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ISIS says it will soon issue metallic coins. The early reports suggest there will be gold, silver and copper coins. ISIS is expected to announce shortly how their coins will trade. The indication being that they will trade according to the value of the metal of which they are made. Many critics of the fiat currency regime may be attracted to this new money.

 

I see some of the same problems that I saw with Bitcoins, though Bitcoins are fiat currency. Their “mining” may be on a gold-like pace, but Bitcoins are not backed by gold,nor does price appear to be tied closely to the price of gold. 

 

To the extent that the new money is perceived to be more sound that paper money, the coins will be hoarded. To the extent that they are hoarded, they will not provide a sufficient means of exchange. The monetary equivalent of hacking may be counterfeiting. The US and other countries work hard to prevent counterfeiters, though they still exist. The ISIS coins appear to be vulnerable to counterfeiting.

 

The ISIS money, like other foreign countries’ coins and notes, are not generally acceptable as payment for one’s liabilities outside of one’s country. Just like you cannot pay the American grocer or British landlord in euro, yen or even gold nuggets, ISIS money will only be good where ISIS dominates, and even then the people living under its heal will find other means of transactions, if necessary.

 

Remember ISIS in not a country.  There is no enforcement of contracts.  There is no judicial system apart from the sword.  The utility of gold, unlike water or air, is not obvious.  It is an expression of social relationships.  It  requires elements of social trust which do not and cannot exist in the territory ISIS terrorizes.    As it said, trust in Allah, but tether your camel.  

 

This Cool Video from CNN was posted on You Tube.  Former US Treasury official, Jimmy Gurule explains how ISIS is funded, including illegal oil sales in a little less than four minutes.  http://ift.tt/1tU9OXp

via Zero Hedge http://ift.tt/1uhMfLX Marc To Market

We have been giving the Russian and Asian demand for gold quite some attention lately, but now it looks like there are several more pieces of the puzzle falling into place. More than a year ago, a representative of Shandong Gold told us that when the Federal Reserve would stop its Quantitative easing program (check) and gold would fall to $1150/oz (check), the company would become more active on the M&A front and actively hunt for potential acquisitions.

In another column, we discussed the way China and Russia are growing closer and closer to each other, after Russia got ‘rejected’ by the Western countries. Both countries have signed very important energy deals, and it started to look like Russia is following the Chinese example and has started to accumulate more and more gold in the reserves of Central Bank. There are two things you can be sure of. First of all, Russia isn’t doing just for fun, there must be a central strategy or plan behind this move. Secondly, you can be very sure Russia’s gold is being stored in the vaults in Moscow and not being lent out in dubious gold lease deals.

And in the past few weeks it looks like Russia is stepping up its efforts to secure a continuous increase in its gold holdings. Two of the world’s largest gold mining companies are actually Russian, of which Polyus Gold is the largest one with an expected gold production of 1.7 million ounces of gold for this year, further increasing in the near future as it plans to bring another Russian mine into production. What was drawing our attention was the recent announcement by Polyus that it would be ‘hedging more of its gold production’. As this is a Russian company with Russian mines financed by Russian banks, we would dare to put a lot of money on a bet that the hedge deal involves a Russian bank. That Russian bank will very likely be Sberbank as it is Polyus’ main financier which has recently re-confirmed its confidence in the company through providing a $1B credit facility. And guess who’s the majority owner of Sberbank? INDEED, The Russian Central Bank. So it’s starting to look like Polyus’ hedge program with physical delivery will result in its gold bars being sold to the Russian Central Bank through Sberbank’s hedging program.

Source

On top of that, Polyus was sitting on $1.8B in cash as of at the end of September, and its cash pile is growing at a rate of $2M per day (yes, even at the current gold price). The question is what will it do with the cash and it’s very likely more gold projects will be added to the portfolio and we wouldn’t be surprised if the company was pushed by the Central Bank and Sberbank to do so.

We wouldn’t be surprised to see Polyus Gold follow the ‘international’ approach of Nord Gold, which used to be Severstal’s gold business. Steel tycoon Mordashev still owns the absolute majority of Nord Gold’s shares, and as he’s a self-proclaimed ‘friend of Putin’, there’s little doubt who’s the ultimate buyer of Nord Gold’s output. And Nord Gold has been stepping up its game lately as it entered into two joint venture agreements (in Canada and French Guiana) and it acquired another advanced stage project in Burkina Faso where the company is already operating. But wait, that’s not all, earlier this week, Nord Gold made an offer to acquire a small Canadian exploration company for a total of less than $25M. This might sound low but that specific Canadian company has roughly 5 million ounces of gold in the ground which could be mined at an all-in cost of $644/oz. Throw in the acquisition cost and capital expenditures, and one ounce of gold would cost Nord Gold just $750. Now it’s easier to understand why it offered to acquire Carlisle Goldfields at a whopping 140% premium.

