Category: zerohedge

Submitted by Simon Black of Sovereign Man blog,

In investing, it’s often said that nothing goes up or down in a straight line.

Stocks, bonds, commodities… they all go through periods of growth, correction, collapse, mania, etc.

We’re seeing this right now with respect to a substantial decline in the nominal gold price after more than 12 straight years of gains.

But I’ve just recently come across an investment trend that has posted the same results for more than 20-years straight. And it’s actually quite alarming.

Every human being on the planet requires sustenance… typically measured in Calories per day.

What’s interesting is that the global average of per-capita Calorie consumption has increased a whopping 24.6% since 1964.

So over the last fifty years, the data clearly show that human beings are eating more… now to an average of roughly 2,940 Calories per person per day.

As you can probably guess, most of the rise has taken place in East Asia just over the last two decades, owing to the increased wealth in that part of the world.

Roughly a billion people have been lifted out of poverty in Asia alone. And as people begin to generate income and accumulate savings, their dietary habits have invariably changed. They eat more, i.e. demand more Calories.

As we eat more, we require more resources from the world. And in the case of food, this means more arable land to grow crops.

But there’s another twist to this trend. As people become wealthier, they not only eat more, but they also begin to consume more resource consumptive foods– especially meat.

It takes a lot more land to grow a kilogram of beef than it does to grow a kilogram of tomatoes. The difference can often be an order of magnitude greater.

So when you look at the demand side of this equation, per capita food consumption is increasing… and we are also consuming a vastly greater amount of land-intensive foods.

In short, the global trend is that we are demanding a much greater amount of arable land per person.

Yet the data on the supply side show the precise opposite.

According to World Bank data, the global average of arable land per person has been on a one-way decline since 1992.

In fact, since 1964, there has only been one year that the global average of arable land per person has increased. In every other instance over the last five decades, arable land per person has declined.

This is an astounding trend.

Our modern ‘science’ is stepping in to address this trend. It’s why much of what we eat is now concocted in a laboratory rather than grown on a farm. It’s why McDonalds puts pink slime in its hamburgers instead of… you know… beef.

But even still, science only goes so far.

Yields for many staple crops (like wheat) essentially hit a wall about ten years ago. After decades of miraculous gains in the amount of tons, bushels, and kilograms per acre we have been able to extract from the Earth, productive capacity has largely plateaued.

In other words, we have maxed out what we can pull out of the soil for now. And the amount of soil per person that’s in production is in serious decline.

To me, this spells out an obvious case for investing in agriculture… and even more specifically, to own farmland.

 

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The Emperor At Christmas…

 

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All 3 branches of the U.S. government have concluded that the NSA has gone way too far … and that mass surveillance is unnecessary.

The U.N. General Assembly agrees.

But one government leader backs the NSA’s Orwellian spying … former KGB officer Vladamir Putin.

It is obvious that the former Soviet uber-spy’s endorsement is ironic.  But there is a second potential explanation.

Putin also has a current net worth alleged to be between $40 billion and $70 billion, and a palace to rival the old monarchs of France.

The real purpose of mass surveillance is economic advantage, diplomatic manipulation, and social control.

The multi-billionaire – whether commie or capitalist – may just want to maintian control and increase his wealth.

Postscript: Given that the American economy has gone from capitalism to socialism for the rich, and that the U.S. used communist torture techniques specifically aimed at extracting false confessions, it has become admittedly difficult to identify the players from the baseball roster these days.

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We suspect the word “but” will figure heavily in President Obama’s news conference today (his last before hitting the Hawaiian tees) as he addresses all the wonderful things that are occurring in the US – and yet moar needs to be done… oh and have you signed up for Obamacare yet?

 

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Submitted by Ron Paul via The Free Foundation blog,

This week the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed’s creation established a banking cartel and a board of government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed’s growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed’s creation, its 100th anniversary may come and go with only a few passing mentions.

Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed’s insidious effects on the US economy—with actions performed without transparency.

Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed’s inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.

But even though the Fed continued to make the same mistakes over and over again, no one in Washington ever questioned the wisdom of having a central bank. Instead, after each episode the Fed was given more and more power over the economy. Even though the Fed had brought about the stagflation of the 1970s, Congress decided to formally task the Federal Reserve in 1978 with maintaining full employment and stable prices, combined with constantly adding horrendously harmful regulations. Talk about putting the inmates in charge of the asylum!

