Everyone knows that the sun rises in the East, moves across our
skies, and sets in the West. Over the past few years, gold buying has
also been rising in the East and moving in an extraordinary migration
away from Western banks and out of the hands of Western investors.
Central Banks in the Far East, the Middle East and Russia have been
stockpiling physical gold … as the West has held onto stakes of paper
ETF’s, futures contracts, and the unbacked dollar.
China seized its golden opportunity last year as its gold consumption
increased 41%, surpassing an astonishing 1,000 tonnes for the first
time ever. A rising Chinese middle class pushed demand for gold jewelry
up 43% and gold bullion up 57%. Chinese consumption of gold has quadrupled in the last decade, toppling India to now take the top spot in global consumer demand.
India, now the second largest buyer of gold in the world, continues
to consume gold at staggering levels for festivals, weddings,
ornamentation and as an investment. In an attempt to discourage gold
purchasing, the Reserve Bank of India has levied heavy taxes on gold
imports to help cut its widening trade deficit. As a result, Indians
have resorted to smuggling gold into the country via Nepal, Pakistan and
Dubai as reports of gold hidden in flower pots, food processors and
grains are becoming rampant. There is now increasing pressure on the
Indian government to ease the tariffs.
In the last decade, Russia has added 570 metric tons of gold to its
stockpile. By adding another 77 tonnes last year, it has increased its
gold holdings to over 1042 tonnes. Putin has made no secret of his
disdain for the US dollar’s dominance in the global financial system. He
has orchestrated one of the biggest gold buy-ups in history to diversify Russia’s reserves and strengthen the ruble.
Don’t look now but Iraq is also buying gold. The Central Bank of Iraq bought 36 tons last month
in an attempt to stabilize their currency and in effect doubled their
gold reserves. It is the largest purchase by a single nation in three
years!
So what do all of these countries know that we don’t? Is China
grooming the yuan to be a new gold-backed reserve currency? Is India
trying to control the world gold market? Is Russia trying to solidify
its new power? Is Iraq preparing for an international currency collapse?
Global gold theories abound but it may come down to something far
more fundamental. The East and West view gold differently. To citizens
in China and India, gold is coveted at every level of society. It is
their pension fund and their retirement plan. It is not only revered for
its beauty, but it is held long-term for its enduring value. It is a
stable and secure asset that is subsequently handed down generation
after generation. To foreign governments, gold wealth is leverage on the
world stage. It is how a country commands fiscal respect and the only
way that smaller or emerging nations can stabilize their currencies and
get an invite to the “adult table.”
So perhaps the West doesn’t “get gold.” Perhaps we are so enamored
with the lure of the almighty “fiat dollar” that we have forgotten that
physical gold is real money. Ultimately, it’s not a question of which
view is smarter or better. The bottom line is that billions of people in
the Far East, the Middle East, and Russia are amassing gold and
accumulating wealth at historic levels. We would be wise to take note of
this critical migration of capital and the economic power that
accompanies it.
Thursday, April 17, 2014
Bank of America, Weighed by Legal Costs, Posts Loss
Eduardo Munoz/ReutersA Bank of American branch in New York.
Updated, 8:30 p.m. | Bank of America
delivered an unwelcome surprise to its investors, as the bank disclosed
larger-than-expected legal expenses in the first quarter stemming from
the financial crisis.
The bank recorded $6 billion in legal costs,
which led it to report a $276 million loss in the quarter. The bank’s
results, which were released on Wednesday, missed analysts’ expectations
and obscured otherwise decent results in its consumer and investment
banking businesses.
The disappointing news shows how Bank of
America is still paying for its mortgage problems nearly six years after
the financial crisis. And other large pending mortgage cases could
continue to weigh on future earnings, including those involving the
Justice Department and multiple state regulators.
Even as executives demonstrate their
successes in rebuilding the bank into a leaner and less risky lender,
the latest quarter reflected the unpredictability of its legal woes. The
bank’s quarterly loss of 5 cents a share missed analyst estimates of a
profit of 5 cents a share.
“Higher litigation expenses clearly blurred
the progress we’ve made in improving our businesses,” the bank’s chief
financial officer, Bruce R. Thompson, said.