There’s little doubt this is just the starting phase and we expect both major Russian companies to buy more projects and companies to get their hands on as much gold as possible. All the signs are pointing in the direction of an end game as Russia’s major producers have very strong ties to the Putin regime and the Russian central bank, which is ultimately where the gold will end up. The end game has started. Did you take your precautions?

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Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Last March, I came across a letter written to George W. Bush and Dick Cheney from a paralyzed and dying Iraq war vet named Tomas Young. It touched me to such an extent, that I highlighted it on Liberty Blitzkrieg at the time. He died on Monday, the day before Veterans Day. If you really want to honor our nation’s soldiers, you should read the following and share it.

RIP Tomas Young.

 

Full letter below, from Counterpunch.

My Last Words to George W. Bush and Dick Cheney

by TOMAS YOUNG

 

I write this letter on the 10th anniversary of the Iraq War on behalf of my fellow Iraq War veterans. I write this letter on behalf of the 4,488 soldiers and Marines who died in Iraq. I write this letter on behalf of the hundreds of thousands of veterans who have been wounded and on behalf of those whose wounds, physical and psychological, have destroyed their lives. I am one of those gravely wounded. I was paralyzed in an insurgent ambush in 2004 in Sadr City. My life is coming to an end. I am living under hospice care.

 

I write this letter on behalf of husbands and wives who have lost spouses, on behalf of children who have lost a parent, on behalf of the fathers and mothers who have lost sons and daughters and on behalf of those who care for the many thousands of my fellow veterans who have brain injuries. I write this letter on behalf of those veterans whose trauma and self-revulsion for what they have witnessed, endured and done in Iraq have led to suicide and on behalf of the active-duty soldiers and Marines who commit, on average, a suicide a day. I write this letter on behalf of the some 1 million Iraqi dead and on behalf of the countless Iraqi wounded. I write this letter on behalf of us all—the human detritus your war has left behind, those who will spend their lives in unending pain and grief.

 

I write this letter, my last letter, to you, Mr. Bush and Mr. Cheney. I write not because I think you grasp the terrible human and moral consequences of your lies, manipulation and thirst for wealth and power. I write this letter because, before my own death, I want to make it clear that I, and hundreds of thousands of my fellow veterans, along with millions of my fellow citizens, along with hundreds of millions more in Iraq and the Middle East, know fully who you are and what you have done. You may evade justice but in our eyes you are each guilty of egregious war crimes, of plunder and, finally, of murder, including the murder of thousands of young Americans—my fellow veterans—whose future you stole.

 

Your positions of authority, your millions of dollars of personal wealth, your public relations consultants, your privilege and your power cannot mask the hollowness of your character. You sent us to fight and die in Iraq after you, Mr. Cheney, dodged the draft in Vietnam, and you, Mr. Bush, went AWOL from your National Guard unit. Your cowardice and selfishness were established decades ago. You were not willing to risk yourselves for our nation but you sent hundreds of thousands of young men and women to be sacrificed in a senseless war with no more thought than it takes to put out the garbage.

 

I joined the Army two days after the 9/11 attacks. I joined the Army because our country had been attacked. I wanted to strike back at those who had killed some 3,000 of my fellow citizens. I did not join the Army to go to Iraq, a country that had no part in the September 2001 attacks and did not pose a threat to its neighbors, much less to the United States. I did not join the Army to “liberate” Iraqis or to shut down mythical weapons-of-mass-destruction facilities or to implant what you cynically called “democracy” in Baghdad and the Middle East. I did not join the Army to rebuild Iraq, which at the time you told us could be paid for by Iraq’s oil revenues. Instead, this war has cost the United States over $3 trillion. I especially did not join the Army to carry out pre-emptive war. Pre-emptive war is illegal under international law. And as a soldier in Iraq I was, I now know, abetting your idiocy and your crimes. The Iraq War is the largest strategic blunder in U.S. history. It obliterated the balance of power in the Middle East. It installed a corrupt and brutal pro-Iranian government in Baghdad, one cemented in power through the use of torture, death squads and terror. And it has left Iran as the dominant force in the region. On every level—moral, strategic, military and economic—Iraq was a failure. And it was you, Mr. Bush and Mr. Cheney, who started this war. It is you who should pay the consequences.

