Wednesday, May 21, 2014

Slowly – But Surely – The USD’s Hegemony Is Being Chipped Away

Dollar Decline: RussiaChina to Expand Payments in National Currencies
SHANGHAI, May 20 (RIA Novosti) – Russia and China are planning to increase the volume of direct payments in mutual trade in their national currencies, according to a joint statement on a new stage of comprehensive partnership and strategic cooperation signed during high-level talks in Shanghai on Tuesday.
“The sides intend to take new steps to increase the level and expansion of spheres of Russian-Chinese practical cooperation, in particular to establish close cooperation in the financial sphere, including an increase in direct payments in the Russian and Chinese national currencies in trade, investments and loan services,” the statement said.
The two countries are also set to deepen dialogue on macroeconomic policy issues, as well as boost growth in mutual investment, including in transportation infrastructure, the development of mineral deposits, and the construction of budget housing within Russia.
China Signs Non-Dollar Settlement Deal With Russia’s Largest Bank
Slowly – but surely – the USD’s hegemony is being chipped away whether by foreign policy faux pas, crossed red-lines, or economic fragility. However, on Day 1 of Vladimir Putin’s trip to China it is clear that the two nations are as close as ever. VTB – among Russia’s largest banks - has signed a deal with Bank of China to pay each other in domestic currencies, bypassing the need for US Dollars for “investment banking, inter-bank lending, trade finance and capital-markets transactions.” Kirill Dmitriyev the head of Russia’s Direct Investment Fund notes, “together it’ll be possible to discuss investment in various projects much more efficiently and clearly,” as Russia’s pivot to Asia continues to gather steam.
Russia/China To Officially Sign 450B Gas Deal, Largest Ever.
Bernanke Says No Need For Fed To Shrink Balance Sheet
The Federal Reserve does not need to shrink its $4 trillion-plus balance sheet by even “a dime” for it to normalize monetary policy when the time comes, former Fed Chair Ben Bernanke said on Monday.
“The Fed has worked very carefully to figure out how to raise rates at the appropriate time,” Bernanke told a monetary policy conference. “That will eventually happen—we hope it happens because that means the economy is going back to normal.”
USDJPY Breaks Key Technical Level; Drags Stocks, Bond Yields Lower
Did the Federal Reserve Launder $141 Billion Dollars Through Belgium to Hide Massive Increase In Quantitative Easing?

Did the Fed Take Drastic and Covert Action to Hide a Large Country Dumping U.S. Bonds?

That’s what former Assistant Treasury Secretary and Wall Street Journal editor Paul Craig Robertsalleges:
Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014?
From November 2013 through January 2014 Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Somehow Belgium came up with enough money to allocate during a 3-month period 29 percent of its annual GDP to the purchase of US Treasury bonds.
Certainly Belgium did not have a budget surplus of $141.2 billion. Was Belgium running a trade surplus during a 3-month period equal to 29 percent of Belgium GDP?
No, Belgium’s trade and current accounts are in deficit.
Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase?
No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.
So where did the $141.2 billion come from?
There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.
In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time.
Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?
Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week.
And see this:


Andy Hoffman joins us to document the collapse. We discuss the end of the nearly 100-year old London SILVER FIX and much more. Andy says the dominoes are beginning to fall as the global economic outlook deteriorates and reality sets in, both for international banks and nation states. We cover a LOT of info in this one, so thanks for tuning in.
For REAL News & Information 24/7:

Did Washington Rescue the Wrong Economy?

Richard (RJ) Eskow 
RINF Alternative News
Economists Atif Mian and Amir Sufi recently wrote an editorial for the Washington Postheadlined, “Why Tim Geithner is wrong on homeowner debt relief.” Using data and arguments from their upcoming book, House of Debt, Mian and Sufi essentially argue that former Treasury Secretary Timothy Geithner’s recent public statements got the bailout exactly backwards. Geithner has argued that rescuing homeowners who were left underwater after the 2008 financial crisis wasn’t worth the effort, and that rescuing the banking system was our most urgent priority.
Binyamin Appelbaum of the New York Times interviewed Sufi and Mian, as well as a number of other economists, for a profile titled “The Case Against the Bernanke-Obama Financial Rescue.” Their position is the same in both cases, of course, and in essence it’s a simple one: After exhaustive research, Sufi and Mian have concluded that long-term economic damage was not an inevitable outcome of the 2008 financial crisis. Instead, it’s the result of a bailout plan which focused on the wrong segments of the economy.
Specifically, Sufi and Mian believe that the 2009 crisis wouldn’t have been any more harmful than other cyclical recessions of recent decades if financial decision-makers had rescued homeowners rather than merely concentrating on bankers.
This argument is closely tied to the idea that we now have two economies. One is for the financial sector, an expanding category which is disconnected from job-producing ventures (and whose rapid-payback, profit-churning mentality is increasingly dominating the management of other industries). The other is the “real world” economy — the one in which people do real work in order to produce real goods and services, and then use their income to purchase those goods and services.
In retrospect, President Obama himself declared his opposition to the “Two Economies” idea when he pitched his financial reform proposals to corporate leaders in April 2010. In a speech at New York’s Cooper Union, Obama said that “there is no dividing line between Main Street and Wall Street … we rise or fall together as one nation.”
That is precisely the formulation which the work of Sufi and Mian contradicts. Their Posteditorial offers a thorough overview of their technical argument, while the Times piece outlines it in layperson’s language. One of their key insights is that helping middle-class homeowners is even more economically advantageous than past studies have suggested. Borrower relief has an even greater stimulus effect than originally thought — if it is targeted towards non-wealthy homeowners. Wealthier homeowners are less likely to spend money when offered debt relief.
Needless to say, these economic arguments are compelling in and of themselves. But the moralarguments for rescuing underwater homeowners make the most compelling case of all. The bankers who were rescued by the United States government — that is, by the American taxpayer, including many of those homeowners — are the same people who misled homeowners into thinking a house was a good investment, then bundled their mortgages and sold them at bubble prices, enriching themselves and often committing egregious acts of fraud in the process.
The bankers got rescued. The homeowners didn’t. As Sufi and Mian conclude in their Posteditorial: “The fact that Secretary Geithner and the Obama administration did not push for debt write-downs more aggressively remains the biggest policy mistake of the Great Recession.”
Amir Sufi and Atif Mian have been publishing important work on this topic for the last eight years, beginning well before the 2008 crisis. Their arguments are compelling and deserve widespread attention, especially at a time when Tim Geithner and others are trying to rewrite history — and when many homeowners still need help.

