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Friday, February 28, 2014

WHEN WILL GOLD SOAR? It's all about the narrative....

It's easy to understand exactly when gold will soar.  Gold will soar when the banks lose control of the narrative.

So what does that mean?

Answer this: Are the Big Banks basically sound, or basically bankrupt and being supported by the Central Banks - which means by your tax dollars?

Which is it?

Are they really recording record earnings?  What's the quality of those earnings?  Are they GAAP earnings?  Or are they based on excluding all "one time" losses, and just counting "ongoing" profits?

Is it possible to know the answers to these questions?

No. Because a) the bank balance sheets are byzantine tomes designed so even their own lawyers can't read all of it.  And B) the banks control the public discourse.

How do they do this?  They own all the media outlets.  Whom do they own?

NBC MSNBC CNBC were all owned by GE which derives all of its profits from financial services, until they were bought by Comcast which is a Media/Fincancial Service Conglomerate so large it defies easy analysis.  But is is owned (Publicly) by a consortium of major banks including Shroder's, JP Morgan, Vanguard, Black Rock etc.

FOX and all it's outlets are owned by Rupert Murdoch's Newscorp.  Newscorp is a media empire with close ties to JP Morgan and Goldman Sachs, and it controls many major financial news sources such as Dow Jones, Wall Street Journal, Barrons, Market Watch etc etc.  And like all major public corps of this size, they are also owned by the major banks and financial institutions like Barclays, Vanguard, State Street, etc.

ABC is owned by Disney, another major media empire which makes most of its profits through real estate investments and development throughout the world. Disney's Corporate Treasury manages over $1 billion of working capital ... for its commercial real estate loan origination and underwriting group in Los Angeles.

CNN and many other outlets were owned by Time Warner Inc which is now owned by Comcast too.

Now, if you listen to the garbage promoted by schills of these companies you'd think some of them were "liberal" and others "Conservative."  You'd spend countless hours arguing ineffectually about the liberal media or the the conservative media.  

You'd be missing the point.  All these outlets serve one master: The Financial Industry which is to say the Big Banks who underwrite, invest, manage, advise and control the financial working of all of these Media Empires.  It's not a vast conspiracy.  It's just the way things work in a financial system that has nothing to do with Capitalism or Socialism.  It's a Banking Plutocracy.  It's always been a Banking Plutocracy.  

Though the banks weren't able to reach full power until until Donal Regan (former CEO of Merrill Lynch) began to dismantle the regulatory system under Reagan and Robert Rubin (Former CEO of Goldman Sachs) finished the job  by trashing Glass Steagall under Clinton.   When it comes to the one thing that really matters in the economy the Democrats and the Republicans agree whole-heartedly.

The politics are theater.  The economics are monolithic.

And they are all invested heavily in the message that the Big Banks are sound, the economy is sound, the financial system is sound.

And yet: People live in the world.  People understand that their own specific financial conditions are precarious and eroding.  People can be conditioned to think and say this or that.  But at some point people, as living sentient beings, realize that things are different from how they are being portrayed.

At some point the Banking/Media conglomerate loses control of the narrative.

That's when gold will soar.

And not because an impoverished populace will go out and buy gold.  They can't afford it.  But because the central banks themselves that are now loading up on Gold in advance of the inevitable: China, and the Pacific Rim countries, as well as certain Western Hedge Funds, will squeeze the exchanges like the Comex that haven't any to support the trillions of paper gold they are "clearing."

The narrative will be lost, and the vultures preparing for this event will squeeze the markets.

That's when gold will soar.

Wednesday, February 26, 2014

Gold-coin find

Gold-coin find ‘greatest buried treasure ever unearthed in the United States’

February 26, 2014, 12:02 PM

A couple in Northern California discovered more than 1,400 rare U.S. gold coins worth more than $10 million, rare-coin expert Kagin’s Inc. announced this week, referring to the find at as the “greatest buried treasure ever unearthed in the United States.”
The couple, who reportedly wish to remain anonymous, found the coins buried in cans on their property in California’s gold country while walking their dog.
“This family literally found the pot of gold at the end of the rainbow,” said Donald Kagin, president of the Tiburon, Calif., coin firm, in a statement.
The Saddle Ridge Treasure, named after a feature of the family’s property, includes almost 1,400 $20 gold pieces, fifty $10 gold pieces and four $5 gold prices, all struck between 1847 and 1894.
“The Saddle Ridge Hoard discovery is one of the most amazing numismatic stories I’ve heard. This will be regarded as one of the best stories in the history of our hobby!” said PCGS and Collectors Universe Inc. President Don Willis, in a statement.
About 90% of the coins will go on sale at a later date on It will be the first major numismatic treasure to be sold through Amazon AMZN +0.06% , Kagin said in its press release.
The face value of the find was $28,000, but it included at least 13 “finest known specimens” — among them an 1866-S No Motto Double Eagle valued at around $1 million.

Sale-Room "rules" for auctions

Six rules for assessing auction values

Rarity: It’s all about supply and demand. The rare what you want is, the fewer chances there will be to buy it. If other people want it too, then it can easily lead to a bidding battle.

All Greek Gold is rare by the standards of almost any other collectible.

Age: Not everything that is old is valuable and not everything that is valuable is old. However, if something is worth collecting, the older an object or picture is the rarer it is likely to be, simply because other examples of it will have been lost or broken over the years.
All Greek Gold is older than almost any other collectible.' Condition: Again, rarity comes into play. The rare an object, the less condition will usually matter, because there are comparatively few opportunities to acquire an example of it. Having said that, severe damage may destroy any value at all. In general terms, the closer an object is to its original condition, the better. Dealers like to buy unrestored items so that they can have them restored and realize the additional value. And there is a premium for modern collectables such as die-cast toys if they retain their original packaging in mint condition.

