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Submitted by Simon Black via SovereignMan.com,

Last week in the Australian state of Queensland, federal police confiscated a whopping 5,465 ounces of silver (worth roughly $106,000) from a man’s home.

This was part of a larger series of police raids instigated by the Australian Tax Office against individuals suspected of tax evasion.

Two obvious lessons come to mind which bear repeating:

1) As we discussed yesterday, only an idiot commits tax fraud or tax evasion. This goes without saying.

 

There are far too many completely legitimate ways to reduce or even eliminate what you owe… which means there’s absolutely zero reason to take any chances by wilfully breaking the law.

 

I know this doesn’t apply to the vast majority of people reading this, but if you are one of the handful of people out there who has been noncompliant with taxes, definitely consider your options to get it fixed.

 

They will find out eventually.

 

It’ll be a much better outcome that you step forward and admit a mistake than wait for the inevitable federal agents to kick down your door in the middle of the night.

 

2) Don’t keep the majority of your assets at home

 

I’m sure that at least some of the people who were subject to the Australian Tax Authority’s raids probably did commit tax evasion.

 

But there are probably many who didn’t… people who just happened to end up on the agency’s list through some honest misunderstanding.

 

Nevertheless, they still had federal police raiding their homes, confiscating anything that looked valuable, including cash and precious metals.

 

This could happen to anyone. Any of us could end up by mistake on the wrong side of some government agency’s list. It happens to innocent people every single day.

 

The real downer is that once armed agents seize your property or freeze your bank account, it’s up to you to prove your own innocence… even though they’ve deprived you of your financial resources to do so.

You don’t ever want to find yourself in this position. And merely hoping it will never happen isn’t exactly a great insurance policy.

Have a backup plan.

Yes, it makes a LOT of sense to hold some physical cash and precious metals in a safe at your home or office.

These are both great hedges against risks in the banking system and monetary system, neither one of which should be underestimated.

Remember what happened in Cyprus back in 2013? The entire banking system went bust, prompting the government to freeze everyone’s bank account and lock an entire nation out of its savings.

It all happened overnight. Friday afternoon everything was fine. Saturday morning was chaos.

Just imagine being frozen out of your life’s savings without warning. It must have been debilitating.

But anyone who had thought ahead and maintained a small stash of precious metals or physical cash at home was just fine.

This is an easy, no-brainer, almost zero-cost strategy to implement.

But just remember that any domestic assets, whether a local bank account or even cash held in a safe at your house, are still within the jurisdiction of your home country’s government agencies.

This means that everything you own is at risk if you happen to be the next innocent person to mistakenly end up on the wrong side of their list.

Don’t keep too much in the home safe. I’d suggest that 1-2 months of living expenses would go a long way in mitigating those financial, banking, and monetary risks.

And don’t keep the rest in your local bank account; again, bank accounts are especially easy for domestic authorities to freeze and confiscate.

Definitely consider keeping at least some assets in a different jurisdiction overseas where your home government has no direct authority.

This could include assets like a savings account at a foreign bank, precious metals held at a secure storage facility overseas, or even cryptocurrency like Bitcoin.

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Not even the mainstream media could cover up the fact that Hillary Clinton made a major diplomatic snafu overnight when she called half of Trump supporters a “basket of deplorables”, adding that they were “racist, sexist, homophobic, xenophobic, Islamaphobic.” Which is perhaps why, moment aog, Hillary said she regretted denigrating “half” of Donald Trump’s supporters but stood by her characterization that much of his campaign is “deplorable.”

“Last night I was ‘grossly generalistic,’ and that’s never a good idea. I regret saying ‘half’ — that was wrong,” Clinton said in a statement.

That was the apology; however just to avoid losing all the ground, she added that “let’s be clear, what’s really ‘deplorable’ is that Donald Trump hired a major advocate for the so-called ‘alt-right’ movement to run his campaign and that David Duke and other white supremacists see him as a champion of their values.” Clinton was referring to Trump’s campaign CEO Steve Bannon, formerly the chairman of Breitbart News.

As reported previously, at a fundraiser Friday night in New York City, Clinton said half of Trump’s supporters were “irredeemable” and could be categorized as a “basket of deplorables” because of their bigoted views, but that the other half were people who believe that government had “let them down” and deserve empathy.

