Gold Premiums in Vietnam Hit $217 Over Spot In Heavy Demand

I think you have had to experience a collapsing currency first hand in order to truly appreciate the fundamentals of monetary value, and how these things can take on what seems like a force of nature.

I was doing business in Moscow during the 1990's, and saw the slow motion collapse of the rouble. Or at least it seemed like a slow motion collapse at first, until it gained quite a bit of momentum despite the measures the State took to maintain their 'official rates.'

Russia had a sovereign currency, right?  And so does Vietnam, and many of the other countries that experienced extraordinary currency depreciation, otherwise known as monetary inflation, since WW II.  Perhaps they just needed some better monetary theorists, or official enforcers with hairier knuckles. Their financial elite seems to have had plenty of false bravado.

But then again, they were not us. We are different. We are unique. We are the masters of all that we survey and purvey, the beauty of the world, the paragon of animals.  London and New York are where the elite meet to eat.

Here is what is happening with gold prices in southeast Asia now.  Ding dong.

This from Goldcore:

The Vietnamese Central Bank sold another 25,700 taels (1 tael = 37.5 grams or 1.2 troy ounces) at a gold bar auction on Friday in order to try and satiate the massive public demand for gold in Vietnam.

The Central Bank hopes that the sale of gold into the market will reduce the very high premiums paid by gold buyers in Vietnam, the largest buyer of gold in Southeast Asia after Thailand and one of the largest physical buyers of gold per capita in the world.

Vietnamese people hold gold as a store of wealth for protection against war, inflation and currency depreciation. In recent months, the bursting of bubbles in the stock market (see chart) and property market and the continuing devaluation of the dong has led to record demand in Vietnam and a surging premium over the spot price of gold.

Today, the premium was close to 5.5 million dong which is the equivalent of a very high premium of $217 per ounce over spot.

Bill Moyers and Lawrence Lessig On Privacy

Physical vs. Paper: The Shanghai Gold Exchange vs. the COMEX

When push comes to shove, the COMEX is only pushing paper.

Weighed, and found wanting.

Shanghai Gold Exchange (SGE)

Weekly Gold Delivery From Vault

The above graph of physical gold delivery out of the Shanghai Gold Exchange (SGE) vaults was prepared by @KoosJansen based on the weekly reports from the Chinese portion of the SGE site. The SGE has confirmed these are deliveries from the vault and the numbers are updated on a weekly basis (each Friday). I will publish the links to the exact Chinese pages next week and will ensure there is updated weekly delivery data available here.

Monthly Physical Delivery From Vault: SGE Versus COMEX

The above graph of monthly gold delivery from vault demonstrates very clearly what many have expressed repeatedly on sites such as KingWorldNews -- the COMEX is a paper gold market while the SGE is quite clearly a world class market for physical gold.

Source: GoldMiner Pulse

Gold Daily and Silver Weekly Charts - FOMC Next Week

Silver stood like a champ today, resisting the early efforts that took gold lower.

And both came back into the close for modest gains, even while stocks turned in a losing week.

FOMC has a two day meeting next week. This will provide a nice opportunity for the scare tactics of the Wall Street insiders.  And perhaps for some of us who see things as they are.

See you Sunday evening.

SP 500 and NDX Futures Daily Charts - Eyes Wide Shut

I enjoyed this commentary from Yves: Is the Fed Going to Dial Down Its Taper Talk?

There is a two day FOMC meeting next week that is most likely to be an opportunity for speculation and jawboning.

Have a pleasant weekend.

NAV Premiums of Certain Precious Metal Trusts and Funds

Plenty of gloom in the premiums which are all negative, but so far the traditional Friday bughunt has failed to materialize. It was getting a little ridiculous, like stock 'Rally Tuesday.'

Next week is the FOMC meeting, a two day affair. Perhaps they are saving their ammo.

Russia Calls For IMF Overhaul

The BRICs can call for whatever they wish, but until they find some way to apply more effective pressure on the Anglo-American banking cartel and their politicians, they are not going to get much of anything.

Their own people cannot get much of anything in the way of reform in the status quo. 