Provenance: This is the history of the object and who has owned it. The clearer this is, the better, and an association with a famous name or celebrated event can add significant value. In some cases, such associations can give otherwise everyday objects of no real value huge cachet, resulting in high prices at auction. By the same token, a lack of provenance or questions over the history of an object can cause problems, especially if there are concerns that an object might have been forged, faked or stolen.

Provenanced Greek Gold certainly commands a premium from advanced collectors.  

Names: Sought-after designers, clockmakers and jewellers, as well as others, can add huge value, so checking to see if an object has been signed or market is essential. Learn your terminology, though. Circle of…, Studio of…, After… or Attributed to… do not necessarily mean that they are by the artist/designer/maker in question.

Historical Names such as Alexander the Great, Ptolemy, Kroisos (Croesus), Darius, Euainatos, Kimon, etc, are always in high demand.

Fashion: What people like changes with the times. Victorian art and furniture, once the mainstay of many an auction, often get barely a look-in these days, while previously ignored areas like post-War design and Vintage fashion have become highly sought after.

Ancient Greece is always in fashion amongst the educated of the world.

Monday, February 24, 2014

Follow the Money

Hard Assets all have their constituency.

New NY Money loves emerging Artists.  Hedge Fund Honchos buy suits for $50,000 from Enzo Dorsi and doodles for $400,000 in Chelsea because they can.

Old NY Money buy their suits at Brooks Brothers and Old Masters, including Impressionists and abstract Impressionists. like Hans Hoffman for $250,000.

 Down in PA they dig race horses that average at about $130,000

In CA they'll buy exotic animals for private zoos like this cat for $60,000
A wild African serval. (CBS)

And of course this electric car for $100,000

In Abu Dabi its all about the mansion... this one will set you back about 50 million dollars.

And in Europe vineyards can be picked up for a little as $20,000 in Bordeaux!  The lure of Mendoza's scenic vineyards overlooked by the Andes has seen prices rise 25 percent

In Russia, they just love Siberian Sable   This one will set you back $100,000

And in China, my God they'll pay $600,000 for a bottle of brandy

But, interesting to note, that in all these places there are wealthy collectors who are wild about the one thing for which all modern cultures share an equal fascination:

Greco-Roman Antiquity: ..

The Russians prefer Rome.  The Chinese prefer Greece.  In Abud Dhabi they're creating a new museum for Greek Coins.  The French love Greece and Rome.  While the Italians, well you can guess. But everyone with any education is fascinated by Greco-Roman culture.

More expensive stuff:

$104,765 for Michael Jordan's shoes

The shoes Michael Jordan wore in his famous "Flu Game" sold for $104,765 early Thursday morning, shattering the record price paid for a pair of game-worn shoes in any sport.
Michael Jordan
Despite battling flu-like symptoms that nearly forced him to miss the game, Michael Jordan scored 38 points to rally Chicago past Utah in Game 5 of the 1997 NBA Finals.
The shoes, brought to the market by Grey Flannel Auctions and consigned by former Utah Jazz ball boy Preston Truman, were worn by Jordan during Game 5 of the 1997 NBA Finals in which Jordan scored 38 points for the Chicago Bulls despite laboring up and down the court from feeling sick that day.

The identity of the winning bidder was not immediately made public, but the amount paid blew away the previous record paid for a pair of game-used shoes, which were also worn by Jordan. A collector paid $31,070 just last month for a pair that Jordan wore in his rookie season.

Record $631,850 Macallan Whisky Sold at Sotheby’s Auction

Source: Sotheby's
The Macallan 6-liter “M” Decanter by Lalique.
Sotheby’s said it sold a bottle of Macallan for HK$4.9 million ($631,850) in Hong Kong, setting a record for the most expensive bottle of single malt whisky sold at auction.
The Macallan 6-liter “M” Decanter by Lalique, exceeded its HK$4 million high estimate and beat a previous record of $460,000 set by Sotheby’s in New York in 2010, the auction house said in a press release.
The Macallan sale, proceeds of which will benefit Hong Kong charities, helped boost total sales for the Jan. 18 wine auction to HK$29.4 million, with 99.7 percent of lots sold.

Only four Imperiale “M” Decanters were ever made by the Macallan distillery, Sotheby’s said. 

(So somebody paid $631,000 for the bottle.) 

Friday, February 21, 2014

Careful what you wish for dept:

Fracking Boom Leaves Texans Under a Toxic Cloud

Photographer: Eddie Seal/Bloomberg
Natural gas is flared at a Pioneer Natural Resources well, in Karnes County, Texas in 2010.
This story was produced by InsideClimate News in collaboration with the Center for Public Integrity and The Weather Channel.
When Lynn Buehring leaves her doctor's office in San Antonio she makes sure her inhaler is on the seat beside her, then steers her red GMC pickup truck southeast on U.S. 181, toward her home on the South Texas prairie.
About 40 miles down the road, between Poth and Falls City, drilling rigs, crude oil storage tanks and flares trailing black smoke appear amid the mesquite, live oak and pecan trees. Depending on the speed and direction of the wind, a yellow-brown haze might stretch across the horizon, filling the car with pungent odors. Sometimes Buehring's eyes burn, her chest tightens and pain stabs at her temples. On those days, she touches her inhaler for reassurance.
In another five miles Buehring, 58, passes into Karnes County, where she was born and once figured on living out her retirement, surrounded by a calm broken only by an occasional thunderstorm.
Today, however, the ranch-style house she shares with her 66-year-old husband, Shelby, is at the epicenter of one of the nation's biggest and least-publicized oil and gas booms. With more than 50 wells drilled within 2.5 miles of their home, the days when the Buehrings could sit on the deck that Shelby built and lull away an afternoon are long gone. The fumes won't let them...

