Outside of gold many strange things are happening, however for this moment we focus on gold Events:
- Congress was pressured to pass another bank bailout.
- CME Group has notified the CFTC that they plan to institute trading collars for Comex precious metals trading. At present, these collars are planned to go into effect on Monday, December 22.
- December 12, we learned the next European county in line – after Germany, Switzerland, The Netherlands and Belgium – to openly talk about repatriating its gold reserves is Austria.
SGT REPORT ECONOMIC NEWS UPDATE:
Documenting the Collapse for the week ending Friday, Dec 12, 2104.
– The System IS Collapsing, Here’s the Latest Dramatic Proof:
– U.S Treasury seeks ‘Survival Kits’ for Federal Bank Examiners
– CME Implements $400 wide gold circuit breakers for vast price swings
– U.S. Taxpayers Now On The Hook For $303 TRILLION in Wall Street Derivatives
Andrew Maguire explains what is happening with PMs in London:
“The London hub is failing because of the growing disconnect between the massive multi-billion naked short derivative bets and the underlying physical market that it’s anchored to. There is no argument that can justify this disconnect as a temporary one. The paper markets have pushed too far this time. The wholesale markets are starting to backwash derivatives positions and that is a dangerous thing for the too-big-too fail bullion banks.”” –Andrew Maguire on kingworldnews.com
Peter Boehringer explains the German gold repatriation campaign:
In Part 2, German precious metals champion Peter Boehringer tells Rick about the ongoing campaign to force the U.S. Federal Reserve to repatriate Germany’s vast gold holdings in the Fed’s vault.
GOLD PRICES KEPT LOW, BUT ONLY FOR AMERICANS!
Posted 7 Dec 2014
We caught up with the Gold Core Founder and Research Director Mark O’Byrne to talk precious metals and worldwide economic realities and what emerged is the truth about gold. Unlike globalist pundit Willem Buiter’s absurd assertion that “gold is a 6,000 year bubble” we find that the price of gold has actually climbed far higher during the past twelve months when priced in just about any currency other than the Dollar. Gold is up more than 14% when priced in Japanese Yen. It’s up more than 12% in the Euro, 5% in the British Pound – but only half a percent when priced in the surging US Dollar. And a word to the wise, these precious metal bargains for American Dollar holders won’t last forever…
Visit Mark’s site:
Rick Rule: The Wealthy are comforted by politicians and bankers’ policies
Posted 14 Dec 2014
Rick Rule, President, and Chief Executive Officer of Sprott US Holdings, Inc., joins us to talk about the Wall Street Derivatives nightmare, and as Rick outlines it, the real world move of PHYSICAL silver and gold from weak institutional hands to strong retail hands. We also discuss the many attributes of palladium and platinum and their place in your portfolio.
Reblogged this on Spartan of Truth.
Reblogged this on Awakestate.
Russian Roulette: Taxpayers Could Be on the Hook for Trillions in Oil Derivatives
The sudden dramatic collapse in the price of oil appears to be an act of geopolitical warfare against Russia. The result could be trillions of dollars in oil derivative losses; and the FDIC could be liable, following repeal of key portions of the Dodd-Frank Act last weekend.
Senator Elizabeth Warren charged Citigroup last week with “holding government funding hostage to ram through its government bailout provision.” At issue was a section in the omnibus budget bill repealing the Lincoln Amendment to the Dodd-Frank Act, which protected depositor funds by requiring the largest banks to push out a portion of their derivatives business into non-FDIC-insured subsidiaries.
Warren and Representative Maxine Waters came close to killing the spending bill because of this provision. But the tide turned, according to Waters, when not only Jamie Dimon, CEO of JPMorgan Chase, but President Obama himself lobbied lawmakers to vote for the bill.
It was not only a notable about-face for the president but represented an apparent shift in position for the banks. Before Jamie Dimon intervened, it had been reported that the bailout provision was not a big deal for the banks and that they were not lobbying heavily for it, because it covered only a small portion of their derivatives. As explained in Time:
The best argument for not freaking out about the repeal of the Lincoln Amendment is that it wasn’t nearly as strong as its drafters intended it to be. . . . [W]hile the Lincoln Amendment was intended to lasso all risky instruments, by the time all was said and done, it really only applied to about 5% of the derivatives activity of banks like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, according to a 2012 Fitch report.
Quibbling over a mere 5% of the derivatives business sounds like much ado about nothing, but Jamie Dimon and the president evidently didn’t think so. Why?
