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In space, no one can hear you scream… unless you happen to be Venezuela’s (soon to be former) leader Nicolas Maduro, who has been doing a lot of scream this morning following news that UAE’s Energy Minister Suhail Al-Mazrouei said OPEC will stand by its decision not to cut crude output “even if oil prices fall as low as $40 a barrel” and will wait at least three months before considering an emergency meeting.

In doing so, OPEC not only confirms that the once mighty cartel is essentially non-existant and has been replaced by the veto vote of the lowest-cost exporters (again, sorry Maduro), but that all those energy hedge funds (and not only) who hoped that by allowing margin calls to go straight to voicemail on Friday afternoon, their troubles would go away because of some magical intervention by OPEC over the weekend, are about to have a very unpleasant Monday, now that the next oil price bogey has been set: $40 per barrell. Luckily, this will be so “unambiguously good” for the US consumer, it should surely offset the epic destruction that is about to be unleashed on America’s shale patch, in junk bond hedge funds around the globe, and as millions of new jobs created as a result of the shale miracle are promptly unwound.

According to Bloomberg, OPEC won’t immediately change its Nov. 27 decision to keep the group’s collective output target unchanged at 30 million barrels a day, Suhail Al-Mazrouei said. Venezuela supports an OPEC meeting given the price slide, though the country hasn’t officially requested one, an official at Venezuela’s foreign ministry said Dec. 12. The group is due to meet again on June 5. 

“We are not going to change our minds because the prices went to $60 or to $40,” Mazrouei told Bloomberg at a conference in Dubai. “We’re not targeting a price; the market will stabilize itself.” He said current conditions don’t justify an extraordinary OPEC meeting. “We need to wait for at least a quarter” to consider an urgent session, he said.

And with OPEC’s 12 members pumped 30.56 million barrels a day in November, exceeding their collective target for a sixth straight month, according to data compiled by Bloomberg. Saudi Arabia, Iraq and Kuwait this month deepened discounts on shipments to Asia, feeding speculation that they’re fighting for market share amid a glut fed by surging U.S. shale production.

The above only focuses on the (unchanged) supply side of the equation – and since the entire world is rolling over into yet another round of global recession, following not only a Chinese slowdown to a record low growth rate, but also a recession in both Japan and Europe, the just as important issue is where demand will be in the coming year. The answer: much lower.

OPEC’s unchanged production level, a lower demand growth forecast from the International Energy Agency further put the skids under oil on Friday, raising concerns of possible broader negative effects such as debt defaults by companies and countries heavily exposed to crude prices. There was also talk of the price trend adding to deflation pressures in Europe, increasing bets that the European Central Bank will be forced to resort to further stimulus early next year.

And while the bankruptcy advisors and “fondos buitre” as they are known in Buenos Aires, are circling Venezuela whose default is essentially just a matter of day, OPEC is – just in case its plan to crush higher cost production fails – doing a little of the “good cop” routing as a Plan B.

According to Reuters, OPEC secretary general tried to moderate the infighting within the oil exporters, saying “OPEC can ride out a slump in oil prices and keep output unchanged, arguing market weakness did not reflect supply and demand fundamentals and could have been driven by speculators.”

Ah yes, it had been a while since we heard the good old “evil speculators” excuse. Usually it appeared when crude prices soared. Now, it has re-emerged to explain the historic plunge of crude.

Speaking at a conference in Dubai, Abdullah al-Badri defended November’s decision by the Organization of the Petroleum Exporting Countries to not cut its output target of 30 million barrels per day (bdp) in the face of a drop in crude prices to multi-year lows.

 

“We agreed that it is important to continue with production (at current levels) for the … coming period. This decision was made by consensus by all ministers,” he said. “The decision has been made. Things will be left as is.”

 

Some say selling may continue as few participants are yet willing to call a bottom for markets.

There is some hope for the falling knife catchers: “Badri suggested the crude price fall had been overdone. “The fundamentals should not lead to this dramatic reduction (in price),” he said in Arabic through an English interpreter. He said only a small increase in supply had lead to a sharp drop in prices, adding: “I believe that speculation has entered strongly in deciding these prices.””

Unfortunately for the crude longs, Badri is lying, as can be gleaned from the following statement:

Badri said OPEC sought a price level that was suitable and satisfactory both for consumers and producers, but did not specify a figure. The OPEC chief also said November’s decision was not aimed at any other oil producer, rebutting suggestions it was intended to either undermine the economics of U.S. shale oil production or weaken rival powers closer to home.

