Tag: finance

While Jeff Gundlach's favorite chart continues to diverge, as Treasury yields tumble (10Y at 2.08 lows today) and despite gold's surge, copper's keeping up…

Knowledge Leaders Capital blog's Steven Vannelli takes a look at how to value gold and how to leverage the gold breakout into fixed income markets.

Today gold is trading over $1,325, the highest since November 9, 2016.

The breakdown in the USD Index last week was a good signal telegraphing the short-term breakout in gold.

Gold is notoriously difficult to value, but we have found one relationship that seems to consistently work. In the Flow of Funds, we can distill the aggregate value of land in the US by the household sector.

We subtract the nominal value of household real estate from the replacement cost of structures to arrive at the land value of US household real estate. The value of land in the US held by the household sector—a similar asset to gold that doesn’t yield anything per se—tends to lead the value of gold by about five years. Given the increase in land values in recent years, gold should be finding a more solid footing and trending up for the next few years.

In addition to buying gold, gold stocks are always another way to play an increase in gold prices.

A couple other ideas in the fixed income realm are: 1) longer-dated TIPS in the US, 2) Australian bonds, 3) Canadian bonds, and 4) longer-dated fed funds futures.

A move in gold back to $1,350 should correspond to a 40bps move down in 30-year TIPS, which with a duration of around 25 years, would correspond to a 10% increase in price.

Australian bonds, represented by the JP Morgan Government Bond Index, in USD, should also have a good response to higher gold prices.

Same idea when we look at Canadian bonds.

December 2019 Federal Funds futures began trading in January of this year. Rates implied in the December 2019 Fed Funds futures contract have fallen from a high of 2.1% in March to 1.54% currently. So, prices have risen from 97.9 to 98.46 since March.

via http://ift.tt/2gn7uyV Tyler Durden

In mid-April, we reported that "just as tensions over North Korea's nuclear program and potential US airstrikes run wild, the NNSA said that in conjunction with the US Air Force, it had completed the first qualification flight test of B61-12 gravity nuclear bomb on March 14 at the Tonopah Test Range in Nevada."

Four months later, and just as concerns over North Korea's provocative launches have send shockwaves across global markets – again – the US National Nuclear Security Administration (NNSA) announced another successful flight test of B61-12 gravity nuclear bombs in Nevada. The second qualification flight test for the nuclear bomb was carried out by the NNSA and the US Air Force.

#NNSA & @usairforce complete second qualification flight test of B61-12 to validate design & system performance. https://t.co/fNgPyJTD4m http://pic.twitter.com/1A3x6lw44j

— Frank Klotz (@FrankKlotzNNSA) August 28, 2017

According to the NNSA press release, two B61-12 gravity bombs (without a nuclear warhead) were dropped from F-15 fighter jets on August 8 at Tonopah Test Range in Nevada, and were designed to test the "non-nuclear functions and the aircraft’s capability to deliver the weapon." These tests are part of a series over the next three years to qualify the B61-12 for service. As we noted at the time, the first qualification flight test occurred in March.

“The B61-12 life extension program is progressing on schedule to meet national security requirements,” said Phil Calbos, acting NNSA deputy administrator for Defense Programs. “These realistic flight qualification tests validate the design of the B61-12 when it comes to system performance.”

According to the editor-in-chief of National Defense magazine, Igor Korotchenko, the second test of the nuclear bomb could indicate that Washington is speeding up its rearmament program. "The fact of the test of this modification of the nuclear bomb indicates that the US continues an accelerated rearmament program of its tactical nuclear arsenal in Europe, as well as that both Washington and Brussels are considering the scenario of a limited nuclear war in Europe," he said.

Furthermore, as RT reminds us, the test comes two months after Politico reported that US senators were pushing legislation to compel President Donald Trump to take steps to develop new missiles which would be “the first steps to jettisoning what is known as the INF treaty.” Moscow said that such a move would be “ridiculous” and would damage America itself as well as its European allies.  In July, Republican Senator Tom Cotton, a member of the House Armed Services Committee, suggested bypassing the milestone treaty that bans the testing, production and possession of land-based intermediate-range missiles by both Moscow and Washington. He urged the White House to “facilitate the transfer of cruise missile technology to our (American) allies,” explaining that “only the US and Russia have signed this treaty. No other country did.”

After the announcement of the plans to upgrade the B61 nuclear weapon, Russia expressed its concerns that the move could destabilize global security. “This means that the armaments threshold could in theory have been lowered, which of course will destabilize the situation to a certain extent,”said the deputy head of Russia’s Foreign Ministry, Sergey Ryabkov, in August 2016.  The program, started under President Obama means that over the next 30 years Washington could spend up to $1 trillion to modernize the US nuclear arsenal. Shortly after his election, president Trump called for the US to “greatly strengthen and expand its nuclear capability,” though he criticized the Obama administration’s costly modernization program during the election campaign.

* * *

The latest test was the second in a series that will be conducted over the next three years to qualify the B61-12 for service. Three successful development flight tests were conducted in 2015.

"This demonstration of effective end-to-end system performance in a realistic ballistic flight environment marks another on-time achievement for the B61-12 Life Extension Program,” said Brig. Gen. Michael Lutton, NNSA’s principal assistant deputy administrator for military application. “The successful test provides critical qualification data to validate that the baseline design meets military requirements. It reflects the nation's continued commitment to our national security and that of our allies and partners."

"The flight test included hardware designed by Sandia and Los Alamos National Laboratories, manufactured by the Nuclear Security Enterprise plants, and mated to the tail-kit assembly section, designed by the Boeing Company under contract with the Air Force Nuclear Weapons Center," the NNSA statement said.

