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Why Sound Money Does Not Need a Central Bank, Only the Rule of Law

Mises Canada - Mon, 06/26/2017 - 17:24

The money that all nations use today is composed either of reserves created by a central bank and/or credit money created by banks via fractional reserve banking. In the first case, a central bank can create reserve money via open market operations, whereby the central bank buys an asset–any asset–with reserves that it creates out of thin air. These reserves land in a bank and allow the banking system to create credit money in multiples of the new reserves via the fractional reserve lending process. Both methods of money creation are fraudulent, if done by any entity other than a central bank, in the case of open market operations, or a bank member of that central bank system, in the case of fractional reserve lending. All nations have thrown the rule of law out the window for these monetary counterfeiters.

 

A sound money system does not sanction counterfeiting money, either via creating reserves out of thin air or via creating credit money via fractional reserve lending. In a sound money system there is only commodity money; i.e., gold, silver, bails of tobacco, etc. Commodity money may be spent, as in using gold or silver coins in everyday transactions, or other receipts may be exchanged which represent commodity money that is stored in a safe and trusted facility. Issuing a coin that does not contain exactly the weight and purity as represented is fraud in a society governed by the rule of law. Issuing certificates or bank receipts in excess of the stored commodity also is fraud in a society governed by the rule of law.

 

A society governed by the rule of law does NOT exempt any entity, including the government itself, from the law. Thus, a central bank that creates reserves out of thin air is committing a crime, as recognized by Sir Robert Peel in his famous Bank Charter Act of 1844. A member bank that pyramids these reserves into multiples of credit money via the lending process is committing a crime, as cogently explained by Jesus Huerta de Soto in his Hayek Memorial Lecture at the London School of Economic in 2010.

 

In a free society governed by the rule of law any entity can create money and offer its use to the public. I can offer the public the use of my wife’s delicious quart jars of homemade pickles as money, either in direct exchange (for example, a jar of pickles for a box of nails at our local hardware store) or as indirect exchange (a certificate that may be redeemed for a jar of pickles upon demand). However, I have violated the law if I hand over a jar that I claim contains my wife’s pickles but instead contains something else. Likewise, I have violated the law if I issue more certificates for my wife’s pickles than jars of pickles in her larder, which fraud would be revealed should too many people try to redeem their certificates at my house.

 

Of course, for transactions among people who do not know one another personally, unlike the local recipients of my wife’s pickles, a more generally accepted commodity would be used and certificates and/or book entry receipts would have to be issued by more widely known entities. For example, Citibank or Bank of America might issue gold certificates and maintain book entry gold accounts that would be generally accepted by a wide group of strangers as long as these strangers had confidence that Citibank or Bank of America had not engaged in fraud. Gold in their vaults equaled the certificates plus book entry accounts to the gram.

 

All that is required to convert to the rule of law is the repeal of legal tender laws granting special exemptions from normal commercial law to the central bank and its system of member banks. The reverse of Gresham’s Law would prevail. i.e., sound money would drive out bad.

Ed Altman Warns Credit Market Looks Like 2007 Again, "Could Come To An End Very Dramatically"

Zerohedge - Mon, 06/26/2017 - 15:28

Legendary bankruptcy expert Dr. Edward Altman, the creator of the financial-distress sniffing Altman Z-Score, warned in mid-2007 of a “Great Credit Bubble” and that there was going to be trouble in the market. He predicted that a meltdown would stem from corporate defaults. While the primary culprit of the financial crisis turned out to be mortgage-backed securities, investors who heeded Altman’s warning nevertheless avoided a lot of grief.

As a reminder, the Altman Z-Score is the output of a credit-strength test that gauges a publicly traded company's likelihood of bankruptcy. The Altman Z-score is based on five financial ratios that can be calculated from data found on a company's annual 10K report. It uses profitability, leverage, liquidity, solvency and activity to predict whether a company has a high degree of probability of being insolvent.

Troublingly, Yahoo Finance's Julia La Roche notes that Altman sees the reckless behavior of 2007 surfacing again.

“We’ve never had such a long benign cycle. And just that one little fact is something that we should be concerned about because if it comes to one and it could come to an end very dramatically.

 

“Back in 2007 prior to the crisis in ’08 and ’09, the fundamentals of credit risk of the companies issuing bonds and taking out loans were quite low,” he said.

 

And the similarity that I see now between 2007 and 2016 is very similar fundamentals, quite a bit high risk and it doesn’t seem to bother the market because it’s the only game in town in terms of getting yield greater than what you can get for low-risk securities like governments and high-grade corporates.”

 

“Speaking about the Z-score, if you compare the average Z-score of companies in 2007 with the average in 2016, which is the last time we looked at it, guess what. The average is actually lower today than it was in 2007, and 2007 was right before the great financial crisis, and of course, in ’08 and ’09 we saw a tremendous increase in corporate bond defaults and loans.

Click the image below for a link to La Roche's full interview...

Low Z-scores are associated with financial distress. Here are some examples from Retail, Tech, and Energy...

Altman concluded:

“So the good news is that it’s no worse, but the bad news is, fundamentally, the companies are no better than they were back in 2007 at least by our model.”

And, just as Moody's predicts, if the gusher of liquidity and low rates is about to end (Janet?) then a pessimistic scenario looks very ominous...

Russian Submarine Test-Fires ICBM

Zerohedge - Mon, 06/26/2017 - 15:09

The Russian Northern Fleet’s Project 955 underwater missile cruiser, aka submarine, Yuri Dolgoruky has successfully test-fired a Bulava missile from the Barents Sea and hit all the designated targets at the Kura practice range in Kamchatka, Russia’s Defense Ministry reported on Monday according to Russia's TASS news agency.

