The Israel Deception

Is the return of Israel in the 20th century truly a work of God, or is it a result of a cosmic chess move to deceive the elect by the adversary?

Friday, December 30, 2016

Gold, Bitcoin, and the state of the dollar heading into 2017

As an observer of economic and geo-political events, we at The Daily Economist prefer to look at things more pragmatically rather than to make wild speculations in forecasts or predictions for a coming year.  But with certain realities beginning to unfold all across the financial spectrum in the last days of 2016, the groundwork appears to be in place for commentary and analysis on a few trends that could be taking shape.

Each of these trends are tied specifically to differing forms of currency or money, and their potential growth in economies both regional, and worldwide as the global financial system heralds immense change and the likelihood of new crises.

The advent of Donald Trump winning the U.S. Presidential election 50 days ago saw stocks, bonds, and the dollar react in ways not seen in the past three years.  And likewise the rest of the world reacted in nearly opposite fashion, with China and India bearing the brunt of America's artificially exploding markets.

And with this in mind it is a high probability that policies coming out of Eurasia and the Far East will dictate much of the monetary changes that the world will experience in 2017.

Gold:

Following the election of Donald Trump to the U.S. Presidency, gold and silver were summarily crushed around 16.5% in the Comex and in London, and began the separation in price between the Western paper markets, and the physical one run out of Shanghai.  And those spreads in price will only become greater than the average $25 - $50 divergence that is currently taking place due to high demand and lower supply of the physical metal.

And it is likely that sometime in 2017 China will seize sole control over price determination for gold and silver as more and more producers sell their metals directly to China and abstain from the manipulated futures markets run by London and New York.

Bitcoin:

Thanks to the extreme rise in the dollar to over 103 on the index, China has experienced severe pressure to its own currency and economy as it fights desperately to rein in capital flight of the Yuan from the Mainland.  And it has been through Bitcoin that many Chinese investors are using to funnel wealth out of China over the past three weeks, causing the price to surge to nearly $1000 from its support level of $640 late last month.

This rise in value will only increase in 2017 as investors in not only China but also in other countries join in and expand their use of the crypto-currency as a conduit to launder money from their local currency into others to then buy tangible assets that protect their store of wealth.

The fate of the dollar as the global reserve currency:


2016 was a banner year for nations and industries to move away from the dollar and conduct commerce using direct bi-lateral currencies.  And these trade agreements were only drops in the bucket to the advent of China expanding the use of the IMF's M SDR currency in international finance.

But China is setting its sights on bigger game, and began this last week when the Deputy General Manager of the Shanghai International Gold Exchange announced a program through which the Yuan currency will be expanded globally through its physical gold markets.  And all that remains is for China to call for the end of the uni-polar reserve currency that is the dollar, and open the door for nations to bypass it at will in a new gold backed trading mechanism underwritten by the Yuan.
The Chinese Yuan is linked to the US Dollar. With the US Dollar at these levels China has rapidly entered a financial crisis. 
In the last month, China has: 
1)   Burned through over $70 billion defending the Yuan.
2)   Had to halt trading in its multi-TRILLION dollar bond market.
3)   Had to issue emergency lending to financial firms to keep them afloat. 
ALL of these are linked to the US Dollar’s rise. And it’s lead the world to a very nasty situation. 
China has a couple different options, NONE of them are pretty for the financial system. 
Alternatively China could go for the “nuclear” option and demand that the US be removed as reserve currency of the world. 
This is not some crazed notion. China is the second largest economy in the world. And the Yuan is now part of the IMF’s SDR currency basket along with the Yen, British Pound and the Euro. 
I’m not saying the US Dollar would necessarily LOSE reserve currency status, but if China were to publicly call for this, the consequences would be severe.
As in, CRISIS severe. – Phoenix Capital Marketing via Zerohedge
The stage is set for a global change in the long-standing Bretton Woods uni-polar reserve currency system, and 2017 is shaping up to be the year for the end of dollar hegemony.  And the primary winners in this will be gold, silver, bitcoin, and the Yuan, with anyone holding paper investments denominated in dollars potentially losing a great deal of their wealth.

Thursday, December 29, 2016

Trump's new Budget Office candidate a huge proponent of gold, silver, and Bitcoin as being money

Less than a month ago we wrote about one of President-Elect Donald Trump's final candidates for the office of Treasury Secretary being a strong proponent for a gold and silver monetary standard.  And although John Allison did not make the final cut in his administration, a new sound money nominee is being set to run the Office of Management and Budget.

Trump's newest OMB selection is a Congressman from South Carolina who not only has spoken out on the virtues of gold and silver as money in the past, but he currently owns both as well as mining stocks and bitcoin.

The man in line to bring together President-elect Donald Trump's federal budget is a big believer in gold, according to financial disclosures. 
Mick Mulvaney, Trump's pick to lead the Office of Budget and Management, owns significant amounts of precious metals and gold-mining stocks based on financial disclosures compiled by Bloomberg. 
According to the filings, Mulvaney held $50,000 to $100,000 in precious metals at the end of 2015. In addition, the South Carolina congressman holds stock in numerous gold and silver mining corporations totaling $252,000 to $855,000, according to the filing. 
The heavy investments into gold is not surprising given past criticism by Mulvaney of the Federal Reserve. In a speech obtained by Mother Jones, Mulvaney told the John Birch Society, a group that believes the only legal forms of currency are gold and silver coins, that the Fed had "effectively devalued the dollar" and "choke[d] off economic growth." - Business Insider

Tuesday, December 27, 2016

Europe now joins the war on gold as they propose confiscation from anyone entering the EU who 'might' be a terrorist

First it was India, who began the war on cash and gold by using the spurious reasons of trying to halt black market transactions.  Then they were followed next by China, who has put in place laws to limit the taking out of gold from the mainland to protect against capital flight.

Now the European Union is getting into the mix as they are proposing new laws which would allow for the confiscation of both cash and gold from anyone entering into the EU whom they deem to be a 'terrorist'.

Image result for gold confiscation
The European Commission is proposing a tightening of controls over cash and precious metals transfers from outside the EU under the guise of shutting down one route for funding of militant attacks on the continent, following the Berlin Christmas attack. 
China has already begun de facto gold import restrictions, and as Jayant Bhandari detailed previously, India is experiencing a continuation of new social engineering notifications, each sabotaging wealth-creation, confiscating people’s wealth, and tyrannizing those who refuse to be a part of the herd, in the process destroying the very backbone of the economy and civilization. There are clear signs that in a very convoluted way, possession of gold for investment purposes will be made illegal. Expect capital controls to follow. 
These new proposals are part of an EU "action plan against terrorist financing" unveiled after the bombings and shootings in Paris in November 2015.
Under the new proposals, customs officials in European Union states can step up checks on cash and prepaid payment cards sent by post or in freight shipments. 
Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU. 
People carrying more than 10,000 euros (8,413.56 pounds) in cash already have to declare this at customs when entering the EU. The new rules would allow authorities to seize money below that threshold "where there are suspicions of criminal activity," the EU executive commission said in a note. 
The plan complements Commission proposals after the Paris attacks to tighten controls on virtual currencies such as bitcoin, and prepaid cards, which French authorities said were used to fund the bombings. 
EU states backed these proposals on Tuesday. Under the deal, which still needs European Parliament approval, holders of prepaid cards would have to show some form of identity when they make payments of 150 euros or more. 
But it gets better... 
The Commission is also proposing common rules for the 28 EU countries on freezing "terrorists' financial resources" and on confiscating assets even from those thought to be connected to criminals. - Zerohedge
The real reasons behind the sudden shift from the EU to restrict money coming into the Eurozone with either cash or gold is because they want to ween people off of using physical money, and/or protecting themselves by keeping their wealth outside the banking system.  Because all one has to do is look at recent history where European banks are not only taking part in helping to launder money for the drug cartels and terrorists, but the government's themselves know about these activities and do nothing to stop it.

China's gold market now being used to back the expansion of the Yuan

The antiquated 'gold standard' now appears to not be the only way to back one's currency with a precious metal as a new program instituted by the Shanghai Gold Exchange (SGE) will soon aid in the expansion and internationalization of the Chinese Yuan.

Just prior to the Christmas break, the SGE launched a new English language website that has the primary purpose of allowing foreigners to access products and purchase gold in RMB.  And since the SGE is the world's largest physical gold market, this move has the two-fold effect of first allowing individuals to bypass London and the Comex if they have no interest in paper gold trading, and secondly to aid in the expansion and internationalization of the Yuan in global trade.

Last week the Shanghai Gold Exchange (SGE) launched a new English website to offer international customers more information and tools on trading gold in renminbi through its subsidiary in the Shanghai Free Trade Zone the Shanghai International Gold Exchange (SGEI). BullionStar took the opportunity to translate a speech by a Teng Wei, Deputy General Manager of the SGEI, named “How China’s Gold Market Can Help The RMB Achieve International Status” that was held at the Renminbi World summit in Beijing on the 29th and 30th of November 2016. In the speech Teng Wei outlined his vision for the SGEI going forward regarding renmibi (RMB) internationalization, connecting the onshore and offshore renminbi market and increasing gold market share. - Bullionstar via Zerohedge
weekly-sgei-sge

Graphic courtesy of Bullionstar

Over the past 45 days the Shanghai Gold Exchange has begun to disconnect itself from the global price standard set twice a day in London and New York by adding premiums of between $30 - $50 to their designated 'fix price'.  And by having a price spread of this magnitude so far above that of the Western paper gold markets, opening up a new portal for U.S. and European traders to buy gold, even in the Yuan currency, will lead to a massive increase in their market share of the global gold market and an ever expanding increase in transactions being done in the Chinese RMB.

Monday, December 26, 2016

Israel: The UN giveth, and the UN taketh away

Contrary to those who believed that the return of the state/nation/kingdom of Israel in the 20th century was either prophesied in the bible, or manifested by the Hand of God, the truth of the matter is that the creation of the Jewish state was a facilitated action administered by the United Nations in 1947.
United Nations Resolution 181, resolution passed by the United Nations (UN) General Assembly in 1947 that called for the partition of Palestine into Arab and Jewish states, with the city of Jerusalem as a corpus separatum (Latin: “separate entity”) to be governed by a special international regime. The resolution—which was considered by the Jewish community in Palestine to be a legal basis for the establishment of Israel, and which was rejected by the Arab community—was succeeded almost immediately by violence. - Encyclopedia Brittania
And this division would last just 20 years until Israel seized the Arab portion of Palestine during the six day war when they claimed justification due to Jordan, who was helping to oversee the Palestinian Arab side of the partition, chose to attack the Jewish state.

But for those who have studied history, the creation of Israel in 1947 as a sovereign nation goes much further back, and stemmed from a political movement schemed up by the Rothschilds through their organization known as Zionism.

In fact there is an argument to be made that World War I was in part engineered by the Rothschilds to destroy the Ottoman Empire, which at the time had dominion over Palestine and the surrounding areas.

Fast forward to Dec. 24 (Christmas Eve)...

For the first time in recent memory the United States suddenly and without warning abstained from a United Nations vote regarding the state of Israel.  And this failure to issue a veto has now culminated in the UN officially condemning the Jewish settlements long built in the territories originally designated to the Arab's (Palestinians), and opens the door for further sanctions unless they either cease and desist building, or remove their occupation altogether.
The United States on Friday allowed a UN Security Council resolution condemning Israeli settlement construction to be adopted, defying extraordinary pressure from Prime Minister Benjamin Netanyahu's government in alliance with President-elect Donald Trump. 
The Security Council approved the resolution with 14 votes, with the US abstaining. There was applause in the chamber following the vote, which represented perhaps the final bitter chapter in the years of antagonism between President Barack Obama's administration and Netanyahu's government. 
The Palestinians were delighted by their rare diplomatic coup. 
"This is a victory for the people and for the cause, and it opens doors wide for the demand of sanctions on settlements," said Mustafa Barghouti, a Palestinian leader. - CNN
As America enters into a new year and a new President at the helm, the question regarding her long-standing alliance with Israel is very much up in the air.  But even with Donald Trump's adamant support of Israel, which he has expressed several times on Twitter in recent days, the rest of the world appears solidly against the policies of the Jewish state, and the ball is now in their court on whether they will cede to the demands of the international community, or rebel against the very organization that gave them their homeland in the first place.

Saturday, December 24, 2016

2017 will see the world's paper gold markets move to the blockchain as banks try final gambit to control prices

If Bitcoin has proved one thing, it is that the future of finance will be fully merged onto the net, and built on the foundation of the blockchain.  This is because the blockchain not only solves many long-standing problems such as security and encryption, but it also is malleable enough to function in any segment of the markets.

Just a few decades ago markets, along with the global financial system, changed forever with the advent of electronic trading, with perhaps the two most visible features being the ending of fractional price quoting, and the ability for the common investor to trade without the need of a broker.  But this platform also birthed the rise of high frequency trading, and algorithms that make equity in trading a thing of the past.

This is one of the reasons why banks in the West are dedicating tons of money and resources towards research on the blockchain, as they believe it is their best shot towards seizing absolute control over the monetary and financial systems, and in being able to control prices in whatever markets they choose.

And entering into 2017 it appears that one of the first environments they are close to getting put on the blockchain is the Western gold trading market where earlier this week, a group of Western banks announced they have completed the first portion of a new gold trading system that will be run using blockchain technology.

Image result for blockchain gold
A group of global banks and financial institutions has completed the first pilot of a new blockchain-based gold trading platform. 
In total, 600 test bullion trades were settled on a platform being developed by Euroclear in partnership with blockchain startup Paxos. The group of financial institutions included Société Générale, Citi, Scotiabank, among other banks. 
Transaction settlement service Euroclear first disclosed that it was working on the initiative earlier this year. The project is aimed at providing faster settlement and cheaper services for unallocated gold on the London bullion market. - Coin Desk

Friday, December 23, 2016

Indicators for gold the best in 16 years as oversold markets show disconnect between bid and price

Well known and respected precious metals analyst Dave Kranzler published some new research derived from the recent and near unprecedented drop in the gold price for the past seven straight weeks.  And in his determination, gold indicators are flashing the best environment for a strong move upward in perhaps the past 16 years.

In addition to the factors outlined from Kranzler's work, when you look at the imploding currency and debt issues throughout the world that are even affecting China right now, along with the crashing of bonds in the U.S., evidence points to the world very soon rushing into gold as the only real safe haven left to protect one's wealth.

Dave Kranzler: I was looking at a lot of data as I was writing up this latest issue of the mining stock journal, and there are several indicators screaming buy about as loudly as I've ever seen a buy signal in the 15 years I've been doing this market. 
These indicators are both technical indicators and some are contrarian indicators.  For instance, I was chatting with Eric King the other day and I said to him just looking at the intra-day action, whenever they try to take silver below $16, and gold below $1130 it bounces back, and that's been the case now for at least a week.  And he said that if gold closes down this week, it will be the first time that he can recall ever that it's closed down seven weeks in a row on a weekly basis.
In the video below Kranzler lays out many of the indicators he has discovered that point towards a vastly oversold market, as well as a growing disconnect between the paper and physical markets.  And despite the continuous beat down in the gold price during the past seven weeks since the Presidential election, the one factor that hasn't changed is that demand for physical gold has increased during this time, and the current price does not reflect this supply and demand factor.

Thursday, December 22, 2016

Year end stock market boom may be tied to Trump planning to lower capital gains rate next year

Leading up to the Nov. 8 Presidential elections, most Wall Street analysts had forecasted dire consequences for the stock markets and economy should Donald Trump win the White House.  But within six hours of the media declaring him the winner, stocks surged in a historic move which one and a half months later, is now standing on the cusp of hitting Dow 20,000.

Yet what is most interesting in the way the markets have gone up nearly parabolic since the election is how little selling there has been, and this despite Janet Yellen raising interest rates and the cost of borrowing last week.  And one thought on this is that traders and investors are holding onto their gains from this rally until early next year because of the potential that Trump will get passed a new tax cut program in 2017 will have huge effects on their capital gains if and when they sell next year rather than taking profits before Dec. 31.

Image result for santa claus rally
Many investors are waiting to take any profits on the Donald Trump rally on the notion that if they wait to sell until January, they will benefit from a capital gains tax cut by the new president on their 2017 returns. 
It's a theory cited by Dan Clifton of Strategas Research Partners in a note to clients Tuesday. Many strategists, including those at Strategas, believe it's the one reason why this rally is showing no signs of slowing down into year end. 
Clifton has a great piece of advice for those waiting to sell in 2017: 
"In 2003, when Congress cut the capital gains tax, the provision was made retroactive to the first committee hearing in March. So be careful just selling on January 1st, depending on when Congress acts, the provision may not be in effect at the exact start of 2017." - CNBC
Many pension and hedge funds often spend a great deal of cash buying into stocks right at the end of the year, leading to the illusion of a 'Santa Claus' rally the media loves to tout.  However, this is mostly done to 'fill out' their books for their clients since they will have be more into stocks than cash when year end reports are sent out to their investors.

Last year the stock markets rose into the end of 2015, and this despite the Fed raising interest rates for the first time in nine years.  But once January 2 rolled around, the markets sold off for the next 17 trading days.

So if recent history is any indication, don't get too excited about this year's rally because there is a high probability that investors and traders are simply waiting until early in 2017 to take their profits on the hope that Donald Trump's expected tax cuts will come to fruition.

Wednesday, December 21, 2016

Global financial markets already creating new gold products for Islam's Sharia finance edict

It was only a couple weeks ago when the Auditing Organization for Islamic Financial Institutions (AAOIFI) began implementation of new edicts regarding gold ownership under Sharia financial law for the world's 1.6 billion Muslims.  And in this short amount of time several markets around the globe are already creating new gold based products to help bring in Islamic investors.

New standards for the use of precious metals in Islamic finance are encouraging the development of financial products based on gold and silver, from futures contracts to a mobile app. 
Toronto-based Bullion Management Group (BMG), which manages $348 million in assets, launched a silver fund in October and expects its bullion funds will adhere to the new AAOIFI guidance, Nick Barisheff, BMG's founder and chief executive, said. 
On Monday, the Singapore Exchange (SGX) said it had certified as sharia-compliant its gold futures contracts, which were originally launched in 2014 and are aimed at the wholesale market. 
Meanwhile, Malaysia-based HelloGold has launched a sharia-compliant online platform using a mobile app, targeting customers through agreements with technology and financial services firms, chief executive Robin Lee said. 
"We expect to sell about 10,000 ounces of sharia-compliant gold by the end of next year," Lee said. He also said that the firm planned to enter Indonesia, the Philippines and Thailand next year and China by 2019. - Reuters

Tuesday, December 20, 2016

Growing spreads between London and Shanghai means that very soon China will take control over gold pricing

Two weeks ago, Deutsche Bank publicly admitted that they and several other banks have been manipulating the price of both gold and silver for several years now.  And yet despite these admissions, both London and the Comex have been smashing down the price of each to the point now where the markets can no longer even facilitate a break even cost for companies producing the metals.

“The analysis of FCF breakeven price suggests that 50% of the gold miners generate free cash flow below $1,150/oz gold with an average FCF breakeven gold price of US$1,135/oz for 2016E,” BMO said. “Excluding dividends, the FCF breakeven gold price for the miners declines to $1,070/oz in 2016E. 
Silver miners may be “less prepared,” however, after enduring a deeper correction in the price of silver relative to gold, BMO said. Three out of 11 companies report FCF breakeven costs for 2016 that are estimated below $15 an ounce, BMO said. - Kitco
As of Dec. 20, the current spot price for gold in London was $11.25, which according to the above study means that the manipulated 'fix' price at the Comex is now $10 below the average cost necessary for 50% of the miners just to break even.

However, as noted in an article published over the weekend here, spot prices out of Shanghai are at least $50 more than what is set in either London or New York, and premiums for metals are even higher than this when purchased in large quantities by investors, stackers, or speculators.

This dislocation in prices between Eastern and Western markets is now creating a nexus point where according to long-time bullion analyst Jim Sinclair, as well as by the CEO of Matterhorn Capital out of Switzerland, China is growing ever closer to being the primary market for determining gold and silver prices, and leaving London and New York with little metal to back their paper contracts.
For those distraught over the COMEX paper futures price of gold plunging towards $1,000/oz, Switzerland’s Egon von Greyerz has some information for you: 
I am not upset because I know one day, COMEX will default. The futures market will default. The banks will not be able to deliver the paper gold they have issued. One day people will come in and try to get their gold, and there won’t be any gold when they ask for it. How can you be nervous (holding gold)? The truth will eventually come out, and that truth will be very painful for all the paper holders of gold.” - Greg Hunter via Silver Doctors

Sunday, December 18, 2016

Venezuela's Maduro halts cash ban as desperate people left with no choice but to give up their children

On Dec. 18, Venezuela President Nicolas Maduro halted his policy from earlier in the week of banning the 100 bolivar currency as the economic situation in the country became even more desperate.  And in addition to the growing starvation, riots, and looting that has emerged from the nation's mass inflation, some Venezuelans are having to give away their children as they can no longer afford to feed them amid the economic chaos.


Struggling to feed herself and her seven children, Venezuelan mother Zulay Pulgar asked a neighbor in October to take over care of her six-year-old daughter, a victim of a pummeling economic crisis. 
The family lives on Pulgar's father's pension, worth $6 a month at the black market rate, in a country where prices for many basic goods are surpassing those in the United States.
"It's better that she has another family than go into prostitution, drugs or die of hunger," the 43-year-old unemployed mother said, sitting outside her dilapidated home with her five-year-old son, father and unemployed husband. 
With average wages less than the equivalent of $50 a month at black market rates, three local councils and four national welfare groups all confirmed an increase in parents handing children over to the state, charities or friends and family. 
The government does not release data on the number of parents giving away their children and welfare groups struggle to compile statistics given the ad hoc manner in which parents give away children and local councils collate figures. 
Still, the trend highlights Venezuela's fraying social fabric and the heavy toll that a deep recession and soaring inflation are taking on the country with the world's largest oil reserves. - Reuters


Sadly, the people's trust in their socialist government, along with in their fiat currency, is partially to blame why few Venezuelan's were prepared for the quick, and in some cases deadly, effects that escalating high inflation has caused for their nation and economy.  And because of the growing loss of confidence in the Bolivar, as well as in access to hard currencies such as the dollar, stories have broken out of those who owned a little gold and silver being able to not only survive this ongoing economic collapse, but actually thrive in it.
Tom Cloud: We got an incredible email this morning from one of our clients who's brother in law is a missionary down in Venezuela.  And he was telling us that in Venezuela, once ounce of silver will buy you food for three or four months... one ounce of silver.  And an ounce of gold will buy you a house. - The Daily Economist
While many Americans believe that what is taking place right now in Venezuela, India, and in Greece over the past six years could ever come to America, then all one needs to do is look back 80 years ago in our history to see what the Great Depression did for a large portion of our citizens following a financial crash that involved stock markets, debt, derivatives, the collapse of a housing bubble, and the overall banking system.
From one perspective, the story emerging from the Great Depression can be described as one of family "disorganization" and deprivation. Marriage rates declined, although they started to rise in 1934, and the trend toward decreasing birthrates, already underway, accelerated during the 1930s. Although divorce rates also declined, this seems to have been largely the consequence of the inability to pay lawyers' fees; desertion rates increased during the decade. In some cases, two or more families crowded together in apartments or homes designed as single-family residences. Some 250,000 youths were on the road, travelling by freight train or hitchhiking in order to find work or more favorable circumstances. From 1929 to 1931, the number of children entering custodial institutions increased by 50 percent. In many economically deprived families, children suffered from malnutrition and inadequate clothing. - IC.Galegroup

Saturday, December 17, 2016

India's war on cash and gold through capital controls not as simple is it seems for the future of their economy

Many in the alternative media, including this author, have seen the outrage engendered by the Indian people over Prime Minister Modi's intrusive measures of capital controls where he has virtually declared war on both cash and gold.  And without a doubt, the attempts by Modi to wean the people off their long-standing traditions of a purely cash economy were done with little planning or thought of the consequences they would trigger.

But when you look below the surface you will find that this policy, albeit through a slower and more methodical way, may actually be necessary if not vital to the future of India as it attempts to grow its economy into an international power.

Since 98% of India's commerce is currently done using only cash, it is virtually impossible to determine the true amount of capital that would be available for the country to expand in both growth and investment since the majority of the nation's wealth resides outside their financial system.  And this has been one of the reasons why India has acted primarily as the world's labor pool rather than as a true economic power.

Yet despite their large GDP which ranks them number seven in the world, they still remain behind economies such as China, the EU, the U.S., Hong Kong, and even Russia in growth potential.

Make in India

Earlier this year Prime Minister Modi created a program to try to entice business creation and expansion into India, using their relatively well educated and vast labor pool as the sweetner.  And this move was to try to end a long-standing trend where most of the best and brightest inevitably left India for better opportunities in Europe, Asia, and the U.S..

However, Modi's Make in India program has accomplished only minimal results at best, and in part this has been due to their antiquated financial system, and the fact that most workers expect to be paid in cash rather than through a formal banking mechanism.

Image result for make in india
The Indian economy is at a critical inflection point in its modern history. India’s GDP growth has accelerated to become the fastest of all major economies in the world, with income levels today at China’s c.10 years ago, it is expected that India is now the next big story. Given its favorable demographics and other resources, India has the inherent drivers to sustain 7-8% growth over the medium to long term and the potential to achieve 10%. 
An India that can sustainably harness its core assets and create new ones has the potential to emerge as one of the key drivers of growth and stability in a world faced with increasing global economic and geopolitical uncertainty. In order to attain this position, however, India will need to do what China has historically excelled at, creating significant population-wide savings and channeling these into (reasonably) efficient assets to deliver competitive returns. Doing this requires a robust financial machine ready to finance the nation’s growth. 
Despite the significant growth and evolution of its financial services industry, India’s financial sector continues to be hamstrung by major structural inefficiencies, including an old fashioned state-dominated banking system and, despite increasingly aggressive changes, a lack of financial inclusion for large parts of the population. It is a sector in need of a new vision as the basis of a restructuring so it can play its part in India’s new growth story. 
Recent years have seen a concerted effort by both the Reserve Bank of India (RBI) and the Modi-led government to rapidly grow financial inclusion and bring more and more of India’s poor into the formal banking system. The country’s technology sector has also made a significant contribution by developing delivery systems that reduce transaction costs and spread access by leveraging growing smartphone penetration. 
However, as various factors including the large pile-up of stressed assets in the banking system, the sharp slowdown in industrial credit growth and other measures of inefficiency of the financial system indicate, India still faces significant challenges in creating an effective financial system if it is to stride more aggressively towards its potential. 
While addressing these challenges will undoubtedly be a painful process and require the expenditure of political capital, the prize is significant: potential incremental growth of 2-3% p.a. would set India’s growth on the path to achieve the double digit levels necessary to replicate China’s economic miracle. - Great Pacific Capital
India is hamstrung by the fact that they are a nation steeped deeply in tradition, and it takes decades if not centuries for serious changes to occur.  And this is why Modi's recent move to ban certain denominations of the Rupee in a very short amount of time has resulted in the population rebelling against the policy, and entrenching their distrust in banks to even greater levels.

It is a difficult act to change the confidence of a people in an institution when their natural reaction is to go on the defensive, especially when that policy is instigated from a government that has a history of corruption.  Yet if India is ever going to move ahead and reach their full potential in the global economic system, then both the people and the government will have to find some way to compromise, otherwise India will remain simply a labor pool for the world's other economic powers, and continue to be considered only a second world economy which helps grow the overall wealth of everyone else.

Friday, December 16, 2016

Turkey's stabilization of the Lira came by dumping dollars and having their citizens rush into gold

Earlier today a new report out showed that China continued dumping dollars in November at the rate of $30 billion, taking their 12 month totals to $404 billion.  At the same time, demand for gold has skyrocketed in China where premiums on the metal are ranging between $50 - $800 per ounce.

And now we are discovering that Turkey's recent call for their citizens to get rid of their dollars and either buy gold or Lira has resulted in a slowdown in the devaluation of their currency, and a stabilization of the Lira over a short period of time.

Asked by their President Recep Tayyip Erdogan to shun the dollar, Turks are favoring gold over liras. 
On the face of it, the appeal to defend the Turkish currency worked. It arrested the biggest three-week surge in foreign-currency deposits since August as Turks drew down a net $450 million from these accounts in the week ended Dec. 9. But residents also boosted their precious metal holdings, traditionally denominated in dollars, by $700 million, a hint that confidence in their currency remains tenuous, according to Nomura Inc. - Bloomberg Markets
Gold demand around the world has been red hot over the past month as confidence in nearly all currencies falls to decades long lows.  And contrary to the dollar's recent moves over 103 on the dollar index, much of this has been due to nations like China, Turkey, Belgium and others dumping Treasuries and their dollars reserves.

As governments look towards creating policies to try to ban cash as a way to protect their dying monetary systems, more and more people are realizing that the current fiat money system that has been prevalent around the world since the 1970's is collapsing around them.  And those that are agile enough to move out of their devaluing currencies and into a sounder form of money such as gold before the supply becomes completely unaffordable, are the ones who will, just like what is slowly taking place in Turkey, be prepared during this emerging currency and banking crisis where even the dollar is no longer safe.

Thursday, December 15, 2016

Following the Fed rate hike and spike in the dollar, the gold price spread between London and China soars to $50

Gold prices were once again beaten down in the United States following the Federal Reserves decision on Dec. 14 to raise rates by .25 bps in only the second move by the central bank in the last decade.  And while gold was sold off on Wednesday as well as early Thursday morning in New York, markets in Shanghai have not followed the same path as those in London and the Comex.

In fact with the London AM Fix coming out just a few hours ago, the price spread between the physical and paper markets have now spiked to a record $50 difference.

Shanghai Price Fix


London Price Fix


As mentioned earlier this week in another article, the divergence in official prices are also being expanded by record amounts of premiums placed upon gold by the market makers in China.  In fact, according to analyst and statistician Dr. Jim Willie, the premiums necessary to purchase large quantities of gold have forced prices right now to exceed $2000 per ounce in the physical markets.

As the dollar continues to strengthen the price of gold in nearly all other currencies and markets will continue to rise, and in some cases break through record levels.  And what we are seeing right now in the price of gold out of both London and the Comex is not indicative of the record demand being created all across the world which is the primary basis between the spreads in price we are seeing between the London fix and the one coming out of Shanghai.

Wednesday, December 14, 2016

At the normal historic 10:1 ratio, gold should be at over $9000 and silver over $1000 to backstop current debt and money supply

As of Nov. 30, the U.S. Department of the Treasury claims in their monthly report that they have a total of 261,498, 926 ounces of gold contained in bullion, coins, blanks, and miscellaneous products.


In addition, the national debt for the United States is approximately $19.8 trillion as of Dec. 1, with $1.48 trillion of that being physical currency in circulation.

Yet the power of the U.S. dollar being the recognized global reserve currency is based upon its being backed by gold, as determined back in the 1940's during the Bretton Woods conference.  And despite the fact that the U.S. Treasury closed the ability for other nations to exchange dollars for gold when former President Richard Nixon closed the 'gold window', it did not stop the caveat that the dollar must be tied to gold in some capacity.

Ie... this is why the Federal Reserve holds reserves in gold even today despite the deception that Fed Chairmen such as Ben Bernanke gave to Congress and the American people that gold is no longer money.

So with this in mind, what should the real price of gold in dollars be today to backstop the current debt and monetary expansion that exists in the global economy?  And just as important, what should the price of silver be if allowed to reside at its historic 10:1 ratio to gold when the manipulation of the metals finally ceases.

For the reported amount of gold the U.S. is believed to hold, the current dollar price to backstop $19.8 trillion in debt would set the price at $75,717.  However, as most of the debt held domestically and offshore is in Treasury Bonds rather than physical cash, let's break it down instead to what the value of gold should be for the amount of actual currency in circulation.

$1.48 trillion / 261,498,926 = $5659 per ounce.

Yet these number are also limited as they reflect simply the bare amount of currency in circulation, but not representing all money used in financial transactions (electronic banking).  So for that we need to look at an approximate number, which is calculated to a relative degree of accuracy by the Debt Clock website, which estimates the current monetary base as being over $3.6 trillion.

$3.61 trillion / 261,498,926 = $13,820 per ounce.

Over time the expansion of the dollar monetary base has become extremely convoluted since its recognition as the global reserve currency.  And this is due to the fact that not only are dollar denominations used as currency, but also bonds and derivatives are considered by many to be as good as money.  So with that in mind we could probably safely put the true price of gold to be somewhere in between the reported amount of dollars in circulation, and the estimated total amount of dollars used between cash and fractional electronic banking.

screen-shot-2016-12-12-at-2-19-49-pm

The invisible hand of the markets will always eventually push asset prices back to their true value, as manipulations can only be done for a finite period of time before they cause distortions elsewhere that lead to financial calamities... as we are seeing right now in the monetary distortions occurring in both India and Venezuela.

So how long can the government suppress gold and silver prices to protect their dollar expansion, and keep the true price from breaking through in the markets?  No one really has an answer to this but historically, no fiat currency system has ever survived to 50 years of use, and we are now within the final five years of that mean.

Tuesday, December 13, 2016

Gold spread between London and Shanghai now $36 as premiums in India and China reach 50% over price

The gold price spread between the London paper markets and the Shanghai physical markets continues to climb as the divergence between China's PM fix and London's AM fix reached $36 on Dec. 13.

Shanghai Gold Fix

London Gold Fix

Yet these prices are not truly indicative of what is really going on in the physical markets since the bullion banks crushed down the spot price following the election of Donald Trump back on Nov. 8.  This is because geo-political and economic events in both India and China have caused demand to surge immensely over the past month, and dealers and jewelers in both countries are incorporating premiums sometimes as high as 50% over the designated price.

Last week saw news of reported gold import curbs in China (and looming capital controls) has sent gold premiums in China near three-year highs amid limited supply of the precious metal (as Reuters reports)... 
The import curbs may be part of China's efforts to limit outflows of the yuan after the currency's slide to its weakest in more than eight years, traders say. China allows only 15 banks to import gold, including three foreign lenders. 
"There is severe restriction on the banks' quota to import gold into China. Each one of them have to justify their need," a Hong Kong-based banker said. 
Gold was sold in China at about $24 an ounce above the international spot benchmark this week. Premiums went as high as $30 last week, the most since January 2014, according to Thomson Reuters data. - Zerohedge
Over in India the shortages and demand are much more extreme, with premiums skyrocketing as government officials threaten consumers and dealers with cuts to imports, and even outright confiscation.
In November the country's gold imports jumped to around 100 tonnes, the highest in 11 months. 
Jewellers and bullion dealers are deferring purchases and gold imports in December could fall to 30 tonnes, down from 107 tones in the same month a year ago, said a Mumbai-based dealer. 
It is estimated that one-third of India's annual demand of around 800 tonnes is paid for in "black money" - the local term for untaxed funds held in cash by citizens that do not appear in any official accounts. 
And this has sparked a surge in physical demand (amid limited supply concerns)... (as Reuters reports) 
There have also been reports of people rushing to buy gold by paying as much as a 50 percent premium above official prices using their unaccounted money to skirt the note ban.

Monday, December 12, 2016

Venezuela follows India in eliminating large currency notes and sets in motion hyperinflation

When you are an economy that not only relies upon exports and foreign investment, messing with your currency is a recipe for disaster.  And besides the internal turmoil that has arisen for the 1.3 billion people in India who rely upon cash over digital banking for 98% of their commerce, Prime Minister Modi's currency elimination scheme is now causing foreign businesses, such as China's Foxconn, to suspend factory output and fire worker's due to decreased sales inside the country.

Foxconn, the world’s largest contract manufacturer and poster boy of the government’s Make in India project, has asked nearly a fourth of its 8,000 factory workers to go on paid leave for two weeks after last month’s demonetisation of high value notes sparked a severe cash crunch that saw sales slump almost 50%, forcing the company to slash production by half.

The government’s move to ban Rs 500 and Rs 1,000 notes from November 9 has had a domino effect on the mobile phone industry where a large majority of mobile phones are bought for less than Rs 5,000 and most of the transactions happen through cash. Consumer purchase power has been reduced dramatically – mobile phone monthly sales halved to Rs 175-200 crore post demonetisation – and sales revival is not looking up, as was perceived earlier, industry insiders said.  - Economic Times/India Times
So with the results and outcomes that sudden demonitization creates out there for the rest of the world to see, only someone like Venezuela's corrupt leader Nicholas Maduro would have the audacity to... well, DO THE SAME THING!  And sure enough, over the weekend Maduro went full retard and immediately made their $100 bolivar denomination no longer legal tender.

Image result for maduro never go full retard
Having observed the economic chaos to emerge as a result of India's shocking Nov. 8 demonetization announcement, and perhaps confident it can do better, today president Nicolas Maduro of Venezuela, Latin America's most distressed economy, mired in an economic crisis and facing hyperinflation, likewise shocked the nation when he announced on state TV that just like India, Venezuela would pull its highest denominated, 100-bolivar bill (which is worth about two U.S. cents on the black market), from circulation over the next 72 hours, ahead of the introduction of new, higher-value notes, as large as 20,000. 
"I have decided to take out of circulation bills of 100 bolivars in the next 72 hours," Maduro said. "We must keep beating the mafias." 
To this we would add "and cue economic chaos", but since this is Venezuela, that's a given. 
The surprise move, announced by Maduro during an hours-long speech, is likely to worsen a cash crunch in Venezuela, and lead the largely-cash based economy to a state of paralysis. Maduro said the 100-bolivar bill will be taken out of circulation on Wednesday and Venezuelans will have 10 days after that to exchange those notes at the central bank. 
Critics immediately slammed the move, which Maduro said was needed to combat contraband of the bills at the volatile Colombia-Venezuela border, as economically nonsensical, adding there would be no way to swap all the 100-bolivar bills in circulation in the time the president has allotted. Indeed, if India is any example, Venezuela - whose economy is far worse than that of India, the world's fastest growing emerging market - may have just signed its own economic death warrant. 
According to central bank data, in November there were more than six billion 100-bolivar bills in circulation, 48 percent of all bills and coins. In other words, Venezuela just eliminated half the paper cash in circulation. - Zerohedge
For those who live elsewhere in the world, just remember that following the 2008 financial crisis the U.S. and Europe both passed laws which make any cash you hold in a bank the property of that bank, and considered an unfunded liability to the institution.  And with central banks, Harvard economists, and even a former Asst. Secretary of the Treasury all calling for an end to cash here in America, what we are seeing now in India and Venezuela are test cases for what is currently in motion in the West to bring about a complete monetary control over the population before or after the next banking and financial crisis hits.

Saturday, December 10, 2016

30 years later the Dow is at the same ratio to debt as it was in late 1987

Following the 1987 stock market crash, the Federal Reserve began a new course of monetary policy in which they would use a combination of debt and manipulated interest rates... not to protect the bond markets or inflation, but to boost up the stock markets.  And in the just over 29 years since this policy started under Alan Greenspan, an interesting parallel has occurred.

The ratio of the national debt is virtually the same as the increase in the Dow Jones average.

National Debt

Dow

In 1987 the United States ended the year with a national debt of $2.35 trillion, and the Dow ended the year at 1927.31.  However, before the Oct. 19 crash it was at 2246.73, or a ratio of 1:.956 Debt to Dow.  This ratio of nearly 1:1 is significant because it is the starting point for a trend where the Dow would begin to rise either in tandem, or in the same multiples as the debt.

When Bill Clinton took office in January of 1993, the debt was at $4.064 trillion and the Dow was at 3301.  And the increase of debt from 1987 to 1993 was virtually the exact same increase the Dow experienced (42% vs. 41.6%) during the same period.

Most mainstream pundits and economic analysts love to tout how Bill Clinton 'balanced the budget' and added few deficits that led to increases in the national debt.  But what they willingly or unwillingly fail to mention is how the Clinton administration raided the Social Security Trust of over $3 trillion and replaced the cash with Treasuries (debt).  And instead of borrowing the money from the Federal Reserve, which would have officially been added to the National debt number, he instead robbed Peter to pay Paul, and his total increase to the debt was over $4.6 trillion to finish out his term with the real debt between $8.6 and $9 trillion.

But there was a caveat that needs to be added to this era as it was also a time when Alan Greenspan lowered interest rates from 7.25% in late 1987 to a low of 3.25% when Clinton took office in 1993.  And because of this near doubling of overall debt coupled with the halving of interest rates, the Dow subsequently more than tripled during this era known as the Dot Com Boom.

Real debt increase from Jan. 1992 to Dec. 31 1999: 120%.  Dow increase from Jan. 1992 to Dec. 31 1999: 348%.  Interest rates halved from 7.25 to 3.25%.

Over the course of the fiscally irresponsible years from 2000 to 2016, where the national debt doubled first under George W. Bush to $9.5 trillion and again under Barack Obama to its current level of $19.8 trillion, the stock markets climbed nearly in tandem to the rise in debt outside the stock market crash and declines of 2008-2009.  And most astonishing is that as of Dec. 9, 2016, the ratio of Debt to the Dow is back where it began nearly 30 years ago at a virtual 1:1 equivalent.

Dec. 9:  Dow close:


Dec. 9: National Debt


$19.87 trillion to 19,756     Ratio 1:.994

Coincidence?  Now imagine what the stock markets would look like if the government had not borrowed so much money... or if they decide to finally shut off the spigot... or the spigot is shut off for them.

Are you willing to put your retirement trust in the hands of entities that will not grow or survive without more and more borrowed debt?

Friday, December 9, 2016

Why gold and Bitcoin are freedom: EU's new plans to eliminate cash are not about convenience, but about control and tax confiscation

As countries as diverse as India, Sweden, Denmark, and Spain begin to work towards the banning of physical cash and instituting a completely digital monetary system, one entity is seeking to trump them all by formulating a program that would not only eliminate cash and atm machines, but would entirely change banking as we know if for all of Europe.

And if their goals are reached, it could become the new standard across the Eurozone as early as late 2017.

Image result for europe seeks cashless society
The European Payments Council (EPC), a subdivision of the European Central Bank, are taking steps in their quest to fully eliminate all cash. The reason is not to lift the burden off retailers or to make transactions more convenient but in reality to raise desperately needed taxes. 
Highly respected ‘ArmstrongEconomics‘ reports that the EPC are going full steam ahead to enable immediate payment systems throughout not just the Eurozone but the entire European Union. The Single European Payments Area (SEPA) has been devised with the ultimate goal of eliminating ATM cash machines and force everyone to use their mobile phones or plastic cards, the project starting as early as November 2017. 
In the absence of confirmed information on this point, it is likely that tourists and business people will be forced to pre-pay Euro’s onto an App if they come from a country outside the eurozone, currently made up of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. 
The final goal of the EU Commission is best described in their own words: “The Single Euro Payments Area (or “SEPA” for short) is where more than 500 million citizens, over 20 million businesses and European public authorities can make and receive payments in euro. SEPA also means better banking services for all: transparent pricing, valuable guarantees ensuring that your payments are received promptly and in full, and banks assuming responsibility if something goes wrong with your payment.” 
This year, meetings and conferences called “Towards a cashless society” were started to get the information transfer across to the infrastructure, supported very heavily by the banks. 
It looks as though the initial battleground for banning cash will be … Greece. - Global Research
Perhaps it is not a coincidence now that earlier this week European Central Bank head Mario Draghi announced that their QE program would be extended until December of 2017, just one month after the EPC hopes to have Europe completely in a cashless society.

The majority of people in the West already function in an environment without cash as online banking, and the use of debt or credit cards, outweighs the number of transactions taking place using physical currency.  However, underlying this trust is the fact that for now, if someone desired to take out their wealth stored in a bank they could do do and have it distributed to them in physical cash notes.

All along the war on cash that has emerged in 2016 has never been about stopping drug cartels, black markets, or the myriad of other excuses those in power have used to justify the banning of physical money.  No, the real reasons stem from the fact that nearly all monetary systems in the West run on a leveraged system where there are upwards of 100 times more money created in digital form than there is actual cash available, and any strong run on the banks could collapse the entire financial system.

Additionally, eight years of failed central bank policies have driven the Western monetary system to the brink of another collapse, and it is forcing these institutions as well as governments to seek never before heard of measures such as negative interest rates, and beyond 100% debt to GDP.

The truth of the matter is that the desire to institute a cashless society is not for the benefit of the 7 billion members who inhabit planet earth, but for the .001% of the 1% who want to use a cashless society to have utter control over money, and everyone's use of it.  And it is why the need to store your wealth in some other vehicle than cash or in a bank is vital, and this means an alternative form of wealth protection such as gold, silver, and bitcoin which banks, nor governments, can readily steal.

Wednesday, December 7, 2016

India takes war on cash to next level as they begin direct raids and confiscation of gold, jewelry, and cash from the people

Make no mistake, the government of India has declared war on its people, and only time will tell if their actions lead to a full scale revolution.

Back in November Prime Minister Modi declared the top two denominations of currency to no longer be valid as legal tender, and the populace had until Dec. 15 to turn in their monetary notes to their local bank.  However, this was met with a combination of trepidation and anger as the Indian economy runs primary on cash for transactions, with an estimated 98% of all commerce occurring using physical currency.

In response Modi suddenly cut short the time frame in which the people could trade in their now outdated bills and as a result, the people have rushed to jewelers to trade their stash of currency for gold and gold products.

And now we are finding out that the initial war on cash has suddenly shifted to a total war on wealth, or at the very least, a war on gold as news of armed raids on people, their homes, and their gold by the government is coming out from on the ground reports.

Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold. 
It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry. 
For background to this article, please see my November 27 article Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan
Large denomination means 500-rupee ($7.30) and 1,000-rupee notes ($14.60), which account for more than 85 percent of the money supply. They are no longer legal tender, effective immediately. 
As one might imagine, chaos ensued. And it continues. - Mish Talk

Despite fall in paper price, gold demand at 5 year high as fears of a supply shortage causing global scramble for the metal

By now most precious metals investors should have realized that the old standard 'spot price' that once dominated gold and silver is on its way out, and acts as little more than a paper value for derivative contracts.  And this can be seen by the price divergence in spreads between the London Fix, and its competition over in China at the Shanghai market.

But until the London/Comex price is gone for good it still controls the buying and selling costs here in the West.  And thanks to the tremendous shorting that has occurred in the paper markets since the Presidential election that took place on Nov. 8, the over $200 drop in price has done little to depress the appetite of gold purchases as the month of November saw the highest amount of buying in the last five years.
Gold demand in November soared to its highest level since the end of 2011 as investors took advantage of a steep drop in prices for the yellow metal following Donald Trump’s win in the U.S. election, according to data from BullionVault released Tuesday. 
The Gold Investor Index, run by Internet-based metals exchange operator BullionVault, jumped to 59.3 in November—its highest level since December 2011. the index stood at 56.8 in October. - Marketwatch
What is making up this increased demand for gold are not just China and Russia, who have continued their massive buying of gold through November of this year, but the inclusion of several other nations such as Britain, Vietnam, the U.S., and of course, India, who have joined in to start exchanging their currencies for gold in their reserves.

Much of this buying is also coming from the fact that outside the dollar, people are losing confidence in global currencies, especially after this year's Brexit event, Venezuelan hyperinflation, and the more recent attack on cash by India's Prime Minister Modi.  And the increase in purchasing worldwide has suddenly revealed incredible shortages that could soon be the catalyst for breaking Comex control over their depressing the spot price of gold.
“For the first time in history, gold supply into the future is under enormous pressure.” The warning from Mark Bristow, chief executive of London-listed Randgold, encapsulates the gold mining sector’s woes. 
Bullion’s only modest price recovery this year compared with other commodities has led the industry to cut spending on exploration dramatically to less than $4bn from almost $10bn in 2012. 
Petropavlovsk, a gold miner with assets in Russia, is a case in point. It has cut its exploration budget by two-thirds. 
“There is a chronic shortage of exploration money and as usual the gold price is not acting in the way everyone thought it would do,” says Peter Hambro, chairman of the company. 
This backdrop has left many in the industry forecasting a supply shortage by the end of the decade. - Financial Times
As an investor it is not the time to be fooled by the paper selloffs or shorting that is occurring in the Comex and other Western markets, but rather a time to take a serious look at supply and demand, and the consequences of dying confidence in most global currencies.  Because the lowered price that is also being coupled with dwindling supply right now is a an opportunity of the decade for the precious metals, and should prove to be very profitable once the world moves completely away from London and New York's control over the market.

Tuesday, December 6, 2016

Islamic council overseeing Sharia finance approves new gold standard for Muslim investing

Following a month of open discussion and commentary, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has officially approved a new gold standard under Sharia financial law on Dec. 5.

Coordinating with the World Gold Council for much of 2016, the AAOIFI has formulated the processes and procedures for the 1.6 billion Muslims around the world, and in particular the 110 million Muslims who participate in active investing, to be able to purchase, own, and invest in physical gold and gold based products such as mining shares.

image
The sharia gold standard announced yesterday allows the over 110 million investors in the Islamic world to invest in: 
a) vaulted gold 
b) gold savings plans (such as GoldCore's GoldSaver) 
c) gold certificates 
d) physical gold ETFs including "probably" the SPDR Gold Trust, the biggest exchange-traded gold (GLD) 
e) gold mining shares (within certain Shari’ah parameters) 
We know three things that the new Shariah gold-standard will achieve: 
a) Increase diversity in the number of available Shariah gold compliant investment products 
b) Greater emphasis on the role of physical gold in gold transactions 
c) Islamic finance will have greater say in the setting of the gold price 
To some, this may appear to be an unnecessary formality taken by the body whose guidelines are followed by Islamic finance institutions across the world. After all, physical gold is Shariah-compliant and holds a unique status for Muslims. 
AAIOFI states, "From the perspective of Islamic Fiqh and the Islamic economic system, gold has its specific significance. This significance arises from the specific principles provided for gold and silver as Thaman in Shari'ah." 
According to Islamic texts, gold is a ribawi item, which means that it must be sold on weight and measure, and cannot be traded for future value or for speculation. In order for a gold instrument to be Shariah-compliant, the precious metal must be the underlying asset in related transactions. - Goldcore via Zerohedge
Perhaps one of the most interesting caveats in the new procedures for gold ownership and investment is the demand for Islam to have a greater say in the setting of the gold price.  And since we already now have a divergence out of Shanghai from the long-standing price determination set in London and New York each day, the potential of a third completely independent market could soon emerge in places like Dubai, Tehran, Indonesia, and even Saudi Arabia.

Monday, December 5, 2016

Turkey calls for citizens to dump their dollars and buy gold or lira as country looks to establish trade using own currency

It is still up in the air whether the failed coup that took place earlier this year in Turkey was from an outside agency, an Erdogan created false flag, or a grass roots engineered event.  But whatever the reason, the leader of Turkey has used this attempt to oust him from power as the impetus to initiate a pivot away from the U.S..

Shortly after the coup attempt back in July, Erdogan purged the government of any pro-U.S. officials and even threatened the long-standing NATO base housed in Ankara.  This of course forced Washington to move their missile cache held in Ankara to other locations, and for all intents and purposes exit a key regional position on the frontier of Russia which was had been used to try to isolate the Eurasian power.

But now it appears that this was just the first step by Erdogan in a new foreign policy where he is seeking to disassociate the country completely from the United States, and to solidify even greater ties with Russia and their growing Eurasian Economic Union (EEU).  And to do this he is now calling on all of Turkey's businesses and citizens to dump their dollar holdings and use the proceeds to buy gold or Lira as the end game looks to be a move towards establishing direct bi-lateral trade with Eurasia without the need for the U.S. dollar as a reserve currency medium.

Normally, any other country would find itself in a dilemma: how to lower rates as per the president's demands to stimulate investment and the economy, without killing the economy... but not Erdogan. As AFP notes, the Turkish president "urged" his fellow Turks on Friday to convert their foreign currencies into gold and lira to stimulate the country's economy as the lira continued its slide against the dollar. 
"For those who have foreign currencies under the pillow, come change this to gold, come change this to Turkish lira. Let the lira win greater value. Let gold win greater value," he said during a televised speech in Ankara. - Zerohedge
It is doubtful that President Erdogan has an acute understanding of finance, or what the devaluing of their currency means for their economy, but perhaps the real answer lies in the fact that the dollar's recent strength over the past month is creating the same monetary conditions that led to the Arab Spring events of five years ago, where a number of Middle Eastern governments were unable to afford to purchase dollars which could be used to buy commodities such as food to feed their hungry populations.

Thus the inevitable answer for Turkey (and others) appears to be in disassociating themselves completely from the dollar, and in negotiating new trade agreements in partnerships such as the EEU, through which they can use their own currencies that bypass the dollar.

"For those who have foreign currencies under the pillow, come change this to gold, come change this to Turkish lira. Let the lira win greater value. Let gold win greater value," he said during a televised speech in Ankara. 
Then overnight, Turkey continued its crusade against high rates, so critical to keep the currency from foundering, when it announced it would prevent companies from borrowing at high rates. The measure will be part of a broader package of economic steps due to be announced Thursday, according to state-run Anadolu Agency which cited Deputy PM Veysi Kaynak as saying in an interview on CNNTurk. 
“The rise in the dollar is certainly important, but the rise in interest is affecting our companies very quickly.” He added that the “prime minister will explain a package of measures that will touch the daily lives of our people,” and “relieve our companies financially,” including our banks." 
It was not exactly clear how government pressure to lower rates would help the plunging currency, however, in a surprising twist, one which likely seeks to isolate the Turkis Lira from its dependency on the US dollar, Erdogan said on Sunday that Turkey is taking steps to allow commerce with China, Russia and Iran to be conducted in local currencies, in what Reuters dubbed "the government's latest effort to shore up the tumbling lira." 
Speaking at the opening ceremony of a shopping mall in Istanbul, Erdo?an said that he had proposed Russian President Vladimir Putin to conduct trade between the two countries with local currencies. - Zerohedge
For years Turkey has been an important nexus point for both Europe and the United States as NATO used that frontier to Eurasia as a key juncture in both the Cold War, and in today's foreign policy to isolate Russia.  However, with Moscow offering much more accommodation to economic growth than what the West has provided in recent years, Turkey is now seeing their future as one standing outside the dollar, and is preparing for a pivot East that is laden with gold and bi-lateral trade.