Gov. Rick Perry: Texas Could Secede, Leave Union (promises, promises....)

Texas Secession
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Thursday, February 20, 2014

Israel Museum showcases ‘first Jewish coin’

by Björn Schöpe
February 20, 2014 – In antiquity the Palestinian region was a melting pot. Various empires shared borders and even local art appeared to be more creative and experimental than in many other places around the Mediterranean as can be clearly seen on its coins.
During the last years Jonathan and Jeannette Rosen collected hundreds of coins minted in ancient Philistia, Samaria and Judah when these parts of Palestine were satrapies (provinces) of the Persian empire. The generous couple donated 1,200 coins to the Israel Museum in Jerusalem. This treasure made the Israel Museum rank for the first time among the short list of the Apollo Magazine’s Acquisition of the Year. Undoubtedly the highlight of this collection is a coin which, according to Haim Gitler, curator of numismatics at the Israel Museum, may be the very first Jewish coin being minted in a Philistian mint for the province of Judah.
The new drachm of Judah before cleaning.
This drachm appeared on the market recently, allegedly it was found in the Hebron hills. The obverse shows a female face with what specialists call ‘Hathoric curls’, a particular type of hair-cut typical of the Egyptian goddess Hathor. The reverse shows a lion prancing over a kind of bull.
Close-up image of the legend yod he dalet.
On the obverse three letters are written in Aramaic: yod, he, and dalet which attribute the coin to the Yehud series, coins minted in Judah.
The new drachm of Judah after cleaning (Photos, Vladimir Naikhin; drawings, Pnina Arad).
Specialist Haim Gitler has discussed this stunning coin in the scholarly periodical ‘Israel Numismatic Research’ explaining that apparently the coin dates to the early fourth century according to the stylistic execution of the images.
'Hathoric curls' in the shape of snakes.
The female portrait on the obverse is to be understood as Gorgo, a Greek monster which served as an apotropaic symbol against all evil. Although the characteristic snake-hairs are missing and the tongue is not stuck out, as we should expect from a traditional image, Gitler can produce similar depictions from Palestinian coins stressing that this region was developing a peculiar pictorial language quite of its own.
The silver-copper-contents are very similar to those of other coins from a supposed central Philistian mint as is the design, too. The three letter therefore may refer to the fact that it was minted for the Persian province of Judah. If this is correct, it would constitute a unique numismatic testimony of such a service.
But the coin has already exalted someone’s imagination who wanted to read into the gorgo a portrayal of Esther, the Jewish wife of the Persian king, and, to make a long story short, tries to decipher the ‘Iranian coin’ with the story of how the festivity of Purim came into existence. At the end of the rather un-scholarly approach we hear about hidden hints in the Purim story to the Nazi-trial of Nürnberg …
The coin, however, does not need this kind of publicity, it tells an intriguing story all the same, although, to be honest, its whole story has not yet been revealed since particularly the image on the reverse is still puzzling the experts.
The Israel Museum plans to display more coins of this collection. As for the Yehud drachm it may even travel to Austria where the Kunsthistorisches Museum in Vienna, in collaboration with the Israel Museum, will show an exhibition on ‘Coins and Cult in the Biblical World’.
Haim Gitler and Oren Tal published a comprehensive study on the coinage of Philistia (‘The Coinage of Philistia of the Fifth and Fourth Centuries BC. A Study of the Earliest Coins of Palestine’, Milan and New York: 2006). A large portion of the coins studied in the book comes from the Rosens’ donation. For a review of the book by Wolfgang Fischer-Bossert in ANS magazine, follow this link.

Americans celebrate economic recovery with debt — lots of debt

Yahoo Finance

Shopping in downtown St. Pete.
View photo

Shopping in downtown St. Pete.
Two new reports highlight the dual financial personalities of American consumers today — one half savvy saver, the other half recovering debt-aholic.

In the last quarter of 2013, consumer debt soared by $241 billion, the sharpest quarter-to-quarter spike since 2007, according to the New York Fed’s recent household credit report.

Americans added $152 billion worth of mortgage debt loads in the fourth quarter of 2013 alone, followed by $53 billion in student loan debt, $18 billion in auto loans, and $11 billion in regular credit card debt.

About 332,000 consumers had a bankruptcy notation added to their credit reports in Q4 2013, about the same number as Q4 2012, according to the report.

Student loan debt continues to burden borrowers both young and old, with a delinquency rate of 11.5%, the highest of any type of debt. It’s still nearly impossible to discharge student debt in bankruptcy, which helps to explain why people are four times as likely to fall behind on these payments as they are their car payments (3.4% delinquency rate). 

The number of people who admit they have more credit debt than they have cash in their savings accounts has increased over the past four years, according to Bankrate's Financial Security Index — up from 23% in 2011 to 28% in 2013.

Wednesday, February 19, 2014

John Hussman sums it all up:

"Ultimately, the U.S. economy will be best served by a return to capital markets that allocate scarce savings toward productive investment rather than speculative activity. The transition to that environment will pose cyclical challenges, but is well worth achieving if the U.S. economy is to escape the grip of what is now more than 15 years of Fed-enabled capital misallocation."