"The Project 955 Borey-class underwater missile cruiser Yuri Dolgoruky has made a successful launch of a Bulava intercontinental ballistic missile from the designated area of the Barents Sea towards the Kura practice range in Kamchatka. The launch was made from the submerged position in compliance with a combat training plan," the Defense Ministry said.

It is unclear if the Russian launch was in response to any recent US or NATO drills: at the end of May, the Pentagon conducted its first successful test interception of a simulated  ICBM attack, modeling a possible escalation in hostilities with North Korea.


"The parameters of the Bulava intercontinental ballistic missile’s flight trajectory were practiced in the normal regime. According to the confirmed data of the registering equipment, the warheads of the intercontinental ballistic missile performed a full cycle of the flight and successfully hit the designated targets at the practice range," the Defense Ministry said.

The last time a Bulava missile was test launched was on September 27 when the submarine Yuri Dolgoruky performed an experimental salvo launch of two ICBMs from the White Sea towards the Kura practice range in the Russian Far East.

 

The Yuri Dolgoruky submarine is the Project 955 Borey-class lead vessel. The underwater cruiser is armed with a set of Bulava sea-launched intercontinental ballistic missiles and also with torpedoes. The sub can be armed with cruise missiles. It has a full displacement of 24,000 tonnes, is about 160 meters long and 13 meters wide. The R-30 Bulava is a solid-propellant ballistic missile developed specially for Project 955 submarines. It can deliver 10 warheads of 150 kilotonnes each to a distance of 10,000 kilometers.

In 2015, the strategic nuclear submarine made the National Interest list of the most deadly Russian submarines. This is what it reported:

The fourth-generation Project 955 submarines are equipped with 16 RSM-56 Bulava submarine-launched ballistic missiles with a range of 8,000 kilometers (nearly 5,000 miles). Each Bulava SLBM is fitted with up to ten thermonuclear warheads.

 

The Borei-class subs “promise to provide the Russian Navy with a potent long-range capability for years to come,” the National Interest noted.

 

The Russian Navy operates three Borei-class submarines, the flag ship Yury Dolgoruky, Alexandr Nevsky and Vladimir Monomakh. The first two were commissioned in 2013, while the latest one is in active service since December 2014.

 

The first submarine of the Project 955-A Borei-II class, dubbed Knyaz Vladimir, is expected to enter service in 2017. By 2020, the Russian Navy plans to operate a total of eight Borei-class ballistic missile submarines, three Project 955 subs and five Project 955-A watercraft.

 

The Borei-class submarines are expected to remain in service for decades to come, at least until 2040.

Why “Hate Speech” is Protected Free Speech

Zerohedge - Mon, 06/26/2017 - 15:03

Via The Daily Bell

Freedom of speech is up there with guns for rights that Americans hold sacred. The political elite has to get creative when they try to take these rights away, lest the backlash makes them lose ground rather than gain it.

By and large, that has been the case with guns; everytime talk starts about restrictive gun control, gun sales soar. Most people realize banning guns would not be feasible, and even if it was, it would not reduce crime but rather leave people vulnerable. And it is encouraging to see many also realize that the prime reason for gun ownership is to prevent genocide, especially perpetrated by the government.

Then there is a cultural meme that seems so obvious I hardly mention it, yet it deserves the spotlight every now and then.

Free speech is being conflated with hate speech in true 1984 doublespeak. There was a time when it was obvious to anyone with a brain that the limits of free speech do not stop when speech becomes offensive. It was once so cherished that people like Voltaire and Evelyn Beatrice Hall expressed that even when they disagree with what someone says, it would still be worth it to defend to the death their right to say it.

That is a pretty profound commitment to free speech which supports principles over politics. But today rival political factions delight in their opponents being punished for their use of free speech. Oh, but of course it isn’t “free speech” they want to be banned, it is “hate speech.”

The left has always been particularly good at changing the meaning of words over time, a prime example being the word liberal which should mean freedom but now means everything I don’t like should be banned.

The Mayor of Portland Oregon is one of these extremists who tried to revoke permits for a free speech rally. Apparently, he missed the irony; Mayor Ted Wheeler said he was only trying to ban “hate speech” that incites violence. He tried to connect a stabbing on a train in Portland with pro-Trump “hate speech.”

The stabbings that killed two men who tried to intervene to stop a man harassing a woman wearing a hijab do seem to be inspired by anti-Muslim sentiments. But the crime was murder, not “hate speech.” Too many illegal things are pre-crimes or victimless crimes; they are illegal because people worry that they will lead to an actual crime with a victim.

But as soon as you cross that line into banning pre-crime, there is no limit. As soon as the government gets to define what constitutes “hate speech” and what could possibly lead to a crime, there is absolutely no limit on the amount of power they can accumulate.

More easily connected to inciting violence is the incident where a man shot members of the Republican Congressional baseball team. He was clearly motivated by the hateful and violent rhetoric of the left. And yet still, the left should absolutely be allowed to continue spewing their vitriolic talking points. Kathy Griffin pretending to be ISIS is distasteful, not criminal. The line is when words cross into actions, and violent actions are already illegal, it will not help to ban things that some claim lead to violent actions.

Even if the government could identify all the paths that lead to becoming violent, it still would not be appropriate to make those pre-crimes illegal. But of course, the government does not have an all seeing omniscient eye which can accurately identify all speech and actions which lead to violence. Instead, they will decide what actions and words they want to ban, and then make up some way that those things could lead to violence.

In this case, the Mayor tried to connect a stabbing to pro-Trump free speech protestors. In other cases, Theresa May tried to conflate internet freedom with terrorism. They say cash and cryptos are only for drug dealers, and that privacy means you have something to hide. At every turn, perfectly normal behaviors are classified as risk factors leading to illegal behaviors, and therefore worthy of regulation.

