Month: September 2019

Lawsuit Argues That San Francisco’s Anti-NRA Resolution Violates the First Amendment

Yesterday the National Rifle Association filed a First Amendment lawsuit against the city of San Francisco, arguing that an anti-NRA resolution recently approved by the Board of Supervisors violates the constitutional rights to freedom of speech and freedom of association. By threatening to cut off government contractors with ties to the NRA, the complaint says, the city is retaliating against the organization for its political advocacy and chilling the speech of its supporters.

The resolution, which the supervisors unanimously approved last week, absurdly describes the NRA as a “domestic terrorist organization.” Its sponsor, Supervisor Catherine Stefani, is a vehement critic of the NRA who views the organization as the chief obstacle to the gun control laws she favors.

“Such advocacy is Stefani’s constitutional right,” the NRA says. “But just as the Constitution entitles her to criticize and debate the NRA, it forbids her from wielding the powers of her office to suppress or retaliate against the NRA’s exercise of its First Amendment rights….Far from protected government speech, Defendants’ actions constitute a ‘threat[] to employ coercive state power’ against NRA members and entities doing business with the NRA.”

The lawsuit asks for an injunction to prevent enforcement of the resolution, which urges city officials to “assess the financial and contractual relationships our vendors and contractors have” with the NRA and “limit those entities who do business with the City and County of San Francisco from doing business with this domestic terrorist organization.” Insofar as that edict affects contractors who are sympathetic to the NRA, it violates the principle established by the U.S. Supreme Court in the 1996 case Board of County Commissioners v. Umbehr. “The First Amendment protects independent contractors from the termination of at-will government contracts in retaliation for their exercise of the freedom of speech,” the Court said in that decision.

The NRA also argues that the city would be violating the First Amendment by forcing contractors to “publicly disclose affiliations that are disfavored by some, and which have no relation whatsoever to the ability of a vendor or contractor to perform requested services or provide requested goods under a government contract.” That sort of inquisition, it says, unconstitutionally compels speech and “would chill a person of ordinary firmness from continuing to speak against gun control, or from associating expressively or commercially with the NRA.”

More broadly, the complaint says, the resolution, which is expressly aimed at undermining the NRA’s influence, is a form of illegal retaliation for constitutionally protected speech. By forcing contractors to “choose between maintaining their relationships with the NRA and keeping or obtaining government contracts,” the complaint says, the city would deprive the organization of services it could otherwise obtain. That is similar to the NRA’s argument in its lawsuit against New York Gov. Andrew Cuomo (D) over his attempts to bully state-regulated banks and insurers into shunning the group.

When he allowed the New York lawsuit to proceed last year, Judge Thomas McAvoy of the U.S. District Court for the Northern District of New York observed that the governor seemed to be sending “the message that insurers and financial institutions that do not sever ties with the NRA will be subject to retaliatory action by the state.” That message, McAvoy ruled, “provides a sufficient basis to invoke the First Amendment.”

Notably, Stefani’s main defense against the NRA’s constitutional claims seems to be that the supervisors didn’t really mean it. “It’s a resolution,” she told The New York Times. “It’s not an ordinance. It’s nonbinding.” But even the threat of scrutinizing contractors for ties to the NRA can be expected to have a chilling effect, and any attempt to follow through on the aspiration to stop contractors from doing business with the organization would implicate the First Amendment.

People who support gun control and/or hate the NRA may be inclined to applaud the San Francisco resolution. They probably would feel differently about a similar resolution, approved by legislators in a more conservative city, that targeted, say, Black Lives Matter or NARAL Pro-Choice America. Aside from the poisonous tendency to portray one’s political opponents as mass murderers, San Francisco’s resolution embodies the view that constitutional principles are worth respecting and defending only when they help people you like—in which case they are not principles at all.

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Lawsuit Argues That San Francisco’s Anti-NRA Resolution Violates the First Amendment

Yesterday the National Rifle Association filed a First Amendment lawsuit against the city of San Francisco, arguing that an anti-NRA resolution recently approved by the Board of Supervisors violates the constitutional rights to freedom of speech and freedom of association. By threatening to cut off government contractors with ties to the NRA, the complaint says, the city is retaliating against the organization for its political advocacy and chilling the speech of its supporters.