More Rare Stuff:

Titanic violin sale to the tune of a new £900,000 record

Titanic and auction house records tumbled in Wiltshire when the violin played by bandmaster Wallace Hartley as the doomed ship slid below the waves 101 years ago sold for £900,000 (plus 15% buyer’s premium).
Bidding came down to a phone battle between a UK collector and a US counterpart, with the former holding on to clinch the sale at Henry Aldridge of Devizes on October 19.
The saleroom had estimated the violin at £200,000-300,000, partly based on the previous Titanic auction record also achieved by Henry Aldridge, for a very large, hand-drawn plan of the ship, used in the official inquiry after it sank, which was sold in May 2011 for £220,000.

Jesse Owens 1936 gold medal races to Olympic auction record

The Jesse Owens Munich 1936 gold medal sold for an Olympic record price at auction: $1,222,145 (£745,210), plus 20% buyer’s premium.
WHEN it comes to Olympic memorabilia, it doesn’t get much bigger than one of the four gold medals awarded to Jesse Owens for his remarkable performances at the 1936 Munich Games.
In winning the 100m, 200m, 4 x 100m and long jump he infuriated the watching Nazis who wanted the Games to be a showpiece of Aryan superiority.
The sale of his medal was always going to create massive worldwide interest and so it proved at SCP Auctions of California. At the end of an online auction on the morning of Sunday, December 8, it had been bought by Ron Burkle, US billionaire investor and co-owner of the Pittsburgh Penguins ice hockey club, for a whopping $1,222,145 (£745,210), plus 20% buyer’s premium.


'Dueling Dinosaurs' Fossil Fails To Sell At Auction, Highest Bid Was For $5.5 Million

he "Dueling Dinosaurs" fossil could break records at auction on Tuesday. The fossil, unearthed in Montana, depicts two dinosaurs locked in deadly combat, and the auction house Bonhams attached an estimate of $7 million to $9 million. But despite plenty of hype and attention, the fossil failed to reach its premium and was not sold.
Dwarf Tyrant The "Dueling Dinosaurs" fossil did not sell at auction on Tuesday.  Reuters
The Associated Press reports the highest bid for the Dueling Dinosaur fossil was $5.5 million. The current record holder for highest price paid for a dinosaur fossil belongs to Sue, the T-Rex skeleton fossil that was sold for $7.6 million in 1997. This fossil, discovered in 2006, features fully articulated skeletons of a Nanotyrannus lancensis, known as a Dwarf Tyrant and a relative to Tyrannosaurus Rex, and a species of Chasmosaurine Ceratopsian, a Triceratops-like dinosaur.

Tuesday, February 18, 2014

Rare Stuff Dept.

How much for an Olympic torch?

Artisan-made relay torches that sold in Paris as the Sochi Winter Olympics started. The one on the left too 100,000 at Beaussant Lefèvre, while the other took 75,000 at Olivier Couteau-Bégarie.
Artisan-made relay torches that sold in Paris as the Sochi Winter Olympics started. The one on the left too 100,000 at Beaussant Lefèvre, while the other took 75,000 at Olivier Couteau-Bégarie.
The answer is that while run-of-the-mill Olympic torches turn out not to be that rare, these two examples are among the hardest to find, with just 33 ever made.

The torches were used in the trans-France relay that preceded the Winter Olympics held at Grenoble in 1968 and they turned up in separate Drouot auctions in Paris within the space of just ten days.

The coincidence was all the more noteworthy given that unlike the torches for the actual games which were produced in their thousands, less than three dozen of these artisan-made relay models were produced. Each with slight variations, they were created by the Société Technique d’Equipement et de Fourniture Industrielle.

First off was the version featured in a small 15-lot section devoted to Olympic memorabilia in the January 29 auction of medals and historic memorabilia held by Beaussant Lefèvre at Drouot. This was missing the internal key to the burner, while the original red grip to the handle had been replaced by a green version, but it was otherwise in a very good state of repair with the original finish. An estimate of €30,000-40,000 proved wide of the mark with the hammer falling at €100,000 (£87,720).

Then on February 8 another of the 33 models turned up in a dedicated sports and Olympic memorabilia sale mounted by Olivier Couteau-Bégarie. This second version, which lacked the burner, carried a slightly higher €40,000-50,000 guide but realised a little less at €75,000 (£65,790).

Monday, February 17, 2014

The price of Gold is dependent on one thing:

There's currently a lot of talk about the end of the gold "bear market."  Gold is now back above its 200 day moving average.

The Love Trade Endures in the East: In January, 246 tons of gold were withdrawn from the Shanghai Gold Exchange, as China continues expressing its love for the precious metal. This marks a record level of gold deliveries on the exchange as well as a significant increase over the same time last year.

In addition, you can see on the chart below that January’s total also exceeds world mining production for the month.

Chinese Demand for Gold Remains Robust

 And, of course, the Fed continues to print money at unfathomable rates

 All this is great for gold.  And yet, and yet, and yet:

All this also misses the point of what drives gold.  What drives gold is so simple, yet so impossible to quantify.  What drives gold is a concept not a number.  What drives gold is impossible to trade against.  But what drives gold is easily the most powerful force in all the markets, and has been so throughout the history of trade.

What drives gold is TRUST.

As long as the Central Banks along with the media outlets which they control, (which is to say all major print and television outlets), can perpetuate the story that THEY are firmly in control of the world economy. and that they can and will ensure that the entire first world banking/trading institution is basically sound, gold will not reach new highs.

But once there is a real crack in the Trust that the First World Banking Cartel can and will ensure a stable lifestyle for the majority of First World citizens, gold will resume its relentless rise which will not culminate until Trust has been completely abandoned and then slowly regained.

