The Global ‘Fractional’ Paper Bullion Market is Collapsing

The Golden Truth – by Dave in Denver
I wrote last week that there was a scramble going on globally by entities seeking to take physical possession of the gold on which they have a legal claim, most of which is sitting either in alleged “allocated” big bank bullion vaults or in alleged “allocated” accounts in Comex custodial warehouse vaults.
I also demonstrated mathematically, using the reported numbers on the CME website for precious metals futures open interest and warehouse gold/silver stocks, that the amount of gold represented by Comex futures open interest far exceeds the amount of deliverable gold on the Comex (the analysis is even more extreme for silver).  In fact, if less than just 10% of the buyers of June gold contracts demand delivery, the Comex won’t have enough gold to cover the legal claims.  For silver (July silver) it’s even more extreme.  
This is a global problem and not just endemic to the Comex.  Globally, the legal claim of ownership on physical gold far exceeds the amount of gold represented by paper futures, LMBA forward contracts, leased gold and vault receipts.  The latter – vault receipts – is where the big banks in London have the most severe problem, as gold this is supposed to be sitting in “allocated” accounts under the name of the legal owner who bought and paid for those bars has been largely leased out.  I’ll get to that in a minute.
First, I received this comment from John Brimelow’s “Gold Jottings” report, which comes from Gerhard Schubert, head of Precious Metals at Emirates NBD, the largest banking group in the Middle East.  Keep in mind that Middle Eastern buyers demand physical delivery of their gold.  Here’s the quote from his latest weekly report:

I have not seen in my 35 years in precious metals such a determined and strong global physical demand for gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid have been the cornerstone of the gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts…
I did speak during the week with several refineries in the world, of course including the UAE refineries, and the waiting period for 995 kilo bars is easily 2-3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US $ 20 and US $ 35 per ounce.

The price hit of two weeks ago has triggered a serious scramble for physical gold and silver.  Reports like the above comment have been flooding from Europe, the Comex has had about 30% of its gold bars literally drained from the customer accounts of the Comex bank custodian vaults and the U.S. mint is running way behind on demand for silver eagles and some weights of gold eagles.  Ditto for the Canadian mint.
And then I get a call from a close friend in NYC last Friday.   His career has been in private wealth management in the private bank department of the Too Big To Fail banks.  He’s been looking for work and chats with old colleagues all the time.  He called my Friday and told me he just got off the phone with a very high level private banker from a big Euro-based TBTF bullion bank, but who was at JP Morgan until about six months ago.
This guy told my friend that there is a scramble by many very wealthy European families/entities to get their 400 oz bars out of the big bank vaults. He knows this personally, for a fact.  He said the private banker community is small over there and the big wealthy families all talk to each other and act on the same rumors/sentiment.  The Bundesbank/Fed and the ABN/Amro situations triggered this move.  He knows for a fact JPM tried to calm fears about 3 months ago by sending a letter to it’s very wealthy clients assuring them their bars were safe, in allocated accounts.  He said right now those same families are walking into the big banks like JPM and demanding delivery of their bars or threatening to take their $100′s of millions in investment portfolios to competitors.  His wording was “these people are putting a gun to the heads of private banks and demanding their gold.”
I know this information is good because I know my friend’s background and when he tells me his source is plugged in, the guy is plugged in. Not only that, my friend’s source said that there’s no doubt that someone like a John Paulson, not necessarily specifically him, but entities like him or it may include him, have held a gun to GLD and demanded delivery of physical in exchange for their shares.
Regarding the Bundesbank/Fed situation, recall that the Bundesbank asked to have some portion of its gold sitting – supposedly – in the NY Fed vault in NYC sent back Germany. The total amount is 1800 tonnes.  After behind the scenes negotiations, the Fed agreed to ship 300 tonnes back over seven years.  To this day, the time required for that shipment has never been explained.  Venezuela demanded the return of its 200 tonnes held in London, NYC and Switzerland and received it all within about four months.
And regarding the ABN/Amro situation.  ABN/Amro offered a gold investment account product that offered physical delivery of the gold in the investment account when the investor cashes out.  About a week before the gold price smash, ABN sent a letter to its clients informing that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption.
I believe it was these two events that triggered the big scramble for physical gold by wealthy families/entities who were suspicious of the integrity of their bank vault custodial arrangement anyway.
In fact, what we are now seeing is the final stages of the paper gold/silver bullion market, which has grown at a parabolic rate over that last 13 years, and includes Comex futures, LMBA forward contracts, OTC derivatives – which is an even bigger paper market than the Comex – leased gold claims/contracts and warehouse receipts.
At some point there will be an even bigger “run on the bank” by those looking for delivery of the physical gold/silver that they have been “assured” is sitting in their “trusty” bank custodian vault.  I know for myself that I have seen enough from the JPM’s of the world to not trust anything they do or say.  I think a lot more people are finally coming to that same conclusion.  At some point there will be a complete collapse of trust in the paper monetary system and the price of gold/silver will really go parabolic, as the masses realize all at once – and far too late I might add – that everything that was rumored over the last 13 years about paper gold, gold leasing, etc is actually true.