The resolution, which the supervisors unanimously approved last week, absurdly describes the NRA as a “domestic terrorist organization.” Its sponsor, Supervisor Catherine Stefani, is a vehement critic of the NRA who views the organization as the chief obstacle to the gun control laws she favors.

“Such advocacy is Stefani’s constitutional right,” the NRA says. “But just as the Constitution entitles her to criticize and debate the NRA, it forbids her from wielding the powers of her office to suppress or retaliate against the NRA’s exercise of its First Amendment rights….Far from protected government speech, Defendants’ actions constitute a ‘threat[] to employ coercive state power’ against NRA members and entities doing business with the NRA.”

The lawsuit asks for an injunction to prevent enforcement of the resolution, which urges city officials to “assess the financial and contractual relationships our vendors and contractors have” with the NRA and “limit those entities who do business with the City and County of San Francisco from doing business with this domestic terrorist organization.” Insofar as that edict affects contractors who are sympathetic to the NRA, it violates the principle established by the U.S. Supreme Court in the 1996 case Board of County Commissioners v. Umbehr. “The First Amendment protects independent contractors from the termination of at-will government contracts in retaliation for their exercise of the freedom of speech,” the Court said in that decision.

The NRA also argues that the city would be violating the First Amendment by forcing contractors to “publicly disclose affiliations that are disfavored by some, and which have no relation whatsoever to the ability of a vendor or contractor to perform requested services or provide requested goods under a government contract.” That sort of inquisition, it says, unconstitutionally compels speech and “would chill a person of ordinary firmness from continuing to speak against gun control, or from associating expressively or commercially with the NRA.”

More broadly, the complaint says, the resolution, which is expressly aimed at undermining the NRA’s influence, is a form of illegal retaliation for constitutionally protected speech. By forcing contractors to “choose between maintaining their relationships with the NRA and keeping or obtaining government contracts,” the complaint says, the city would deprive the organization of services it could otherwise obtain. That is similar to the NRA’s argument in its lawsuit against New York Gov. Andrew Cuomo (D) over his attempts to bully state-regulated banks and insurers into shunning the group.

When he allowed the New York lawsuit to proceed last year, Judge Thomas McAvoy of the U.S. District Court for the Northern District of New York observed that the governor seemed to be sending “the message that insurers and financial institutions that do not sever ties with the NRA will be subject to retaliatory action by the state.” That message, McAvoy ruled, “provides a sufficient basis to invoke the First Amendment.”

Notably, Stefani’s main defense against the NRA’s constitutional claims seems to be that the supervisors didn’t really mean it. “It’s a resolution,” she told The New York Times. “It’s not an ordinance. It’s nonbinding.” But even the threat of scrutinizing contractors for ties to the NRA can be expected to have a chilling effect, and any attempt to follow through on the aspiration to stop contractors from doing business with the organization would implicate the First Amendment.

People who support gun control and/or hate the NRA may be inclined to applaud the San Francisco resolution. They probably would feel differently about a similar resolution, approved by legislators in a more conservative city, that targeted, say, Black Lives Matter or NARAL Pro-Choice America. Aside from the poisonous tendency to portray one’s political opponents as mass murderers, San Francisco’s resolution embodies the view that constitutional principles are worth respecting and defending only when they help people you like—in which case they are not principles at all.

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Tailing 3-Year Treasury Auction Sees Solid Demand Despite Rising Yield

Tailing 3-Year Treasury Auction Sees Solid Demand Despite Rising Yield

After August’s 3Y Treasury auction sold to blistering demand despite the lowest yield since September 2017, there was some speculation that today’s modest back up in rates would provide even more interest for short-dated paper. Yet while today’s sale of $38BN in 3Y notes indeed saw a modest increase in yields, rising from 1.562% last month to 1.573% today, demand was mixed, with the high yield fractionally tailing the When Issued 1.570% by 0.3bps.