“As I said, many of Trump’s supporters are hard-working Americans who just don’t feel like the economy or our political system are working for them,” Clinton said Saturday. “I’m determined to bring our country together and make our economy work for everyone, not just those at the top. Because we really are ‘stronger together.’”

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Since entering the Presidential race last year, Trump has made international trade a cornerstone of his campaign and has promised to go after countries like China that “cheat on trade”.  In fact, the Trump website promises that “day one” his administration will take steps to “designate China as a currency manipulator” and crack down on “illegal export subsidies [that] intentionally distorts international trade.”

On day one of the Trump administration the U.S. Treasury Department will designate China as a currency manipulator. This will begin a process that imposes appropriate countervailing duties on artificially cheap Chinese products, defends U.S. manufacturers and workers, and revitalizes job growth in America. We must stand up to China’s blackmail and reject corporate America’s manipulation of our politicians. The U.S. Treasury’s designation of China as a currency manipulator will force China to the negotiating table and open the door to a fair – and far better – trading relationship.

 

China’s illegal export subsidies intentionally distorts international trade and damages other countries’ exports by giving Chinese companies an unfair advantage. From textile and steel mills in the Carolinas to the Gulf Coast’s shrimp and fish industries to the Midwest manufacturing belt and California’s agribusiness, China’s disregard for WTO rules hurt every corner of America.

As we’ve noted in the past, the aluminum industry provides a textbook example of how China “cheats on trade” and the corresponding impact on U.S. companies.  In fact, the Wall Street Journal recently took a look into the production and trading activities of one Chinese aluminum producer, China Zhongwang Holdings Ltd., that seemingly “cheats” in many of the ways Trump enumerates above.  

As background, China is the biggest producers of aluminum in the world with production fueled by access to inexpensive electricity and tax breaks from the government.  As local demand plummeted in the wake of the “great recession,” much of China’s aluminum production has found it’s way to the U.S….though often not through direct, or technically legal, channels. 

The dumping of cheap aluminum on the U.S. market has decimated domestic production with only five aluminum smelters left in the U.S. down from 23 in 2000.  In fact, Alcoa, the largest American aluminum maker, recently announced plans to spinoff its aluminum production assets in order to isolate its more profitable parts-making units.  Alcoa CEO, Klaus Kleinfeld, attributed the move to illegitimate Chinese exports that were “the major driver” of lower aluminum prices.

Back in 2009, U.S. aluminum imports from China surged causing import prices to plunge by 30% and crushing U.S. producers like Alcoa.  That surge in imports and simultaneous price collapse caused the Commerce Department to take notice.  In 2010, the Commerce Department enacted new tariffs on Chinese aluminum imports after an investigation revealed that the Chinese were dumping cut-rate aluminum on the U.S. markets while receiving subsidies back home.

But the story doesn’t end there, of course, as the rabbit hole goes much deeper.  Unable to dump aluminum on the U.S. market directly, Zhongwang Holdings, a large Chinese aluminum producer, found a workaround that involved  rerouting U.S.-bound aluminum through Mexico.  In fact, a review of trade data found that just as China’s export of aluminum to the U.S. collapsed in 2010 they simultaneously surged to Mexico. 

 

Jeff Henderson, President of a U.S. trade group known as the Aluminum Extruders Council, took note of the shift in Chinese exports to Mexico and decided to dig a little deeper.  As such, he commissioned a plane to flyover a “small” factory in Mexico and, to his great “shock,” found about 6% of the entire world’s inventory of aluminum sitting in the middle of the Mexican desert covered in tarps.

Two years ago, a California aluminum executive commissioned a pilot to fly over the Mexican town of San José Iturbide, at the foot of the Sierra Gorda mountains, and snap aerial photos of a remote desert factory.

 

He made a startling discovery. Nearly one million metric tons of aluminum sat neatly stacked behind a fortress of barbed-wire fences. The stockpile, worth some $2 billion and representing roughly 6% of the world’s total inventory—enough to churn out 2.2 million Ford F-150s or 77 billion beer cans—quickly became an obsession for the U.S. aluminum industry.

 

Aluminum-industry representative Jeff Henderson says he is convinced that China Zhongwang Holdings Ltd., a Chinese aluminum giant controlled by billionaire Liu Zhongtian, tried to evade U.S. tariffs by routing aluminum through Mexico to disguise its origins, a tactic known as transshipping.

