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?

Tuesday, November 15, 2016

Got gold? Italy's Monte dei Paschi bank begins bail-ins for bond holders

Bail-ins can no longer be said to be limited to just Cyprus now as on Nov. 15, a major Eurozone country just facilitated the confiscation and subsequent haircut of bond holders owning the bank's subordinated debt.

Italy's albatross, and the world's oldest operating bank which goes back to the days before the discovery of the New World, was finally forced to capitulate to stave off insolvency by cutting staff and conducting a bail-in of certain bond-holders of the bank's debt.

Ever since the bank failed the ECB's latest stress test this summer, when it was advised that it needs to raise billions in capital, only to see the process fizzle with virtually no willing sources of new cash emerging due to the opaque labyrinth of the bank's bilions on NPLs, Italy's third largest, most insolvent, bank has been hoping to avoid a debt conversion, out of fears it may spook retail bondholders across the capital structure, and in other Italian banks, who may perceive the move even if touted as "voluntary" as a creditor bail-in. Which it technically is. 
Earlier today, the bank's board bet on Monday to set the terms for a bond-to-equity conversion that is part of the lender's capital boosting plans. As part of its sweeping restructuring, Monte Paschi was planning to lay off a tenth of its staff, shut branches and sell assets to win investor backing for a 5 billion euros ($5.4 billion) cash call, its third recapitalisation in as many years. The key part, however, due to the lack of new investor interest was the previously leaked voluntary conversion of its subordinated debt, whose successful execution would limit the amount of new funds needed.
So while we wait to learn if Monte Paschi will be successful in raising the critical outside cash, here is what Monte Paschi's bail-in, pardon debt conversion will look like, according to sources including Ansa, Bloomberg and Reuters: 
  • Monte Paschi approves voluntary debt-to-equity swap offer
  • Offer to target subordinated bonds for total outstanding amount of 4.289 billion euros; will offer between 20-100 percent of nominal value in bond swap offer
  • Holders of ~€4.5 billion of subordinated bonds will be able to convert them to shares
  • Bank is also considering possibility of launching conversion into equity of 1 billion euros of Fresh 2008 bonds
  • Senior bonds not included in the voluntary conversion plan
  • The bank is also considering conversion plan for EU1b of hybrid bonds
  • The conversion price is seen at 85% of nominal value for riskier Tier 1 bonds, according to Ansa sources.
  • The Conversion price is seen at 100% of nominal value for less risky Tier 2 bonds
  • Monte Paschi will acquire €700m of MPS Capital Trust II securities, also Tier 1, at 20%
  • It will also acquire seven series of BMPS subordinated debt at 100%
Offer open to investors classified as “qualified investors” only for Upper Tier 2 securities - Zerohedge
Monte Dei Paschi is not the only European bank experiencing insolvency issues, but they could be opening the door for institutions like Deutsche Bank to have to follow suit since EU rules negate the possibility of a government funded taxpayer bailout.

When you take into account what occurred late last week in India, where their government abruptly eliminated higher denomination bills to attempt to force their citizens to keep their money solely in a bank, and couple this with the instability of banks all across Europe, the world is once again teetering on the potential of another credit crisis, only this time it will be your money that is used to bail them out unless you learned the lessons of 2008 and have your wealth stored in something much more tangible.

Got gold?

Monday, November 14, 2016

The dollar vs. gold dichotomy: As dollar strengthens it opens door for greater gold buying

As we have mentioned many times before here at The Daily Economist, you should not value gold simply in its relation to the dollar.  In fact, all one has to do is look at countries like Venezuela and now India to know that when a nation's currency loses confidence or value, gold soars to all-time highs in relation to their money.

Of course we in the U.S. quite often are only interested in what happens to things in relation to the dollar, and in many cases rightly so since it still holds the position as the global reserve currency.  But that in itself should not be a deterrent since the recent strength in the dollar has created an incredible buying opportunity for physical gold.

5 Day dollar chart:


One Week Gold Chart:


As you can see in the above charts, in the same period that the dollar climbed 400 bps to over 100 on the index, gold fell to $1216 and its lowest point vs. the dollar in some months.

But here is the catch many gold bugs fail to realize... when the dollar strengthens it means that your purchasing power in that currency is much greater, so you inevitably get more 'bang for your buck'.  It is only when the dollar is collapsing and gold prices are also falling that purchasing gold becomes a losing proposition.

A stronger dollar is bad news for foreign markets as seen by the historic drop in the Chinese Yuan as well as in the Euro and Yen.  And it also means that investors and traders there will be looking towards gold as a safe haven to protect against the devaluing of their currency, which will lead to even greater shortages in gold than we already have today.

