Washington Senate Approves Less Restrictive Medical Marijuana Bill

Saturday the Washington Senate
a bill that addresses some of the
that patients have about new restrictions on medical
marijuana. S.B.
, introduced by Sen. Ann Rivers (R-La Center), is
substantially more permissive than H.B.
, the medical marijuana bill
last month by the state House of Representatives,
although both bills would abolish dispensaries, require patients to
register with the state, and reduce limits on possession and
cultivation. The patient-friendlier provisions of S.B. 5887, which
passed by a vote of 34 to 15, include:

Collective gardens. The House bill would ban
dispensaries (a.k.a. “collective gardens”) as of May 2015, while
the Senate bill would let them continue to operate until that
September. Even after then, the Senate bill would let patients (or
their designated providers) pool their resources and grow marijuana
together for their own medical use. S.B. 5887 includes rules aimed
at preventing collective gardens from evolving into dispensaries:
Just one garden is allowed per location, no more than four patients
may grow together at a time, and at least 15 days must elapse after
one member leaves before a new member may join. 

Cultivation limit. Each patient (or a
designated provider) would be allowed to grow up to six plants
(down from 15 currently), but there would be no limit on how many
of those six plants could be flowering at one time.

Purchase limits. Patients could buy up to three
ounces of marijuana (more if a health professional says it is
necessary), 48 ounces of marijuana-infused products in solid form,
216 ounces of marijuana-infused liquids, and 21 grams of
concentrates. Those are three times the limits for recreational
customers. The current possession limit for patients is 24 ounces
of marijuana.

Tax exemptions. When they buy cannabis from
state-licensed stores with “medical marijuana endorsements,”
registered patients would not have to pay standard sales tax or the
retail-level excise tax, but the latter exemption would expire in
September 2015. “I am not happy about that, and we’ll be fighting
for its reinstatement this week,” says Philip Dawdy, media and
policy director at the Washington Cannabis

Supply and access. The state Liquor Control
Board, which would be renamed the Liquor and Cannabis Board, would
to “increase the amount of square feet available for
production by marijuana producers if the producer agrees to use the
extra space to grow products for medical use and for sale to
medical marijuana endorsed stores.” On the retail end, the board

“reconsider the maximum number of retail outlets permitted
and allow for a new license period and a greater number of retail
outlets in order to accommodate the medical needs of qualifying
patients.” When it does so, “a preference may be given to those
license applicants who intend to operate a medical-only store.”

Medical strains. The Liquor and Cannabis
“adopt rules on products sold to qualifying patients
under an endorsement, including THC concentration, CBD
concentration, and THC to CBD ratios appropriate for patient
use.” State-licensed pot stores would be allowed to “identify
the strains, varieties, THC levels and CBD levels” of their
products, although state regulations would prohibit the sort of
symptom-specific advice currently available from dispensaries.
“We’ll have to work with LCB in rule making to straighten out what
people can say,” Dawdy says. 

Recommendations. An
to H.B. 5887 defines “principal care provider”—the
person authorized to recommend marijuana for a patient—as a “health
care professional who is designated by a qualifying patient.” That
provision should help veterans who receive primary care through
V.A. hospitals where doctors are not allowed to recommend

Affirmative defense. Patients with
doctor’s recommendations would continue to have an affirmative
defense against marijuana charges until April 1, 2016, after which
they would have to register with the state, which would give them
immunity from arrest.

Registry privacy. In addition to
confirming a patient’s eligibility for higher purchase limits and
tax exemptions, information from the registry could be
with a law enforcement agency “engaged in a bona fide
specific investigation of suspected marijuana-related activity that
is illegal under Washington state law.” Illegally sharing
information from the registry would be a
Class C felony

“I’m not calling it good,” Dawdy says, “but it is a workable
framework for medical going forward.” The Senate and the House
have until Thursday to agree on a compromise bill.

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Intern at Reason This Coming Summer!

The deadline for
Reason magazine’s paid ten-week summer internship,
which begins in June, is coming up (March 26).

