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Deutsche Bank Says “Yes” Vote Has “Narrow But Clear Lead” In Swiss Gold Referendum As 1M GOFO Is Most Negative Since 2001

As we explained over the weekend, should the Swiss gold referendum pass successfully, the price of gold will surge. It was none other than JPM who warned that the “markets under appreciate this event”, explaing that “If the referendum is passed, the Swiss National Bank (SNB) will be forced to increase reserves by around 1,500 tonnes over five years, i.e. 300 tonnes per year. This 300 tonnes per year accounts for 7.5% of annual gold demand of 4,000 tonnes per year.”

Well, even as the SNB has been scrambling to make the referendum seem like a non-event, with very little chance of passing, moments ago Deutsche Bank released a piece that roundly refuted everything the Swiss Central Bank has been peddling. To wit, here is a note just out from DB’s Robin Winkler:

  • On 30 November, the Swiss will vote in a referendum to decide whether the SNB’s constitutional mandate should be changed to require the central bank to 1) never sell any gold reserves once acquired, 2) store all its gold on Swiss territory, 3) hold at least 20% of its official reserve assets in gold.
  • The likelihood of a yes vote is considerable. The proposal requires a simple country-wide majority to pass, as well as a majority in at least 50% of Swiss cantons. Current polling shows the ‘yes’ campaign with a narrow but clear lead and there are reasons to believe that factors on the day could be favourable for the amendment. If an affirmative vote was recorded, there is little political leeway to delay or dilute implementation.
  • We find that some of the concerns over the technical implementation of the 20% rule may be overblown. The SNB should be able to meet its gold demands with relative ease. Nor do we subscribe to the view that this would have a long term impact on gold price trends. In the event of further intervention, SNB rebalancing into gold could have a more marked impact on short term price trends, however. The SNB should easily be able to repatriate its gold holdings from abroad.
  • The possibility that the SNB could circumvent the requirement through the creation of a sovereign wealth fund is remote. While technically attractive, this option is not politically feasible. However, the SNB could use gold swaps to mitigate some of the adverse implications of the gold vote, in particular with respect to asset return risk and market footprint.
  • The amendment would carry significant balance sheet risks for the SNB. As well as concentrating market risk, the SNB would be effectively short an option on gold but without having received a premium. Balance sheet risks could be mitigated by the SNB returning to marking gold at purchase rather than market prices.

Well, after Germany’s miserable failure to reclaim its gold when the Bundesbank received a tap on its shoulder “strongly hinting” the NY Fed and BNP may have serious procurement problems of gold that is ‘already there’, it appears at least one European nation is about to have access to its gold, and judging by the increasing warnings about the global fiat bubble popping by none other than the BIS (yet again, more shortly), probably not a moment too soon.

As for the SNB being easily “able to repatriate its gold holdings from abroad” we appreciate the optimism, just don’t point out to the DB analyst that 6 Month GOFO just want negative once again even as 1M GOFO rate hit the most negative it has been since… 2001!




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Congress Passes Keystone XL Pipeline Bill, Senate Can’t Block, Obama Veto To Come?

As somewhat expected the House passed the Keystone XL Pipeline approval bill:

  • *HOUSE PASSES KEYSTONE APPROVAL BILL 252-161; SENATE VOTE NOV 18

It is relatively clear that the Senate does not have the votes to be able to overturn and thus it will be forced on to President Obama’s desk – “to veto” or “not to veto.”

 

 

As Reuters reports,

“We are going to make it as easy as possible for the Senate to finally get a bill to the president’s desk that approves this long-overdue Keystone XL pipeline,” said Republican Representative Bill Cassidy from Louisiana, who is sponsoring the House bill.

 

Approval for the pipeline, which would help transport oil from Canada’s oil sands to refineries along the U.S. Gulf coast, has rested with the administration as it crosses an international border.

 

The decision has been pending for more than six years amid jousting between proponents of the pipeline who say it would create thousands of construction jobs and environmentalists who say it would increase carbon emissions linked to climate change.

 

Obama, speaking at a news conference in Myanmar on Friday, said his position on the 800,000 barrels per day pipeline had not changed.

 

…

 

The White House has not made clear whether Obama would use his veto to block the bill currently before Congress, but he has threatened to use that power in the past.

 

The Senate was still one vote shy of the 60 needed to overcome a filibuster, or blocking procedure, and pass a companion bill, an aide to a Keystone supporter in that chamber said on Friday. The Senate vote is expected next Tuesday.

