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?

Saturday, April 29, 2017

With Congress unwilling to provide tax relief to Americans, join the new tax revolt whenever you dine out

There used to be just two primary things that were true in life... those being death and taxes.  But ever since the start of the new millennia, we can add a third one to that list, and it is the incompetency of government to ever do anything that is beneficial for the American people.

Case in point.  Ever since President George Herbert Walker Bush lied to the the people and said, 'read my lips, no new taxes', every single President since has at some point increased the burden of the American people to provide more and more money to feed the monster that is Washington.

Fast forward to 2017 and President Donald Trump's tax cut proposal.

Using the Reagan model of 'trickle down' economics, Donald Trump is seeking to pass a massive tax cut for corporations, small businesses, and in a minor sort of way, for the Middle Class.  However there has been no real efforts made by Congress in the first 100 days of Trump's Presidency to actually write legislation to accomplish this, and it is unlikely to occur since the House and Senate are unwilling to accept a decline in their own revenue largesse even as the American people find themselves completely tapped out in credit and savings.

Ironically, it took less than this for the colonists to rebel against Britain when they passed the Stamp Act and demanded the colonists use only their fiat currency to conduct commerce back in 1776.  And with some Americans paying upwards of 60% of their income to Federal and State governments (California), the ballot box no longer provides a means of redress.

Thus it's time to use a little ingenuity and begin a legalized form of tax revolt.

In a recent event from the state of Missouri last week, a customer dining out at a restaurant decided to 'stick it to the government' and crossed out their expected 'tip' for the servers who provided him his meal, and instead wrote on a piece of paper that the money that would have formerly gone for a tip be given instead to the server as a gift.


Now why is this significant?  Because tips are taxed by the government as wages, while gifts are not taxable if they do not exceed a certain monetary threshold.
  • You can give up to $14,000 to any number of individuals this year without triggering gift taxes.
  • Anything above the annual limit has to be reported and counts toward your lifetime exclusion.
In addition, this is also a way to respond to the growing demand for a boost in the minimum wage without needing a law to accomplish this, and to also help keep lower income workers receiving welfare benefits for those who need it.

The rich have always skated by not having to pay their full share of taxes by simply incorporating themselves where they have hardly any income, and where most of the money they receive is taxed under the umbrella of much lower capital gains rules.  In addition, these elite can deduct almost anything which lowers their taxable earnings even more.  And if both the state and Federal governments simply see the American people as entities solely existing to provide them money so they can take us into unnecessary wars or fund wasteful social and green agendas, then the only way to fight back is to find our own loopholes in the tax code... starting with the elimination of tips and instead replacing them with gifts.

Friday, April 28, 2017

Shanghai Gold Exchange to launch new platform to streamline trading and delivery of gold purchases

The Shanghai Gold Exchange announced on April 28 that they are launching a new platform known as the GEMS-2 Platform which will both change the designation and access on the exchange for brokers and traders, and streamline the trading and delivery of physical gold.

The Shanghai Gold Exchange (SGE), the world’s largest physical gold exchange, is set to launch its GEMS-2 trading system on May 2nd, 2017, a measure that it said will benefit both China’s domestic gold market and the global precious metals market. 
SGE said in a circular that the launch of GEMS-2 platform will introduce the concept of Seat as the principle business unit of each member. As such, the concept of former propriety account and brokerage account will be converted to propriety seat and brokerage seat. This is in addition to splitting the former trader and brokerage codes to represent its propriety seat. 
Aimed at finding the market-wide price in the world’s No.1 gold mining and importing nation, SGE has added 3 new market orders on the basis of the former limit order: five best prices fill-or-kill orders (five best prices FOK orders), five best prices fill-and-kill orders (five best prices FAK order) and five best prices immediate-to-limit orders. - Finance Magnates

Thursday, April 27, 2017

Iran's model for using gold in place of the petrodollar growing as Russia takes the lead in global oil market

Even before China and Russia implemented their new payment systems to allow for nations to trade using their own currencies rather than having to go through SWIFT and the dollar, a precedent was set during the years of Iranian sanctions to have oil trading done outside the petrodollar.

Image result for gold for oil
The sanctions were meant to be stifling, but the Iranians loosened this problematic liquidity noose by using all their banks that weren’t sanctioned, and sold rich Iranian oil to India. Of course, the Indians couldn’t pay Tehran directly. Neither could they pay bilaterally in rupees due to sanctions and infrastructure needed to trade in a bilateral currency. Instead, Iran requested that India pay in gold so India paid Turkey, the Middle East’s gold market, and Turkey gave Turkish gold to Iranian banks, which then swapped with the Central Bank of Iran.
This 'oil for gold' mechanism allowed Iran to survive during the decade long sanctions imposed upon them by the U.S., but more importantly, it set in motion a way for Russia and China to use this process on a more permanent basis.
This clever evasion was known as the Iran-India-Turkey triangle. Iran was escaping the dominance of the US dollar and trading in real money, not a hegemonic fiat currency that was being printed hot-off-the-press all day. They were dealing in gold; not something that could be strangled through SWIFT and electrons traded on a screen easily. A simple intermediator and precious metals could break Obama’s heralded “crippling” sanctions. 
Fast forward to March 2017; the Russian Central Bank opened its first overseas office in Beijing as an early step in phasing in a gold-backed standard of trade. This would be done by finalizing the issuance of the first federal loan bonds denominated in Chinese yuan and to allow gold imports from Russia. 
The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan. 
This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade. 
The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course. 
All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar. - Atimes

Wednesday, April 26, 2017

Move over Bitcoin as SEC may choose to allow Ethereum ETF instead

With the SEC announcing yesterday that it was reopening the case for the Winklevoss twins Bitcoin ETF, another crypto-currency is also vying for the same market regulators approval.

And this one might have a better chance of success than the Father of All digital currencies.

Ethereum is a crypto-currency that has the backing of many large S&P 500 companies, and this provides it a much better foundation for approval as an exchange traded fund according to the SEC.

Image result for ethereum
Then today, in similarly favorable news for holders of Bitcoin's smaller peer, Ethereum, it was revealed that the SEC had quietly begun the process of considering whether to approve an exchange-traded fund for the cryptocurrency ethereum. Recall that ethereum exploded higher at the end of February when it was revealed that a consortium of venerable corporations including JPM, Intel, Microsoft and many others, had created a blockchain alliance based on the ether technology. 
In same ways, whereas bitcoin has been seen as the more venerable, if "renegade" cryptocurrency, ether has developed the reputation of the smaller, better-behaved relative, one which is backed by major banks and corporations, which in the past has distanced itself from bitcoin due to limitations associated with its specific blockchain technology. 
While ether and bitcoin are similar, they are also very different. First of all, none of the big Chinese exchanges lists ether for trading (which means it is only a matter of time before they do) sending it into orbit as the traditional Chinese bubble stampede does. Second, the two biggest ether exchanges are Coinbase and Kraken, both regulated.
Ethereum is backed by almost all household brands who have formed an alliance in support of the platform. Microsoft is a big proponent, with ether’s protocol added to Hyperledger, the open-source cross-industry blockchain development effort headed by the Linux Foundation. 
Whether that makes an ether-based ETF more likely remains to be seen. What we do know is that the backers of the EtherIndex Ether Trust first filed in July 2016, seeking to launch an ETF backed by a cache of ethers on the NYSE Arca exchange, according to Coindesk. NYSE Arca then filed for a proposed rule change clearing the way for the ETF listing in December, according to a notice published in January
Then, in a new notice from the SEC, the agency announced that it has begun considering whether to approve the proposed ETF, opening up a comment period for outsiders. - Zerohedge

Trump's first 100 days don't hold a candle to FDR's bank holiday and gold nationalization

When we look back at President Trump's first 100 days on Saturday, April 29th (this author's birthday by the way), the pundits will have a field day trying to decide whether they were productive, pathetic, or just mediocre.  But the fact of the matter is the 100 day determination of a new President is nothing more than political theater because as with all comparisons they must be done in relation to an individual in the same office, and under circumstances of a similar note.