Of course Liu Zhongtian, owner of Zhongwang Holdings, denies any efforts to avoid U.S. tariffs by shipping through Mexico but the WSJ notes that the records are relatively clear.  Trade records show that hundreds of thousands of tons of aluminum were shipped to Mexico from China through a series of companies, including one owned by Liu’s son and another by someone who described himself as a longtime business associate.

Mr. Liu, a member of China’s ruling Communist Party, denies any connection to the Mexican aluminum or transshipping. “These things have nothing to do with me,” he said in a June interview at his company’s Liaoning, China, plant, where he lives in an apartment inside the factory. He said he wouldn’t know how to establish a business in Mexico, joking that “in that sort of place, there are a lot of killers with guns.”

The flow of aluminum from China to the U.S. gets a little convoluted but the following WSJ graphic boils it down:

Since Jeff Henderson brought of all these trade manipulations to light, Liu has shifted tactics to be a little “smarter.”  Liu’s son has been replaced as CEO of the “small” Mexican aluminum producer and replaced with a California attorney named Charles Pok.  Pok originally denied having any connection with Liu but later admitted that he did have a relationship which he couldn’t discuss due to “attorney-client privilege”…isn’t that convenient?

But lately, after the Mexico shenanigans were revealed by Jeff Henderson, the Chinese aluminum export game has shifted to Vietnam with exports surging over the past two years.

 

Of course, much of the “Vietnamese” aluminum will end up on the U.S. market.  In fact, the U.S. has imported some 2,000 tons of aluminum from Vietnam over the past couple of years.  And wouldn’t you know it, Perfectus Aluminum, owned by none other than Liu’s son, is one of the largest buyers.

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Submitted by Charles Hugh-Smith via PeakProsperity.com,

 

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By EconMatters

I expect at least a 4 to 5 million barrel build in oil stocks for the next EIA Inventory report this upcoming week. If we have another drawdown in Oil Stocks that will perk my radar up for a possible rebalancing turn in market fundamentals. The next two weeks oil reports should iron out any weather related distortive effects in the market. Oil may open lower on Sunday with the poor market lead in for Asia Markets.

 

 

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The slow-motion trainwreck that is the hedge fund investing world, which as we documented one month ago has failed miserably – if predictably – to compensate LPs for its 2 and 20 model, and generate outsized returns during a regime of central planning, having created zero alpha since 2011…

 

…. took its latest casualty in the form of the once-iconic hedge fund Perry Capital. While it has not unwound just yet, the 28-year-old hedge fund run by Goldman alum Richard Perry, has lost more than half of its assets in less than a year after posting declines since 2014.

Richard Perry

According to Bloomberg, the firm’s assets slumped to $4 billion as of the end of August compared with $10 billion in September last year. The reason for the tremendous outflows is that Perry has posted losses of 18.4% from the beginning of 2014 through July of this year. The fund declined 2.6% in the first seven months of this year after losing 12.6% in 2015.

Curiously, as on numerous previous occasions, while Perry’s losses aren’t even that substantial, in a time when the S&P500 just can’t go negative courtesy of central banks, LPs patiene has become non-existent (however, a shocking outlier in this regard is Bill Ackman’s Pershing Square, where the LPs have continued to amaze the investing community by not redeeming what’s left of their assets despite one terrible investment decision after another).

What is even more notable about Perry, is that the firm had never had a losing year from its 1988 inception through 2007, when it managed $14 billion. Perry, 61, had previously worked on Goldman’s risk-arbitrage desk, which was once led by Robert Rubin, who later became U.S. Treasury secretary. The team spawned a group of hedge fund managers that included Frank Brosens, who co-founded Taconic Capital Advisors, and Eric Mindich of Eton Park Capital Management.

Perry’s core competency is “event-driven”, with a focus on merger arb, takeovers and bankruptcies.

As Bloomberg adds, Perry Capital is among the managers including Tudor Investment Corp. and Brevan Howard Asset Management that have seen investors flee. The $2.9 trillion hedge-fund industry has come under fire this year for everything from excessive fees to lackluster returns, with investors pulling the most money since the aftermath of the global financial crisis.

