Mark Mobius Echoes Carl Icahn: "There Is Definitely Going To Be Another Financial Crisis" 

In an almost verbatim repeat of Carl Icahn's words of caution which we noted yesterday, Templeton's legendary chairman Mark Mobius said that "another financial crisis is inevitable because the causes of the previous one haven’t been resolved" during a luncheon (menu included herb crusted chicken breast with cheese and tomato sauce, mashed potato and green vegetables, seasonal salad) at the Foreign Correspondents’ Club of Japan in Tokyo. Bloomberg reports: "There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes." Unlike Icahn, Mobius stopped short of calling for a return to Glass-Stegall and a repeal of the abominable Gramm-Leach-Bliley which unleashed the era of zero margin derivatives and financial system neutron bombs. On the other hand, it is nice of Messrs Icahn and Mobius to speak up now, two years after the ongoing systemic instability transferred $3.5 trillion in capital from current and future taxpayer generations to the present financial elite. We do, however, forgive them because in their better late than never contrition, they join the likes of Zero Hedge who since January of 2009 have warned, over and over, that nothing in the structure of capital markets has changed, and that the market could any day open not only bidless, but broken beyond even Brian Sack-ian band aid repair.

In Violation Of UN Resolution, Western "Boots" Are Now On The Libyan Ground 

Submitted by Tyler Durden on 05/30/2011 17:29 -0400

In a TV slip caught by Al Jazeera, yet another Zero Hedge prediction has been confirmed: namely that it was only a matter of time before NATO "boots on the ground" would promptly replace the CIA's "sandals on the ground" in a fully Western-backed land invastion of Libya. Since it is too early to predict the nationality of the armed invaders, we will assume they are British as Al Jazeera speculates, because otherwise Congress is about to find itself in an unprecedented scandal for completely ignoring its duty to impose the War Powers Act, which in turn would mean that the President now has a unilateral right to enforce the invasion of any country he so chooses. We will leave the bitter implications of what this could mean, as America celebrates, and remembers the lives of so many who died for this once great country, to others. 

 

 

EU Debt Contamination Deepens In Greece, Portugal And Ireland - Gold Just 2% From Record Nominal High 

Submitted by Tyler Durden on 05/30/2011 08:00 -0400

Gold and silver are flat in US dollars but higher in euros this morning. Trade is thin with the UK and US markets closed for spring holidays. Gold and silver were 1.75% and 8% higher last week and the precious metals and especially gold appear to be on solid footing due to the continuing debt crisis in Europe and concerns about a slowdown in the US and global economy. Despite gold being only some 2% away from the record nominal highs seen at the end of April ($1,563.70/oz), sentiment remains lackluster at best with little or no coverage of gold in the international financial press and media over the weekend. In the last two weeks we have experienced a lot of sell orders and the ratio of sell to buy orders has been the highest since our foundation in 2003. Value buyers emerged last week but much of the buying was by existing clients adding to their holdings. The threat of sovereign default and contagion increases by the day. 

 

 

 

 

EU Holds Unannounced Emergency Talks With Greece Over Weekend To Draft Second Bailout As Two Year Greek Bonds Pass 26% 

Submitted by Tyler Durden on 05/30/2011 08:35 -0400

Another weekend, another secret, and failed, meeting between the EU and Greece to find a bailout solution that simply does not exist. Reuters reports that while America was out camping, barbecuing and all around vacationing, the European Union was feverishly working on a second bailout package, holding another round of emergency talks with the Greek government, to prevent a June 29 default by Greece when money runs out. Alas, it is now too late: with austerity protests now a daily event, the political opposition has the upper hand and it seems that Greece's conservative opposition has demanded lower taxes as a condition for reaching a political consensus with the Socialist government on further austerity measures, a move which Brussels would not agree to, since unlike in America, cutting revenues does not lead to an reduction in the deficit, and anyone with a 2nd grader's education is aware of it. Punctuating that Europe's idealist unitary vision is about to be torn to shreds, even as the US and UK are out for the day, is the Greek 10-year Bund spread which rose by 20 basis points to 1,387 while two-year yields were up 58 bps to 26.23%. 