Given that the deadline is a little over two weeks away I
thought it would be worth reiterating the advice my former
Mike Riggs
gave to potential intern applicants almost a year

  • Follow instructions

  • Write the hell out of your cover letter

  • Show some familiarity with the publication

  • Tell me what you can do for us, because we know what we can do
    for you

  • Be Patient

I cannot stress enough the importance of taking these tips
seriously. As I mentioned
back in November
, talented applicants have ruined their chances
of being considered for an internship at Reason by failing to do
something as simple as following instructions.

Something I have been noticing since I have started looking over
intern applications is the tendency for applicants to write almost
identical cover letters to dozens of publications. These cover
letters express an interest in a career in journalism but
oftentimes do not mention why they want to be at Reason in
particular. An application with a cover letter that mentions issues
Reason is known for covering or the writings of a particular editor
is going to grab my attention much more than an application with a
cover letter that mentions Reason once in the introductory

Interns here get to write for Reason.com and Reason
magazine about topics that interest them. Our current intern,
, has been writing about technology, Bitcoin, and civil
liberties. Zenon
, who did such a fine job as an intern we hired him,
interviewed Russian libertarian activist
Vera Kichanova
during his internship. Guy Bentley, who
now works at the London-based City A.M. (which you should
all be reading), wrote about foreign
while he was an intern here.

As well as writing, Reason interns provide admin assistance to
the office, assist staff with research, and transcribe interviews.
The internship is based in Washington, D.C., and interns are
encouraged to attend events in the city that interest them.

If you want to pursue a paid journalism internship in
Washington, D.C. that will allow you to write about topics that
interest you please send in an application. But make sure to take
the tips above seriously.

If you have a question send me an email: mfeeney@reason.com.

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A. Barton Hinkle: Big Government Will Help You Eat Right

How hard is it to read the “nutrition facts”
label on a package of food? According to the Obama administration,
it’s nearly impossible. But do we really need the government’s help
figuring out what’s best to eat? A. Barton Hinkle says we don’t,
and then explains why more government involvement in food labeling
will only make things worse.

View this article.

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Ted Cruz vs. Rand Paul on Foreign Policy: Quién Es Más Reagan?

I for one think Cruz looks much better with the beard. |||The long-interesting
Wacko Birds vs. Angry Birds
split in today’s tumultuous GOP has
tended to distract from the split-within-the-split when it comes to
Tea Party types and foreign policy.

Sen. Rand Paul (R-Kentucky), representing the
anti-interventionist strain, has
insisted from the get-go
that the Tea Party is an explicit
rejection of neoconservative belligerence. While that seemed like
wishful thinking in 2011, the notion gained more plausibility by

September 2003
, when many TP groups and politicians went all-in
against the Obama administration’s
attempts to use force in Syria. When Paul’s
ambitious and considerably more hawkish Wacko Bird Senate
colleagues Ted Cruz (R-Texas) and Marco Rubio (R-Florida)
joined the doves on Syria
, it was a telltale sign that the
intervention was doomed.

Well, that was then. Vladimir Putin’s thuggish takeover of
Crimea and menacing gestures toward Eastern Ukraine are generating
a lot of hawk-talk about the alleged consequences of American
“weakness,” and its possible embodiment in
anti-interventionists like Paul
. On
ABC News
yesterday, O.G. Wacko Bird Ted Cruz made it

The man cannot stay behind the podium. ||| Pete Marovich/McClatchy-Tribune“I’m a big fan of Rand Paul. He
and I are good friends. But I don’t agree with him on foreign
policy,” Cruz said. “I think U.S. leadership is critical in the
world. And I agree with him that we should be very reluctant to
deploy military force abroad. But I think there is a vital role,
just as Ronald Reagan did… The United States has a responsibility
to defend our values.” […]

“A critical reason for Putin’s aggression has been President
Obama’s weakness,” Cruz told Karl on “This Week.” “That Putin fears
no retribution… [Obama’s] policy has been to alienate and abandon
our friends and to coddle and appease our enemies.” 