The internals, however, were almost identical to last month’s, with the bid to cover virtually unchanged at 2.42 (up from 2.41), and just a whisker above the lowest yield since April 2009. That did not prevent foreign bidders from stepping up however, with Indirects taking down 46.2%, just below the 46.7% last month, and a tad lower than the 6 auction average of 47.0%. Meanwhile, with Directs dropping from 19.3% to 16.6% this led to a modest increase Dealers to 37.2% from 34.0%, if in line with the recent auction average of 36.5%.

Overall, this was a slightly weaker auction compared to last month, if certainly nothing to be concerned about.


Tyler Durden

Tue, 09/10/2019 – 13:17

Tags
Business Finance

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Trump ‘Scotlandgate’ Air Force Story Crushed By NYT Report Of Long-Standing Lodging Deal

Trump ‘Scotlandgate’ Air Force Story Crushed By NYT Report Of Long-Standing Lodging Deal

The latest leftist triggering over President Trump has once again fizzled – although the truth never gets as much attention as the initial outrage. 

After the MSM spent days lambasting Trump over a report that seven US Air Force C-17 crew stayed at his Scotland resort during an overnight refueling stop, the New York Times has revealed in a follow-up that the Trump Organization had a preexisting lodging deal with both the Scottish airport and the US military that predated his presidency. 

The government records, released through Scottish Freedom of Information law, show that the Trump organization, starting in 2014, entered a partnership with the airport to try to increase private and commercial air traffic to the region.

As part of that arrangement, the Trump Organization worked to get Trump Turnberry added to a list of hotels that the airport would routinely send aircrews to, even though the Turnberry resort is 20 miles from the airport, farther away than many other hotels, and has higher advertised prices.

***

Both the Defense Department and executives at the airport confirmed on Monday that the airport also has a separate arrangement with the United States Air Force. Under that arrangement, the Scottish airport not only refuels American military planes but also helps arrange hotel accommodations for arriving crews, as it does for some civilian and commercial aircraft. –NYT

“We provide a full handling service for customers and routinely arrange overnight accommodation for visiting aircrew when requested,” the Prestwick airport said in a Monday statement, adding “We use over a dozen local hotels, including Trump Turnberry, which accounts for a small percentage of the total hotel bookings we make.”

Not only that, Trump’s resort was cheaper than the Marriott.

The crew, which consisted of active duty and national guard members from Alaska, was charged $136 per room, which was less expensive than a Marriott property’s rate of $161. And both were under the per diem rate of $166. –NYT

“A local agent on contract with the U.S. government assisted with the reservations and indicated that there wasn’t a room available closer to Prestwick airport,” said the Air Force in a statement, while a DoD official added on Monday that the Air Force “relies on a contracted representative at the Prestwick airport to support our aircrew needs.”

The number of such stops by Air Force planes at Prestwick rose from 180 in 2017 to 257 last year and 259 so far this year. The 259 stops this year included 220 overnight stays. Since October 2017, records show 917 payments for expenses including fuel at the airport worth a total of $17.2 million.

Air Force officials could not say on Monday how many times military crews had been sent to Trump Turnberry, but added that they are now going through vouchers to come up with such a count. –NYT

On Monday, President Trump tweeted: “I know nothing about an Air Force plane landing at an airport (which I do not own and have nothing to do with) near Turnberry Resort (which I do own) in Scotland, and filling up with fuel, with the crew staying overnight at Turnberry (they have good taste!). NOTHING TO DO WITH ME” 

Then, Trump dismissed the entire ordeal, suggesting that he’s so wealthy that the extra business was a drop in the bucket. 

“I don’t need to have somebody take a room overnight at a hotel,” he said. 

That said, the “gotcha” in the NYT report is that “documents obtained from Scottish government agencies show that the Trump Organization, and Mr. Trump himself, played a direct role in setting up an arrangement between the Turnberry resort and officials at Glasgow Prestwick Airport” (which still predated his presidency). 

Deputy commander of the Air Force Air Mobility Command Lt. Gen Jon T. Thomas said in a Monday interview that the Air Force has been using Prestwick for stopovers since at least the late 1990s, and that the rising number of stopovers was based entirely on operational demands; the airport has 24-hour operations and is in a convenient location. 

