Tag Archives: China

The Money Printing Road To Perdition – Got Gold?

Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

Where’s the “V?” – Obviously the Fed has injected monetary cocaine into the stock market to make it appear as if stocks are “discounting a “V” economic recovery.  But a “V” on Main Street is nowhere to be found (graphic is from Crescat Capital -the comment bubble is my edit):

The chart above plots the NY Fed’s weekly index of economic activity (red line) vs. the Bloomberg U.S. financial conditions index, which attempts to measure the relative strength of the bond, equity and money markets (white line). With the amount of money the Fed has injected into the financial system, it’s no surprise that the financial conditions index is soaring. However, as I’ve suggested in recent issues, this money is having little, if any, effect on real economic activity.

Compounding the insanity of the current market valuations is the fact that no one has any idea just how bad the economic damage has been from the shutdown of the economy and the virus crisis. We won’t know for several months the degree to which unemployment and overall economic activity will recover. Certainly this idea that there will be a full recovery by the end of the summer (per several White House officials) is completely foolish.

The economic numbers that appear positive are merely a “statistical” bounce attributable to the “re-opening” during May from the highly depressed state of the economy during the lock-down period. But household debt delinquencies – credit card, auto and mortgage – continue to rise, while there’s little evidence that the majority of those who lost their jobs will be re-employed any time soon, if ever.  What will be the effect on the economy when unemployment benefits expire for a large portion of those receiving them now and who can not find a job?

The Fed asserts that its money printing is necessary to restore economic health.  But this is poorly disguised Orwellian propaganda.  Most of the Fed’s money printing has been used to keep the Too Big To Fail banks from choking to death on subprime and non-performing “assets,” such as leveraged loans to the retail and oil sectors, CLO liabilities and counter-party exposure from OTC derivatives (credit default swaps, primarily).  The resumption of money printing in September 2019 is evidence of that assertion. The rest of the printed money is funding the enormous load of new Treasury issuance.

Gold hit a new eight-year high today. This comes interestingly on the heels of escalating tensions with China. Trump likely does not understand this, but China holds several aces up its sleeve which can be used to undermine the U.S. dollar and detonate the ticking time bombs embedded in the U.S. financial system.  The most notable wild card held by China is its increasing control over the global physical gold market.

In the context of these comments from a Vice Chairman at the China Securities Regulatory Commission (i.e. a CCP member), it’s quite possible that China is starting to flex its muscle slowly to reset the price of gold to more closely align the vast spread between the paper derivative gold price determined in London and NYC and a true “price discovered” price of gold that reflects the underlying supply/demand reality:

Fang Xinghai, a vice-chairman at the China Securities Regulatory Commission, said that as China mainly relies on the US dollar payment system in international deals, it makes it vulnerable to possible US sanctions.

“Such things have already happened to many Russian businesses and financial institutions. We have to make preparations early – real preparations, not just psychological preparations,” Fang said at a forum organised by Chinese media outlet Caixin.

Fang’s comment came at a time when Washington is pondering how far it should go to use the US dollar’s key role in international payment to punish Chinese individuals, companies and financial institutions for alleged involvement in issues such as Xinjiang and Hong Kong.  (Caixin Gloal, via Zerohedge)

I’m just speculating here,  but China may be starting to flex its muscle in the gold market. It’s a widely accepted proposition that China’s Central Bank holds many multiples of the amount of gold officially reported.

China is the world’s largest producer of gold and now its setting its sights on acquiring robust western hemisphere gold mines.  Two State-controlled Chinese mining companies have made three notable western gold mining company acquisitions this year: one with a mine in Canada (TMAC); one with a soon-producing gold mine in Columbia (Continental Gold); and one in Guyana (Toronto-based Guyana Goldfields).  All three mine properties host very high-grade gold resources.  China would not spend hundreds of millions to acquire high margin gold mines to sell the gold produced at a manipulated,  artificially low price of gold.

Beyond China’s “invisible hand,”  I don’t know how else to explain the strength in the gold price during a period of time – late 2019 through present – when China and India have largely been absent from the gold market based on import data, while at the same time the Comex paper gold open interest has declined over 40% since January.

