By David Galland and Stephen McBride, Garret/Galland Research

How George Soros Singlehandedly Created the European Refugee Crisis - And Why

George Soros is trading again.

The 85-year-old political activist and philanthropist hit the headlines post-Brexit saying the event had “unleashed” a financial-market crisis.

Well, the crisis hasn’t hit Soros just yet.

He was once again on the right side of the trade, taking a short position in troubled Deutsche Bank and betting against the S&P via a 2.1-million-share put option on the SPDR S&P 500 ETF.

More interestingly, Soros recently took out a $264 million position in Barrick Gold, whose share price has jumped over 14% since Brexit. Along with this trade, Soros has sold his positions in many of his traditional holdings.

Soros had recently announced he was coming out of retirement, again.

First retiring in 2000, the only other time Soros has publicly re-entered the markets was in 2007, when he placed a number of bearish bets on US housing and ultimately made a profit of over $1 billion from the trades.

Since the 1980s, Soros has actively been pursuing a globalist agenda; he advances this agenda through his Open Society Foundations (OSF).

What is this globalist agenda, and where does it come from?

The Humble Beginnings

The globalist seed was sowed for young George by his father, Tivadar, a Jewish lawyer who was a strong proponent of Esperanto. Esperanto is a language created in 1887 by L.L. Zamenhof, a Polish eye doctor, for the purpose of “transcending national borders” and “overcoming the natural indifference of mankind.”

Tivadar taught young George Esperanto and forced him to speak it at home. In 1936, as Hitler was hosting the Olympics in Berlin, Tivadar changed the family name from Schwartz to Soros, an Esperanto word meaning “will soar.”

George Soros, who was born and raised in Budapest, Hungary, benefited greatly from his father’s decision.

Allegedly, in 1944, 14-year-old George Soros went to work for the invading Nazis. It is said that until the end of the war in 1945, he worked with a government official, helping him confiscate property from the local Jewish population.

In an 1998 interview with 60 Minutes, Soros described the year of German occupation as “the happiest time in my life.”

Soros’s Venture into Finance

When the war ended, Soros moved to London and in 1947 enrolled in the London School of Economics where he studied under Karl Popper, the Austrian-British philosopher who was one of the first proponents of an “Open Society.”

Soros then worked at several merchant banks in London before moving to New York in 1963. In 1970, he founded Soros Fund Management and in 1973 created the Quantum Fund in partnership with investor Jim Rogers.

The fund made annual returns of over 30%, cementing Soros’s reputation and putting him in a position of power—one he utilizes to this day to advance the agenda of his mentors.

The Currency Speculations That Threw Britain and Asia into Crisis

In the 1990s, Soros began a string of large bets against national currencies. The first was in 1992, when he sold short the pound sterling and made a $1 billion profit in a single day.

His next big currency speculation came in 1997. This time Soros singled out the Thai baht and, with heavy short-selling volume, destroyed the baht’s artificial peg to the US dollar, which started the Asian financial crisis.

“Humanitarian” Efforts

Today, Soros’s net worth stands at $23 billion. Since taking a back seat in his company, Soros Fund Management, in 2000, Soros has been focusing on his philanthropic efforts, which he carries out through the Open Society Foundations he founded in 1993.

So who does he donate to, and what causes does he support?

During the 1980s and 1990s, Soros used his extraordinary wealth to bankroll and fund revolutions in dozens of European nations, including Czechoslovakia, Croatia, and Yugoslavia. He achieved this by funneling money to political opposition parties, publishing houses, and independent media in these nations.

If you wonder why Soros meddled in these nations’ affairs, part of the answer may lie in the fact that during and after the chaos, he invested heavily in assets in each of the respective countries.

He then used Columbia University economist Jeffrey Sachs to advise the fledgling governments to privatize all public assets immediately, thus allowing Soros to sell the assets he had acquired during the turmoil into newly formed open markets.

Having succeeded in advancing his agenda in Europe through regime change—and profiting in the process—he soon turned his attention to the big stage, the United States.

The Big Time

In 2004, Soros stated, “I deeply believe in the values of an open society. For the past 15 years I have been focusing my efforts abroad; now I am doing it in the United States.”

Since then, Soros has been funding groups such as:

• The American Institute for Social Justice, whose aim is to “transform poor communities through lobbying for increased government spending on social programs”

• The New America Foundation, whose aim is to “influence public opinion on such topics as environmentalism and global governance”

• The Migration Policy Institute, whose aim is to “bring about an illegal immigrant resettlement policy and increase social welfare benefits for illegals”

Soros also uses his Open Society Foundations to funnel money to the progressive media outlet, Media Matters.

Soros funnels the money through a number of leftist groups, including the Tides Foundation, Center for American Progress, and the Democracy Alliance in order to circumvent the campaign finance laws he helped lobby for.