“You’d better believe Putin sees in Benghazi four Americans are
murdered, the first ambassador killed in service since 1979, and
nothing happens,” Cruz added, echoing comments  by
other Republicans like Sen. Lindsey Graham, R-S.C. “You’d better
believe that Putin sees that in Syria, Obama draws a red line and
ignores the red line. You’d better believe that Putin sees all over
the world.”

When asked about Russia’s record of aggression before Obama
became president, including its invasion of Georgia during the
presidency of George W. Bush, Cruz instead slammed Obama […]

Rand Paul, who
one year ago
went to the Heritage Foundation to unveil what he
portrayed as his Reaganesque vision for foreign policy,
did not take kindly
to Cruz’s co-opting of the Gipper, writing
a Breitbart.com column titled “Stop Warping Reagan’s Foreign
Policy.” Excerpt:

Reagan clearly believed in a strong national defense and in
“Peace through Strength.” He stood up to the Soviet Union, and he
led a world that pushed back against Communism.

But Reagan also believed in diplomacy and demonstrated a
reasoned approach to our nuclear negotiations with the Soviets.
Reagan’s shrewd diplomacy would eventually lessen the nuclear
arsenals of both countries.

Many forget today that Reagan’s decision to meet with Mikhail
Gorbachev was harshly
 by the Republican
hawks of his time
, some of whom would even call Reagan
In the Middle East, Reagan strategically pulled back our forces
after the tragedy in Lebanon in 1983 that killed 241 Marines,
realizing the cost of American lives was too great for the

Without a clearly defined mission, exit strategy or acceptable
rationale for risking soldiers lives, Reagan possessed the
leadership to reassess and readjust.

Today, we forget that some of the Republican hawks of his time
criticized Reagan harshly for this too, again, calling
him an appeaser
. […]

I also greatly admire that Reagan was not rash or reckless with
regard to war. Reagan advised potential foreign adversaries not to
mistake our reluctance for war for a lack of resolve. 

What America needs today is a Commander-in-Chief who will defend
the country and project strength, but who is also not eager for

Regarding Russia’s invasion of Ukraine, for example, there is
little difference among most Republicans on what to do. All of us
believe we should stand up to Putin’s aggression. Virtually no one
believes we should intervene militarily.

So we are then faced with a finite menu of diplomatic measures
to isolate Russia, on most of which we all agree, such as sanctions
and increased economic pressure.

Yet, some politicians have used this time to beat their chest.
What we don’t need right now is politicians who have never seen war
talking tough for the sake of their political careers.

Tart, substantive exchanges like that are one of the reasons I
lament the GOP’s decision to
its 2016 presidential nominating schedule. The
Republican Party’s approach toward foreign policy is up for grabs,
and with it the party’s potential popularity. Surely on questions
of life and death, more debate is better than less.

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China Loan Creation Tumbles, Lowest Credit Growth In 20 Months

One month ago, when we last looked at the incredible amount of Chinese new loan issuance, a topic which even the mainstream media is slowly starting to circle in on as the primary source of hot money flow creation in the world, we found the highest loan notional issued by the country’s semi-sovereign banks since 2009, and the largest one-month ever monthly total in the largest aggregated, Total Social Financial, series, which rose by an unprecedented CNY2.6 trillion, or over $400 billion in one month! That was just before the tremors surrounding first the potential defaults of several Chinese shadow-banking Trusts, and certainly before the first official corporate bond default which took place last week.

Overnight, the PBOC released its latest, February, loan data. As expected, it reveals something else entirely.

In the month in which there were pervasive fears that China would let one or more Trusts go bankrupt (a fear which was unfounded as China did bail out two shadow trusts in February, only to finally allow a corporate bond default last week), loan creation ground if not to a halt, then certainly was significantly impacted, and its collapse may explain the abysmal February trade data as well, which far more than merely indicating calendar effects from the Chinese Lunar New Year, shows that something dramatically changed with the well-greased Chinese economic machine. That something was an abrupt drop in credit.