Image result for fdr first 100 days gold nationalization
Everyone observing politics seems to agree on two things about a president’s first 100 days in office: 
1. 100 days is a meaningless, arbitrary marker for a president’s performance that is likely to be more misleading than useful.
and… 
2. Let’s treat it like it is important! Reeeeeeee! 
The thing that fascinates me the most about this situation is that the so-called “pro-science” people are giving Trump low grades for his first 100 days. 
Allow me to connect some dots. 
In science, you don’t have much of an experiment unless you have a control case for comparison. For example, you can’t know if a drug helped with a particular disease unless you study the people who didn’t take the drug at the same time as those who did. 
But the pro-science people forget this concept when thinking about politics. Where is the control case for Trump’s first 100 days? 
Is it George Washington’s first 100 days? 
Is it Jimmy Carter’s first 100 days? 
And which prior president came to office in 2017 with identical problems and the most polarized political environment in history? - Scott Adams
The first 100 days concept came out of President Franklin Roosevelt's first term in office where he attempted to pass a bold agenda to try to put a tourniquet on the hemorrhaging economy, and then attempt to restart it with a series of socialist government programs.  And like the way Congress has snuffed out most of Trump's attempts to push through his agenda, so too did the Supreme Court do the same for FDR as he sought to re-shape the nation into a socialistic or communistic oligarchy.

Yet more importantly, can we say that the Standard's (FDR's) 100 days were successful?  Ironically they were in the same way Trump's could be said to be successful in that they both changed the mindset of Americans into realizing that there may be hope from each one's respective administrations.

1.  FDR - Fireside chats - The only thing we have to fear is fear itself.

2.  Trump - Consumer confidence soars to a 15 year high.

However, there are two vastly important things FDR did in his first 100 days that shaped the future for the banking and monetary systems... and neither were good.  First, he called for a bank holiday in which he ordered the shutdown of every financial institution for at least a week, and summarily broke into everyone's safety deposit boxes to nationalize any gold they owned or had.  Secondly he issued an Executive Order making ownership of gold illegal, and under the threat of imprisonment, ordered anyone who still had some outside the banks to turn it in.

Lastly he secretly forced all banks to register under the Federal Reserve system, and there were many which never re-opened because they refused to follow this demand.

So if we are to compare the current President's first 100 days with another Commander-in-Chief residing in the Oval Office under relatively similar circumstances, we can almost say that Donald Trump was world's better than FDR when it came to banking and the nation's monetary system since he not only cut taxes for a large portion of the population by removing the Obamacare mandate, but he also has seen the stock market soar to record highs despite his 'approval rating' being one of the worst in the polls of the mainstream over the past 70 years.

Tuesday, April 25, 2017

In followup to ESFS payment system to bypass SWIFT, Russia ready to open Mir payment card for international use

With both Russia and China having recently completed their SWIFT alternative payment systems that will allow them or any nation to bypass the dollar and any potential U.S. sanctions, on April 25 Russia is pushing its next payment program forward by internationalizing the Mir payment card through a joint deal with Mastercard.

In fact, Russia is now joining China who has a similar credit/debit card system known as Union Pay, and where the Chinese version is already the singular biggest payment card in the world.

Russia's National Payment Card System (NSPK) and Mastercard are holding negotiations on co-badged cards, to be called Mir-Mastercard, Russian Vedomosti newspaper reported Tuesday, citing bank officials. 
According to the media outlet, NSPK and Mastercard will produce 40 million co-badged cards, if the outcome of negotiations is positive. In Russia, the card will operate as Mir, while abroad it will function as a card of the international payment system. 
The newspaper added that the Russian Central Bank and NSPK had been holding negotiations with Visa since the end of the previous year. The NSPK reportedly also signed agreements on co-badged cards with Japanese JCB, American Express and Union Pay. 
The Mir national payment system started operating in Russia on April 1, 2015. The system was created after Visa and MasterCard stopped service to some credit cards issued by Russian banks due to US sanctions imposed on Russia. Mir, operated by NSPK, seeks to ensure the sovereignty of the national payment industry and secure the processing of domestic transactions using Russian bank cards. - Sputnik News
As Russia and China continue to expand their creation of alternative financial systems to not only compete with, but even surpass long-standing Western models, the likelihood of more and more countries and consumers switching to dollar alternatives becomes a very real probability, especially since China intends to make use of their systems along their Silk Road initiative, and Russia likewise in their bid to control the global energy markets.

As Western paper gold markets slam the price following French elections, demand elsewhere continues to boom

Despite the fact that the dollar has fallen nearly 200 bps since Emmanuel Macron won the first round of elections taking place in France, the price of gold and silver in the Western paper markets has been beaten down, even to the point of them falling back below their 200 day moving averages.  However, this has not slowed down the actual demand for physical gold worldwide as expectations of higher prices are still being forecast in locations like Asia, India, and the burgeoning markets of Dubai.

Dubai: Despite falling to its lowest level in weeks, gold might just continue to stick to its ground and move higher over the next few days, an industry source said.
Gold prices held their levels on Tuesday morning, after posting the biggest decline since March on the initial results of the French elections. 
As of 9.30am, 24K was retailing at Dh155.50 per gram in Dubai, slightly up from Monday’s afternoon trade and about Dh15 higher than in January 2017. 
For those who are awaiting further declines, however, it’s important to note that prices remained volatile and current trends suggest there is more room to move on the upside. 
Factors that could play in favour of gold include the polls in Germany and United Kingdom, as well as upcoming policies by US president Donald Trump. 
“Gold will continue to remain volatile with several global factors like US policies and upcoming German and UK  elections influencing the investment strategies of institutional investors,” Merchant told Gulf News. - Gulf News

Sunday, April 23, 2017

Analyst Bo Polny's newest forecast seeks market crash and gold price soar in tandem with French election outcome

Analyst Bo Polny is not unique in trying to correlate numerical cycles to market outcomes, but his use of historical biblical trends has resulted in some fairly accurate forecasts.  And this is not to say that Polny has not been in error on a number of occasion, which is the case for his calls on the gold and equity markets over the past six to twelve months, but overall he has a track record that is above 80% over a long period of time.

Earlier this week Bo Polny was a guest on Greg Hunter's USA Watchdown program and during the 30 minute interview, he once again laid it on the line to say that his data and charting are showing a new stock market crash coming before the end of April, and the start of the gold price moving upwards towards $2000 in just the next few months.

And while it may be fairly easy to make predictions based upon geo-political events that are unfolding fast and furious right before out eyes, Polny had re-adjusted his calculations before the month of April had started, and before the U.S. engaged in military campaigns in Syria and now, North Korea.