RiaNovosti
Russia’s Putin Calls for IMF Overhaul, Bigger Role for BRICS

MOSCOW, June 14 (RIA Novosti) – Russia will use its presidency of the G20 to push for a radical overhaul of the International Monetary Fund and changes to its voting system to give developing economies a stronger voice, President Vladimir Putin said Thursday in an interview with RIA Novosti.

“The IMF frequently fails to keep up with the rapidly changing situation in global finance – first and foremost, in making effective and timely decisions,” Putin said in answers to written questions, adding that the decisions’ “implementation leaves much to be desired as well.”

Russia currently holds the rotating presidency of the G20, a formal grouping of the world’s 20 most powerful economies, and will lead the G8, a group of the world’s eight richest countries, in 2014.

Putin did not call for the outright dissolution of the IMF, but argued that the organization must adjust to “current economic realities” and said it was time to consider the issue of its “overall reorganization.”

In particular, he said that the voting system used at the IMF to determine policy should be changed to “enhance the role of developing countries,” with new weight given to the so-called BRICS group of Brazil, Russia, India, China and South Africa...

Read the rest here.

Gold Daily and Silver Weekly Charts - Watch for Price Shoving After Europe Goes to Bed Tomorrow

FOMC next week.

A late day rally in the metals and stocks was caused by a Fed mouthpiece implying that they would not be ending QE anytime soon, taper or not.

Until the FOMC meeting confirms this, or not, then it will largely be a technical trade.

Lately the wiseguys have been hitting the metals on the Comex after Europe goes to bed.

Let's see if that still works, or if it has become a crowded trade.

I see where John Hathaway says that Gold Will Shock World With $1,000 Rapid Advance.  Shut up!

It would certainly be a topic of conversation to say the least.  Stranger things have happened. Bill Clinton was just named 'Father of the Year.'   You can't make this stuff up.

SP 500 and NDX Futures Daily Charts - Wax On, Wax Off - $yria

My own take is that today was a 'technical trading day.' The economic news of this morning was 'so-so' if you take a closer look at it.

After the sell off for the past two days, and the big losses on the Nikkei overnight, the wiseguys saw an opportunity for a near term short squeeze when the futures we able to hold 1610. So they ran it right back to the top of the short term downtrend channel.  It is easy to shove prices around in these lightly participated markets.

Wax on, wax off.

Tomorrow we get PPI and Michigan sentiment. As a reminder, the wealthy will get the Consumer sentiment reading about five minutes before you do.

FOMC next week and that will weigh on the markets.

NAV of Certain Precious Metal Trusts and Funds - Metals Brace For Friday's Bug Hunt

Hudson: Is this gonna be a standup fight, sir, or another bughunt?
Gorman: All we know is that there's still no contact with the colony, and that a xenomorph may be involved.
Frost: Excuse me sir, a-a what?
Gorman: A xenomorph.
Hicks: It's a bughunt.

Comex Registered Gold Continues to Fall To All Time Lows

"I have no spur
To prick the sides of my intent, but only
Vaulting ambition, which overleaps itself,
And falls on the other. . . ."

Macbeth Act 1, scene 7. 25–28

Every time the Comex registered gold has moved to these extreme lows, it has marked a bottom and a major trend change.

The value of global currencies, Comex gold, JPM's vault bullion, and the confidence of the people in the markets.

All in all, it seems like a race to the bottom.

This has many people just shaking their heads.  And one can hardly blame them.

How low can they go?

Max Keiser and Mark O'Byrne Discuss the Gold and Silver Markets

"The tyranny of a prince in an oligarchy is not so dangerous to the public welfare as the apathy of the citizens in a democracy."

Montesquieu

I do not see the NSA involvement which Max mentions.  It does not seem to be necessary if you have big market principals and insiders involved, able to operate in secret with the acquiescence of the regulatory bodies and exchanges.   And if there is a need to obtain more specific information, the industry dominant Bloomberg terminal offer a wealth of information about how and when it is being used.

I do think there is serious fraud and abusive market rigging going on, as we have seen in LIBOR, energy, ISDA spreads,  advance selling and leaking of key economic data, insider trading, Bernie Madoff, MF Global, the London Whale, and now currency markets.

There is a general disregard for the rule of law when it is overruled by 'expediency.'   And the threshold for overruling it has gotten lower and lower, to whenever it is of benefit to one's friends and associates, rather than isolated to key issues of national interest. That is a corrosive condition.    It is crony capitalism, and it is destructive of real economic productivity and of markets.