 

“Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran and Russia. This also is incorrect,” he said.

Well actually… “Saudi Arabia’s oil minister Ali al-Naimi had told last month’s OPEC meeting the organization must combat the U.S. shale oil boom, arguing for maintaining output to depress prices and undermine the profitability of North American producers, said a source who was briefed by a non-Gulf OPEC minister.”

And as Europe has shown repeatedly, not only is it serious when you have to lie, but it is even worse when you can’t remember what lies you have said in the past. That alone assures that the chaos within OPEC – if only for purely optical reasons – will only get worse and likely lead to least a few sovereign defaults as the petroleum exporting organization mutates to meet the far lower demand levels of the new normal.

In the meantime, the only question is how much longer can stocks ignore the bloodbath in energy (where there has been much interstellar screaming too) because as we showed on Friday, despite the worst week for stocks in 3 years, equities have a long way to go if and when they finally catch up, or rather down, with the crude reality…

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

Andrew Hall is known as “The God Of Oil” by some floor traders. When he was to be paid a $100 million bonus, the Great Recession had just begun and anger toward banks prompted officials to reign in corporate bonuses from those which took bailout funds. Since Citigroup owned the Phibro Group, the subsidy that once stood on its own before Citi bought and later sold the organization to Occidental Petroleum, Hall was able to keep his $98 million bonus from 2008 — but not the $100 million bonus from 2009.

Bloomberg News reported on Tuesday Hall would be leaving Phibro as Occidental prepares to close the Phibro fund by year-end. Occidental’s timing is unique considering the events around the global oil market. Some have speculated the sell off is driven primarily through geopolitics as the US attempts to apply greater pressure on Russia and ISIL. Bloomberg also noted that Hall recently said oil would fall to $50/barrel before rebounding in the first half of 2015.

Another possible reason for the increased velocity of the decline in oil — one which has failed to make headlines and the CNBC utterly butchered — could be the liquidation of a position in oil. There is currently no way to prove this scenario; however, the current situation surrounding Phibro may be material to the decline in spot oil prices. It’s apparent oil began its decline as the US applied pressure to the Russian government budget and ISIL’s ability to fund itself through oil sales. During these declines, the already “return-frustrated” Hall who’s had two losing years in the past three, Hall most likely dump positions on Phibro and Astenbeck funds.

Hall headed commodities trading at Phibro and is the head of Astenbeck Capital. Hall was employed at Phibro since 1982 and watched at the firm was sold to Citigroup then Occidental. As a subsidiary of Occidental, Phibro could have the ability to mask its activity in Occidental’s hedging activity. Speaking with traders within the oil complex, I learned that there has been heavy trading activity on the OTC market on the backend of the oil curve. Hall theoretically could mask his trading activity in his Phibro account under Occidental’s general hedging activities thus making it difficult to see exactly what he has been doing. Andy Hall is known to take long bets on the backend of the curve as Bloomberg Markets shows in the image below:

This could be a way for a large holder to avoid having to post exiting positions of long trades on the backend of the oil curve. By dealing on the backend, Phibro’s activity may be overlooked as participants focus more heavily on the front end, or next months contract. As recently as September, Hall went “all in on a bet that the shale-oil boom will play out far sooner than many analysts expect.” With a player this big having a conviction that strong, it would be safe to assume that his liquidation had a material impact on the oil price decline.

This wouldn’t be the first time a single player has shown their impact on the oil market. Recall in 2009 when Stephen Perkins of PVM Oil Futures bought roughly $520 million worth of oil futures in about 150 minutes in a drunken state after a weekend of heavy drinking.. Perkins cornered nearly 3/4’s of the futures market that night and moved oil $1.50/barrel.

No one can know for sure but the seemingly unexpected and at times volatile selling in oil could have very well been Hall.

The next question is which bank has newly created long-term investments with IRR’s generated on expectations of an end product that is now selling for nearly 50 percent less?

With oil futures sub-$60 handle, it would be evident that no one is waiting around to find out if Hall actually did liquidate Phibro.  Little doubt remains that we’ve seen the end of the sell-off.

via Zero Hedge http://ift.tt/1uEEpZK CalibratedConfidence

The fundamental issue confronting investors is about supply and demand.  In recent weeks, as energy prices and other industrial commodity prices fell, investors focused on supply.  The stimulative effect of the fall in prices, and the likely policy response by some major central banks, such as the ECB, and possibly the BOJ.   This was good for equity markets and weighed on the euro and yen. 