Phil Hoover, an engineer at Sandia National Laboratories, shows off a flight test
body for a B61-12 nuclear weapon

The B61-12 consolidates and replaces four B61 bomb variants in the nation’s nuclear arsenal. The first production unit is scheduled to be completed by March 2020.

The original B61 gravity bomb is the mainstay of the Air Force’s nuclear arsenal and one of the legs of the so-called nuclear triad, along with the intercontinental ballistic missiles deployed from either ground-based silos or oceangoing submarines. The B61 nuclear gravity bomb, deployed from U.S. Air Force and NATO bases, has almost 50 years of service, "making it the oldest and most versatile weapon in the enduring U.S. stockpile." Numerous modifications have been made to improve the B61’s safety, security, and reliability since the first B61 entered service in 1968, and four B61 variants remain in the stockpile: the 3, 4, 7, and 11. However, the aging weapon system requires a life extension to continue deterring potential adversaries and reassuring our allies and partners of our security commitments to them.

The B61-12 LEP will refurbish, reuse, or replace all of the bomb’s nuclear and non-nuclear components to extend the service life of the B61 by at least 20 years, "and to improve the bomb’s safety,  effectiveness, and security" according to the NNSA. The B61-12 first production unit will occur in FY 2020. The bomb will be approximately 12 feet long and weigh approximately 825 pounds. The bomb will be air-delivered in either ballistic gravity or guided drop modes, and is being certified for delivery on current strategic (B-2A) and dual capable aircraft (F-15E, F-16C/D & MLU, PA-200) as well as future aircraft platforms (F-35, B-21).

President Trump has endorsed the ambitious and expensive plan to modernize the US nuclear triad, begun under his predecessor.

The August test of the B61-12 was the second in a series with the final design review due in September 2018 and the first production unit scheduled for completion by March 2020. Once the bomb is authorized for use in 2020, the US plans to deploy some 180 of the B61-12 precision-guided thermonuclear bombs to five European countries as follows:

• Belgium – 20;
• Germany -20;
• Italy – 70;
• Netherlands – 20;
• Turkey -50;

… although in light of the recent deterioration in relations between Washington and Ankara, it will likely consider reassessing the Turkish deployment.

via http://ift.tt/2wlngyt Tyler Durden

Amid desperate efforts to save stranded citizens – police report over 3,000 rescues alone – and the arrival of the so-called 'cajun navy' to assist, Harvey continues to pummel Texas, paralyzing Houston as the region braces for yet more rain after the Tropical Storm recharged over warm waters and heading back in-land.

“This is, if not the largest, it has to be categorized as one of the largest disasters America has ever faced,” Texas Gov. Greg Abbott declared at a press conference Monday afternoon.

Houston's main water-way, Buffalo Bayou, shows over 30 inches of rain and it's about to get a lot worse. Buffalo Bayou is the main waterway that snakes through the heart of Houston, and the water levels of two reservoirs that feed into it are particularly concerning.

“The reality is the water is continuing to rise,” Mr. Turner said. “The water level along Buffalo Bayou in all likelihood will increase.”

Forecasters say Harvey will move slowly to the northeast throughout the week and shower some parts of the state with another 15 to 20 inches of rainfall by the end of Thursday. Additionally, The Post reports that certain areas to the west of Houston could see as much as 50 inches of rain by the time the storm is over — which would be the largest recorded total in Texas history.

The death toll remains unclear.

WSJ notes that on Monday evening, Mayor Sylvester Turner said three deaths in Houston had occurred during the storm but could not confirm reports that a family of six had died in their vehicle.

#PhotosFromTheField: Aerial photos from our rescue crews earlier today. #Harvey #TMDHarvey @USNationalGuard http://pic.twitter.com/fAcqPDSnmt

— Texas Military Dept (@TXMilitary) August 29, 2017

Authorities said they fear the death toll will rise.

Roads surrounding Houston’s Vintage and Sugar Land hospitals “have eight feet of water,” said Michael Covert, senior vice president of Catholic Health Initiatives’s Texas operations. “They have become islands of humanity.”

Citizen rescuers also jumped in to help fellow residents, using private motor boats and even kayaks to ferry stranded people to safety as thousands poured into shelters around the state.

With waters continuing to rise, some people panicked as they waited for rescue.

“They’re making it difficult for us to rescue them,” said Clyde Cain, a member of the Louisiana-based Cajun Navy rescue force. “You have people rushing the boat. Everyone wants to get in at the same time. They’re panicking. Water is rising.”

FEMA officials said they expected to see at least 30,000 people show up to shelters by the end of the slow-moving storm.

“It is imperative that we do everything possible to protect the lives and safety of people across the state of Texas as we continue to face the aftermath of this storm,” Gov. Abbott said.

President Trump will touch down in Corpus Christi, Texas, at noon Tuesday to survey the flood damage with his wife, Melania. “Protecting the lives of our people is my highest priority,” he said at a press conference Monday. “Every asset at my command is at the disposal of local officials.” …

Leaving now for Texas!

— Donald J. Trump (@realDonaldTrump) August 29, 2017

Meanwhile, The Post reports that FEMA Administrator Brock Long said he expects about 450,000 people will file for disaster relief, adding the agency will “be here for several years helping you guys recover.”

“There are several factors that make it worse than Katrina. For one, there is the scope of the flooding. Harris County and the surrounding areas are so saturated,” Brown told the Houston Chronicle.