It is ironic that the freest exchanges of information on some of these market abuses are occurring in Asia, and in governments that have made much less pretense to transparency and freedom of information than the US and UK.  They see what is coming and are making it easier for their people to protect themselves.  This is because they are not beholden to the Anglo-American banking cartel.

I am sure that the Congressional hearings that would follow the 'failure to deliver' of a major bullion bank or exchange will be very impressive, full of faux anger and histrionics from outraged politicians.  But like the MF Global hearings, I would expect much noise and heat, little light, and no effective redress for those who have been harmed, 'bailed-in' if you will. 

I expect the whole thing, all the leverage, deception, and fraud to be swept under the rug, and the event attributed to the course of human events.  The madness of crowds, practically an act of God, like the rewriting of the CDO/Housing financial crisis.  It is the most likely outcome in a credibility trap.  And apathy just encourages greater and bolder excesses and abuses.  Greed and fraud are usually not self-limiting, but self-reinforcing. If it worked once it will work again, so keep expanding.  Nothing is sacred.

Here is a reminder of the fundamentals.

Gold Daily and Silver Weekly Charts - Hunger Games

The overnight news about revelations of price rigging and market manipulation in order to steal money from customers was disconcerting. You may wish to scroll down and read more about it.

The FOMC meets next week. Tomorrow will bring more economic news.

QE is not over by a long shot. They may call it something else. They may wrap it in a different package. And the government may finally get busy and do some decent economic planning for growth rather than this interminable infighting and divvying of loot.

People may wish to protect some of their wealth from expropriation. There are a number of things one may do if you have not done so already.

One of the things you may wish to do is to watch The Hunger Games if you have not had time to read the books.  I think that the dystopia it portrays is as possible as 1984 or a Brave New World.  Or perhaps even something by Charles Dickens.

The price manipulation in the markets is fairly obvious for anyone who wishes to look and see it. I mean, really. 

SP 500 and NDX Futures Daily Charts - Front Running For a Fee

Stocks gave it up today on mostly international jitters, with the political situation in Turkey and the economic situation in Japan.

VIX has now reach the levels that have signaled the recent high water marks.

Tomorrow we get US unemployment claims, Ex-Im Prices, and Retail Sales.

Any further weakness risks stocks slipping out of their short term trend channels and providing a more interesting test of support.

SP 500 Futures Intraday

Let's see if and where the equity market finds support.

I will be 'rolling over' the June contract to September by the end of the week.

NAV Premiums of Certain Precious Metal Trusts and Funds

Subdued pricing even with today's little rally.

The specs are licking their chops to sell into an anticipated Friday decline, based on their recent experience. It is merely a herd behavior, similar to 'rally Tuesday' in stocks.  That decline is generally for the period after the world markets close for the weekend.

Some Thoughts on the Forex Rigging Scandal and Market Manipulation

The foreign exchange rigging scandal that is coming to light is very interesting, even in this time of financial scandals and corruption.

Here is the original Bloomberg story on it and you may wish to read it in its entirety.

The corruption in the enormous global foreign exchange market is coming to light not because of any surveillance by regulatory bodies. The multi-trillion dollar market is a genuine 'spot market' and is not considered a financial assets market, and is therefore lightly regulated.

As you may recall,  a certain liberal economic columnist asserted some years ago that it was not possible to rig the price of commodities using the futures market because the price is set in the spot market.  Well, he was wrong about that, since in those cases the spot price is a derivative of the front month in the futures. 

But with forex we do have an actual spot market, and apparently that principle does not hold even where there is an actual spot market, and of a size that most would assert that price fixing was not possible.  They forget that prices are set at the margins.

Efficient market theory dies hard because it is such a nice neat model and so attractive to the abstract mind.  That it is a mere fantasy is another matter.

The story came to light because very large customers went to the regulatory body in London and complained that they were tired of being cheated. The authority was forced to respond.

There is quite a bit of talk that nothing that was done was 'illegal.'

While that may be technically true from a regulatory perspective, there is sufficient evidence that traders from different companies were acting in concert to fix global benchmarks knowing with the intent to steal from their customers. If that is not the very definition of a criminal conspiracy I am not sure what would be.