Gold has been surprisingly strong this morning, hitting an eight-year high at $1785 (August gold basis). If August gold can jump over the $1788-1790 area, which has been defended vigorously by the paper gold slinging western bullion banks, the $1800 level may fall like Gaul…

Is Trump A Weaker President Than George W. Bush?

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Shortly after his inauguration, Trump started doing the politicians favorite dance-step: The 180-Degree Pivot.  This is where the politician as a candidate for office issues policy promises that patronize enough voters to get the politician elected.  Once elected, the politician reverses course and becomes a puppet for actual policy-deciders “behind the scenes.”  The only “promise” to which Trump seems to adhering is that stupid wall along the Mexican border.  I’m not sure who really wants that other drug-addled right-wingers and schizophrenics.

More disconcerting is Trump’s about-face on foreign policy.  Specifically, his Administration’s sudden antagonism toward pretty much the rest of the world, except Israel, England and Saudi Arabia.  To his credit, early on Trump threw a few punches at the Deep State.  Unfortunately the Deep State has once again hijacked the Oval Office – more rapidly than I expected.

I wanted to re-post this commentary from my friend, Dr. Paul Craig Roberts, in which he presents VP Mike Pence as the Deep State’s front-man in the White House.  I was concerned from the day Trump selected him that Pence was a Trojan Horse for the Deep State.  As Dr. Roberts elaborates, it appears as if my fears were well-founded:

President Trumps Disappearance – by Dr. Paul Craig Roberts (LINK)

In my long experience in Washington, vice presidents did not make major foreign policy announcements or threaten other countries with war. Not even Dick Cheney stole this role from the weak president George W. Bush.

But yesterday the world witnessed VP Pence threaten North Korea with war. “The sword stands ready,” said Pence as if he is the commander in chief.

Perhaps he is.

Where is Trump? As far as I can tell from the numerous emails I receive from him, he is at work marketing his presidency. Once Trump won the election, I began receiving endless offers to purchase Trump baseball caps, T-shirts, cuff-links, coffee mugs, and to donate $3 to be entered into a raffle to win some memorabilia. The latest offer is a chance to win one of “personally signed five incredible photographs of our historic and massive inauguration.” https://donate.donaldjtrump.com/signed-inauguration-photo-sweepstakes?utm_medium=email&utm_campaign=JFC_direct-ask_signed-inauguration-photo-sweepstakes&additional[utm_content]=041917-inaugural-photo-contest-djt-jfc-p-p-hf-e&utm_source=e_p-p&amount=3

For Trump, the presidency is a fund-raising device. If his VP, National Security Advisor, Secretary of Defense, UN Ambassador, CIA Director, whoever, want to start wars wherever, that’s just more memorabilia to raffle off for a $3 donation.

As a result of Trump’s failure to govern his own government, we have VP Pence telling Russia and China that there could be a nuclear exchange on their borders between the US and North Korea. Although Pence is not smart enough to know, this is not something Russia and China will accept.

Washington worries about North Korea having nuclear weapons, but the entire world worries that Washington has nuclear weapons. And so many of them. World polls have shown that the majority of the world’s population are far more concerned about the threat to peace posed by Washington and Israel than by Iran, North Korea, Russia and China.

Pence prefaced his “the sword stands ready” remark with “the United States of America will always seek peace,” which after Serbia, Somalia, Afghanistan, Iraq, Libya, Yemen, Pakistan, and Syria is as false a statement as it is possible to make. From Washington’s perspective it is always Washington’s victims that are “reckless and provocative,” never Washington.

The US stands for war. If the world is driven to Armegeddon, it will be Washington, not North Korea, Iran, Russia, or China, that brings life on earth to an end.

Blame It On China…

Financial Markets, Market Manipulation, Precious Metals, U.S. Economy, , , ,

Nothing is ever the fault of the “exceptional” United States.  It’s not our fault that we have to spend trillions containing the evil terrorists in the Middle East while we steal their oil and occupy their countries.

And of course it’s China’s fault that the U.S. stock market is all of a sudden finding the gravitational pull of economic, financial and political fundamentals.

BlameChina

China must be the reason that the U.S. stock market has been bought up the highest p/e ratio in history.  Note:  I’m using a p/e ratio based on the way earnings were calculated using GAAP 20 years ago – not today’s garbage GAAP which enables companies to manipulate their accounting to an extreme degree.

