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WORLD FINANCIAL REPORT ON RADIO DECEMBER 11th 2015
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CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: OPEC’s Oil Market Disarray Looks Like 1990s Slump All Over Again. OPEC has dropped any attempt at trying to fulfill its founding mission and manage the oil market, sending global benchmark Brent crude to a six-year low. For Saudi Arabia’s Ali al-Naimi, the most powerful and longest-serving of the group’s oil ministers, it may have seemed like history was repeating itself. There are several striking parallels between the Organization of Petroleum Exporting Countries’ current situation and the period from 1997 to 1999, when the group lost control of the market and oil slipped to less than $10 a barrel. While investors may wonder whether markets will follow a similar trajectory this time, it’s important to remember that OPEC emerged from the crisis to see oil prices surge all the way to almost $150 a barrel. If the parallels hold, markets could be in for a wild ride. Read more here-http://bloom.bg/1QxjaaV
-CHART OF THE WEEK: Goldman Changes Euro Hypothesis as Forecasts Raised on ECB Miss. Goldman Sachs Group Inc. raised its forecasts for the euro after its call that the European Central Bank would send the shared currency tumbling as much as 3 percent with dovish easing policies crumbled last week. Read more here-http://bloom.bg/21PGxSD and http://bloom.bg/21PR0NU
-CHART OF THE WEEK: The Central Bank Hall of Shame. At this point, it seems like the data is favorable enough to justify the Federal Reserve hiking interest rates for the first time since June 2006. A rate hike would put an end to the so-called zero-interest-rate policy (ZIRP), which the Fed put into place in December 2008 in its effort to stimulate growth and stoke inflation during the darkest hours of the global financial crisis. Of course, the concern is that the Fed may actually be hiking rates too soon. Indeed, many of its central bank peers around the world have hiked rates in this post-financial-crisis era, only to be forced to cut again within months because their local economies couldn’t handle it.
During a presentation on Thursday, Deutsche Bank’s Chief International Economist Torsten Slok shared this chart, which he informally called, “the central bank hall of shame.” It picks on eight countries, whose central banks hike rates, only to cut rates once again soon after. “It’s a very important reminder that the rest of the world has not been very successful with this experiment,” he said. The Fed surely doesn’t want to get inducted into this unfortunate list. The group’s Federal Open Market Committee convenes on December 15 and 16 to decide whether or not they’ll pull the trigger. Read more here-http://read.bi/1OVWQpK
-CHART OF THE WEEK: Biggest Bank in Denmark Warns Emergency Rate Damage Is Growing. Danske Bank says Denmark’s negative interest rates have lasted longer than anyone could have expected, with the damage to the financial industry growing increasingly burdensome. “This was seen as an emergency rate that would go away in 2015,” Claus Ingar Jensen, head of investor relations at the Copenhagen-based bank, said in a phone interview. “If pressure on margins is ongoing in 2016, that will mean something to bank earnings.” Read more here-http://bloom.bg/1Z01tUu
-CHART OF THE WEEK: Nomura If You Thought This Year Was Volatile in Asia, Just Wait Until 2016. While 2015 has brought about a number of challenges for Asian economies, Nomura says investors shouldn’t expect the region’s troubles to recede anytime soon. In fact, things might just get worse. “The choppy seas we foresaw in 2015 are likely to get choppier in 2016,” Nomura’s Chief Economist for Asia ex-Japan Rob Subbaraman and his team said in a note. “We forecast Asia-ex Japan GDP growth to slow further to 5.7 percent in 2016. That would be its slowest pace since 1998, heightening the already non-trivial risk of credit crunches.” Read more here-http://bloom.bg/1Y3XqnW
-CHART OF THE WEEK: Five Charts That Show American Exceptionalism Is a Myth. Jeremy Grantham, chief investment strategist at GMO, has some bad news for Americans. From health care, to politics, to education, to the economy, the U.S. is far from a standout, he says. And before the nation can resolve its challenges, Americans must first acknowledge them. “We are dealing today with important issues, one so important that it may affect the long-term viability of our global society and perhaps our species,” the strategist writes in his latest quarterly letter. “It may well be necessary to our survival that we become more realistic, more willing to process the unpleasant, and, above all, less easily manipulated through our need for good news.” In the letter, Grantham presents a dozen exhibits that cast doubt on the notion of American exceptionalism. We’ve highlighted five that jumped out. Read more here-http://bloom.bg/1QhGJpP
-CHART OF THE WEEK: Trudeau’s Tax Hike on Canada’s Richest 1 Percent Comes Up Poor. Canada’s government is increasing taxes on high-income earners by four percentage points next year while conceding the move won’t raise as much revenue as initially planned. Finance Minister Bill Morneau announced the change, effective Jan. 1 and a key pledge of the Liberal Party ahead of its election in October, after markets closed Monday in Ottawa.