Why has Soros donated so much capital and effort to these organizations? For one simple reason: to buy political power.

Democratic politicians who go against the progressive narrative will see their funding cut and be attacked in media outlets such as Media Matters, which also directly contribute to mainstream sites such as NBC, Al Jazeera, and The New York Times.

Apart from the $5 billion Soros’s foundation has donated to groups like those cited above, he has also made huge contributions to the Democratic Party and its most prominent members, like Joe Biden, Barack Obama, and of course Bill and Hillary Clinton.

Best Friends with the Clintons

Soros’s relationship with the Clintons goes back to 1993, around the time when OSF was founded. They have become close friends, and their enduring relationship goes well beyond donor status.

According to the book, The Shadow Party, by Horowitz and Poe, at a 2004 “Take Back America” conference where Soros was speaking, the former first lady introduced him saying, “[W]e need people like George Soros, who is fearless and willing to step up when it counts.”

Soros began supporting Hillary Clinton’s current presidential run in 2013, taking a senior role in the “Ready for Hillary” group. Since then, Soros has donated over $15 million to pro-Clinton groups and Super PACs.

More recently, Soros has given more than $33 million to the Black Lives Matter group, which has been involved in outbreaks of social unrest in Ferguson, Missouri, and Baltimore, Maryland, in 2015. Both of these incidents contributed to a worsening of race relations across America.

The same group heavily criticized Democratic contender Bernie Sanders for his alleged track record of supporting racial inequality, helping to undercut him as a competitive threat with one of Hillary Clinton’s most ardent constituencies.

This, of course, greatly enhances the clout Soros wields through the groups mentioned above. It is safe to assume that he is now able to drive Democratic policy, especially in an administration headed by Hillary Clinton.

Simply, what Soros wants, he gets. And it’s clear from his history that he wants to smudge away national borders and create the sort of globalist nightmare represented by the European Union.

In recent years, Soros has turned his attention back to Europe. Is it a coincidence that the continent is currently in economic and social disarray?

Another Home Run: the Ukrainian Conflict

There’s no doubt about Soros’s great influence on US foreign policy. In an October 1995 PBS interview with Charlie Rose, he said, “I do now have access [to US Deputy Secretary of State Strobe Talbott]. There is no question. We actually work together [on Eastern European policy].”

Soros’s meddling reared its ugly head again in the Russia-Ukraine conflict, which began in early 2014.

In a May 2014 interview with CNN, Soros stated he was responsible for establishing a foundation in the Ukraine that ultimately led to the overthrow of the country’s elected leader and the installation of a junta handpicked by the US State Department, at the time headed by none other than Hillary Clinton:

CNN Host: First on Ukraine, one of the things that many people recognized about you was that you during the revolutions of 1989 funded a lot of dissident activities, civil society groups in Eastern Europe and Poland, the Czech Republic. Are you doing similar things in Ukraine?

Soros: Well, I set up a foundation in Ukraine before Ukraine became independent of Russia. And the foundation has been functioning ever since and played an important part in events now.

The war that ripped through the Ukrainian region of Donbass resulted in the deaths of over 10,000 people and the displacement of over 1.4 million people. As collateral damage, a Malaysia Airlines passenger jet was shot down, killing all 298 on board.

But once again Soros was there to profit from the chaos he helped create. His prize in Ukraine was the state-owned energy monopoly Naftogaz.

Soros again had his US cronies, Secretary of the Treasury Jack Lew and US consulting company McKinsey, advise the puppet government of Ukraine to privatize Naftogaz.

Although Soros’s exact stake in Naftogaz has not been disclosed, in a 2014 memo he pledged to invest up to $1 billion in Ukrainian businesses, but no other Ukrainian holdings have since been reported.

His Latest Success: the European Refugee Crisis

Soros’s agenda is fundamentally about the destruction of national borders. This has recently been shown very clearly with his funding of the European refugee crisis.

The refugee crisis has been blamed on the civil war currently raging in Syria. But did you ever wonder how all these people suddenly knew Europe would open its gates and let them in?

The refugee crisis is not a naturally occurring phenomenon. It coincided with OSF donating money to the US-based Migration Policy Institute and the Platform for International Cooperation on Undocumented Migrants, both Soros-sponsored organizations. Both groups advocate the resettlement of third-world Muslims into Europe.

In 2015, a Sky News reporter found “Migrant Handbooks” on the Greek island of Lesbos. It was later revealed that the handbooks, which are written in Arabic, had been given to refugees before crossing the Mediterranean by a group called “Welcome to the EU.”

Welcome to the EU is funded by—you guessed it—the Open Society Foundations.

Soros has not only backed groups that advocate the resettlement of third-world migrants into Europe, he in fact is the architect of the “Merkel Plan.”