The unexpected loss at Bank of America drove
down the bank’s shares by 1.6 percent on Wednesday on an otherwise
positive day for the stocks.
At the heart of the additional legal expenses
was a $6.3 billion settlement that the bank announced last month to
settle a lawsuit arising from troubled mortgage-backed securities it
bundled and sold to Fannie Mae and Freddie Mac before the financial crisis.
The bank agreed to pay that sum to settle a
lawsuit filed by the Federal Housing Finance Agency on behalf of the two
government-sponsored mortgage finance firms that bought the securities
from two Bank of America affiliates, Countrywide Financial and Merrill Lynch.
Bank of America continues to grapple with the
legal fallout from the mortgage lending debacle. The settlement with
the Federal Housing Finance Agency concludes one of the bank’s largest
legal liabilities, accounting for about $3.6 billion of the legal
expenses in the quarter. (The rest of the settlement, $2.7 billion, was
accounted for in previous quarters.)
The bank disclosed the $3.6 billion charge
related to the Federal Housing Finance Agency settlement last month, but
the additional legal expenses of $2.4 billion in the quarter related to
other cases caught many by surprise.
“There is no way to model for this,” said Lisa Kwasnowski, a banking analyst at the credit rating firm DBRS.
The bank does not do much to help investors
project how much in legal expenses it will record each quarter. Bank
officials say they will not disclose their total legal reserves for a
particular case because that could give litigants the upper hand in
negotiating a settlement by signaling how much the bank is willing to
pay.
But the large litigation expense in the first
quarter indicates that the bank is getting closer to reaching
settlements with prosecutors and other litigants on a number of fronts,
people briefed on the matter said. The bank and prosecutors are
negotiating a broad deal, referred to as a global settlement, that would
resolve a number of outstanding investigations, according to people
briefed on the matter. In paying a multibillion-dollar penalty, the bank
would put to rest an investigation into the bank’s sale of mortgage
backed investments and a separate mortgage related lawsuit that the
Justice Department filed against the bank last summer.
Last month, Bank of America said it had
preliminary discussions to resolve the government’s inquiry. The deal,
one of the people briefed on the matter said, is expected to be more
than the $2.4 billion that the bank set aside in the first quarter.
Excluding the litigation expense, the bank
said its profits would have totaled roughly 35 cents a share, beating
Wall Street expectations of 27 cents a share.
Still, revenue was down 4 percent from the year-ago quarter, to $22.7 billion.
“It was a messy quarter,” said Mike Mayo, a banking analyst at CLSA.
Bank of America’s fixed-income trading
operations suffered from declining client demand and low interest rates —
a fate none of the largest Wall Street firms has escaped in the first
quarter. The bank’s fixed-income trading revenue fell 15 percent in the
first quarter when adjusting for a one-time write-down in the same
period a year ago. But overall markets revenue increased, fueled by
solid results in equities and credit trading.
Consumer banking profit increased 14 percent
from a year ago, as deposits increased and expenses declined. Overall
loan values were down, as the bank continued to run off its legacy
portfolio.
The bank’s pipeline of mortgage applications
increased 23 percent from the fourth quarter, suggesting that this
market was “bottoming out,” Mr. Thompson said.
He said the bank was not lowering its credit
standards to bolster its mortgage productions, but was focusing more
intently on selling mortgages to private wealth clients and other
existing customers. “We are not going down-market,” he said.
Karpal killed in accident, son injured
- Malaysiakini - DAP stalwart Karpal Singh, 74, has passed away.
Veteran opposition MP and lawyer Karpal Singh was killed in an accident near Gopeng in Perak this morning.
His long-time personal assistant Michael Cornelius Selvam Vellu, 39, was also killed.
Karpal's son Ram Karpal and the driver were also injured in the accident which occurred at 12.40am near 301.6km northbound marker along the the North-South Highway.
Malaysiakini learnt that Karpal and his son, who is also a lawyer, were heading north for a court case later today.
Photos taken at the scene of the accident - near Gua Tempurung
in Kampar - show the white Toyota Alphard badly damaged.
Contacted later, an Ipoh police spokesperson told Malaysiakini that it is believed the MPV collided with a lorry which switched lanes without indication.
Karpal's other son and Puchong MP Gobind Singh Deo (left) told The Star that his father had died on the spot.