Canada will also cut taxes on middle-income earners by 1.5 percentage points, he said, and roll back annual contribution limits on tax-free savings accounts to C$5,500 ($4,065) from C$10,000 for the coming year. The increased levy on high earners applies to those making more than C$200,000 annually, creating a new tax bracket with a rate of 33 percent, up from the 29 percent currently paid on earnings C$140,388 and above the previous highest bracket. Prime Minister Justin Trudeau campaigned on increasing taxes on the “wealthiest one percent,” saying it would raise C$2.8 billion in fiscal 2016 and pay for the corresponding cut for middle-income earners. The Liberals now predict it will only raise C$2 billion. Read more here-http://bloom.bg/1mbz4N4
-“The very first experience I had with money was during the holidays. I was very young, about five or six I believe, and my mother handed over 10 cents to both me and my brother. She asked us to place it into the Salvation Army ringing box. I remember at the time that 10 cents seemed like a lot of money and we didn’t have much back then. However, I quickly learned what it felt like to give to others and to those who might need it a little more than you. It was an incredible feeling and life changing experience.” John Paul DeJoria Billionaire
-“If the Fed raises interest rates at the beginning of a recession they could trigger a stock market crash and depression. Could they be that stupid?” Michael Belkin
-“According to the Fed’s data, the average American is $46,150 in debt.” Businessinsider.com
-“It’s a different world when the Fed is raising interest rates. Everybody needs to unwind trades at the same time and it is a completely different environment for the market.” Jeffrey Gundlach CEO and CIO of DoubleLine Capital
-“Maybe the greatest energy investing opportunities we’ve ever seen lie ahead.” David Rubenstein cofounder and co-CEO of the alternatives giant Carlyle Group
-“Anglo American Plc tumbled the most on record Tuesday, and today shows no signs of letting up down 8.8 percent. The stock is on track for its worst week since 2008 and it’s only Wednesday. The year has already been grim for the company. Anglo has slumped 76 percent and with asset sales, mine closures, and job cuts will shrink to a shadow of its former self. Short sellers have been circling short interest for Anglo is at a record, while that of peer Glencore Plc is also at a two-year high.” Bloomberg
-“The bottom line is gold’s new secular lows are totally artificial and unsustainable. They are the result of record extreme gold-futures short selling by American speculators, in stark contrast to gold’s strong physical fundamentals. This epic shorting arose from these traders’ historically-proven-false belief that Fed rate hikes devastate gold investment demand. And their radical short selling is running out of steam. This means the symmetrical guaranteed gold-futures buying is imminent as those excessive shorts are covered. As usual that will propel gold sharply higher, erasing these fake new secular lows that were never fundamentally righteous. Speculators’ massive short covering following such extreme shorting will be amplified by long futures buying and investment capital returning, unleashing a mighty gold upleg.” Adam Hamilton
-“The gold bulls are running and the stories are legion on why you should own Gold. Zerohedge highlights the net short position by Hedge Funds (this has happened only two times, now and last July), the fact that there are 293 paper ounces for every real ounce of gold in the world a record and the persistence of bearishness. In another note for “Money Morning”, the title concurs “Four reasons to be bullish on gold right now” including the mining stocks are refusing to fall further, the price has stabilized or risen against most currencies (outside of the U.S.), the CFTC short report that shows the commercials (smart) money have dramatically reduced short positions to almost flat while the speculators net long as collapsed (the most favourable since 2002) and technical (including an “outside reversal” on Friday) also support higher prices.” BNN
-Clive Maund: Gold Market Update. Read more here-http://bit.ly/1NQALpl
-Frank Holmes: Sweden has declared war on cash. Among the endangered species in Sweden are the gray wolf, European otter and cash. Back in June, I shared with you the story of how, in 1661, the Scandinavian monarchy became the first country in the world to issue paper money. (It was an unmitigated disaster, by the way.) Now it might be the first to ban it altogether. All across Sweden, cash the physical kind, not cash in the bank is disappearing. Many if not most businesses have stopped accepting it. ATMs are now as uncommon as pay phones.
Churchgoers tithe using mobile apps. Fewer and fewer banks even accept or dole out cash. So what’s going on? For one, the Swedish people have enthusiastically embraced mobile payment systems. Even homeless newspaper vendors now carry card scanners. But that’s not the concerning part. Cash’s demise appears to be orchestrated by Sweden’s central bank, which of course stands to benefit from the switch. In a purely electronic system, every financial transaction is not only charged a fee but can also be tracked and monitored.
Plus, taxes can’t be levied on cash that’s squirreled away in Johan’s sock drawer. Since July, interest rates in Sweden have lingered in negative territory, at -0.35 percent, forcing account holders to spend their money or else see their balances slowly melt away. Negative rates can also be found in Denmark and Switzerland, where they’re as low as -1.25 percent. The Swiss 10-year bond yield plummeted to -0.40 percent on Tuesday, which means people are paying the government to hold their “investment.”
Nick Giambruno, senior editor of Casey Research’s International Man, calls negative interest rates in a cashless society a “scam.” His perspective is worth considering: “If you can’t withdraw your money as cash, you have two choices: You can deal with negative interest rates or you can spend your money. Ultimately, that’s what our Keynesian central planners want. They are using negative interest rates and the “War on Cash” to force you to spend and “stimulate” the economy. The War on Cash and negative interest rates are huge threats to your financial security. Central planners are playing with fire and inviting a currency catastrophe.”
Sovereign Man goes even further, writing: “Financial privacy has been destroyed. Banks are now merely unpaid spies of bankrupt governments, and they will freeze you out of your life’s savings in a heartbeat if some faceless bureaucrat orders them to do so.” Read more here-http://read.bi/1jORPUR
-The Bank of Canada just said the 3 most controversial words in central banking: ‘negative interest rates.’ The governor of the Bank of Canada just said the three most controversial words in central banking: “negative interest rates.” In a speech on Tuesday, BoC Gov. Stephen Poloz discussed some of the bank’s framework for thinking about potential responses to future incidents of financial distress. And among the tactics the BoC could choose to take in the future, Poloz mentioned negative interest rates.
This is something central banks in Switzerland, Denmark, and Sweden and most notably the European Central Bank have all put in place. “The fourth unconventional monetary policy tool I want to cover is negative interest rates, which is something you have heard a lot more about recently,” Poloz said in his speech given at The Empire Club in Toronto. Poloz added: In 2009, the Bank said it couldn’t cut its policy rate below 0.25 per cent, because we believed that zero or negative interest rates might be incompatible with some markets, such as money market funds. This was a common view at the time.