 

I would not be writing this letter if I had been wounded fighting in Afghanistan against those forces that carried out the attacks of 9/11. Had I been wounded there I would still be miserable because of my physical deterioration and imminent death, but I would at least have the comfort of knowing that my injuries were a consequence of my own decision to defend the country I love. I would not have to lie in my bed, my body filled with painkillers, my life ebbing away, and deal with the fact that hundreds of thousands of human beings, including children, including myself, were sacrificed by you for little more than the greed of oil companies, for your alliance with the oil sheiks in Saudi Arabia, and your insane visions of empire.

 

I have, like many other disabled veterans, suffered from the inadequate and often inept care provided by the Veterans Administration. I have, like many other disabled veterans, come to realize that our mental and physical wounds are of no interest to you, perhaps of no interest to any politician. We were used. We were betrayed. And we have been abandoned. You, Mr. Bush, make much pretense of being a Christian. But isn’t lying a sin? Isn’t murder a sin? Aren’t theft and selfish ambition sins? I am not a Christian. But I believe in the Christian ideal. I believe that what you do to the least of your brothers you finally do to yourself, to your own soul.

 

My day of reckoning is upon me. Yours will come. I hope you will be put on trial. But mostly I hope, for your sakes, that you find the moral courage to face what you have done to me and to many, many others who deserved to live. I hope that before your time on earth ends, as mine is now ending, you will find the strength of character to stand before the American public and the world, and in particular the Iraqi people, and beg for forgiveness.

 

-Tomas Young

What’s so impressive about this letter, beyond the incredible emotion and pain behind it, is the fact that Mr. Young was so prescient about so many issues. He highlighted the debacle that became the Veterans Administration scandal before it broke, and he also pointed to the dangerous power vacuum created in Baghdad before the emergence of ISIS. We lost a special soul on Monday.

Another related post I would strongly suggest reading is: “Stop Thanking Me for My Service” – Former U.S. Army Ranger Blasts American Foreign Policy and The Corporate State.

via Zero Hedge http://ift.tt/1tWn5Pn Tyler Durden

In the past 3 months there has been much discussion regarding the gruesome and barbaric beheadings by ISIS of western hostages. Yet surprisingly, a similar and just as barbaric tradition has been taking place for ages just a few hundred miles east of ISIS, in Saudi Arabia. It has been met with nothing but silence by the same indignant western societies who are quick to condemn ISIS villainy. Why the disconnect? According to the following interview by Canada’s CBC reporter Anna Maria Tremonti with Newsweek’s Janine Di Giovanni looking at the “shock over ISIS beheadings but silence over Saudi Arabia beheadings” the answer why few if any dare to criticize the Saudis is simple: oil.

From CBC:

The crimes committed by ISIS in Syria and Iraq are immense and repulsive. But videos of the extremists purportedly beheading captives appears deranged. Decapitation as a means of execution has terrified people as long as there have been sharp blades.

But while the world condemns ISIS, not so far away a nation routinely punishes its criminals in a similar way. And sometimes the punishment is for acts most people in the West wouldn’t even consider crimes.

Newsweek Middle East editor Janine Di Giovanni has investigated beheadings in Saudi Arabia and she joined us from Paris.

We called and emailed the Saudi embassy in Ottawa to see if anyone wanted to comment on the practice of beheadings in Saudi Arabia. We have not heard back, but that offer remains open.

The beheadings by ISIS and the Saudi Kingdom are the latest manifestation of an ancient horror. Frances Larson has looked into the terrifying and bizarre history of beheadings in her new book “Severed: A History of Heads Lost and Heads Found”. She is an honourary research fellow at the University of Oxford.