Of importance according to Bo Polny's latest technical analysis is that the key dates of April 24-26 coincide with the tail end of the French elections, and just before the government potentially shuts down should Congress refuse to raise the debt limit by April 28.

Investors and analysts remember what happened to gold, equities, bonds, and currencies following the Brexit vote in June of last year, and the outcome of this first round of French elections on Monday could be even more chaotic as France is the linchpin on whether the EU remains a viable coalition, and if the Euro currency is ready to begin its deathwatch as two of the four French candidates have publicly called for its demise.

Predictions on Euro currencies reaction for each of the four French candidates


International law firm seeks to define Bitcoin as property rather than as a currency

A month ago, an international law firm that specializes in blockchain technologies and crypto-currencies submitted a white paper in which they advocated that Bitcoin should be officially recognized as property and protected by the property laws of sovereign countries.

Using a California legal precedent on property as their foundation for U.S. determination, the firm believes Bitcoin transactions should be conducted the same as one would do with property, where contractual agreements between two parties utilize permissions and escrow while allowing the Bitcoin owner to retain ownership until the terms of the contract are complete.

Image result for bitcoin is property

Image use courtesy of Michael Carney/pondodaily
As Bitcoin is adopted by more users every day, the need to determine how it can integrate into mainstream society becomes even more pressing. One major question continues to be how traditional laws apply to Bitcoin and its use. 
Many of those determinations could have major implications for Bitcoin and its holders, and few will play a bigger role in the United States than property laws, which could ultimately govern ownership over the digital currency. 
A new white paper, “Treatment of Bitcoin Under U.S. Property Law,” seeks to analyze how the worlds of digital currency and property law should intersect. The report was assembled by Perkins Coie, an international law firm that specializes in blockchain technology and digital currency and has been active in the space since 2013. While detailed and clearly well-researched, the paper’s foremost conclusion is straightforward and transparent. 
“We conclude that property interests should exist in bitcoin under such law, and that multiple sources of persuasive authority provide additional support for that conclusion,” the paper’s authors, J. Dax Hansen and Joshua L. Boehm, wrote. 
The paper begins with an overview of Bitcoin’s technological attributes and what those mean for how property law can apply to it. Using California state law as a benchmark and Bitcoin transactions as an example, the authors make their case. 
“Parties may ... enter into contractual arrangements in which one party entrusts partial or complete control of such private key(s) to a third party while still maintaining formal title to the bitcoin value represented in applicable [unspent transaction outputs],” the paper reads. “These kinds of contractual arrangements are commonplace in custodial, trust, and escrow settings, which have generated well-developed legal principles that should generally translate to bitcoin custodial contexts.” 
The paper dissects academic articles from some of the country’s foremost law professors, who also, for the most part, support the idea that intangible property rights should apply to Bitcoin: 
“Property law scholars who have encountered the bitcoin ownership issues in the context of broader, more theoretical undertakings have reached (or assumed) the same general conclusion ... that is, interests in bitcoin should be protected by property law.” - Bitcoin Magazine
Perhaps the most important question in this concept of labeling Bitcoin and other crypto-currencies as property in the eyes of the legal system is that it would have a profound effect on Bitcoin exchanges who have in the past simply mixed all customer accounts and currencies into a 'pool' rather than keeping them segregated and untouchable without the permission of the account holder.  In fact, it was this re-hypothication scheme that led to the insolvenciea of exchanges like MT. Gox, who used financial and security regulations rather than property law to end up selling more Bitcoins to customers than they had available in their own account.

The United States court system has already made initial rulings that label Bitcoin as property, mostly for taxation purposes rather than for legal protections.  But until the world comes to a consensus on what exactly Bitcoin and other crypto-currencies function as... property, securities, currency, etc... then for the most part crypto-currencies will remain on the fringe and in the realm of a select few who recognize their potential and application.

Saturday, April 22, 2017

Fear of bank runs and insolvency behind IMF's newest proposal for elimination of cash

While both the Fed and the mainstream media will never tell the truth on how solvent or insolvent a bank is right up to the day when they go under or collapse, the IMF a few weeks ago issued a new report pushing for the elimination of cash as the means to keep account holders from taking their money out of domestic and global institutions.

The fear of bank runs and all out bank insolvencies are what are at the heart of the IMF's push to eliminate physical cash and bring all economies under the dominion of a digital system according to the former head of Germany's Federal Association of German Industry in an interview he participated in on April 21.

Image result for the move to eliminate cash is to stop bank runs
In its recent report, the International Monetary Fund (IMF) proposed to abolish cash and recommended to adopt measures in order to restrict its use. In an interview with Sputnik Germany, former head of the Federal Association of German Industry (BDI) Hans-Olaf Henkel said that this "could lead to terrible consequences." 
Henkel believes that one of the main reasons behind this proposal is the desire of financial institutions to force people to keep their money in banks. 
"The European Central Bank (ECB) does not want that depositors to keep their money under the pillow. If any bank in Europe goes bankrupt, then depositors have a guaranteed right that the state will return them the amount of up to 100,000 euros. But not more," the economist told Sputnik Germany. 
So, if a bank goes bankrupt, people who have savings of over 100,000 euros will remain with nothing. Thus, many keep their cash not in banks, Henkel argued. – Sputnik News

Gold and silver price diverges even more last week as ratio is now over 71:1

While there were at least two distinct attacks on gold by the bullion banks last week as the amount of paper short contracts on the Comex has reached record levels, the price was able to stay relatively stable as it ended the week around $1285.

But unfortunately the same cannot be said for silver as it was hit much harder than its more valuable monetary brother, and by the end of the week the ratio between gold and silver prices reached over 71:1.


Silver has always carried much greater volatility since the metals were removed from the U.S.'s monetary system, however this extreme divergence in price is primarily due to the amount of manipulation allowed in the futures markets where unlimited amounts of shorting are accepted to help protect the dollar and reserve currency.

Historically, the price ratio between gold and silver was at best 5:1 at times, and on average between 10:1 and 16:1.  And when you take into consideration the fact that silver is now an intrinsic necessity for most of the electronics and technology we rely upon to run our daily lives, then at some point even the manipulation will cease as demand for the metal will override even the central bank's ability to control its price.


When gold and silver ratio's reach extreme levels on either side, then it is very profitable to conduct a swap of one metal for the other dependent upon how big or small that ratio is.  And at 71:1, exchanging gold for silver is a great way to make future profits without having to spend a great deal more than the premium costs that might be required by local and online coin shops who can easily do this exchange.

Thursday, April 20, 2017

Billionaire investor announces he has put 10% of his money into Bitcoin and Ethereum

A former hedge fund manager and partner over at Goldman Sachs announced on April 19 at a forum at Harvard University that he has put 10% of his net worth into Bitcoin and Ethereum.

Billionaire Mike Novogratz also stated that he considers his investment into crypto-currencies as the 'best investment of his life', and considers that these and other forms of blockchain based currencies will be the future of money and finance.

Image result for bitcoin investment
Billionaire investor Mike Novogratz is betting big on digital currencies like Bitcoin and Ether. 
"Ten percent of my net worth is in this space," Novogratz said at a forum held at the Harvard Business School Club of New York Wednesday. He declined to say exactly how wealthy he is, but he's a former hedge fund manager at Fortress Investment Group and a Goldman Sachs partner who made the Forbes billionaire list in 2008. 
It's the "best investment of my life," Novogratz said. - CNN Money

Jack Ma and Alibaba to spend nearly half a billion dollars to turn global retail into a cashless society

When most people think of a cashless society, they generally point towards actions being taken or discussed by government legislators, academics, and even central banks.  But it is not often that the move towards a completely digital economy is being undertaken by a free market enterprise.