Since then, we have seen the experience of several central banks, such as the ECB and Swiss National Bank, which have adopted negative policy interest rates. There, we’ve seen that financial markets have been able to adapt and continue to function. Given these and other developments, the Bank is now confident that Canadian financial markets could also function in a negative interest rate environment. Now, Poloz cautioned that this is not something being actively discussed by the BoC. Currently, the BoC’s benchmark interest rate is pegged at 0.5%. Read more here-http://read.bi/1U5oPVU
-“China cut the yuan’s reference rate to the weakest since 2011, fueling speculation that the central bank is trying to release pent-up depreciation pressure before a potential rate increase by the Federal Reserve. There are signs that the People’s Bank of China has started guiding the yuan lower before the Fed acts say Bloomberg economists. An index of emerging-market currencies dropped to a record low Tuesday on fears a Fed rate hike will spur capital outflows. Traders now put the odds of a Fed liftoff next week at 80 percent.” Bloomberg
-“Uber is looking to raise as much as $2.1 billion in a financing round that would value the car-booking company at a whopping $62.5 billion, people familiar with the matter told Bloomberg. The funding shows Uber is accelerating its expansion and branching into new services. Meanwhile, rival ride-sharing firms are forging an alliance to take on Uber’s growing global presence. Lyft, China’s Didi Kuaidi, India’s Ola, and Southeast Asian taxi-booking app GrabTaxi teamed up to offer users traveling overseas seamless access to rides via the same app they use back home.” Bloomberg
-Finland is considering giving every citizen €800 a month. Proposals for a national basic income are intended to simplify the social security system and encourage more unemployed people to take on temporary work. Authorities in Finland are considering giving every citizen a tax-free payout of €800 (£576) each month. Under proposals being draw up by the Finnish Social Insurance Institution (Kela), this national basic income would replace all other benefit payments, and would be paid to all adults regardless of whether or not they receive any other income.
Unemployment in Finland is currently at record levels, and the basic income is intended to encourage more people back to work. At present, many unemployed people would be worse off if they took on low-paid temporary jobs due to loss of welfare payments. More than 10 per cent of Finland’s workforce is currently unemployed, rising to 22.7 per cent among younger workers. According to research commissioned by Kela, close to 69 per cent of the Finnish population favours the idea of a national basic income. Detractors caution that a basic income would remove people’s incentive to work and lead to higher unemployment.
Those in favour point to previous experiments where a basic income has been successfully trialed. The Canadian town of Dauphin experimented with a basic income guarantee in the 1970s and the results both social and economic were largely positive. Finnish Prime Minister Juha Sipilä supports the idea, saying: “For me, a basic income means simplifying the social security system.” The basic income will cost Finland roughly €46.7 billion per year if fully implemented. Kela’s proposals are due to be submitted in November 2016. Read more here-http://bit.ly/1NVZSNV
-CBO: Taxes, Spending, Deficit All Up in First 2 Months of FY2016. The federal government taxed more, spent more, and ran a bigger deficit in the first two months of fiscal 2016 than it did in the first two months of fiscal 2015, according estimates the CBO published yesterday. The federal fiscal year begins on Oct. 1 and ends on Sept. 30. The increase in federal spending in the first two months of fiscal 2016 was largely driven by increased expenditures on Social Security, Medicare and Medicaid. The increase in taxation was driven by increases in individual income tax and payroll tax payments. “The federal budget deficit was $200 billion for the first two months of fiscal year 2016, the Congressional Budget Office estimates,” said the report. “That deficit was $22 billion larger than the one recorded during the same period last year. Revenues and outlays were both higher than last year’s amounts, by 3 percent and 6 percent, respectively.” Read more here-http://bit.ly/1M41YUb and http://bit.ly/1SR7SO1
-Labor Force Participation Improves Slightly; 94,446,000 Americans Not in Labor Force. The number of Americans not in the labor force last month totaled 94,446,000–a slight improvement from the 94,513,000 not in the labor force in October and the labor force participation rate increased a tenth of a point, with 62.5 percent of the civilian non-institutional population either holding a job or actively seeking one. The labor force participation rate of 62.4 percent in September and October was the lowest in 38 years. The Bureau of Labor Statistics says economy added 211,000 jobs in November, and the unemployment rate was unchanged at 5.0 percent. Read more here-http://bit.ly/1OU761K
-Since January The US Has Added 294,000 Waiters & Bartenders, And Zero Manufacturing Workers. Read more here-http://bit.ly/1RcVydr
-Gundlach Says the Fed Might Regret Raising Rates. Jeffrey Gundlach, whose $51.3 billion DoubleLine Total Return Bond Fund has outperformed 99 percent of peers over the past five years, said the Federal Reserve may come to regret raising U.S. interest rates amid signs of a fragile economy and a crumbling credit market. The Fed is likely to find itself in a “conundrum” in a year or two if it raises rates amid economic trouble, Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital, which manages about $80 billion, said during a webcast Tuesday.
The central bankers appear “hell-bent” on lifting rates despite weak economic signals such as gross domestic product, he said. “We’re looking at some real carnage in the junk-bond market,” Gundlach said. “This is a little bit disconcerting that we’re talking about raising interest rates with the credit markets in corporate credit absolutely tanking. They’re falling apart.” Gundlach cited several danger signs in the U.S. economy that he argued make it a bad time to raise rates. Manufacturing has slowed as the dollar strengthened.
Corporate profit margins have plateaued. High-yield bond spreads have widened and an exchange-traded fund of junk bonds had its lowest close today in more than six years. “It’s possible the Fed pulls another Lucy and the football,” he said, referring to the “Peanuts” cartoon character who yanks the ball from would-be kicker Charlie Brown. If the Fed does act next week, a quarter-point increase is likely, according to Gundlach. Read more here-http://bloom.bg/1TChOLo
-Bond Market Warning: People are going to be carried out on stretchers. Parts of the US corporate bond market are starting to look increasingly risky, and “people are going to be carried out on stretchers.” That was the fantastic quote in the Financial Times on Sunday from Laird Landmann at TCW, a major asset-management firm. According to the report, Landmann added: “When earnings are coming down, leverage is high and interest rates are going up. It’s not good.” Read more here-http://read.bi/1Y3YWq9
-5 signs the US economy isn’t ready for a rate hike. The likelihood of a December rate increase jumped from 58% to 70% based on federal-funds futures trading data. The daily business of will-they-or-won’t-they predictions is a fool’s game. But one thing is for sure: higher interest rates are coming whether in December or sometime in 2016. Wall Street has good reason to pay so much attention to the Federal Reserve. A common denominator of the last seven bear markets was a sea change in monetary policy in the form of either (a) increasing interest rates or (b) the withdrawal of monetary stimulus. But today is very different and more dangerous because the stock market must deal with the double-whammy of higher interest rates and the removal of quantitative easing. At the same time, the signs of economic stress are piling up higher than a hippie in a hot-air balloon. Read more here-http://read.bi/1OSrDpw
-Mike Maloney: What Happens When Yellen Raises Rates? Watch here-http://bit.ly/1mdalIu
-Dollar Traders Give Yellen Green Light as Fed Rate Meeting Nears. The dollar’s biggest weekly loss since May just made it a little easier for the Federal Reserve to raise interest rates. The greenback’s tumble from a 12-year high removes one of the last stumbling blocks for officials contemplating how to navigate their first rate increase in almost a decade. As the specter of liftoff looms, options suggest traders are the least concerned in four months about dollar strength versus the euro. Hedge funds and other large speculators reduced bets on dollar gains for the first time in six weeks in the period through Dec. 1, Commodity Futures Trading Commission data show. Read more here-http://bloom.bg/1lQJnFS
-The smart money is getting out of real estate. Real estate investing is all about timing, and Sam Zell knows this better than anyone. He sold his real estate firm, Equity Office, to Blackstone Group for $39 billion near the peak of the market. This was back in February 2007 only months before real estate credit markets started to spiral out of control. He’s doing it again. At the end of October, his real estate fund, Equity Residential, agreed to sell more than 23,000 apartment units to Starwood Capital for $5.4 billion. The sale represents over 20 percent of the Equity Residential portfolio.