That said, Thomas says the Air Force is reviewing the decision to place Air Force crew members at a hotel owned by the Trumps. 

“Let’s make sure we are considering potential for misperception that could be created by where we billet the aircrews,” adding “It is a reasonable ask for us to make sure we are being sensitive to misperceptions that could be formed by the American people or Congress or anyone else.” 


Tyler Durden

Tue, 09/10/2019 – 13:11

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The Department of Homeland Security Is a Mess of Misconduct and Ineptitude

With bigger government now popular on both the nationalist right and the progressive left, it’s an appropriate moment to review what constitutes existing government. A recent inspector general’s report may offers some crucial insights. The report shows that the inner workings at the most recently created executive department—the Department of Homeland Security (DHS)—are a mess despite years of warnings about problems in its component agencies.

“The Department does not have sufficient policies and procedures to address employee misconduct,” notes the new report from the DHS Office of the Inspector General (OIG), dated June 17, 2019. “Specifically, the Department’s policy does not include procedures for reporting allegations of misconduct, clear and specific supervisor roles and expectations, or clearly defined key discipline terms used across the components.”

As examples of what constitutes misconduct among DHS employees, the report mentions “being absent without leave, improper use of a government-issued credit card, and sleeping on the job.” That sort of petty, but damaging, misbehavior probably represents the most common sort of misconduct. But bad behavior also includes much more serious issues, too.

Keeping a handle on that sort of misbehavior could potentially be a big job. “Although DHS has no department-wide misconduct allegation data, the Joint Intake Center for U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) received more than 16,368 allegations of misconduct and other reportable information in fiscal year 2014 alone,” notes OIG.

Unfortunately, there’s nobody really in charge of making sure DHS employees don’t run amuck. The “Employee Relations office has limited staffing to perform these functions and staff do not believe they are responsible for managing the allegation process,” states the OIG report.

This is a pretty remarkable state of affairs 17 years after the Department of Homeland Security was established in the wake of the 9/11 terrorist attacks. The department is now massive and includes such familiar agencies as CBP, ICE, the Federal Emergency Management Agency (FEMA), the Secret Service, the Transportation Security Administration (TSA), and the Coast Guard.

Agencies do have their own internal disciplinary procedures, as illustrated by the CBP and ICE misconduct numbers. Yet there’s no DHS-wide standard for tracking or penalizing bad behavior by government employees. And the individual agencies can be very bad at policing themselves.

The Secret Service, for example, has a long and sordid record of scandals involving drinking on the job, abusing power, and simply dropping the ball. Employees also seem prone to looking for leverage over people who criticize that record. “A Secret Service database containing sensitive personally identifiable information (PII) pertaining to Congressman Jason Chaffetz, Chairman of the House Committee on Oversight and Government Reform, was accessed on approximately 60 occasions by Secret Service employees” after Chaffetz tangled with the Secret Service director during a hearing about agents’ misconduct, the inspector general noted in 2015.

The Coast Guard also has problems that would seem to require external oversight. A whistleblower at the scandal-beset Coast Guard Academy suffered retaliation from her superiors after she reported racial and sexual harassment. An “investigation substantiated Complainant’s claim that she was retaliated against on the basis of her complaints, in violation of the Military Whistleblower Protection Act,” the inspector general found.

The Coast Guard has also been remiss about “properly reporting service members who are prohibited from possessing a firearm”—a hot button issue at a time when politicians are constantly bloviating about the alleged evils of armed civilians.

Meanwhile, at CBP, data showed “that arrests for corruption of CBP personnel far exceed, on a per capita basis, such arrests at other federal law enforcement agencies,” according to one 2015 report by the Homeland Security Advisory Council. A subsequent report cited a “broken disciplinary process,” “endemic corruption,” and “unlawful and unconstitutional use of force” at CBP. It recommended changes including shifting CBP personnel to “excepted service” status to streamline crackdowns on serious misbehavior. But that didn’t happen, and the CBP remains beset by problems.

Across DHS agencies, a little adult supervision would seem to be in order. But it seems the department simply isn’t up to the job of providing such oversight. The problems at the component agencies of the DHS, and at the DHS itself, have been headline fodder for years.