 

“Also, the amount of damages will continue to grow. There will be mold and structural damages adding up.” Brown said when Tropical Storm Harvey finally goes away, it will leave an incredible bill for taxpayers to pick up.

 

“This will be unfathomably expensive for both the private sector and taxpayers,” Brown said. “This will be easily the most expensive natural disaster in American history.”

One look at this image and we suspect his unprecedented statement may still be understatement…

via http://ift.tt/2vomaEQ Tyler Durden

More information has emerged from Israeli Prime Minister Netanyahu's meeting with President Putin last week. The two met in the Black Sea resort town of Sochi on August 23rd to discuss recent developments in Syria. According to new shocking reports in both Arab and Israeli media, a senior Israeli official accompanying Netanyahu on the trip threatened to assassinate Syrian President Assad by bombing his palace in Damascus, while further adding that Israel will seek to derail the US-Russia brokered de-escalation deal reached in Astana, Kazakhstan earlier this summer.

According to the Jerusalem Post:

A senior Israeli official warned the Russian government that if Iran continues to extend its reach in Syria, Israel will bomb Syrian President Bashar Assad's palace in Damascus, according to reports in Arab media.

 

Israel also warned that if serious changes do not happen in the region, Israel will make sure the ceasefire deal, reached by the United States and Russia in Astana, Kazakhstan, will be nullified.

 

A senior Israeli source told the Al-Jadida newspaper that no understanding was reached between the Israelis and the Russians. Prime Minister Benjamin Netanyahu did, however, make it clear to Putin that its concerns must be met or Israel will be forced to act.

 

The warnings occurred in a meeting between Netanyahu and Russian President Vladimir Putin last week.

As we noted at the time, Netanyahu's brazen words to Putin that 'preventative' escalation in Syria to destroy what Israeli defense officials commonly call the "Iranian land bridge" (or the so-called 'Shia crescent') reveals increased desperation as even the West is now seeming to ignore Netanyahu's repeatedly declared "red lines". While Netanyahu's public statements in Sochi were provocative enough – openly threatening direct military escalation in Syria should his demand for Iranian forces withdrawal not be met – the newly revealed threat of assassinating the sitting head of a sovereign U.N. member state takes the war of words to a whole new level.

Israel has warned Russia it will bomb Assad's palace if Iran continues to expand in Syria, according to officials https://t.co/uqunMXSPvG

— Liz Sly (@LizSly) August 28, 2017

The Israeli Prime Minister also shared intelligence with Putin which purports to reveal Iranian plans for long-term presence in Syria. It appears Netanyahu is now making his case before world media, with new BBC and other international headlines reading, "Iran building missile factories in Syria and Lebanon: Netanyahu".

The Jerusalem Post details exactly which officials accompanied Netanyahu in Russia:

The prime minister, accompanied by Mossad head Yossi Cohen, the newly appointed head of the National Security Council, Meir Ben-Shabbat, and Likud minister Ze'ev Elkin who served as his translator, flew to Sochi on the Black Sea for the meeting, returning to Israel shortly after it ended.

We further explained that Israel has long been at open war with Syria, in spite of the fact that both Israeli officials and international media rarely acknowledge it. In 2013 Israel launched a massive missile attack against a Syrian defense technology facility in Jamraya outside of Damascus. And yet more brazen was the 2016 attack targeting Damascus International Airport, which killed a well-known Hezbollah commander. In a significant admission earlier this month, the head of Israel's air force acknowledged nearly one hundred IDF attacks on convoys inside Syria over the course of the past 5 years.

Netanyahu himself was recently caught on a hot mic bragging that Israel had struck Syrian targets at least "a dozen times". And this is to say nothing of Israel's covert support to al-Qaeda linked groups in Syria's south, which has reportedly involved weapons transfers and treatment of wounded jihadists in Israeli hospitals, the latter which was widely promoted in photo ops involving Netanyahu himself. As even former Acting Director of the CIA Michael Morell once directly told the Israeli public, Israel's "dangerous game" in Syria consists in getting in bed with al-Qaeda in order to fight Shia Iran.

Assad's presidential office building – New Shaab Palace – sits above central Damascus. Image source: Flickr/Nawar-2012

While Israel has for years played more of a quiet 'long game' in Syria outside the media spotlight: providing tacit support to al-Qaeda terrorists in Syria along its Golan border (in Netanyahu's words to Putin: Israel prefers the "Sunni sphere" over "bringing in Shi'ites" which reflects a disturbing widely held view among Israeli officials that ISIS is the 'lesser evil') as well semi-regularly bombing select targets, its increased willingness to loudly and unreservedly voice its intentions to the world is the result new realities it appears unprepared to accept.

What new realities in the region are now pushing Israeli officials to incautiously leak threats of Assad's assassination to the Arab press?

First, the Syrian government and its allies Russia, Iran, and Hezbollah are winning the war. In Israel's thinking the Astana agreement potentially means Iranian presence will now be backed by Russian air power. It also appears that in the United States' backing of 'de-escalation zones' which necessarily involves Iranian enforcement, the US is giving tacit approval to Iranian troop presence in Syria. This is Israel's worst nightmare: it invested so heavily in toppling Assad in the first place in order to roll back what it claims is 'Iranian and pro-Shia expansion' in the region.

Secondly, the US has essentially signaled to Israel: you are on your own when it comes to Syria policy. Trump shut down the CIA program to topple Assad – a program which had the assistance of Israeli intelligence. Other world leaders like France's Macron have further stated that Assad is here to say for the near future.

