Global Collapse Now Accelerating As Central Banks Buy Gold

from KingWorldNews:

King World News has contacts all over the world that send information to the network directly from the front lines of the global economy. These are the types of things you won’t hear in the mainstream media. Today we wanted to share a couple of these important communications. Below is the first one:
“I have spent 35 years working in U.S. manufacturing and currently work for a global company that dominates manufacturing of equipment that touches oversea shipping containers, before and after the cargo vessels (the shipyards). 2.5 months ago our backlog was 21 months, today our backlog is 15 months.
Needless to say we are worried about this declining backlog. Recently a directive came down from the CEO to cut costs and eliminate financial waste wherever possible, beginning with needless travel. Friday I was talking to a supplier of ours that said that Caterpillar has pulled all of their work so that this work could be in-sourced internally at CAT.
CAT is in a slowdown as well, which is pretty amazing due to all of their mining equipment…..
Continue Reading @ KingWorldNews.com

Prepare For War, Skyrocketing Crude & A Global Depression

from KingWorldNews:
Today Michael Pento warned King World News readers to prepare for war in the Middle-East and a massive surge in the price of crude oil. Pento also warned that the staggering surge in crude would usher in a global depression. Today Michael Pento writes exclusively for King World News to put readers ahead of the curve regarding these important geopolitical events and central bank actions.
Here is Pento’s piece: “Global central banks are getting ready to pump more liquidity into the system to mollify the negative economic effects resulting from the growing likelihood of a war between Israel and Iran. Bloomberg reported that Israeli Prime Minister Benjamin Netanyahu told U.S. Defense Secretary Leon Panetta on August 1st that “time is running out” for a peaceful solution to Iran’s atomic program.”
“The Tel Aviv-based newspaper Haaretz also reported on August the 10th that Netanyahu and Israeli Defense Minister Ehud Barak are considering bombing Iran’s nuclear facilities before the presidential elections in the US. In addition, Shlomo Brom, a former Israeli army commander, said the nation is now actively planning civil-defense measures.
Michael Pento continues @ KingWorldNews.com

The Growing Threat Of Soybean-Inspired Social Unrest In China

Two weeks ago we explained why the drought-inspired soaring price of Soybeans  - specifically from the US - would notably influence global central-planners' actions - and more specifically the Chinese (given its high impact on food price inflation). Food prices remain elevated and the PBoC is undertaking Reverse Repos - the exact opposite of an RRR-driven easing program so many expected. However, there is a further, deeper, and more troubling consequence than 'simple' inflationary arguments - that of social unrest. The Chinese devote more than 20% of their income to food (three times more than Americans - according to the USDA) and their newly affluent soybean-oil inspired tastes are being dramatically impacted by these rising prices; "Inflation has a long history of sparking discontent, so obviously it's on the forefront of the Chinese leadership's mind."

Be Optimistic (And Wrong) About The Chinese Economy

When China started tightening policy to fight inflation, almost no one thought that it would slow the economy to what China is in right now. When China started imposing ever more aggressive real estate prices curb, some people believed that that it would not make home prices drop (because there are many people in China, and urbanisation, etc), and even less believed that it would slow the economy to what China is in right now. When China started to slow down more than most thought, almost no one thought that it could be a big problem, while some thought that the slowdown was “engineered” to fight inflation.  Because it was an intentional slowdown, not many people believed that it could get much worse. Digging deeper, we have not found much good reasoning behind those who insist on the uber-optimistic case, and most bullish arguments can be boiled down: "This is China.  China is different.  Don’t ask, just buy."

In The Aftermath Of The Greek Blue Light Precedent: Belize Demands Half Off On Its Debt... Or Else

"Greece set a precedent for 'Here's what you're going to get, take it or leave it'" is how the WSJ summarizes an analyst's 'shocked' thoughts on the growing game of 'call my bluff' being played among beggars being choosers. Belize is surprise surprise running out of money to pay its debts and is insisting that creditors forgive 45% of what they are owed - OR allow it to delay any debt payments for 15 years (yes, seriously, read that again) - leaving a default on the country's $543.8mm almost inevitable. Three things stand out to us: 1) the nation's government shunned bondholders by simply posting a note on its website that it would be 'skipping a payment' as opposed to telling creditors directly; 2) none other than 'Long GGBs are the slam-dunk trade-of-the-year' Greylock Capital are "mystified" that yet another trade has gone pear-shaped adding that they are "sure every country could benefit from not paying their debt but this isn't the way to do it!"; and 3) this would be one of the worst restructuring terms ever as the "Greek effect" could inspire other countries to pursue restructurings on more favorable terms - especially given that: "Even if you don't need a restructuring you can force one upon bondholders because it's so hard to recover money from a sovereign who won't pay,"

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German Court Reverses Anti-'Nazi-Era' Military Restrictions

Late on Friday, the BBC reported that the German military will in future be able to use its weapons on German streets in an extreme situation. This ruling, we hope purely a technicality - but clearly warranting some concern as to 'why now?' - by Germany's Constitutional Court, reverses some of the severe restriction on military deployments that were set down in the German constitution after Nazi-era abuses. After WWII, the new constitution ruled that soldiers could not be deployed with guns at the ready on German soil - the court has now changed that (it seems on the basis of terrorist concerns - as opposed to widespread bank runs, populist revolts at bailout-back-downs, or Hollande/Monti/Draghi sending over some boys).

