Sunday, April 27, 2014

Grant Williams – On Whats Happening With Gold

Grant thinks gold has already bounced off its low…
And the geopolitical factors Grant mentioned ought to push gold higher from here:
** Just how much gold is China buying?** If it turns out that the paper gold markets are heavily manipulated, that should push the spot price up, too…

The Global Banking Game Is Rigged, and the FDIC Is Suing

Biggest Credit Bubble In History Runs Out Of Time

It has been a feeding frenzy for junk debt. Yield-desperate investors, driven to near insanity by the Fed’s strenuous interest-rate repression, are holding their noses and closing their eyes, and they’re bending down deep into the barrel and scrape up even the crappiest and riskiest paper just to get that little extra yield.
Last year, highly leveraged companies issued $1.1 trillion in junk-rated loans. It’s a white-hot market. Leveraged-loan mutual funds – dolled up in conservative-sounding names and nice charts to seduce retail investors – gorge on these loans. They saw 95 weeks in a row of inflows, week after week, without fail, adding over $70 billion to their heft, as Bloombergreported, and only the sky seemed to be the limit. But suddenly, that endless flow of money reversed.
“It’s going to be a disaster on the way out,” Mirko Mikelic, who helps manage $7 billion in assets at ClearArc Capital, told Bloomberg. “On the way in, there’s insatiable demand….”
Private equity firms have been ruthlessly taking advantage of that “insatiable demand.” And they have a special self-serving trick up their sleeve: Their junk-rated overleveraged portfolio companies issue new loans, but instead of using the funds for expansion projects or other productive uses, they hand them out through the back door as special dividends. It’s one of the simplest ways PE firms use to strip cash out of their portfolio companies. It loads even more debt on the already highly leveraged portfolio company without adding productive capacity. And those who end up holding this debt – for example, the mutual fund in your portfolio – have a good chance of losing it all.
“It’s kind of like an epidemic,” explained Martin Fridson, a money manager at Lehmann, Livian, Fridson Advisors LLC, in an interview with Bloomberg. “Once an investment banker sees that, he’s going to go to his clients and say, ‘Here’s a window of opportunity, you can take a dividend and get away with it.’”
And they’ve been getting away with it. Default rates on junk debt hovered at 1.7% in the first quarter, a near record low. But that’s always the case when liquidity sloshes through the system and years of interest rate repression turns yield investors into brain-dead zombies, always willing to replace troubled debt with new money. But the historical average is 4.5%, and when things tighten up, as they did during the financial crisis, default rates jump into the double digits [read.... Biggest Credit Bubble in History Flashes Warning: ‘Seek Cover’]. 
They’re all doing it. Junk-rated mobile-phone insurer Asurion finagled a $1.7 billion loan in March. But instead of doing something productive with the funds to generate cash flow to service the loan, it blew the money out the back door as a special dividend which it owners – PE firms Madison Dearborn Partners, Providence Equity Partners, and Welsh Carson, Anderson & Stowe – pocketed with gusto.
BMC software borrowed $750 million via one of the riskiest forms of debt, payment-in-kind (PIK) notes, where, if push comes to shove, BMC can chose to pay interest not with cash but with more of the same debt. The amount it owes gets larger, as its chances of survival shrivel. Instead of defaulting, the company will simply hand the lender more paper that’s increasingly worthless. BMC promptly forwarded the $750 million to its owners, a group of PE firms let by Bain Capital that had acquired BMC only seven months earlier.
Time is of the essence. Platinum Equity, which had acquired Volvo’s rental car division, waited only a week after closing the deal before sucking $262 million out that the company had obtained by issuing PIK debt.
So far this year, these already overleveraged companies have issued nearly $21 billion in junk-rated debt for the purpose of paying special dividends to the PE firms that own them – the most since the bubble of 2007, before it all blew up spectacularly. Of that, $3.5 billion were these reeking PIK notes. When a default occurs, the PE firms have the cash, and the lenders get stuck with largely worthless paper.
That’s what invariably happens when the Fed’s interest rate repression pushes investors out toward the thin end of the risk branch. During normal times, no sane lender would go along with this without demanding a confiscatory yield. The door would be closed to these sorts of glaring wealth-transfer shenanigans. But these are not normal times. This is the greatest credit bubble in history.
Among the most insatiable buyers of this stuff: leveraged-loan mutual funds, and by extension, retail investors. But now, they’re getting cold feet, apparently, and for the first time, after 95 weeks in a row of inflows, they yanked money out, Bloomberg reported. Not a panic just yet, but the flow has reversed. In the week ended April 16, they drained $276 million out of these mutual funds.
And these funds are starting to bleed. The LS&P/LSTA Leveraged Loan 100 Index, which sports a 5-year annual return of 10.5%, dipped into the red for April and might book its first monthly loss since the taper-tantrum turmoil last summer.
Mutual funds that hold leveraged loans are fearsome products. They entice investors with a little extra yield, but still less than an FDIC insured one-year CD used to pay in the pre-crisis days. That’s how far the Fed has pushed it. But these loans are even less liquid than corporate bonds. Unlike bonds or stocks, they’re not regulated. They’re traded the old-fashioned cumbersome way, via email or even the phone, involving complex paperwork that may take weeks to complete. It’s not easy to transfer a loan. And when belatedly spooked investors start selling these mutual funds, fund managers are forced to dump loans into a market where liquidity just evaporates without notice. Prices plunge on the sales that do go through – and those who get out first, bleed the least.
“We all feel like we’re at the top of the cycle, and everyone’s skating on new ice,” explained Nick Beim about a parallel and equally treacherous aspect of the bubble that everyone knows is going to deflate someday with a terrific hiss. He is a partner at venture-capital firm Venrock, and the startup scene has come unhinged, with 33 startups in the US alone having valuations of $1 billion or more. Dropbox crowns the list at $10 billion. A lot of moolah for a small money-losing outfit. But turmoil and losses and whiffs of reeking reality have suddenly replaced blue-sky exuberance. Read…. IPO Craze Peaks, Investors Scurry Out of the Way, VCs Fret