And finally, despite its enormous size, the foreign exchange market was able to be rigged against customers because of the concentration of market power in a few hands, and the manner in which trades are placed, taken and executed.

From the Bloomberg story:

"While hundreds of firms participate in the foreign-exchange market, four banks dominate, with a combined share of more than 50 percent, according to a May survey by Euromoney Institutional Investor Plc.

Deutsche Bank AG (DBK), based in Frankfurt, is No. 1, with a 15.2 percent share, followed by New York-based Citigroup Inc. (C) with 14.9 percent, London-based Barclays Plc (BARC) with 10.2 percent and Zurich-based UBS AG (UBSN) with 10.1 percent."

We do not know what entities have been named in these revelations. These are merely the largest. We may never know depending on how the London regulators choose to dispose of it.

But it does shoot a gaping hole in the efficient markets theory. Here is a huge, widely dispersed market with literally millions of transactions affecting almost every economically involved individual in the world, and it became a chronically rigged market in a corruption scheme that went on for many, many years.

Put that in your free market neo-liberal pipe and smoke it.

I see where Singapore's regulator was threatening to reprimand the guilty parties. I submit that given the wide range of abuses and scandals that have been revealed and which are still ongoing, that there needs to be some serious action and soul-searching done about how markets are set up, what secrecies are permitted to the major players, the asymmetric distribution of information, and the invariable and pernicious, official sanctioned secrecy that marks every single financial fraud which we have seen over the past twenty years.

Secrecy is a privilege that has a limited place in markets that are honest, efficient and effective.

And I am sorry but if you still choose to believe that the markets, even very large and significant ones, are not being routinely rigged to the disadvantage of the public, then you are probably a fool, or a tool, or an obtuse, purblind ideologue.  

And that goes in spades for the precious metals and equity markets that are saturated with outsized position shoving, event driven price rigging, collusion, and high frequency front running as a normal order of business.

The Ongoing Debate Between Power and Conscience, Secrecy and Its Abuses

"At its very inception this movement depended on the deception and betrayal of one's fellow man; even at that time it was inwardly corrupt and could support itself only by constant lies. After all, Hitler states in an early edition of 'his' book:  'It is unbelievable, to what extent one must betray a people in order to rule it.'

If at the start this cancerous growth in the nation was not particularly noticeable, it was only because there were still enough forces at work that operated for the good, so that it was kept under control.

As it grew larger, however, and finally in an ultimate spurt of growth attained ruling power, the tumor broke open, as it were, and infected the whole body.

The greater part of its former opponents went into hiding. The German intellectuals fled to their cellars, there, like plants struggling in the dark, away from light and sun, to gradually choke to death."

The White Rose
Second Leaflet
Munich, 1942


"We can never forget that everything Hitler did in Germany was 'legal,' and everything the Hungarian freedom fighters did in Hungary [in 1956] was 'illegal.'

Martin Luther King


"All frauds, like the wall daubed with untempered mortar, with which men think to buttress up an edifice, always tend to the decay of what they are devised to support."

Richard Whately

I do not claim to have any particular authority in this difficult area of policy and ethics, except to note that we learn from history that this is a debate that must happen, always. Power that becomes too concentrated, that is accustomed to operating in secret, is deadly to a free society.

Individual judgment can be a dangerous thing. The great variety of people can rationalize almost any action in their private mind, whether it be a principled stand for justice, or a destructive and unjust act of violence.

As always, there is danger in the extremes.

We have seen, over and over as groups or self-defining classes of people come to power, that they can tend to rationalize actions that in retrospect were clearly not in the public interest, but largely in their own, from making their tasks more effective to lining their pockets with funds and abusing power.

Transparency, debate, and freedom of speech are the necessary safeguards that our Constitution has ensured.  This has been one of the greatest and most effective innovations in political theory.

One of my greatest ongoing concerns is the secrecy and incestuous dealing between the government and the financial sector, bonded by enormous amounts of money and mutual power. I am convinced that this corruption is impairing the real economy for the indulgence of a privileged few, who have set themselves above the people, and above the law.

So I present this debate to provoke some additional thought on the subject.

One thing I will say is that the vilification of the messenger, in this case Snowden, by the mainstream media in the States has been disappointing, and at times, almost surreal.