Third, Hezbollah has just finished wiping up ISIS on the Lebanese-Syrian border and now appears more confident than ever. Israel went all in with the Sunni insurgency fighting Assad as that insurgency also threatened the existence of Hezbollah, which Israeli defense officials understand to be the most formidable foe right across Israel's border. On Monday Hezbollah General Secretary Hassan Nasrallah declared August 28 as Lebanon's "Second Day of Liberation" in a televised address celebrating Lebanon's military victory over ISIS in the country's northeast. As we reported recently, it's an 'open secret' that US special forces advisers are indirectly coordinating with Hezbollah through the Lebanese Army, though politically sensitive as Lebanon depends heavily on US military aid.

And finally, Israel senses that international opinion is shifting quickly now that ISIS is rapidly folding. It knows that world opinion will not stomach another Iraq style invasion for regime change in the Middle East. And yet such a prospect of regime change in Syria is now all the more difficult as Russian air defenses are so deeply entrenched. Israel now finds itself isolated and Netanyahu's brazenness stems from this realization. His screams grow louder from a position of weakness.

Now, the only question that remains is: on the remote chance that Israel does escalate militarily in Syria, what will Russia let it get away with?

via http://ift.tt/2wli11u Tyler Durden

Authored by Charles Hugh Smith via OfTwoMinds blog,

You don't need an army to achieve World Domination; all you need is enough cheap credit to buy up everything that generates the highest value and/or income.

World Domination–it has a nice ring, doesn't it? Here's how to achieve it in 5 steps:

1. Turn everything into a commodity that can be traded on the global market: land, leases on land, options to purchase land, houses, buildings, rooms in slums, labor, tools, robots, water, water rights, mineral rights, rights to air routes, ships, aircraft, political power, shares in corporations, government bonds, municipal bonds, corporate bonds, student loans that have been bundled into debt-based instruments, the income from city parking meters, electricity, software, advertising, marketing, media, social media, food, energy, insurance, gold, metals, credit, interest-rate swaps and last but not least, financial instruments that control and/or pyramid all the real-world goods and assets that have been commoditized (i.e. almost everything).

Why is this the essential first step in World Domination? Once something has been commoditized, it can be bought and sold in the global marketplace in fiat currencies–currencies that are not backed by any real-world asset and that can be created out of thin air by central and private banks.

You see the dynamic, right? Create credit-currency out of thin air, and then use this "free money" to buy up the real world. Quite a trick, isn't it? Get a means of exchange for essentially nothing (i.e. money at near-zero interest rates) and then trade this for assets that produce goods and services everyone else needs or wants.

Now we understand steps 2 and 3:

2. Enable private banks to create money out of thin air via fractional reserve banking. You know the drill: banks can issue $15 in new loans for every $1 in cash they hold in reserve. (Depending on the current regulations, it might as little as $10 or as much as $35 that can be created and lent out for every $1 held in cash reserve.)

In the current zero-interest rate environment, this new money can be borrowed for near-zero carrying costs by corporations and financiers.

3. Establish a central bank with essentially unlimited ability to bring money into existence and use it to backstop the private banking sector. If the private banks get in trouble, no problem, the central bank is there to bail them out with unlimited lines of credit and an unlimited ability to create new money.

4. Undermine/destroy local economies' ability to organize production and consumption without using credit and fiat currencies (i.e. money controlled and issued by central and private banks). Trading goods on barter? Get rid of that. Using social ties rather than cash or bank credit to organize production and consumption? Eliminate that capability. Locally issued currencies? That's against the law. Using cash? bad, very bad–everyone must use banks and bank credit instead.

Once these four steps are in place, the 5th step is easy:

5. Buy up all the productive assets and income streams of the world with nearly free credit-money. No saver can compete with corporations and financiers with access to billions of dollars in nearly-free credit-money.

It doesn't matter if you earn $1,000 or $100,000 a year–you will be outbid.

Once everything can be bought on the global marketplace, and you have nearly unlimited access to super-cheap credit, you don't need an army to achieve World Domination; all you need is enough cheap credit to buy up everything that generates the highest value and/or income.

Now you understand why I say: if we don't change the way we create and distribute money, we've changed nothing.

via http://ift.tt/2vAWWPi Tyler Durden

Gold Surges 2.6% After Jackson Hole and N. Korean Missile

– Gold surges as N. Korea fires ballistic missile over Japan
– Safe haven buying sees gold break out to 10-month high after Jackson Hole and rising North Korea risk of attack on Guam
– South Korea’s air force dropped eight MK 84 bombs near Seoul;  simulating the destruction of North Korea’s leadership
– Gold rises from $1,291 to $1,325; Silver surges 3.2% from $17.05 to $17.60
– Volatility as seen in VIX surges as stocks fall; FTSE -1.1%
– Yen rises in short term but no safe haven in long term with gold haven risen 9.8% per annum in JPY (see chart)
– Gold was moving higher after Jackson Hole and had broken through crucial $1,300/oz level
– Asian geopolitical risk allied to U.S. political instability increasing safe haven bid
– $20 trillion U.S. debt ceiling storm looms

Editor: Mark O’Byrne

This morning the price of gold has rallied to its highest point since the Trump’s election. North Korea’s firing of a missile over Northern Japan which landed in waters off Hokkaido in the Pacific, has sharply escalated tensions in the Korean peninsula and in Asia.

This latest move by Kim Jong Un was intended to show that an attack on Guam is possible at any time, according to North Korea’s Mun-hwan.