Gold And Silver – Prospects For Both From A Russian POV

[POV = Point Of View]
One of the biggest problems for the West, the US in particular, is its increasingly
parochial perspective from the narrowest of lenses,  fully colored by the elite’s use of
its main propaganda machine, the Maintstream Media.  It will not work for people to
expect more from their government, rather, people have to demand and expect more
from themselves, for in the end, people will discover all they really had to rely upon
was themselves and failed to do so.
All of the information one needs to make more enlightened decisions is out there.
One has to change their broken habits of spoon-fed expectations from local news and
take a more active role in seeking the truth.  In a nation that relies upon a police state,
increased militarization, and NSA [STASI] spying on its docile population, one cannot
expect to hear truth, only lies, and the Obama administration is certainly delivering them.
Ask yourself, what is your impression of Russia, of Putin?  Then, consider the following
information about both.  Never in the history of the world have [mostly] Western central
bankers issued anything but worthless paper currency, backed by nothing, controlled by
unelected bureaucrats, and none beholding  to nor responsible for citizens of a nation,
your neighbors and everyone you may know.   This is the world in which most of you live
without challenging it.  Others, outside of the Western sphere of central banks, with a firm
grip on their respective governments, refuse to remain a victim of the West’s inflationary
degradation via fiat currencies and the rot-from-within they generates.
Who has been the champion prodder of the Ukrainian situation?  The United States, led
by its teleprompter-reading corporate president, Barack Obama.  What has he done?
Threatened economic sanctions, provided neo-Nazi thugs to continue to stir unrest, steal,
or remove, if you prefer, all the Ukrainian gold in the middle of the night, and drain the
country of billions of dollars, transferred to Swiss banks.  Are any of these moves in the
least bit constructive, let alone justifiable?
Putin’s response?   Aggression to match aggression?  No.  Just patience, waiting as events
that are doomed to fail play out.  While Obama does what he can to stir up a hornets nest
in an area of the world the US has no business in interfering, Putin is allowing Obama to
take as much political rope as he needs to hang himself.  In the meantime, Putin is busy
putting together deals with other countries, and its natural gas deal with China in the
works will be a game-changer for Russia.   All of the deals made and those in process will
bring income to Russia as a nation.  What kind of income?
More rubles, some yuan, maybe even some gold.  Totally absent is the use of the dollar
as the disappearing world reserve currency.  Putin is taking his job of running a country
seriously and responsibly.
Putin spurns Western central banks and continues to strengthen the ruble.  He makes
deals with other natural resource-rich countries.  Obama invades oil-rich countries.
While Obama pushes for war on the other side of the world with Syria and Ukraine,
Putin is busy making deals on the other side of his world with Obama’s ignored neighbors,
Mexico and Latin America.  While Obama allows the Fed and Wall Street to continually
suppress and disparage the gold market, Putin is building Russia’s gold reserves.  No fiat
ruble over there.
What has Obama done to help strengthen the US financially?  Nil, and to the contrary,
he has increased government spending, with no means of ever repaying it, and he has
worsened the plight of millions and millions of Americans through his enrich-insurance-
companies scheme at the expense of leaving people without affordable insurance coverage.
Most Americans have never heard of Russia’s Gazprom, yet it dwarfs Exxon and Mobil in
size.  In anticipation of Western sanctions, Gazprom secured natural gas deals with China.
If Gazprom never sold another energy unit of natural gas to the West, its bottom line will
continue thrive with its natural gas sold to the East.  Further, Gazprom will now only sell
their product using rubles, yuan, and gold, no petrodollars allowed.
The Russian banking system has responded to the West’s petty and of no-effect sanctions
by raising a one-finger salute to the West.  Russian banks have stopped using the dollar
and have adapted total reliance upon its own ruble, intent on having the ruble become a
part of any new global currency.  US banks continue to entrap citizens with debt-forever
fiat.  Russia has the second largest gold reserve in the world.  US is the highest debtor
nation in the entire world.  The US has always had a fondness for being number 1 in
The fact that Russia has rejected the dollar in every way, coupled with another fact that it
will only transact its gas and oil trade in the ruble will have an impact on the US and the
West more than any sanctions Obama can ever hope to [under]achieve.  As a  consequence
of pushing Russia away from the [totally failed] Western banking system, the US stands to
lose trillions of fiat $ in return.  It is not just Russia.  All of the other BRICS nations are
following suit.  The US and the central banking system is committing seppuku, [hari kari],
financial [self-imposed] disembowelment.
Still think of Russia as an “evil empire?”  Here is a quote from one of Russia’s members of
Parliament on the US and its fiat:
The dollar is evil. It is a dirty green paper stained with blood of hundreds of
thousands of civilian citizens of Japan, Serbia, Afghanistan, Iraq, Syria, Libya,
Korea, and Vietnam. Our national industrial giants will not suffer any losses if
they choose to make contracts in Rubles or other alternative currencies. Russia
will benefit from that. We should act paradoxically when we deal with the West.
We will sell Rubles to consumers of our oil & gas, and later we will exchange