Jeh Johnson, the Obama administration’s Secretary of Homeland Secretary, was openly frustrated with the hot mess over which he presided. But the most that came out of that frustration were committees acknowledging problems and recommending reforms which would fail to be implemented.

Nonetheless, there’s a growing fetish on the nationalist right and the progressive left for a more active federal government. Both the nationalists and the progressives want federal authorities to reshape the economy and our personal lives, and both want to regulate our speech.

All that molding, reshaping, and regulating is going to require a lot of new government employees. And there’s no reason to expect those employees would behave better than their colleagues in the various agencies under current executive departments.

Any new Departments of Telling You What to Do for Your Own Good are bound to produce instances of misconduct petty and great, just like the Department of Homeland Security does now. So, if you want to know what sort of fate the latest prophets of big government have in mind for us, peruse that inspector general’s report on disciplining misconduct at DHS and look through all the reports that came before. And then brace yourself for a rough ride.

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The Department of Homeland Security Is a Mess of Misconduct and Ineptitude

With bigger government now popular on both the nationalist right and the progressive left, it’s an appropriate moment to review what constitutes existing government. A recent inspector general’s report may offers some crucial insights. The report shows that the inner workings at the most recently created executive department—the Department of Homeland Security (DHS)—are a mess despite years of warnings about problems in its component agencies.

“The Department does not have sufficient policies and procedures to address employee misconduct,” notes the new report from the DHS Office of the Inspector General (OIG), dated June 17, 2019. “Specifically, the Department’s policy does not include procedures for reporting allegations of misconduct, clear and specific supervisor roles and expectations, or clearly defined key discipline terms used across the components.”

As examples of what constitutes misconduct among DHS employees, the report mentions “being absent without leave, improper use of a government-issued credit card, and sleeping on the job.” That sort of petty, but damaging, misbehavior probably represents the most common sort of misconduct. But bad behavior also includes much more serious issues, too.

Keeping a handle on that sort of misbehavior could potentially be a big job. “Although DHS has no department-wide misconduct allegation data, the Joint Intake Center for U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE) received more than 16,368 allegations of misconduct and other reportable information in fiscal year 2014 alone,” notes OIG.

Unfortunately, there’s nobody really in charge of making sure DHS employees don’t run amuck. The “Employee Relations office has limited staffing to perform these functions and staff do not believe they are responsible for managing the allegation process,” states the OIG report.

This is a pretty remarkable state of affairs 17 years after the Department of Homeland Security was established in the wake of the 9/11 terrorist attacks. The department is now massive and includes such familiar agencies as CBP, ICE, the Federal Emergency Management Agency (FEMA), the Secret Service, the Transportation Security Administration (TSA), and the Coast Guard.

Agencies do have their own internal disciplinary procedures, as illustrated by the CBP and ICE misconduct numbers. Yet there’s no DHS-wide standard for tracking or penalizing bad behavior by government employees. And the individual agencies can be very bad at policing themselves.

The Secret Service, for example, has a long and sordid record of scandals involving drinking on the job, abusing power, and simply dropping the ball. Employees also seem prone to looking for leverage over people who criticize that record. “A Secret Service database containing sensitive personally identifiable information (PII) pertaining to Congressman Jason Chaffetz, Chairman of the House Committee on Oversight and Government Reform, was accessed on approximately 60 occasions by Secret Service employees” after Chaffetz tangled with the Secret Service director during a hearing about agents’ misconduct, the inspector general noted in 2015.

The Coast Guard also has problems that would seem to require external oversight. A whistleblower at the scandal-beset Coast Guard Academy suffered retaliation from her superiors after she reported racial and sexual harassment. An “investigation substantiated Complainant’s claim that she was retaliated against on the basis of her complaints, in violation of the Military Whistleblower Protection Act,” the inspector general found.

The Coast Guard has also been remiss about “properly reporting service members who are prohibited from possessing a firearm”—a hot button issue at a time when politicians are constantly bloviating about the alleged evils of armed civilians.