*  *  *




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In Case There Was Any Doubt

I did a post less than a month ago called Won’t You Be My Neighbor? which vividly captured a crumbling rustbucket of a “house” that was being offered for $1.8 million. The house is located on a very busy boulevard (in spite of the “very desirable area” mentioned below), and I’ve been keeping an eye on it for a “Sold” sign ever since. The absence of such a sign made me think, well, people have finally come to their senses. No one is buying this dump.

Of course, this isn’t the case………I present to you this news from this morning’s paper:

1115-house

I recognize that some of you might be disappointed to have let this one get away. Take heart; in the same paper, this beauty (whose paint color choices must surely be very forward-thinking) is being made available for $5.5 million. Go get ’em!

1115-redhouse




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Gold & Silver Are Soaring

The USDollar continues its slide since 10amET (now unchanged on the week) as Gold and Silver just legged higher once again. Gold is now over $40 off the day’s lows and Silver has broken above $16. Increased chatter about the Swiss Gold Initiative is being blamed for now (as EURCHF tests down to 1.2011 – inching ever closer to testing the 1.20 peg. Oddly, last Friday was also a major melt-up day for precious metals. Treasury yields are also plunging as desk chatter notes limited liquidity – also reflected in the stock markets EKG-like moves.

Gold-to-Silver ratio has tumbled from 75.5x to 73.5x…

 

As Futures surge…

 

Charts: Bloomberg




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The Next Crisis Will be a Crisis of Faith in the Fed

The Fed has created a very very dangerous situation.

 

Ever since 2009, anytime the markets came close to breaking down, “someone” (read: the FED) has stepped in a propped the markets up.

 

In 2010, the S&P 500 staged a death cross, where its 50-DMA broke below its 126-DMA (the half year moving average). Stocks were in a perilous state with the 2008 Crash still in everyone’s short-term memory.

 

The Fed stepped in, hinting at, then all but promising, and then finally launching QE 2 in July, August, and then November, respectively.

 

This set off a rally in stocks that lasted until the EU Crisis erupted in full force in 2011. Once again stocks staged a death cross. And once again, the Fed stepped in with promises of action followed by the announcement of Operation Twist in September 2011. Stocks took off and we were back to the races.

 

Which brings us to 2012. Europe was really going down in flames. Greece, then Portugal, and even Spain were lining up for bailouts. And the bailouts were getting larger by the month with Spain requesting €100 billion in June 2012.

 

ECB President Mario Draghi promised to do “whatever it takes” to hold the EU together. But the carnage was spilling over even into US markets. So Bernanke’s Fed promised yet another QE program, though this new program would be “open-ended” in June.

 

Sure enough, Bernanke unveiled QE 3 in September 2012. He then upped the ante, unveiling QE 4 in November 2012.

 

Stocks took off again, launching one of the sharpest, strongest rallies in history.

 

This same madness has continued despite the Fed ending its QE efforts. Last month the markets took a nosedive to critical support. This time around rather than launching a new monetary policy, a Fed President stepped out and hinted that the Fed should consider postponing the end of QE (a mindless statement given the Fed had only $5 billion in QE left at the time.

 

Logic aside, the markets took the hint and erupted higher again.

 

 

In simple terms, the Fed has completely conditioned the markets to believe that NO MATTER WHAT stocks will be held up.

 

This policy has worked fine… but eventually it will fail, just as all market props do. Eventually the investment herd will begin to sell/ take profits. And at some point there will be a selling panic.

 

Gauging when this will happen is impossible as we are now talking about crowd psychology, not market fundamentals or economic data (neither of which have mattered for over two years).

 

However, the fact remains that all bubbles burst. This bubble will be no different other than the fact that it was in fact been the FED that created and perpetuated it long after it normally would have burst.

 

Put another way, when the next crisis hits, the Fed will effectively be out of ammo as it will be a crisis of faith in the Fed. Whenever investors themselves begin to comprehend that the Fed is now more leveraged than many of the investment banks were when they went bust in 2008, the end game will begin.

 

If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

http://ift.tt/1rPiWR3

 

Best Regards

Phoenix Capital Research

 

 




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Italy’s Grillo Rages “We Are Not At War With ISIS Or Russia, We Are At War With The ECB”

Next week, Italy’s Beppe Grillo – the leader of the Italian Five Star Movement – will start collecting signatures with the aim of getting a referendum in Italy on leaving the euro “as soon as possible,” just as was done in 1989. As Grillo tells The BBC in this brief but stunning clip, “we will leave the Euro and bring down this system of bankers, of scum.” With two-thirds of Parliament apparently behind the plan, Grillo exclaims “we are dying, we need a Plan B to this Europe that has become a nightmare –  and we are implementing it,” raging that “we are not at war with ISIS or Russia! We are at war with the European Central Bank,” that has stripped us of our sovereignty.