 

However, this changed abruptly last week.  Several developments took place that shifted the focus to the weakness of demand.  OPEC and IEA cut their forecasts for oil demand next year.  China reported an unexpectedly large fall in imports and slower real sector performance.  Meanwhile, reports suggest China may reduce its growth target next year from 7.5% to 7.0%.  This follows on the heels of the recent cut in the ECB’s GDP projections for the euro zone. The Bundesbank also halved its German growth forecasts.

 

Ultimately, we suspect the second narrative is not as compelling as the first.  The downward revisions of demand were already foretold by the IMF and OECD, which had cut their world growth forecasts weeks ago.  A slowing of the Chinese economy has also been widely recognized.  It is hardly new news. 

 

The same can is true of the ECB staff’s new GDP forecasts.  Is sluggish growth really surprising under the tutelage of order-liberal austerity?  Moreover, we note that these new forecasts did not include the growth (or impact on prices) of a significant decline in oil prices since the OPEC meeting.  Growth projections will likely be raised if the decline in energy prices is sustained. 

 

Given the magnitude of the equity markets advance and euro and yen declines since the last swoon in the first half of October, a technical correction might not have needed much of a spark in the first place.   Year-end portfolio adjustments, realizing some winners, perhaps to offset some losses, as in the energy patch.  As violent as the price action has been in recent days, the fundamental theme of divergence remains intact.  Even if these counter-trend moves cannot always be anticipated, they should be incorporated into investors’ strategies.  Assuming one’s understanding the primary drivers has not changed, these setbacks offer important opportunities. 

 

II

 

The key event next week is the Federal Reserve’s last meeting of the year.  It will include updated macroeconomic forecasts, and be followed by a Yellen press conference. As the Federal Reserve has done in the past, it should be expected to look largely past the deflationary implications of the decline in energy prices, and the short-run volatility in the equity market.

 

With the asset purchases over, the FOMC statement can be simpler.  The economic assessment may be upgraded.  The labor market has continued to improve, though not yet to acceptable levels.  Inflation is not trending toward the FOMC’s target. 

 

In terms of forward guidance, there are three phrases that are important.  The first is the characterization of slack in the labor market.  Is is still “significant”?  We suspect that this phrase will be left in if the Fed adjusts the second phrase.  It involves the length of time between the end of QE and the first hike.  Is it still a “considerable time”?

 

Many observers have argued this phrase has largely been gutted already of any real meaning.  However, its absence would raise confidence in a rate hike in the middle of next year.  Recall Yellen’s faux pas at her first press conference.  She veered away from strategic ambiguity to define “considerable” as around six months.  Given the recognized importance of communication in this period of reliance on forward guidance that important changes in phrases and policy will be followed by the Chair’s press conference, like this week.   

 

The third important phrase comes at the end of the statement.  Even after the inflation and unemployment are consistent with the Fed’s mandates, economic conditions may warrant a lower Fed funds rate than officials would regard as the long-term equilibrium rate.  This suggests the terminal rate for this cycle will likely be lower than in past cycles. 

 

The Fed also will announce new forecasts—the famous dot plot.  The general direction of forecasts may be interesting, but this tool has a high noise to signal ratio.  The fact of the matter is that the Fed forecasts have consistently been too high for inflation and unemployment.  Both of these will likely be cut.      It will be interesting to see if the Fed lowers its equilibrium rate down from the current 3.75%, which the market sees nearer 2.25%. 

 

 III

 

The Japanese election was largely a foregone conclusion.  The LDP and Komeito coalition will retain its super-majority.  Conventional wisdom is that this will permit Prime Minister Abe to pursue the weakest of his initiatives, the structural reforms the third arrow (the first two are fiscal and monetary stimulus). 

 

This mistakes the problem.  Abe already enjoys a super-majority, and the structural reforms remain the least effective of this three-prong economic strategy.

 

The problem is that even though the DPJ secured a majority for several years, Japan remains very much a one-party state.  It continues to be dominated by the Liberal Democrat Party.  Even now, despite lack of strong public support for Abenomics, the DPJ, and other small opposition parties fail to make much headway.   They have failed to articulate a compelling alternative to Abenomics.