When will that happen?

My guess is it won't be all that long from now.  But that's just a guess.  Trust was breached in 2008, and then the breach was papered over with tens of trillions of dollars of taxpayer money.  The paper was supported by the spinning of an absurd narrative that this massive transfer of wealth to the wealthiest was restoring a foundation of comfort and well being for all.

I don't control all the world's media outlets so I can't say with any surety when  the absurd narrative that they perpetuate will eventually be rejected.

It will probably take another exogenous event that shakes mass Confidence and puts a crack in that blind Trust.

But events occur all the time.  You only need to read a little history to put your trust in the likelihood of a disruptive event that exposes a mass delusion.

Friday, February 14, 2014

Banks not just rigging libor, currencies, metals anymore:

Excerpted from
February 12, 2014 11:00 AM ET

By now, everyone knows that the Financial Services Modernization Act of 1999 – also known as the Gramm-Leach-Bliley Act repealed the famed Glass-Steagall Act separating bankers and brokers, which had been passed in 1933 to prevent conflicts of interest within the finance sector that had led to the Great Depression. 
 But a tiny provision in the bill also permitted commercial banks to delve into any activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally."

Complementary to a financial activity. What the hell did that mean?
"From the perspective of the banks," says Saule Omarova, a law professor at the University of North Carolina, "pretty much everything is considered complementary to a financial activity."

Today, banks like Morgan Stanley, JPMorgan Chase and Goldman Sachs own oil tankers, run airports and control huge quantities of coal, natural gas, heating oil, electric power and precious metals, as well as food products, metals like zinc, copper, tin, nickel and, most infamously thanks to a recent high-profile scandal, aluminum.

And they're doing it not just here but abroad as well. 

In just the past few years we've seen an explosion of scandals – from the multitrillion-dollar Libor saga (major international banks gaming world interest rates), to the more recent foreign-currency-exchange fiasco (many of the same banks suspected of rigging prices in the $5.3-trillion-a-day currency markets), to lesser scandals involving manipulation of interest-rate swaps, and gold and silver prices. 
 But those are purely financial schemes. In these new, even scarier kinds of manipulations, banks that own whole chains of physical business interests have been caught rigging prices in those industries. For instance, in just the past two years, fines in excess of $400 million have been levied against both JPMorgan Chase and Barclays for allegedly manipulating the delivery of electricity in several states, including California. In the case of Barclays, which is contesting the fine, regulators claim prices were manipulated to help the bank win financial bets it had made on those same energy markets.
And last summer, The New York Times described how Goldman Sachs was caught systematically delaying the delivery of metals out of a network of warehouses it owned in order to jack up rents and artificially boost prices.

Wednesday, February 12, 2014

Who's the chump at the table?

There's an old saw that says if you're looking around the poker table trying to figure the chump - then it's you.

When you gamble in the risk markets - the stock market, the bond market, the currency markets the commodity markets, you're sitting at the table with traders from Goldman Sachs, JP Morgan, Barclay's, the Bank of China, and a dozen enormous hedge funds that aren't even pretending to be banks.

Guess who's the chump at that table?

But there's a whole other market out there for real things with real values.  Coins.  Medals.  Greek and Roman Sculpture.  Rare Books.  Historical Documents.   Chinese Porcelain.  Gems.  Memorabilia.  Rare recordings.  Furniture.  Prototypes.  Wine.  Hand woven silk carpets.  Automobiles. 

You know Crackpot Stuff you see on Antique Roadshow.  And in weird auction catalogs.

And it all seems so - esoteric.

But the thing is, if you are a person with interests other than who's screwing who on reality television, chances are you might know quite a bit about some area of history, of art, of invention. 

Some area that makes you something of an amateur expert.  Some area where you can look around the table and recognize that you actually know quite a bit more than a few of the chumps staring back at you.  Especially those chumps from the big banks who are sitting at that table too, thinking that because they understand gambling in the risk markets, they must understand everything on earth.

And if you know a little something, you can study hard, a learn a whole hell of a lot more.

And if you're smart, right now, that's the best place in the world to put your money.

Yeah, sure, it's not diverse.  And there's no yield.

But in a world of absolute correlation with negative real rates forever, it's not functionally less diversified and has the same non-yield as  a "diversified portfolio" put together by the shark at the banks who's looking at you like he's looking at a prize chump.

Your choice.

Monday, February 10, 2014

2 things money can't buy: a sense of aesthetics and imagination:

Art Flippers Chase Fresh Stars as Murillo’s Doodles Soar 

Feb 6, 2014 7:49 PM ET


Oscar Murillo's Untitled (Drawings off the wall), 2011. Oilstick, spray paint, enamel, dirt and mixed media just sold for $400,000!  

Better hurry up and climb on the bandwagon, because clearly it will be almost impossible for the artist to produce another doodle of this fantastic quality.


“There’s a tremendous amount of speculation in the market right now, particularly for emerging artists,” said Todd Levin, director of the New York-based Levin Art Group, who has advised collectors for more than 25 years. “It is more ferocious than it’s ever been.”

Flipping has picked up as wealthy collectors chase paintings by emerging artists with the goal of reselling them quickly for a profit, a strategy some advisers say may be a sign that the contemporary art market is taking on characteristics of a financial bubble. (gee, ya think?) From 2011 through 2013, the number of works three years old or younger sold at auction topped 7,300 annually, compared with 4,023 in 2007 when the art market was peaking, according to research firm Artnet Worldwide Corp.