 

60 seconds of brutal honesty of the tyranny in Europe…

Beppe Grillo also said today…

It is high time for me and for the Italian people, to do something that should have been done a long time ago: to put an end to your sitting in this place, you who have dishonoured and substituted the governments and the democracies without any right. Ye are a factious crew, and enemies to all good government; ye are a pack of mercenary wretches, and would like Esau sell your country for a mess of pottage, and like Judas betray your God for a few pieces of money. Is there a single virtue now remaining amongst you? A crumb of humanity? Is there one vice you do not possess? Gold and the “spread” are your gods. GDP is you golden calf.

 

We’ll send you packing at the same time as Italy leaves the Euro. It can be done! You well know that the M5S will collect the signatures for the popular initiative law – and then – thanks to our presence in parliament, we will set up an advisory referendum as happened for the entry into the Euro in 1989. It can be done! I know that you are terrified about this. You will collapse like a house of cards. You will smash into tiny fragments like a crystal vase. Without Italy in the Euro, there’ll be an end to this expropriation of national sovereignty all over Europe. Sovereignty belongs to the people not to the ECB and nor does it belong to the Troika or the Bundesbank. National budgets and currencies have to be returned to State control. They should not be controlled by commercial banks. We will not allow our economy to be strangled and Italian workers to become slaves to pay exorbitant interest rates to European banks.

 

The Euro is destroying the Italian economy. Since 1997, when Italy adjusted the value of the lira to connect it to the ECU (a condition imposed on us so that we could come into the euro), Italian industrial production has gone down by 25%. Hundreds of Italian companies have been sold abroad. These are the companies that have made our history and the image of “Made in Italy”.

*  *  *

As Martin Armstrong asks rather pointedly…

Since the introduction of the euro, all economic parameters have deteriorated, the founder of the five-star movement in Italy is absolutely correct. The design or the Euro was a disaster. There is no fixing this any more. We have crossed the line of no return. Beppe is now calling for referendum on leaving euro. Will he be assassinated by Brussels? It is unlikely that the EU Commission will allow such a vote.

*  *  *




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Anti-Censorship Groups Tell Senate to Stop the ‘Stop Advertising Victims of Exploitation’ Act

A coalition of civil liberties, publishing,
and online commerce groups are asking Congress to oppose a piece of
anti-speech, anti-sex work legislation known as as the “Stop
Advertising Victims of Exploitation” (SAVE) Act. The bill is
allegedly aimed at thwarting human trafficking but in reality would
create harsh new criminal liabilities for websites and publishers,
allow federal agents to censor online ads, make it harder for adult
sex workers of all sorts to safely connect with clients, drive
traffickers further underground, and potentially expose anyone
advertising online to new privacy infringements.  

Introduced by Sens. Dianne Feinstein (D-Calif.) and Mark Steven
Kirk (R-Ill.) in June, the bill could prove tempting to the
incoming Senate. With its ostensible focus on helping child
“victims of exploitation”—particularly child sex trafficking
victims—the SAVE Act (S. 2536) is another bit of legislation ripe
for displaying bipartisanship. 

In a November 12 letter to the U.S. Senate, nine
organizations—including the American Civil Liberties Union, the

Internet Commerce Coalition, the Electronic Frontier Foundation, the
Association of Alternative News Media, and the National Coalition
Against Censorship—wrote to convey “strong opposition” to the SAVE
Act. Though they “share the vital goal of ending human
trafficking”, the groups humbly suggest the government use tools
already at its disposable—such as “the strong federal law that
already criminalizes such activity online”—to combat trafficking,
rather than placing broad, unconstitutional restrictions on
everyone’s free speech and privacy rights.

The SAVE Act would do several things: 1) create extensive
record-keeping requirements for any website, online services, and
print publication that hosts adult advertisements, 2) require
anyone posting an adult ad to submit photo identification, 3)
enable the Department of Justice (DOJ) to ban certain “euphemisms”
or “code words” from online advertising entirely, and 4) make
websites that host user-generated ads criminally liable should any
of those ads wind up promoting the sexual exploitation or abuse of
a minor. Under the law, the operator of a website such as
Craigslist that hosts thousands of new user-uploaded ads daily
could could face up to 10 years prison if any one of these is
eventually linked to child sex trafficking.