Now we are reaping the noxious effects of a century of loose monetary policy, as our economy remains mired in mediocrity and utterly dependent on a stream of easy money from the central bank. A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. The government’s growing monopoly on money creation, high barriers to entry into banking to protect politically favored incumbents, and favored treatment for government debt combined to create a rickety, panic-prone banking system. Had legislators known then what we know now, we could hope that they never would have established the Federal Reserve System.

Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UpLgxW97V5o/story01.htm Tyler Durden

Submitted by Ron Paul via The Free Foundation blog,

This week the Federal Reserve System will celebrate the 100th anniversary of its founding. Resulting from secret negotiations between bankers and politicians at Jekyll Island, the Fed’s creation established a banking cartel and a board of government overseers that has grown ever stronger through the years. One would think this anniversary would elicit some sort of public recognition of the Fed’s growth from a quasi-agent of the Treasury Department intended to provide an elastic currency, to a de facto independent institution that has taken complete control of the economy through its central monetary planning. But just like the Fed’s creation, its 100th anniversary may come and go with only a few passing mentions.

Like many other horrible and unconstitutional pieces of legislation, the bill which created the Fed, the Federal Reserve Act, was passed under great pressure on December 23, 1913, in the waning moments before Congress recessed for Christmas with many Members already absent from those final votes. This underhanded method of pressuring Congress with such a deadline to pass the Federal Reserve Act would provide a foreshadowing of the Fed’s insidious effects on the US economy—with actions performed without transparency.

Ostensibly formed with the goal of preventing financial crises such as the Panic of 1907, the Fed has become increasingly powerful over the years. Rather than preventing financial crises, however, the Fed has constantly caused new ones. Barely a few years after its inception, the Fed’s inflationary monetary policy to help fund World War I led to the Depression of 1920. After the economy bounced back from that episode, a further injection of easy money and credit by the Fed led to the Roaring Twenties and to the Great Depression, the worst economic crisis in American history.

But even though the Fed continued to make the same mistakes over and over again, no one in Washington ever questioned the wisdom of having a central bank. Instead, after each episode the Fed was given more and more power over the economy. Even though the Fed had brought about the stagflation of the 1970s, Congress decided to formally task the Federal Reserve in 1978 with maintaining full employment and stable prices, combined with constantly adding horrendously harmful regulations. Talk about putting the inmates in charge of the asylum!

Now we are reaping the noxious effects of a century of loose monetary policy, as our economy remains mired in mediocrity and utterly dependent on a stream of easy money from the central bank. A century ago, politicians failed to understand that the financial panics of the 19th century were caused by collusion between government and the banking sector. The government’s growing monopoly on money creation, high barriers to entry into banking to protect politically favored incumbents, and favored treatment for government debt combined to create a rickety, panic-prone banking system. Had legislators known then what we know now, we could hope that they never would have established the Federal Reserve System.

Today, however, we do know better. We know that the Federal Reserve continues to strengthen the collusion between banks and politicians. We know that the Fed’s inflationary monetary policy continues to reap profits for Wall Street while impoverishing Main Street. And we know that the current monetary regime is teetering on a precipice. One hundred years is long enough. End the Fed.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UpLgxW97V5o/story01.htm Tyler Durden

Despite the absolute assurances (by your friendly local asset gatherer) that a taper would unleash hell in the bond markets, a decidedly one-sided market has seen a tremendous squeeze in the last 2 days. Echoing Operation Twist’s effort, the term structure of Treasury yields has collapsed by 5 standard deviations to 3-month flats.

 

 

Our suspicion is that traders were positioned for a taper and weakness (steepening) in bonds  and when that did not materialize in size, exits were hit in a hurry… either that or macroeconomic growth and reflation hopes and dreams are dashed in the reality of bond premia.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/YQehxA33hRo/story01.htm Tyler Durden

With 75 minutes until the President’s news conference – that we suspect would have been chock full of positivity over the ‘progress’ the Obamacare website has made – Healthcare.gov is down.

As WaPo first observed, “The home page is still present, but when one tries to apply for a health plan, the site says the “system is down.” A message on the screen says it is part of “scheduled maintenance.” The deadline for people to obtain coverage for the New Year is Dec. 23 — which means the site could see in spike in visits in the coming days.”

The result of all the Obamacare “fixes” is screen captured below:

 

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Today’s AM fix was USD 1,195.00, EUR 875.33 and GBP 731.69 per ounce.
Yesterday’s AM fix was USD 1,205.25, EUR 881.16 and GBP 736.35 per ounce.