Until now.

Ant Financial, which is a subsidiary of Jack Ma's online retail company, Alibaba, is looking to spend nearly half a billion dollars to entice businesses around the world to join his dream of creating a completely cashless retail environment.

Image result for jack ma cashless society
ALIBABA'S financial affiliate Ant Financial said it plans to spend 3 billion yuan (US$435 million) each year in the next two years to push forward the construction of a cashless society through partnership with various kinds of merchants and service providers. 
A total of 15 institutions became the first batch of members of the cashless alliance including the United Nations Environment Program and retailer Carrefour to help boost the adoption of cashless payment. 
Finnish mobile payment service provider ePassi and Australian payment firm Paybang also joined the alliance, which eventually hopes to include 30 million members covering 100 nations. - Shanghai Daily
Interestingly, the inclusion of the UN's Environmental Program to the partnership suggests highly that this vision is about much more than digital commerce, and perhaps is part of the elites goal of instituting a carbon credit monetary system as well as bringing about Agenda 21.

Wednesday, April 19, 2017

MIT Professor believes Bitcoin or other crypto-currencies could save financial system

The original idea and concept of Bitcoin was to create a de-centralized form of currency that could not be manipulated, devalued, or financialized by governments or central banks who throughout history have used the power to print money as the means to accumulate wealth and power at the highest levels.  And indeed, the very nature of the world's most current fiat monetary construct has done just that as less than 20 individuals hold more wealth than half the world's population.

This is why gold and silver are and were so important in the past because left to their own devices, they provided individuals, communities, and even nations a stable and often un-inflationary form of money that not only grew productivity, but kept a check on corrupt governments until they seized the power to either 'clip', or replace gold and silver outright.

But in the 21st century the world is rushing headlong into a new paradigm of digital money, and at stake is the age old battle over who controls the ability to 'print' that money.  And according to a Professor at MIT, the advent of Bitcoin or some other decentralized crypto-currency could be the answer to both improving and perhaps even saving the financial system.

Image result for bitcoin can save the financial system
Simon Johnson, a professor at MIT’s Sloan School of Management, says some form of digital currency could fundamentally improve the financial system.
“How do you feel about the way that our existing financial system operates?” Johnson asked the audience at the Business of Blockchain conference, an event organized by MIT Technology Review. “I myself have a lot of concerns. The system we have is not robust—it almost collapsed in the fall of 2008 in the United States, the most sophisticated financial market in the world.” 
In theory, a cryptocurrency such as Bitcoin might make the financial system more stable by providing a way to monitor and trace transactions. Indeed, it may be no coincidence that the paper outlining the concept for Bitcoin was released in 2008, during the financial meltdown. The open-source code for the currency was released several months later, in 2009. Bitcoin was invented by the pseudonymous Satoshi Nakamoto, whose identity remains a subject of great speculation. 
Cryptocurrencies might also remove many of the hurdles that make it harder for poorer people to use the financial system, even in advanced countries, Johnson said: “It is absolutely shameful and really embarrassing that so many people in the United States—one of the richest counties in the history of the world—do not participate in the formal financial system." - Technology Review
In reality a completely Bitcoin based financial system would not be feasible as the 21 million total bitcoins ever to be mined would not fully support both a government and consumer's needs for over 200 countries.  However, a combination of an international trade currency, which would be designated for use by banks and governments only, coupled with a crypto-currency like Bitcoin for use by consumers and businesses that would not be allowed to be traded in financial markets, could solve many of the inefficiencies and corruptions that inevitably spawn over time from the use of a singular form of money.

As former President Calvin Coolidge once said, "The business of America is business", but what he really should have meant was that the government has no place in interfering with business and free markets.  And in a free market, money is determined to be what consumers and producers agree for it to be, and without interference from corrupt men and women who control the means of its production.

Deja vu as traders dump another $3 billion in naked gold shorts following UK's vote for snap elections

Just as with yesterday, it appears that the market manipulators are desperately trying to beat down the gold price as geo-political events continue to dictate the global narrative.  And with 22,000 naked short contracts not being enough to kill sentiment in the gold market on April 18, either the same or some new bullion bank upped the ante with a 25,000 contract short earlier this morning.


In fact today's gold price manipulation occurred shortly after news hit the wire that the UK Parliament had approved Theresa May's request for snap elections, and for Britain to accelerate their plans for leaving the EU.
As totally expected, Theresa May - following a contentious debate - won the UK parliament vote to allow a June 8th snap election by a count of 522 to 13, well above the two-thirds majority needed. 
Opposition leader, Jeremy Corbyn welcomed the poll but accused the PM of changing her mind and breaking promises on a range of issues. 
The result triggers what will be an intense seven-week campaign in which the U.K.’s relationship with the EU will be the focus. - Zerohedge

Tuesday, April 18, 2017

Venezuela is the new Greece as Maduro forced to sell gold and give up oil assets to deal with debts

At least with Hugo Chavez, the former Venezuelan President understood that gold was an important reserve to help hedge against the nation's declining oil revenues following the Great Recession.  But unfortunately for the people of Venezuela, the individual who followed him into power after Chavez's mysterious death is as ignorant about finance and economics as anyone can be.

But hey, what would you expect from a former bus driver?

Not counting the currency debasement that President Maduro has created which has led to more than a year's worth of hyperinflation from his socialist policies and capital controls, the Venezuelan dictator also chose to lease the very gold his predecessor had returned to the country.  But as things have continued to spiral downward, Maduro is being forced to sell it outright just to get some hard currency to at least pay the military as civil unrest reaches epic proportions.

Image result for maduro hyperinflation
It was almost exactly two years ago when a cash-strapped Venezuela quietly conducted its first, little-noticed gold-for-cash swap with Citigroup, as part of which Maduro converted part of his nation's gold reserves into at least $1 billion in cash courtesy of the US bank. As Reuters reported then, the motive was simple: convert $1 billion of the country's gold into much needed dollars to fund imports and keep the economy from sinking. However, instead of selling the gold outright, a move which would have been met with a firestorm of protests from political opponents and allies alike, leased it to Citi instead. 
Specifically, Venezuela provided 1.4 million troy ounces of gold to Citi in exchange for cash. And while Venezuela would have to pay interest on the funds, it got the key benefit of being able to maintain the gold as part of its foreign currency reserves. After all, the gold was "merely rehypothecated", if only on paper, the actual physical gold would be transferred to an unknown vault of Citi's choosing where it would become an asset effectively controlled by the bailed out US ban (there was a brief scare last July when Citi warned it would close the account of the Venezuela Central Bank, which prompted us to ask if Citigroup was about to confiscate $1 billion in Venezuela gold). 
While it is still unknown if Citi did in fact confiscate a substantial chunk of Venezuela's sovereign gold, what is worth noting is that even just two years ago, Venezuela was in far better economic and social shape than it is currently, which ultimately prompted Maduro's choice of picking a swap instead of an outright sale of the country's gold. Now, however, with hyperinflation rampant, with daily protests, many of which turn violent and deadly, and with the opposition set to unleash the "mother of all protests" on Wednesday even as Maduro has ordered the army to take to the streets, the president has far fewer qualms about preserving even the illusion of stability at this point. What he does need, however, is access to dollars, be it to pay Venezuela's creditors, provide funds to the cash strapped state-owned energy company PDVSA, or simply to pay the army which is the only thing keeping the nation away from a revolution, and Maduro from facing a deadly endgame. 
Which is why Maduro is about to do what he did two years ago, only on a vastly greater scale, and perhaps simply sell Venezuela's gold outright. - Zerohedge
However, this news isn't the only economic calamity for Maduro to hit the wires today as Russia has chosen to seize a Venezuelan oil tanker to use as collateral for the $30 million the nation owes in delinquent port fees.

