

Its total gold shipments to China in 2012 jumped 94 percent from the 2011 total to over 832 tonnes, but imports also were six times higher at 274.684 tonnes, data from the Hong Kong Census and Statistics Department showed on Tuesday. (www.censtatd.gov.hk)

“It is not a surprise,” said Dan Smith, head of metals research at Standard Chartered. “Consumer and investment appetite was quite strong, and no one knows how much the central bank is buying.”

Investors are waiting for a research report from the World Gold Council due next week, which will show whether China overtook India last year as the world’s top gold consumer.

“This is a very strong number,” said Nick Trevethan, senior commoditystrategist at ANZ in Singapore. “China’s implied gold demand looks set to approach or exceed 1,000 tonnes based on Hong Kong trade data and the annualised gold production number.”

The implied demand could reach 1,050 tonnes if gold inflow from other channels is factored in, he added.

China produced 322.8 tonnes of gold in the first 10 months of 2012, up 11 percent from a year earlier, the Ministry of Industry and Information Technology said.

Physical buying at the start of 2013 was strong as seasonal demand picked up before the Lunar New Year, which falls on Feb. 10. But buying has since ebbed as prices moved higher and settled in a rangebound mode.

Traders have said the pre-holiday demand is not as strong as in the past few years as improving global and domestic economies sap some investors’ interest in gold.

Gold – Supply and Demand- Gold supply and demand statistics for 2012

Dear friend and client of AFE,

The gold supply and demand statistics for 2012 have been released by the World gold Council.

Things we note:

1. Central Bank purchases of gold have reached a level not seen in 48 years. Watch what they do, not what they say.

2. Total investment demand in gold (including Central Bank purchases) has finally exceeded jewelry demand in gold, something we predicted several years ago.

3. Total ETF/Gold Fund demand in gold was roughly $15 Billion, or 3.4% of the market cap. of Apple (AAPL), or .11% of the market cap. of the S&P 500. No, gold is not in a bubble.

You may download the PDF here:

http://anglofareast.com/downloads/GDT_Q4_2012.pdf

With our compliments,
Your Anglo Far-East Team

Gold Price – China – China to introduce Gold ETF’s into it’s financial market

In a move to boost the development of the gold and capital market in china, Securities regulators from China have provided  provisional rules for the operations of Gold Exchange-Traded funds.

Taken from China Times:

China to introduce gold ETFs

BEIJING — China’s securities regulator published provisional rules for the operation of gold exchange-traded funds, or ETFs, on Friday, paving the way for introducing such business into the country’s financial market.

There is no specific timetable yet for the listing of gold ETFs, or mutual funds traded on stock exchanges that track the price of gold and have most of their assets invested in gold, according to an official from the China Securities Regulatory Commission, or CSRC.

Authorities need to thoroughly study how to regulate gold ETFs in order to protect investors’ interests in such new products, said the CSRC official, who declined to be identified.

The move will be part of government efforts to boost the development of both the gold market and the capital market.

Gold ETFs are operated in most of the world’s major financial markets, with a combined asset scale of more than $140 billion as of the end of July 2012, according to a CSRC statement.

China’s rapidly growing gold market has created conditions for the development of gold ETFs, said the statement.

China is the world’s biggest gold producer and consumer, with its gold output reaching 360.96 metric tons in 2011, according to the China Gold Association.

The value of gold product transactions surged 53.45 percent year-on-year to 2.48 trillion yuan ($395 billion) at the Shanghai Gold Exchange, the country’s major gold bourse, in 2011, the association said.

Currency Wars – Gold is Money – Russian Central bank: Russia will keep buying Gold

Russia, the seventh largest gold holder of gold with a total amount of $526.4 billion will keep buying gold. This action have been ongoing since last decade and will continue as method of wealth diversification in times of economic crisis where investing in securities and deposits remains risky.

Taken from Business Recorder:

Russia central bank to keep buying gold: Ulyukayev

DAVOS: The Russian central bank will continue to buy gold and other precious metals as it seeks to diversify its foreign reserves, First Deputy Chairman Alexei Ulyukayev said on Thursday.

Russia’s reserves, the world’s fourth largest, stand at $526.4 billion. The share of gold has risen to nearly 10 percent, a target set in the middle of the past decade, raising market questions over whether the central bank will keep buying.

“We are buying metal and will continue to pursue this course,” Ulyukayev told reporters on the fringes of the World Economic Forum in Davos.

“This is a course of asset diversification in a situation when investing in securities or deposits remains risky.”

Ulyukayev also said the US dollar accounted for 46 percent of the currency portion of the central bank’s reserves, and the euro 40.5 percent.

Sterling has a 9 percent share, the Canadian dollar 3 percent and the Australian dollar, added to Russia’s reserves last year, at 2 percent.

Separately, Ulyukayev said that inflation could exceed 7 percent in February but should start to ease from March onwards. Consumer inflation reached 6.6 percent in 2012.

He saw no grounds for further monetary stimulus but left open the direction of the central bank’s next interest-rate move. “It could be one way or the other,” Ulyukayev told reporters.

Silver – Supply and Demand – Silver ETF’s made more than 500 tons in 2012

One of the biggest silver ETF’s added more than 500 tons of silver to it’s stock, making the total holdings more  than ten thousands tons.

Taken from Bloomberg:

Biggest Silver ETF Adds 572 Tons in Largest Gain in Five Years

Assets in iShares Silver Trust, the biggest exchange-traded fund for the metal, climbed the most in five years as more investors are seeking an alternative to gold.

Holdings jumped 572 metric tons, or 5.9 percent, the biggest increase since December 2007, according to data on the iShares website today. BlackRock Inc. (BLK), the manager of the fund, confirmed the figures. The metal worth $579 million boosted assets to 10,735 tons, the most since May last year.

Global investment through all silver-backed exchange-traded products is a record 19,114 tons, or about nine months of mine output, according to data compiled by Bloomberg and Barclays Plc. Steps by policy makers from the U.S. to China and Europe to boost economies attracted investors to precious metals on bets that stimulus will stoke inflation.

“Some investors see poor man’s gold as a cheaper alternative to the yellow metal and are allocating to it,” Mark O’Byrne, executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars, said by e-mail today. “Allocations to silver remain very small which suggests that the holdings could go higher resulting in higher silver prices again in 2013.”

Silver will rise as much as 28 percent to $40.25 an ounce this year, based on the median of 49 analyst, trader and investor estimates compiled by Bloomberg in December. The metal for immediate delivery was at $31.3325 an ounce today in London.

Silver almost tripled since the end of 2008, and is up 2.9 percent this year compared with a 0.2 percent decline in gold and 9.4 percent jump in platinum.