A Closer Look at the Lincoln Amendment
The preamble to the Dodd-Frank Act claims “to protect the American taxpayer by ending bailouts.” But it does this through “bail-in”: authorizing “systemically important” too-big-to-fail banks to expropriate the assets of their creditors, including depositors. Under the Lincoln Amendment, however, FDIC-insured banks were not allowed to put depositor funds at risk for their bets on derivatives, with certain broad exceptions.
In an article posted on December 10th titled “Banks Get To Use Taxpayer Money For Derivative Speculation,” Chriss W. Street explained the amendment like this:
What was and was not included in the exemption was explained by Steve Shaefer in a June 2012 article in Forbes. According to Fitch Ratings, interest rate, currency, gold/silver, credit derivatives referencing investment-grade securities, and hedges were permissible activities within an insured depositary institution. Those not permitted included “equity, some credit and most commodity derivatives.” Schaefer wrote:
A fraction, but a critical fraction, as it included the banks’ bets on commodities. Five percent of $280 trillion is $14 trillion in derivatives exposure – close to the size of the existing federal debt. And as financial blogger Michael Snyder points out, $3.9 trillion of this speculation is on the price of commodities.
Among the banks’ most important commodities bets are oil derivatives. An oil derivative typically involves an oil producer who wants to lock in the price at a future date, and a counterparty – typically a bank – willing to pay that price in exchange for the opportunity to earn additional profits if the price goes above the contract rate. The downside is that the bank has to make up the loss if the price drops.
As Snyder observes, the recent drop in the price of oil by over $50 a barrel – a drop of nearly 50% since June – was completely unanticipated and outside the predictions covered by the banks’ computer models. The drop could cost the big banks trillions of dollars in losses. And with the repeal of the Lincoln Amendment, taxpayers could be picking up the bill.
When Markets Cannot Be Manipulated
Interest rate swaps compose 82% of the derivatives market. Interest rates are predictable and can be controlled, since the Federal Reserve sets the prime rate. The Fed’s mandate includes maintaining the stability of the banking system, which means protecting the interests of the largest banks. The Fed obliged after the 2008 credit crisis by dropping the prime rate nearly to zero, a major windfall for the derivatives banks – and a major loss for their counterparties, including state and local governments.
Manipulating markets anywhere is illegal – unless you are a central bank or a federal government, in which case you can apparently do it with impunity.
In this case, the shocking $50 drop in the price of oil was not due merely to the forces of supply and demand, which are predictable and can be hedged against. According to an article by Larry Elliott in the UK Guardian titled “Stakes Are High as US Plays the Oil Card Against Iran and Russia,” the unanticipated drop was an act of geopolitical warfare administered by the Saudis. History, he says, is repeating itself:
Now, says Elliott, the oil card is being played to force prices lower:
War on the Ruble
If the plan was to break the ruble, it worked. The ruble has dropped by more than 60% against the dollar since January.
On December 16th, the Russian central bank counterattacked by raising interest rates to 17% in order to stem “capital flight” – the dumping of rubles on the currency markets. Deposits are less likely to be withdrawn and exchanged for dollars if they are earning a high rate of return.
The move was also a short squeeze on the short sellers attempting to crash the ruble. Short sellers sell currency they don’t have, forcing down the price; then cover by buying at the lower price, pocketing the difference. But the short squeeze worked only briefly, as trading in the ruble was quickly suspended, allowing short sellers to cover their bets. Who has the power to shut down a currency exchange? One suspects that more than mere speculation was at work.
Protecting Our Money from Wall Street Gambling
The short sellers were saved, but the derivatives banks will still get killed if oil prices don’t go back up soon. At least they would have been killed before the bailout ban was lifted. Now, it seems, that burden could fall on depositors and taxpayers. Did the Obama administration make a deal with the big derivatives banks to save them from Kerry’s clandestine economic warfare at taxpayer expense?
Whatever happened behind closed doors, we the people could again be stuck with the tab. We will continue to be at the mercy of the biggest banks until depository banking is separated from speculative investment banking. Reinstating the Glass-Steagall Act is supported not only by Elizabeth Warren and others on the left but by prominent voices such as David Stockman’s on the right.
Another alternative for protecting our funds from Wall Street gambling can be done at the local level. Our state and local governments can establish publicly-owned banks; and our monies, public and private, can be moved into them.
Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling Web of Debt. Her latest book, The Public Bank Solution, explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.