It is estimated that Venezuela has some of the largest oil reserves in the world, as well as untapped minerals that could save the country from its monetary hell.  But with Hugo Chavez having nationalized (stolen) corporate property and equipment from foreign entities several years ago, Venezuela no longer has the skills, resources, or cash to produce their way out of debt, and thus the Bus Driver in Chief is left with little options but to sell the nation's gold just so he can stay in power a little bit longer.

Another day, another manipulation as gold slammed with naked short contracts after dollar falls below 100 on index

As we at The Daily Economist have continued to say over and over in the investment space, there are no markets, only manipulations.  And whether it is the Fed offering trillions in cheap money for insiders to buy back their stocks, the Exchange Stabilization Fund buying S&P future and the Yen to trigger algo traders, or the bullion banks naked shorting the precious metal markets, the only way to trade in today's world is to go with the manipulators and not use technicals or fundamentals.

Thus it should have come as no surprise on April 18 when in a matter of seconds, a bullion bank dumped over $3 billion in naked short contracts at the same time the dollar fell below 100 on the index, and where gold was working its way towards $1300 per ounce.

While the dollar index tumbles to its lowest level since days after the electiom, someone decided this morning was an opportune time to dump over 22,000 gold futures contracts (almost $3 billion notional) sparking a quick plunge in the precious metal. - Zerohedge
Interestingly, the short position at the Comex had actually fallen to its lowest levels since the elections as gold and silver crossing over their 200 day moving average spelled a strong buy signal for the commodities.  But with today's dumping, short contracts are back up to over 68,000.


(and add 22,000 to the April 11 number)

Monday, April 17, 2017

After a decline due to Modi's cash banning scheme, India's gold importing soars in in first quarter of 2017

In the latest report out of India for the first quarter of 2017, the world's largest gold consumer market saw a return of soaring imports of the precious metal following a 4th quarter decline due in part to Prime Minister Modi's attempts to ban most cash.

During the first three months of this year, gold imports were for 230 tons, which is nearly as much as the period between April and November last year when the government instituted a cash ban and a new scheme to bring about a cashless society.

Sentiment has turned up in the gold market the last few weeks. And new data from the world’s top consuming center — India — shows there may indeed be cause for optimism amongst bullion buyers. 
Data reported in the local press showed that India’s gold imports saw a big jump during the most recent quarter, January to March 2017. With total imports for the period hitting 230 tonnes. 
To put that in perspective, consider some numbers from recent quarters — during which India’s gold imports showed some of the weakest figures on record. 
During April to October 2016, gold imports totalled just 264 tonnes. Meaning that incoming shipments for that entire seven-month period were barely above the figures for the most recent three months. 
That suggests a major surge in gold demand is happening here. In fact, imports for the Jan-Mar 2017 quarter were the strongest for those months since 2013. - Oil Price
Since the beginning of the year, gold has climbed by more than 11% from $1148 on Jan. 1 to nearly $1300 following last weekend's trading.

Wall Street financialization of Bitcoin continues as CME seeking to allow derivative trading

The CME Group is in the process of finalizing a patent for a Bitcoin derivative contract that would allow Bitcoin miners to hedge their production of Bitcoin currency.

In a new report on April 17, the Chicago Mercantile Exchange (CME) is planning to allow for derivative trading of Bitcoin futures on the nation's largest commodity exchange, and continue Wall Street's financialization of the crypto-currency.

Image result for wall street financialization of bitcoin
Derivatives giant CME Group is looking to patent a way for bitcoin miners to hedge against operational risks. 
As detailed in a patent application published last week by the US Patent and Trademark Office, the proposed system would receive data from the bitcoin network as a means of keeping contracts up to date – monitoring metrics like network difficulty and price.
CME previously launched a pair of bitcoin price indexes last year. 
The filing is notable as bitcoin mining, the process by which new transactions are added to the bitcoin blockchain, is a kind of commodities production. Miners expend energy and manpower in exchange for newly minted bitcoins. - Coindesk
The largest problem with this of course is that derivatives and futures contracts for both commodities and currencies are allowed to be bought and sold by banks and other entities who have no skin in the game.  And it is this type of trading that has led to the suppression of gold and silver since their prices are determined by benchmark auctions in London, and paper futures contracts at the Comex.

Sunday, April 16, 2017

Ted Butler wants metals owners to join in mail campaign to the Comex to end silver manipulation once and for all

Long time precious metals analyst Ted Butler has started a campaign to try to end price manipulation in the silver markets by asking everyone to copy and paste a letter he wrote to two new top executives taking over at the U.S. Commodities Futures Trading Commission (CFTC).

In the letter, Mr. Butler points out the years of allowed fraud and price manipulation that has gone on in the futures markets of precious metals, and in particular silver, and cites information from the Comex and CFTC's own websites that validate the manipulation going back more than a decade.

So, for anyone with an interest in higher silver prices or who is a believer that free markets, not controlled by large traders gaming the system, is the right way, then there is something you might consider doing. Now is an ideal time to raise these very important issues about concentration and manipulation in COMEX silver. The two officials most responsible for uncovering manipulation at the CFTC just started in this capacity on Monday and should be more open to the facts than otherwise. I can understand how many might feel that contacting these officials and others might be a waste of time, given the agency’s failed record over the years in this regard. Still, I’m not talking about any burdensome effort, just sending a few emails or letters to get straight answers to some very good questions. 
I’ve already written to the two new officials (both by email and hard copy) and feel free to use what I sent. I would ask you not to improvise and include other issues, such as gold manipulation. Besides, nothing would impact gold prices more than having the silver manipulation terminated. The best approach is in being as specific and factual as possible so as to pin the agency down. They may refuse to answer and one way of insuring maximum pressure is to write to them through your elected officials. Here’s the letter I wrote that you are free to copy. I’ll include pertinent emails address at the end. - Silver Seek
And here is the letter to copy, paste, and email to the addresses and commissioners below.

April 10, 2017

Andrew B. Busch via Email
Chief Market Intelligence Officer

James McDonald
Director - Enforcement Division

Commodity Futures Trading Commission

1155 21st Street NW
Washington, DC 20581

Dear Sirs,

Congratulations and best wishes on your appointments to key positions at the Commission at this critical time in market history.
I’m writing concerning a matter that the Commission has considered on a number of past occasions – allegations of a silver price manipulation on the Commodity Exchange, Inc. (COMEX). The reason the Commission has considered the issue of a silver price manipulation several times in the past is because the agency’s own public data and guidelines point strongly to such a manipulation. Never have the data been more convincing than what was just published Friday, in the Commission’s release of its weekly Commitments of Traders (COT) Report, for positions held as of April 4, 2017.