It is absurd to claim that free speech doesn’t protect “hate speech,”unpopular opinions, or even violent rhetoric. This country was founded by revolution. Clearly, the founders did not envision the limit to that speech to be when someone has their feelz hurt.

They didn’t even want it to be limited to non-violent speech. The founding fathers advocated taking up arms to protect their lives, liberty, and property from an oppressive government. The speech they used roused the people to violence in righteous resistance to tyranny.

The very fact that protesters must get permits to demonstrate shows that the right to protest or peaceably assemble has already been dismantled.

I have the right to speak my mind, no matter who agrees, and no matter if they want to label it violent speech, hate speech, or revolutionary speech.

We are well past the point of begging and groveling to the government to allow us to speak freely. If you must beg to exercise a right, it is not a right you have. We have some problems in this country, and I will use my freedom to call them out.

Violence is wrong except in defense, even when the perpetrator has a fancy costume, a shiny badge, or a government salary. I think it is appropriate to kill police who break into your home without a warrant because it is a natural human right to protect yourself against unjust force.

I think working for the IRS makes you a thief, and the agents deserve to be caged until they work off their debt to those they have robbed.

I think people have the right to break off from larger political bodies until they have found governing consensus among their voluntary groups, even if that means reducing the government to the size of a sovereign individual.

People may not agree with what I say, but if they seek to stop me by threat of force from speaking my mind, they are the violent ones, who must use the government’s guns to get their way. And that is the ultimate irony, that those who call for the banning of free speech because it causes violence have just one way to enforce their ban; through the violence of the state.

"It's A Technicolor Swan... And You Can See It Coming From A Thousand Miles Away"

Zerohedge - Mon, 06/26/2017 - 14:52

Authored by James Howard Kunstler via Kunstler.com,

When I think of the Democratic Party these days, the image instantly comes to mind of little Linda Blair playing the demon-possessed child in the classic horror movie, The Exorcist (1973), most particularly the scene in which she spews a stream of pea soup-like projectile vomit into the face of kindly old Max von Sydow, as Father Merrin, the priest come to rescue her.

The pea soup represents the sort of ideology that the Democratic Party has spewed out in recent years — a toxic mush of racial identity politics, contempt for men, infantile entitlement tantrums, corporate whoring, and a demonic quest for war with the Russian Federation. Father Merrin, the priest, stands for incorruptible American men, who have been, at last, killed off by this barrage of diabolical idiocy.

Can you think of a single figure in the Democratic faction who dares to oppose the lethal nonsense this party has been sponsoring and spewing?

Who are its leaders? Chuck Schumer in the Senate — a mendacious errand boy for Wall Street? Nancy Pelosi in the House, who wears her cluelessness like a laminate of pancake makeup. Got anyone else? Uncle Joe (Biden)? That’s rich. Bernie? (Looks like his wife is about to be indicted on a federal bank fraud rap for running a small Vermont college into the ground. Whoops.)

Who else you got? Governor Andrew Cuomo of New York. I live near Albany, the state capital, and I can assure you that Governor Cuomo is ripely loathed and detested by anyone who has had actual dealings with him. Insiders tell me he makes Nixon look like Mr. Rogers. And this is apart from the fact that he seems to stand for nothing.

I registered as a Democrat in 1972 — largely because good ole Nixon was at the height of his power (just before his fall, of course), and because he was preceded as party leader by Barry Goldwater, who, at the time, was avatar for the John Birch Society and all its poisonous nonsense. The Democratic Party was still deeply imbued with the personality of Franklin Roosevelt with a frosting of the recent memory of John F. Kennedy and his brother Bobby, tragic, heroic, and glamorous. I was old enough to remember the magic of JFK’s press conferences — a type of performance art that neither Bill Clinton or Barack Obama could match for wit and intelligence — and the charisma of authenticity that Bobby projected in the months before that little creep shot him in the kitchen of the Ambassador Hotel. Even the lugubrious Lyndon Johnson had the heroic quality of a Southerner stepping up to abolish the reign of Jim Crow.

Lately, people refer to this bygone era of the 1960s as “the American High” - and by that they are not talking about smoking dope (though it did go mainstream then), but rather the post World War Two economic high, when American business might truly ruled the planet. Perhaps the seeming strength of American political leaders back then was merely a reflection of the country’s economic power, which since has been squandered and purloined into a matrix of rackets loosely called financialization — a criminal magic act whereby wealth is generated without producing anything of value.

Leaders in such a system are bound to be not just lesser men and women but something less than human. Hillary Clinton, for instance, lost the 2016 election because she came off as demonic, and I mean that pretty literally. To many Americans, especially the ones swindled by the magic of financialization, she was the reincarnation of the little girl in The Exorcist. Donald Trump, unlikely as it seems — given his oafish and vulgar guise — was assigned the role of exorcist. Unlike poor father Merrin, he sort of succeeded, even to his very own astonishment. I say sort of succeeded because the Democratic Party is still there, infested with all its gibbering demons, but it has been reduced politically to impotence and appears likely to soon roll over and die.

None of this is to say that the other party, the Republicans, have anything but the feeblest grip on credibility or even an assured continued existence. First of all there is Trump’s obvious plight as a rogue only nominally regarded as party leader (or even member). Then there is gathering fiasco of neither Trump or his party being able to deliver remedies for any of the ills of our time that he was elected to fix.

The reason for that is simple: the USA has entered Hell, or at least a condition that looks a lot like it. This is not just a matter of a few persons or a party being possessed by demons. We’ve entered a realm that is populated by nothing but demons — of our own design, by the way.

Our politics have become so thoroughly demonic, that the sort of exorcism America needs now can only come from outside politics. It’s coming, too. It’s on its way. It will turn our economic situation upside down and inside out. It’s a Technicolor swan, and you can see it coming from a thousand miles out. Wait for it. Wait for it.