“While existing aiding and abetting crimes should certainly
reach someone who knowingly hosts a child trafficking ad with
the intent to further the trafficking venture,” the groups
note,

S.2536 would mean that websites and services hosting
user-generated content could be held criminally liable even if they
do not have actual knowledge that an ad for illegal activity
appears on their sites. 

Consequently, virtually any user-generated content host—like
Facebook, Twitter, eBay, Amazon or various online dating
sites—will have every incentive to prohibit content that falls
under the bill’s broad definition of “adult advertisements,”
which includes communications that are wholly or only partially
devoted to proposing lawful commercial exchange for lawful
services–in other words, speech that is
unquestionably protected by the First Amendment. At best,
user-generated content sites will default to taking down content
that is flagged as an “adult advertisement” as soon as a complaint
is lodged, regardless of whether the content appears to be
related to child trafficking or state child exploitation crimes, or
even fits the bill’s definition of “adult advertisement” at
all.

(…) And given the vague definitions and broad scope of
the new crime, S.2536 would create a situation ripe for selective
enforcement against sites and services that host disfavored – but
wholly lawful – speech.

In addition, any website, online service, or print publication
that hosts any content falling under the bill’s definition as an
“adult advertisment” would be required to obtain photo
identification from anyone posting the content. This requirement
manages to threaten ample people’s privacy while creating
additional regulatory burden for websites and publishers.
Non-compliance could result in up to five years in jail—and
noncompliance doesn’t even have to be intentional: 

S. 2536 does not require that the website operator, online
service, or publication know or intend to host “adult
advertising” content before imposing liability. If one of a site’s
millions (or billions) of users were to upload a post or an
image that fell under the bill’s broad definition and that site
operator had not already collected a copy of the user’s
driver’s license, the site operator would face a mandatory
minimum penalty of $250,000 and up to 5 years in prison. The
effects would be felt the hardest by smaller businesses, both
online and print, for whom one single violation triggering the
mandatory minimum penalty could very well mean bankruptcy, and
would serve as a disincentive to new start-ups

Rather than risk inadvertantly hosting an illegal ad without
having obtained the proper identification, many sites would simply
start requiring a government-issued photo ID in order to post an
ad. Don’t have one or don’t want to share that info? You can’t sell
your washer or advertise your pet-sitting services. Submit your ID?
Add your personal info into another insecure database. And the
terribleness of this bill doesn’t even end there… 

Further, because the recordkeeping requirement would also apply
to those who “place” advertisements as well as those who host them,
individuals who upload lawful content that falls under the bill’s
broad definition of “adult advertisement” would be likely to
violate the law en masse simply because they are not aware of it.
These individuals could become easy targets for prosecution for
failure to comply with the recordkeeping requirement, diverting
attention away from pursuing traffickers and those engaged in the
actual victimization of children.

And perhaps most egregiously of all, the SAVE Act would empower
the DOJ to ban the use of certain words in all online
advertising. If the agency determined that something was a
potential euphemism or “code word” for trafficking, web operators,
publishers, and digital ad networks would be forced to censor ads
containing these words or phrases. “Such a requirement is
unworkable in practice,” states the ACLU et al.’s letter, “would
give the Department of Justice an enormous amount of discretion to
censor online speech, and would not withstand scrutiny under the
First Amendment.”

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For Thanksgiving: Go See Citizenfour!

CitizenfourI just saw Citizenfour, the
documentary about Edward
Snowden and his terrific revelations about just how pervasively
the Federal government is violating our constitutional privacy
protections as secured by the Fourth
Amendment. The title comes from the email handle Snowden used
when he first contacted journalist and filmmaker Laura Poitras. The
documentary features no satisfying explosions, car chases or
crashes, and no gun battles in which the bullets never run out.
Nevertheless, it is riveting. From Kurt Loder’s incisive
Reason review of
the movie:

Snowden documents a world in which the NSA routinely collects
cellphone conversations from millions of Americans, along with
their email and records of their other online activities, and
consigns all of it to a huge NSA data-storage lair in Bluffdale,
Utah. Woven together, this information tells highly detailed
stories about blameless private citizens, to be used later,
perhaps, for purposes not yet devised. “It’s not science-fiction,”
Snowden says. “This stuff is happening right now.” And the only
arbiters of such behavior – the only bulwark against abuse — are
secret intelligence courts and fully-briefed but unobjecting
politicians. “I remember what the Internet was like before it was
being watched,” Snowden says. “Now people make jokes about being
watched. They accept it.” (Poitras brings in Jacob Appelbaum of the
Tor Project to expand upon this thought: “What people used to call
liberty,” Appelbaum says, “we now call privacy.”)