Fake Silver Flooding Market - Mike Maloney & James Anderson

“They Don’t Want Certificates, They Want the Real Product” – CME President on Gold

by GoldCore


Today’s AM fix was USD 1,469.50, EUR 1,113.60 and GBP 942.95 per ounce.
Yesterday’s AM fix was USD 1,472.75, EUR 1,126.13 and GBP 950.04 per ounce.
Gold climbed $5.60 or 0.38% yesterday to $1,476.00/oz and silver finished down 0.27%.

Cross Currency Table – (Bloomberg)
In a remarkably candid interview, the President and Executive Chairman of CME Group Inc, Terrence Duffy,  told Bloomberg TV that today gold buyers “don’t want certificates … They want the real product”.
When asked by Cristina Alecci at the Milken Institute 2013 Global Conference in Los Angeles on Bloomberg Television’s “Street Smart.”about gold, Duffy says
“What’s interesting about gold, when we had that big break two weeks ago we saw all the gold stocks trade down significantly, we saw all the gold products trade down significantly, but one thing that did not trade down, was gold coins, tangible real  gold.  That’s going to show you, people don’t want certificates, they don’t want anything else.  They want the real product.”

“I think that is the value of gold.”
“Whether you are going to own mining stocks are anything else. I think the coins are probably of more value than anything else.”
The CME Group Inc or Chicago Mercantile Exchange is the world’s largest futures exchange company. It owns and operates large derivatives and futures exchanges in Chicago and New York City, as well as online trading platforms. It also owns the Dow Jones stock and financial indexes, and CME Clearing Services, which provides settlement and clearing of exchange trades.
The CME’s President’s comments were noticed by Mike Krieger of Liberty BlitzKrieg and featured on Zero Hedge.
Slowly but surely, gold coins and bars value as safe haven assets, unlike gold futures and other paper and digital forms of gold, is being realised.
All paper forms of gold, particularly leveraged ones, should be avoided due to counter party and systemic risk.
The exception to the rule regarding certificates are Perth Mint certificates. They are in effect warehouse receipts which are fully backed by physical gold, silver and platinum – ounce for ounce – from the AAA rated government of Western Australia.
Mints from the U.S., Great Britain and Australia have all seen a surge in demand after gold futures fell 13% in mid April.
The U.S. Mint’s gold coin sales have reached their highest level since December 2009.

Gold in USD, 5 Year – (Bloomberg)
Gold coin sales at the U.S. Mint in March were 62,000 ounces, while in April sales reached 209,500 ounces and back in December 2009 they recorded 231,500 ounces of coins sold.
Silver-coin sales in April were 4.2 million ounces up from 3.36 million in March.


Silver in USD, 5 Year – (Bloomberg)
The price drop has shifted investor sentiment out of gold backed ETF’s and into physical gold.
The yellow metal has fallen 12% this year, even after an 11% gain from $1,321.50/oz on April 16.
Demand was so strong after the price retracement that the U.S. Mint ceased sales of its .10/oz gold coins on April 23.