Pushing IPOs

Reselling pricier, better-known pieces by the likes of Francis Bacon and Andy Warhol yields bigger dollar returns, sometimes in the tens of millions, as auction houses break records at postwar and contemporary sales. Artists born in the 1980s can be more lucrative on a percentage basis if collectors choose wisely, with prices for pieces by Oscar Murillo and Lucien Smith surging more than 3,000 percent in the past two years. 

The profits stem from lower entry costs and pent-up demand for the hottest names, mostly men under age 35. Some artists work in a variety of media, including performance art and sculpture. Abstract paintings tend to be the most popular among speculators.

Sunday, February 9, 2014

The Death Of The U.S. Middle Class: No Longer A Greatly Exaggerated Rumor: 40% of all U.S. workers are now making less than what a full-time minimum-wage worker made back in 1968, after accounting for inflation.

The Death Of The U.S. Middle Class: No Longer A Greatly Exaggerated Rumor
The companies Dollar Tree and Michael Kors don’t have much in common. Although they’re both retailers, they cater to a very different customer base.
Dollar Tree is a discount retailer that offers merchandise at the fixed price of $1.00. It caters to the low-income class. Michael Kors, on the other hand, is a luxury retailer that sells high-end clothing and accessories, such as handbags.

But they do have one thing in common: they’re both thriving in the current economic environment.
Dollar Tree has added 323 stores just in the last 12 months. Sales have grown at a compounded annual growth rate of about 12% over the last five years. And the stock has jumped 550% since 2008.
Since going public in 2009, Michael Kors’ sales have jumped more than 650%. This past week alone, the stock rallied 20%, after the company wowed Wall Street with a blowout third quarter.

While discount and luxury retailers are doing well, companies that cater to the middle class are in trouble. Perhaps JC Penney is the best example. Last month, the company announced the closing of 33 stores and 2,000 layoffs. The stock has lost more than 90% of its value since 2007, and many analysts believe the company is heading to bankruptcy.
This performance discrepancy is now rippling through the retail industry. Companies that sell goods to the 1%, such as Tiffany, Coach and Nordstrom, are booming. Discount retailers, such as Dollar Tree and Dollar General, are also experiencing tremendous growth.

But those selling goods to the middle class, such as Sears and JC Penney, are struggling.
And the reason is simple: The American middle class is continuing to disappear.

A Disturbing Economic Trend

A thriving middle class has always been one of the pillars of the American empire. That’s why the decline of the U.S. middle class has become one of the most disturbing economic trends of this past decade.
In order to achieve the so called “American dream,” the middle class needs to have steady jobs with rising income. But that’s not happening. According to the latest data from the Census Bureau, median household income fell for the fifth straight year in 2012 to $51,017, the lowest inflation-adjusted income since 1995. As you can see in the chart above , that’s 9% below its record high of $56,080 set in 1999.
Meanwhile, the rich keep getting richer. The Wall Street Journal recently reported that the average income for the top 1% has jumped 11% over the last decade. That explains why luxury retailers are doing so well.

A 2012 study from the Institute for New Economic Thinking shows that the top 5% of earners already accounts for 38% of domestic consumption. In comparison, they were responsible for 28% of total consumption in 1995. With the middle class in decline, the rich is now playing a bigger role in the economy.

The bottom line is that the middle class is getting squeezed. So why is this happening?

The economy is very complex, so there are several factors involved. Things like excessive regulation and policies that favor special interests have contributed to this trend. But the Fed’s monetary policy has also played a key role in recent years. Its bond purchase program known as Quantitative Easing (“QE”) has boosted the price of financial assets, such as stocks and real estate…assets that mostly the rich hold.

Meanwhile, paychecks are simply not keeping up with inflation. In fact, 40% of all U.S. workers are now making less than what a full-time minimum-wage worker made back in 1968, after accounting for inflation. 

With its bond purchase program, the Fed wanted to push up financial asset values in order to stimulate demand through the so-called “wealth effect.” But that’s just a myth. There are several research papers that show the wealth effect is negligible.

So, this isn’t really helping to stimulate the economy. It’s just enriching those who own financial assets at the expense of the middle class. The result is a growing gap between the rich and the rest. It’s possibly one of the most dangerous and unintended consequences of current monetary policy.
This is a big deal because our economy is largely based on consumption. So, it’s hard to see how we will be able to maintain strong economic growth without a thriving middle class.

Friday, February 7, 2014

Where is the world's gold going?

Epoch Times: Where is gold going?
Mr. Rickards: One of the big movements right now is gold moving from places like UBS, Credit Suisse, and Deutsche Bank to private storage such as G4S, ViaMAT, and Brink’s. That doesn’t increase the supply of gold at all. But what it does do is it decreases the floating supply available for trading.
If I have my gold at UBS, UBS typically has the right of rehypothecation. But if I take my gold and move it over to ViaMAT, it’s just sitting there and it’s not being traded or rehypothecated.
So, if I move gold from UBS to ViaMAT, there’s no more or less gold in the world. I’m still the owner, and it’s the same amount of gold. But from a market perspective, the floating supply has decreased.
The biggest player in that is China. China is buying thousands of tons of gold secretly through deception and using military intelligence assets, covert operations, etcetera.
Epoch Times: So why will gold rally then?
Mr. Rickards: There is a total supply of gold in the world. But to corner a market or squeeze a market, you don’t need to buy all the gold, you just need to buy the floating supply. Think of all the gold in the world, it’s about 170,000 tons. Think of a little sliver on top of it that is the floating supply available for trading.
Gold that’s in the Comex or JPMorgan or GLD vaults is available for trading. Gold purchased by the Chinese will not see the light of day again for the next 300 years, and is not available for trading. So with the gold going from West to East, and from GLD to China, the total amount of gold is unchanged, but the floating supply is declining rapidly.
This means that the paper gold that sits on top of the floating supply is becoming more and more unstable and vulnerable to a short squeeze, because there is not enough physical gold to support it. So that’s likely to collapse at one point and lead to a short squeeze and heavy buying.
Epoch Times: Mr. Rickards, thank you very much for the interview.
James Rickards is the author of the national bestseller “Currency Wars” and the forthcoming book “The Death of Money.” He is a portfolio manager at West Shore Group and an adviser on international economics and financial threats to the Department of Defense and the U.S. intelligence community.