That report indicates that the concentrated net short position held by the four largest traders in COMEX silver futures hit an all-time extreme in numbers of contracts of 78,021, the equivalent of 390 million oz. of silver. The concentrated net short position of the eight largest traders was indicated at 104,978 contracts or the equivalent of nearly 525 million oz., or more than 60% of world annual mine production. No other commodity comes close to COMEX silver futures in terms of a larger concentrated short position when compared to real world production. On its face, the large concentrated short position in COMEX silver futures would appear to be an artificial price depressant.

As you know, the Commission monitors and publishes concentration data in all regulated futures markets as the prime front line defense against price manipulation. After all, it would be nearly impossible to manipulate any market without a concentrated position. But not only do COMEX silver futures stand out as having the largest concentrated short position of any commodity, in terms relative to real world production, consumption and existing inventories, the concentrated short position in COMEX silver futures is notable for other reasons.
For one reason, the big short traders do not appear to be engaged in any sort of legitimate hedging, since there are no signs they represent actual producers or hedgers of physical holdings. Separate agency data, contained in the monthly Bank Participation Report, indicate that the largest shorts are mostly domestic and foreign banks essentially operating as speculators, in a pseudo-market making capacity against other speculators. Publicly-owned mining companies are required to disclose any hedge activity and few, if any have disclosed any hedging in silver. The big short sellers in COMEX silver futures are financial firms, mostly banks, speculating against other big speculators and have no legitimate economic or hedging purpose in dealing in COMEX silver in the first place. As I’m sure you know, Congress allows futures trading for the purpose of encouraging legitimate hedging, not to encourage excessive speculation.

The largest COMEX silver short seller for the past nine years is JPMorgan. That has been the case ever since it acquired the failing investment bank Bear Stearns, the former largest COMEX silver short seller, according to Commission data and its correspondence with lawmakers. The special manipulative twist here is that since 2011, JPMorgan has engaged in an epic accumulation of physical silver at prices much lower than would have existed if the bank had not also been the largest silver short seller on the COMEX. In the recently completed COMEX March silver futures delivery period, JPMorgan stopped (accepted) 2689 contracts in its own proprietary trading account, plus another 739 contracts on behalf of a client(s), considerably more than the 1500 contracts allowed according to exchange regulations. This while JPMorgan was the largest short holder in COMEX silver futures. It is not possible to imagine a more compelling motive or intent for manipulation than to acquire a massive amount of any commodity at depressed prices, where the acquirer is responsible for the depressed prices.

Almost without fail, on every past occasion where the concentrated short position in COMEX silver futures reached extreme levels, it was only a matter of time before the price of silver gets rigged lower by these big shorts to induce speculative selling from traders operating on technical price signals. In fact, COT report data indicate that JPMorgan has never taken a loss, only profits on every silver short position it has added over the past nine years. Such results would not be possible in a market that wasn’t manipulated in price. In essence, speculators have taken over the price discovery process in silver because there are so few real hedgers trading on the COMEX, only speculating banks betting against other speculative traders. Even assuming the current extreme concentrated short position leads yet again to a sharp selloff in silver, there is another issue that goes to the core of regulatory concern.
In addition to the clear agency data pointing to a silver price manipulation, the presence of such a large and non-economic short position necessarily enhances the likelihood of disorderly market conditions once it becomes clear to enough market participants that unbacked concentrated short positions on the COMEX have been the reason why silver prices are so depressed.

I have communicated all this to the Commission, JPMorgan and the CME Group (owner-operator of the COMEX) for many years, with hardly any acknowledgement or rebuttal. I am hoping you will consider this matter differently and act to finally end the manipulation. I’m sure how you handle this matter will define your tenure. If I can be of any further assistance, please do not hesitate to call on me.
Sincerely yours,

Ted Butler

Andrew B. Busch - abusch@cftc.gov
James McDonald – jmcdonald@cftc.gov
Acting Chairman J. Christopher Giancarlo – cgiancarlo@cftc.gov
Commissioner Sharon Y. Bowen – sbowen@cftc.gov

Let me close by telling you that I am very thankful for the unique opportunity created by the new senior appointments at the CFTC, along with the simultaneous publication of the most concentrated data in silver shorting in history. I assure you that I am not holding my breath waiting for the CFTC to finally step up to the plate and do the right thing; not after 30 years of denial and obfuscation. I know full well that the agency’s denials up through today have only hardened it to maintain the façade that nothing is wrong in COMEX silver, despite glaring and growing evidence to the contrary. Still, it would be a waste not take advantage of an unexpected opportunity.

Ted Butler
April 12, 2017

www.butlerresearch.com

Cyber hacker group going after Bitcoin wallets to break their encryption and steal currencies

Over the past right years there have been a number of cyber hackers who have either sought to provide whistleblowers a way to disseminate information, or even worse, to hack into any number of monetary and banking systems in order to steal large sums of money.

In the sovereign world the biggest case of cyber-theft came when hackers broke into the SWIFT system and stole nearly $100 million from the Indonesian government.

But a new cyber group is going after a different type of game, and the now stated goal of the aptly named, Large Bitcoin Collider, is to blitz the encryption of digital Bitcoin wallets to break their 'impenetrable security' in order to steal any digital currency kept in those wallets.

Image result for bitcoin wallets can be hacked
A group called the "Large Bitcoin Collider" claims it can smash open bitcoin wallets by using a so-called brute force attack, which directs mass amounts of computer power at individual wallets in order to guess their private keys. 
The project, which has been underway for months, relies on a distributed network of computers (similar to bitcoin itself), and invites anyone to participate—those who do could potentially share in the proceeds of the wallets cracked open. 
A "trophy list" on the home page of Collider (an apparent reference to the Hadron Collider) suggests the group has successfully opened over a dozen wallets, though only three had any bitcoin in them. It's unclear if the group is motivated by financial gain or the cryptographic challenge of smashing wallets—the answer is probably both based on the site's webpage and outside observers. - Fortune
On the surface this hacker group appears to be less interested in money, and more interested in causing havok for individuals who believe their Bitcoin is secure in an online wallet.  And since anything online can eventually be hacked by someone with enough time, tools, and skill, the answer to this is to take your Bitcoin wallet offline, and keep your currency stored in a more secure 'Paper wallet'.

Friday, April 14, 2017

As consumers find themselves broke, a proposal to Congress would sacrifice social security for more money to spend

When 9/11 hit, the Bush administration saw that the terror event could have serious ramifications on the economy as people naturally would pull back on spending out of fear of further geo-political and domestic crises.  And in the wake of this the President not only went on the air encouraging people to spend using the guise of 'Don't let the terrorists win', but he also got Congress to approve a tax rebate to filter billions of dollars into consumer's pockets so they would prime the pump to keep spending.

Then following the 2008 Financial Crisis and subsequent Great Recession, that decade of spending that was additionally fueled by near zero interest rates and a housing bubble which gave homeowners a virtual 'equity checkbook' came to an abrupt halt as job losses, foreclosures, and the realization of massive consumer debt put the economy into its worst environment since the Great Depression.

So the Fed then embarked on a new program called Quantitative Easing where they pumped $10's of trillions of dollars onto Wall Street and the Federal Government to facilitate the creation of not just one asset bubble, but multiple ones in housing, stocks, student loans, automobile loans, and the bond market.  And this provided the illusion of recovery, but only sustainable as long as the increased printing of money did not reach the point of diminishing returns.