*  *  *

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Shock Footage: Protester Shot Dead On Live TV During Venezuelan Riots

SHTF Plan - Mon, 06/26/2017 - 14:52

We’ve repeatedly warned our readers that a collapse of life as we know it in America would quickly devolve into violence, looting and outright anarchy. As the economic landscape in America deteriorates it is likely only a matter of time before millions of starving Americans make their way to the streets in protest. When that happens they’ll be met with a heavily armed response. It’ll start with tear gas and rubber bullets, but that won’t be enough to stave off the starving and hopeless masses, so we can fully expect real bullets to start flying in short order.

To see a real-world example of this one need only turn their attention to Venezuela, where the collapse of their currency has led to hyperinflation to the point that supplies of bare essentials like flour, meat, medicine and toilet paper are unavailable to the general population. The situation has been playing out for several years and it appears to be coming to a head.

As evidenced by the video below, which appeared on Live television, Venezuelan riot police and military are now to the point where they are willing to kill to ensure the security of the State.

As people watched on live TV, a protester hurled rocks over the fence of La Carlota air base in Caracas. His face was covered by a bandanna, and a knapsack was strapped to his chest.

Two soldiers approached, standing just feet away from the riots.

Then, one of the officers pulled out a rifle and fired, striking the activist in the chest. He stumbled off-camera. A few minutes later, a group of people are seen carrying him.

The protester, later identified as 22-year-old David José Vallenilla, died at the hospital. He had been shot in the chest three times. (WaPo)

 

Caught on tape! Maduro’s armed forces shot killed a 22 year old protester in #Venezuela pic.twitter.com/Mf9gbavR1U KenRoth hrw POTUS

— #YoSoyLibertador 97k (@EnkiVzla) June 23, 2017

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Should America ever go the way of Venezuela following an economic, financial and/or monetary collapse, this is exactly what we can except, which is why we urge our readers to prepare for the worst by stockpiling, at the very least, survival essentials like emergency foods, water purification tools and personal defense armaments so that you can stay out of the way when the shooting starts.

Related: Letters from Venezuela: This Is What Life Is Really Like in a Post-Collapse Society

ALERT: BIS And Mike Tyson Warnings Worrisome

King World News - Mon, 06/26/2017 - 14:37

As we kickoff the final week of trading in June, the BIS and Mike Tyson warnings are very worrisome.

The post ALERT: BIS And Mike Tyson Warnings Worrisome appeared first on King World News.

The 3 Reasons Why Goldman Just Turned Bullish On Gold

Zerohedge - Mon, 06/26/2017 - 14:29

Following this morning's flash crash in gold, in which a "fat finger" - usually a euphemism for any trade that can not be logically explained yet one which reprices a given asset class substantially lower as happened with gold - suddenly sold $2.2 billion worth of gold in under a minute, taking out the entire bidside stack, we were expecting banks to immediately come out with bearish reports on gold, piggybacking on the latest central bank-facilitiated smackdown, and allegedly allowing their prop desks to load up on the yellow metal on the cheap.

We were surprised, however, when moments ago Goldman came out with a report explaining why the bank is now bullish on gold, Further, in the note from Goldman's x-asset strategist, the bank laid out three specific reasons why gold may trade well above the bank's commodity team year-end target of $1,250.

This is what Goldman said moments ago:

Across asset classes last week copper was the best performing asset (+2.5%), while oil was the worst performing asset (-4.3%, Exhibit 3). Gold's performance was flat (+0.1%) over the same period, but had an intraday min at 1.6% today. Much of the focus has obviously been on oil where concerns are that expanding supply in the US and Libya will counter OPEC cuts. Gold has received less focus, although its cross-asset correlations have quietly been rising to new extremes (Exhibit 1).

 

 

Our commodity team's view is gold at $1250/oz over 12 months as higher real rates from Fed tightening could put further pressure on gold, but this may be offset by 3 things:

  1. lower returns in US equity (as we expect) should support a more defensive investor allocation,
  2. EM $GDP acceleration would add purchasing power to EM economies with high propensity to consume gold, and
  3. GS expects gold mine supply to peak in 2017.

Gold has been increasingly trading as a "risk off" asset, with its correlation with global bonds at the 100th percentile since 2002...

 

... and should thus be sensitive to our expectation of rising rates from here. However, with global growth momentum likely having peaked, gold could represent a good hedge for equity, in particular in currencies with low and anchored real yields.

 

Gold implied vol remains attractive for investors' of either view: it trades at its 0th percentile relative to the past 10 years (Exhibit 28).

While Goldman's arguments are sound, the fact that the bank is urging its clients to buy gold, ideally from Goldman, suggests that the selloff is most likely nowhere near done.

Uh WOW!!! Cryptocurrency Carnage Continues

Silver Shield - Mon, 06/26/2017 - 14:21

Silver Shield BU MiniMintages Silver Shield Group Proof MicroMintages

The post Uh WOW!!! Cryptocurrency Carnage Continues appeared first on Silver Shield Xchange.

Senate GOP Releases Revised Healthcare Bill

Zerohedge - Mon, 06/26/2017 - 14:12

Senate Republicans, led by Mitch McConnell, have just released 'modest' revisions to the "draft" healthcare bill that was dropped last week.  The only substantive change appears to be the addition of a "waiting period" on those who allowed their coverage to lapse for a period of 63 days or more during the prior coverage year.

"Starting in 2019, individuals who had a break in continuous insurance coverage for 63 days or more in the prior year will be subject to a six month waiting period before coverage begins.  Consumers will not have to pay premiums during the six month period."