Source: Yonhap via ZeroHedge

There had previously been concern that the war of words between Trump and Kim Jon-Un would result in others getting caught in the crossfire. This was confirmed this morning when Japan was made a clear target.

“North Korea’s reckless action is an unprecedented, serious and a grave threat to our nation”
– Japanese Prime Minister Shinzo Abe

Immediately after the missile launch was detected the Japanese government’s J-Alert system interrupted radio and TV to warn citizens of the possible missile and urged them to take refuge in solid buildings or underground shelters. Bullet train services were temporarily halted and warnings went out over loudspeakers in towns in Hokkaido.

South Korea’s air force has staged a live-fire drill simulating the destruction of North Korea’s leadership. Earlier this morning four South Korean fighter jets bombed a military firing range north of Seoul after President Moon Jae-in asked the military to demonstrate capabilities in a show of strength to North Korea.

North Korea refers to these missile launches as ‘tests’. But they are more than tests of the equipment, they are also tests on the patience, nerves and self-control of those who feel threatened by Kim Jong-Un. Observers and surrounding countries believe this saber-rattling is growing ever more serious and dangerous by the day.

As Yonhap notes, “the North’s provocation is another slap in the face to Moon and U.S. President Donald Trump as they have sought to resume dialogue, and could bring tensions on the peninsula to a new high.”

Trump is also left red in the face after his comments that Kim Jong Un “is starting to respect us.” Yet another idiotic comment from the current incumbent of the White House.

Safe havens rise as risk assets fall from record highs

Fear in the markets has been expressed by the climb in price of gold and the ongoing support for the Japanese Yen, Swiss Franc and US Dollar.

While the yen has risen in the short term, the notion that it is a ‘safe haven‘ in the real sense of that term – as a medium and long term hedge for investors – is inaccurate. This is clearly seen in the table above and the chart below which show that the yen has fallen nearly 10% per year versus gold in the last 15 years.

Gold rose in yen prior to the crisis from 2002 to 2007 and again during the height of the crisis from 2009 to 2012.

Seeing as Japan is at risk of a nuclear attack and being sucked into a war – wars are expensive things – the yen is actually vulnerable and will likely fall in the coming months.

Gold in JPY – 15 Years – Goldprice.org

The rise in the price of both gold and silver is expected given the events of last night, however they do not come without support elsewhere.

The outcome of Jackson Hole and growing concern over the looming US debt ceiling have been providing growing support for the climb in gold and silver.

Where does it end?

Currently there are two major drivers for the price of gold, both of them related to President Donald Trump himself.

These are: US political instability and tensions in Asia including with North Korea.

Following Trump’s election markets had expected Trump’s plans for fiscal stimulus to do great things for the economy. A planned $500 billion infrastructure spending program was expected to lead to strong US economic expansion, higher interest rates and a more robust dollar.

However, nothing has materialised and Trump now has the problem of a potential government standoff as the $20 trillion debt ceiling issue looms in September.

Many might argue that Trump inherited these huge economic challenges that will likely lead to political instability. But, one problem he has definitely made worse and arguably added to (in the short-term) is that of North Korea.

A major difference with the North Korea problem is that for the first time in modern history the US has a president who is happy to be confrontational and threatening. He does not appear to want to be conciliatory and work to find a multi-lateral solution. With this in mind it is near impossible for investors to know how this will end.

At the time of writing there has been no official response from the White House or tweets from President Trump. How the situation with North Korea will unfold relies heavily on what happens in Washington. No doubt, If Trump decides to tweet and escalate the matter the situation will become even messier prompting a sharp sell off in risk assets.

Uncertainty drives the gold price

Once again the short-term support for gold is being solidified by uncertainty. This combined with the long-term support that is driven by the irrevocable damage governments have done to our markets and currencues, means that we are left with a strong basis for an ongoing climb in the gold price.

Investors are turning to gold today because one of the world’s most advanced economies is under threat by one of the last closed-dictator regimes.

The situation will be helped or hindered by others in the western world who are also concerned for their own country’s safety. We are very much on the brink of something which could affect lives for generations to come, much like the last two major wars that dragged every corner of the globe into them.

In previous scenarios when countries’ safety and sovereignty have been under threat, gold has acted as a safe haven for those who are concerned about the safety of their assets, currencies and wealth. They have invested in gold, safe in the knowledge that it cannot be deleted by a cyber attack or told it cannot be used when they cross borders. They know that it is the ultimate safe haven.

The market reaction to events overnight shows again that diversification is key. Gold should be treated as a currency and added to a balanced, diversified portfolio to ensure financial insurance in the coming months and years.

News and Commentary

Gold climbs to 9-1/2 month high on rising North Korea tensions (Reuters.com)

Gold Jumps on Haven Demand as N. Korea Lobs Missile Across Japan (Bloomberg.com)

Asian markets jolted by North Korean missile test over Japan (Marketwatch.com)

North Korea fires missile over Japan, sharply escalating tensions (Reuters.com)

Stocks Drop, Yen Jumps After Korea Missile Launch (Bloomberg.com)

Source: Marketwatch

Gold rise is “trend we’ll continue to see until data or politics changes” – Stepek (MoneyWeek.com)

Finland’s Largest Pension Funds Dumps US Stocks Because “There Is No President In The US” (Bloomberg.com)

Unloading Dollar Assets Would Be Most Effective – Chinese State Media Unveils Trade War ‘Countermeasures’ (ZeroHedge.com)

Are You Prepared for These Potentially Disruptive Economic Storms? (GoldSeek.com)

One look at this chart and even the haters might be tempted to buy some gold (MarketWatch.com)