Platinum in USD, 5 Year – (Bloomberg) 
In Australia, consumers were cueing in lines ½ of a kilometre to purchase gold coins.  In jewellery stores in China and India they had their stock depleted in a day, according to The World Gold Council.
The heightened demand brings premiums that investors are paying to have the precious metal in their hands.
In India they are paying 5 times the amount before the price drop in April.  In Singapore and Hong Kong consumers are paying nearly $3/oz, said to Ng Cheng Thye, the head of precious metals at Standard Merchant Bank (Asia) Ltd.
In the U.S., the Arizona Senate passed legislation to make gold and silver accepted as currency, and it now goes to the governor for approval. This is a further step by citizens to protect themselves against the lack of control and collusion in the current international monetary system.

Palladium in USD, 20 Year – (Bloomberg)

Precious Metals “Trading Sideways” Ahead of Fed Decision

London Gold Market Report
from Ben Traynor, BullionVault
Wednesday 1 May 2013, 07:30 EDT

Precious Metals “Trading Sideways” Ahead of Fed Decision

WHOLESALE prices for gold bullion drifted lower Wednesday morning in London, dipping below $1470 an ounce, though it remained slightly up on where it started the week after two-and-a-half days trading in a tight range, with China’s markets closed since last Friday until tomorrow for the Labor Day holiday.

Silver meantime fell towards $24 an ounce to almost exactly where it started the week, while other commodities also fell and US Treasuries were flat ahead of today’s Federal Reserve policy announcement.

“Silver has been trading sideways for the past few sessions, with support at Friday’s low at $23.64 and resistance at Friday’s high at $24.87,” say technical analysts at bullion bank Scotia Mocatta.

“We are looking for a retest of the $22.07 low [of April 16].”

In London, the FTSE 100 ended the morning up on the day, while other European markets were closed for the May 1 holiday.

In the US meantime the Federal Open Market Committee is due to announce its latest decisions on US monetary policy later today.

“We expect the Fed to leave policy unchanged today,” says a note from Standard Bank’s currency team.

“Policymakers are likely to pledge that the Fed will continue to buy $85bn of bonds per month until ‘the outlook for the labor market has improved substantially in a context of price stability’…there is some speculation that the Fed could soften its language, perhaps in an effort to steer the market away from the idea that it could taper, or even end, bond purchases by the close of 2013.”

“There is concern [among Fed policymakers that] the first taper would be misinterpreted as the onset of a tightening cycle”, says Michael Feroli, chief US economist at JPMorgan Chase in New York.

“You want to see how the market is going to digest a cut in purchases” adds Feroli’s colleague Joseph LaVorgna, “so you want to do it in a way that minimizes the disruption.”

“Accommodative policies are generally seen as supportive for gold,” says INTL FCStone metals analyst Ed Meir, “but as the events of the last few weeks have demonstrated, the precious metal does not always move in lockstep with simple expansion in money supply. Instead, it seems to pick up steam either as a result of turmoil in the financial markets or on the back of higher inflation readings, neither of which seem to be prevalent at this particular time.”

“[Gold's] longer-term trend has been broken to the downside,” says a note from Credit Suisse.

“This fact is significant because in a downtrend the default move of a price is lower in the absence of convincing fundamentals. With fundamentals only neutral, we think some risk still persists.”

Over in Europe, the European Central Bank is due to announce its latest monetary policy decision Thursday.

“Given the latest data, we think that the case for a front-loaded rate cut is strong enough already,” says UBS economist Reinhard Cluse “so that the ECB is likely to cut rates on May 2.”

However, “the chances of fully-fledged quantitative easing from the ECB are low,” adds Nomura economist Nick Matthews.

“The European Central Bank is obviously in a difficult position,” German chancellor Angela Merkel said last week.

“For Germany it would actually have to raise rates slightly at the moment, but for other countries it would have to do even more for more liquidity to be made available and especially for liquidity to reach corporate financing.”

On the currency markets, the Euro rose to a two-month high against the Dollar Wednesday above $1.32.