Here is a summary of the changes:

Here are the changes in the revised version of the Senate GOP health care bill, just released: pic.twitter.com/hJ0sAQLHkI

— Frank Thorp V (@frankthorp) June 26, 2017

 

Of course, the real question now becomes whether or not Republican leaders in the Senate will stick to their guns and force a vote this week.  While Senator Cornyn seems adamant that a vote this week ahead of the July 4th recess is an absolute necessity, perhaps he would be well served to take a look back at how well the rushed process worked out in the House back in March (see: In Stinging Defeat, House Republicans Abandon Obamacare Repeal Effort).

I am closing the door. We need to do it this week before double digit premium increases are announced for next year. https://t.co/Cxi3qAslg3

— JohnCornyn (@JohnCornyn) June 26, 2017

 

Meanwhile, you can all expect to be bombarded by liberal politicians appearing on mainstream media outlets to tell you how even the slightest changes that cut even a single dollar of Medicaid will result in an untold number of deaths. 

As the American Medical Association points out, “medicine has long operated under the precept of Primum non nocere, or ‘first, do no harm’...which we're sure makes perfect sense to progressive legislators as it essentially implies that you can never, ever cut a single dollar of entitlement spending.  Per The Hill:

“Medicine has long operated under the precept of Primum non nocere, or ‘first, do no harm.’ The draft legislation violates that standard on many levels,” AMA Executive Vice President and CEO James Madara wrote in the letter.

 

"We believe that Congress should be working to increase the number of Americans with access to quality, affordable health insurance instead of pursuing policies that have the opposite effect, and we renew our commitment to work with you in that endeavor."

 

The Senate GOPs bill would end ObamaCare's Medicaid expansion by 2024 and cap how much the federal government spends on the Medicaid program.

 

The Senate bill would change Medicaid funding from an open-ended commitment from the federal government to states to a per-capita cap, which essentially caps spending by how many enrollees a state has.

 

It would also downsize the subsidies people get to purchase health insurance and make it easier for states to waive out of some ObamaCare regulations.

 

"It seems highly likely," Madara wrote, that the changes "will expose low and middle income patients to higher costs and greater difficulty in affording care."

Should be a fun roller coaster ride of a week.

The full text of the bill can be reviewed here:

Blistering Demand For Short End As 2Y Auction Stops Through; Bid To Cover Jumps

Zerohedge - Mon, 06/26/2017 - 14:11

With the Fed continuing to hike rates, it should come as no surprise that today's 2Y auction printed at a high yield of 1.348%, the highest stop out since October 2008. And perhaps because the yield was so high, it invited significant buyside demand, mostly from foreign central banks, with the auction stopping through the When Issued of 1.354% by 0.6 bps, the same as last month, and demonstrating surprising demand for the short end of the curve.

Confirming the strong demand was the jump in the Bid to Cover from 2.904 in May to 3.031%, the highest since November 2015, as a result of $82.0bn in total bids for $29.2bn in notes sold vs six previous auction average of $74.2b in bids for $29.1b in notes sold.

Additionally the internals were just as strong, with the Indirect Bid of 56.62% well above the 6 month average of 50.2% if slightly less than last month's 57.15%. However, with the surge in Direct Bids to 18.35%, it meant the Primary Dealer takedown of 25.04% was the second lowest on record.

Overall, this was a very strong auction, one which continued to foil the traditional narrative that in a time of rising rates demand for the short end should see some weakness, although one possible explanation comes from Bloomberg which notes that the auction was expected to benefit from short-covering demand and carry.

Joe LaVorgna Has Left Deutsche Bank

Zerohedge - Mon, 06/26/2017 - 14:00

Two years after correctly abandoning his long-held bullish perspective on the US economy's growth prospects, Deutsche Bank's chief economist Joe LaVorgna has reportedly left the bank, "planning to work elsewhere in financial services."

Some may recall, that back in 2013, we noted that when it comes to forecasting the future, even one Groundhog Phil has a success rate of 71%, or over a standard deviation more accurate compared to Joe "Coin Toss" LaVorgna's 51%.

LaVorgna had long been optimistic about U.S. economic expansion. About two years ago he changed his view by correctly predicting a deceleration in gross domestic product growth. After Donald Trump was elected president of the U.S., the economist said the new leader was a “game changer” and that if the tax rate were lowered, stocks in the S&P 500 would rally.

Bloomberg reports that he left the German lender last week and is planning to work elsewhere in financial services, said one of the people, who asked not to be identified discussing personnel matters. Peter Hooper who worked alongside LaVorgna, will continue to handle duties tied to economic forecasts and analysis, said another person.

LaVorgna has worked at Deutsche Bank for about two decades, joining from Lehman Brothers Holdings Inc., according to Financial Industry Regulatory Authority records. A spokeswoman for Deutsche Bank declined to comment.

US Destroyer Ignored Warnings Ahead Of Deadly Collision

Zerohedge - Mon, 06/26/2017 - 13:53

The latest update on the mysterious circumstances surrounding a collision between a Philippines’ flagged container ship and a Navy destroyer that left seven sailors dead has arrived, courtesy of Reuters.

The news agency is reporting exclusively that the USS Fitzgerald ignore the much-larger cargo ship’s repeated warnings to get out of its path of travel.

“In the first detailed account from one of those directly involved, the cargo ship's captain said the ACX Crystal had signaled with flashing lights after the Fitzgerald "suddenly" steamed on to a course to cross its path.

 

The container ship steered hard to starboard (right) to avoid the warship, but hit the Fitzgerald 10 minutes later at 1:30 a.m., according to a copy of Captain Ronald Advincula's report to Japanese ship owner Dainichi Investment Corporation that was seen by Reuters."

The incident has spurred no fewer than six investigations, including two internal hearings by the US Navy and a probe by the United States Coast Guard (USCG) on behalf of the National Transportation Safety Board. The Japan Transport Safety Board, the JCG and the Philippines government are also conducting separate investigations.