Gold Prices (LBMA AM)

29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce
28 Aug: No LBMA prices today as UK holiday
25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce
24 Aug: USD 1,285.90, GBP 1,003.26 & EUR 1,090.44 per ounce
23 Aug: USD 1,286.45, GBP 1,004.33 & EUR 1,091.68 per ounce
22 Aug: USD 1,285.10, GBP 1,000.71 & EUR 1,091.95 per ounce
21 Aug: USD 1,287.60, GBP 999.82 & EUR 1,096.52 per ounce

Silver Prices (LBMA)

29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce
28 Aug: No LBMA prices today as UK holiday
25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce
24 Aug: USD 16.93, GBP 13.20 & EUR 14.36 per ounce
23 Aug: USD 17.06, GBP 13.32 & EUR 14.48 per ounce
22 Aug: USD 17.02, GBP 13.27 & EUR 14.48 per ounce
21 Aug: USD 17.02, GBP 13.20 & EUR 14.48 per ounce

Recent Market Updates

– Diversify Into Gold On U.S. “Political Instability” Advise Blackrock
– Trump Presidency Is Over – Bannon Is Right
– The Truth About Bundesbank Repatriation of Gold From U.S.
– Cyberwar Risk – Was U.S. Navy Victim Of Hacking?
– Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300
– Mnuchin: I Assume Fort Knox Gold Is Still There
– Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words
– Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High
– Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard
– World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2
– Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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• Stocks Drop, Gold Leads Haven Rally on Korea Fears (BBG)
• Trump heads for Texas as flood waters rise (Reuters)
• Destruction Tests U.S. Shale (WSJ)
• Gulf Coast Faces Billions in Damage (WSJ)
• Harvey Recharges as Crippled Houston Counts the Cost (BBG)
• North Korea’s ‘reckless’ missile launch over Japan sharply escalates tension (Reuters)
• North Korea Missile Launch Into Pacific Provokes Japan (WSJ)
• Tough choice for Trump if Congress refuses border wall financing (Reuters)
• Oil prices dip as market grapples with hurricane damage (Reuters)
• At Whole Foods, Amazon Takes Rare Lead in Cutting Prices (WSJ)
• U.N. nuclear watchdog opens uranium bank in Kazakhstan (Reuters)
• Regulators, Auto Lenders Dig Into Customer-Refunds Process (WSJ)
• Pentagon Faces $65 Billion in Budget Cuts (BBG)
• Russia rejects allegations it will use war games to launch an invasion (Reuters)
• Iran rejects U.S. demand for U.N. inspector visit to military sites (Reuters)
• Apple, Studios at Odds Over Movie Pricing Ahead of Apple TV Rollout (WSJ)
• Islamic State convoy reaches east Syria after ceasefire (Reuters)
• Freeport Gives Up Majority Stake in Indonesia’s Grasberg Mine (WSJ)
• Trump Punishes Longtime Aide After Angry Phoenix Speech, Sources Say (BBG)
• Lufthansa wants Air Berlin long-haul planes (Reuters)

 

Overnight Media Digest

WSJ

– The United States Navy says it has recovered the remains of all 10 sailors who went missing when the USS John S. McCain collided with a tanker near Singapore a week ago, a development that focuses attention on investigations under way into the causes of the crash and what will happen next to the stricken destroyer. on.wsj.com/2gl8fZc

– The United States government Monday called on Guatemalan President Jimmy Morales to rethink his attempt to expel a United Nations-backed anticorruption prosecutor who is investigating the president and other top politicians for possible breaches of campaign finance laws. on.wsj.com/2glUt8N

– North Korea launched a ballistic missile over Japan Tuesday, in the latest in a string of direct provocations that have destabilized the region and triggered global alarm. on.wsj.com/2gl8iUS

– Ricardo Darre has resigned as chief executive of Argentina’s state-run oil and gas producer, YPF SA , the company said Monday. on.wsj.com/2gkrJNJ

– Pope Francis will travel to Myanmar in late November for a visit likely to highlight struggles of the country’s embattled Muslim minority. on.wsj.com/2gluvCd

– China and India said they had negotiated a solution to a more than two-month-long standoff on a remote Himalayan plateau, ending a stalemate that had raised concerns about a potential military conflict. on.wsj.com/2gluxKl

 

FT

* The European Union’s chief negotiator Michel Barnier said on Monday he was concerned at the slow progress of Brexit talks, while his British counterpart David Davis called for “imagination and flexibility” to move on.

* North Korea fired a missile early on Tuesday that flew over Japan and landed in the Pacific waters off the northern island of Hokkaido, South Korea and Japan said, in a sharp escalation of tensions on the Korean peninsula.

* Gilead Sciences Inc agreed to buy Kite Pharma Inc in a nearly $12 billion deal on Monday, as it looks to replace flagging sales from hepatitis C drugs with an emerging and expensive class of cancer immunotherapies that are expected to generate billions of dollars in revenue.