£518 billion for the filthy rich getting richer under Tories

Britain’s richest people are wealthier than ever before with a combined fortune of more than £518 billion, according to this year’s Sunday Times Rich List.
The 1,000 richest have seen their combined wealth rise more than 15 percent on last year’s total of £449 billion. They now own the equivalent of a third of Britain’s economic output.
A minimum of £85 million is needed to even be considered for the list—compared to £80 million in 2008 and £75 million last year. To get into the top 500, the rich need £190 million—double the £80 million required in 2004 and up £30 million from the £160 million cut off point for last year’s list.
Most distinguished among the old money names squats the queen. She had a sterling year as she added £10 million to one’s personal fortune. She is ranked a rather common 285 with £330 million.
Though after years of wrangling by the palace that is a severe underestimate of how much loot she and her parasitical family actually own.
South African insurance tycoon Douw Steyn, the money behind the meerkats annoyance on television,  saw his wealth go up by £50 million to a total of £600 million, ranked 170. Former Tesco boss Sir Terry Leahy, was among the new entrants with a “value” of £100 million, ranking at 863.
Some 104 billionaires are now based in the UK—more than triple the number from a decade ago—with a combined wealth of more than £301 billion.
It means Britain has more billionaires per head of population than any other country, while London’s total of 72 sterling billionaires is more than any other city in the world
The report is an underestimate as it doesn’t reveal how much the rich have in the bank. Or how much they hide away offshore or under the bed.
Via Morning Star

‘Justice for Sale’? Critics Slam Fed Deal With Tax Dodger-Abetting Bank Behemoth

“As usual, no current senior officials were targeted. Pray tell, what is the deterrent value?”

Andrea Germanos
Swiss banking giant Credit Suisse pleaded guilty to criminal charges it abetted U.S. tax dodgers. But while the Justice Department is heralding the charges as showing that no institution “is above the law,” critics charge it is a “missed opportunity” to provide a real deterrent and show that justice isn’t for sale.
According to the terms of the agreement announced Monday, Credit Suisse will pay $2.6 billion — $100 million to the Federal Reserve, $715 million to the New York State Department of Financial Services and $1.8 billion to the Justice Department.
“This case shows that no financial institution, no matter its size or global reach, is above the law,” Attorney General Eric Holder said in a statement. “Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”
“The bank actively helped its account holders to deceive the IRS by concealing assets and income in illegal, undeclared bank accounts,” Holder said on Monday.
He described the charges against Credit Suisse’s “extensive and wide-ranging conspiracy to help U.S. taxpayers evade taxes” as “a major step forward in our ongoing effort to protect the American people from financial misconduct.”
“This is the largest bank to plead guilty in 20 years,” Holder said, adding, “This case shows that no financial institution, no matter its size or global reach, is above the law.”
Yet the bank’s executives were not forced to step down, nor do they face jail time. The settlement also allows the banks to keep the veil of secrecy over who the tax-dodging Americans were.
As Naked Capitalism‘s Yves Smith noted Tuesday:
As usual, no current senior officials were targeted. Pray tell, what is the deterrent value? The fines, which are more than the bank expected to pay, ultimately come out of taxpayer hides.
Further, the deal was “a big, missed opportunity,” James Henry, former chief economist at McKinsey and Company, now a senior advisor to the Tax Justice Network and senior fellow at the Vale Columbia Center on Sustainable International Investment, told Democracy Now‘s Amy Goodman and Aaron Maté on Tuesday.
“The reason the Swiss stock market and in particular Credit Suisse is soaring this morning is because they are delighted with this deal,” Henry said.
“In this case we have the second largest Swiss bank with 45,000 employees and 1.26 trillion Swiss francs of client assets under management getting away with essentially a fine that amounts to three months of their net earnings. No senior executives [...] are going to jail…. Brady Dougan the CEO is expected to stay on, in fact, and he said in front of his shareholders this week that this will have very slight impact on Credit Suisse’s performance.”
“I think we’ve missed the opportunity to really send a message here because the way they structured this plea bargain was to rule out any impact on Credit Suisse’s license to operate in the United States which is the only impact that a criminal prosecution could have had. And I think that going forward banks in Switzerland will be looking for new ways, new inventive ways of serving Americans,” he said.
These rich Americans took advantage of a system not afforded to most, Henry continues. “This is just another case of where we’re transferring tax burdens to the poor and middle class who don’t have any choice but to pay up. So, [there's a] basic question about the rule of law here, about justice essentially being for sale.”
The outcome is not surprising, as “[t]his administration is permeated with people who are basically very sympathetic to Wall Street and to Swiss interests as well,” he said.
Senator Carl Levin (D-Mich.)—who, at a February Congressional hearing slammed Dougan’s secrecy over the names of the tax-evading Americans and called the bank’s actions a “classic case of bank secrecy and bank facilitation of US tax evasion”—issued a statementon Monday following the charges and again questioned the allowance of this ongoing secrecy.
“It is appropriate that U.S. law enforcement has imposed a $2.6 billion penalty and held Credit Suisse criminally liable for aiding and abetting tax evasion. This guilty plea strikes an important blow against tax evasion through bank secrecy. But it is a mystery to me why the U.S. government didn’t require as part of the agreement that the bank cough up some of the names of the U.S. clients with secret Swiss bank accounts. More than 20,000 Americans were Credit Suisse accountholders in Switzerland, the vast majority of whom never disclosed their accounts as required by U.S. law. This leaves their identities undisclosed, with no accountability for taxes owed,” Levin’s statement continued.