Finally, here is the latest hedge top and bottom 20 hedge fund performance breakdown courtesy of HSBC.

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The biggest issue in financial political power structure today is the End of Centralization.

In the post 2008 era, the Globalists made a major push to hold the system together. The multi-billionaire class, particularly those who made fortunes from crony capitalism and bubble economics joined forces with the Keynesian media shills to convince the world that the only way we would survive would be if trillions of Dollars were given to those who were deemed “systemically important.”

Warren Buffett was a prime example of this. Buffett amassed a fortune by being a raging capitalist who prided himself on never losing money on an investment. But by the time 2008 rolled around, he faced the very real prospect of seeing his fortune halved.

Somehow he managed to convince the public that he was still a great guy while pushing for bailouts in the very firms in which he had taken large stakes: Goldman, Wells Fargo, etc.

Buffett was not the only one. He’s just the best known.

Let’s be blunt here: the 2008 bailouts and money pumps completely betrayed capitalism. The outcome was precisely what you’d expect from Central Planning:

1)   Economic stagnation.

2)   The creation of low quality jobs that offer little upward mobility.

3)   Concentration of wealth.

Today, eight years later, the elites are terrified that the game is ending.

You can see this in many ways. The architects of this mess (Ben Bernanke, Alan Greenspan, Larry Summers and others) have resurfaced with revisionist narratives in which they are not responsible.

Similarly, those currently at the helm of the Central Banks have begun abdicating their responsibility for what’s coming.

This is most evident in Central bank Presidents like Draghi and Yellen dropping all pretenses of being able to hit their goals/ targets and instead passing the blame onto political bodies such as Congress.

·      Bank of Japan Head Harihiko Kuroda confessed in January that Japan has a limited GDP potential no matter what policy he employs.

·      European Central Bank President Mario Draghi admitted that despite FOUR NIRP cuts and €1 trillion in QE the ECB won’t hit its inflation targets for a decade.

·      Federal Reserve Chair Janet Yellen has begun implicitly pushing for Congress to step up in terms of policy because the Fed is effectively out of ammunition.

These are very critical “tells” from those at the top of the Central Planning economic structure. These individuals know the game is about up and they know what is coming. They also know that politically the tides are now against them.

BREXIT, Trump, Le Pen, Duterte, are all part of a larger global trend away from Centralization towards Nationalism. Whether you like or despise these people/ issues is irrelevant. Their popularity is the product of the last eight years of Cronyism/ Central Planning.

This terrifies the global elites, particularly those who have been riding the crony capitalist gravy train to $ billions. It also terrifies those who link their power and prestige to the current system (Central Bankers, academic economists, and media shills).

This is why you are seeing shilling occur on an unprecedented scale in the media. Those who’ve made fortunes from market bubbles (Mark Cuban for one) as well as the usual Keynesian shills (Krugman, etc) are out in full force claiming that if the system doesn’t maintain the status quo, the world will effectively end.

This is just another version of the Great 2008 Lie, that if we didn’t bailout certain people/ prop up certain institutions, the world would end. It was bogus then and it is bogus now.

The fact is that capitalism operates just fine with failures. There were many firms ready to step up to fill the void created by letting key players who made business ending decisions fail.

Consider that over half of the current Fortune 500 were founded during recessions or bear markets in stocks.

Obviously recessions, bear markets and firm failures don’t stop economic progress. If any thing they promote it much as a forest fire wipes out dead debris to make room for the stage of growth.

The last eight years prove Central Planning doesn’t work. Global Central Banks have spent over $14 trillion, and maintained ZIRP/NIRP for eight years, punishing savers and those relying on interest income…

And what has the world got to show for it? The weakest recovery (if you can call it that) in decades, wealth inequality at extremes, and a record number of individuals relaying on welfare/ entitlements.

Never before in history has so much money been spent, accomplishing so little. And it’s set the stage for another massive financial crisis.

If you, like us, believe that the world is heading for another financial crisis, you’ll love our 21-page investment report titled the Stock Market Crash Survival Guide.

In it, we outline the coming crash will unfold…which investments will perform best… and how to take out “crash” insurance trades that will pay out huge returns during a market collapse.

We are giving away just 1,000 copies of this report for FREE to the public.

To pick up yours, swing by:

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

 

 

 

 

 

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