 

NYT

– Dara Khosrowshahi, 48, is on the threshold of becoming one of the world’s most prominent entrepreneurs. On Sunday night, he was selected to be chief executive of Uber Technologies Inc, the ride-hailing company that is the world’s most valuable start-up. The deal is almost official, according to the travel reservations site Expedia Inc, which Khosrowshahi currently runs. nyti.ms/2iDUYMj

– Hurricane Harvey may inflict as much as $30 billion in damages on homeowners, according to preliminary estimates. But only 40 percent of that total may be covered by insurance — and of that, the federal government will bear the biggest liability. nyti.ms/2wO74sg

– The drugmaker Gilead Sciences Inc said on Monday that it would buy Kite Pharma Inc for about $11.9 billion to bolster its aging portfolio with an emerging cancer treatment. nyti.ms/2iEIK64

– The Food and Drug Administration announced a crackdown on dangerous stem cell clinics on Monday, while at the same time pledging to ease the path to approval for companies and doctors with legitimate treatments in the growing field. nyti.ms/2iEPAIH

– The Guardian has established a nonprofit venture in the United States, theguardian.org, to focus on tapping philanthropic organizations — or even corporate foundations and think tanks — for financial help to report on issues including human rights and climate change. nyti.ms/2wjYNt1

 

Canada

THE GLOBE AND MAIL Caterpillar construction-equipment dealer Toromont Industries Ltd has struck a deal to buy privately held Hewitt Group for C$1.02 billion ($819.01 million)in cash and stock as it seeks to ride a mining-sector recovery and tap into a massive pool of public-infrastructure spending planned over the next decade, particularly in Quebec. (tgam.ca/2wFKF01)

As NAFTA negotiations enter the second round of talks this week, the duty-free threshold for e-commerce purchases could provide some negotiating leverage for Canada, some observers say. (tgam.ca/2wFwzM3)

Amid Bay Street speculation about who will buy Canadian construction company Aecon Group Inc , AltaCorp Capital Inc is placing an early bet that it will be a large international firm such as Kiewit Corp or ACS Group. (tgam.ca/2wFB3lK)

 

Britain

The Times

– The European Union’s chief negotiator Michel Barnier has warned Britain to start “negotiating seriously” as the stand-off over the Brexit divorce bill intensified. Speaking before the latest round of talks began in Brussels today, Barnier voiced frustration at the government’s “ambiguity” and the failure of ministers to publish a position paper on UK’s potential financial liabilities. bit.ly/2wEdnyb

– High street lenders are enjoying windfall gains from a 115 billion pounds ($148.61 billion) Bank of England funding scheme that was supposed to boost growth rather than profits. Net interest margins for some of the biggest users of the Bank’s term funding scheme have risen significantly since it was launched as part of a post-Brexit stimulus package in August last year. bit.ly/2wE7Pnm

The Guardian

– Companies that are publicly listed in the UK will be obliged to publish the pay ratio between their chief executive and their average British worker under government plans. The proposals, which will be announced on Tuesday and will come into force by next June, will also aim to give workers a voice at the boardroom level. bit.ly/2wDpvzK

– Manufacturers are demanding that the UK government provide urgent clarity on the future of EU workers’ rights, warning they will face shortages of skilled staff if they cannot recruit from Europe after Brexit. bit.ly/2wDpBr6

The Telegraph

– The pension deficits weighing down thousands of Britain’s businesses grew by billions of pounds last year, with black holes widening ­despite moves to close “gold-plated” defined benefit schemes. The total cost of pension liabilities among blue-chip FTSE 100 companies grew 95 billion pounds to 681 billion pounds in 2016, according to JLT Employee Benefits. bit.ly/2wEezl9

– Nissan Motor Co Ltd will increase production at its Sunderland plant by a fifth and double the amount of parts it sources from within the UK in an attempt to offset higher costs following Britain’s withdrawal from the EU. The Japanese car company will step up production by 20 percent to around 600,000 vehicles per year. bit.ly/2wEedLp

Sky News

– Leading shareholders in Dixons Carphone Plc want directors to accelerate a search for its next boss after last week’s shock profit warning wiped nearly a quarter off the company’s stock market value. bit.ly/2wEcBkX

 

via http://ift.tt/2vAOyj9 Tyler Durden

After an uncharacteristically long, “Gen. Kelly-mediated” delay, Donald Trump finally issued an official response to last night’s North Korean launch which flew over Japanese airspace. And, instead of tweeting, perhaps indicative of the gravity of the situation, moments ago the White House issued an official statement saying that “all options are on the table.”

Full statement below:

Statement by President Donald J. Trump on North Korea

 

The world has received North Korea’s latest message loud and clear: this regime has signaled contempt for its neighbors, for all members of the United Nations, and for minimum standards of acceptable international behavior.

 

Threatening and destabilizing actions only increase the North Korean regime’s isolation in the region and among all nations of the world. All options are on the table.

While that may be, judging by North Korea’s repeated provocations, at least Kim is convinced that Trump really has no options. Indeed, as Bill Blain commented earlier, “What will Donald do? After last week’s “Fire and Fury” rant, the N Koreans are expecting him to fulminate, look stupid, make some further angry comments – in short more bluster. They will continue to goad him into doing something “angry”… at which point America gets the blame, and China can step in as peacemaker.“

In other words, North Korea – and China – appear to have set a trap for the US president. Will Trump avoid the temptation to walk straight in it, or – in an attempt to “boost ratings” – will Trump do what Gens Kelly and McMaster are telling him to do? One more launch by North Korea may be all it takes to find the answer.

via http://ift.tt/2x08WOf Tyler Durden

The totality of the damage from Hurricane Harvey isn’t yet known, and as it continues to rain in Texas and Louisiana, it will likely be a few days before officials can start tallying up the damage but President Donald Trump has already promised Texans that he will swiftly pass an emergency funding bill to help offset what’s likely to be tens of billions of dollars in damages.

But while Trump may hope that emergency funding is swiftly approved, Bloomberg points out that Congress has final say over the details of any relief bill. And lawmakers, who are not only facing a particularly hectic legislative calendar next month but don't have the – let's just say – best relationship with Trump these days, might not get the job done as quickly as the president would like.