10 Ways to Survive Skyrocketing Food Prices

Jeffrey Green
Activist Post

Food prices are getting out of control. As meats, dairy, and eggs climb to record high prices and over 50 million Americans are now on public food assistance, family budgets are being stretched like never before just to survive.

Yet official statistics say Americans only spend about 11% of their post-tax income on food.  I don't know about you, but food is my family's biggest monthly expense no matter what percentage of my income it is. I suspect that the same goes for most households reading this.

The causes for higher prices are many: currency inflation, fuel costs, bad weather, commodity speculation, higher demand, etc. I refer to the causes only to illustrate that this trend is very likely to continue. Therefore, it is wise to manage this crucial household expense more closely.

It may seem unusual to view food as an investment or your pantry as a savings account, but that is how you should treat it. The strange thing is, the health and quality aspect of food actually improves when you think of food as "money in the bank". This concept is proven in the list below.

As mentioned earlier, food is my family's largest monthly expense even with us doing everything I recommend in this article.  But we've managed to reduce our food bills significantly while simultaneously building up large reserves and getting healthier by using the techniques outlined here.

Here are ten ways to survive skyrocketing food prices:

Grow Your Own:  It is cheap and easy to grow some vegetables or keep a few chickens.  It's simple, the more you produce yourself, the less you have to buy. And the quality will be far superior to anything you can find in the grocery store. Outrageous prices for healthy organic vegetables more than makes it worth turning some soil.

Plan Your Meals: This is perhaps the most important item on this list. How many times have you gone crazy trying to figure out what to have for dinner only to relent and order pizza? Convenient fast food has become a crutch for busy people, but planning meals ahead of time actually makes life more convenient. Because you planned exactly what you're buying and what you're making and when, you save time and money.

Pre-Cook Meals: Pre-cooking meals and snacks is another way to bring convenience to busy people and save money. For instance, double up your chili recipe with the intention of splitting it into multiple meals. Or cook several more chicken breasts than you need and use them throughout the week for other meals. When you make pizza, make enough dough for several and freeze them. Pre-making food for a few days or a full week means less work and more savings.

Cook From Scratch: Cooking from scratch is a great way to save money on food, and it won't take much more elbow grease to make a cake from scratch than it does from a box mix. Making a big batch of refried beans from dried pinto beans is not that difficult. Learning to cook from scratch is as easy as Googling, and you can buy these foodstuffs in bulk for huge savings (more on that below). And, finally, it's much healthier than processed, pre-packaged or fast food.

Extreme Couponing: If my wife doesn't save over 50% on our entire grocery bill, she considers the trip a failure. We are extreme couponers, which means we clip coupons and thoroughly study the store circulars before making our shopping list. We buy our favorite items in bulk when they go on sale so we not only save A LOT of money, we also always have a surplus of those items. With food prices always going up, that surplus (bought at half-price) is better than money in the bank.

Hunting and Fishing: Meat from wild game tends to be much healthier than concentration-camp cattle or chicken, and it's nearly free. It's is not for everyone but if you're a meat-eater, hunting and fishing season provides a way to fill your freezer with quality meats for very little money.

Buy Staples in Bulk: If you're not a professional shopper like my wife and don't have the time to cut coupons, your next best bet is taking a monthly trip to warehouse stores like Costco. Canned items are often cheaper in bulk there than on sale at supermarkets. Plan your trips wisely. Another great option is buying grain right from the mill. You can buy bulk heritage wheat flour, organic rice, non-gmo corn meal at mills like Anson Mills or Pleasant Hill Grain.

Manage Your Pantry: Notice how some of these tips lead into other tips? Managing the inventory in your pantry (food bank) is crucial to maximizing your budget. Have a rotation method that keeps things fresh and alerts you to when certain items need replenishing. Managing your pantry helps you plan meals, cook from scratch, identify sales, and buy in bulk. They all reinforce each other.

Learn to Preserve: Growing and preserving your own tomato sauce alone will save hundreds of dollars per year. Same goes for pickles, sauerkraut, jams, apple sauce, meat jerky, dried fruits and veggies, etc. If you can't grow them yourself, buying the raw foods in bulk and then preserve them is still cheaper than factory brands. Many orchards offer cheap pick-your-own options in season. Load up and preserve.

Store Emergency Food: Last but not least, everyone should have a stockpile of storable food. Thankfully, there are now some great healthy emergency foods that last 20 years. The way food prices are going, these may be one of the best investments any family can make. Not only is it an excellent measurable investment, storable food also is instantly usable insurance against disasters. At the very least, every household should have a 3-day emergency food supply.

Food should be a bigger part of our financial planning. Your large monthly expense for food is only expected to grow larger without action on your part.  Use the techniques above and your health and bank account will profit.