The Merkel Plan was created by the European Stability Initiative whose chairman Gerald Knaus is a senior fellow at none other than the Open Society Foundations.

The plan proposes that Germany should grant asylum to 500,000 Syrian refugees. It also states that Germany, along with other European nations, should agree to help Turkey, a country that’s 98% Muslim, gain visa-free travel within the EU starting in 2016.

Political Discourse

The refugee crisis has raised huge concern in European countries like Hungary.

In response to 7,000 migrants entering Hungarian territory per day in 2015, the Hungarian government reestablished border control in order to keep the hordes of refugees from entering the country.

Of course this did not go down well with Soros and his close allies, the Clintons.

Bill Clinton has since come out and accused both Poland and Hungary of thinking “democracy is too much trouble” and wanting to have a “Putin-like authoritarian dictatorship.”

Seeing through Clinton’s comments, Hungarian Prime Minister Viktor Orbán responded by saying, “The remarks made about Hungary and Poland … have a political dimension. These are not accidental slips of the tongue. And these slips or remarks have been multiplying since we are living in the era of the migrant crisis. And we all know that behind the leaders of the Democratic Party, we have to see George Soros.”

He went on to say that “although the mouth belongs to Clinton, the voice belongs to Soros.”

Soros has since said of Orbán’s policy toward the migrants: “His plan treats the protection of national borders as the objective and the refugees as an obstacle. Our plan treats the protection of refugees as the objective and national borders as the obstacle.”

It’s hard to imagine that he could be any clearer in his globalist intentions.

The Profit Motive

So why is Soros going to such lengths to flood Europe with hordes of third-world Muslims?

We can’t be sure, but it has recently come to light that Soros has taken a large series of “bearish derivative positions” against US stocks. Apparently, he thinks that causing chaos in Europe will spread the contagion to the United States, thus sending US markets spiraling downward.

The destruction of Europe through flooding it with millions of unassimilated Muslims is a direct plan to cause economic and social chaos on the Continent.

Another example of turmoil equaling profit for George Soros, who seems to have his tentacles in most geopolitical events.

We all understand correlation is not causation. However, given Soros’s extraordinary wealth, political connections, and his long track record of seeing and profiting from chaos, he is almost certainly a catalyst for much of the geopolitical turmoil now occurring.

He is intent on destroying national borders and creating a global governance structure with unlimited powers. From his comments directed toward Viktor Orbán, we can see he clearly views national leaders as his juniors, expecting them to become puppets that sell his narrative to the ignorant masses.

Soros sees himself as a missionary carrying out the globalist agenda taught to him by his early mentors. He uses his vast political connections to influence government policy and create crises, both economic and social, to further this agenda.

By all appearances, Soros is conspiring against humanity and is hell-bent on the destruction of Western democracies.

To any rational thinker, some global events just don’t make sense. Why, for example, would Western democracies take in millions of people whose values are completely incompatible with their own?

When we look closely at the agenda being actively promoted by the leading globalist puppet master, George Soros, things become a little clearer.

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On Soros & Gold

David, again.

While I’m not a conspiracy theorist per se, I do believe there is a naturally occurring and constant collaboration about shared interests occurring amongst the heads of governments, corporations, investment managers and all of the bottom feeders that survive off their scraps.

What I find most interesting about Soros is that he is so obvious in his intentions and persistent in their pursuit. Given the consequences of his actions, it is also clear he’s a believer in moral relativism and that the ends justify the means.

That he turns a nice buck in his crusade for what certainly rhymes with a one-world government is a Soros hallmark.

“It allows me the money needed to fund my philanthropies” he might answer to the charges he is profiting from blood in the streets he was instrumental in spilling.

Going forward when something big is happening geopolitically, I am going to start my analysis by checking under rocks for signs of Soros.

At the beginning of this article we noted that Soros has gone big into American Barrick (ABX), a leading gold producer. As of the end of March it was his single largest holding at 7.36% of his overall portfolio.

As telling, he has dumped a lot of his more conventional stocks in recent months.

Given the man’s inside track – and active manipulations – you might want to take the hint and pick up some physical gold as an insurance policy against a systematic shock.

If you already own gold, I probably wouldn’t chase it here as it has had a good run of late. Ditto silver which is up 46% year to date. But if you don’t own some, adding precious metals to your portfolio as a long-term holding, even at today’s prices, makes sense.

Per last week, I continue to believe the gold stocks have probably gotten ahead of themselves and could be in for a pretty significant correction. If so, I would be inclined to up my allocation to the sector to 20% of my total portfolio.

That said, no one can predict the future and gold could continue to power ahead, with the gold shares a more leveraged way to play the sector.