Rubles for Gold. If they do not like this, let them not do this and freeze to death.
Before they adjust, and this will take them three of four years, we will collect
tremendous quantities of Gold. Russian companies will at last become nationally
oriented and stop crediting the economy of the United States that is openly hostile
to Russia.”    
Source: Izvestia newspaper
What of he US ally Germany?  Guess where Germany will turn when push comes to
shove?  East!  It has vastly important financial ties with Russia.  Germany’s ties to the
US?  Mostly fiat and highly objectionable NSA tentacles covering the country.
Israel.  Surely the staunchest US ally?  Well, it turns out that the US worsening of events
in Ukraine are a threat to Israeli security.  Israel has its own floating Tamar natural gas
platform, and it has made a deal with Gazprom to export the liquified natural gas.
How much of any of this has anyone read or heard about from government-controlled
mainstream media?  Not a peep, not a sentence.  The elites want US citizens to remain
dumbed down, and US citizens are complying in utter ignorance and steadfast refusal to
consider any alternative news sources.  Reliance upon the total control over the corporate
and bankrupt federal government’s newspeak is the elite’s goal.
At the outset, we said people need to expect more from themselves and take more
responsibility for their own lives.  Reliance upon any government is a trap from which
there is no escape.
We have not even covered all that can be covered re Russia and Putin, or Obama and the
federal government, for that matter.  We have not even touched China, India, the growing
BRICS nations as a power unto themselves, totally outside of and separate from the self-
toppling United Sates.
The acronym BRICS brings to mind the story of the Three Little Pigs, making houses of
straw and twigs that failed, [fiat], with the safest being the one built of brick.  The
BRICS are using a lot of gold in building their financial ties together.
None of this addresses timing, but the message is clear:  financial integrity and strength
is relying upon gold, in some large degree, as a standard, at least indirectly.  The message
should be the same for us all who endeavor to withstand the inevitable fall-out from fiat
currencies destroying the Western financial system.  The East, parts of the Middle East,
and even Central and South American countries are accumulating gold.  There is no
concern about gold going lower or even not going higher, for now.  The end-game is not
the short-term price, it is for where gold will seek its natural price level once freed from
Western central bankers and to not be caught holding nothing but value-lost paper.
On a side note, the elites are not stupid.  It is likely that they may even be orchestrating
the demise of the Federal Reserve Note “dollar.”  The direction may have been intended
to replace the “dollar” with another fiat issue, like an SDR, [Special Drawing Rights], to
be issued by an all-controlling, non-elected or representative government, like the BIS,
[Bank for International Settlements], or some similar elite organization.  What was not
anticipated, during all the decades of planning, was the rise of the East and the use of
gold as a measure of currency control.
Last week could have been an important anchor for a turning point in gold and silver.
The comments on the weekly chart cover a lot of ground.  What can be added are the
observations labeled 4 and 5.  Both are directed at the level of volume.   The area marked
4 shows increased volume as price rallied.  On the current correction, volume has dropped
off.   This tells us that the selling pressure is not there, as it used to be.
The gold price is also respecting, albeit loosely, the half-way correction area between the
recent swing low and swing high.  In somewhat of a down market condition, that is a good
showing.  Gold’s failure to decline to the lower channel line is an indication of strength.
GC W 26 Apr 14
The daily gold chart is confirming observation made on the weekly, but with more detail.
What was not covered in the chart comments was the thin line at the half-way measure
of the down sloping channel.  Whenever price can hold the half-way point of anything, it
is taken as a relative measure of strength
GC D 26 Apr 14
Silver is a test of one’s patience.  All purchases made at current, even slightly higher, prices
will be viewed as gifts and wise moves sometime in the future, be it later this year or into
2015/2016.  When silver finally does rally away from its [very constructive] support zone,
purchases made at 
any higher price in the past few years will look like bargains.
The way the charts are setting up, even purchases in the paper futures market now have a
diminished downside.  What cannot be known is 
when a move to the upside will make any
such buys worthwhile from a profit perspective.
SI W 26 Apr 14
That high volume spike should loom as important, moving forward.  As with gold, it may
be an anchor for establishing the low point for silver, too.  Similar to gold, silver has kept
just above the half-way area in its down channel.  In this last correction, silver did not
even come close to reaching the lower channel live, as it did in late March.  Last week’s
close has it bumping up against the upper channel line very soon after the last challenge
just two weeks ago.  This is a positive development within a negative down trend.
On an ending note, last week, mention was made of Gann and the Cardinal Grand Cross,
an astrological significant time frame.  It all ends with a solar eclipse on the 29th. [See
Gann, Cardinal Grand Cross, A Mousetrap And Wrong Expectations, if you did not read
it.]  It is just interesting to see how both gold and silver can be potentially bottoming at
the same time.   From our unwavering point of view, price and volume remain the most
reliable guides and source of market information.
SI D 26 Apr 14