However, the details of what transpired during the June 17 collision remain sketchy because, as Reuters, noted, nobody is talking.

“The U.S. Navy declined to comment and Reuters was not able to independently verify the account.

 

A spokesman for the U.S. Navy's Seventh Fleet in Yokosuka, the Fitzgerald's home port, said he was unable to comment on an ongoing investigation.

 

Spokesmen from the Japan Coast Guard (JCG), U.S. Coast Guard and ship owner, Dainichi Invest, also declined to comment.”

As Reuters reports, investigators will examine witness testimony and electronic data to determine how a naval destroyer fitted with sophisticated radar could be struck by a vessel more than three times its size. Another focus of the probes has been the length of time it took the ACX Crystal to report the collision. The JCG says it was first notified at 2:25 a.m., nearly an hour after the accident. In his report, the ACX Crystal's captain said there was "confusion" on his ship's bridge, and that it turned around and returned to the collision site after continuing for 6 nautical miles.

As we reported three days ago, data obtained from the ACX Crystal suggests the ship was on autopilot at the time of the collision, which has raised the specter that the incident was caused by sophisticated hackers.

And while investigators say they’ve found no evidence the collision was intentional, that the ship was relying on its computerized navigation system at the team of the collision means hackers could’ve infiltrated into the ship’s navigation system and steered it into the Navy ship – though the collision off the coast of Japan could’ve just as easily been caused by a malfunction, or human error if the system’s warning signals were ignored.

The incident left the highest rarity of such crashes has also raised questions about what caused the collision, and who might be at fault.

Collisions at sea involving Navy ships are extremely uncommon, occurring only once or twice a decade. Indeed, the incident amounted to the worst loss of life for the Navy since the bombing of the USS Cole in Yemen’s Aden harbor, an incident that left 17 sailors dead.

US naval history includes a few notable accidents. In 2005, the USS San Francisco, a Los Angeles-class submarine, hit a seamount or underwater mountain, injuring dozens of crew. In 2001, the USS Greeneville, another Los Angeles-class sub, performed an emergency ballast blow for special visitors aboard the vessel, surfacing quickly and hitting a Japanese fishing ship on the surface near Hawaii, killing nine crew members of the Japanese vessel.

In one of the Navy’s worst incidents, the aircraft carrier Wasp in April 1952 collided with the destroyer Hobson in the North Atlantic, killing 176 men.

Mr. McGrath declined to speculate as to what occurred or who or what might be to blame in the Fitzgerald incident. The collision occurred in darkness in a high-traffic area of the Pacific, he said. The most concerning aspect of the collision, from the destroyer’s point of view, is the damage to the Fitzgerald’s starboard side below the waterline, resulting from the container ship’s construction and the way its bow hit, he said.

the Fitzgerald collided with the merchant vessel, which was more than three times its size, some 56 nautical miles southwest of Yokosuka early on Saturday. Three people were evacuated to the U.S. Naval Hospital in Yokosuka after the collision, including the ship's commanding officer, Bryce Benson, who was reported to be in stable condition. According to Reuters, Benson took command of the Fitzgerald on May 13. He had previously commanded a minesweeper based in Sasebo in western Japan.

The Fitzgerald limped into port on Saturday evening, listing around 5 degrees, a U.S. Navy spokesman in Yokosuka said. The flooding was in two berthing compartments, the radio room and auxiliary machine room, he said. There were 285 crew onboard.
 

Dave Kranzler: Central banks try to scare the crap out of the gold market

GATA - Mon, 06/26/2017 - 13:48

12:51p ET Monday, June 26, 2017

Dear Friend of GATA and Gold:

Dave Kranzler of Investment Research Dynamics today quotes an explanation for today's central bank flash crash in gold, provided by gold market analyst John Brimelow of John Brimelow's Gold Jottings report:

"The day was well chosen as the Muslim world including Turkey was closed for the end of Ramadan, as was India, which has the amiable habit of observing the holidays of religious minorities."

Kranzler adds: "Four a.m. Eastern time is one of the slowest, lowest-volume trading periods during any 24-hour period. Why would a seller of a large number of contracts sell at that time of day when the largest buyers of what is being sold are not in the market at the time of the sale?"

He answers his own question: "to scare the crap out of the market."

Kranzler's commentary is headlined "Central Bank Intervention Slams Paper Gold" and it's posted at the IRD internet site here:

http://investmentresearchdynamics.com/central-bank-intervention-slams-pa...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

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Newrange Gold Stakes 111 Additional Claims at Its Pamlico Gold Project in Nevada

Company Announcement
Monday, June 26, 2017

VANCOUVER, British Columbia, Canada -- Newrange Gold Corp. (TSX-V: NRG, US: CMBPF) is pleased to report that the company has staked 111 new claims at the company's Pamlico Project in Nevada. The new claims:

-- Add 928 hectares to property.

-- Increase property by 75 percent to 2,165 hectares.

-- Better encompass the dominant gold trends in the area.

-- Cover areas of prospects and mine workings with historic surface samples ranging from 0.5 to 3.0 grams of gold per metric tonne in highly deformed and altered carbonate sediments.

-- Add multiple prospective targets in favorable volcanic rocks known to host high-grade gold mineralization as currently being explored in the Merritt Zone.

-- Provide a significant exploration and operational "buffer" around previous holdings. ...

... For the remainder of the announcement:

http://www.newrangegold.com/i/pdf/NRG_NR_20170626-Final.pdf

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 25-28, 2017
Hilton New Orleans Riverside Hotel, New Orleans, Louisiana
http://neworleansconference.com/

Mines and Money London
Business Design Centre
London, England, United Kingdom
Monday-Thursday, November 27-30, 2017
http://london.minesandmoney.com/

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Italy’s newest bank bailout cost as much as its annual defense budget

Simon Black - Mon, 06/26/2017 - 13:34

Two more Italian banks failed over the weekend– Banco Popolare di Vicenza and Veneto Banca.