"My brother Ram is slightly injured but we are trying to get through to him," he added when the daily contacted him at 3.30am.
Karpal, 74, was involved in a previous car accident in 2005 where he was paralysed and wheelchair-bound.
The vocal politician graduated from University of Singapore and started his law practice before running for Parliament in 1978.
His long tenure as Jelutong MP and fiery speeches in the Dewan Rakyat earned him the moniker "Tiger of Jelutong".
Karpal had recently relinquished his post as DAP chairperson pending the disposal of his appeal against a sedition charge.
Last month, the High Court found him guilty of uttering seditious words against the Sultan of Perak at the height of the constitutional crisis in 2009.
PM offers condolences
Meanwhile, Prime Minister Najib Abdul Razak conveyed his condolences via Twitter.
"I have just landed at Ankara when I heard the news that YB Karpal Singh died in a road accident. My condolences to the family," read the premier's tweet.
Other netizens also expressed condolences and shock over Karpal's passing.
His long-time personal assistant Michael Cornelius Selvam Vellu, 39, was also killed.
Karpal's son Ram Karpal and the driver were also injured in the accident which occurred at 12.40am near 301.6km northbound marker along the the North-South Highway.
Malaysiakini learnt that Karpal and his son, who is also a lawyer, were heading north for a court case later today.
Photos taken at the scene of the accident - near Gua Tempurung
in Kampar - show the white Toyota Alphard badly damaged.
Contacted later, an Ipoh police spokesperson told Malaysiakini that it is believed the MPV collided with a lorry which switched lanes without indication.
Karpal's other son and Puchong MP Gobind Singh Deo (left) told The Star that his father had died on the spot.
"My brother Ram is slightly injured but we are trying to get through to him," he added when the daily contacted him at 3.30am.
Karpal, 74, was involved in a previous car accident in 2005 where he was paralysed and wheelchair-bound.
The vocal politician graduated from University of Singapore and started his law practice before running for Parliament in 1978.
His long tenure as Jelutong MP and fiery speeches in the Dewan Rakyat earned him the moniker "Tiger of Jelutong".
Karpal had recently relinquished his post as DAP chairperson pending the disposal of his appeal against a sedition charge.
Last month, the High Court found him guilty of uttering seditious words against the Sultan of Perak at the height of the constitutional crisis in 2009.
PM offers condolences
Meanwhile, Prime Minister Najib Abdul Razak conveyed his condolences via Twitter.
"I have just landed at Ankara when I heard the news that YB Karpal Singh died in a road accident. My condolences to the family," read the premier's tweet.
Other netizens also expressed condolences and shock over Karpal's passing.
"Shocked and sad news! DAP chairman Karpal Singh passed away in
accident tonight. Malaysia has lost a truly patriotic son," wrote
Taiping MP Nga Kor Ming.
The bodies of the two deceased, Karpal and Michael, arrived at the Ipoh General Hospital at 7.20am.
Penang Chief Minister Lim Guan Eng (right) and his deputy Mohd Rashid Hasnon, and former Perak menteri besar Nizar Jamaluddin were there.
They conveyed their condolences to Karpal's sons Gobind and Jagdeep. Karpal's wife was seen crying, while a relative tried to prevent photos from being taken. The bodies were sent for post-mortem.
Nomi Prins-Financial Crash-Collapse Coming, It Should Have Happened Already
http://usawatchdog.com/nomi-prins-aut… On
another financial collapse, best-selling author Prins predicts, “We
absolutely can. There is much more reason that we will than that we
won’t. The stability of the system is really fake. A lot of speculation
has occurred with cheap money, and then it is bailout, and then nothing
changes, and then something worse happens. That is the current pattern
and the pattern of the last three decades.”
Prins, who is a former top
Goldman Sachs banker, exclaims, “It is very easy to see how the system
could unravel because it isn’t stable. We are definitely in big trouble.
There is no way we are not headed for a crisis. . . . It should have
happened already, but the level of support is epic and reckless from the
political and financial elite.”Join Greg Hunter as he goes One-on-One with Nomi Prins, best-selling author of the new book, “All the Presidents’ Bankers.”
Subscribe to:
Posts (Atom)