 

The biggest obstacles to Abe’s success appear to be largely internal to the LDP.   Like most if not all large parties, the LDP is a coalition.  The kinds of reforms that Abe is pushing for goes against the interests of some of the LDP’s traditional supporters, like the agricultural sector. 

 

Look at Abe’s cabinet itself.  It is divided between the old guard, former prime ministers and privileged families, and agents of change.   Simply put then, Abe’s third arrow is compromised because the LDP itself is divided.  It is not clear, especially given the low public support for Abenomics itself, whether the election itself will shape the internal tension within the LDP. 

 

It may take some time to see if the election results changed the balance of power within the LDP.  The changes to the cabinet ministers and the debate over the supplemental budget may be early tells. Abe’s political agenda, which includes restarting nuclear plants and allowing Japanese defense forces to be used to protect allies, is also controversial and will require the expenditure of his political capital.  

 

IV

 

Abe is not the political risk-taker that it  seemed to some when he initially called snap elections.  It is Greece Prime Minister Samaras who has taken significant political risks by bringing forward the presidential selection process.  It could lead to national elections, in which his party (New Democracy) is trailing behind the opposition Syriza. Syriza wants to roll back much of the austerity, and  the international official creditors restructure Greece’s debt to ease the burden.  

 

Greece’s parliament will have three chances to pick the next president, starting December 17.  The first two rounds require a the support of 200 of the 300 members to support the candidate.  In the third and final round 180 votes needed.  The governing coalition has 155 seats.  There are 46 swing seats, and that is where Samaras is battling. 

 

The drama climaxes in the third round that will be held on December 29.  Political insiders suggest that Samaras needs to secure at least 15 more seats in the first couple of rounds (to give 170 votes) for him to have a chance in the third round.  We anticipate it will come down to the wire.  The risk of failure and the eventual election of a Syriza government will keep investors on edge.  

 

Many see Syriza issuing unacceptable demands on its official creditors that renew the risk of a Greek exodus from EMU.  There are two significant developments that have changed since the earlier existential issue.  First, with a primary budget surplus Greece is in a considerably better negotiating position.  Second, the creditors will feel strengthened by the institutional capacity built over the last couple of years that will leaves Europe much better able to cope with the consequences of a Greek exit. 

 

Samaras took a significant political risk, but it is not necessarily suicidal as it is being portrayed.  Syriza may be ahead in the polls, but its lead is not insurmountable, and more importantly, would need coalition partners.  It is not clear who this could be.  The opposition in Greece is very ideological and very fragmented.  

 

Even if Syriza holds on to its 5% lead over the ND, it still is well short of a majority.  It may be the biggest party, but Syriza may not be able to put together a coalition. It may not lead the next government after all.  This does not mean that Greek assets cannot sell-off further.  To the contrary it warns that Greek asset may dramatically overshoot before recovering if the center prevails.   

via Zero Hedge http://ift.tt/13mYLRZ Marc To Market

Following the passage of the Crominbus on Thursday night in a last minute “nailbiter” when the Federal spending bill got just one vote more than the required majority, it was off to the Senate. And late last night, proving that the Senate can work on weekends when a piece of Citigroup-penned legislation is on the table, in a 56-40 vote (21 democrats, 18 republicans, 1 independent voting No), the Senate joined the House in voting itself $1.1 trillion for the next 9 months, with the bill now heading for the final signature: Obama’s. There is some argument whether the executive will join the legislative in confirming the US government is now (and always has been) merely a pupet of Wall Street, although we expect all it will take Jamie Dimon is just one more phone call of “encouragement” to Obama to make sure Wall Street’s will is done in the White House.

Regardless, here is a roll coll of those 40 Senators who voted “No” – as CBS’ Mark Knoller points out: “interesting combination of Dems and GOPs voting against the bill. Franken, Warren, McCain, Cruz, Klobuchar et al.” As we showed yesterday when it became clear that Republicans and especially Democrats voting for the Crominibus and its swaps pushout provision had received far greater bribes money from Wall Street than their “No” voting peers, one can predict with laser-like accuracy that the same story will hold in the Senate, and that Senators voting for the Cromnibus will have received substantially greater “lobby” funds from Wall Street than “Nay”-sayers.

Senators voting No on final passage: 40
21 Democrats and 1 Independent voted against the Omnibus.
18 Republicans voted against the Omnibus.