The fund plans to sell another 4,700 apartment units in the near future. Most of the proceeds will be returned to investors in the form of a dividend sometime next year. Another real estate fund managed by Zell, Equity Commonwealth, has sold 82 office properties worth $1.7 billion since February. The fund plans to raise another $1.3 billion by selling off more properties over the next few years. Zell is cashing out of non-core assets after the run up in real estate prices in recent years. Rather than reinvest, much of the cash is being returned to investors. The message he is sending is clear it’s time to sell. Read more here-http://read.bi/1RF30NF
-Oil Trading ‘God’: Now is not the time to exit the market. Astenbeck Capital, the energy and commodities hedge fund led by oil trading “god” Andrew J. Hall, is on track for its worst year ever. But it doesn’t sound like he’s backing out anytime soon. On December 1, he wrote the following in a letter to investors obtained by Business Insider: With short term and long term factors pulling in opposite directions, prices are likely to remain volatile for the time being, driven by macroeconomic sentiment and positioning. In the shorter term the market remains oversupplied and inventories, already high, will probably rise a bit more in the New Year, even if they are falling currently.
However, in the longer term, prices are unsustainable low on any reasonable assessment and global spare capacity is wafer thin. Predicting the precise trajectory of prices given these conflicting pressures is all but impossible. With heightened geopolitical risks and current positioning, there is a very real possibility for significant short term price spikes. There is certainly still a chance of lower prices in the next month or so, but weighing that possibility against the virtually inevitability of higher prices down the road leads to a simple conclusion: now is not the time to exit the market. Hall was certainly spot-on when he noted a chance for lower prices in the next month or so. Read more here-http://read.bi/1U6noGJ
-OPEC Unshackled From Quota Could Add Millions of Barrels. OPEC’s new free-for-all production stance could lift the lid on millions of barrels of additional crude supply next year. “Everyone does whatever they want” now that the Organization of Petroleum Exporting Countries has effectively abandoned its formal production target, Iranian Oil Minister Bijan Namdar Zanganeh said after the group met on Friday. What Iran wants is to revive exports by about 1 million barrels a day when sanctions are removed next year. It’s not the only member with potential to swell the global oil surplus, with millions of barrels of capacity lying unused under the sands of Saudi Arabia and Libya. “It means more OPEC oil next year,” Jamie Webster, a Washington-based oil analyst for IHS Inc., said of the organization’s Dec. 4 decision. “OPEC is not cutting. With Iran looming, as well as largely only upside risk for Libya, the smart money is on more, and not less, production.” Read more here-http://bloom.bg/1jPtazF
-CIBC: The Crude Glut Might Be Cured Faster Than You Think. OPEC has sent oil prices back to the mat, but North America might be able to pick them back up before too long. CIBC World Markets Economist Nick Exarhos notes that the decline in U.S. oil production hasn’t come about with the speed or magnitude most experts expected. But in the details of production data, he finds a dynamic that could support crude prices next year. “The EIA’s data on the changes in ‘legacy’ production a measure on the decline rate of existing wells suggests that if no new rigs were drilled, production would drop by a million barrels per day every quarter,” writes Exarhos. “U.S. production is now forecast to decline by 500,000 barrels per day over the next six months, a reason to expect at least some price recovery in 2016.” Read more here-http://bloom.bg/1IGfouP
-Billions of Barrels of Oil Vanish in a Puff of Accounting Smoke. In an instant, Chesapeake Energy Corp. will erase the equivalent of 1.1 billion barrels of oil from its books. Across the American shale patch, companies are being forced to square their reported oil reserves with hard economic reality. After lobbying for rules that let them claim their vast underground potential at the start of the boom, they must now acknowledge what their investors already know: many prospective wells would lose money with oil hovering below $40 a barrel.
