When one thinks of Switzerland, banking comes to mind easily but gold doesn’t as much. But, "it is said that the Swiss only love money... this is not true. They also love gold." A full two-thirds of the world’s gold goes through Switzerland and, in an average year, it refines grossly 70% of the world’s gold. Six of the gold refiners on the LBMA Good Delivery list make for 90% of global volume, and four of those are in Switzerland. Up until 1992, the Swiss franc’s 40% backing by gold was written in the country’s Constitution. When Switzerland became a member of the IMF it had to abandon this backing by gold. Today, Swiss citizens have asked for a referendum to be called in order to get back to that backing. As Gilles Labarthe wrote, "Switzerland is for gold what Bordeaux is to wine."
A leaked recording by the vice-chairman of Vanke Group (China’s biggest property developer), confirms, as The Telegraph's Amrbose Evans-Protchard reports, what the bears have been saying for months, 'it is a dangerous bubble, and already deflating'. Mao Daqing's words, translated, are ominous: "In 1990, Tokyo’s total land value accounts for 63.3% of US GDP, while Hong Kong reached 66.3% in 1997. Now, the total land value in Beijing is 61.6% of US GDP, a dangerous level... China has reached its capacity limit for new construction of residential projects... and I don’t see any possibility for a rise in home prices." The simple chart below highlights all one needs to know - inventory is exploding - and as Mao concludes: "housing production per 1000 people reached 35; even when the housing market is hot, no country has a figure of greater than 14 - this should cause alarm."
As we noted on the last day of March, April was supposed to be the best month for stocks, with an average return since 1950 of over 2%. It wasn't.
This system is on the way out. It will reset. Like feudalism before, our system will go the way of the historical dust bin. And future historians will look back (just as we view feudalism) and say “why did they put up with that nonsense…? This reset is nothing to fear. Human beings are incredible creatures who have a long-term track record of growth. We rise. We progress. As Jobs notes, human beings were fundamentally tool creators. We take our situation, however grim or rudimentary, and we make it better.
After a long and agonizing winter which was attributed to the so-called “Polar Vortex”, we thought it would be appropriate to highlight for precious metal investors the implications of what we call the “Chinese Gold Vortex”. Over the past year, we have been very vocal about what we consider an aberration: the complete disconnect between gold supply and demand fundamentals and the actual price of the metal.
- Headline of the day goes to... Cold weather seen temporarily slowing U.S. economy (Reuters)
- Americans Want to Pull Back From World Stage, Poll Finds (WSJ)
- U.S. Plans to Charge BNP Over Sanctions (WSJ)
- What about Jay Carney: Putin Threat to Retaliate for Sanctions Carries Risks (BBG)
- Fed expected to take further step toward ending bond buying (Reuters)
- A Fed-Watcher’s Guide to FOMC Day: Steady Taper, Green Shoots (BBG)
- Alstom accepts 10 billion euro GE bid for its energy unit (Reuters)
- BOJ projects inflation exceeding 2 percent, keeps bullish view intact (Reuters)
Silver is undervalued when compared with gold, platinum, palladium, base metals including copper, oil, stocks (S&P, DJIA, Nasdaq etc) bonds and the U.S. dollar ... There are very few, if any assets that remain at the same price levels that they were more than 30 years ago ...
It doesn’t get any more Orwellian than this: Wall Street mega banks crash the U.S. financial system in 2008. Hundreds of thousands of financial industry workers lose their jobs. Then, beginning late last year, a rash of suspicious deaths start to occur among current and former bank employees. Next we learn that four of the Wall Street mega banks likely hold over $680 billion face amount of life insurance on their workers, payable to the banks, not the families. We ask their Federal regulator for the details of this life insurance under a Freedom of Information Act request and we’re told the information constitutes “trade secrets.”
The coming week will be busy in terms of data releases in the US; highlights include an improvement in consumer confidence, anemic 1Q GDP growth, and solid non-farm payrolls (consensus expects 215K). Wednesday brings advanced 1Q GDP - consensus expected a pathetic 1.1% qoq, on the back of what Goldman scapegoats as "weather distortions and an inventory investment drag", personal consumption (consensus 1.9%), and FOMC (the meeting is not associated with economic projections or a press conference). Thursday brings PCE Core (consensus 0.20%). Friday brings non-farm payrolls (consensus of 215K) and unemployment (6.6%). Other indicators for the week include pending home sales, S&P/Case Shiller home price index, Chicago PMI, ADP employment, personal income/spending, and hourly earnings.
- U.S. Plans to Hit Putin Inner Circle With New Sanctions (BBG)
- Russian Billions Scattered Abroad Show Trail to Putin Circle (BBG)
- GE’s Alstom Bid Gains Steam as Hollande Said Not Opposed (BBG)
- Russia-West tensions pressure stocks, buoy oil prices (Reuters)
- Toyota Said to Plan to Move U.S. Sales Office to Texas (BBG)
- Egyptian court seeks death sentence for Brotherhood leader, 682 supporters (Reuters)
- Greece warned of 14.9 billion euro financing gap (FT)
- Comcast to shed 3.9 million subscribers to ease cable deal (Reuters)
- Big U.S. Banks Make Swaps a Foreign Affair (WSJ)
While the Fed has clearly had a problem with reflating the broader housing bubble, one which would impact the middle class instead of just those who are already wealthier than ever before thanks to the Russel 200,000, one place which not only never suffered a housing bubble pop in the 2006-2008 years, but never looked back as it continued its diagonal bottom left to top right trajectory is Canada. As the chart below shows, the Canadian housing bubble has put all attempts at listening to Krugman and reflating yet another bubble to shame.
Defending the nation's mass surveillance programs because "people were desperate to avoid another [9/11] attack," Hillary Clinton, speaking at University of Connecticut on Wednesday night, noted that a balance must be found to "make sure that we're not infringing on Americans' privacy, which is a valued, cherished personal belief that we have." But her most controversial comments were swved for Edward Snowden, as she though it "odd that he would flee," since, she noted, "we have all these protections for whistle-blowers, " and concluded rather cryptically that, "turning over a lot of that material... gave all kinds of information, not only to big countries, but to networks and terrorist groups and the like."
The ‘pensions time bomb’ looms: pension funds' lack of diversification, and overexposure to traditional assets may cost pension holders dearly according to research we have just released. Pensions allocations to gold are very low internationally and yet gold has an important role to play over the long term in preserving and growing pension wealth.
There have been 13 senior financial services executives deaths around the world this year, but the most notable thing about the sad suicide of the 14th, a 52-year-old banker at France's Bred-Banque-Populaire, is she is the first female. As Le Parisien reports, Lydia (no surname given) jumped from the bank's Paris headquarter's 14th floor shortly before 10am. FranceTV added that sources said "she questioned her superiors before jumping out the window," but the bank denies it noting that she had been in therpapy for several years.
The figures are out and it looks like the United States exported a record amount of gold to Hong Kong in January. Not only is this 3 times more gold exported than January 2013 (17 mt), it was 84% more gold than the record month set in August (31 mt). As we can see, gold bullion is fleeing the U.S. and heading to the East. Again... that 57 mt figure is just gold bullion. As the West continues to play games with Monopoly money and Derivatives manufacturing, the East accumulates as much gold as it possibly can. While Main Stream Media and its Banker cohorts release bearish $1,050 price targets for gold, the Asians and Indians smile as they build the largest amount of gold stocks in the world.