Gold dropped $27 or 2.22% yesterday, closing at $1,191.50/oz. Silver slid $0.58 or 2.93% closing at $19.21/oz. Platinum dropped $14.76, or 1.1%, to $1,316.24/oz and palladium edged down $2.53 or 0.4%, to $692.97/oz.

Gold in U.S. Dollars, 1 Year – (Bloomberg)

Gold fell below support at $1,200/oz yesterday and is vulnerable to a further test of the June 28th low of $1,180.50/oz. A close below $1,180.50/oz could lead to prices falling to $1,100/oz and the next level of support is $1,000/oz.

Gold rallied from its worst closing price in almost three years after the Fed’s decision to marginally reduce its debt monetisation programme. Gold is on track to suffer its first decline since 2000 or first decline in 13 years.

The taper is not as bearish as some suggest as debt monetisation will continue at the whopping $900 billion per annum – down from over $1 trillion per annum and the Fed will maintain near zero percent interest rates for the foreseeable future.

Chinese demand may once again stem the decline in gold prices. Chinese buyers eagerly scooped up gold at bargain prices overnight after the 4% price fall this week and 29% fall this year.

Gold volumes for the benchmark cash contract on the Shanghai Gold Exchange (SGE), China’s biggest spot bullion market, climbed to a 10 week high as lower prices led to increased buying.

The volume for bullion of 99.99% purity climbed to 19,775 kilograms yesterday, the biggest since October 8, from 13,673 kilograms the previous day, according to exchange data compiled by Bloomberg. Prices fell on the SGE overnight for a third day, losing 2.1% to 235.85 yuan a gram ($1,208 an ounce), the lowest since February 2010.

Gold in Renminbi – Shanghai Gold Exchange – 5 Years

The surge underscores robust demand in the nation set to overtake India as the largest buyer of gold. When gold entered a bear market in April, demand for jewelry and gold bars surged in Asia, even as more speculative investors cut holdings in ETF products at a record pace.
China’s shipments from Hong Kong rose to the second highest on record in October, with the amount in the first 10 months in 2013 alone more than doubling to 955.9 tons. This does not include shipments directly into China that do not go through Hong Kong.

Chinese demand for gold has surged again this year and the World Gold Council’s estimate of demand reaching 1,000 metric tons, is increasingly being seen as very conservative. Chinese demand may be much, much higher with some analysts saying that demand may be close to the 2,000 tonne mark.

Gold Fixes/Rates/Vols – (Bloomberg)

The Shanghai Gold Exchange (SGE), now the world’s biggest exchange for physical gold, plans to offer storage accounts to investors in China and internationally. This could lead to even greater flows of gold into China in 2015.

The SGE plans to  launch an international board in the pilot free trade zone to attract offshore yuan capital to invest in the Chinese mainland’s gold market, a senior official said earlier this month.

“We want to tap the opportunity from Shanghai’s pilot free trade zone and launch an international board to attract offshore yuan to invest in the mainland,” Xu Luode, chairman of the bourse, said at a precious metals forum in Shanghai December 6th.

The Shanghai exchange will establish a system that publishes daily rates at which selected market participants are willing to lend gold in the mainland interbank market, which is similar to the Gold Forward Offered Rates by the London Bullion Market Association, according to Xu.

Gold’s sell off this week was again primarily due to paper gold selling by traders and speculators on the COMEX as there was little selling of coins and bars by bullion buyers. Indeed, we have again seen more buyers than sellers this week and there has been a slight increase in demand.

Bullion premiums in western markets are flat again this week. Gold bars  (1 oz) are trading at $1,249.89/oz or premiums of between 3.75% and 4.5%, and larger gold bars (1 kilo)  are trading at $39,800/oz or premiums of between 3% and 3.5%.

Arguably, the Fed’s small taper and statement is bullish for gold as the Fed confirmed that ultra loose monetary policies and the unprecedented zero percent interest policies are set to continue. Also, the  Federal Reserve’s balance sheet continues to deteriorate which should support gold in 2014.

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While a military campaign against Syria (and Iran) on the usual grounds has been postponed indefinitely, two nations in the Middle East have been seething: Saudi Arabia and, of course, Israel. Yet while Saudi Arabia rarely if ever gets its own hands dirty, instead executing its geopolitcal strategy through puppet states in need of its oil, Israel has never had a problem with engaging in offensive wars. And now that the threat of an imminent war, one which would have been largely carried out on the back of the US military, is gone Israel is preparing to do just that.