Voting No: (40)

BLUMENTHAL, D-CT
BOOKER, D-NJ
BOXER, D-CA
BROWN, D-OH
CANTWELL, D-WA
CORKER, R-TN
CRAPO, R-ID
CRUZ, R-TX
FLAKE, R-AZ
FRANKEN, D-MN
GILLIBRAND, D-NY
GRASSLEY, R-IA
HARKIN, D-IA
HELLER, R-NV
HIRONO, D-HI
RON JOHNSON, R-WI
KLOBUCHAR, D-MN
LEE, R-UT
LEVIN, D-MI
MANCHIN, D-WVA
MARKEY, D-MA
MCCAIN, R-AZ
MCCASKILL, D-MO
MENENDEZ, D-NJ
MERKLEY, D-OR
MORAN, R-KS
PAUL, R-KY
PORTMAN, R-OH
REED, D-RI
RISCH, R-ID
RUBIO, R-FL
SANDERS, I-VT
SCOTT, R-SC
SESSIONS, R-AL
SHELBY, R-AL
TESTER, D-MT
VITTER, R-LA
WARREN, D-MA
WHITEHOUSE, D-RI
WYDEN, D-OR

Not Voting: (4)

Chambliss, R-GA
Coburn, R-OK
Feinstein, D-CA
Inhofe, R-OK

* * *

So, in addition to the now infamous Derivatives provision, what else does the Spending Bill contain? Here courtesy of The Hill is a breakdown of its main spending components:

The bill includes language repealing part of the Dodd-Frank Wall Street reform law that will allow banks covered by the Federal Deposit Insurance Corporation to directly engage in derivatives trading.  This set off the biggest political storm for the legislation, as Sen. Elizabeth Warren (D-Mass.) led a liberal insurrection against the White House, which decided not to fight Republicans over the measure.

Wall Street lobbied for the change, and the bill will be sent to Obama with the language in it.

Campaign finance

The bill also raises the limits on what people can give to political committees each year, greatly increasing the money wealthy people can donate. The provision would allow a wealthy donor to contribute a total of more than $1.55 million to a national party.

House Democratic Leader Nancy Pelosi (D-Calif.) lambasted the change in a floor speech in which she broke with the White House over the bill.

DC marijuana

The bill prevents Washington, D.C., from implementing a new referendum that legalizes recreational use of marijuana.

D.C. Del. Eleanor Holmes Norton complained that it was another example of Congress stepping on local rule, but she won few allies for her position in Congress.

Sage grouse

The bill would prevent the government for one year from listing the sage grouse as an endangered species in an effort to protect oil-drilling projects.

School lunches

The legislation relaxes school nutrition standards championed by first lady Michelle Obama.

One change would allow schools the flexibility to implement whole grain nutrition standards, while another prevents new standards to reduce sodium from taking effect until additional scientific studies are conducted.

The White House said it could live with the changes.

Pensions

The bill permits trustees of underfunded pension plans to adjust benefits, saving troubled plans without a federal bailout.

But the language crafted by House Education and Workforce Committee Chairman John Kline (R-Minn.) and ranking member George Miller (D-Calif.) could lead to cuts in the pensions of people covered by the plans.

ISIS

In a victory for the White House, the bill contains $64 billion for the Pentagon to use for its overseas contingy operations, including the fight against the Islamic State in Iraq and Syria.

It allocates $5 billion from that fund for the administration to fight the Islamic State in Iraq and Syria — slightly less than what the White House had requested.

Ebola

The bill meets another administration demand by including $5.4 billion in emergency funding to fight Ebola. While that’s not as much as the $6.2 billion requested by the White House, the inclusion of the funds bolstered Obama’s support for the measure.

Body cameras

The bill doesn’t contain funding for body cameras for police, which Obama had requested after the outcry over police killings of two black men, and grand jury decisions not to indict the officers involved. The spending package does provide funding for other related community policing programs.

The bill also doesn’t include funding for high-speed rail, for the Obama administration’s “Race to the Top” education program and for the International Monetary Fund.

via Zero Hedge http://ift.tt/1A8qsry Tyler Durden

As previewed yesterday, in one of the lowest turnout elections in recent years (due to heavy snow: where have we heard that before) the ruling party of Japan’s Prime Minister Shinzo Abe, the LDP, is set for a landslide victory in the lower house elections today, according to exit polls. Here is Bloomberg with the details:

• JAPAN RULING LDP WINS 275-306 SEATS: NHK EXIT POLL
• JUNIOR COALITION PARTNER KOMEITO WINS 31-36 SEATS: NHK POLL
• JAPAN OPPOSITION DPJ WINS 61-87 SEATS: NHK EXIT POLL
• JAPAN INNOVATION PARTY WINS 30-48 SEATS: NHK EXIT POLL
• JAPAN COMMUNIST PARTY WINS 18-24 SEATS: NHK EXIT POLL
• JAPAN RULING COALITION SET TO WIN 2/3 MAJORITY, NHK EXIT POLL
• TURNOUT PROJECTED AT BETWEEN 51.7% AND 52.9%

What happens next?