But alas, that happened during 2015 where it takes at least $4 new printed dollars to equal $1 new dollar in GDP growth.

As we reach the end of the first quarter of 2017, the data is signalling the tipping point of all of these bubbles, and an end to consumers being able to borrow and spend beyond their means.  Retailers are closing stores and filing for bankruptcies at accelerating rates, and earlier this month credit card debt for Americans crossed over $1 trillion for the first time since prior to the 2008 crash.

So with consumer and government spending making up 80-85% of the nation's GDP, what is left for Congress and/or the Fed to scheme up to keep the economy from 'officially' spinning back towards an ever greater recession than nine years ago?

One proposal suggested by a Congressional lobbyist to legislators would be to cut or eliminate the Social Security tax paid by workers and business owners in favor of getting that money into the pockets of consumers so they can keep the ponzi scheme going for a few more years.

Image result for fed bush economy titanic
President Trump and his Republican colleagues are in a precarious position at the moment. They need to find ways to trim costs, yet not at the expensive of expanding the federal deficit. One idea being floated around Washington by a GOP lobbyist, according to Fox News, is one that would see the payroll tax drastically cut or eliminated entirely. 
In 2015, Social Security generated $920.2 billion in revenue, and the payroll tax accounted for 86.4% of that revenue. The payroll tax, which also funds Medicare, is a 15.3% aggregate tax on earned income. Overall, 12.4% goes to fund Social Security, and 2.9% funds Medicare. However, most workers are only responsible for half of this amount, with their employers covering the remainder. Thus, your responsibility as a worker is often 7.65% of your earned income (6.2% to Social Security and 1.45% to Medicare). Only the self-employed wind up paying the full 15.3%. 
Even then, Social Security's payroll tax has added exemptions. Earned income is taxed between $0.01 and $127,200, as of 2017. Any additional income above and beyond $127,200 is free and clear of taxation, which is a big benefit to the wealthy.
Under the Republican proposal, the payroll tax for Social Security (the aforementioned 12.4% tax) would be eliminated, while the Medicare tax of 2.9% would remain in place. 
Why eliminate this absolutely critical source of funding? Removing the Social Security payroll tax would add $3,100 to the pockets of the average Americans household earning $50,000 a year. Republican lawmakers have long believed that putting money back into the pockets of Americans is the best way to stimulate our consumption-driven economy. - Madison
With the government already borrowing over $1 trillion in deficit spending each year to simply make ends meet, the concept of borrowing the additional difference to cover Social Security payments should the tax be cut or removed from workers is not only in of the realm of possibiities, but has already been done back in the 1990's when President Bill Clinton replaced the $3 trillion cash surplus that was in the Social Security trust fund with U.S. Treasuries (debt) so they could spend the money elsewhere on the way to building the first great bubble, that of the Dot Com variety.

Thursday, April 13, 2017

Over the past 220 years the one key factor in higher gold prices is when inflation is higher than interest rates

Many analysts have been citing the Fed and their new interest rate hike policies as the catalyst for rising gold prices, as well as a few who have been pointing to geo-political events such as Brexit and the Trump election as the key driver of gold.  But the reality of this is that most moves following these events have been fleeting, especially with the central bank's ability to manipulate prices through derivatives and the paper markets.

So if there was one intrinsic data point we could point to that would ensure a near certainty for gold to move higher and higher in price, which one has the historic evidence to back this up?

How about when real inflation is higher than central bank set interest rates.

Chart of Consumer Price Index, 1800-2005

As we can see from the above chart, when the nation was on a gold standard from the start of the Republic to 1913, inflation was relatively flat except for the periods of war (1812 and 1860-1865) when monetary expansion was needed to conduct them.  And even during the time of the industrial revolution in the late 19th century, the set price of gold remained the same as it was in 1792 and where inflation barely grew at all.

It was only after the creation of a private central bank in 1913 that mirrored the ones controlling Europe that inflation really began to take off in America.  And it was this inflation, coupled with a devaluing of purchasing power of the dollar, that forced FDR to raise the gold price from $20 per ounce to $35.

Yet even this increase in the price of gold to keep up with the jump in inflation that took place over the 20 years from 1913 to 1933 was enough to sustain the dollar's purchasing power until the 1960's when the U.S. began to increase the currency's monetary base to pay for the extended war in Vietnam.  And this led to nations beginning to reject the dollar and demand redemption in gold which began to dwindle the nation's gold supply.

And with a smaller gold supply to back the ever increasing currency supply, the gold price was once again raised in 1972 to $42.22 per ounce.

One year later however, the dollar was completely removed from a gold backing and instead backed by the petrodollar agreement which as part of the deal with Saudi Arabia and the OPEC nations, allowed for a tripling of the oil price so that the U.S. could then triple their money supply.  And this is once again seen in the above chart around 1973 when inflation was finally let loose upon the public in an unprecedented way.

Of course we know from that point on the gold price was free to move as the market's saw fit, and as inflation turned into stagflation, and then high inflation (13% by 1979), the gold price eventually rose to near $850 per ounce before Paul Volker and the Fed did something drastic...

The raised interest rates from 11.5% to 21% over the next 18 months.

And with interest rates now finally being above Real inflation, the gold price began to fall, almost in tandem to inflation itself.

During the 1980's and into the early 1990's the Fed kept interest rates relatively high, and well above the rise of Real inflation.  And you can see on the chart that during this period inflation rose moderately and was easily masked by the economic boom that took place during the Reagan years.  But following the 1987 stock market crash, Alan Greenspan would soon take over control of the Federal Reserve and began to lower interest rates from 7.5% to eventually 1% following 9/11, and as such the gold price once again rose in tandem to real inflation being greater than set interest rates.


Image result for gold price chart 1992 - 2008

And ever since 2003, interest rates have never been above 4.5%, and have mostly been below 1%.

So what has been the REAL inflation during that time period?



Around 2015 real inflation has begun to rise once again, and the Fed has summarily been forced to embark on a new rate hike policy that started in December of that year.  And even with three rate hikes over the past 18 months, interest rates are not even close to the real rate of inflation, and thus the gold price has remained constant despite the crash in the gold price between 2009 and 2011 when real inflation dropped by more than 50%.

So what does the future hold for gold both now, and in the coming years?  Well the Fed no longer has the ability to raise interest rates above real inflation since U.S. and global debt levels have made it impossible to do so without bankrupting all sovereign nations.  And this means that while the paper manipulators may succeed in holding down the price in the short run, the invisible hand of the markets will always win out, and rising inflation that is greater than central bank interest rates will mean that the gold price cannot help but keep moving up.

Wednesday, April 12, 2017

Maine legislator wants state to join AZ, TX, UT, and ID by removing sales tax from purchase of gold and silver

On April 11 a state Senator from Maine is seeking to follow the growing trend of other states in recognizing gold and silver as money once again by calling for the removal of state sales tax from the purchase of precious metals.

Speaking this week with the state's Committee on Taxation, Senator Eric Brakey is pushing a measure to have state taxes removed from the buying and selling of gold and silver bullion since many dealers and buyers are simply going across the border to states which currently do not have tax impositions on precious metal transactions.