The full 27-minute interview can be found after the jump. The all too obvious reasons why the Saudis are immune from any western criticism, at least according to the Di Giovanni, are laid out 11 minutes into the recording. Also pay particular attention to the executioner saying he is “doing the god’s work.” One wonders if he works for Goldman too?

via Zero Hedge http://ift.tt/11djm9i Tyler Durden

Having been ‘guest-of-honor’ at the APEC Summit the previous week, it appears Russian President Vladimir Putin is getting the ‘Obama-at-APEC’ treatment at the G-20 meeting in Sydney. Following his ‘odd’ shaped convoy of protection last week, The Independent reports Putin chose a different type of entourage this week as he headed to Brisbane to meet the world’s leaders. Putin has stationed four warships close to Australian waters as he arrived in Australia. Having drawn ridicule from no lesser wit than Britain’s David Cameron who sarcastically bleeted, “I didn’t feel it necessary to bring a warship myself to keep myself safe at this G20, and I’m sure that Putin won’t be in any danger,” when it came time for the team photo, it was clear what ‘message’ was being sent…

As The BBC reports,

Australia says it is monitoring four Russian naval vessels that are approaching its waters to the north of the country.

 

 

The Australian Defence Force said two frigates and a surveillance aircraft had been sent to track the warships.

 

 

In a statement, it said the Russian vessels were heading towards Australia but remained in international waters.

 

Analysts say it is a show of force by Russian President Vladimir Putin ahead of the G20 summit in Brisbane.

 

“The movement of these vessels is entirely consistent with provisions under international law for military vessels to exercise freedom of navigation in international waters,” the ADF statement read.

 

 

The ADF said Russian naval vessels have previously been deployed in conjunction with major international summits, including the Apec summit in Singapore in 2009.

 

“A warship from Russia’s Pacific fleet also accompanied former Russian president Medvedev’s visit to San Francisco in 2010,” the statement added.

And then there’s David Cameron’s quip:

“I didn’t feel it necessary to bring a warship myself to keep myself safe at this G20, and I’m sure that Putin won’t be in any danger,” he said last night.

And a clear message sent via the team photo:

Last week’s APEC Summit… Putin between China’s Xi and Brunei’s Hassanal Bolkiah with Obama positioned with the wives…

 

 

 

This week’s G-20 Meeting… Obama front-and-center between China’s Xi and Brazil’s Rousseff, just in front of Britain’s Cameron with Putin almost out of shot

 

Source: BusinessWeek

Has the world’s diplomatic stability really deteriorated to 8-year-old playground antics? (or has it in fact always been there) Stand next to me! No, stand next to me!

*  *  *

And finally, there’s this… Spot the difference

 

Is it us or does that Koala look like it’s trying to get away?

via Zero Hedge http://ift.tt/1xDf0UG Tyler Durden

“The Chinese, among others, seem to be responding to the lower oil price with additional demand,” notes one tanker executive as Bloomberg reports the number of supertankers sailing toward China’s ports matched a record on Oct. 17 and is still close to that level now. The plunge in price has enabled China to add 35 million barrels to its inventories in the past three months as the nation fills its strategic petroleum reserves, OPEC said yesterday. Furthermore, though the oil slide is hurting nations from Venezuela to Iran – that depend on energy for revenues – ship owners serving the industry’s benchmark Middle East-to-Asia trade routes are reaping the best returns from charters in years as the slump drives down the industry’s single biggest expense. As one analyst notes, “we’ve seen the Chinese buying a lot from the Middle East and that’s really let rates cook.” So it appears the Chinese, in the face of the worst growth and economy in years, are rational enough to buy more at lower prices (as opposed to the buy-more-because-stocks-are-at-all-time-highs Western investors).

 

A near-record 113 tankers are destined for China…

 

As Bloomberg reports,

At a time when China’s economy is growing at the slowest pace in decades, its oil imports are rallying. The world’s second biggest economy purchased 25.5 million metric tons a month in the January-to-September period, heading for a record year. Falling prices may add to those figures as winter approaches.

 

“The main traders, they are typically more active in the tanker market when prices have dropped,” said Moerkedal of RS Platou Markets. “When you look at chartering in the last couple of weeks China has definitely been one of the most active buyers of oil.”

 

…

 

While the oil slide is hurting nations from Venezuela to Iran that depend on energy for revenues, companies including airlines and cement makers are benefiting as their fuel costs decline. Ship owners serving the industry’s benchmark Middle East-to-Asia trade routes are reaping the best returns from charters in years as the slump drives down the industry’s single biggest expense.

 

The biggest tankers earned an average of about $28,000 last month shipping Middle East oil to Asia, Baltic Exchange data show. The last time they made more during October was in 2008. Rates averaged almost $20,000 since the start of January, heading for the best year since 2010.