Companies such as Chesapeake, founded by fracking pioneer Aubrey McClendon, pushed the Securities and Exchange Commission for an accounting change in 2009 that made it easier to claim reserves from wells that wouldn’t be drilled for years. Inventories almost doubled and investors poured money into the shale boom, enticed by near-bottomless prospects. But the rule has a catch. It requires that the undrilled wells be profitable at a price determined by an SEC formula, and they must be drilled within five years. Time is up, prices are down, and the rule is about to wipe out billions of barrels of shale drillers’ reserves. The reckoning is coming in the next few months, when the companies report 2015 figures. Read more here-http://bloom.bg/1NeS3iN
-Grocery and restaurant costs to gobble up your budget next year, study says. A new report says the average household in Canada will spend $8,631 on groceries and restaurant meals next year, up by $345 because of food inflation. The University of Guelph’s latest forecast estimates that food inflation could be between two and four per cent in 2016 compared with 4.1 per cent this year. The school’s Food Institute estimates food inflation in 2015 cost the average Canadian household an extra $325 this year. The Food Institute says a combination of factors are pushing up prices, including the impact of climate change and the high value of the American dollar, which increases the price of imports from the United States. The latest Statistics Canada data shows overall consumer prices were up one per cent in the 12 months to October, with a decline in fuel prices offsetting increases in most other spending categories. Read more here-http://bit.ly/1SQxWsS
-A Chinese man opened a bank account with so much moldy cash that after 7 hours the counting machines broke. A Chinese man took 5 million yuan (HK$6.04 million) of old banknotes to the bank to open an account and broke the machines as they tried to count it, local media reports. According to the report, the man surnamed Li from Sichuan Province carried eight bags of cash to a branch of the Agricultural Bank of China to open an account, the West China City Daily reported. Most of the 5 million yuan consisted of damp, mouldy banknotes. The machines took seven hours to count the total from 1pm to 8pm and even “burned out” one of the units, the report said. “Normally, counting banknotes will take approximately three hours,” one employee from the bank was quoted as saying. Read more here-http://read.bi/1NjaXCX
-Madoff Victims Get $1.2 Billion in Sixth Ponzi Scheme Payout. Bernard Madoff’s victims will have a bit more to spend on holiday gifts this year as the trustee unwinding his fraud begins sending out a total of $1.2 billion in recovered funds, with checks averaging $1.1 million each. The biggest payout to victims in more than three years comes a week before the anniversary of Madoff’s Dec. 11, 2008, arrest, when thousands of retirees, charities, investment funds and other clients discovered they’d lost $17.5 billion in principal to his decades-long Ponzi scheme. The distribution, which starts Friday, boosts victims’ recoveries to $9.16 billion, or about 57 percent of the cash they lost, trustee Irving Picard said in a statement. Checks will range from $1,298 to $202 million, he said, and when the payout is complete almost 1,300 victims will have recovered their investments. It’s the sixth distribution of funds. In 2012, Picard doled out payments totaling almost $5 billion. Read more here-http://bloom.bg/1YZKhyq
-Nearly Half of Youth Say ‘American Dream’ Is Dead: Harvard Poll. American’s youth are down on the future, with nearly half of those ages 18 through 29 believing the “American Dream” is more dead than alive, a nationwide survey released Thursday by Harvard University’s Institute of Politics shows. Reflecting the sour mood of the overall electorate, 48 percent of those asked “For you personally, is the idea of the American Dream alive or dead?” responded “dead.” Those who picked “alive” accounted for 49 percent. Read more here-http://bloom.bg/1NemvcJ
-20 People Now Own As Much Wealth as Half of All Americans. The US is caught in a vicious cycle, with rising political inequality driving an ever-rising concentration of wealth at the top. Read more here-http://bit.ly/1SQO79q
-The cost of buying the ’12 Days of Christmas’ rose 0.6% in 2015. Here’s another clue that inflation has been going nowhere. PNC released its annual Christmas Price Index on Monday, which rose just 0.6% for 2015. Back in 1983, PNC first measured the cost of everything in the ’12 days of Christmas’ song to entertain their clients during the slow holiday weeks. And every year since then, a team of economists has come up with an index of the price changes as a fun way to help people understand how this aspect of economics works. Because commodity prices have tumbled in the past year, the cost of most of the 12 things were unchanged year-on-year, reflecting the trend in the real government consumer price index. The cost of five gold rings was also unchanged, surprising PNC economists the most as actual gold prices have fallen more than 10% in 2015. Read more here-http://read.bi/1Y350yX
-The 10 most expensive champagne bottles on the planet. Nothing says celebration quite like popping bottles of Champagne. Sparkling wine originated in 17th-century France as an experiment for kings and queens. The process was later perfected and popularized by Benedictine monk Dom Pierre Pérignon. Today, sparkling wine is made from grapes of Chardonnay, Pinot Noir, or Pinot Meunier all over the world. Read more here-http://read.bi/1IYiRzQ
-LeBron James Signs Unprecedented Lifetime Contract With Nike. LeBron James will be in the Nike stable for the rest of his basketball career and beyond. The world’s largest sporting goods company Monday signed the four-time NBA MVP to an unprecedented lifetime contract. Terms of the deal weren’t released, but sports agent David Falk, who represented Michael Jordan for most of his playing career, estimated its value at $400 million to $500 million. A source close to James who is familiar with the contract said it is “significantly higher.” Nike in a statement said the 30-year-old Cleveland Cavaliers forward provides “significant value to our business, brand and shareholders.” Read more here-http://bloom.bg/1jOBeR8
-Lot 392: Platinum, Fancy Colored Diamond and Diamond Brooch, Bulgari. The fanciful floral bouquet set with a marquise-shaped Fancy Vivid Yellow diamond weighing 2.86 carats, a round-cornered square modified brilliant-cut Fancy Intense Blue diamond weighing 2.47 carats and a round Fancy Intense Bluish Green diamond weighing 2.09 carats, accented by marquise-shaped diamonds weighing approximately 7.40 carats, further set with round, baguette and pear-shaped diamonds weighing approximately 9.20 carats, gross weight approximately 16 dwts, signed Bulgari, with maker’s mark; 1964. Accompanied by three GIA reports: No. 2175262591 stating that the 2.86 carat diamond is Fancy Vivid Yellow, Natural Color, I1 clarity. No. 2175262649 stating that the 2.47 carat diamond is Fancy Intense Blue, Natural Color, VS2 clarity. No. 2171262568 stating that the 2.09 carat diamond is Fancy Intense Bluish Green, Artificially Irradiated, SI1 clarity. Estimate 500,000-700,000. Lot Sold. 1,750,000. See more here-http://bit.ly/1HWY5FI