Time Is the Trigger for Equities and Bullion: Charles Oliver

Brian Sylvester of The Gold Report (5/19/14)
Charles Oliver, lead portfolio manager with the Sprott Gold and Precious Minerals Fund, believes the only thing between investors and bigger investment returns on precious metals equities and bullion, especially silver, is time. In this interview with The Gold Report, Oliver discusses silver and gold demand drivers, as well as portfolio ideas that figure to get bigger with time as the trigger.
The Gold Report: “Sell in May and go away” is a common investing axiom but does it have any validity?
Charles Oliver: I recently went through some research on seasonality in the gold price. March has been negative in the gold space in six of the last eight years, April has proven negative four out of the last eight years, and May and June have both been negative five of the last eight years. However, we see a fairly dramatic turnaround in July where six of the last eight years have been positive. In August, another six of the previous eight years have been positive; September has been positive five of the last eight years. The “sell in May” adage could actually represent a great buying opportunity on the pullback.
TGR: What are some investment themes you expect to dominate through the rest of the year?
CO: It really comes down to printing money. The U.S. has reduced its money printing but it is still aggressively printing. Now we’re hearing about the Europeans potentially getting into quantitative easing. The debasement of currencies is an ongoing theme.
The other key theme is the demand for physical gold. China has become the world’s largest gold buyer, consuming about 40% of the world’s mine production. India, which historically had been the world’s largest gold consumer, has established some tariffs on gold imports, so there’s been some pullback there.
It’s noteworthy that over the last couple of decades the European central banks have been collectively selling gold. That stopped a couple of years ago. Some numbers from the Swiss Customs Authority show that Germany, France, Singapore, Thailand, even the United Kingdom, are fairly significant gold buyers. These are very positive events.
TGR: What about geopolitical events? Do you expect those to dramatically influence gold prices?
CO: Historically, wars and the risk of wars have been quite positive for the gold price yet recent events in the Ukraine haven’t seen gold do anything. In fact, it’s trading near the bottom end of its recent range. But should things escalate, I feel strongly that it will have a positive impact. I certainly hope that it doesn’t come to that but the risk seems significant.
TGR: What is the investor pulse in the precious metals space?
CO: A year ago investors were selling a little, as they had been for some time. The selling had mostly stopped by the end of the 2013 and the people who didn’t have long-term conviction had left. In early 2014 I was a bit surprised to see U.S. value investors streaming in because we had been through a period of net redemptions. When the Americans come into the market they can have quite a dramatic impact on prices. I’ll call it sporadic because it has not been a consistent stream.
TGR: What happened to those bids?
CO: Generally speaking, American investors, portfolio managers and pension funds were saying at the end of 2013, “We’ve had some good returns in the general market but the market is looking somewhat expensive.” They were looking for areas where there was good value. The gold price had been hammered over the last couple of years so they were starting to move some of their allocations into that space. We’ve also seen some private equity buying assets and taking them private. And some Asian interests dipping their toes in the water. People are starting to wake up and show some interest but they are still waiting for some sort of trigger in order to say that this is the time to jump in.
TGR: Any idea what that could be?
CO: I’ve spent a lot of time thinking about that question. I liken the 1974 to 1976 period to today. In 1974, the oil price was going up after the oil embargo and inflation was going up, too. It was peculiar because the gold price went from about $200 per ounce ($200/oz) to $100/oz over the next couple of years. Then in 1976 gold suddenly went from $100/oz to about $800/oz. I have spent a lot of time trying to determine the trigger for that event. Sometimes it is just time. When I look back at 2013, I see a lot of positive fundamentals—strong Chinese demand, huge amounts of money printing—yet the gold price went down. Sometimes it’s just the way the markets time themselves.
TGR: Do investors need to revise their price expectations for precious metals equities? There is zero froth in this market.
CO: I think that’s a good way of putting it. I’m continually trying to figure out where the market may go. Not too long ago I said that by the end of this decade gold should be approaching something like $5,000/oz, which would have a huge impact upon the markets and stock valuations. The market is valuing equities as if gold is going to stay at $1,200–1,300/oz forever. I believe that the market will be proven wrong over time.
TGR: Gold is trading at roughly 67 times silver. Does that make silver your preference?
CO: Yes. It was Eric Sprott who came up with the thesis and I fully embrace it. For over 1,000 years, the silver-gold price relationship was close to 16:1, so that implies that if gold is $1,600/oz, the silver price would be $100/oz. The last time that happened was 1980 when the gold price was roughly $800/oz and the silver price was around $50/oz. Over the next couple of years, I expect to see that 67:1 ratio migrate toward 16:1.
TGR: Yet the trend is moving in the opposite direction.
CO: In the short term sometimes these things happen. About 25% of the weighting in the Sprott Gold and Precious Minerals Fund (SPR300:TSX) is in silver equities, which is probably among the highest in the peer group for precious metals funds.
TGR: What’s your investment thesis for silver versus gold?
CO: About two-thirds of mined silver is used in industry, whereas gold has virtually no industrial usage. Gold is considered a reserve currency whereas silver is not. About 150 years ago many countries had silver reserves backing their currencies. Today they don’t but China has trillions of U.S. dollars that it is converting into hard assets. The Chinese are buying a lot of gold but if they ever decide to be a silver buyer we would see a huge shift in the price of silver. Look at every mined commodity out there today—copper, nickel, zinc, iron ore—China accounts for 40–50% of global consumption.
TGR: Is it all about margin for precious metals equities?
CO: A lot of these companies are producing gold at $1,000/oz or silver at $18/oz. Should silver go up to $30/oz, that $2/oz margin suddenly becomes $12/oz—a sixfold increase. Shifts in commodity prices could have huge impacts on the profitability of these companies.
TGR: Tell us about some of your top silver holdings.
CO: Among my top 10 silver holdings, I have Silver Wheaton Corp. (SLW:TSX; SLW:NYSE), Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ) and Tahoe Resources Inc. (THO:TSX; TAHO:NYSE), which operates one of the world’s newest silver mines. I visited Tahoe’s Escobal mine in Guatemala earlier this year to check out its ramp-up period because that can be challenging. The company is doing a very good job of ramping up to nameplate capacity. Tahoe’s Q1/14 results beat the expectations of most analysts and a number of them are revising their forecasts upward.
In the gold space I have companies such as Osisko Mining Corp. (OSK:TSX) and IAMGOLD Corp. (IMG:TSX; IAG:NYSE).
TGR: I thought the Osisko story was finished.
CO: A byproduct of the Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE)/Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) takeover bid for Osisko is a potential Osisko spinout company. For every Osisko share, investors would own one share of the spinco. It means roughly 15% of an Osisko share is represented by the value of the spinco and the other 85% consists of shares in Agnico-Eagle, Yamana and cash. An Osisko shareholder today will end up owning a combination of all three companies, plus the cash component of the offer.
One thing that keeps me excited about the spinco is that it is going to have a 5% royalty on the Canadian Malartic gold mine. It would also have a 2% royalty on the Hammond Reef and Kirkland Lake assets, as well as a large land package in Mexico. The Osisko spinco would be Canada’s newest royalty company and royalty companies often get a premium valuation.