(In other news, the sky is blue.)

The Italian Prime Minister himself stated that depositors’ funds were at risk, so the government stepped in with a bailout and guarantee package that could cost taxpayers as much as 17 billion euros.

That’s a lot of money in Italy– around 1% of GDP. In fact it’s basically as much as the 17.1 billion euros they spent on national defense last year (according to an estimate by Italian think tank IAI).

You don’t have to have a PhD in economics to figure out that NO government can afford to spend its entire defense budget every time a couple of medium-sized banks need a bailout.

That goes especially for Italy, whose public debt level is already 132% of GDP… and rising. They simply don’t have the money.

Moreover, the European Union actually has a series of new rules collectively known as the “Bank Recovery and Resolution Directive” which is supposed to prevent failing banks from being bailed out with taxpayer funds.

Here’s the thing– Italy has LOTS of banks that are on the ropes.

So with taxpayer resources exhausted (and technically prohibited), who’s going to be on the hook next time a bank goes under?

Easy. By process of elimination, the only other party left to fleece is the depositor.

Here’s how it works:

Let’s say a bank takes in $1 billion in deposits.

Naturally the bank doesn’t just keep $1 billion in cash sitting in its vault. They invest the money. They make loans. They buy assets.

So the bank’s balance sheet shows $1 billion worth of assets, and $1 billion worth of deposits that they owe to their customers.

But sometimes banks screw up when they invest their customers’ funds. Loans go bad. Borrowers default.

For example, if a bank invested $200 million in Greek government bonds, and then the government of Greece defaults, the bank would only have $800 million in assets remaining.

But they’d still owe their depositors the full $1 billion.

How can a bank with only $800 million in assets possibly honor the $1 billion worth of deposits they owe to their customers?

They can’t. And there’s a word for this: insolvency.

This is the problem with so many banks across Italy (and many other countries around the world). They owe their depositors more than their assets are worth.

Again, the taxpayers are ultimately on the hook from this weekend’s bailouts, along with some subordinated bondholders who got wiped out.

But Italy’s banking problems go far beyond two little banks. This is a systemic issue across the country’s ENTIRE banking sector. And the solution goes far beyond what the taxpayers can afford.

So next time around it could very well be the depositors who end up losing money.

Even if not, it hardly seems worth taking the chance.

By the way, I’m not just talking about Italy here.

You know how they say “time heals all wounds?” Well, not in banking. Some wounds never heal.

And there are countless banks and banking systems around the world that never fully recovered from the 2008 crisis.

This raises the question– why hold money at a shaky bank in a country where the government is in debt up to its eyeballs? Especially when there are so many better options.

Most people never think twice about where they hold their savings, typically opening accounts based on some irrelevant anachronism like geography.

It’s 2017. Why trust all of your savings to a financial institution simply because it’s across the street?

If you run a website, you wouldn’t necessarily choose a web hosting company because it’s located in your home town. You’d find the best company with the best service and best uptime.

If you want to buy a new mobile phone, you wouldn’t just go to a local retailer. You’d probably shop online and find the best deal, even if it’s from a company across the planet.

Why should money be any different?

The world is a big place with LOTS of options and opportunities.

And there are plenty of places where the banks might have MUCH stronger fundamentals, located in jurisdictions with minimal debt.

But if this is too exotic, you could also consider physical cash.

With an at-home safe, you effectively become your own banker, eliminating the middle man and eliminating the risk to your savings.

This is all part of a great Plan B.

Clearly there are risks in a number of banking systems, including most of the West where the majority of governments are themselves insolvent.

Perhaps those risks are never realized.

But it’s hard to imagine you’ll be worse off for holding a little bit of physical cash… or to consider the option of holding a portion of your savings in a bank that’s conservative, well-capitalized, and located in a country with zero debt.

Even if nothing bad ever happens, there’s no downside in having taken these steps.

But if these risks do pan out, your Plan B will end up being the best insurance policy you’ve ever had.

Source

Financial Times calls gold's flash crash 'mysterious'

GATA - Mon, 06/26/2017 - 13:31

But the newspaper will be damned before it puts to central banks any questions about their gold trading.

* * *

Gold Remains Under Pressure After Mysterious Drop

By Adam Samson
Financial Times, Lodon
Monday, June 26, 2017

Gold, one of this year's best-performing commodities, is still pinned around the day's lows after a mysterious tumble earlier today.

Spot gold was recently down $12.69, or 1 percent, at $1,243.9 a troy ounce. That represented a modest recovery from the day’s lows of $1,236.43, which was the weakest level on an intraday basis since May, according to Bloomberg data.

Traders struggled to pin the fall on a particular event, with some analysts suggesting that an accidental "fat finger" trade may have triggered the initial fall, although moves like that typically immediately unwind.

"One question market participants are asking is: What happened to gold?," Citigroup strategists pondered. ...

... For the remainder of the report:

https://www.ft.com/content/31b7f81e-d803-31bb-8835-95205b7c1c03


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GoldMoney was established in 2001 by James and Geoff Turk and is safeguarding more than $1.7 billion in metals and currencies. Buy gold, silver, platinum, and palladium from GoldMoney over the Internet and store them in vaults in Canada, Hong Kong, Singapore, Switzerland, and the United Kingdom, ­taking advantage of GoldMoney's low storage rates, among the most competitive in the industry. GoldMoney also offers delivery of 100-gram and 1-kilogram gold bars and 1-kilogram silver bars. To learn more, please visit:

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Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 25-28, 2017
Hilton New Orleans Riverside Hotel, New Orleans, Louisiana
http://neworleansconference.com/

Mines and Money London
Business Design Centre
London, England, United Kingdom
Monday-Thursday, November 27-30, 2017
http://london.minesandmoney.com/

* * *

Help keep GATA going:

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Trump Responds: "Unanimous Supreme Court Decision A Clear Victory For Our National Security"

Zerohedge - Mon, 06/26/2017 - 13:29

Many have been waiting with bated breath all morning for Trump's response on the Supreme Court's decision regarding his travel ban.  While we expected that response would come in the form of a snarky tweet, it has unfortunately been revealed via a more carefully crafted official statement.

pic.twitter.com/MW1ZddE7CZ

— Maggie Haberman (@maggieNYT) June 26, 2017

 

Here is the full text:

Statement from President Donald J. Trump

 

Today's unanimous Supreme Court decision is a clear victory for our national security. It allows the travel suspension for the six terror-prone countries and the refugee suspension to become largely effective.