The Euro gold price meantime fell to €1112 an ounce, close to yesterday’s low and 0.9% down for the week so far.

Growth in China’s manufacturing sector meantime slowed last month, according to official purchasing managers’ index data published Wednesday. China’s official manufacturing PMI fell from 50.9 in March to 50.6 in April, with 50.0 being the threshold between indicating sector contraction and expansion.

Britain’s manufacturing PMI rose to 49.8 last month, up from 48.6 a month earlier. Similar data for the US are due to be released later today.

Ben Traynor

Watch Out, World!: Even Amerika's Wealthy Are Losing Ground

Cognitive dissonance among the US sub-elite
means more war and death for everyone else

4/29/2013

Occasionally the tip of the iceberg pokes through, and the reported facts corroborate the experience of most of the people. The recent Pew Center report that has now reached broad circulation shows that a full 93% of US households *lost* ground in the much vaunted recovery of 2009-2011. This just validates what we are all living through, glossed over by averages, smoke and mirrors. There is no "recovery." Sectors *within* the top quintile are holding on, barely. 
This is the starkest portrayal I've seen in black and white; I had previously been telling anyone who would listen that, while there seems to be a pickup for those in the $250,000 and up range, it is clearly not the case for the bottom 4 quintiles [i.e. $100,000 combined household income 2010]. It should be shocking enough to most middle class types that the real picture is so different from what they believe to be living--that is, that they are actually in the top 8-10%... BUT the data shows even worse. Even families up to $500,000 (!) are losing ground.
This bespeaks the desperation in the political outlook of what Zinn called The Guards and what Chomsky called The Priesthood: people who are doing just fine in the current system but think it needs a few tweaks. As this sector shrinks, the internal contradictions will become more apparent and the response of the state becomes harsher and less elastic. So households with "two good jobs" say $100,000 plus each, are prone to seeing some hope, the famous 'green shoots' mantra that fell on deaf ears for most of us a few years ago. Come on, guys--it *can* work! We all need to just be a bit more patient! Etc. 
The political ramifications are quite alarming. This sector is crucial to the viability and perceived legitimacy of the system, and their panic has far reaching consequences. It may just beginning to dawn on them that they, too, will ultimately be left behind in the wealth shift, and that it was never really about them. Slowly but surely, and to varying degrees, they are recapitulating Judas' epiphany [the Andrew Lloyd Weber version, at least]: "My god I'm sick. I've been used--and you knew all the time!" They are just beginning to see that they are facing an uphill battle in a rigged game against the House with a stacked deck--and any other cheesy analogies you want to cram in there--but there is nowhere for them to go.
Paradoxically, the initial wave of reaction to this newfound betrayal by their patrons in the ruling class is not to turn on their masters. It is to express this anger at those below, in the age-old game of shooting the messenger. Consequently, they become even better "shushers," the Seinfeld term for viewers who keep order in a theater. Border collies, gatekeepers... they have always been there, but they were more consciously part of the professional 'left,' an icon of the political class. In the current period, their anger is more desperate and more diffuse: They have always been more inclined, for example, to trust the police, to believe the official version of events, to avoid sources of information considered by their class position and experience to be beyond the Pale. Having rarely, if ever, been on the wrong side of Officialdom, or had to bail relatives out of jail, or had any race-tinged experiences themselves, they are primed and pampered to be the intellectual shock troops of Acceptable Discourse. In the face of increased perfidy on the part of their class betters, they can't (yet) bring themselves to bite what they still perceive as the hand that feeds them. Consequently, they will lash out at the incongruously labeled 'parasites' who they feel are ruining their banquet, even as the din of cognitive dissonance grows inside their heads. 
The brutal fallout from this game is apparent all around us, as the body counts rise and the single minded state terrorism of the state apparatus grows ever more horrific in its attempt to maintain their bloated lifestyles through hegemony over the world's resources. This transaction is completely lost on the Shushers--rather, they become its ghoulish cheerleaders, with or without acknowledgement. They are capable, somehow, of rationalizing the complete destruction of country after country--even as they are shown they are being lied into doing so. It is inconsequential to them that their government is funding, arming and training the very Islamic terrorists in Syria and Libya that they are primed to fear elsewhere. The simple mathematical rule of balance and scale demands that they acknowledge and reject the 1000 : 1 ratio of violence ravaging the world in their name, with their money, with their silence at best and enthusiastic endorsement at worst. They just don't give a shit, and their macabre privileging of the relatively few victims among their own--as awful as these surely are--is lost outside the bubble, where the rest of the world grieves for their victims. 
The economic consequences of their loss of station scares the shit out of them: while logic and basic morality dictate that they should wake up every morning with the bloody carnage of their own drone army foremost in their minds, they are instead preoccupied with how they can no longer afford an annual pilgrimage to Disney, or that they may have to postpone the kitchen/bath/boat/car upgrade they have been contemplating. If this makes them sound like monsters, it should. There is something epic about the horror of simultaneously having no power over a political system that wreaks such destruction and yet defending that very system as acceptable and benign, without at the very least having been the proverbial canary in the coal mine, the littlest Who shouting 'We are here!' from the tallest available tower. It is more than a sham and a shame. It is a moral crime, a breach of ethical duty that will yield unimaginable consequences when the balance is eventually righted. And yes, for international readers, I do realize the self-absorption of focusing on the internal Amerikan experience, and hear your cries of "Who gives a shit!' inside my head." If you have stuck with me this long, much respect. Sometimes I feel it necessary to speak to and about my Amurkan countrymen from the perspective of one who shares, albeit sometimes tangentially, their experience.
I believe we are living in the time where this shit will all hit the fan. It may take a year or two or ten, but in historical terms we are living in that instant, that one day where, looking back, it will become apparent that everything changed. It is the pivotal moment so brilliantly enacted by the montage at the end of Les Miserables where all social actors, no matter their role or position, sense that something momentous is on the horizon: "Tomorrow we'll discover what our God in heaven has in store. One more dawn. One more day. One day more!"
© 2013 Daniel Patrick Welch. Reprint permission granted with credit and link to danielpwelch.com.