-Lot 91: White Gold, Fancy Intense Blue Diamond and Diamond Ring. Centering a marquise-shaped Fancy Intense Blue diamond weighing 2.14 carats, flanked by round diamonds weighing approximately .35 carat, size 5¼. Accompanied by GIA report no. 5171190289 stating that the diamond is Fancy Intense Blue, Natural Color, SI2 clarity. Estimate 500,000-700,000. Lot Sold 910,000. See more here-http://bit.ly/1NJ2ht6
-Lot 343: Pair of 18 Karat Gold and Fancy Intense Yellow Diamond Earstuds. Set with two cut-cornered rectangular modified brilliant-cut Fancy Intense Yellow diamonds weighing 8.27 and 8.02 carats. Accompanied by two GIA reports: No. 2165979229 stating that the 8.27 carat diamond is Fancy Intense Yellow, Natural Color, VVS2 clarity. No. 2165653117 stating that the 8.02 carat diamond is Fancy Intense Yellow, Natural Color, VS1 clarity. Estimate 350,000-400,000. Lot Sold 418,000. See more here-http://bit.ly/1RHej7X
-Lot 474: Platinum, Fancy Vivid Yellow Diamond and Emerald Ring. Centering a cushion-cut Fancy Vivid Yellow diamond weighing 5.32 carats, flanked by pear-shaped emeralds, size 6¾. Accompanied by GIA report no. 10621069 dated May 6, 1999, stating that the diamond is Fancy Vivid Yellow, Natural Color, Internally Flawless. Estimate 175,000-200,000. Lot Sold 328,000. See more here-http://bit.ly/1U9vX3D
-Lot 258: 18 Karat Gold, Platinum, Fancy Vivid Yellow Diamond and Diamond Ring. Centering a pear-shaped Fancy Vivid Yellow diamond weighing 3.24 carats, framed by baguette diamonds weighing approximately 4.40 carats, size 5¾. Accompanied by GIA report no. 2173231618 stating that the diamond is Fancy Vivid Yellow, Natural Color, VS1 clarity. Estimate 65,000-75,000. Lot Sold 90,000. See more here-http://bit.ly/1QhTLDA
-Lot 291: Gold, Fancy Intense Yellow Diamond and Diamond Ring. Centered by an old European-cut Fancy Intense Yellow diamond weighing 3.09 carats, framed by old European-cut near colorless diamonds weighing approximately 1.65 carats, size 5. Accompanied by GIA report no. 1172245146 stating that the diamond is Fancy Intense Yellow, Natural Color, SI1 clarity. Estimate 50,000- 70,000. Lot Sold 68,750. See more here-http://bit.ly/1Y0asrS
-Bonhams Sets Auction Records As Diamond Ring Sells for $1.9M. Bonhams sold a 2.97-carat diamond ring for $2.2 million (GBP 1.5 million), including the premium, at its fine jewelry auction in London on December 5, setting two world records and a third for the sale of a ruby ring. The step-cut diamond, set in a ring designed by jeweler Andrew Grima, fetched the highest-ever auction price per carat for a fancy greyish-blue diamond and also set a record for a Grima creation. The price beat the pre-sale estimate of $752,000 to $1.05 million, the auctioneer said in a statement. Read more here-http://bit.ly/1M5XFYB
-Petra Sells 23-Carat Pink Diamond for More Than $10M. Petra Diamonds Limited has received $10.1 million from the sale of an exceptional 23.16-carat pink diamond, achieving $433,938 per carat for the rough stone. The miner recovered the gem from the Williamson mine in Tanzania in November 2015, according to a statement December 9. Petra, which is listed on the London Stock Exchange, sold the gem into a partnership and has retained a 20 percent interest future proceeds from polished sales.
The stone was bought by Golden Yellow Diamonds on behalf of Israeli diamond manufacturer M.A. Anavi Diamond Group, which specializes in large and unique colored diamonds. “This sale result affirms that the market for high quality coloured diamonds remains robust,” said Johan Dippenaar, Petra’s chief executive officer. “Pinks of this size and quality are incredibly rare, but the Williamson mine is known to produce them from time to time. This bodes well for the future of the mine as we continue to ramp up production and optimize the processing plant. Given the exceptional nature of this pink stone, we are delighted to retain exposure to the uplift in the polished.” Read more here-http://bit.ly/1jRzc2v
-Chris Martenson: The Screaming Fundamentals For Owning Gold. We’re at a moment of historic opportunity. Why Own Gold? The reasons to hold gold (and silver) I mean physical bullion here are pretty straightforward. Let’s begin with the primary ones: To protect against monetary recklessness, As insurance against the possibility of a major calamity in the banking/financial system, For the embedded ‘option value’ that will pay out handsomely if gold is re-monetized.
Real interest rates are deeply negative (meaning that the rate of inflation is higher than Treasury bond yields). Even more startling, there are trillions of dollars worth of sovereign debt that has negative nominal yields. This means that investors pay various governments to take their money from them for periods as long as seven years. For example, at the time of this writing in late 2015, $1,000 loaned to the German government for 5 years will pay back $980 at the end of those five years. That’s insane. Or at least, a very new wrinkle that we have yet to determine how it will alter investor decisions and psychology. Negative interest rates are a forced, manipulated outcome courtesy of central banks.
Of course, the true rate of inflation is much higher than the officially-reported statistics by at least a full percent or possibly two; and so I consider real bond yields to be far more negative than is currently reported. Historically, periods of negative real interest rates are nearly always associated with outsized returns for commodities, especially precious metals. If and when real interest rates turn positive, I will reconsider my holdings in gold and silver but not until then. That’s as close to an absolute requirement as I have in this business. Recently commodities have been hard-hit, declining in price by large amounts. So negative interest rates are giving us different results this time than we’d expect so far. Read more here-http://bit.ly/1lxUpk3
-Frank Holmes: An Illustrated Timeline of the Gold Standard in the U.S. Read more here-http://bit.ly/1U9RJo4
-Updated: Latest Gold Reserve figures from the World Gold Council. The World Gold Council (WGC) has today announced its regular statistical update on gold reserves in the official sector. This monthly release includes (1) World Official Gold Holdings ranking gold holdings by country, (2) a spreadsheet with the latest changes in official sector gold holdings. As noted these are not completely up to date except for the Chinese reserve figure where we have added in the 19.8 tonne change in our table. We are also only showing the Top 20 national plus IMF holdings in our table below a full table for all countries as reported to the IMF is available on the WGC website (www.gold.org/statistics ). Read more here-http://bit.ly/1Q3VnkF
-China Adds Most Gold in November in 5 Months as Price Slumps. China probably increased central bank gold reserves in November by about 21 metric tons, the most in at least five months, as prices had the biggest drop in more than two years. The value of gold assets was $59.52 billion at the end of last month from $63.26 billion at end-October, according to data on the People’s Bank of China website released Monday. That works out to 56.05 million troy ounces or about 1,743 tons, based on the London Bullion Market Association afternoon price auction on Nov. 30, Bloomberg calculations show. The stash was 55.38 million ounces a month earlier.