Meanwhile, at CBP, data showed “that arrests for corruption of CBP personnel far exceed, on a per capita basis, such arrests at other federal law enforcement agencies,” according to one 2015 report by the Homeland Security Advisory Council. A subsequent report cited a “broken disciplinary process,” “endemic corruption,” and “unlawful and unconstitutional use of force” at CBP. It recommended changes including shifting CBP personnel to “excepted service” status to streamline crackdowns on serious misbehavior. But that didn’t happen, and the CBP remains beset by problems.

Across DHS agencies, a little adult supervision would seem to be in order. But it seems the department simply isn’t up to the job of providing such oversight. The problems at the component agencies of the DHS, and at the DHS itself, have been headline fodder for years.

Jeh Johnson, the Obama administration’s Secretary of Homeland Secretary, was openly frustrated with the hot mess over which he presided. But the most that came out of that frustration were committees acknowledging problems and recommending reforms which would fail to be implemented.

Nonetheless, there’s a growing fetish on the nationalist right and the progressive left for a more active federal government. Both the nationalists and the progressives want federal authorities to reshape the economy and our personal lives, and both want to regulate our speech.

All that molding, reshaping, and regulating is going to require a lot of new government employees. And there’s no reason to expect those employees would behave better than their colleagues in the various agencies under current executive departments.

Any new Departments of Telling You What to Do for Your Own Good are bound to produce instances of misconduct petty and great, just like the Department of Homeland Security does now. So, if you want to know what sort of fate the latest prophets of big government have in mind for us, peruse that inspector general’s report on disciplining misconduct at DHS and look through all the reports that came before. And then brace yourself for a rough ride.

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Here’s Every Reason To Avoid Buying A Gold ETF

Here’s Every Reason To Avoid Buying A Gold ETF

Authored by Simon Black via SovereignMan.com,

Buckle up, this one’s going to be entertaining… because I should have called this note “Why you should always read the fine print.”

This morning I read through the prospectus and annual reports of the most popular Gold ETFs in the world.

First, some background:

ETF stands for ‘exchange-traded fund’. It’s sort of like a mutual fund that’s listed on the stock exchange, meaning investors can buy/sell shares of an ETF just like they would buy/sell shares of Apple, Ford, or (God help us) Netflix.

But unlike Apple, which is an operating business with employees, products, revenue, etc., an ETF is NOT an operating business. It’s a fund that merely pools capital to own assets.

The benefit for investors is that ETFs can be an easy and convenient way to invest in certain assets which would otherwise be difficult to buy.

If someone wants to buy Egyptian stocks, for example– they could open a brokerage account in Cairo… or buy an Egypt ETF that’s listed on the New York Stock Exchange.

The ETF is a LOT easier for most investors.

But there are also ETFs for gold and silver. And I find this mystifying.

We’re not talking about Egyptian stocks. Gold and silver are easy to buy. You could have Canadian Maple Leaf gold coins delivered to your home with a few mouse clicks.

So gold ETFs provide no added convenience.

Yet there’s an enormous amount of downside.

First off– it’s important to know that if you buy an ETF, you’re paying for a ton of unnecessary expenses.

The ETF has to pay custodian fees, marketing fees, listing fees to the New York Stock Exchange, audit fees, management fees, etc.

I’m chairman of the Board of Directors for a company that’s listed on a stock exchange, and trust me– the listing fees are REALLY expensive.

If you own physical gold in your own safe, you wouldn’t have to suffer the cost of paying lawyers, auditors, and investment bankers.

But GLD does. Which means that as a GLD investor, YOU are fundamentally paying those costs.

And remember that ETFs aren’t operating businesses. Apple makes money selling overpriced hardware. But GLD has no products, and hence doesn’t generate any revenue.

So how do they pay for this mountain of expenses?

By selling gold.

Your gold.

GLD trustees periodically sell off the gold (that’s supposedly owned by the investors) in order to pay expenses.

Right in its own prospectus, GLD tells us:

“The amount of gold [held by GLD] will continue to be reduced during the life of the Trust due to the sales of gold necessary to pay the Trust’s expenses”

And like I said, those expenses are NOT cheap. I’ll come back to that.

This is important because GLD (and several other ETFs) are structured as ‘flow-through’ trusts.