According to UPI, “Israeli generals are preparing for a decisive — and probably brief — war against Hezbollah, one of Israel’s most implacable foes, with plans to smash the Iranian-backed Lebanese movement’s military power, a study says. The Israelis’ primary objective will be to eradicate Hezbollah’s reputedly massive arsenal of missiles and rockets “for years to come,” the report by the Begin-Sadat Center for Strategic Studies in Tel Aviv said.”

In other words, Syrian script, rinse repeat – spook with stories of massive weapon arsenals, propose a permanent resolution that involves invading – “briefly” although it never really works out that way – and then leak a few false flag videos “proving” just how evil the nation that is about to be invaded is.

Full story from UPI

Israel gets ready for ‘short, sharp war’ against Hezbollah

Israeli military intelligence estimates Hezbollah has 80,000 missiles and rockets of all calibers, ranging from ballistic missiles with warheads packing 700 pounds of high explosives, to short-range rockets, many of them aimed at cities including Tel Aviv. Some estimates go as high as 100,000.

The weapons that give Israelis nightmares are the long-range missiles with which Hezbollah can pound the Jewish state’s population centers and strategic installations without let-up for at least a month.

Israel’s military, which failed to crush Hezbollah in a 34-day war in 2006, “has prepared for a combined air and large-scale ground operation, driven by new intelligence and precision-firepower capabilities, to deliver a knockout blow and eliminate Hezbollah as a fighting force for years to come,” observed the report’s author, Yaakov Lappin, the Jerusalem Post’s military analyst.

Knocking out Hezbollah’s missile storage bunkers and launch sites will be the air force’s main mission, as it was in 2006, when Hezbollah only had about 20,000 missiles, 4,000 of which hit northern Israel.

Lappin said Israel will use “unprecedented capabilities” and a combat fleet that could destroy hundreds of targets a day.

In the last year, Israelis have been bombarded with government warnings to brace themselves for weeks of unprecedented missile bombardment if war comes — although the media have sought to reassure the public the armed forces will protect them with new weapons, tactics and all manner of electronic wizardry.

A key protection system will be the much-vaunted, four-tier missile defense shield known as Homa, The Wall in Hebrew. This includes the long-range Arrow 3 system, designed to destroy Iranian ballistic missiles outside Earth’s atmosphere, down to the Iron Dome, which has by official count shot down 84.6 percent of the short-range Palestinian rockets it has engaged in the last two years.

Even so, whatever the dimensions and capabilities of the generals’ plan, another report poured cold water on Israeli expectations of survival in the next war, which will — for the first time since the state was founded in 1948, a half dozen wars ago — target the home front.

Nathan Faber of the Faculty of Aerospace Engineering at the Technion, Israel’s Institute of Technology, warned in an article on the website of the Magen Laoref, or Homefront Shield, foundation, that the Homa could crumble due to technological, operational and financial reasons in a multifront war with Hezbollah, Iran and others.

Faber, formerly chief scientist in the military’s missile division, said at least one-third of all missiles fired at Israel will in all probability get through.

He calculates Israel could be threatened by 800 Iranian Shehab-3b and more advanced Sejjil-2 ballistic missiles, and 400 Soviet-era Scud ballistic missiles held by Syria, some of which may be used in its 33-month-old civil war.

There will also be 500-1,000 medium-range tactical missiles — like Iran’s Fajr or Fateh weapons, which Hezbollah already has — and more than 100,000 short-range rockets held by Syria, Hezbollah and the Palestinian Hamas group in Gaza.

Faber reckons about one-third of the missiles fired at Israel will be intercepted by the air force, another third will malfunction and one third will get through defensive screens, including about 400 of the 1,200 ballistic systems.

Regarding tactical missiles, Faber noted that “since these are very precise missiles the great majority of them will hit their target” after evading the anti-missile defenses.

He calculates Iron Dome — which he assesses has a kill rate of only 66 percent — will have to deal with 30,000 rockets.

The cost will be awesome — and possibly prohibitive.

By Faber’s tally, Iron Dome operations will cost $6 billion, countering 400 ballistic missiles another $3 billion, while mid-range interceptions will total as much as $2 billion.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/EUmgcKR2CJ0/story01.htm Tyler Durden