'People fear a Cyprus-style grab': Expat exodus from Spain as deadline for Britons to declare property and savings at home arrives

• Spanish tax laws affect an estimated 200,000 British expats
• Residents must declare any asset over €50,000
• Expats want to come home but many can't sell
• Rumours of Cyprus-style grab abound

The pain in Spain: Lorna Ainsworth helps expats and says she has has been inundated with requests, mainly from elderly people who are bewildered

New Spanish tax laws affecting an estimated 200,000 British expats, have sparked panic, prompting some to leave the country or hand in their residence cards at town halls before today's deadline (30 April), fearing a Cyprus-style money grab.
Opponents, including Spanish politicians, have branded the new asset declaration law discriminatory, and fear an exodus of EU residents from the fragile economies of the coastal towns.
Russell Thomson, the former British Consul for Alicante, Spain, has led a petition to the EU, branding the law unlawful and discriminatory against non-Spanish residents.

The Spanish government requires that any resident with an overseas asset worth more than €50,000 and who lives in Spain at least six months (183 days) of the year is affected – and must declare what they own abroad.
Failure to declare or any errors in any of the 720 online forms will result in a penalty of €10,000 or more.
As relatively few Spaniards have assets outside of Spain, those most affected are EU residents, the vast majority of which are British pensioners and retirees who have homes in the UK and, or, rely on UK pension funds and trusts for their income.
They are required to declare UK bank account numbers, mortgages and other details, via professional intermediaries, in an online format, considered risky by many.
Any delays or errors will attract hefty penalties. No information has been given as to what will be done with the data. The new law was passed in November 2012, but the majority did not find out until several months ago via the local English-language newspapers.

Lorna Ainsworth, 67, a retired hospital manager and JP, who lives in Javea, on the Costa Blanca, is one of the founders of Xabia Democrática, a political party that gives much needed representation for expats. She has been inundated with requests for help, mainly from elderly people who are bewildered.