TGR: Does the new company have a ticker?
CO: Osisko shareholders will have to vote to accept the Agnico-Eagle and Yamana bid. I expect it will pass and the Osisko spinco should be trading sometime in June.
TGR: Osisko was targeted largely because it had a large low-grade, low-cost asset in a safe jurisdiction. Does that make companies like Detour Gold Corp. (DGC:TSX) and Tahoe Resources takeover targets?
CO: Certainly both Detour and Tahoe would fit the model sizewise. Goldcorp Inc. (G:TSX; GG:NYSE)walked away from the Osisko bid and clearly it wants to continue to grow through mergers and acquisitions. What will Goldcorp do? I’m not expecting the company to come out tomorrow and make an acquisition on either of these names, but I think it will certainly do the diligence work.
Goldcorp already owns 40% of Tahoe, which has a world-class asset with world-class operating statistics. Goldcorp is already in Guatemala; I’m not sure if it wants to increase its weighting there.
In the case of Detour, yes, it’s in Canada, and from that point of view, quite attractive. Detour is still in the ramp-up stage and perhaps it has finally reached the point where it is producing and reducing its cash costs. But I think Detour is still a year behind Osisko on that front.
TGR: Detour just published Q1/14 results. It had an adjusted net loss of $0.20/share, while it produced roughly 107,000 oz gold. Your thoughts?
CO: I was impressed at what Detour was able to achieve because it was a tough winter. I had some concerns that the weather might have proven to be an impediment, but the company produced a significant amount of gold. I think the grade was 0.9 grams per ton. Some of that was from stockpiles to buffer the grade at the mill. There are always a few bumps in the road but Detour has done very well.
TGR: In early 2013 that stock was above $25/share. Now it’s about $11/share. What’s going to get it back above, say, $15/share?
CO: A couple of things. As I said earlier, I believe the gold price is going higher. With higher gold prices come higher margins. And I think the market is still putting a discount on Detour as it’s in the ramp-up phase. As the company brings down cash and operating costs quarter by quarter and approaches Detour Lake’s nameplate production capacity, the stock will get back to a higher valuation.
TGR: Do you have any more gold names for us?
CO: I’ll mention some of my larger holdings of nonproducers: Dalradian Resources Inc. (DNA:TSX) andAsanko Gold Inc. (AKG:TSX; AKG:NYSE.MKT) that form part of a diversified portfolio.
TGR: What is the Dalradian story over the next 18 months or so?
CO: The company will continue to derisk the Curraghinalt project in Northern Ireland. Dalradian will go underground and through further drilling convert a fair amount of the Inferred resources to the Measured and Indicated category. As the market gets confidence with those numbers, it will start to rerate the company. A lot of people were concerned about whether mining would occur in Northern Ireland. To address that, Dalradian is looking to make a concentrate instead of using cyanide. The company is doing things that will ultimately make it more attractive.
TGR: Why do you own Asanko?
CO: It used to be called Keegan Resources. The management of Asanko bought into the project for around $27 million. These are the people that ran LionOre Mining, which under a decade ago was the subject of a bidding war between Xstrata Plc (XTA:LSE) and Norilsk Nickel Mining Co. (GMKN:RTS; NILSY:NASDAQ; MNOD:LSE). They’re good people with good operational experience. Asanko merged the PMI Ventures assets with those that were in Keegan and now has two projects within about 10 kilometers of each other, which are expected to have synergies. The company also has a significant amount of cash.
TGR: The Sprott Gold and Precious Minerals Fund has held positions in Pretium Resources Inc. (PVG:TSX; PVG:NYSE), Guyana Goldfields Inc. (GUY:TSX), Unigold Inc. (UGD:TSX.V) and Kirkland Lake Gold Inc. (KGI:TSX). Does it still have positions in those names?
CO: Pretium and Guyana are among my top holdings. Unigold, which you mentioned, is a small-cap name in the Dominican Republic. Unfortunately it has been the victim of the small-cap market where investors have turned their backs on these types of companies through no fault of management. I think Unigold has an interesting property with lots of opportunities and drill targets, and could potentially have a mineable resource one day.
TGR: Guyana Goldfields’ flagship Aurora project has outlined 6.5 million ounces Measured and Indicated, yet the stock price is falling.
CO: The company is at the point where it is ordering equipment, getting its financing in place, and then it will start building and moving Aurora forward. Again, it’s time and execution.
TGR: Pretium had a bumpy ride in 2013. Do you still have faith in management?
CO: Yes. I visited Brucejack in British Columbia last year. It’s a “nuggety” project that’s difficult to model. It takes a lot of drilling to get that necessary level of confidence. Last year the company processed a 10,000-ton bulk sample that produced around 6,000 ounces (6 Koz) or about 0.6 ounces per ton. In February, Pretium sent another 1,000-ton sample to the mill and it produced around 3 ounces gold per ton. The important thing to look at with this company is that there is lots of gold underground; the model still needs work to figure out how best to mine it. Pretium is proceeding with further studies on Brucejack, but I think it will be a mine. It’s also a potential acquisition as it is a high-grade deposit in Canada.
TGR: Kirkland Lake Gold forecasts roughly 126 Koz in production in 2014. Is that realistic?
CO: It will probably come close to that number. Kirkland Lake has a new CEO, George Ogilvie, and a fairly dramatic change in ideology. A couple of years ago the company was focused on mining everything in the mine. Ogilvie is focused on mining more profitable ounces.
TGR: I understand that Kirkland has been attempting to lower costs. Is that working?
CO: Kirkland Lake is not yet profitable, but it has instituted a new program to mine higher grades. It will focus on the high-grade ore because that is where it will make a profit. This is the same strategy that Rob McEwen put into place at the Red Lake mine. I think Kirkland has huge potential but it ultimately comes down to strategy execution.
TGR: In March you said that gold would reach $5,000/oz within a few years. That seems optimistic.
CO: It’s based on the historical relationship between the Dow Jones Industrial Average and the gold price. Over the last 100 years there have been three times when it has cost 1 to 2 ounces gold to buy the Dow. The last time was 1980 when the gold price was $800/oz and the Dow was 800.
People roll their eyes when you forecast big numbers. In 2004 or 2005, I said gold would reach $1,000/oz. When it reached $1,000/oz, I moved to $2,000/oz and we almost got there. With the willingness of the market to continue to print money, I believe that we are going to get that 2 or 3 to 1 relationship with the Dow. With the Dow at 16,000, I think $5,000/oz is achievable. It’s not really that the gold price is increasing, it’s that paper currencies are depreciating in value.
TGR: Thank you for your time and commentary, Charles.
Charles Oliver joined Sprott Asset Management in 2008. He is lead portfolio manager of the Sprott Gold and Precious Minerals Fund. Previously, he was at AGF Management Limited, where his team was awarded the Canadian Investment Awards Best Precious Metals Fund in 2004, 2006 and 2007. His accolades also include: Lipper Awards’ best five-year return in the Precious Metals category (AGF Precious Metals Fund, 2007), and the Lipper Award for best one-year return in the Precious Metals category 2010.
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1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Guyana Goldfields Inc., Pretium Resources Inc., Tahoe Resources Inc. and Unigold Inc. Goldcorp Inc. is not associated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services.
3) Charles Oliver: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. The Sprott Gold and Precious Metals Fund owns all the companies mentioned in this interview. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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Epic Rise in Gold & Silver or an Asset BUBBLE Bursting?