I guess it’s China’s fault that almost every public and private pension fund in the U.S. is extraordinarily underfunded.

It’s probably even China’s fault that U.S investors and pensions gobbled up shale oil industry junk bonds like they were going out of style on the assumption that oil would stay above $100/barrel forever.

It’s China’s fault that student debt and auto loans have hit an all-time high in this country.  When housing prices crash again that will be China’s fault too.

I guess when it comes right down to it, it’s China’s fault that Hilary Clinton is being hounded by problems with her use of her personal email to sell U.S. foreign policy decisions to the highest bidder while she was Secretary of State.  Hell, I guess it was China who took a paper towel and wiped clean the hard drive on her personal server.

The fact of the matter is that there was indeed a series of big asset bubbles that formed in China.  But they are no different or more severe than the same asset bubbles that have formed all over the world, including and especially in the United States.  But at least China is trying to address its bubbles.  It was the first to throw its cards on the table and try to let some air out its asset bubbles.  Meanwhile the U.S. continues to defend and inflate its bubbles.

I mean, c’mon on – triple C-rated junk bonds in this country were trading at 4% at one point.  A triple C rating means that the company which issued that debt has a very high probability of going bust.  Triple C-rated paper in the 1990’s traded at yields in the high teens or higher.  More than likely CCC- rated bonds become the new equity of a company when it files for bankruptcy reorganization.  Or it becomes worth pennies on the dollar if the company liquidates.   Triple C-rated paper trading at 4% implies an extreme bubble in the junk bond asset class.  But that’s China’s fault, I guess.

UntitledThis will not end well for the United States.   The problem with forcing the “blame China” propaganda on the U.S. public is that it inevitably will lead to a scenario in which the U.S.Government’s neocons who run the Department of Defense will justify starting a war with China.  A war with Russia is being started in Syria as I write this.  But that’s China’s fault too…

Message From Jeff Brown In Beijing To Readers:

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Thank you Rory and Dave, for a great show. China is just too important, actually always has been, to be ignored on the world’s 21st century stage. I am not saying that the Chinese government is angelic. All governments are inherently power hungry and evil. But after 4,000 years of continuous history, to understand China, you must be able to accept alternative definitions of democracy, rule of law, society and culture. All Xi Jinping and every Chinese leader since 1949 have said and are saying is, “We choose to develop our society, economy and culture based on Chinese terms, not on Western notions. And we resent you trying to shove your versions down our throats”. I invite Rory’s and Dave’s fans to learn more about China, in audio and writing, at http://www.44days.net. Looking forward to the next show with Rory and Dave soon! Jeff in Beijing.

Here is our Shadow of Truth interview/podcast with Jeff Brown:

This is a must-listen interview. It is the pilot interview for a series of interviews the Shadow of Truth will be doing with Jeff. We consider Jeff to be “our eyes and ears on the ground in Beijing.” These are reports from China that are unfiltered by western media.

Reader response: Very insightful stuff and quite heartening in his conviction that the leadership of China is not in on some frightening back scenes new world order deal with our oligarchs. I agree with you, Dave, that it never made sense in simple psychological terms.

Here are the people who *forced* opium on your people to get silver, who fought two wars with you over this, who dumped India’s silver on the market in the late 1920’s and early 1930’s and destroyed your economy and who have shown zero human connection to their own western countrymen. You should go in with *these* people in any kind of deal?! – “Fred H”

A Crumbling Empire – A New World Order

Financial Markets, Gold, Market Manipulation, U.S. Economy, ,

CrumblingEmpireNWO

Yes, the New World Order theorists are correct.  Only they have the wrong players in the line-up.  The picture on the left speaks for itself.  The photo on the right emphasizes this:

Russia and China Conclude several Important Agreements Today

Russian President Vladimir Putin today, May 8th, will hold talks in Moscow with President Xi Jinping. The president’s aide Yuri Ushakov told reporters that the Chinese leader is in Russia for several days on an official visit at the invitation of Putin.