My review: Edward Snowden is a patriot.

MockingjayDuring the Thanksgiving holidays, Americans
traditionally flock to the multiplexes to enjoy the latest
blockbusters. I, for one, intend to join the throngs at the
cineplex to watch Mockingjay, the latest
installment of The Hunger
Games series. The books and the movies are the story of
how the citizens of Panem ultimately rebel against a tyrannical
government that pervasively spies on and controls their lives.

So a modest proposal: This Thanksgiving, go enjoy the story of
Katniss
Everdeen’s fight for freedom. And then, for an interesting and
chilling juxtaposition, go see Edward Snowden’s struggle to protect
our liberty in Citizenfour.

At the risk of being melodramatic, here’s hoping that America
never needs a Katniss Everdeen.

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Glenn Greenwald on Hilary Clinton: “Soulless, Principle-Free, Power Hungry…”

Screen Shot 2014-11-14 at 10.08.22 AMOne attribute I like most about Glenn Greenwald is that he never pulls punches. One of his most prescient and cutting political lines came earlier this year when he made some observations on the upcoming 2016 Presidential election in which two status quo, corrupt, bloodthirsty con-artists will compete for the Oval Office. While we don’t yet know which crony the GOP will put up, Hilary is pretty much a foregone conclusion for the Democrats. Greenwald observed:

Hillary is banal, corrupted, drained of vibrancy and passion. I mean, she’s been around forever, the Clinton circle. She’s a fucking hawk and like a neocon, practically. She’s surrounded by all these sleazy money types who are just corrupting everything everywhere. But she’s going to be the first female president, and women in America are going to be completely invested in her candidacy. Opposition to her is going to be depicted as misogynistic, like opposition to Obama has been depicted as racist. It’s going to be this completely symbolic messaging that’s going to overshadow the fact that she’ll do nothing but continue everything in pursuit of her own power. They’ll probably have a gay person after Hillary who’s just going to do the same thing.

continue reading

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Russia Undermining 20 Years of Nuclear Cooperation With U.S.

The U.S.’s relationship with
Russia is about to get even more tense. The latter nation announced
that it’s going to curtail nuclear cooperation with America,
backtracking on the last two decades of security work.

The New York Times
sheds some light:

The message delivered by [Sergey Kirienko, the head
of Russia’s state nuclear company] is the first time that the
rising tensions between the Kremlin and the Obama administration
have threatened to disrupt some of the practical efforts that the
two sides initiated at the end of the Cold War to help Russia
safeguard its nuclear materials.

“There is a real danger that 20 years of U.S.-Russian
cooperation to secure nuclear material will simply stop at the end
of this year, and some of the gains we have made could slip away,”
said Matthew Bunn, a Harvard professor who, during the
administration of Bill Clinton, supervised a classified government
study on protecting nuclear materials in Russia.

A senior Obama administration official said the United States
still planned to work with the Russians on nuclear security efforts
in third countries and hoped to persuade the Russian government to
continue cooperation in Russia. …

“Nuclear security in Russia has improved dramatically since the
years immediately following the collapse of the Soviet Union,”
the Belfer Center at Harvard concluded in a March report.
“Unfortunately, sophisticated conspiracies to steal valuable items
continue to plague Russia.”

Last week Russia announced that it would boycott the 2016
Nuclear Security Summit, which will be hosted by the Obama
administration.

Russian relations with the West have become tense on another
nuclear front. Nuclear-capable bomber drills over Europe without
“active transponders—which would allow civilian air traffic
controllers to see them. The situation could lead to a serious
accident where an airliner might collide with a Russian bomber,”

explains The Daily Beast. Likewise, Russia just
announced that it’s going to conduct long-range bomber patrols over
the Gulf of Mexico. Earlier this year, a Russian propaganda
director
announced that his country could “turn the U.S. into
radioactive ashes” if it wanted.

Both President Barack Obama and Secretary of State John Kerry
met with their Kremlin counterparts last weekend to try to find
common ground on Russia’s war in Ukraine. Little if any progress
was made. Obama will have another unofficial meeting with Vladimir
Putin this weekend at the Brisbane G20 summit.

Russian troops have been crossing Ukraine’s border in larger
numbers since last week, and Andrei Illarionov, Putin’s former
economic adviser who now works at the Cato Institute, predicts
that Russia will launch a larger-scale invasion within two
weeks. 

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