Chart Of The Day: Americans At Or Below 125% Of The Poverty Level

From AP: "the number of Americans with incomes at or below 125 percent of the federal poverty level - the income limit for qualifying for legal aid - is expected to reach an all-time high of 66 million this year. A family of four earning 125 percent of the federal poverty level makes about $28,800 a year, government figures show." And visually...

John Ralston Saul: The Collapse of Globalism

Global Japan & the Problems With A Debt Jubilee

The deleveraging trap is a catch-22; while debt remains excessive, economic activity remains subdued, and while economic activity remains subdued, generating more production than consumption to pay down debt is extremely difficult. As we have seen in Japan — where the total debt load remains above where it was 1991 — fundamentals can remain depressed for years or even generations. Certainly, the modern debt jubilee isn’t going to cure the culture that led to the excessive debt. Certainly, it won’t wash away the vampiristic TBTF megabanks who caused the GFC and live today on bailouts and ZIRP. Certainly, it won’t fix our broken political or financial systems where whistleblowers like Assange are locked away and fraudsters like Corzine roam free to start hedge funds. And certainly it won’t wash away the huge mountain of derivatives or shadow intermediation that interconnect the economy in a way that amplifies small shocks into greater crises.

How The FED Has Virtually Guaranteed Hyperinflation

from GregVegas5909:

They’re Running Out of Gold!… And Jobs

by Brittany Stepniak, Wealth Wire:
There’s a startling trend growing in Europe as families run out of all their money – both fiat currencies and hard-money metals.
Yesterday, Bloomberg reported on a story of a married couple selling off their last pieces of precious jewelry – their wedding rings, even – in order to pay their monthly rent dues.
Mr. Paulo Oliveira lost his job as a builder last month, and he’s afraid they will soon be kicked out of their apartment because he and his wife have no money left, and their gold is gone too.
According to Mr. Oliveira, “Everyone I know is struggling, even the gold stores are empty because nobody has any more gold left to sell.”
Portugal, historically known as the home of some of Europe’s biggest gold reserves, appears to be running out of gold.
Luis Almeida is part of a family-owned gold store near Lisbon’s Rossio Square, and he said that business has gone from great to terrible in just a short couple of months. After owning the store for nearly four decades, this market slump has led to the worst situation they’ve ever seen. Almost all of their clients have simply run out of gold – they’ve already sold their jewelry to pay their bills.
Read More @ WealthWire.com

Former Central Bankers Speak Out Against Central Banks

by George Dorgan, Testosterone Pit.com:

There are already three former European central bankers who criticize more or less openly the European Central Bank (ECB).
Axel Weber, former president of the Bundesbank
Axel Weber quit the Bundesbank in February 2011 when he realized that his tough monetary stance would not allow him to become president of the ECB. Later he took a new job at UBS, where he is supposed not to utter too much critics against the establishment.
Juergen Stark, former chief economist of the ECB
Juergen Stark left the ECB in September 2011 in protest against the ECB monetizing of debt. The current role of Juergen Stark is different. He decided to make his opposition against the ECB public. Juergen Stark spoke with the Manager Magazin last month.

“I see the need for consolidation in the euro area. Weaker states would have to leave the monetary union. What matters is that the Franco-German axis hold. The integration of the core must not be lost. Otherwise we get a political and economic disaster of historic proportions.”

In March he criticized the ECB and accused her of provoking inflation.
Read More @ TestosteronePit.com

The Fed is Out of Bullets

by The Doc,Silver Doctors:
Our friend TF from TFMetalsReport notes that The Fed’s current holdings of Treasuries under 2 years in duration are now negligible, meaning The Fed is out of short-term paper to sell (think operation twist) to keep long rates down .
TF states that with 10 year rates suddenly climbing back towards 2% and with The Fed suddenly out of bullets, the only option left is a re-ignition of overt quantitative easing.