China ended six years of secrecy in July over how much gold it’s hoarding as it seeks to spur greater global use of its currency and diversify its $3.44 trillion in foreign-exchange reserves. The International Monetary Fund last week approved the inclusion of the yuan in the fund’s Special Drawing Rights basket, alongside the dollar, euro, pound and yen. The change will take effect Oct. 1, 2016. Bullion prices slumped 6.8 percent in November, the biggest monthly decline since June 2013. “They are continuing to diversify their foreign reserve holdings,” Ole Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by phone. “They’re thinking long term and they see this as an opportunity to accumulate while the prices have come down.” Read more here-http://bloom.bg/1NJtmwd
-Top Forecaster Gan From OCBC Sees Gold Declining Through 2016. It’s all downhill for gold next year at least according to the top ranked precious metals forecaster. Bullion will drop each quarter to $950 an ounce by the end of 2016, said Barnabas Gan, an economist at Oversea-Chinese Banking Corp., keeping to a forecast he made in October. The bearish outlook reflects an improving U.S. economy and an increase in borrowing costs to 1.5 percent by the end of next year after an initial rise of 25 basis points at the Federal Open Market Committee meeting on Dec. 15-16, he told reporters in Singapore on Thursday.
“With the improving growth sentiment and higher interest rates in the U.S., the love for yield and the love for risk-taking is going to dominate,” Gan said in an interview. “Gold being a safe haven, there’s little reason as to why you should put money into assets that yield nothing.” Gold is heading for a third annual decline, the longest slump since 2000, as the Federal Reserve prepares to raise rates for the first time in almost a decade. While Fed Chair Janet Yellen has assured a gradual pace of liftoff, she told lawmakers last week a rate increase at the meeting this month was a “live option” given that the economy is “doing well,” and a move from the current near-zero level is widely expected. Read more here-http://bloom.bg/1IInnrc
-Greg Hunter: Gerald Celente Interview War & Economic Calamity Coming, 2016 Predictions. Watch more here-http://bit.ly/1OkY3Eh
-Greg Hunter: Rob Kirby Interview Blow Off Event Will Change Financial Universe Forever. Watch more here-http://bit.ly/1OUFbAP
-Lawrie Williams: 2016 a crunch year for physical gold supply. The latest data out of Switzerland on gold exports to China would seem to confirm the strong trend in late year Chinese gold demand. Combined exports to mainland China and to Hong Kong (where nearly all will be destined for re-export to the Chinese mainland) totalled 75.8 tonnes, of which 28.8 tonnes, or 38%, went directly into mainland China, further confirming that although Hong Kong remains the primary route for Chinese gold imports, its exports to the mainland can no longer be considered a proxy for total Chinese imports with up to 40% nowadays going to the mainland direct. This varies more from some sources of supply and less from others. Read more here-http://bit.ly/1Q4vgKr
-Lawrie Williams: Why Has Gold Price Been So Depressed. Nobody Cares. The ‘Nobody Cares’ quote was the theme of Grant Williams’ polished performance at Mines & Money London last week. Grant is a Senior adviser to Vulpes Investment Management in Singapore but is perhaps better known as the author of the always entertaining and enlightening Things that make you go hmm newsletter (TTMYGH). This has been published since 2009 and has become one of the world’s most widely read financial publications. TTMYGH primarily covers the impacts of economic policies and geopolitics on all types of investment and occasionally puts a particular emphasis on gold, which Grant sees as having some very strong years ahead once it gets through the current malaise in perception indeed indifference to gold as an asset class throughout much of the financial world. As he says Nobody Cares! Read more here-http://bit.ly/1U8Fl7C
Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00
Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57
Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
-Straight Talk: An Interview With Ted Butler. Question: Based upon your understanding of these conditions and their trends, what is your price forecast for gold and silver for 2016? And for the next 5 years to 2020? Ted: It depends on what the COMEX commercials, particularly JPMorgan, do. Specifically, if the big COMEX commercials (of which JPMorgan is the biggest) don’t add aggressively to their short positions on the next silver rally, we could jump quickly to $30 or $50 or more. It’s not a question of anything else. I should add that someday and maybe quite soon, the big COMEX commercials won’t add to short positions on a silver rally for a variety of reasons. Whenever that occurs, we go boom in the price.
Question: Assuming the silver market will soon correct the current bear market conditions, do you think an investor will profit more in silver bullion or in established silver mining shares during the next 12 months? Ted: I could see mining companies outpacing the price of silver when the real silver rally commences, but metal is much surer and less prone to things that could go wrong. After all, metal can’t go bankrupt. Plus I have this vision that someday silver will climb so high in price that the market will disbelieve the high price can be sustained and the price of mining company shares may discount that disbelief and not fully reflect the high price of metal. Until then, however, I wouldn’t be surprised to see mining shares outperform metals although I am not offering that as investment advice. Read more here-http://bit.ly/1lyeExP
-Clive Maund: Silver Market Update. Read more here-http://bit.ly/ZVqylt
-Steve St. Angelo: Physical Silver Investment Demand Great Deal Higher Than Official Estimates. Read more here-http://bit.ly/1OW6HvX
-While silver and gold prices have had nothing to do with real world supply and demand and everything to do with COMEX positioning, that just creates a different set of consequences. One potential consequence is the possibility of a melt up in prices, particularly in silver. I know that sounds crazy considering recent price action, but I just established the perverse nature of rotten price action on the market structure. The fact is, collectively, the metals are configured in the most bullish of market structures in modern history, according to COT data.
Doesn’t it follow that the best chance for a price melt up would seem to be highest when those that control the market are best positioned for a melt up? Since the commercials are positioned better than they’ve been in years, the only real question is the extent of the coming rally. That’s not to say the commercials can’t delay the coming certain rally for a time longer, possibly including slight new price lows, but the main focus should be on the inevitable price rally to come. The extent of rally depends on whether JPMorgan and the other big commercial crooks add to short positions, particularly in silver.