Key driver of gold in 2014: physical demand
slowing sales from European central banks and large purchases from emerging market countries in Latin America, the Middle East and Asia
China Gold Demand Rising 25% by 2017 as Buyers Get Wealthier
Bright Spot for India’s Gold Demand

The $12 Trillion Ticking Time Bomb

Time and again, we’ve been told that the Great Crisis of 2008 has ended and that we’re in a recovery.
Indeed, earlier this year, we were even told by Fed Chair Janet Yellen that the Fed may in fact raise interest rates as early as next year.
If this is in fact true, how does one explain the following statement made by the Fed’s favorite Wall Street Journal reporter, Jon Hilsenrath?
One worry: As they move toward a new system, trading in the fed funds market could dry up and make the fed funds rate unstable. That could unsettle $12 trillion worth of derivatives contracts called interest rate swaps that are linked to the fed funds rate, posing problems for people and institutions using these instruments to hedge or trade.
So… the Fed may not be able to raise interest rates because Wall Street has $12 trillion in derivatives that could be affected?
Weren’t derivatives the very items that caused the 2008 Crisis? And wasn’t the problem with derivatives that they were totally unregulated and out of control?
And yet, here we find, that in point of fact, all of us must continue to earn next to nothing on our savings because if the Fed were to raise rates, it might blow up Wall Street again…
Simply incredible and outrageous.
What’s even more astounding is that Hilsenrath is in fact understating the issue here. It’s true that there are $12 trillion worth of derivatives contracts related to the fed funds rate… but total interest rate derivatives contracts are in fact closer to $192 TRILLION.
And that’s just the derivatives sitting on US commercial bank balance sheets. We’re not even including international banks!
So…the US economy is allegedly in recovery… the financial markets are fixed… and all is well in the world. But the Fed cannot risk raising interest rates to normal levels because Wall Street has over $12 trillion (more like over $100 trillion) in derivatives contracts that could blow up.
That sure doesn’t sound like things were fixed to us. If anything, it sounds like the stage is set for another 2008 type disaster.
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Is Small Business a Threat to the Status Quo?

Truth is the first victim of the Company Store’s dominance.
My view of the Status Quo as a neocolonial, neofeudal arrangement is succinctly captured by correspondent D.C.’s description of state-corporate capitalism: the Company Store. In the plantation model (i.e. any economic setting dominated by a primary corporate employer and/or the state), almost everyone works for the company, and is beholden to the company for their livelihood and security.
In exchange for this neofeudal (often described as paternal) security, employees must shop at the company store, which maintains a near-monopoly (i.e. competition is limited because the company owns the land and/or colludes with local government) as a means of extracting monopoly prices.
The company store extends credit to employees (in the modern version, student loans take the place of employee credit), and since prices are kept artificially high and wages are kept stagnant, the employees never manage to pay off their debts at the company store.
This describes the core dynamic in our state-corporate system. The state-corporate Status Quo suppresses competition (few other stores are allowed in town), usually by indirect means: high land leases, high fees for doing business in town, mountains of absurd regulations no small businesses can afford to meet, etc.
In state-corporate capitalism, small business thus poses a threat to the monopolistic partnership of the government and dominant corporations. Small businesses that try to meet all the regulations and pay all the fees and taxes are either marginalized or driven out of business by the high overhead.
But those that live in the nooks and crannies between the major players pose a threat to the guaranteed profits of the state-corporate Status Quo. As a result, despite the propaganda about how the state supports small business, the real agenda is to marginalize small business in every way possible so the small-business sector can never gain enough political weight to challenge the corporate interests and their partners, the state fiefdoms.
Here is D.C.’s gloves-off, truth-to-power commentary:

The decline of small businesses serves the same purpose as continuous, compound monetary inflation: Both keep everyone on “company property” buying at the “company store.”
Inflation means that people can’t save in a medium that is not ready-to-be-seized (by the IRS, any Federal court, any creditor like a hospital, i.e. by any minion of the central state Corporation). If people could save honest money “under the mattress” without continuous erosion, then some of their wealth might remain fully private.
We can’t have fully private wealth. The Company must always be able to take what the Company deems its fair share, or take whatever payments the Company Store levies (since people are largely compelled to purchase their medical services, for instance, from the CS and prices are not marked on the shelf…only assessed in arrears).
The same is true of employment. If people are able to earn a living apart from the Company, they become less subject to the Company’s innumerable rules (including, especially, the requirement to buy everything at…you guessed it…the Company Store).
Small businesses are messy little vermin much more difficult to regulate (and corral, and milk) than what otherwise amount to subsidiaries of the Company Store. All significant corporations in the USA today are clearly such subsidiaries. What else do their legal departments do but finagle “deals” and navigate “hyper-compliance” with the larger Company? The corporations for which I have worked behave like subordinates in a branch of the military: “Sir, YES Sir!” A larger phylum of invertebrates will never be discovered.
Small businessmen, however, comply only under overt duress and are apt to seek end-arounds at every opportunity due to self-interest and lack of bureaucratic organizational incentives. Seeking alternate paths to exercise greater liberty and keep a larger share of their product puts them on the side of nascent informal networks to which you refer.
Your conception of private or informal networks side-stepping the Company is both (in my opinion) the future and an existential adversary of the central state Corporation. This means to me that we will see an increasingly hot war emerge as the early adopters pursue their fledgling networks while the minions of the Corporate State ever-more-openly chase and harass them.
My belief is that people only abandon a failing paradigm when the cost of duplicating the “service” privately is lower than the combined cost of the old paradigm plus the cost of its failures. For example, people will abandon the tax-paid, centrally-planned education paradigm only as they perceive the cost of duplicating it privately (home schooling, unschooling, foregone income, etc.) is lower than the “cost” of uneducated, mis-educated, unsafe kids.
Early adopters must be willing to pay twice (private duplication plus tax extortion) so their formula for the decision is Private+Tax < tax-produced output.
(By the way, I consider current “private” schools to largely be the same as tax-paid. Until a market fully emerges, finding a true alternative to the tax-paid model is challenging.)
This means that early adopters of non-Corporate State paradigms must evaluate the “costs” of the old paradigm higher than their neighbors. The lingering consent of the neighbors to the old paradigm will place heavy burdens on the early adopters of new paradigms.
A significant problem with forging new paradigms is that the earliest of adopters are overt criminal organizations. Non-criminals will intentionally be conflated with criminal networks as the Corporate State’s minions war on alternatives that threaten its parasitic and dysfunctional monopoly.

This Chart Is The Fate Of Housing In America As Student Loans Bankrupt A Whole Generation

Wolf Richter
A friend of mine is suffering from excruciating anticipatory pain. He’s heading to New York to attend his daughter’s graduation, which should be a glorious moment in life. But her commencement speaker is Fed Chair Janet Yellen. “Gotta find some thorazine to take before the ceremony,” he muttered. He paid for his daughter’s education. Not many students are that lucky.
Student loan balances soared 362% to $1.1 trillion since 2003, during a period when mortgage debt – including the effects of the current Housing Bubble 2 – rose “only” 65% to $8.2 trillion and credit card debt actually declined by 4.2% to $660 billion (chart). The burden of servicing that increasing pile of student loans is eating into other forms of borrowing and spending, such as the American classic, reckless consumption on credit cards, or the purchase of a home. And so the proportion of first-time buyers – the single most important sign of a healthy housing market – has been shrinking for years.
Recent graduates are facing a job situation that remains tough. The employment-population ratio for 25-34 year olds (chart) is on a similarly terrible trajectory as the EP ratio for the overall working-age population: It declined sharply from the employment peak in 2001 when 81.5% of the people in that age group were working. The ratio dipped below 78% in 2003, recovered a little, only to plunge in 2008, finally dropping below 74% in 2010. Since 2012, it has been recovering in fits and starts to a recent high of 76% earlier this year, only to drop again more recently. Like other Americans, this age group is having trouble finding jobs.
Over 70% of the students who are sitting through a commencement speech this spring have student loans. They will start their career, if any, with an average student loan balance of $33,000. Even when adjusted for inflation, it’s about twice as much as 20 years ago. Back then, only 43% of students graduated with student loans. After decades of red-hot tuition and fee increases, working your way through college in four years, the way I and many others did back in the day, has become a pipedream.
Every year, it gets worse. The Class of 2012 was the most indebted ever. Then the Class of 2013 took over that dubious honor, only to be trumped by the Class of 2014. Next year, the honor will go to the Class of 2015. Among the reasons for this fiasco: the way colleges are paid liberates them from both free-market and governmental constraints. They can charge whatever they want and get away with it because students can just go ahead and borrow it. Even noisy student protests with mass arrests trip up administrators only briefly. And through the student loan programs, designed with whatever intentions, the government is simply aiding and abetting colleges in extracting ever more money from the future lives of their students.
The equation might not have gone so horribly awry if each class of graduates had seen their incomes skyrocket in line with their student debt. But that’s a crummy joke. Between 2005 and 2012 – the last year for which this data set is available – the inflation-adjusted average student loan balance of graduates under 30 years old has soared 35% while the median annual income adjusted for inflation for college graduates between 25 and 34 years old has declined by 2.2%. And this is what this torturous condition looks like:
Something has to give. Sure, whittling down real incomes via inflation – among the goals of the inflation mongers at the Fed, the IMF, and elsewhere – reduces the labor costs of employers and makes the US more competitive with Bangladesh. Not raising the minimum wage in line with inflation is based on the same principle. And surely, providing workers only minimum food, some rags to wear, and basic shelter, instead of paying them actual wages, would do an even better job at it.
But this strategy has a drawback. These graduates will soon enter the generation of potential first-time home buyers. Today’s first-time buyers graduated a few years ago. For them, dealing with their student-loan burden isn’t nearly as much of a drag on their spending power. And they’re already staying away from the housing market.
The Class of 2014, including some of those who dozed through Yellen’s commencement speech, will be suffocating under their record-setting student loans that they have to pay for with their skimpy wages – the lucky one who find jobs that pay enough to make any payments at all. This is the future generation of first-time home buyers. And on top of their mountain of student loans, they’re facing higher interest rates and the inflated prices of Housing Bubble 2, if it can be kept inflated long enough, which appears unlikely, given the deteriorating condition of the crux of the housing market, these suffocating first-time buyers.
Home prices in San Francisco hit $945,000 in February, 16% above the prior peak. But momentum stocks, which the city is addicted to, are crashing. With terrible results. Read….Momentum Stock Fiasco Pricks San Francisco Housing Bubble