The Fed is out of bullets. The goal of “Operation Twist” was to create demand for the 10-year and the 30-year, thereby keeping rates low and in a downtrend. They accomplished this “sterilized” program by selling their short-term bills and notes and using the proceeds to buy longer term notes and bonds. Now, look at that final frame again. The Fed is now out of paper to sell. Their current holdings in the 1.5 year and less range are negligible. Therefore, they have no more ammo. Now look again at that last frame. The Fed now owns nearly 70% of the outstanding 10-year note inventory. They are that market. There is hardly anyone left besides the Fed and the Fed is out of cash to keep it going. Suddenly, we have a simple imbalance of more sellers than buyers and…down goes price.
Notice what I said above, “the Fed is out of cash”. Like athletic momentum or alcohol-induced desire, this is but a temporary thing. Let me state this clearly again: THE FED CANNOT AND WILL NOT ALLOW RATES TO RESET HIGHER. THE RESULTING BURDEN OF HIGHER INTEREST COSTS ON THE ALREADY ACCUMULATED DEBT WILL ONLY SPEED THE DEMISE OF THE PONZI AND THIS CANNOT BE ALLOWED. Therefore, with rates backing up and with the Fed out of liquidity to support a turnaround, the only option left is a re-ignition of overt quantitative easing.
Read More @ Silver Doctors

Support the Silver Circle

[Ed. Note: Just received this note from our friend Ron Hera, so sharing it with you:]
from Ron Hera, Hera Research:
The Silver Circle Movie will help to create a new generation of hard money advocates and precious metals investors. I support their efforts and wish them every success.
If you have friends or family that STILL DON’T UNDERSTAND the silver manipulation story, have ‘em read this – Silver Market Manipulation FAQ.
The Silver Market Manipulation FAQ is a compilation of information and references about silver market manipulation assembled for the Silver Circle movie website www.SilverCircleMovie.com and exclusively hosted there.
Silver Circle is an exciting new film that portrays the world after a massive economic collapse: tyranny, explosions, monetary mayhem, romance and rebels. At the center of corruption is the Federal Reserve, which has gained enormous control over America’s economy, with disastrous effects beginning to show. Standing in opposition, is an eclectic band of rebels who have vowed to take back the freedom they once knew…and they won’t go down without a fight.
Silver Circle takes animated filmmaking to the next level while breathing new life into an age old story of precious metals, fiat currencies and corruption versus the right of every human being to basic economic freedom.
Scheduled for theatrical release in the fall of 2012, Silver Circle is an exciting independent, animated film that already has millions of enthusiastic fans and supporters worldwide The audience appeal is diverse and unique ranging from comic book geeks to survivalists living in the woods! The goal of the filmmakers is to create a new genre of “smart culture” that brings education into fun through fictional stories. Thanks & pass it on!

Mark Faber – Financial Survival Is About Diversification And Personal Survival

from FinancialSurvivalNetwork.com:
Inflation has killed the middle class and provided a windfall to Wall Street. The financial sector has outgrown the real economy substantially over the past 30 years. The financial sector no longer exists to allocate capital but rather to act as the “house” in the largest casino that the world has ever known. This means that over time the sector will revert to the mean, which means that it is due for a large deflation. This means that geographical diversification is essential to preserving wealth. Real estate has a money-laundering component that makes it a magnet for black market income around the world. People don’t trust the market any longer. Corzine and others have completely undermined the credibility of the system. And the debt collapse could occur at any time.
CLICK HERE TO LISTEN TO AUDIO INTERVIEW

Does China Plan a Gold-backed Renminbi?

by Mountain Vision, Gold Silver Worlds:
We expect the Chinese central bank to continue gradually accumulating gold, and we think that it might be planning a gold backing for the renminbi. If that were to happen, international acceptance would soar. Not for nothing was the enormous amount of gold reserves in the United States (N.B. the US reserves were at 29,663 tonnes in 1953) along with military dominance a central reason for the US dollar becoming the global reserve currency.
Since the Chinese current account surplus has been on a steady decline, the widely held opinion of the massive undervaluation of the Yuan seems to become more susceptible to questioning as well. Therefore, a quick internationalisation would make perfect sense from a Chinese point of view. Officials have also confirmed this hypothesis. The Head of Research at the People´s Bank of China recommends investing in gold in order to protect and diversify China´s currency reserves95. Zhang Jianhua said that gold was the only safe haven for risk-averse investors, whereas other forms of investment from government bonds to property were losing value”. It was necessary for the Chinese government to further optimise the portfolio structure of its currency reserves. He advised buying gold on relative weakness.
A former central banker claimed that US Treasuries were not safe in the medium to long term. In addition, China will launch a new investment fund that will invest parts of the more than USD 3,000 in currency reserves in energy and precious metals. PBoC advisor Xia recommends holding only USD 1,000bn in currency reserves, with the rest to be earmarked for strategic investments. He goes on to suggest a gradual increase in gold reserves and recommends pursuing a “buy the dip” strategy over an extended period of time.
Read More @ GoldSilverWorlds.com

In The News Today

August 19, 2012, at 9:15 pm
by Jim Sinclair

Jim Sinclair’s Commentary

Good Knight Wall Street.