Here is Goldman’s visual summary:

AP’s take: “A landslide victory could improve Abe’s chances of pushing ahead with difficult political and economic reforms, and his long-term goal of revising Japan’s constitution. Share prices have risen and many companies have reported record profits, but the recovery has faltered in recent months, with the country returning to recession after a sales tax hike chilled demand among consumers and businesses.”

Japan’s Finance Minister, Taro Aso, best known for eyewatering gaffes and constant propaganda, commented: “I believe this shows that voters gave the Abe administration a positive evaluation over the past two years.”

Unfortunately, considering that in order to push the Japanese stock market, Abe had to crush not only the economy, resulting in an unprecedented 4th recession since Lehman:

… and also send real wages reeling for a record 16 consecutive months, as a result of soaring import-cost inflation:

… as well as push corporate bankruptcies to a record high due to the plunging yen:

… it is difficult to believe any of the prevailing propaganda narrative, especially when one considers the steadily declining popularity of Abe’s cabinet:

 

So what really happened? The following observation from AP is spot on: “Despite weakening popularity ratings, a recession and messy campaign finance scandals, the Liberal Democrats were virtually certain to triumph thanks to voter apathy and a weak opposition.“

And there you have it: the apathetic Japanese people have spoken, or rather chosen not to. As a result, when the entire Japanese house of Ponzi cards comes crashing down for the final time, they will have nobody but themselves to blame. Which, incidentally, is the case in every other “developed” nation.

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

New York Times on Benefits of Gold in Currency Wars
The New York Times published an important article this week in which the benefits of gold to nation states during a period of currency wars was highlighted. The article was noteworthy as the New York Times has rarely covered gold in a positive manner.

The article, entitled ‘The Golden Age’ is about the growing use of gold in geopolitical affairs. They drew attention to the gold repatriation movements in Europe and to the accumulation of the precious metals in vast quantities by the central banks of the East – particularly Russia and China.

The Times attempts to get into the mind-set of the central banks who are buying gold or attempting to repatriate their current stocks of the metal. It presents two major rationales for the current trend.

“Some that’ve interpreted the metal’s mini-comeback as an indication that financial Armageddon, in the guise of runaway inflation, is approaching. Others have read the recent move as a symbolic way for central banks and governments to make a show of strength in nervously uncertain economic times.”

The first point is one which we have covered here consistently. The article quotes Jim Rickards who interprets the policies of China and Russia as “they understand who fragile things are and they are getting ready for the demise of the dollar.”

The Times refers to the unprecedented waves of money printing by central banks in recent years “which in theory can devalue sovereign currencies.” Despite the fact that massive money printing programs have always led to high inflation the Times seems to believe that this time it may be different – famous last words in economic terms.

The other side of the argument as put forward by the Times does not really hold water. It suggests that the accumulation of gold is a largely symbolic act . It is being used to induce a “culture of stability.”

It quotes a professor from the University of Southern California, “I doubt that the Russians or the Chinese actually believe that gold is such a great investment in terms of pure returns,” he says -“But if they are trying to suggest that they are unhappy with the dollar or that they want to become a global player, then gold is very powerful.”

He does not seem to realize that these two countries already are global players whose influence is growing as that of the U.S. declines. They may not view gold as an investment in the classic sense how they clearly view gold as an important monetary asset as seen in their declarations and in the enormous volumes they have been accumulating.

The New York Times is the paper of Paul Krugman and the Federal Reserve and central banks. It rarely has a critical word to say about central banks and the current fiat monetary system. Conversely, it rarely has a positive word to say about gold.

The article is thus noteworthy and suggests a realisation that currency wars are set to intensify with gold again becoming an important monetary and geo-political asset.



A new Golden Age cometh. The golden rule – those who have the gold will make the rules …


‘Golden Age’ is worth a read and can be read here

Must read guide to Currency Wars here

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