Saturday, November 12, 2016

Gold price spread between Shanghai and London now up to $7 as recent price slam sends more buyers to China

Following the Presidential election on Nov. 8, the gold cartel dumped extraordinary amounts of paper gold contracts which not only reversed the $61 gains that occurred when it appeared that Donald Trump was going to win, but they also ended up slamming down the price by an additional $50 over the next two trading sessions.

Part of this was due to a massive rise in the dollar, which went from 96 to over 99 on the dollar index, and the deflationary scare that crept into the markets that many now believe will quash the Fed from raising rates in December.

In the meantime, the takedown of the gold price by the bullion banks through their dumping of 85,000 paper contracts, or over $10 billion in gold derivatives, was the equivalent of 12% of the global gold mining output annually.


Yet the chaos in the gold price had limited effects over in China, where the Shanghai Gold Exchange functions as the world's largest physical gold market.  And in one of the more interesting notes over the past days was that the spread between the London/Comex gold fix and the Shanghai daily fix is now $7, which is up $2 from just one month ago.

Shanghai morning fix Nov 11 (10:15 pm est last night): $  1265.29 
NY ACCESS PRICE: $1260.00 (AT THE EXACT SAME TIME) 
Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1267.47 
NY ACCESS PRICE: 1260.60 (AT THE EXACT SAME TIME/2:15 am) 
HUGE SPREAD TODAY!!  7.00 dollars - Harvey Organ

Thursday, November 10, 2016

Europe, not the U.S., were the biggest buyers of gold after Donald Trump won the presidency

As the election counts began coming in on the evening of Nov. 8, the markets reacted chaotically as the night wore on to the reality that Donald Trump victory was going to be the next President of the United States.  And this market turmoil led to the dollar, stocks, and gold all moving in extreme opposition to what the markets had anticipated when they closed for business on Tuesday.

Yet the most interesting thing occurred within hours of seeing the Dow futures down 840 points, the dollar down 300 bps, and gold up $61... these markets all reversed and by the time trading was over on Wednesday gold had lost all of its gains, the dollar had recovered all of its losses and more, and stocks closed well into the green.

So the question then remains is, does a Trump victory mean the end to the gold bull market, or was this 'recovery' a last ditch effort by the Fed and Treasury to prop up paper markets?

Perhaps the answer lies over in Europe where following the Trump victory gold sales all across the continent were occurring at a record pace.

Spot gold prices surged nearly 5 percent with Donald Trump's surprise U.S. presidential election win spurring purchases of physical gold 
The flurry of buying on physical markets mostly took place in Europe, after Trump's victory was declared, when the price of spot gold surged by nearly 5 percent to a six-week high of $1,337.40 an ounce. 
Gold gave up gains during U.S. trading and turned slightly negative, as the dollar moved higher and Wall Street stocks rose sharply. [MKTS/GLOB] 
"Overnight, there has been a tremendous increase in our sales," said Oliver Heuschuch, head of trading for Degussa's gold business, one of the biggest German physical dealers. 
"It's nearly treble the size of regular business."
Ahead of the election, analysts widely expected that a Trump victory would cause gold prices to rally as investors sought refuge in perceived safe-haven assets such as gold. 
Demand for physical gold and silver in the United States rose in the weeks prior to the vote, but in contrast to Europe there was little sign of buying in the United States on Wednesday. 
"Today's figures are already some of the best on record, even surpassing our performance following the Brexit vote," said Chris Howard, director of bullion at the United 
Kingdom's Royal Mint, about Signature Gold sales that involve customers buying gold that is stored at the mint. 
The Pure Gold Company in London said its sales spiked 42 percent early on Wednesday versus the prior day. - Reuters

Wednesday, November 9, 2016

As expected, Trump victory drives gold price back over $1300 as global markets uncertain of future

As we at The Daily Economist wrote yesterday, the opportunity for short-term anti-establishment bets in gold, currencies, and the stock markets came to fruition when Donald Trump successfully beat the odds and won the White House early on Wednesday morning.

Starting with his taking of Florida in the early evening, and culminating with his surpassing of 270 electoral votes around 2:30am, global markets treated the Trump victory like a Brexit part two, and gold was definitely a benefactor by rising over 5% at one point.

Gold jumped nearly 5 percent on Wednesday to its strongest in six weeks as investors snapped up safe havens with Republican Donald Trump winning the race for the White House over Democrat Hillary Clinton. 
It marked gold's biggest single-day gain since June 24 when it rose as much as 8 percent when Britain decided to leave the European Union. It closed up 4.8 percent that day. 
A Trump win, which many see could lead to economic and global uncertainty, may also push the U.S. Federal Reserve to hold off from raising interest rates next month, further burnishing gold's draw, analysts say. - CNBC
Despite the fact that Trump will not officially take office for another 72 days, his victory will reverberate around the world's markets for some time as the uncertainty of new fiscal and monetary policies that may or may not be beneficial to Wall Street will have a significant effect on gold going forward.