Given the lockstep nature of price movements in the COMEX/NYMEX metals, it wouldn’t be surprising to me to see all the metals surge upward in the very near term. After all, they all certainly fell in unison. But looking a bit ahead and assuming that JPMorgan doesn’t add to short positions aggressively, at some point we must see a genuine divorce in the price of gold and silver from the price ratio prevailing over the past year and longer. Silver analyst Ted Butler Dec 9 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-There was a big one-day withdrawal mid-week last week from the big gold ETF, GLD, of 500,000 oz; adding to the total of 1.5 million oz redeemed from the trust over the past month. While somewhat surprised at the total amount of gold redeemed, it is certainly in keeping with the premise of plain vanilla investor liquidation and not any deep conspiracy theory (aside from the ongoing manipulation). After all, when investment assets trade to price lows extending back years, meaning that one’s investment is continuously worth less, the usual collective investor response is to sell. But based upon Friday’s sharp and, hopefully, continuing rally, we should see a cessation to the reductions in the holdings of GLD and see increases dead ahead.
But what may be normal investor reaction in GLD wouldn’t appear to be the case in its counterpart, the big silver ETF, SLV. There was an early [last] week deposit of more than a million oz in the metal holdings of SLV, which I would attribute to short covering; but Friday’s 2.3 million oz deposit of metal into the trust looks related to a pickup in trading volume on Thursday after silver looked like it was resisting establishing further new price lows. Volume on Thursday was 8.2 million shares which was the highest daily trading volume since the recent price top on Oct 28. Usually, deposits and withdrawals of metal take a bit longer in SLV, but that appears to be the most plausible explanation for yesterday’s 2.3 million oz deposit.
Also on Friday, trading volume in SLV exploded to more than 14.7 million shares, or nearly three times average daily volume, on the rally. The way GLD and SLV function is that on days when there is obviously net investor buying of new shares, the corresponding amount of actual metal must be deposited shortly into the trusts. The only way to avoid depositing the actual metal is for sellers to short shares to avoid having to deposit metal, a perversion of what the prospectuses outline. Therefore, just like I just described in GLD, I would now expect additional silver metal deposits into SLV and if those deposits don’t occur over the next few business days, the most reasonable explanation is that the crooks (JPM) is back to shorting shares of SLV. Silver analyst Ted Butler Dec 5 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-Even though daily price gains have been as rare as hens’ teeth over the past 5 or 6 weeks, Friday’s rally was enough to put both gold and silver at the highest weekly close in four weeks. I’d ask you to reflect on that for a moment, specifically, a one day rally that was significant enough, but far from record breaking, to put gold and silver prices at four week highs. And please keep in mind that on Thursday, both gold and silver traded at new intraday price lows extended back for five or six years.
Here’s what that means to me it is unquestionable confirmation of the whole COMEX price manipulation, salami slicing, snookering of the managed money traders by the crooked commercials premise and nothing else. Something caused prices for gold and silver (and platinum, palladium, copper and even crude oil) to move in a relentless stair-step manner for nearly six weeks, only to suddenly turn up after it appeared the managed money technical funds finally sold as many futures contracts that they were capable of selling.
As it turns out, this one-day rally in gold and silver was quite unusual in that never have I witnessed more commentators and analysts getting the call right. The clear distinction between those who understood what was going on during the six week price decline and anticipated that a rally was close at hand and those commentators who didn’t, had to do with the focus on the COT market structure. Those that embraced the idea that managed money/commercial positioning is responsible for price movement proved to be “in the know,” while those looking at non-COT factors were, well, out to lunch and clueless. Silver analyst Ted Butler Dec 5 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-We are all captive to our own life experiences. I admit to being captive to what I’ve learned in studying the data from the COMEX silver market compiled by the federal regulator, the CFTC. I know most peoples’ eyes glaze over when confronted with the statistics in the Commitments of Traders Report; but having studied this report for more than 30 years, the data explains past and prospective price movements to me. If it didn’t, I wouldn’t continue to rely on it.
Recent actual and predicted changes in this report tells me we are likely to witness an impressive rally in silver that could easily turn into the big rally I have long expected. These changes are directly related to the recent decline in silver for more than a month has only occurred because the key commercial traders in COMEX silver, especially JPMorgan, have rigged prices lower to get other traders to sell so that the commercials could buy. While this has occurred regularly over the years and has always resulted in silver price rallies; there are aspects about this most recent decline that are special, like the persistent day after day price declines. It tells me that the rally this time may be much more dramatic that previous setups.
My conclusion is that not only is silver undervalued on a fundamental basis, recent trading activity on the COMEX points to it being at a market bottom as well. The current price of silver is wrong and will only be made right at some much higher price level. I know I have thrown caution to the wind and now own more silver than I ever have and would suggest you study the matter and consider doing the same. Silver analyst Ted Butler Dec 2 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN
-As always, when the managed money technical funds put on what turns out to be a record long position, prices have been driven higher and are in position for a sell off. Conversely, and as is the case currently, when the managed money technical funds sell and put on an extreme net short or create a low net long position, that means prices have come down and the market structure is set for a rally. Only a fool or a dyed-in-the-wool manipulation denier would doubt the connection between managed money buying and selling and price movement.
The fact that we’ve witnessed record extremes recently in COT readings for managed money positions, both long and short, means one thing for sure these traders’ collective positions are more massive than ever before. Thus, there can’t be any real debate whether the managed money positions are massive and it can’t be a coincidence that gold and silver and copper prices have hit multi-year lows amid managed money short positions being, effectively, at multi-year highs. And does anyone seriously believe we would be at multi-year price lows without technical fund short positions being equally extremely short? Therefore, the markets’ price discovery process has been captured by excessive and massive managed money positioning, as I’ve long contended and as Kemp’s article indicates.
What to do about it? While I think it’s too far gone in silver and its price is destined to explode, the answer to massive managed money positioning is so simple and obvious that it’s almost funny that it hasn’t been proposed and enacted by the CFTC and CME. The answer to massive and price-setting speculative positions is one thing and one thing only legitimate speculative position limits. The only difference here is that because the managed money position is massive mostly on a collective basis and not on an individual trader basis, there must be a collective position limit on managed money traders. Silver analyst Ted Butler Dec 2 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN