Month: January 2014

Some may have forgotten, or not be aware, that the Federal Reserve system has its own police force. Well, it does: “The U.S. Federal Reserve Police is the law enforcement arm of the Federal Reserve System, the central banking system of the United States…. Officers are certified to carry a variety of weapons systems (depending on assignment) including semi-automatic pistols, assault rifles, submachine guns, shotguns, less-lethal weapons, pepper spray, batons and other standard police equipment. Officers also wear bullet resistant vests/body armor. On October 12, 2010 President Barack Obama signed into law S.B. 1132 the “Law Enforcement Officers’ Safety Act Improvements Act”, which states that law enforcement officers of the Federal Reserve are “qualified law enforcement officers” and thus are authorized to carry a firearm off-duty.”

At last check, there were over 1000 sworn members of the Fed police force. And judging by the recent spike in appearances of such “help wanted” ads as those shown below, that number is too low. We expect many more job postings such as these to appear in the coming weeks and months: in fact, we are willing to predict that the closer we get to a “renormalization” of the Fed’s balance sheet, the faster the hiring of Fed cops…

 

Position Summary:
 

Law Enforcement Officer
 

The Law Enforcement Officer is responsible for the protection of Bank property, valuables, and staff. Maintains security perimeter at building entrances, and performs routine building patrols to prevent unauthorized entry to premises, provide fire protection, and deter criminal and other irregular activities. Performs public relations functions by answering inquiries and providing direction to employees and visitors. Enforces federal laws and Federal Reserve policies and regulations to protect life, property and assets. Responds to incidents on Bank property and provides emergency  services. This position is an essential function of the Bank and may require extended work hours and/or work during emergency or crisis situations.

* * *

Police Technician

It’s about respect and recognition from your peers. It’s you. At the Federal Reserve Bank, we operate a part of the nation’s bank, helping to shape policies that enable people to purchase homes, send their children to school, and to live greater lives. It’s a good feeling, knowing that your work holds such meaning. It’s an even better feeling, knowing that you’re doing so with a team that recognizes the talents that make you unique. Join us today.

Are you looking for a challenging and rewarding position? Look no further!

Key Responsibilities:

• Develops and maintains proficiency in areas such as weapons (lethal and non-lethal), first aid, CPR, fire fighting techniques, civil disorders, and public relations, by attending training classes. Must exhibit spontaneous good judgment over life and safety issues (shoot and don’t shoot scenarios, discrete handling of detected weapons and/or explosive devices, when to employ use of life saving and rescue equipment, etc.).
• Controls pedestrian and vehicle access to the facility, patrols building and reports unusual situations or unauthorized individuals. Responds to general alarm, provides emergency service, and follows local response protocol until the alarm or situation has been resolved. Monitors Bank departments for safety or security violation and reports findings to department management. May prepare and/or review appropriate shift reports and distributes as required. Works all posts. Prepares logs and input information pertaining to incident and daily activity reports in prescribed format.
• Monitors metal detectors or utilizes metal detection wands to scan visitors, personal items, and packages for unauthorized items. Monitors and authorizes visitors accessing Bank facilities and records visitor data on appropriate logs. Monitors surveillance equipment, intercoms, telephones, radios, and other specialized equipment. Inspects vehicles entering security sensitive areas for unauthorized personnel or contents.
• Operates as a law enforcement officer pursuant to the authority given the Board of Governors by Section 11 (q) of the Federal Reserve Act. Authorized personnel act as law enforcement officers pursuant to regulations of the Board of Governors and approved by the U.S. Attorney General (Uniform Regulations for Federal Reserve Law Enforcement Officers).
• On an as needed basis may conduct initial investigations into accidents and incidents, make proper notifications to the senior law enforcement officer on duty, and perform follow up duties as directed by supervisor. Could be needed to testify in court in response to a subpoena regarding accidents or incidents.
• Develops proficiency in use of personal computer (PC) and related software, computerized access and control systems, video surveillance equipment, x-ray and metal screening equipment, various alarms systems and Automated External Defibrillators.
• On an as needed basis may participate in special assignments to protect dignitaries of a Reserve Bank or the Board of Governors, this could include escorting visitors, contractors and/or vendors working in high security areas.

Qualifications:

• Education: High School Diploma or GED
• Experience: Less than two years

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PR4nXMIOo9k/story01.htm Tyler Durden

When it comes to setting the prevailing economist groupthink, nobody does it better than the economists at JPMorgan and Goldman Sachs. Which is why the following chart of projected 2014 GDP growth by quarter in the Developed and Emerging World from JPM, explains succinctly just where the groupthink now expects marginal global growth will come from (Mexico, South Africa, Korea, UK, Italy?). We show it just because the economist consensus is always wrong when it comes to the important inflection points (see ECB rate cut decision, Taper off decision, Taper on, the great financial crisis, “subprime is contained”, etc).

So for those curious to know what most likely will not happen in the new year, this chart’s for you.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/jBESSkKt75A/story01.htm Tyler Durden

Last week, which straddled the New Year holiday, saw a reversal in the trends seen in second half of Q4 13.  These trends were characterized by the strength of the euro, sterling and the handful of currencies that move in their orbit, like the Swiss franc, and Danish krone and the weakness of the yen and dollar bloc currencies.

 

Full participation will return for an event-packed week that features the non-manufacturing PMIs, ECB and BOE policy meetings, the minutes from the December FOMC that saw the Fed announce the beginning of the end of QE3+, and the December US non-farm payrolls. 

 

We had expected some backing and filling after the dramatic moves on December 27,  the thinness of market conditions last week likely exacerbated the price action.   The price action that saw the euro drop around 1% on the week, and sterling shed about half as much, damaged the technical outlook.   

 

The push above $1.38 in the euro was not confirmed by the RSI or MACD, leaving a bearish divergence in its wake.   The euro was turned lower after testing the trend line drawn off the July ’08 high near $1.6040 and the May ’11 high near $1.4940 and just above $1.3900 at the end of the year (last week mistakenly estimated that trend line near $1.4050 in early Jan–hat tip to Mark Etzkorn at Currency Trader for setting me straight).  The 5-day moving average has slipped below the 20-day average.  A convincing break of $1.36 would signal a move toward $1.3500-25, while a move above $1.3725 would help stabilize the tone.  

 

The Swiss franc is interesting from a technical perspective.   The dollar fell to a 2-year low on Dec 27 at CHF0.8800.  It has rebounded and, before the weekend, took out the downtrend line drawn off the July and Nov highs.  The RSI and MACDs are trending high, never confirming that low on Dec 27.  The next upside target is seen in the CHF0.9080-CHF0.9100.  

 

Sterling posted a key reversal on the first trading session of 2014 by making a new high for the move (poking briefly through $1.66) before selling off to five day lows and settling below the Dec 31 low dismissing the price action that Bloomberg recorded for Jan 1).  The technical indicators are more mixed for sterling than was the case for the euro.  There does not appear to be a bearish divergence in the RSI as there was in the euro, but there is a bearish divergence with the MACDs.  In addition, the 5- and 20-day averages are not poised to cross.   Still a convincing break of $1.6400 could trigger another bout of long liquidation that could push it toward $1.6320.  On the upside, it may require a move back above $1.6500 to indicate a resumption of the uptrend. 

 

The dollar put in a key reversal against the yen on Jan 2 by making a new (albeit marginal) high and then selling off to its lowest level since Dec 27.  Japanese markets were closed for much of the period and the local market’s response will likely be important.   The dollar found support near JPY104, which corresponds to the 20-day moving average.  This moving average has not been violated since early Nov.  

 

The RSI and MACDs have turned lower and market positioning is still extreme, suggesting a vulnerability in the market.  However, with Fed tapering and US rates firm, many look for the yen to weaken sharply this year.  This will likely encourage dollar buying on pullbacks. 

 

The 20-day moving average had turned back bounces in the Australian dollar twice in November and twice in December.  It stalled there again on Jan 2, but short through it on Jan 3.    While the RSI and MACDs have turned up, we are suspicious of a bull trap.  A break of the $0.9000-35 area would ease these suspicions and suggest scope toward $0.9150-$0.9200. 

 

On several occasions in recent weeks, the US dollar has tried establishing a foothold above CAD1.07, but for naught and frustrating ideas of a breakout.   While the MACD is trending lower, the RSI has been bouncing along the 50 level, giving no strong directional signals.  We would be more inclined to buy US dollars in the CAD1.0560-80 area, with a fairly tight stop to play the six week range, with a view of additional USD strength in the period ahead. 

 

The technical outlook for the Mexican peso is far from clear.  The trend line drawn off the dollar’s Sept and Nov high was approached in Dec (before the dollar fell to MXN12.80) and comes in now just above MXN13.20.  On the other hand, the dollar has not traded below MXN13.00 since Christmas eve.   While we like the peso on a medium and long-term view, but don’t see a favorable risk-reward trade at current levels. 

 

The CFTC Commitment of Traders report on positioning in the currency futures is not available for the most recent period.  

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/lYhc6wNG4Qk/story01.htm Marc To Market

Download GoldCore Outlook For 2014

CONTENTS
– Introduction
– Review of 2013
– Gold and Silver Have Torrid Year – Fall 27% and 35% Respectively
– Year Of Paper Selling But Robust Physical Demand – Especially From China
– Highlights Of Year – German Gold Repatriation, Record Highs In Yen, Huge Chinese Demand
– Lowlights Of Year – Massive Paper Sell Offs in April/June and Cypriot Deposit Confiscation
– Syria and the Middle East
– U.S. Government Shutdown and $12 Trillion Default Risk
– Continuing Central Bank Demand
– Regulatory Authorities Investigate Gold Rigging

Outlook 2014
– Geopolitical Tensions – The Middle East, Russia, China, Japan and the U.S.
– Ultra Loose Monetary Policies Set To Continue with Yellen as New Federal Reserve Chair
– Eurozone Debt Crisis Again – UK, U.S. Japan and China Also Vulnerable
– Enter The Dragon – Chinese Gold Demand Paradigm Shift To Continue
– Death Of Indian Gold Market Greatly Exaggerated
– Long Term (2014-2020) MSGM Fundamentals

Conclusion

Introduction
Happy New Year. We would like to take this opportunity to wish our clients and subscribers a prosperous, healthy and happy 2014.

With 2013 having come to a close, it is important to take stock and review how various assets have performed in 2013, assess the outlook in 2014, and even more importantly, the outlook for the coming years.

2013 was the year of the speculator and the year of the risk asset, such as equities, with global stocks doing well in the sea of liquidity and cheap money created by central banks.
Surprisingly to many gold bulls, these favourable monetary conditions did not lead to higher precious metal prices. Gold and particularly silver had a torrid year and significantly underperformed the vast majority of equity and bond markets.

The MSCI World Index was up 23% and the S&P 500, the Nasdaq and the FTSE were up 32%, 35% and 14% respectively.

MSCI World Index – 1970 to January 3, 2014 – Bloomberg

Bond investors did not fare as well as interest rates began to rise from all-time record lows. As bond prices fell, interest rates rose. The bellwether 10-year Treasury note closed the year at 3.028%, which was up from 1.76% at the start of 2013 and the highest since July 2011.

US 10 Year Note – 1964 to January 3, 2014 – Bloomberg

The Barclays US Aggregate bond index, which is dominated by Treasury, mortgage and corporate bonds and is the leading benchmark followed by institutional money, is set to record its first negative year of total returns since 1999. The bond market’s major benchmark registered a total return of minus 2.1% for 2013. It is only the benchmark’s third annual negative total return since 1976, according to Barclays.

REVIEW OF 2013

Gold and Silver Have a Torrid Year – Fall 28% and 36% Respectively
Gold fell in all major currencies in 2013 and fell 28% in dollar terms for its first annual price fall since 2000. Gold fell 40% in pound terms, 45% in euro terms. Gold fell much less in Japanese yen terms and was 16% lower in yen as the yen continued to be devalued and debased.

Silver was down by 36% in dollar terms and by more in the other currencies; silver had its poorest annual performance since 1984.

Gold came under pressure in the first half of 2013 and saw falls from near $1,700/oz at the start of the year to $1,180/oz by mid-year. Indeed, gold’s low for the year took place on June 28th, which was the last day of trading in Q2, and an important time frame for those evaluating gold’s longer term performance.

The price falls in the first half took place despite a positive fundamental backdrop and despite the risk of contagion in the Eurozone – especially from Spain, Italy and Greece. This risk was so great in the early part of the year that it led George Soros to warn in February that the Eurozone could collapse as the U.S.S.R. had.

In March, Cyprus was the first country to experience a bank bail-in of depositors, where both individual and corporate account holders, experienced capital controls and a confiscation of nearly 50% of their deposits. In June and then again two weeks ago, the EU confirmed that depositors will be bailed in when banks are insolvent.

International monetary and financial authorities globally, including the ECB, the Bank of England and the Federal Deposit Insurance Corporation (FDIC), have put in place the regulatory and legal framework for bail-in regimes in the event of banks failing again.

Are Your Savings Safe From Bail-Ins

Gold saw a bit of a recovery in the third quarter with gains in July and August as gold interest rates went negative, bullion premiums in Asia surged and COMEX inventories continued to fall. Silver surged 12% in 5 trading days in mid August due to record silver eagle coin demand and ETF demand.

UK gold ‘exports’ to Switzerland increased greatly during the year due to demand for allocated gold in Switzerland due to Switzerland’s tradition of respecting private property throughout the centuries and its strong economy. However, more importantly, UK gold exports to Switzerland were due to the significant increase in store-of-wealth demand from China and many countries in Asia.

Institutional gold in the form of London gold delivery bars (400 oz) was exported to Swiss refineries in order to be recast into one kilogramme, 0.9999 gold bars used on the Shanghai Gold Exchange and in the Chinese market.

However, this was not enough to prevent further falls in the final quarter and in recent days when gold has again tested support at $1,200/oz.

Year Of Technical, Paper Selling But Robust Physical Demand

German Gold Repatriation
The year began with a bang, when news broke on January 17 that the German central bank was attempting to repatriate Germany’s gold reserves. The Bundesbank announced that they will repatriate 674 metric tons of their total 3,391 metric ton gold reserves from vaults in Paris and New York to restore public confidence in the safety of Germany’s gold reserves.

Bundesbank – Goldbarren

The repatriation of only some 20% of Germany’s gold reserves from the Federal Reserve Bank of New York and the Banque of Paris back to Frankfurt was meant to allay increasing German concerns about their gold reserves. But the fact that the transfer from the Federal Reserve is set to take place slowly over a seven year period and will only be completed in 2020 actually led to increased concerns. It also fueled concerns that the unaudited U.S. gold reserves may be less than what is officially recorded.

What was quite bullish news for the gold market, saw gold quickly rise by some $30 to challenge $1,700/oz. The news was expected to help contribute to higher prices but determined selling saw gold capped at $1,700/oz prior to falls in price in February.

Paper Selling On COMEX
Gold’s falls in 2013 can be attributed in large part to paper selling by more speculative players on the COMEX. This was graphically seen in April when there was a selling raid on the COMEX which led to a huge price fall of nearly 15% in two days prior to the emergence of “extraordinary” demand for gold internationally.

The sell off came as demand in Europe began to pick up due to concerns that the Cypriot deposit confiscation may be a precedent that could be seen in other EU countries.

The speed and scale of the sell off was incredible and even some of the bears were surprised by it. Many questioned the catalysts for the $150 two day sell off. The sell off was initially attributed to an unfounded rumour regarding Cyprus gold reserve sales – this was soon seen to be a non-story. The Cyprus rumour did not justify the scale of the unprecedented sell off.
Reports suggested that a single futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting. The futures market then saw a further wave of selling of contracts worth some $15 billion, equivalent to 10 million ounces of selling or 300 tonnes, in just 35 minutes.
Gold futures with a value of over 400 tonnes were sold in a handful of trades in minutes. This was equal to 15% of annual gold mine production. The scale of the selling was massive and again underlines how one or two large banks or hedge funds can completely distort the market by aggressive, concentrated leveraged short positions.

Investment banks and hedge fund speculators can manipulate the paper or futures gold price in whichever direction they want in the short term due to the massive leverage they can utilise. The events in April further bolstered the allegations of manipulation by the Gold Anti-Trust Action Committee (GATA).

Significant Demand For Physical Gold Globally
Gold prices fell very sharply despite very high demand. However, the gold price decline was arrested by the scale of physical demand globally. This demand was particularly strong in the Middle East and in Asia, particularly China but was also seen in western markets with government mints reporting a surge in demand in 2013.

This demand for physical gold was seen in western markets throughout the year. In April, the US Mint had to suspend sales of small gold coins; premiums for coins and bars surged in western markets due to high demand.

Mints, refineries and bullion brokerages were quickly cleared out of stock in April and COMEX gold inventories plummeted. There were gold and silver coin and bar shortages globally.

This continued into May as investors and savers globally digested the ramifications of the Cypriot deposit confiscation. The crash of the Nikkei in May also added to physical demand in Japan and by nervous investors internationally.

This led to all time record gold transactions being reported by the LBMA at the end of May.

Chinese demand remained very robust and Shanghai Gold Exchange volumes surged 55% in one day at the end of May – from 10,094 kilograms to 15,641 kilograms. There were “supply constraints” for gold bars in Singapore and bullion brokers in Singapore and India became sold out of bullion product at the end of May.

This, and concerns about a very poor current account deficit and a possible run on the Indian rupee, prompted the Indian government to bring in quasi capital controls and punitive taxes on gold in June. Ironically, this led to even higher demand for gold in the short term and much higher premiums in India. Longer term, it has led to a massive surge in black market gold buying with thousands of Indians smuggling in gold from Bangkok, Dubai and elsewhere in Asia.

June saw another peculiar sudden 6% price fall in less than 24 hours. This again contributed to increased and very robust physical demand. U.S. Mint sales of silver coins reached a record in the first half of 2013 at 4,651,429 ounces and the UK’s Royal Mint saw a demand surge continuing in June after demand had trebled in April.
Asian markets continued to see elevated levels of gold buying. Gold demand in Vietnam was so high that buyers were paying a $217 premium over spot gold at $1,390/oz. Premiums surged again in China as the wise Chinese ‘aunties’ and wealthy Chinese continued to buy gold as a store of wealth.

Despite very high levels of demand for gold, in Asia especially, gold languished and sentiment in western markets continued to be very poor with gold falling to the lows of the year on June 28th.

July saw continuing strong demand for gold internationally as volumes surged to records on the Shanghai Gold Exchange (SGE). Premiums rose and feverish buying left many of Hong Kong’s banks, jewellers and even its gold exchange without enough gold bullion to meet demand.

In August, demand remained elevated and gold forward offered rates (GOFO) remained negative and became more negative. This showed that physical demand was leading to supply issues in the highly leveraged LBMA gold market or the institutional gold bar market.

Today, as we enter the New Year gold, forward offered rates (GOFO) remain negative, meaning banks, which had lent their customers gold to obtain a positive return, and therefore increase the “paper” gold supply, will take the gold back. This should limit the amount of gold on the market and increase the gold price.

Chinese buyers are of increasing importance but it is important to note that physical demand rose significantly throughout the world in 2013 despite falling prices. This is seen in the levels of demand experienced by leading bullion dealers, refiners and government mints. This is clearly seen in the data released by the Perth Mint and the U.S. Mint which both saw increased demand for physical gold coins and bars in 2013. Other mints have yet to report their numbers.

The Perth Mint of Western Australia reported yesterday that they saw a very significant increase in sales in 2013 despite the falling prices. Gold sales from the Perth Mint, which refines most of the bullion from the world’s second-biggest producer Australia, climbed 41% last year.

Sales of gold coins and minted bars totalled 754,635 ounces in 2013 from 533,333 ounces a year earlier, according to data from the mint.

Silver coin sales surged 33% to about 8.6 million ounces from 6.5 million ounces in 2012, according to the Perth Mint.

Gold bullion sales expanded 12% to 58,944 ounces in December from 52,700 in November and about 51,778 ounces in December 2012, according to data from the mint. Gold sales fell to as low as 30,430 ounces in August and peaked at about 112,575 in April, when gold was hammered 14% lower on the COMEX in just two days.

Silver coin sales were 845,941 ounces last month from 807,246 in November and 452,389 a year earlier, it said.

The U.S. Mint also saw an increase in physical gold sales and sold 14% more American Eagle gold coins last year and sales climbed 17% to 56,000 ounces in December from November, according to data on the mint’s website as reported by Bloomberg.

Syria and the Middle East
Even bullish developments such as the prospect of war in Syria at the end of August, only led to small, short term price gains. War in Syria and in the Middle East, pitching the U.S. and western allies against China and Russia was expected by many to lead to “market panic” and to propel gold “much, much higher,” in the words of astute investor Jim Rogers.

Only the fact that President Obama and the U.S. were confronted with opposition by people internationally against another war and were outmaneuvered diplomatically, prevented the war with Syria.

The war had the potential to destabilise the region with ramifications for oil prices and the global economy.

U.S. Government Shutdown and $12 Trillion Default Risk
Another very bullish development for gold came in late September and early October with the U.S. budget negotiations and government shutdown.

They highlighted the dire U.S. fiscal position and the complete failure of the American political and economic class to deal with their extremely precarious financial position in any meaningful way. The U.S. government is essentially bankrupt with a national debt of over $17 trillion and unfunded liabilities of between $100 trillion and $200 trillion.

In the coming months and years, it will lead to a lower dollar and much higher gold and silver prices.

However, in the year of paper gold selling that was 2013, even this did not lead to higher gold prices.

Continuing Central Bank Gold Demand 
All year, central banks continued to accumulate gold with Russia, Kazakhstan, Azerbaijan, Kyrgyz Republic, Turkey and other central banks continuing to diversify their foreign exchange reserves.

U.S. Federal Reserve employees in underground vault holding monetary gold

Central banks continued to be strong buyers of gold in 2013, albeit the full year data may show demand was at a slightly slower rate than the record levels seen in recent years. Q4 2013 will be the 12th consecutive quarter of net purchases of gold by central banks.

Total official central bank demand continued at roughly 100 tonnes every single quarter. However, this does not include the ongoing clandestine and undeclared purchases of gold by the People’s Bank of China. Conservative estimates put PBOC demand at 100 tonnes a quarter or at over 400 tonnes for the year. More radical projections are of demand of over 1,000 tonnes from the PBOC in 2013.

Regulatory Authorities Investigate Gold Rigging
Peculiar, single trade or handful of trades leading to sudden gold price falls were common in 2013 and contributed to the 28% price fall.

Therefore, those who have diversified into physical gold will welcome the move by the German financial regulator BaFin to widen their investigation into manipulation by banks of benchmark gold and silver prices. In December, the German banking regulator BaFin demanded documents from Germany’s largest bank, Deutsche Bank, as part of a probe into suspected manipulation of the gold and silver markets.

The German regulator has been interrogating the bank’s staff over the past several months. Since November, when the probe was first mentioned, similar audits in the U.S. and UK are also commencing.

Precious metal investors live in hope but their experience of such investigations is that they are often very lengthy affairs with little in the way of outcome, disclosure or sanction. The forces of global supply and demand, one anemic, the other very high, are likely to be more important and a valuable aid to gold and silver owners in 2014 and in the coming years. As ultimately, the price of all commodities, currencies and assets is determined by supply and demand.

Janet Yellen Becomes Fed Chair

At year end came confirmation that cheap money uber dove Janet Yellen was set to take over from Ben Bernanke as Chair of the Federal Reserve. Gold bulls cheered loudly at her appointment thinking that Yellen’s appointment would lead to a recovery in oversold gold prices. However, even this bullish development did not help embattled gold prices.

OUTLOOK FOR 2014

Introduction

2013 was a year of calm in the world of finance. 2014 may not be so calm and there is a risk of renewed turbulence on global financial markets. There are many unresolved risks which were present in 2013 but did not come to the fore and impact markets as they could have.

The Eurozone debt crisis is far from resolved and there remains an underappreciated risk of sovereign crises in other major industrial nations.

There are far more positives for gold than negatives and the positives include ultra-loose monetary policies, risk of sovereign and banking debt crises and systemic or contagion risk, the increasingly uncertain political and military situation globally and of course increased demand for gold from the Middle East, much of Asia and particularly China.

Download GoldCore Outlook For 2014

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/PXF6irLCW84/story01.htm GoldCore

Submitted by Brandon Smith of Alt-Market blog,

It was the winter of 1939, only a few months earlier the Soviet Union and Hitler's Third Reich had signed a partially secret accord known as the Molotov-Ribbentrop Pact; essentially a non-aggression treaty which divided Europe down the middle between the fascists and the communists. Hitler would take the West, and Stalin would take the East. Stalin's war machine had already steamrolled into Latvia. Lithuania, and Estonia. The soviets used unprecedented social and political purges, rigged elections, and genocide, while the rest of the world was distracted by the Nazi blitzkrieg in Poland. In the midst of this mechanized power grab was the relatively tiny nation of Finland, which had been apportioned to the communists.

Apologists for Stalinist history (propagandists) have attempted to argue that the subsequent attack on Finland was merely about “border territories” which the communists claimed were stolen by the Finns when they seceded from Russia during the Bolshevik Revolution. The assertion that the soviets were not seeking total dominance of the Finns is a common one. However, given the vicious criminal behavior of Russia in nearby pacified regions, and their posture towards Finland, it is safe to assume their intentions were similar. The Finns knew what they had to look forward to if they fell victim to the iron hand of Stalin, and the soviet propensity for subjugation was already legendary.

The Russian military was vastly superior to Finland's in every way a common tactician would deem important. They had far greater numbers, far better logistical capability, far better technology, etc, etc. Over 1 million troops, thousands of planes, thousands of tanks, versus Finland's 32 antiquated tanks, 114 planes which were virtually useless against more modern weapons, and 340,000 men, most of whom were reservists rallied from surrounding farmlands. Finland had little to no logistical support from the West until the conflict was almost over, though FDR would later pay lip service to the event, “condemning” soviet actions while brokering deals with them behind the scenes. Russian military leadership boasted that the Finns would run at the sound of harsh words, let alone gun fire. The invasion would be a cakewalk.

The battle that followed would later be known as the “Winter War”; an unmitigated embarrassment for the Soviets, and a perfect example of a small but courageous indigenous guerrilla army repelling a technologically advanced foe.

 

To Fight, Or Pretend To Fight?

Fast forward about seven decades or so, and you will discover multiple countries around the globe, including the U.S., on the verge of the same centralized and collectivized socialist occupation that the Finnish faced in 1939. The only difference is that while their invasion came from without, our invasion arose from within. The specific methods may have changed, but the underlying face of tyranny remains the same.

In America, the only existing organization of people with the slightest chance of disrupting and defeating the march towards totalitarianism is what we often refer to as the “Liberty Movement”; a large collection of activist and survival groups tied together by the inexorable principles of freedom, natural law, and constitutionalism. The size of this movement is difficult to gauge, but its social and political presence is now too large to be ignored. We are prevalent enough to present a threat, and prevalent enough to be attacked, and that is all that matters. That said, though we are beginning to understand the truly vital nature of our role in America's path, and find solidarity in the inherent values of liberty that support our core, when it comes to solutions to the dilemma of globalization and elitism, we are sharply divided.

While most activist movements suffer from a complete lack of solutions to the problems they claim to recognize, constitutional conservatives tend to have TOO MANY conceptual solutions to the ailments of the world. Many of these solutions rely upon unrealistic assumptions and methods that avoid certain inevitable outcomes. Such strategies center mostly on the concepts of “non-aggression” or pacifism idealized and romanticized by proponents of Gandhi, Martin Luther King Jr, and the anti-war movements of the 1960's and 1970's. The post-baby boomer generations in particular have grown up with an incessant bombardment of the “higher nature” of non-violence as a cure-all for every conceivable cultural ailment.

We have been taught since childhood that fighting solves nothing, but is this really true?

I can understand the allure of the philosophy. After all, physical confrontation is mentally and emotionally terrifying to anyone who is not used to experiencing it. The average “reasonable” person goes far out of their way on every occasion to avoid it. Most of the activists that I have met personally who deride the use of force against tyrannical government have never actually been in an outright confrontation of any kind in their lives, or if they have, it ended in a failure that scarred them. They have never trained for the eventuality. Many of them have never owned a firearm. The focus of their existence has been to hide from pain, rather than overcome their fears to achieve something greater.

There is nothing necessarily wrong with becoming an “intellectual warrior”, unless that person lives under the fantasy that this alone will be enough to defeat the kind of evil we face today.

Non-aggression methods rely on very specific circumstances in order to be effective. Most of all, they rely on a system of government that is forced to at least PRETEND as if it cares what the masses think of it. Gandhi's Indian Independence Movement, for example, only witnessed noticeable success because the British government at that time was required to present a semblance of dignity and rule of law. But what happens if a particular tyranny reaches a point where the facade of benevolence disappears? What happens when the establishment turns to the use of the purge as a tool for consolidation? What happens when the mask comes completely off?

How many logical arguments or digital stashes of ethereal Bitcoins will it take to save one's life or one's freedom then?

Arguments For And Against Violent Action

The position against the use of “violence” (or self defense) to obstruct corrupt systems depends on three basic debate points:

1) Violence only feeds the system and makes it stronger.

2) We need a “majority” movement in order to be successful.

3) The system is too technologically powerful – to fight it through force of arms is “futile”, and our chances are slim to none.

First, violence does indeed feed the system, if it is driven by mindless retribution rather than strategic self defense. This is why despotic governments often resort to false flag events; the engineering of terrorist actions blamed on scapegoats creates fear within the unaware portions of the population, which generates public support for further erosion of freedoms. However, there is such a thing as diminishing returns when it comes to the “reach, teach, and inspire” method.

The escalation of totalitarianism will eventually overtake the speed at which the movement can awaken the masses, if it has not done so already. There will come a time, probably sooner rather than later, when outreach will no longer be effective, and self defense will have to take precedence, even if that means subsections of the public will be shocked and disturbed by it. The sad fact is, the faster we wake people up, the faster the establishment will degrade social stability and destroy constitutional liberties. A physical fight is inevitable exactly because they MAKE it inevitable. Worrying about staying in the good graces of the general populace or getting honest representatives elected is, at a certain point, meaningless. I find it rather foolish to presume that Americans over the next decade or two or three have the time needed to somehow inoculate the system from within. In fact, I'm starting to doubt that strategy has any merit whatsoever.

Second, the idea that a movement needs a “majority” of public backing to shift the path of a society is an old wives tale. Ultimately, most people throughout history are nothing more than spectators in life, watching from the sidelines while smaller, ideologically dedicated groups battle for superiority. Global developments are decided by true believers; never by ineffectual gawkers. Some of these groups are honorable, and some of them are not so honorable. Almost all of them have been in the minority, yet they wield the power to change the destiny of the whole of the nation because most people do not participate in their own futures. They merely place their heads between their legs and wait for the storm to pass.

All revolutions begin in the minds and hearts of so-called “outsiders”. To expect any different is to deny the past, and to assume that a majority is needed to achieve change is to deny reality.

Third, I'm not sure why non-aggression champions see the argument of statistical chance as relevant. When all is said and done, the “odds” of success in any fight against oligarchy DO NOT MATTER. Either you fight, or you are enslaved. The question of victory is an afterthought.

Technological advantage, superior numbers, advanced training, all of these things pale in comparison to force of will, as the Finnish proved during the Winter War. Some battles during that conflict consisted of less than a hundred Finns versus tens-of-thousands of soviets. Yet, at the end of the war, the Russians lost 3500 tanks, 500 aircraft, and had sustained over 125,000 dead (official numbers). The Finns lost 25,000 men. For every dead Finn, the soviets lost at least five. This is the cold hard reality behind guerrilla and attrition warfare, and such tactics are not to be taken lightly.

Do we go to the Finnish and tell them that standing against a larger, more well armed foe is “futile”? Do we tell them that their knives and bolt action rifles are no match for tanks and fighter planes? And by extension, do we go to East Asia today and tell the Taliban that their 30 year old AK-47's are no match for predator drones and cruise missiles? Obviously, victory in war is not as simple as having the biggest gun and only the uneducated believe otherwise.

The Virtues Of Violence

The word “violence” comes with numerous negative connotations. I believe this is due to the fact that in most cases violence is used by the worst of men to get what they want from the weak. Meeting violence with violence, though, is often the only way to stop such abuses from continuing.

At Alt-Market, we tend to discuss measures of non-participation (not non-aggression) because all resistance requires self-sustainability. Americans cannot fight the criminal establishment if they rely on the criminal establishment. Independence is more about providing one's own necessities than it is about pulling a trigger. But, we have no illusions about what it will take to keep the independence that we build. This is where many conceptual solutions are severely lacking.

If the system refuses to let you walk away, what do you do? If the tyrants would rather make the public suffer than admit that your social or economic methodology is better for all, how do you remove them? When faced with a cabal of psychopaths with deluded aspirations of godhood, what amount of reason will convince them to step down from their thrones?

I'm sorry to say, but these questions are only answered with violence.

The Liberty Movement doesn't need to agree on the “usefulness” of physical action because it is coming regardless. The only things left to discern are when and how. Make no mistake, one day each and every one of us will be faced with a choice – to fight, or to throw our hands in the air and pray they don't shoot us anyway. I certainly can't speak for the rest of the movement, but in my opinion only those who truly believe in liberty will stand with rifle in hand when that time comes. A freedom fighter is measured by how much of himself he is willing to sacrifice, and how much of his humanity he holds onto in the process. Fear, death, discomfort; none of this matters. There is no conundrum. There is no uncertainty. There are only the chains of self-defeat, or the determination of the gun. The sooner we all embrace this simple fact, the sooner we can move on and deal with the dark problem before us.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/yAgkNlAJ-do/story01.htm Tyler Durden

Cliff Asness would politely request people stop saying "It's a stock picker's market." While pairwise correlations have dropped to post-crisis lows, they remain elevated to 'normal' levels but, as Asness rages, perhaps asset managers who rely on this 'weak' phrase should more honestly note "I think they mean, "We will have to pick stocks now because the market isn’t making us money the easy way."

 

 

One of Cliff Asness' Pet Peeves…

I don’t know what it means to say, “It’s a stock picker’s market.”

It may mean the whole market isn’t going straight up now so you have to make your money picking the right stocks, but I don’t understand why active managers would suddenly get better at stock picking at those times. Note that I do think a valid use of this concept may occur when, after adjusting for market moves, there is not a lot of dispersion in stock returns, meaning that individual stocks tend to move in lockstep, leaving little idiosyncratic volatility — a necessary (but not sufficient!) ingredient to generate outperformance (assuming one is unwilling to lever up smaller differences at these times). But that’s a quant measure, and I don’t think that’s what many people mean by this comment.

I think they mean, “We will have to pick stocks now because the market isn’t making us money the easy way.” To the extent I’m wrong, I withdraw the peeve (is there a specific form I need to file for that?).

Similarly, you often hear financial professionals say such things as “forecasting market direction from here is exceptionally difficult” in a tone conveying “gee, this is really strange.” Well, I think forecasting the market over short-term horizons is always exceptionally difficult.

If they said, “Our market-timing forecasts are mostly useless most of the time, but right now, they are completely useless,” I suppose I’d be OK with it, but I’m not holding my breath that they will.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XmkU54DMK3M/story01.htm Tyler Durden

Cliff Asness would politely request people stop saying "It's a stock picker's market." While pairwise correlations have dropped to post-crisis lows, they remain elevated to 'normal' levels but, as Asness rages, perhaps asset managers who rely on this 'weak' phrase should more honestly note "I think they mean, "We will have to pick stocks now because the market isn’t making us money the easy way."

 

 

One of Cliff Asness' Pet Peeves…

I don’t know what it means to say, “It’s a stock picker’s market.”

It may mean the whole market isn’t going straight up now so you have to make your money picking the right stocks, but I don’t understand why active managers would suddenly get better at stock picking at those times. Note that I do think a valid use of this concept may occur when, after adjusting for market moves, there is not a lot of dispersion in stock returns, meaning that individual stocks tend to move in lockstep, leaving little idiosyncratic volatility — a necessary (but not sufficient!) ingredient to generate outperformance (assuming one is unwilling to lever up smaller differences at these times). But that’s a quant measure, and I don’t think that’s what many people mean by this comment.

I think they mean, “We will have to pick stocks now because the market isn’t making us money the easy way.” To the extent I’m wrong, I withdraw the peeve (is there a specific form I need to file for that?).

Similarly, you often hear financial professionals say such things as “forecasting market direction from here is exceptionally difficult” in a tone conveying “gee, this is really strange.” Well, I think forecasting the market over short-term horizons is always exceptionally difficult.

If they said, “Our market-timing forecasts are mostly useless most of the time, but right now, they are completely useless,” I suppose I’d be OK with it, but I’m not holding my breath that they will.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XmkU54DMK3M/story01.htm Tyler Durden

Submitted by John Browne via Euro Pacific Capital,

Ever since President Nixon broke the US dollar's last link to gold, the world has been set adrift on a sea of fiat currencies that have been increasingly debased, serving the interests of governments and financial elites. For the last five years, central banks have imposed near-zero rates of interest that have helped push up stock, bond, and real estate prices, but have made it nearly impossible for savers to receive meaningful returns on bank deposits.

To make matters worse, the apparatus of national security has turned financial transactions into a massive exercise in government surveillance. Under the camouflage of 'protective' measures, such as the USA PATRIOT Act, governments have invaded the privacy of citizens and compromised banking secrecy in an unprecedented and often unconstitutional manner. Despite huge potential transaction-cost reductions achievable through advances in digital technology, banks continue to charge exorbitant transaction fees while maintaining transfer delays that reflect a pre-digital age. In addition, bank regulators, led by the IMF, have shown a willingness, in the case of Cyprus, to make depositors liable for poor banking decisions. Many private citizens may naturally see the status quo as a deliberate policy to crush middle-class savers and pave the way for centralized socialism. Some have sought a way out.

Gold 2.0?

Traditionally, investors have turned to precious metals such as gold to help protect and privately transfer their wealth. However, ever-increasing regulation, monitoring, and physical searches have eroded some of the key protections afforded by gold. Gold's weakness over the past 24 months has also spooked many former adherents. In such an environment, many have seen the recent arrival of digital crypto-currencies as the means to restore the monetary independence that has been co-opted by big governments. Currencies like the now-famous Bitcoin offer the potential for a store of value, low transaction costs, free movement, and anonymity. It's no wonder that Bitcoin has taken the world by storm. But all that glitters is not gold.

Wikipedia defines a crypto-currency as, "a peer-to-peer, decentralized, digital currency [or medium of exchange] whose implementation relies on the principles of cryptology to validate the transaction and the generation of the currency itself." In short, it is a virtual currency traded by private, unregulated internet exchanges. Despite the recent fame of Bitcoin, there are actually a number of other crypto-currencies that have been created in recent years. Names include Litecoin, Peercoin, Namecoin, and Primecoin. Bitcoin, established in 2009, is undoubtedly the most successful, and it became a breakout news story in 2013.

Bitcoin Pros & Cons

Bitcoin offers a few distinct advantages over conventional currencies: it allows almost instantaneous peer-to-peer transactions that completely avoid the expensive and cumbersome bank-run electronic payment systems, and it allows for fast international movement of funds outside foreign exchange controls.

Many investors are also betting that Bitcoin will offer a better store of value over time than serially printed fiat currencies. That's because the Bitcoin protocol automatically, and apparently irrevocably, limits the number of bitcoins that will be created to 21 million. In this sense, they are immeasurably more honest than US dollars. However, unlike US dollars, pounds sterling, or euros, bitcoins do not carry legal tender status, but rather rely on the network of merchants and individuals to continue to accept them as payment for goods and services.

Finally, by utilizing anonymous wallets, some users may think that crypto-currencies like Bitcoin offer increased financial privacy. I believe that this is largely an illusion. Governments have shown a great ability to crack any code no matter how well planned (just look at the British government's success against the Germans in the Second World War). I have full faith that the US Federal government can, over time, develop techniques to map all cyber transactions.

A Volatile Elephant in the Room

But it is Bitcoin's volatility that will likely be its immediate undoing. In recent months, as more speculators have moved into the market, prices have been unstable to say the least. On November 29th, Bitcoin reached $1,242 in Tokyo just as gold dipped to $1,240 an ounce. When those two values crossed, many began to speculate that Bitcoin had replaced gold as the premier alternative to fiat money. With relatively high transaction costs and delivery delays, precious metals are expensive to store and transport. In contrast, Bitcoin transactions are fast, cheap, and transnational. But little, if any, store of value is offered. That reality has been demonstrated in recent weeks as Bitcoin has dropped by some 50 percent in market value.

While crypto-currencies remain insulated from central bank manipulation, governments have thus far been tolerant, perhaps because their capability to track transactions is more advanced than Bitcoin believers admit.

Nevertheless, the advent of crypto-currencies represents the increasing popular demand for a currency insulated from political debasement and bank profiteering. Crypto-currencies represent a legitimate attempt by private citizens to reassert their sovereignty over such government actions. I appreciate the effort, and I believe it holds much promise. But for now, I will stay with the traditional store of value, gold.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/LNVclmvkAAE/story01.htm Tyler Durden

Emerging Market equities have tumbled over 4% in the last 2 days on heavy volume…

 

 

The last time the world experienced a major Emerging Market meltdown, the US was still by far the world’s major ‘consumer’. However, as the following chart from JPMorgan shows, that is very much not the case anymore…

 

and the last few days ugly echoes of the mid-Summer Taper Tantrum in Emerging Markets (most notably Asia), while being shrugged off by most, may be much more important to any sustained global recovery than your friendly local asset-gatherer would ever care to admit.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/fysu1nEtBpI/story01.htm Tyler Durden