Tuesday, November 8, 2016

Brexit II moment for gold and stocks as markets are completely priced in for Hillary victory

Election day 2016 has finally arrived, and it is not only the American people who are preparing for a change in leadership but also the markets.  In fact, thanks to a simple press conference done on Sunday by FBI Director James Comey, the markets exploded yesterday with expectations that Hillary Clinton would come out successful in the Nov. 8 vote.

But as many analysts have discussed over the past month, the outcome of today's Presidential election could actually trigger a Brexit part deux type event, as stocks, gold, and currencies are completely priced in for a Clinton victory, and this means that today's trading could actually be life changing for individuals if Donald Trump ends up winning.

Rickards says that Trump "will probably win" and, if he, does stock markets will crash 10% and gold will rise $100 over night. 
The markets and polls believe Clinton will win and that is priced into markets in the same way that a 'Bremain' was priced into markets prior to the 'Brexit' vote. 
“If Hillary wins nothing happens, if Trump wins you will have an earthquake.” 
Should Trump win, which looking at the polls is not an impossibility, gold would likely surge $100 per ounce overnight, says Rickards. 
What Hillary did was appalling and there will be ‘another reckoning on November 8th’ which the market has failed to price in, creating a good scenario for gold. He says you don’t have to agree that Trump will win, but agree that that in reality he could win. 
For Rickards, this is an excellent opportunity for investors, particularly those who have an allocation to physical gold which he believes is set to rise in the coming months and years. - Zerohedge

Sunday, November 6, 2016

Moves up in gold and down in stocks over past 10 days signal the markets now believe in a strong Trump victory

For anyone who has taken the time to watch buying and selling activity in the gold markets over the past month, it was more than obvious that the takedown during the first week of October was both manufactured, and done at a time when the world's biggest physical market (China) was off for a national holiday.  And as such, once they returned gold has risen over each of the last four weeks back to above the $1300 support level.

But what is perhaps most interesting for the markets in general is the historic declines we have seen over the past 9 days in the Nasdaq and S&P 500, and the 7 days in a row for the Dow, where that measured amount of negative trading has not occurred since 1980.  And this is being attributed to the sudden shift in political winds where the markets now strongly believe that Donald Trump will win the election.

Image result for trump accepts gold for deposit
The S&P 500 ended lower on Friday for a ninth straight day, the longest losing streak for the benchmark index in more than 35 years, as investors stayed on edge ahead of an uncertain U.S. election. 
The tech-heavy Nasdaq also ended lower for a ninth-consecutive session, while the Dow industrials closed down for a seventh straight day. 
Investors have been unnerved by signs of a tightening presidential race between Democrat Hillary Clinton and Republican Donald Trump. 
Clinton had been thought to have a clear lead until the re-emergence last week of a controversy over her use of a private email server while secretary of state. 
"Investors are uncertain about the outcome of the election, and they have grown more uncertain since last Friday," said Walter Todd, chief investment officer with Greenwood Capital in Greenwood, South Carolina. - Reuters
The Donald Trump phenomenon is now being paralleled to that of the UK's earlier Brexit vote from back in June, where going into the final day the markets bet heavily on a Remain outcome.  And when this did not happen following the vote, stocks, currencies, and bonds all fell drastically, and gold rose by $100 in a single day.

Some analysts are expecting more of the same come Tuesday, with equities falling by perhaps 1000 or more points on Wednesday and gold going up $100 - $150 if Trump prevails.  But this may be just the beginning of a much larger financial crisis since central banks are too hamstrung to deal with another black swan type event.

Thursday, November 3, 2016

SDR's for trade between nations, gold for the rest of us when currencies collapse

It is inevitable that the monetary system the world has used over the past 43 years will not only come to an end, but all signs are warning that this end is very near.  Going back to 1988, one of the Establishment's primary propaganda publications issued a forecast of a new global currency replacing the dollar by 2018, and here in 2016 we have already seen the beginnings of that currency through the IMF's announcement to circulate the M SDR (Special Drawing Rights) under Chinese authority.

Image result for the economist world currency

This means of course that during the transition, all fiat currencies like the Dollar, Pound, Euro, and Yen will experience extreme devaluations, or in some cases like perhaps the Euro, outright elimination.

But how long until this actually takes place?