If Sen. Eric Brakey gets his way, buying silver and gold may get cheaper for Mainers.
State Sen. Eric Brakey, R-Auburn, is pushing a measure to exempt gold and silver coins and bullion from the state sales tax. 
Brakey, an Auburn Republican, is pushing a measure to exempt gold and silver coins and bullion from the state sales tax. 
Douglas Carnrick of Winslow told lawmakers that many coin collectors and investors simply buy their gold and silver out of state — and then forget that they’re still required to pay the sales tax on their own later. 
Since about half of the states don’t impose sales tax on gold and silver purchases, it’s not hard for buyers to avoid shelling out for sales tax online or by traveling to nearby states that exempt precious metals sales. 
“The reason for this is, gold and silver coinage and bullion are not normal goods like everything else we charge a sales tax on,” Brakey told the Committee on Taxation this week. He said they are a form of currency for many. – Sun Journal

Did the CME ditch the London Gold Fix to instead start its own gold blockchain trading platform?

About a month ago, the CME Group along with Thompson-Reuters ended their contract early with the LBMA in which they ran the daily benchmark auctions to fix gold prices in the Western markets.  And while there has been speculation as to why they chose to summarily leave their five year contract with the LBMA two years early, there have been few evidenced reasons for their cutting ties with the daily gold fix.

Until now?

On April 12 the Chicago Mercantile Exchange (CME Group) announced they were in the final stages of testing for a new gold trading platform that will run using Blockchain technology, and will open up the buying and selling of paper (digital) gold that is reportedly backstopped using physical gold from the British Royal Mint.

Image result for digital gold tokens
Model using Digital Gold Tokens in lieu of physical gold
Pretty soon, pension funds and other institutional traders will be able to buy and sell gold using a trading platform inspired by the digital currency bitcoin. 
U.S. futures and options exchange CME Group announced on Tuesday that it is in the final stages of testing a platform for spot gold that’s based on the blockchain, the pioneering distributed-ledger technology that powers the bitcoin network.
CME built the platform in partnership with the U.K. Royal Mint, which has helped supply $1 billion in gold bullion to back transactions executed on the network, and blockchain company AlphaPoint. 
The platform isn’t expected to launch until later this year, according to news releases from the CME Group and AlphaPoint. 
Physical gold will be represented on the platform by tokens called RMGs—short for Royal Mint Gold. The platform is the first digital gold product targeted at institutional investors, and its also the first to work with a government entity, according to the releases. - Marketwatch

Tuesday, April 11, 2017

Gold price could have smooth sailing to $1300 per ounce after 2% climb and crossing 200 day moving average

On April 11 gold climbed more than $20 in intraday trading to close at $1273.  This 2% move was the third attempt in recent weeks to pierce through the hard resistance of its 200 day moving average and is a strong signal that the price could quickly move to or beyond $1300.

Live New York Gold Chart [Kitco Inc.]

With Trump threatening North Korea, Putin on the tape over Syria, China threatening 'red lines', and French poll data sparking panic across the pond, it seems safe-haven buying is suddenly de rigeur as Gold tops $1275 for the first time since the election, breaking above its 200-day moving average. - Zerohedge

Major bond settlement house seeks to have gold trading on the blockchain by the end of the year

On April 11 one of the world's largest bond settlement facilities announced they have completed the initial phases of a gold trading platform on the blockchain that they hope to bring fully online before the end of the year.

Euroclear is one of two primary clearing houses for securities in Europe, and has acted as a major player for the U.S. Treasury as countries began dumping their dollar denominated bonds over the past five years.  And with the advent of the blockchain and its potential as a virtual platform for a myriad of financial products, Euroclear decided to use the technology as a way to bring gold trading fully onto the digital sphere.

Image result for gold if you don't hold it you don't own it
Clearing and settlement services firm Euroclear has expanded the scope of its blockchain-based gold trading platform project, eyeing a full launch for later this year. 
The company announced today that it completed the second stage of testing for its platform, developed in partnership with blockchain startup Paxos, with a group of 16 financial institutions including Citi, Scotiabank and Société Générale. More than 100,000 bullion settlement transactions were conducted over a two-day period. 
The pilot comes months after Euroclear announced the completion of the first phase, during which about 600 transactions were conducted. Euroclear first unveiled the platform in June
According to the firm, the successful test paves the way for a full production launch sometime in late 2017. - Coindesk

Russia potentially changing stance on legality of Bitcoin and other crypto currencies

For the most part, Russia has been vehemently against Bitcoin and any other crypto-currencies, primarily because of their unregulated nature.  And even without the use of decentralized digital money within their borders, the Eurasian power constantly deals with other types of monetary problems that fall under the umbrella of 'money laundering' and other illicit activities.

But on April 11 this may slowly be changing as a Deputy Finance Minster for the government provided a ray of hope for the crypto-currency community as he announced that Bitcoin and other forms of digital money could actually become legalized as early as next year.

Cryptocurrencies may be recognized in Russia by 2018, according to Deputy Finance Minister Aleksey Moiseev. 
Moiseev says monitoring cryptocurrencies could be an instrumental tool against money laundering, and Bitcoin and other digital currencies could be recognized by next year as the central bank works with the government to develop rules against illegal transfers. 
The state needs to know who at every moment of time stands on both sides of the financial chain,” Moiseev said in an interview, as cited Bloomberg. “If there’s a transaction, the people who facilitate it should understand from whom they bought and to whom they were selling, just like with bank operations.” 
Last year the idea of a national cryptocurrency had been considered by the Ministry of Finance and the Central Bank, which would see the banning of all other virtual currencies in Russia. The idea had not been discussed by the Kremlin, however, according to Presidential Press Secretary Dmitry Peskov at the time. 
Russian officials had been opposing all virtual currencies, arguing their cross-border nature, transaction anonymity and lack of a supervisory body makes them the perfect vehicle for illegal transactions. - Russia Today
Bitcoin and other crypto-currencies have experienced a wild ride over the past year, with some nations such as India outright banning it completely as the government seeks to bring about their own version of a cashless society, while over in Japan the government has come to fully embrace its use by its citizens and businesses.

Monday, April 10, 2017

SGE goes international for first time as Dubail's gold exchange to open new gold futures trade with China in RMB

On April 10, the Shanghai Gold Exchange received its first real international partner as Dubai's gold exchange is opening up a new futures market with China to trade gold in RMB.

The Dubai gold market is the largest metals trading platform in the Middle East, and this program will have the capacity to link China's gold market directly to the Islamic world.  And this is especially important now that Islam's primary financial authority for Sharia Law Finance has approved the purchasing and ownership of gold for the 1.6 billion Muslims living around the world.

Middle East's largest financial trading platform the Dubai Gold and Commodities Exchange (DGCX) is moving to launch the DGCX Shanghai Gold Futures (DSGC). This is after it tasted success with the launch of futures trading in Indian gold. The exchange, akin to Singapore, is attempting to become a hub for trading in financial products linked to India and China, two of the largest Asian economies. 
The DGCX last week announced commencement on trading in Shanghai Gold Future. Trading in financial products linked to India and China, two of the largest Asian economies. 
The DGCX last week announced commencement on trading in Shanghai Gold Future. Trading in Indian gold and currency is a major hit on the DGCX platform with volumes in currency pair rivaling that of the Indian bourses. 
The yuan-denominated gold contracts on DGCX marks the first-ever usage of the Shanghai Gold Benchmark Price in international markets. The launch of the DSGC was officially announced at the Dubai Precious Metals Conference (DPMC) last week.  – Economic Times India