Thursday, February 6, 2014

Why Ancient Greek?

There are those aware of issues such as hypothecation risk, bail-ins, eminent domain confiscations, and systemic derivative counter party risk.

And there are those who simply get the edgy feeling that things are somehow grossly out of whack.

Both parties are currently seeking some sort hard asset protection - just in case.

So, at some point they might ask: why Ancient Greek Coins?

For starters

A) Precedent.  From about 650 BCE to 1971 AD Gold (and silver) coinage has been the principal store of wealth for human beings.  And for another 2000 years before that the same is true for gold and silver in bar and ingot form.

B) Intrinsic Value as Historical Documents.  The coins of each era contain pertinent information about the political, military, and economic history of that era.  Many of them portray the only surviving portraits of the most important figures of world history.  Their metal content and manufacture hold the secret to the geology and technologies that formed the worlds great economies.  Their inscriptions give clues to languages long since defunct, and personages and cities otherwise lost to history.

But this is true for many types of coinage.  So: why Ancients Greek Coins?

Because the coinage of Greece and the Black Sea Area (Turkey) are the world's first coins.  And as such, the belong to every culture that owes a debt to classical Greece.

What debt?  Alphabetic Language.  Philosophy.  Syllogistic reasoning.  Aesthetics.  Drama.  Epic.  Myth.

All of these elements both inform and are alluded to in one form or another in the coinage of the Ancient Greeks.  The greatest artists of classical Greece were invited to design the coinage by ruling tyrants and councils.  Each Polis competed to present not only the most beautiful coins, but also coins that told the story of that region.  Its mythological roots.  Its military conquests.  Its economic strengths. It's architectural triumphs.

And as such Ancient Greek coins are both art objects and historical documents that transcend the borders and cultures of the modern world.  And they are equally valued by all cultures that value culture, art and history.

Best of all - back to precedent: this has been true now for 2500 years.  It is likely to remain true indefinitely into the future.

Tuesday, February 4, 2014

only fools think...

QE has created asset price booms, but historically high excess bank reserves are still generally not being lent, and monetary velocity remains relatively low. But last spring, we witnessed the first tangible sign that the Fed may be trapped in its current posture. The Fed cannot retreat due to excessive debt in the system, the fragility of major financial institutions (still opaque and overleveraged) and the prospect that a collapse of bond prices could lead to a quick, deep recession. This situation may be the early stages of a phase in which the Fed is afraid to act because it has the “tiger by the tail,” and perhaps is beginning to realize that the current situation carries significant risks. QE has not generated a sharp upsurge of sustaining and self-reinforcing growth thus far. What it has done is lift stock and asset prices and exacerbate inequality. If investors lose confidence in paper money, as evidenced by either a hard sell-off in one of the major currencies or a sharp fall in bond prices, the Fed and other major central bankers will be in a pickle. If they stop QE and/or raise short-term rates to deal with the loss of confidence, it could throw global markets into a tailspin and the worldwide economy into a severe new recession. However, if they try to deal with the loss of confidence by stepping up QE or keeping interest rates at zero, there could be an explosion in commodity and other asset prices and a sharp acceleration in inflation. What would be the “exit” from extraordinary Fed policy at that point? The current, benign-looking environment (low inflation and
stable economies) is by no means ordained to be the permanent state of things. At the moment, “tapering” is expected to get underway, but that prospect represents a tentative, slight diminution of bond-buying. It contains no real promise of normalizing monetary conditions. If the economy does not light up, the impact of another year of full-bore QE is impossible to predict. Five years and $4 trillion have created economic and moral distortions but very little sustainable value. Maybe the sixth year will produce the “riot point.” Nobody knows, including the Fed.

As we and others have said, the Fed is overly reliant upon models that do not account for real-world elements of instruments, markets and traders in the derivatives age. Models cannot possibly take into account unpredictable interactions among huge positions and traders in new and very complicated instruments. Thus, the Fed should be careful, humble and conservative. Instead, it is just blithely plowing ahead as if it knows exactly what is going on. Intelligent captains sail uncharted waters with extra caution and high alert; only fools think that each mile they sail without sinking the vessel further demonstrates that they are wise and the naysayers were fools. This is a formula for destruction. The crash of 2008 should have been smoking-gun evidence of the folly of this approach, but every mistake leading up to the crash, especially excessive and “invisible” leverage and interest rates that were too low, has been doubled down upon in the years since.

Thre Front Runners

The new narrative amongst the following class is that the emerging market crisis is causing temporary jitters affecting the US stock markets.


The Front Running class, otherwise known as Smart Money: which means money closest to the Fed, understands that the Fed is serious about reducing the rate of their balance sheet expansion.  The "returns" of this expansion are getting close to zero.  It doesn't matter that they're still expanding.  The fact that the rate of expansion is slowing is enough to make the Front Runners head for the exits on all of their trades.