A month ago one of the chief architects of the Euro creation back in 1999 published an op-ed on how the currency was flawed, and that its days numbered thanks to the deteriorating confidence and value imposed upon it by the European Central Bank.  And as we know in Japan over the past 20 years, the UK in recent months, and through the dumping of dollars by foreigners against the current global reserve, the clock is ticking on whether nations can get together in time to agree upon a way for a global reset, or if greed will bring their inevitable downfall through some global financial crisis.

Right now the first or perhaps even primary model for the next global reserve currency already exists, and is being propagated in the markets and in trade.  But this currency, known as the SDR, will only be available for nations to trade with one another at a central bank or Ministry level, and this leaves the 99.99% of us dealing with the aftermath of our own money's devaluation.

Thus while the world banks and governments prepare for the SDR to save their financial systems, what remains for you and I are the physical forms of money that have been a part of economics from the beginning of civilization.

We’ll soon experience profound problems with the U.S. dollar. I expect to see inflation in some areas, deflation in others. On the world stage, we could see anything up to and including a full-fledged currency crisis. 
Collapse is a calamitous process that destroys wealth like a tsunami hitting a seacoast. 
We’ll see several stages of the collapse play out in any event, because central banks are out of room to steer monetary policy outside of a very narrow channel. 
The Fed didn’t raise interest rates in 2010-11, when it should have bitten down on the proverbial bullet. Now, as the world economy teeters on the edge of major breakdown, the Fed can’t cut rates to boost the economy. Even if the Fed’s traditional rate-cutting medicine worked — and it doesn’t always work — that bottle of economic snake oil is nearly empty. 
Aside from the Fed, other central banks around the world are in even worse shape. Many of them participated in the failed negative interest rate experiment. We can’t look to them for any help at all. 
Sauve qui peut! 
This will put increased importance on special drawing rights (SDRs), or world money, and gold as possible tools with which to truncate the next collapse. I expect that many nations will use SDRs as a method to protect themselves — certainly the U.S.
But if you’re not a country plugged into the central bank, what’s left for us mere mortals? Your best option is to use gold. - Daily Reckoning

Wednesday, November 2, 2016

Gold soars and stocks fall as markets now forecasting a Trump victory

For the first time since the early October beat down of gold, the precious metal crossed over $1300 per ounce as revelations from the FBI on re-opening the cast against Hillary Clinton has pushed the markets into believing that Donald Trump has a strong shot at becoming the next President of the United States.

In Monday's trading, gold rose over $10 and stocks fell to the point that the 18,000 level was breached on the Dow for the first time since August.  And in the pre-market today that trend is continuing as gold is up another $10 while stock futures are down another 39 points.

LA Times
In a study released last week the GFMS team at Thomson Reuters concluded that while a Clinton win would not have a dramatic impact on the gold price, a Trump triumph will put pressure on financial markets and the dollar, prompting investors to seek the relative safety of gold: 
According to GFMS a Trump victory could spark a rally to $1,400 and maybe even $1,500 in our view while a win for Clinton would likely see prices ebb lower. - Mining.com
Live New York Gold Chart [Kitco Inc.]

World stocks, the dollar and oil fell on Wednesday, while safe-haven assets such as gold and the Swiss franc rose as investors were rattled by signs the U.S. presidential race was tightening just days before the vote.
Investors were beginning to rethink their long-held bets of a November 8 victory for Democratic candidate Hillary Clinton amid signs her Republican rival Donald Trump could be closing the gap, deepening the recent decline across major stock markets. - NBC News

Tuesday, November 1, 2016

Investors, traders, and analysts expect gold to be higher in forecasts for 2017

Gold has been validated to currently be in the next leg of a Bull Market and investors, traders, and analysts all see the price going much higher in 2017.

In a poll conducted by Reuters on Oct. 28, 35 Wall Street participants confirmed that the gold price will go up next year, with the average price range being about $1331 per ounce.

Gold is expected to post its highest average annual price in four years in 2017, a Reuters poll showed on Friday, after bottoming out this year following three straight years of decline. 
The poll of 35 analysts and traders conducted over the last two weeks returned an average gold price forecast for 2017 of $1,331 an ounce. That would be the highest average since 2013, when the metal plunged 28 percent year on year. 
Respondents predicted an average gold price this year of $1,270 an ounce, slightly above the current average of $1,258. That reflects a stronger expected performance in the fourth quarter, when prices are expected to average $1,300. - Reuters
On a side note, the estimated price range of $1331 from Wall Street participants does not take into consideration geo-political or financial black swans, which like with Brexit, could send gold skyrocketing well above their current forecasts and closer towards gold's all time highs.