Overvalued? Analysts at Goldman Sachs believe the Spanish property collapse has further to go.

‘The stress of on them has been unimaginable. They have had to pay for Spanish tax advisers, but Spanish and UK fiscal rules are different. For example, many of the tax advisers do not know what a ‘bond’ or ‘a trust fund’. Mis-categorising these could tip somebody over the €50,000 threshold.
‘Rumours of Cyprus-style actions abound. ‘Many people I know intend to change from resident to non-resident status and use their homes here for less than 183 days per year.
‘Many people I know are leaving; many more want to leave but can't sell their properties'
The petitioners, calling themselves Concerned European Residents (CER)  represent a group of British and other EU residents, expat councillors and politicians, who want to ensure that the laws are applied to criminals ‘and do not impact on the rights and privacy of innocent pensioners.’
They report ‘a considerable uncertainty and a degree of anxiety as the deadline approaches’ in the British community, and warn that if the process is not frozen and modified,  ‘it will drive thousands of expatriates from Spain with the inevitable loss of tax revenues and employment opportunities’.
It says: ‘We are being targeted’ and forced to reveal sensitive personal information and data to others, including the authorities, with no guarantees that this information will not be used in a tax or asset grab.’
The petition also raises concerns about the security of this online data and the risks it presents -- especially given the high records of corruption in local government in Spain.

Worried: Sarah Hill says people in her local area are very stressed and fear repercussions from declarations

Sarah Hill, 57, a retired youth worker who lives near Alicante in Orihuela Costa, an expat ‘new town’ that is home to 28,000 British residents , said: ‘The government want us to declare all this info without telling us why and what they are going to do with it. If you don’t declare you get a huge fine.
‘It’s Big Brother. Those affected, legitimate tax residents in Spain -- who have done the right thing -- are not even allowed to vote nationally here.’

‘In the years I have been here, I have never known such widescale anxiety amongst so many expats. Here on my ‘urbanicacion’ people are very stressed.
'It’s hitting people with smaller amounts of savings. €50,000, the equivalent of £42,000, is not such a big amount by today's standards. The information given out by the Spanish Government has been very poor and sometimes innacurate and misleading, and it appears that rules have been changing.’

‘It's sending expats returning to the UK in droves. Many people are putting their houses on the market or dropping the prices. For many people, it is the final nail in the coffin. For those of us who remain and who have no wealth, many of us are working with charities to feed and clothe the hungry and poor. It will hit the local economies as it's the well-off ones who are leaving.'

A rush of expats wanting to head home

WHAT MUST BE DECLARED

Spanish residents must declare overseas assets worth more than €50,000 in any of the following three categories:

• Savings or deposits (including annuities).
• Shares or investments.
• Property.

So, if you have €48,000 of savings in an overseas account, and €47,000 invested in stocks and shares, you would not be required to declare either of these.

Spanish authorities also want people to declare if they are the beneficiary or an authorised signatory on an overseas asset.

Residents groups and online forums report widespread fear and anger throughout the ‘urbanicacions’ and coastal towns of Valencia – where expats make up as many as 77% of the population in some places – with many people reporting that they intend to leave Spain.

Town halls have reported an influx of people wanting to change their residency status or de-register at the town halls. There are also rumours of British expats handing in their residence cards at their local police stations and rushing to leave by the end of April.

A new law just passed in Madrid will prevent villa owners from letting property which will further hamper plans.
Lorna Ainsworth said: ‘There is no doubt whatsoever that people who retired here for a peaceful life feel somewhat beleaguered and the magic of Spain has gone. We have been criminalised; guilty till proven innocent.

‘Many expats kept property and money in the UK for when they are elderly, so that they could return to be nearer family or arrange care in the community or a nursing home when they were no longer able to cope here, as there are very few facilities for this in Spain.’

The petitioners say the new law, dubbed the new 'Spanish Inquisition' is a draconian measure designed to tackle corruption, after previous attempts had a poor uptake -- hence the hefty penalties.