The Kremlin has said the Chinese leader is in the Russian capital at the invitation of Putin. More than 40 agreements ranging from security to the economy and energy are expected to be signed by the two leaders as they are poised to boost Sino-Russian ties…In addition, Russia’s largest gold mining company “Polyus Gold” plans to sign an agreement with the Chinese gold mining corporation on a number of projects, including the Natalka deposit in the Magadan region.   LINK

My colleague Rory Hall and I will be releasing an interview on the Shadow of Truth with someone who has been living in China for many years.  He will be our “eyes and ears” on the ground in Beijing.  He’s currently working on the diaries of China’s President,  Xi JinPing.

When I asked him what his view was of the NWO theories about the U.S. and China cooperating behind the scenes to orchestrate a one world Government, he responded with an amused chuckle:  “The Chinese HATE the United States.”   By “Chinese” he was referencing Chinese leadership.

Are Chinese Gold Imports Really Down This Year?

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Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.   – Ayn Rand

The answer is, we don’t know.  And we don’t know because we can’t know.  Reuters ran a story this morning which asserted that China’s gold imports had dropped to a 16-month low in May.  But the truth is, we don’t know what China’s total imports in May were.

We do know that the World Gold Council’s 2013 tally of China’s gold imports was egregiously inaccurate:   China To WGC:  “HUH?”   Not only that, according to the general manager of the precious metals department for the State-run Industrial & Commercial Bank of China, the ICBC  is not meeting the demand for gold by the market.  Hmm…

In fact, it’s been impossible to track China’s total gold imports since late April, when China began to allow gold imports into the mainland through Beijing:   China Opens Beijing To Gold Imports.

While Hong Kong publishes monthly reports on the amount of gold supplied to China, mainland China does not release trade data on gold.  Prior to this, we could track China’s gold imports from data reported by Hong Kong and the Shanghai Gold Exchange.

The move to make China’s gold import volume opaque is intentional:   “The bulk of gold bought by China used to flow through Hong Kong, making its export data a useful proxy for Chinese demand as Beijing treats data about imports of the precious metal as a state secret”  (LINK).

I bring this up because I’ve seen several reports and blog commentaries which suggest that China’s demand for gold is declining this year.  The conclusion is that the gold is headed for another down-leg.

Seemingly, the current action in the gold market is contradicting the premise that gold is headed lower…If I were U.S. policy-makers, I would be worried about the reasons China has decided to go “cloak and dagger” on their gold imports…

 

This Is Why I Believe Rickards Is Wrong About The IMF SDR

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James Rickards has been quite vocal in his view that the price of gold is headed much higher.  Yet, in the same breath he aggressively promotes the  idea of using the IMF SDR to replace the dollar as the world’s reserve currency.

There’s two reasons for this.  First, if you study Rickard’s background going all the way back to his role in the Iran hostage crisis, you’ll see that he’s been lifetime “front man” for the most powerful interest groups that control this country behind the scenes.  First and foremost he’s a front-man for the Pentagon.

I’ve been told separately, independently from two different sources that the elite insiders in the Department of Defense know that the demise of the dollar is inevitable.   That there’s nothing that can be done to prevent it.

Which brings us to the second reason that Rickards is trying to pimp the IMF SDR like a magic elixir snake-oil salesman.  The U.S. dollar currently represents 61.2% of the IMF SDR:   SDR Currency Basket.

If the U.S. Government can persuade the world to accept the IMF SDR as a replacement for  the dollar, the U.S. Government will still have de facto control over the world’s reserve currency and therefore can continue to defer the systemic collapse of the U.S. into the future.   Please note the absence of Chinese yuan or Russian rubles from the IMF SDR basket.

I have always believed that China and Russia would never accept an IMF SDR as the global reserve currency, even if the U.S. and EU were willing to put those two respective currencies in the basket.  The biggest clue for me has been the rate at which both China and Russia are accumulating gold in their currency reserve accounts and working to eliminate the use of the dollar in their trade agreements.

But this article, reinforces my view – BRICS To Form Their Own “IMF:”

The BRICS nations — Brazil, Russia, India, China and South Africa — are reportedly close to finalizing their long-awaited development bank and currency reserve, each valued at $100 billion, in what has been billed as a historic challenge by the world’s emerging economies to a global financial architecture that has been dominated by the U.S. and Western Europe since its post–World War II inception.