To wit: Chinese banks made 644.5 billion yuan ($105.21 billion) worth of new yuan loans in February, lower than a forecast of 716 billion yuan and below the previous month’s 1.3 trillion yuan, central bank data showed on Monday.

Looking at the bigger picture, total social financing in February stood at 938.7 billion yuan, well below the previous month’s 2.58 trillion yuan, and also well below expectations.


It gets worse: as SocGen calculates, Total social financing (TSF) recorded a gain of CNY 939bn in February. The sharp decline from the January level (CNY 2580bn) can be mostly attributed to seasonality but the TSF was also down yoy (1071bn last February), which dragged total credit growth down to a 20-month low of 17.1% yoy from 17.5% yoy, according to our estimate.


Breaking down the loan creation by various components, va SocGen:

Yuan loans increased notably less than expected by CNY 645bn (Cons. 730bn, SG 750bn). Although it was still 25bn more yoy, growth of outstanding loans inched down to 14.2% yoy from 14.3% yoy. However, once again, non-bank credit saw a much bigger slowdown. Entrusted loans increased CNY 80bn, CNY 63bn less yoy and the lowest in 20 months. Probably due to easier interbank liquidity conditions lately, the net increase in bond financing was up to CNY 99.5bn from the very depressed levels in the past two months. However, the first bond default that occurred on 7 March will likely reverse this nascent improvement trend. New trust loans had a sharp fall of CNY 104bn from January to CNY 78bn, the second smallest monthly increase since mid-2012. Reportedly, formal banks have started to distance themselves from the trust sector by scaling back trust product distribution to banks’ clients. It may also be the beginning of investors adjusting for the long over-due first defaults of trust products. Whichever the case, the near-term prospect for trust financing is not beautiful.

This latest money and credit report again supports our view that credit growth is still sliding and will likely remain so in the near term. In H2 2013, the credit slowdown was mostly responding to higher interbank rates, as intended by the PBoC. From here onwards, the downward pressure will come from follow-up regulatory tightening of the Document 107 issued by the State Council in January and, more critically, from financial market participants’ adjustments to fast rising default risk. Such adjustments are necessary for China in the long run to develop a healthy financial market, but are nothing if not risky in the short term. We think that the policymakers will run more default experiments, but at the same time stand ready to intervene so as to avoid a systemic financial crisis. Our central scenario remains that there will be disruptions but not a meltdown, but the risk is tilting to the downside.

Finally, the French bank’s conclusion is hardly welcome for China bulls:

China’s total credit growth slowed further in February, again driven by shadow banking deceleration. Lower interbank rates have not really helped ease credit conditions. It seems that the rising default risk has started to erode Chinese investors’ confidence. Together with continued regulatory tightening on banks’ off-balance-sheet activity, we are certain that this slowing credit trend has further to go and will inflict real pain on the economy. The season of weak Chinese data has just begun.

That’s ok, all of the above, too, is priced into the USDJPY algos.


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S&P Retraces Half “Putin-Press-Conference” Gains

AUDJPY (and therefore US equities) is sliding this morning after the ubiquitous pre-open melt-up providing a green open for retail investors to believe in. Notably, from the close before Putin’s press conference, the Nasdaq is underperforming all major indices (and Trannies soaring) but this morning has seen almost one-way traffic since the open. Treasuries are unch today as are precious metals (recovering from early losses) and the USD is modestly higher driven by AUD and GBP weakness.


S&P futures have retraced half the post-Putin gains…


And notably from the close before Putin’s press conference, Nasdaq is underperforming (and Trannies soaring)


But AUDJPY remains in charge…


Charts: Bloomberg


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Supply and Demand Report 9 Mar

by Keith Weiner


Gold went up and silver went down this week. It’s natural for most people to say, “gold went up”, but it’s the most unnatural phenomenon. The dollar is paper scrip issued by the Fed. The fine print tells you that it’s irredeemable, which is like a promise to give you a kilo of sugar that will never be honored. The quantity of this paper is rising while its quality is falling. Everyone knows that its value is unstable, and over long periods of time its value falls alarmingly. And yet we still presume to use this paper to measure the value of gold!