So when they sell gold to pay expenses, this can create hidden tax headaches for GLD investors. The IRS could treat those gold sales as if you personally had sold gold, triggering capital gains consequences.

GLD’s 2018 annual report states this clearly on page 21:

“When the Trust sells gold . . . to pay expenses, a U.S. Shareholder generally will recognize gain or loss. . .”

But aside from the excessive costs and possible tax consequences, ETFs are simply not designed for your benefit. They’re designed for Wall Street’s benefit.

GLD, for example, has a terribly complex structure involving a ‘sponsor’, ‘marketing agent’, ‘trustee’, ‘custodian’, and various ‘Authorized Participants’.

These middlemen standing between you and your gold are all big Wall Street banks who suck value from your investment.

Here’s something really incredible: with GLD, the physical gold is supposed to be held with the ‘Custodian’, which is HSBC Global.

But according to GLD’s legal documents, the Custodian has the right to use Sub-Custodians. Yet they’re not required to have any written agreement with the sub-custodians.

Those sub-custodians can then shift your gold even further to sub-sub-custodians, which also does not require a written agreement.

This is directly from GLD’s report:

“The Custodian’s selected subcustodians may appoint further subcustodians.”

“These further subcustodians are not expected to have written custody agreements with the Custodian’s subcustodians that selected them.”

This is where it gets really ridiculous:

“[T]he Custodian does not undertake to monitor the performance by subcustodians of their custody functions or their selection of additional subcustodians and is not responsible for the actions or inactions of subcustodians.”

In other words, the gold could end up with some sub-sub-sub-custodian. No written agreement is required.

And, even though the primary custodian (HSBC) is receiving handsome fees, they have no obligation to monitor the sub-custodians, nor can HSBC be held responsible if someone screws up.

Moreover, the report states:

“The Custodian and the Trustee do not require any direct or indirect sub-custodians to be insured or bonded with respect to their custodial activities…

“Therefore, Shareholders cannot be assured that the Custodian maintains adequate insurance or any insurance with respect to the gold held by the Custodian on behalf of the [ETF].”

So, not only is there zero requirement to even have a written agreement before storing your gold with some sub-custodian, there’s also no requirement to insure the gold that they’re storing.

SOUNDS LIKE ANOTHER WIN FOR THE LITTLE GUY!

Seriously, you have to be insane to buy GLD.

Sure, it’s convenient to click a button and buy GLD with your brokerage account.

But it’s also convenient to buy physical gold coins on Amazon. Jeff Bezos can deliver them to your house via drone strike later this afternoon.

Yes, GLD is liquid. You can sell shares anytime during market hours. But physical gold is also liquid. You can sell it anywhere in the world.

So gold ETFs have no real advantage.

But the disadvantages are numerous. You’re paying a ton of unnecessary expenses, dealing with potential tax consequences, and enriching big Wall Street banks who have no obligation to do anything on your behalf.

No thanks.


Tyler Durden

Tue, 09/10/2019 – 12:45

Tags
Business Finance

via ZeroHedge News https://ift.tt/2AhFB2d Tyler Durden

Jesus

… a very common name in Mexico, and I assume in many Spanish-speaking countries, as well as among Hispanics in the U.S. But my sense is that it’s very rare in most other Christian countries, and apparently even quite rare (from a cursory Internet search) in Portuguese-speaking countries.

Nor is it just a Catholic thing; there seem to be extremely few Irish and Polish Jesuses, and I think Italian ones as well. Isa (generally seen as the Arabic equivalent of Jesus) is apparently a not uncommon name in at least some Muslim countries; but my question here is focusing on Christian countries, since Jesus would presumably have a special role there.

(Note that the name “Joshua” is related to the name “Jesus”; Yeshua is apparently a variant of Yehoshua. But today, I think, Joshua isn’t really seen as that closely linked to Joshua, just as Jacob isn’t really seen as that closely linked to James, despite their historical link, except when we’re using historical references, such as the Jacobean period or the Jacobite rebellion.)

So what’s the scoop? Inquiring minds want to know.