Ethnic, religious diversity can lead Malaysia to a brighter future, says Obama

The President of the United States, Barack Obama believes that, like the US, Malaysia can draw strength from its ethnic and religious diversity and learn from history to carve a brighter future for the next generation.
In his remarks at a state banquet hosted at Istana Negara in conjunction with his three-day state visit to Malaysia, Obama noted that while the US and Malaysia may be different as nations, their people shared similar hopes and aspirations, Bernama reported today.
"I believe that whether we come from a remote village or a big city, whether we live in the United States or in Malaysia, we all share basic human aspirations - to live in dignity and peace.
"(We want) to shape our own destiny, to be able to make a living and to work hard and support a family. And most of all, to leave the next generation something better than what was left to us," Bernama reported him as saying.
According to Bernama, Obama said these were the aspirations that can illuminate a new era of partnership between the US and Malaysia.
The banquet was graced by the Yang di-Pertuan Agong Tuanku Abdul Halim Mu'adzam Shah and Raja Permaisuri Agong Tuanku Hajah Haminah, as well as Prime Minister Datuk Seri Najib Razak.
The US president, who spent some years in Indonesia as a child, also sprinkled a few Malay words and expressions during his speech at the banquet. This was well received by the audience who responded generously with applause at his valiant attempts.
"Selamat petang" (Good evening) and "terima kasih banyak" (thank you very much) were the key lines he used at the start and end, respectively, before speaking of "bekerjasama" and the "boleh spirit" to illustrate the partnership between the two nations, Bernama reported.
Obama arrived in Kuala Lumpur today on a three-day visit to Malaysia as part of his four-nation tour of Asia that started in Japan followed by South Korea while his final stop is the Philippines.
His trip here is the first by a sitting US president in 48 years since President Lyndon B. Johnson's trip back in 1966. – April 26, 2014.