The Front Runners are the ones who have single handedly pushed everything higher on the Knowledge that the Fed would keep increasing  the rate of expansion.  Emerging market currencies and markets: the US stock markets, and a host of derivatives.

Now the Front Runners will sell everything with the knowledge the rate of increase has reached its limit.  Then they'll put on massive short positions and the downswing gains momentum.

Who are these Front Runners?  They're the banks that own the Fed, and the Hedge Funds run by ex bankers who left to make even more money - but who still maintain their web of contacts.

Nothing else has moved the markets up.  Nothing else will move the markets down.  You'll hear lots of stories about economic data.  None of it will have any bearing on the markets. 

It's all about front running the Fed.

Saturday, February 1, 2014

They're here.....

merging market storm spreads to Russia as rouble wobbles

Russian central bank vowed “unlimited” intervention to defend the rouble after it fell to a record low against a basket of currencies

An elderly South Ossetian man receives monetary aid in Russian rubles in Tskhinvali
Image 1 of 3
Moscow has already burned through $7bn of reserves since early January Photo: AFP
The simmering crisis in emerging markets has spread to Eastern Europe, forcing Russia and Romania to defend their currencies against capital flight and triggering a sharp rise in Hungary’s borrowing costs.
The Russian central bank vowed “unlimited” intervention to defend the rouble after it fell to a record low against a basket of currencies.
Moscow has already burned through $7bn of reserves since early January. Yields on Russia’s two-year “cross-currency swaps” – closely watched by traders for signs of a liquidity crunch – rocketed by 60 basis on Thursday to 7.6pc. They have risen by 140 points in the past three weeks.
Two-year swap yields showing liquidity crunch
While there is no single cause for the emerging market sell-off, the backdrop is a combined monetary squeeze by the US and China that is draining liquidity from the global system.
Russia’s central bank governor, Elvira Nabiullina, said she would not allow a disorderly rouble slide or risk widespread damage to the financial system, backing away from earlier pledges to free the exchange rate. “We are not planning to quit intervention,” she said.
James Lord and Meena Bassily, from Morgan Stanley, said Russia faces an invidious choice, since any move to defend the rouble automatically tightens monetary policy, pushing up borrowing costs. Russia learnt a hard lesson in 2008-2009 when it spent $200bn of reserves defending the currency but in the process caused a collapse of the money supply and destroyed part of the banking system. Yet it cannot risk a policy of benign neglect at a time of stubbornly high inflation and capital outflows that reached $63bn last year.
Tatiana Orlova, from RBS, said there is a risk of “a run on the currency” unless the authorities take decisive action.
In Hungary, 10-year bonds have jumped 60 points over the past week amid reports that the central bank will be forced to ditch plans for rate cuts to shore up the economy. The bank said it is watching the forint “very carefully” after a 7pc slide this month, a drop seen as “too big” for safety.
“Central and Eastern European currencies are starting to wilt. Hungary is trading on very thin ice, but even Poland is vulnerable,” said sovereign bond strategist Nicholas Spiro.
The fresh ructions came after Turkey’s “shock and awe” move to double interest rates on Tuesday failed to restore confidence in the lira, leaving it unclear what the country can feasibly do next. A less drastic move by South Africa had equally meagre results.
“Our concern is that this could lead to a new phase of the crisis,” said Neal Shearing, from Capital Economics. “These countries are caught between a rock and a hard place.”
Analysts say Turkey has ended up with the worst of both worlds. The rate shock will shatter growth and could trigger recession but the authorities have used up their last credible tool for defending the currency.
Lars Christensen, from Danske Bank, said: “Everybody knows that Turkey cannot raise rates by another 500 basis points and nor can they sustain the current rates for long because it will kill the economy.
“I fear the only way out of this may be capital controls, though it would be disastrous if the world goes down that route. These countries should stop trying to defend quasi-pegs and just let their currencies fall. We now have a very risky situation where several central banks are responding to weakening growth in China by tightening policy, which makes it worse.”
Turkey’s finance minister, Mehmet Simsek, denied that there are any plans for capital controls but admitted that the issue “had come up” and was being studied. It has been widely reported in the Turkish press that premier Recep Tayyip Erdogan favours such curbs as less damaging than a monetary squeeze.
Dominic Byrant, from BNP Paribas, said Turkey is the country most at risk, punished for a current account deficit above 7pc of GDP and external debt equal to almost 180pc of exports. But any state with a trade deficit, sticky inflation that also depends heavily on exports to China, is at risk. “Brazil and Indonesia stand out as obvious candidates: 20pc of Brazil’s exports go to China,” he said.

Kingsmill Bond, from Sberbank, said Russia should be sheltered from the latest storm since it has a big current account surplus and oil is still at $105 a barrel. “It gets hit whenever there is an emerging market shock because 70pc of the free float of the Russian equity and bond market is held by foreigners.”
He said there are concerns that oil prices could start to track the slump seen in other commodities as Iran, Libya and Iraq step up production, although Russia has a “rainy day” fund worth 8pc of GDP to cover shortfalls for a while. “We think oil would have to fall below $80 to become a serious issue,” he said.
The International Monetary Fund said it in its annual health check that Russia’s growth potential has collapsed, exhorting the country to reinvent itself to escape the middle income trap. “Russia needs to embrace a new growth model. The previous model of high growth on the back of rising oil prices cannot be replicated,” it said.
The emerging markets are now at a critical juncture. There have been record redemptions this month from mutual funds that invest in these countries but big insurance companies and sovereign wealth funds have held firm.
“Any sign that institutional money is starting to flee would mark a much more severe escalation of the sell-off,” said Mr Spiro.