The BRICS nations first announced their plans for the bank in March 2013 but struggled to reach an agreement over China’s desire to hold a greater stake in the institution. But a Brazilian government official told Reuters last week that the five members were ready to split funding and control equally, clearing the last major hurdle for a launch in 2016.

To economists in the developing world, who have long criticized the World Bank and IMF as anathema to the countries they purport to help, the New Development Bank holds tremendous promise. Critics say the West has taken advantage of its monopoly in international lending to wield outsize influence in the economic and political affairs of developing countries, dictating development models that further entrench these countries’ subservience to the West.

But unlike the U.S. and Europe, who are in lockstep on most things, the BRICS countries have little in common but a shared ambition to rebalance the global economic order.

I would suggest that anyone who wants to see the issues clearly should place a little less “faith” in the information being disseminated by people like Jim Rickards.  I would also suggest that the  unwillingness of Russia/China to cooperate with the U.S. on the matter of the U.S. dollar is the reason recent military aggression by the U.S. toward Russia and China…

Meanwhile…

Financial Markets, U.S. Economy, ,

…while Obama goes on a rampage threatening every country and region of the world economically and militarily, China continues to forge and expand its relationships with all of the U.S.’ former allies.   Here’s another one:   China/Kuwait Meet Up.

Rest assured, any economic agreements will not include using the U.S. dollar to settle trade activities between the two countries.   While Obama struts his stuff, China quietly and methodically is working to make the U.S. dollar irrelevant…

Putin Concerned About The Security Of Russia’s Gold Reserves

Gold, Precious Metals, , , ,

Putin says Russia and China need to secure their gold and currency reserves

Russia and China need to ensure their gold and currency reserves are secure, Russia’s President Vladimir Putin told foreign journalists at the St Petersburg International Economic Forum.

Read the short article here:   Putin/China/Gold

As a colleague points out Putin’s remarks:  “he is speaking on behalf of China and that does not happen accidentally.”

Also, please note the debut of my new Youtube Video Channel.  This is the pilot episode of “Golden Truth,” which will feature short videos that expose the truth behind the headlines and other topics.  I’m collaborating with John Titus, who is an attorney and who used to have a high level patent law practice before he burned out.  His new mission is video and film production.  He has one of the best research minds I’ve ever come across. The first episode is slightly longer than what will be typical, but needed some contextual explanation which took up time and it’s very unpolished on my end:

InvestmentResearchDynamics/Golden Truth Youtube Video Channel – Episode 1

Will the REAL Chinese Gold Demand Numbers Please Stand Up

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There are assumptions in this analysis that should be clear to all. But if it only serves to expose the futility of attempts in western capital markets to manage the gold price, the exercise has been worthwhile. For much of 2013 commentators routinely stated that Asian demand was satisfied from ETF redemptions. But as can be seen, ETF sales totalling 881 tonnes covered only one-quarter of the west’s shortfall against China, the rest coming mostly from central bank vaults.  – Alisdair Macleod, Renewed Estimates of Chinese Gold Demand (link)

While there has been much debate over the amount of gold that is actually, realistically being transferred from the western bank and Central Bank vaults, all of us who study this issue can say with 100% confidence that any estimates from the World Gold Council, or from WGC-derived analyses, are incorrect by a significant amount.   This much we know.

Alisdair Macleod, who is one of the few gold market analysts out there with analysis and commentary about the gold market that I believe offers accurate insight and is worth reading,  published a detail report which outlines what appears to be the most bona fide estimate of the amount of gold that is being “absorbed” by China annually.  While most of us have speculated on the size of the true amount of gold held by the PBOC, Mr. Macleod’s analysis puts together the numbers which show why the PBOC disclosure is misleadingly low.

The questions remain why, if gold is a mere ornamental asset being held out of “tradition” (per Bernanke’s testimony to Congress), are Central Banks so secretive about their gold market transactional activities?   This of course is a purely rhetorical question…

I would urge everyone who is interested in seeking truth to spend time and carefully read Mr. Macleod’s analysis linked at the top.  In that I’ve been researching and studying the gold market for nearly 14 years now, I can say with complete conviction that if Alisdair’s numbers are not 100% accurate, they’re pretty damn close to the truth.