But why does that surprise us?  We have seen the same thing occurring in numerous whistle blower cases, including the slurs and marginalization against those who have stood up to expose corruption and fraud in the markets, even by otherwise intelligent and well-meaning people.   That is a culture of conformity, the status quo, and the enabling of a power that will, in the end, serve only itself.

I promised you that this would be a time of 'revelations.'  And that process is not done, but continues.  My greatest concern is that given enough time and official messaging that people will come to accept almost anything, and come to thrive on the spectacles of misery.  That is the Hunger Games.

Banks Manipulating Trades and Rigging Benchmarks in Foreign Exchange Markets

Are there any markets that have not been corrupted by lax regulation, and as a consequence by Banks who have been emboldened in their insatiable greed by the lack of effective enforcement of the rules and equal justice for all?

It is somewhat ironic that this news of routine price rigging comes on the revelation that Obama is replacing Gary Gensler, Chairman of the CFTC, for being too aggressive in seeking to regulate the Swaps markets and angering some foreign banks (read London trading operations of the big multinational banks). 

London has become a favored haven for corrupt financial practices such as 'the London Whale.'

I will suggest to you that this is still just the tip of the iceberg.  And for those who assert that there is no manipulation in the precious metals markets, despite all the odd price action and blatantly predatory selling raids, I would suggest that they are obviously lacking in something, exactly what I cannot say.

There will be no sustainable recovery until the impediments to honest price discovery and the pernicious tax of corruption is eliminated through greater transparency, equal enforcement of existing laws, and serious reform. 

One can seriously wonder how confident they can be that the governments of the US and the UK, and of Europe as well, are seriously committed to performing the basic function of maintaining honest markets for their constituents.  If market confidence breaks, there will be hell to pay.

Even if they hide and tolerate this corruption for the sake of 'confidence, ' markets have a significant role to play in the economy.  That function has become warped and perverted through corrupt practices, with serious real world results, which accumulate and worsen over time, with consequences that we have yet to discover.

Breaking News from Bloomberg:

"Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice.

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

The behavior occurred daily in the spot foreign-exchange market and has been going on for at least a decade, affecting the value of funds and derivatives, the two traders said. The Financial Conduct Authority, Britain’s markets supervisor, is considering opening a probe into potential manipulation of the rates, according to a person briefed on the matter..."

Obama Quietly Firing the CFTC's Gary Gensler For Pressuring Banks on Swaps

It appears that President Obama is bidding adieu to CFTC Chairman Gary Gensler, purportedly for being 'too aggressive' with the Banks over their antics in the markets, with special emphasis on swaps and derivatives activity offshore.

I wonder who put the word in President Barry's ear?  It is best to tread lightly around those treasured havens for financial piracy.

I discount any speculation that this is in reaction to a major breaking scandal on the metals exchanges. That would be too good.

The replacement is reported to be a Amanda Renteria, the former chief of staff to Senate Agriculture Committee Chairwoman Debbie Stabenow, Democrat of Michigan. Renteria was the first Latina chief of staff in the Senate.

She is the daughter of Mexican immigrant workers, studied at Harvard Business School, and spent most of her career in public service. However, after graduating she worked briefly at Goldman Sachs & Co.

She might turn out to be a highly effective regulator despite her lack of practical experience in financial regulation.  That would be a nice change of pace for a generally docile and Big Finance compliant administration.  Let's see what she has to say.  But I am not hopeful given the Obama crew's abysmal track record in financial reform and 'change you can believe in.'

Here is a link to Renteria's bio.

Here is the story as it was carried by The Huffington Post.

Common Dreams
Obama Cans Regulator Who Crossed Wall Street

Ouster is a gain for big bankers advocating lax oversight

Sarah Lazare, staff writer

The Obama Administration is quietly firing Commodity Futures Trading Commission head Gary Gensler, who ran afoul of big banks by pushing for greater government oversight.

The ouster comes in the midst of controversy over a proposed CFTF rule, strongly supported by Gensler, that would extend U.S. regulation to swaps--a kind of derivative exhange--involving firms founded or doing business in the United States. This means that foreign banks and hedge funds would face the same regulations as U.S. ones when trading in swaps with U.S. parties....