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China Scraps Foreign Investment Limits For Stock, Bond Markets… But Does Anyone Care

China Scraps Foreign Investment Limits For Stock, Bond Markets… But Does Anyone Care

China continues to try to take steps to open its markets – if not so much the yuan which has to remain firmly behind the Chinese firewall to avoid an FX-driven capital flight panic – to the rest of the world, or rather, to US-based buyers of Chinese stocks and bonds.

To that end, overnight Beijing eliminated a rule that previously required approvals to purchase quotas to buy Chinese stocks and bonds. The change was announced in a statement by the State Administration of Foreign Exchange on Tuesday, Bloomberg reported.

China’s SAFE removed the $300 billion overall cap on overseas purchases of the assets in the latest push by Chinese authorities to increase the use of the yuan in international transactions, if not to further internationalize the yuan whose “fair value” remains strictly the purview of the PBOC. As Bloomberg notes, about two thirds of the cap had remained unused at the time. The move also comes at a critical time, just as China seeks foreign capital to reverse its soon-to-be-negative balance of payments.

Yet while China can claim it is doing everything in its power to open up its markets to foreign investors, some ask if this is just another purely optical move since only about $111 billion of the current $300 billion quota was being met. It is therefore unclear whether the rule change will attract any new capital to the country’s $13 trillion bond and $6.9 trillion stock markets. Furthermore, there already exist “alternate” routes for investing in China, such as trading links with Hong Kong Exchanges & Clearing, which allow offshore investors to trade stocks and bonds in China via the former British colony.

Ding Shuang, chief China and North Asia economist at Standard Chartered Bank said: “The move is more symbolic and won’t trigger significant capital inflows. But it’s a good gesture for the officials to make, as the 70th anniversary of the People’s Republic of China’s founding is approaching and there’s a lack of positive development in the trade talks with the U.S.”

In total, according to the PBOC foreign investors held 2 trillion yuan in Chinese bonds and 1.6 trillion yuan of stocks onshore at the end of the June.

China started trying to grant overseas investors ease of access to its markets in 2000, when it was trying to negotiate entry into the World Trade Organization. It has continued since President Donald Trump has called the country a ” one-sided beneficiary of global commerce.”

Beijing first eased rules last year, removing lock in periods and allowing investors who had used the quote to repatriate their money at any time. Previously, there had been controls on how much investors were allowed to take out of the country at once. The country has also allowed foreign banks and insurers to take controlled stakes in some local ventures. For instance UBS Group, JPMorgan and Nomura Holdings all won approval for majority control of their local securities joint ventures. 

The changes to the Qualified Foreign Institutional Investors (QFII) and Renminbi Qualified Foreign Institutional Investors (RQFII) programs means that foreigners only need to register before investing in Chinese securities. 

SAFE believes the move will “make China’s bond and equity markets better and more widely accepted by international markets.” 

As Gerry Alfonso, director at Shenwan Hongyuan Group concluded: “It is a gesture, trying to reduce red tape and reinforcing the message that they are continuing to open the Chinese capital markets. It probably does not have a massive short term impact on stocks, but overall it is a good development.”


Tyler Durden

Tue, 09/10/2019 – 12:27

Tags
Business Finance

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Jesus

… a very common name in Mexico, and I assume in many Spanish-speaking countries, as well as among Hispanics in the U.S. But my sense is that it’s very rare in most other Christian countries, and apparently even quite rare (from a cursory Internet search) in Portuguese-speaking countries.

Nor is it just a Catholic thing; there seem to be extremely few Irish and Polish Jesuses, and I think Italian ones as well. Isa (generally seen as the Arabic equivalent of Jesus) is apparently a not uncommon name in at least some Muslim countries; but my question here is focusing on Christian countries, since Jesus would presumably have a special role there.

(Note that the name “Joshua” is related to the name “Jesus”; Yeshua is apparently a variant of Yehoshua. But today, I think, Joshua isn’t really seen as that closely linked to Joshua, just as Jacob isn’t really seen as that closely linked to James, despite their historical link, except when we’re using historical references, such as the Jacobean period or the Jacobite rebellion.)

So what’s the scoop? Inquiring minds want to know.

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