However, its main victims are innocent foreign residents of Spain, ‘who, perfectly legitimately, have chosen to hold part of their retirement savings in the country of their nationality.’

‘Their assets held outside Spain are not wealth that has been siphoned out from the Spanish economy by corrupt politicians, money launderers and tax evaders,’

Russell Thomson, as lead petitioner writes.  ‘Our worldwide, tax-paid, assets mainly derive from our working lives prior to coming to Spain, and many of us have preferred to maintain those assets away from banks here, given their recent performance record.

‘We see that many Spaniards appear to be immune from prosecution even when they are openly exposed …and have known and very substantial assets of dubious origins abroad. We cannot escape what we see in terms of widespread mismanagement, overspending, wasteful and bankrupt administrations at all levels as well as rampant corruption.’
The petition calls for a delay on today's deadline and amendments ‘to ensure that the laws are applied with due force against their intended targets and do not impact on the rights and privacy of innocent pensioners.’

Push for Europe to overturn the law

Campaigning: Deputy Mayor of Javea Oscar Anton is opposing the new law and fighting for his residents - 55% of whom are expats, mainly British.

There have been three other complaints to the EU about the law, complaining it is unlawful as it breaks EU and Spanish laws.

The Double Taxation Agreement was designed to prevent these assets being taxed or grabbed-- but given what happened in Cyprus, and in light of Spain's record in introducing arbitrary laws by Royal Decree, people fear anything is possible.

Oscar Anton, the deputy mayor of Javea, where 55% of the population, mainly Britons, are affected by this – is one of the few Spanish politicians officially opposing this law. He says many EU residents are coming to Javea Town Hall each day wishing to de-register as local residents.

He issued a motion against the Spanish government, warning of ‘the economic catastrophe that could ensue if foreign nationals resident in Javea and other towns …take their business elsewhere or even only decide to become tax residents of their home countries.’ He is rallying other coastal towns to join the opposition.

He believes the law is discriminatory, and is not convinced the Spanish government is unaware of the effect it will have on EU residents.

‘An expat who has a home in their country of origin worth over 50,000€ has to declare it, a Spaniard who has a boat or luxury car worth over 50,000€ in another country does not have to declare it. Put this way it would seem to refute the government’s claims that they are not targeting foreign nationals resident in Spain.’
Data published this week by the Spanish government show that in some towns on the Costa Blanca, as many as 50% of homes are empty. Other data shows that nearly a quarter of the one million EU residents in Spain have returned to their home countries in the last few years.

Meanwhile, Portugal is encouraging expats to up sticks and move there, announcing that any new residents will not have to pay tax for the first five years.
The new law was passed by Royal Decree in Nov 2012. In March this year, the British Embassy in Madrid posted an update on taxation guidelines for Britons.

A British Embassy spokesman in Madrid said yesterday: 'We are aware this is an issue of considerable concern amongst the British community in Spain, as communicated by individuals, expat groups and the English language newspapers.

'While the requirement is not new, the new Decree allows for tougher penalties, and the legislation also means that criminal charges can be brought in the case of non-compliance. Severe penalties can be incurred for incorrect, incomplete or late reporting.

'Britain has a double taxation agreement with Spain to ensure people do not pay tax on the same income in both countries

'The updated guidance on the website is intended to remind British residents in Spain of their existing tax obligations. Taxation is a complex issue and the British Embassy and British Consulates are unable to assist with any personal enquiries.'   

Read more information from the UK government on the Spanish law here.

Sony executives give up bonuses to atone for slump in fortune

TOKYO (AFP) - Dozens of Sony executives including the firm's chief are foregoing bonuses this year in an "unprecedented" step to atone for a slump in its embattled electronics unit, a spokeswoman said Wednesday.
Chief executive Kazuo Hirai is among 40 top managers who will not get a bonus estimated at several hundred million dollars "due to severe business circumstances, including stagnant performance in the electronics sector", the spokesman said.
The leading Nikkei business daily said the payout could have totalled 1.0 billion yen (S$12.6 million).
Last year, seven top Sony executives gave up their bonuses "but the number this time is unprecedented," she added.

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