Anyways, in comparison to the undefined unit known as the dollar—which we don’t know if it moved up or down or sideways—gold moved up. Gold went up by fourteen pieces of paper, engraved with the picture of George Washington. Silver—by the moving and nonobjective reference point of copper clad zinc coins stamped with the image of Abraham Lincoln—moved even more. Silver went down, and now it can be bought with a stack of those copper colored slugs that’s 26 shorter than last week. We could as well say that silver went down by an inch and a half, because a stack of 26 pennies is about that tall.

Wouldn’t it make more sense to say that the dollar went down by about a quarter of a milligram of gold?

Here is the graph of the metals’ prices.

            The Prices of Gold and SilverGold and Silver Prices

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, hoarding or dishoarding.

One could point out that gold does not, on net, go into or out of anything. Yes, that is true. But it can come out of hoards and into carry trades. That is what we study. The gold basis tells us about this dynamic.

Conventional techniques for analyzing supply and demand are inapplicable to gold and silver, because the monetary metals have such high inventories. In normal commodities, inventories divided by annual production can be measured in months. The world just does not keep much inventory in wheat or oil.

With gold and silver, stocks to flows is measured in decades. Every ounce of those massive stockpiles is potential supply. Everyone on the planet is potential demand. At the right price. Looking at incremental changes in mine output or electronic manufacturing is not helpful to predict the future prices of the metals. For an introduction and guide to our concepts and theory, click here.

Here is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio rose 1.44 points—2.3%. In other words, silver fell by about 11mg of gold.

            The Ratio of the Gold Price to the Silver Price
Gold to Silver Ratio

The data has been showing for a long time that, while supply and demand in gold is slightly tight, it’s loose in silver. Speculators are stretching the silver price higher by several dollars. When will they let go and let it snap back down to neutral, or even overshoot? It’s hard to say, but the world seems to be in a credit contraction mode right now. There are ongoing declines in many currencies. Forget the Ukrainian hryvnia, Venezuelan bolivar, and Argentenian peso. It’s also happening in the Brazilian real, Russian ruble, Indian rupee, and perhaps beginning in the Chinese yuan (and in many others too).

We will get to the point where people are desperate to get gold and silver and dump paper. That buying frenzy—and accompanying collapse of almost everything else—is still ahead of us. In the meantime, we appear now to be firmly in a period of squeezing the debtors.

The whole point of using leverage to buy gold or silver futures is speculation. The speculators are trying to front-run the real buyers of the metals—the people who buy to take it home, and not sell regardless of price.

It may be due to the pressures of credit contraction. Or it’s possible that silver demand is falling relative to gold because it has a substantial non-monetary (i.e. industrial) use and gold is almost purely monetary. Either way, the demand for silver metal, relative to the demand for gold metal, is quite a bit lower than it was a few years ago. The current silver price under $21 only partially reflects this fact.

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide terse commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

            The Gold Basis and Cobasis and the Dollar Price

The cobasis went sideways while the dollar fell (i.e. the price of gold rose). This suggests buyers of real metal, not speculators, led the price action this week. The neutral price of gold went up another twenty-five bucks, to around $1470.

Now let’s look at silver.

            The Silver Basis and Cobasis and the Dollar Price

Silver’s pattern still hasn’t really changed. We see a rise in the dollar price as measured in silver (i.e. a drop in the silver price as measured in dollars). And with this price move, we see the cobasis rise a bit. Silver futures were sold.

The cobasis is still quite negative.


© 2014 Monetary Metals


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Gold Hedges Against Surge In Cost Of Bread, Eggs, Beer and Fuel

Today’s AM fix was USD 1,334.25, EUR 961.55 and GBP 800.87 per ounce.
Friday’s AM fix was USD 1,348.25, EUR 971.22 and GBP 805.17 per ounce.

Gold fell $11.30 or 0.82% on Friday, to $1,339.20/oz. Silver dropped $0.65 or 2.2% at $20.89/oz.

For the week, gold’s positive momentum continued and gold eked out slight gains of 1.3%.

Inflation history table: How the price of everyday items changed over 40 years – (Lloyds Private Banking via Daily Telegraph)

Gold retreated in all currencies for a second day after U.S. jobs data was slightly better than expected. Bullion for immediate delivery fell 0.4 % to $1,336.00 in London.

Gold sold off sharply on Friday after the data and was down $25 in minutes in concentrated selling. The sell off was unusual as the data did not merit such a sharp, sudden sell off especially given that the fundamentals, including the geopolitical situation, remain highly supportive.

Gold in US Dollars (Bloomberg)

Prices posted a fifth weekly gain last week, climbing to a four-month high of $1,354.87 on March 3, as tension between Ukraine and Russia escalated. This has led to an increase in safe haven demand which has contributed to gold’s 10% gains so far in 2014.

Platinum lost $3.20, or 0.2%, to $1,483.60 an ounce, ending around 2.5% higher for the week, while palladium rose 65 cents, or 0.1%, to $781.80 an ounce, up roughly 5% for the week.

Russia is among the world’s biggest producers of platinum and palladium. Its conflict with Ukraine and tensions with the U.S. is leading to worries about supplies of the precious metals.

Gold Hedges Against Massive Inflation In Bread, Beer, Eggs, Fuel and Property 
A new study has shown how the British pound has depreciated significantly in the last 40 years and how gold has again acted as hedge against inflation and currency debasement.


Gold in British Pounds – 2000 to March 10 2013 (Bloomberg)

The value of the pound has shrunk so rapidly over the last 40 years that a pound in 1973 is worth the equivalent of just nine pence today, the study by Lloyds Bank Private Banking has found.

The study found £9.48 in 1973 would have the same spending power as £100 today. The rising cost of retail goods means someone who was a millionaire 40 years ago would need £10,553,000 today to enjoy the same spending power, according to Lloyds Bank, which analysed data from the Office for National Statistics.

Everyday staples that we eat and consume now cost a huge amount more due to the massive 91% depreciation of the pound in the last 40 years.

– Beer surged by more than 20.5 times in cost. A pint of a beer has shot up by 1,948% from 14p to £2.87 per pint.

– Bread and the cost of a loaf of bread costs a whopping 12 times more – up 1,082% from 11p to £1.30.

– Milk costs nearly 8 times more. A pint of milk went up 667% from 6p to 46p.

– Coffee in its instant form (per 100g) cost nearly 10 times more from 28p to £2.67.

– Apples cost 7 fold more. From 28p per kilo to £2.02 per kilo for a rise of 622%.

– Sausages cost 8 times more. A kilo of sausages went from 58p to £4.84 or 735%.

– Butter costs nearly 11 times more. A 250 gramme slab of butter went from 13p to $1.42 or 992%.

– Carrots cost 8 times more. A kilo bag of carrots now costs 91p, up from 11p or a rise of 723%.

– Sugar costs nearly 9 times more. A kilo bag of sugar now costs 93p, up from 11p – up 787%.

– Eggs costs 8 times more. A dozen eggs now cost £2.78, up from 33p or a rise of 743%.

– Flour costs 8 times more. A 1.5kg bag of flour went from 15p to £1.19 or a rise of 724%.

– Petrol or diesel costs nearly 18 times more. A litre of diesel went from 8p to £1.41 or 1,727%.

– Residential property costs 18 times more. The price of the average detached house went from £16,980 to £305,391. The family home now costs 1,699% more.

Soaring inflation in recent months has put pressure on cash strapped households. However, the recent surge in inflation is less than that seen between 1973 and 1983, which saw the biggest rise in the cost of day-to-day items, at an annual average rate of a whopping 13.6%.

The lowest increase in inflation came during the period 1993 to 2003, with an annual increase of 2.6%, according to official data.

In the past ten years to 2013, inflation averaged 3.3% per year, with the highest levels coming post recession from 2008 and on.

If retail prices were to rise by 2.8% annually – in line with government targets – the value of money would decline by a further 67% over the next 40 years.