 

…

 

“We’ve seen the Chinese buying a lot from the Middle East and that’s really let rates cook,” Erik Stavseth, an analyst at Arctic Securities ASA in Oslo whose recommendations on shippers returned 15 percent in the past year, said by phone Nov. 11. “With oil prices low going into winter, that’s likely to continue.”

 

The number of supertankers sailing toward China’s ports matched a record on Oct. 17 and is still close to that level now. The country added 35 million barrels to its inventories in the past three months as the nation fills its strategic petroleum reserves, OPEC said yesterday.

*  *  *
So like Russia and gold, China sees low-priced oil as an opportunity to build inventories.

*  *  *

The biggest concern, of course, is that this burst of activity is interpreted by the all-knowing-ones as some sustainable pick up in aggregate demand that “means” growth is back baby… and thus begins another mini cycle of mal-investment.

via Zero Hedge http://ift.tt/1xDbpG2 Tyler Durden

Submitted by David Stockman via Contra Corner blog,

This is getting downright stupid. After the minor 8% correction in October, the dip buyers came roaring back and the shorts got sent to the showers still another time. Earlier this morning the S&P 500 was pushing 2050 – or up 12% in less than a month.

So the great con game remains in tact. The casinos run by the Fed and other central banks can’t go down for more than a few of days—until one or another central banker hints that more free money is on the way.

A few weeks ago it was James Bullard hinting at a QE extension. Next was Mario Draghi pronouncing that the whole ECB is unified behind a plan to expand its already swollen balance sheet by another $1.2 trillion. And then Haruhiko Kuroda, the certifiable madman running the BOJ, not only announced his 80 trillion yen buying scheme, but soon averred that falling oil prices—–a godsend to Japan—–were actually a threat to his mindless 2% inflation goal that might necessitate even more money printing. That is, after buying up 100% of the massive Japanese government bond market, the BOJ would not hesitate to monetize ETF’s, stocks, securitized real estate debt and, apparently, sea shells, if necessary.

Accordingly, bounteous wealth is seemingly to be had by the three second exercise of clicking  “buy” on the SPU (basket of S&P 500 stocks). Indeed, for the past 68 months running, the stock market has blown through every mini-correction, and has been traversing a near parabolic rise.

 

Needless to say, this relentless expansion of the bubble eventually kills off the bears, the skeptics, the prudent and even the militantly incredulous. Undoubtedly, that is where we are now because the global economic news has been uniformly negative since the October dip, yet the market has resumed its relentless melt-up.

Under such circumstances, therefore, it is well to remember that we are in the middle of the greatest central bank fueled inflation in recorded history, and that this insidious inflation has been channeled into financial assets owing to the arrival of peak debt everywhere around the world.

Stated differently, households are saturated with debt and cannot borrow any more to spend on goods and services that have not been earned with prior production. So the massive tide of liquidity generated by the central banks never leaves the financial markets; it just cycles there, fueling the carry trades and every manner of speculation that modern technology-enabled bankers can concoct.

But that is the Achilles heel of the game. As the bubble takes on ever greater girth, it becomes increasingly susceptible to a negative shock to confidence. Part of the reason is technical.  When markets reach their current nose bleed levels there are no shorts left; and it is also likely that the day trading gamblers have become increasingly lax about absorbing the cost of even cheap “downside insurance” (i.e. puts on the S&P 500). That is, they are “long” and “unprotected”.

So if a sharp, sustained self-off gets underway due to an unexpected blow to confidence or the arrival of the proverbial “black swan”—- there are no shorts to cover and take their profits by buying the market as it craters; and there is a simultaneous scramble among the buy-the-dip longs for downside “protection” in order to ride out the storm. But in this context, market makers who sell such protection are not in the least inclined to write insurance or puts on a naked basis.  So they sell the index short in order to cover their exposure, thereby adding to the downward momentum.

That is part of the reason why central bank driven bubbles expand relentlessly for years, but then correct swiftly and violently in a few months or even weeks when the bubble finally cracks. Thus, the S&P pattern shown above unfolded in a similar manner during the 2002-2007 Greenspan Bubble—–and then crashed after the Lehman event.

During an appearance on Fox Business yesterday, I had an opportunity to address this pattern in greater detail in response to the skepticism of the show’s free market host, Stuart Varney. "Kuroda is a certifiable madman"

 

Yes, you can “loose” a lot of money on the way up.  The problem is, no one rings a bell at the top.

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