Banking System In Danger: ECB Plans Negative Rate on Bank Deposits, Fed Will Prop Up The System Until It Falls Apart, 132 Nations Want Out!!!

Bernanke Shocker: “No Rate Normalization During My Lifetime”
Forget all talk about “dots“, “6 months”, or any other prognostication from the Fed’s new leadership about what will happen in the near and not so near future. For the real answer prepare to shelve out the usual fee of $250,000 for an hour with the Chairsatan, or read Reuters’ account of what others who have done so, have learned. The answer is a stunner.
“At least one guest left a New York restaurant with the impression Bernanke, 60, does not expect the federal funds rate, the Fed’s main benchmark interest rate, to rise back to its long-term average of around 4 percent in Bernanke’s lifetime. “Shocking when he said this,” the guest scribbled in his notes. “Is that really true?” he scribbled at another point, according to the notes reviewed by Reuters.”
To think one could have read Zero Hedge for free for the past 5 years and gotten the same answer (time for a pop quiz: pumping liquidity into a closed system in perpetuity is i) inflationary or ii) deflationary?). But no, one would rather pay Bernanke’s former annual salary in less than an hour to get the answer from the same person who infamously stated that “subprime was contained”, that “there is no housing bubble”, and that he doesn’t buy the premise of house price declines as there has never been a “decline of house prices on a nationwide basis.

John Williams Of Shadow Government Statistics – Fed Will Prop Up The System Until It Falls Apart
Published on May 18, 2014… John Williams of predicts an explosion of U.S. debt. He says, “All the projections on the budget deficit are based on positive economic growth going forward. With the ongoing contraction, you’ll see a much worse budget deficit. It’s going to do bad things to the banking system. The Fed is going to be easing, and they’ll say they are easing to stimulate the economy; but in reality, they’ll be doing this to prop up the banking system. The rest of the world sees this and they don’t want to hold the dollar, and they will sell off the dollar. The Fed is going to have to come in and prop up the system until it falls apart.”
Join Greg Hunter as he goes One-on-One with economist John Williams, founder of
“No Rate Normalization During My Lifetime”

US debt and unfunded debts are $147 trillion today and rising at $8 trillion a year.  There is no chance that US rates can normalize.  I could have saved you that $250,000.
Or put it another way – US debt and unfunded liabilities are $1,265,000 per taxpayer and rising at $69,000 per taxpayer per year.
Kotlikoff claims that US debt and unfunded liabilities exceed $230 trillion and growing at $11 trillion a year.
132 Nations Want Out Cabal Banking System
The secret cabal’s control over international markets is becoming less of a mystery as increasing numbers of markets reveal themselves so obviously to be fixed. The cabal cheats the 99 percent with Libor interest rates, foreign exchanges, & Gold,…
Combatting the Crunch: ECB Plans Negative Rate on Bank Deposits
When it meets on June 6, SPIEGEL has learned, the European Central Bank may implement a negative interest rate for financial institutions seeking to park their money at the Frankfurt powerhouse. The move is aimed at spurring loans.
European Central Bank executive board member Peter Praet of Germany is expected to recommend that the bank cut its main refinancing rate from the current 0.25 percent to a record low of 0.15 percent when the bank’s Governing Council meets on June 5.
In addition, the bank also wants to introduce a negative rate on bank deposits of -0.1 for the first time in its history. The ECB’s deposit rate is currently at zero, and a further cut would mean that banks would effectively have to pay a fee to park their money. Normally they would be paid interest to do so. Under the new punitive rate, if a bank were to deposit €100 million in a central bank account, the ECB would withhold €100,000. The measure is aimed at encouraging banks to lend money rather than park it at the ECB. It is hoped the move will prevent the kind of credit crunch and freeze in lending seen during the height of the euro crisis, when private and corporate loans all but dried up.
This is a SGT REPORT NEWS BRIEF: Documenting the Collapse for the week ending Friday, May 16th.
In this episode:
- UK Prime Minister David Cameron Targets Bank Accounts
- Fascist US Oligarchy Installs Offspring & Family Friends on Board of Ukraine’s largest Gas Co.
- Food Price Inflation in the U.S. SOARS
- California Burns
- London Silver Fix Folds as Deutsche Bank Flees
- CPM’s Jeffrey Christian Spins the News, Proposes COMPUTERIZED Silver Price Fix