Jim Rickards – ECB’s Draghi Is The Model Central Banker

Obamacare Exchange 'Cover Oregon' Collapses in Failure

Breitbart News and others have chronicled the "Unmatched failure" that Cover Oregon has now officially become. As was pointed out on March 20 of this year, "The Oregon Obamacare exchange has received $305 million in taxpayer-funded federal grants, spent $160 million on its busted website, dropped $10 million on hipster promotional ads, erroneously enrolled 4,000 illegal immigrants in full Oregon Health Plan coverage contrary to federal law, and has not enrolled a single Oregonian online."

Oregon was even given "a $48 million "early innovator" grant for states whose exchanges were intended to serve as models for the nation." While the money was spent, clearly, that promised was never fulfilled
State officials may finally be coming to grips with the idea that they have failed completely. It looks like the exchange will be closed down and turned over to the feds. Perhaps fittingly, the White House's favorite exchange will be turned over to the White House.
Cover Oregon's former Director rocky King had already resigned in January and he wasn't the first, "King is the second official connected to the exchange to resign. He came under fire when the online enrollment system failed to go live in October. Technical problems with the exchange have been an embarrassment to the state and forced Oregonians to apply using paper applications. The state had to hire or reassign nearly 500 people to process applications by hand."
On March 21 Breitbart News reported on questionable behavior as a processing center.
A former Cover Oregon employee is blowing the whistle on her working environment, claiming that employees were encouraged to push paper applications through the process despite obvious problems such as missing Social Security numbers.
The whistleblower appeared in an interview with KATU investigators which was published Thursday. She said when she questioned whether it was appropriate to process some of the claims she was seeing a manager told her to "quit stressing and go take a walk." Another anonymous source told KATU "I’m not sure when it started but then eventually we were told, if they don’t have a social just go ahead and enter it, just push it on through."
And from there, it just keeps getting worse, "Oregon’s state exchange is the “only one to fail so spectacularly that no residents have been able to sign up for coverage online since it opened early last fall. The Post added that it would cost the state between $4 and $6 million to move Cover Oregon’s exchanges into the federal insurance marketplace. But that is only a fraction of the $10 million the federal government awarded Oregon to promote those exchanges in what some mocked as the least informative but most trippy health insurance ads associated with the ACA."
Now, with millions wasted on a massive failure in terms of development and millions more in protion of that which we now know will never work, this may prove to be the poster child for the ongoing failures of ObamaCare.
Long on problems and so short on answers there effectively aren't any, Cover Oregon will revert to federal control. And it may not be the last state in which that has to happen.
"The Obama administration is poised to take over Oregon’s broken health insurance exchange, according to officials familiar with the decision who say that it reflects federal officials’ conclusion that several state-run marketplaces may be too dysfunctional to fix.
Unfortunately, there are few reasons to believe much of anything about the floundering law is functional, whether it's being administered at the state, or federal levels.

Obama’s Wrong Headed Approach To China

Should You Buy Gold and How Much

An IT worker writes: 'Emotionally, we are broken'


Training your replacement must be an awful experience. It’s bad enough to lose a job. It’s an entirely different thing when you believe that U.S. government H-1B policies are assisting in the transfer of your job overseas.
Training your replacement must take enormous inner reserve.
There’s an IT professional who, at this moment, is training offshore replacements, the people who are taking over the work. This IT pro is also a good writer, and has penned a short explanation about what life is now like.
The name, employer, and everything else will remain anonymous.
The IT worker writes:
“As Americans, we maintain our pride and dignity as we are forced to train our H-1B replacements. We struggle with the reality of having no jobs, but yet we train our replacements without prejudice and hold our heads up high because we are ingrained with a work ethic to do our very best.
We use clichés such as ‘when one door closes, another one opens’ or ‘out of bad something good will happen.’ But the future is uncertain. Emotionally, we are broken. A lot of us suffer from anxiety. Some of us are taking medications for our nerves. But we persist. We go to work every day. We train unskilled H-1B workers day after day. We look to the future, but what does it hold for us?
Does anyone even care anymore? Our elected officials look the other way. There is sympathy and empathy from Americans, but we are lost as to what to do.
How do I get the message out there? I am an American. I am one of you and I have a soul and feelings but I'm helpless if no one hears my message.”