If inflation follows this pattern, consumers would need £311 in 2053 to have the same spending power as an individual with £100 today – or more than £3 million to enjoy the equivalent lifestyle of a millionaire today.

Lloyds based the calculation on estimates that a 2.8% rise in Retail Prices Index (RPI) inflation would be consistent with the government’s 2% target for Consumer Price Inflation.

Media coverage of the study tended to focus on the fact that the average price of a pint of lager increased from 14p in 1973 to £2.87 in 2013.

Little attention or coverage was given to the fact that gold has risen in value by more than beer, bread, apples, milk, sausages, butter, carrots, sugar, coffee, eggs, flour, diesel and even the beloved residential property in the form of the average detached house.

Therefore, gold had acted as a store of value and hedge against currency depreciation and inflation in the UK in the last 40 years, as it has done throughout recorded history.

On the back of the study, banking giants Lloyds warned that in 40 years, an individual would need £3 million to enjoy the same lifestyle as a millionaire today. Alternatively, millionaires could allocate a portion of their hard earned cash to gold to hedge against inflation. Investors and savers would be prudent to do the same.

Investing and saving are about protecting and growing one’s wealth in the long term. The recent poor performance of gold has garnered much attention and negative comment. Gold’s long term and historical performance as an important hedge against inflation continues to be unappreciated … for now.

Our latest report, ‘Gold Is Safe Haven According To Academic and Independent Research‘ looks at the academic and independent research on gold as a safe haven asset and hedge against inflation in more detail and can be read here.


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Edward Snowden: NSA Too Busy Spying on Americans To Catch Terrorists

Edward SnowdenIn

testimony published last week
by the European Parliament’s
Committee on Civil Liberties, Justice, and Home Affairs, NSA
snooping whistleblower Edward Snowden told lawmakers that mass
spying has proven to be an especially ineffective means of
deterring wrongdoing. NSA claims to have prevented multiple
terrorist attacks evaporated upon actual scrutiny. Worse, he says,
the NSA is so busy probing the general public’s gaming habits and
personal communications that it has no time or to devote to
anything useful.

According to

The first principle any inquiry must take into account is that
despite extraordinary political pressure to do so, no western
government has been able to present evidence showing that such
programs are necessary. In the United States, the heads of our
spying services once claimed that 54 terrorist attacks had been
stopped by mass surveillance, but two independent White House
reviews with access to the classified evidence on which this claim
was founded concluded it was untrue, as did a Federal Court.

Looking at the US government’s reports here is valuable. The
most recent of these investigations, performed by the White House’s
Privacy and Civil Liberties Oversight Board, determined that the
mass surveillance program investigated was not only
ineffective–they found it had never stopped even a single imminent
terrorist attack–but that it had no basis in law.

Specifically, the board
, “we have not identified a single instance involving
a threat to the United States in which the program made a concrete
difference in the outcome of a counterterrorism investigation.”

When it comes to legal concerns, the board
“There are four grounds upon which we find that the
telephone records program fails to comply with Section 215,” that
“the program violates the Electronic Communications Privacy Act,”
and that “The NSA’s telephone records program also raises concerns
under both the First and Fourth Amendments to the United States

The board’s report also cautioned, “the bulk collection of
telephone records can be expected to have a chilling effect on the
free exercise of speech and association, because individuals and
groups engaged in sensitive or controversial work have less reason
to trust in the confidentiality of their relationships as revealed
by their calling patterns.”

Needless to say, the White House
glibly rejected
the Privacy and Civil Liberties Oversight
Board’s conclusions.

Snowden went on to point out the failings of the NSA’s
all-you-can-hoover approach to surveillance.

I believe that suspicionless surveillance not only fails to make
us safe, but it actually makes us less safe. By squandering
precious, limited resources on “collecting it all,” we end up with
more analysts trying to make sense of harmless political dissent
and fewer investigators running down real leads. I believe
investing in mass surveillance at the expense of traditional,
proven methods can cost lives, and history has shown my concerns
are justified.