 

 

 

 

 

China SAFE Reports Monetary Gold Holdings Increased By $11 Billion, Or 30%, In 2010, As Gross Foreign Financial Assets Pass $4 Trillion 

Submitted by Tyler Durden on 05/30/2011 09:09 -0400

China's State Administration of Foreign Exchange (SAFE) has released its breakdown of 2010 international investments. In summary: financial assets abroad rose 19% last year to $4.126 trillion from $3.457 trillion. That includes the country's $2.914 trillion of foreign reserves at the end of 2010 as well as other assets such as direct investments, securities, and gold. As for gold, it increased by $11 billion from $37.1 billion to $48.1 billion, or a 29.6% increase (it is unclear if this number is at a fixed gold price or accounts for MTM). On the liabilities side, which increased from $1.946 trillion to $2.335 trillion, the biggest change was as a result of a surge in Foreign Direct Investment into China which increased by $162 billion to $1.476 trillion. Netting liabilities against assets leads to a net position of $1.79 trillion in external net assets.

CIA Warns Of A Greek Military Coup, Rebellion, If Austerity Intensifies 

Submitted by Tyler Durden on 05/30/2011 10:30 -0400

Turkish daily Hurriyet, which paraphrases German Bild, which in turn references a CIA report, warns that Greece could face a military coup if the "tough austerity measures and the dire situation" escalate any further. On the other hand, one can avoid this belabored hypertextual chain and simply look at what happens practically every day on Syntagma square where yet again we are witnessing record numbers of people protest against what everyone now realizes is a dead end regime (luckily, in a peaceful manner, for now). More Captain Obviousness (thank you Grant Williams) from Hurriyet: "According to the CIA report, ongoing street protests in crisis-hit Greece could turn into escalated violence and a rebellion and the Greek government could lose control, said Bild. The newspaper said the CIA report talks of a possible military coup if the situation becomes more serious and uncontrolled." Luckily, following last year's Athens mob-inspired flash crash, and 2011's MENA revolutions, the market is rather desensitized to this sort of thing, and nothing short of fat-finger driven invasion of Greece by Turkey, in its humanitarian bid to reestablish the Ottoman Empire 2.0, could dent the /ES or EURUSD by more than 0.01%.

Following Milan Election Loss, Failed Berlusconi "Referendum" Sets Stage For Early Italy Elections 

Submitted by Tyler Durden on 05/30/2011 12:51 -0400

Following electoral upheavals in Portugal, Germany and Finland, it is time to add Italy to the list, after Silvio Berlusconi's center-right coalition appears to have lost the critical election in Italy's financial capital, Milan, which also happens to be the center of the Bunga Bunga man's business and media empire. And while the mayoral election is merely symbolic for now, its outcome has substantial consequences for Italian governance (and thus stability): "With most votes already counted, leftist Giuliano Pisapia was set to capture Milan city hall with some 55 percent of the vote against around 46 percent for outgoing center-right mayor Letizia Moratti. The local elections were seen as a referendum on the billionaire prime minister. "This is the first defeat for Berlusconi's center-right coalition since they came back to power, and it sends a clear signal of voters' disillusionment," said Maurizio Pessato of pollsters SWG. "These results make early elections more likely, possibly next year, and I don't see any chance of meaningful economic reforms being implemented by a lame duck government." As is by now known, while Spain has recently reentered the bond vigilante's scope after its bonds have continued to traded near record highs, Italy has so far been spared. That will change soon: "Italy is the only euro zone economy in which, taking account of inflation, citizens are poorer on average than they were 10 years ago. Berlusconi's government last month cut its growth forecast for this year to 1.1 percent from 1.3 percent and cut next year's outlook to 1.3 percent from 2.0 percent. S&P's lowered its credit outlook on Italy this month due to its weak growth and failure to adopt reforms, although worries of an immediate impact on the markets eased after the Treasury sold long-term bonds near the top of its target range Monday." Will this be the catalyst that is seen as "change" to the status quo by enough bond holders that Italy becomes that last peripheral European domino to fall?