Heard the rumour China is buying 6,000 tonnes of gold? It may not be as crazy as it sounds Frik Els | August 17, 2012
Hedge fund gurus George Soros and John Paulson and central banks around the world are jumping back into the bullion market.
At MarketWatch, Myra P. Saefong, speaks to Kevin Kerr, president of Kerr Trading International, Brien Lundin, editor of Gold Newsletter and Mark O’Byrne, executive director at GoldCore about "unconfirmed speculation" that China – the world’s number one producer and second-placed consumer (at the moment) – is gearing up to buy up to at least 5,000 to 6,000 tonnes starting before the end of the year.

There is also “the potential for greater demand from unreported purchases by the People’s Bank of China, should they decide to again report an increase in their gold holdings,” [O’Byrne] said.
[Kerr said] "If China buys this much gold, that would exceed annual, global production of gold, he said. “We do not have enough gold for China to buy that much, and it will take China time to purchase this amount of gold.”
“There’s a significant discrepancy between domestic gold demand in China and the level of Chinese gold imports and production, and apparently this gap is being made up by central bank gold purchases,” said Lundin.
More…




Jim Sinclair’s Commentary

And how many lives, broken bodies and minds did this expedition cost?

U.S. Says Iraqis Are Skirting Sanctions With Help for Iran By JAMES RISEN and DURAID ADNAN
Published: August 18, 2012
WASHINGTON — When President Obama announced last month that he was barring a Baghdad bank from any dealings with the American banking system, it was a rare acknowledgment of a delicate problem facing the administration in a country that American troops just left: for months, Iraq has been helping Iran skirt economic sanctions imposed on Tehran because of its nuclear program.
The little-known bank singled out by the United States, the Elaf Islamic Bank, is only part of a network of financial institutions and oil-smuggling operations that, according to current and former American and Iraqi government officials and experts on the Iraqi banking sector, has provided Iran with a crucial flow of dollars at a time when sanctions are squeezing its economy.
The Obama administration is not eager for a public showdown with the government of Prime Minister Nuri Kamal al-Maliki over Iran just eight months after the last American troops withdrew from Baghdad.
Still, the administration has held private talks with Iraqi officials to complain about specific instances of financial and logistical ties between the countries, officials say, although they do not regard all trade between them as illegal or, as in the case of smuggling, as something completely new. In one recent instance, when American officials learned that the Iraqi government was aiding the Iranians by allowing them to use Iraqi airspace to ferry supplies to Syria, Mr. Obama called Mr. Maliki to complain. The Iranian planes flew another route.
More…




Jim Sinclair’s Commentary

The means to this end is the important criteria. US Treasury rates are where they are because the Fed is the buyer. Who is going to buy these bonds in this article and with what to limit the euro interest rates? There is only one way to accomplish this in the practical sense and that is called QE for a long time, maybe to Infinity.

If This Report Is True, The ECB Is Actually Getting Close To Firing Off The Bazooka Joe Weisenthal | Aug. 19, 2012, 10:35 AM
There’s a story by Reuters citing the latest edition of German magazine Der Spiegel, which is reporting that the ECB is considering setting an explicit top yield threshold for peripheral nation borrowing costs at its meeting in September.
In other words, ECB chief Mario Draghi would come out and say something like: "Italy’s 2-year borrowing costs shall not be more than 300 basis points above Germany’s 2-year borrowing costs, and if it rises above that level, the ECB will come in and press it down via bond purchases."
It would be an incredible game changer for traders to know that the ECB was sitting there on the bid at a certain level, standing ready to buy sovereign debt.
That the ECB would eventually do something like this has been buzzed about for a long time, but speculation really started heating up in late July, when Mario Draghi came out and said that high peripheral borrowing costs were impeding the transmission of monetary policy, and thus came under the purview of the ECB.
He further hinted at something like this at the August meeting, when he talked about making purchases at the short end of the yield curve, offering the market a very clear idea that more action was on the way.
More…

 

Jim’s Mailbox

August 19, 2012, at 9:12 pm
by Jim Sinclair

Dear Mister Sinclair,
I’m a big fan of your site, not that I’m that interested in finances, but I also can see the "big bang" that’s heading our way.
I’ve been following your blog for a while and always have a nice laugh over the drawings. The thing I thought was missing in that area is a nice, 1 picture explanation of the current situation. So I made this simple drawing(in paint). Maybe you will post it, or maybe you know an artist who can make a nicer drawing about the subject.
Regards,
CIGA Jan-Albert

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