 

As President, I cannot allow people into our country who want to do us harm. I want people who can love the United States and all of its citizens, and who will be hardworking and productive.

 

My number one responsibility as Commander in Chief is to keep the American people safe. Today's ruling allows me to use an important tool for protecting our Nation's homeland. I am also particularly gratified that the Supreme Court's decision was 9-0.

Of course, we're sure that today's ruling is also "particularly gratifying" for the Trump administration in light of their previous accusations that rulings by the 9th district court in San Francisco were politically motivated.

Well, as predicted, the 9th Circuit did it again - Ruled against the TRAVEL BAN at such a dangerous time in the history of our country. S.C.

— Donald J. Trump (@realDonaldTrump) June 13, 2017

David Haggith: Central banks buying stocks have rigged U.S. market beyond recovery

GATA - Mon, 06/26/2017 - 13:01

12:05p ET Monday, June 26, 2017

Dear Friend of GATA and Gold:

Financial writer David Haggith today details the documentation available from CME Group, operator of the major futures exchanges in the United States, showing that governments and central banks are surreptitiously intervening constantly in all markets -- not just bonds but also commodities and stocks. Some of this documentation has already been brought to your attention by GATA and Zero Hedge.

Haggith's analysis is headlined "Central Banks Buying Stocks Have Rigged U.S. Stock Market Beyond Recovery" and it's posted at his blog, The Great Recession," here:

http://thegreatrecession.info/blog/central-banks-buying-stocks/

Much of this documentation has been sent by GATA to most major financial news organizations throughout the world but it remains a prohibited subject with them.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

ADVERTISEMENT

Newrange Gold Stakes 111 Additional Claims at Its Pamlico Gold Project in Nevada

Company Announcement
Monday, June 26, 2017

VANCOUVER, British Columbia, Canada -- Newrange Gold Corp. (TSX-V: NRG, US: CMBPF) is pleased to report that the company has staked 111 new claims at the company's Pamlico Project in Nevada. The new claims:

-- Add 928 hectares to property.

-- Increase property by 75 percent to 2,165 hectares.

-- Better encompass the dominant gold trends in the area.

-- Cover areas of prospects and mine workings with historic surface samples ranging from 0.5 to 3.0 grams of gold per metric tonne in highly deformed and altered carbonate sediments.

-- Add multiple prospective targets in favorable volcanic rocks known to host high-grade gold mineralization as currently being explored in the Merritt Zone.

-- Provide a significant exploration and operational "buffer" around previous holdings. ...

... For the remainder of the announcement:

http://www.newrangegold.com/i/pdf/NRG_NR_20170626-Final.pdf

Join GATA here:

New Orleans Investment Conference
Wednesday-Saturday, October 25-28, 2017
Hilton New Orleans Riverside Hotel, New Orleans, Louisiana
http://neworleansconference.com/

Mines and Money London
Business Design Centre
London, England, United Kingdom
Monday-Thursday, November 27-30, 2017
http://london.minesandmoney.com/

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16

Revenge: Watch As Programmer Floods IRS Phone Scam Hotline With Thousands Of Calls

SHTF Plan - Mon, 06/26/2017 - 12:33

You’ve no doubt received calls from luxury vacation hotlines, an Internal Revenue Service representative seeking money, and perhaps even gotten an email or two from a twice-removed, long-lost cousin who happens to be a Nigerian prince looking to park money in your bank account.

With advancements in technology, scammers these days have been successful in separating their targets from millions of dollars by targeting thousands upon thousands of victims daily.

One programmer decided enough is enough and found a novel way to fight back.

After receiving a call from someone with a foreign accent claiming to be an IRS agent collecting back taxes, the founder of the Project Mayhem Youtube channel decided that payback was in order. So, he wrote a short auto-dialing script designed to flood the scammers’ phone number with so many calls – 28 calls per second – that they were no longer able to make calls to potential victims, get voice mails or even receive calls from ‘marks’ trying to contact the company to pay their supposed debts.

The results are hilarious, with the scammers getting so frustrated that they start cussing up a storm and admitting they are scammers.

Because they leave voice mails and demand people to call back or be arrested, what if they couldn’t receive calls?

Better yet, what if they got so many calls, that we flooded the scammers, preventing any more scams…

And then recorded everything?

… This should work perfectly, 28 calls per second…

Watch:

To give you an idea of how unbelievably successful such scams can be, Indian police recently raided an IRS phone scam company and arrested 70 individuals. The company reportedly stole some $300 million from targets in the United States who fell for the con.

Jim’s Mailbox

JS Mineset - Mon, 06/26/2017 - 11:44

I went through this personally in 90-91, when light aircraft took a hit. European currencies were strong @ the same time and, as a result, but of the small plane fleet got sold to European interests.CIGA Ben K You Know It’s Bad When… Prices For Used Jets Are CrateringJune 25, 2017 America’s wealthiest individuals are... Read more »

The post Jim’s Mailbox appeared first on Jim Sinclair's Mineset.

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