Four Catalysts Needed For The Industrial Commodities Rally To Resume 

The recent sluggishness in equity markets has certainly affected industrial commodities over the past few months, if not gold, which as pointed out earlier is just 2% below its nominal highs and rising despite the 4th margin hike on the Shanghai Gold Exchange overnight - once again gold is seen at the apex of the fiat currency replacement pyramid. So what could cause a rally in industrial commodities in the near term? Sean Corrigan lists the four key catalysts, whose occurrence listed in order of probability, could rekindle the recently faltering rally. 

 

 

 

 

 

Same Time, Same Channel, Same Protest: Live Feed From Downtown Athens 

It seems like it was just yesterday (and the day before, and the day before that) that we linked to the live feed from Athens' Syntagma square. Oh yes it was. Having narrowly avoided the midday sun, another balmy evening sees the exodus of tens of thousands of Greeks to the front patio of the parliament, where they will now chant in protest of a minimum retirement age of 58 for a few hours, go back to work tomorrow, then repeat the whole spectacle all over again. And while not so desperate Atheneian housewives bang on pots and pans, the Santorini-for-Ibiza-for-confetti asset swap is currently being finalized. 

 

 

 

 

 

Despite Preemptive Gold Margin Hike In Shanghai, Gold Is Poised To Close May Near Record On Sovereign Risk Worries 

Submitted by Tyler Durden on 05/30/2011 15:50 -0400

After a near epic margin driven collapse in silver, which appears to have been largely forgotten as the metal has resumed it upward climb, it is gold which has once again regained the crown in the fiat substitute race. As Reuters reports: "The speculators are coming back, mainly driven by the European debt crisis," said a Singapore-based trader. "Gold is likely to slowly move up during the summer unless we see big headlines, such as the U.S. raising interest rates earlier than expected." Of course, where some see "speculators" others see rational investors who are already discounting the inevitable next step by the central planner cartel, which forced to deal with a slowing economy will have no choice but to inflate the global adjusted monetary base (and dilute outstanding fiat) by another several hundred billion. Elsewhere, in preparation for another gold breakout, the Shanghai Gold Exchange hiked gold and silver margins once again, this time preemptively. "The Shanghai Gold Exchange said on Monday it will raise margin requirements on gold forward contracts to 12 percent from 10 percent from the June 2 settlement, a move to help ward off excessive volatility in global markets during the Dragon Boat Festival holiday on June 6. The bourse will also hike silver forward contracts to 17 percent from 15 percent. It will also set gold daily trade limits to 9 percent and silver at 12 percent from June 3." Still, the gold fixing at the close of NYMEX trading was $1,539.1, $30 away from all time nominal highs. Incidentally, would it be too much to ask of the exchanges to provide the general public with just what the formula is that they use to make their margin hike (and, reduction) decisions? They would be amazed how quickly any allegations of collusion with the administration would disappear if only a little transparency was introduced to the "system."

Got Gold And Silver??? 

 

Jim Sinclair’s Commentary

Any way they can get it. The more gold mining entities the Chinese own, the less gold that will come to market.


China National Gold Seeks Africa Investment as Bullion Trades Near Record By Bloomberg News – May 29, 2011 8:02 PM MT
China National Gold Group Corp., the state-owned company that controls the nation’s largest gold deposits, wants to invest in projects in Africa as it expects bullion to trade near record levels for the next three years.
“We aim at large-scale mines with good potential in countries that have close ties with China and domestic stability,” President Sun Zhaoxue, 48, said in an interview in Shanghai. “Gold prices will foreseeably fluctuate at historically high levels for another three years.”
Gold jumped to a record $1,577.57 an ounce this month, helping make this year among the busiest for gold deals since 2006. Citic Group, China’s biggest state-owned investment company, and partners agreed this month to buy Gold One International Ltd. for about A$444 million ($469 million) to gain assets in South Africa.
The value of announced gold deals so far this year stands at $16.8 billion, more than the totals for the entire year in 2009 and 2008, according to data compiled by Bloomberg.
China National, owner of the Yangshan deposit in Gansu province, may also invest in Southeast Asia and Central Asia, Sun said. It currently doesn’t operate any mines outside China.
The company is also reviving mines that were uneconomical in China’s western provinces as record prices make it profitable to mine them, Sun said, adding that it’s also increasingly exploiting lower grade deposits near existing mines because of higher prices.
More…