Despite the extraordinary intrusions of the NSA and EU national
governments into private communications world-wide, Umar Farouk
Abdulmutallab, the “Underwear Bomber,” was allowed to board an
airplane traveling from Europe to the United States in 2009. The
290 persons on board were not saved by mass surveillance, but by
his own incompetence, when he failed to detonate the device. While
even Mutallab’s own father warned the US government he was
dangerous in November 2009, our resources were tied up monitoring
online games and tapping German ministers. That extraordinary
tip-off didn’t get Mutallab a dedicated US investigator. All we
gave him was a US visa.

Nor did the US government’s comprehensive monitoring of
Americans at home stop the Boston Bombers. Despite the Russians
specifically warning us about Tamerlan Tsarnaev, the FBI couldn’t
do more than a cursory investigation–although they did plenty of
worthless computer-based searching–and failed to discover the
plot. 264 people were injured, and 3 died. The resources that could
have paid for a real investigation had been spent on monitoring the
call records of everyone in America.

Snowden’s testimony also ranged over disclosures to come, and
the complicity of European spy agencies in snooping on each other’s
citizens—and then sharing the data with the NSA, which gets the
full package. Countries even modify their privacy laws to make the
NSA’s job (and that of their own agencies) easier.

All of this, to suck up more data than the spies can process, at
the expense of targeting real threats.

from Hit & Run http://ift.tt/1cqx3q9

Meanwhile In Turkey…

The Turkish Lira is tumbling this morning (+150pips at 2.22); rapidly devaluing back towards pre-emergency-rate-hike levels and Turkish bond yields have surged back to levels seen in mid-2009. The driver appears to be the release of several political prisoners, suggesting the President is starting to lose control and given that ‘political stability’ is the key factor for many of these EM debt markets. The government, however, remains adamant that an “operation” by some institutional holders of lira bonds to “threaten” Turkey’s economy started after the probe into government corruption began in mid-December.

As Bloomberg notes,

Economy Minister Nihat Zeybekci says “operation” to undermine Turkey’s economy started after emergence of Dec. 17 probe into alleged govt corruption, state-run Anatolia news agency reports.


Zeybekci links lira volatility to “operation” by some institutional holders of Turkey’s lira bonds: Anatolia


Holders of Turkey debt dumped lira bonds, increased FX positions to “threaten” Turkish economy


Zeybekci says action against economy destined to fail

However one glance at the chart of Turkish bonds and it’s clear the selling began amid Taper fears last summer and was merely exacerbated by corruption concerns and EM crisis flows (and who would lock in rates for an allegedly corrupt government)


It would appear the driver of today’s weakness is an apparent loss of control by the President as several political prisoners are released by Turkey’s 13th high criminal court:

Turkey’s 13th high criminal court rejects release of some suspects in Ergenekon trial today, while 21st criminal court released others in same case, saying parliament’s abolition of specially authorized courts meant they had to be set free, HT reports.  


* 21st court decided today to release Ergenekon suspects Tuncay Ozkan, Levent Goktas and Sedat Peker, who were being     tried for alleged involvment in the so-called Ergenekon plot to overthrow Prime Minister Recep Tayyip Erdogan’s govt  


* 13th court, in contrast, didn’t release suspects, saying that parliament had no authority to dissolve the specially authorized courts that saw the cases, known in Turkish as OYMs  


* HSYK, the body that appoints judges and prosecutors – and which was re-structured by the govt amid a corruption probe – says 13th court overstepped its authority and parliament does have the authority to open or shut courts down


* Nationalist lawyer known for suing authors including murdered Armenian journalist Hrant Dink and Nobel Prize-winning author Orhan Pamuk for “insulting Turkishness” freed today, state-run TRT reports.  


* Kerincsiz among suspects freed after being jailed in so-called Ergenekon trial of people alleged to be plotting a coup against Prime Minister Recep Tayyip Erdogan


* Lieutenant General Mehmet Eroz also freed, TRT says

Chart: Bloomberg


via Zero Hedge http://ift.tt/1fjzZof Tyler Durden