According to Bloomberg, conservative lawmakers could turn obstructionist unless the plan is offset by domestic spending cuts.

“After previous storms, lawmakers have usually demanded detailed spending plans for emergency funds, while conservatives have argued that disaster funding should be offset by domestic spending cuts. With Harvey still expected to dump rain over Texas and Louisiana for several days, the full scope of the damage isn’t yet known.”

While Trump said he’s already spoken with members of Congress, he has yet to submit a formal spending request for additional relief funds.

“The real number, which will be many billions of dollars, will go through Congress,” Trump said Monday at a news conference ahead of a planned visit Tuesday to Texas to meet with local officials involved in the response. “It will happen very quickly.”

Meanwhile, at least one Texas lawmaker has promised to add relief measures to a temporary spending bill that must be passed if Republicans want to avert a government shutdown after the current spending resolution expires on Sept. 30. However, Republicans haven’t said whether they will bring such a measure up for debate after Congress returns from its summer vacation.

“As the scale of damage from the storm became apparent, Texas Democrat Sheila Jackson Lee said she will draft a "robust" relief measure to be added to a spending bill on the House floor next week. Republican leaders, however, haven’t committed to a swift debate. A spokeswoman for House Speaker Paul Ryan of Wisconsin, AshLee Strong, said Congress "will help those affected by this terrible disaster."

 

"The first step in that process is a formal for resources from the administration,” she said.”

One option before Congress is to approve a “down payment request” on the cleanup effort in Texas as part of the spending bill, before passing a more comprehensive measure later.

“The stopgap bill could be a natural place to add in disaster relief funding, even if it’s just a down payment ahead of a more comprehensive relief measure later in the year. That’s how Congress handled Hurricane Katrina in 2005, when it approved $10 billion in immediate aid while most members were still on August recess. It followed up months later with a $51 billion package.”

However, the administration hasn’t yet determined how much additional funding will be needed beyond what FEMA is already planning on spending.  

“So far, the Trump administration hasn’t determined whether additional funds will be needed, acting Homeland Security Secretary Elaine Duke said Monday on Bloomberg Television. She said if additional funds are needed, the Department of Homeland Security will work with Congress to obtain them.”

And with $3.3 billion in the bank, FEMA may have enough money in its disaster relief fund to start the cleanup effort, but nowhere near enough to finish it.

“A House Republican aide said that the Federal Emergency Management Agency has sufficient, disaster relief funding for now. FEMA said it has $3.3 billion in the disaster relief fund as of Monday, which includes money that can be shifted from longer-term priorities. Costs associated with Harvey are “quickly drawing down the remaining balance” in the fund, said Stephanie Moffett, a FEMA spokeswoman.”

Ironically, this time Democrats are alligned with Trump: Nancy Pelosi has already called on Democrats to support any Harvey related legislation… assuming it’s not tied to a bill that further restricts abortion rights, or funding for Trump’s border wall.  

“House Minority Leader Nancy Pelosi of California issued a statement Monday saying, “Republicans must be ready to join Democrats in passing a timely relief bill that makes all necessary resources available through emergency spending.”

However, with the storm expected to cause some $30 billion in damages, including the impact on the labor force, power grid, transportation and other elements that support the region’s energy sector, more relief funding will likely be necessary – and soon. Chuck Watson, a disaster modeler with Enki Research, said in an email Monday that Harvey could be one of the top eight hurricanes to ever strike the US. David Havens, an insurance analyst at Imperial Capital, said the final tally might be as high as $100 billion, a total that could potentially threaten insurers’ balance sheets.

As of now, Harvey is on track to become the fourth most-expensive storm in US history, though this is based on an incomplete assessment of the damages.

While we wait to see how this latest Congressional drama unfolds, Trump – who is still due a response on the latest North Korea launch – says he has been in frequent contact with the Republican governor of Texas, Greg Abbott and is taking pains to show the public that he’s actively engaged in the federal response to the storm. He and Melania Trump are planning to travel to Texas on Tuesday even as Harvey, now a tropical storm but expected to regain hurricane status shortly, continues to deluge the region. An airspace restriction issued by aviation authorities suggests Air Force One will land in Corpus Christi, away from the worst ongoing flooding in the Houston region.

via http://ift.tt/2gl31ww Tyler Durden

The latest missile launch by North Korea on Tuesday will elevate tensions for some time, but it will be contained, writes Kwon Young Sun, a senior economist at Nomura International.

Quoted by Bloomberg, Kown writes that Tuesday’s provocation has reignited market concerns just as tensions were seen easing through mid-August. As a result, “tensions between N.Korea and the U.S. reached levels unseen since 1994.” He adds that another spike is plausible, considering the military drill between the U.S. and S.Korea is still ongoing.

Oddly enough, as we discussed earlier, despite the latest geopolitical shock, the South Korean stock market and currency were barely shaken. However, according to the Nomura strategist, unless the dollar keeps weakening, other drivers that could limit KRW’s strength include Korea’s relations with China, trade tensions with the U.S., local capital outflows and intervention by the authorities

More apropos to what is bother markets this morning, Kwon writes that “although it is hard to predict”, three early warning signals may suggest imminent U.S. military action:

• U.S. orders for evacuation of U.S. citizens in S.Korea
• U.S. military builds up large scale force near the Korean peninsula
• U.S. elevates defense readiness condition to level 3 from level 4

Finally, he writes that the “probability for war ultimately breaking out on the Korean peninsula is about 35%”, although the number is most likely to change going forward.

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