As always with gold shares, it is important to remember a few things:

• In most cases, these are speculations. That’s because their financial metrics often don’t line up with anything looking like a good value. What you are really betting on is a revaluation of the ounces of gold or silver a company is sitting on.  Thus, if a company is sitting on one million ounces of gold and gold goes up by $100, the company just got a lot more valuable.
   
• Never fall in love with a gold stock.  Set a rational return goal and once hit, at least scrape your original investment off the table. That way you are playing with the casino’s money.

  Also per my article last week, keep in mind that should gold stocks buck the trend in a future global equities correction, the money managers who own big positions in gold stocks will almost certainly dump their holdings in order to dress up the rest of their portfolios. As the trading volume in precious metals share is relatively thin, you want to beat them out the door.
   

• Embrace the volatility. The low trading volume of most of these stocks is a key reason they have such explosive upside. Any significant uptick in investor interest can send a stock soaring.

  However, the flipside is also true. In the bear market that started in 2011, the majority of the precious metals stocks lost upwards of 75% of their value and many simply dried up and went away. Enjoy the ride, but don’t stay too late at the party.

Earlier this week I commented to a friend that if the EU was going to remain relevant, there had to be some major financial pain dished out post-Brexit. To let that seminal event pass with nothing more than the equivalent of a global shrug would entirely change how people view the European Union.

The bottom line, I’m expecting some volatility, perhaps triggered by Soros taking a second run at crushing the British pound, the source of much of his fortune and fame.

It’s promising to be a long, hot summer.

Here Come the Clowns

Nothing comes close to the Get Out of Jail card handed by the clowns at the FBI to Hillary over her private email servers. This despite pretty much no one disputes she broke any number of federal laws of the sort which would have landed a lesser clown in jail.

To quote FBI Director James Comey, “Although there is evidence of potential violations of the statutes regarding the handling of classified information, our judgment is that no reasonable prosecutor would bring such a case.”

There is nuance in that statement. For starters, that there is evidence of violations. But also the stark political reality that no “reasonable prosecutor” would enforce the laws, considering who the perp is: the standard bearer for the Democrats going into this election.

Besides, going after Clinton means crossing swords with Soros and no “reasonable prosecutor” would want to do that.

Just saying…

• Fed caution hits dollar as Japan anticipation builds (Reuters)
• Obama asks U.S. voters to 'carry' Clinton to White House, defeat Trump (Reuters)
• Democrats skewer Trump (Politico)
• Obama, Biden Toss Barbs at Trump and Say Clinton Is Only Choice (BBG)
• Did Donald Trump’s Executives Violate the Cuban Embargo? (BBG)
• 'Helicopter money' might weaken currencies more than QE as sky's the limit (Reuters)
• German inflation remains weak despite rise in July, state data suggest (Reuters)
• China says to hold drills with Russia in South China Sea (Reuters)
• Gas Taxes Keep Rising to Quell a Different Kind of Road Rage (BBG)
• China’s Taikang Life Insurance Takes 13.5% Stake in Sotheby’s (WSJ)
• Insurance Companies Have Joined the Ranks of Shadow Banks (BBG)
• German police raid mosque and apartments in crackdown on Salafists (Reuters)
• Little known jihadist inspired latest wave of ‘lone wolf’ attacks (Reuters)
• Second French church attacker was known to police: sources (Reuters)
• Households on the Hook for Italy’s Next Bailout (BBG)
• Credit Suisse: No Time to Gloat (BBG)
• Tepco’s Profit Plummets Amid Declining Sales and New Competition (BBG)
• Gawker Founder Nick Denton Wins Temporary Reprieve From Hulk Hogan Judgment (WSJ)

Overnight Media Digest

WSJ

- The Federal Reserve opened the door to an interest rate increase later this year, possibly as early as September, after a policy meeting at which officials concluded the economy is on more solid footing and risks to the outlook have diminished. http://on.wsj.com/2auOlqm

- A Chinese life insurance company run by the grandson-in-law of Chairman Mao Zedong has bought a 13.5 percent stake in Sotheby's, citing a "positive view" of the auction house as well as potential interest in a board seat. Taikang Life Insurance Co Ltd <IPO-TKLI.HK>, one of China's biggest insurance companies, disclosed its stake Wednesday in a filing with the Securities and Exchange Commission, a regulatory requirement for active investors who press for corporate change. http://on.wsj.com/2ab8b7T

- Boeing Co said in a regulatory filing Wednesday that it might stop production of the 747, ending nearly a half-century of building the plane that became the aircraft of choice for the U.S. president and other heads of state. http://on.wsj.com/2av9JgQ

- SABMiller Plc has paused its integration work with Anheuser-Busch InBev, as the London-based brewer's board consults with shareholders over whether the revised offer AB InBev broached on Tuesday is acceptable. http://on.wsj.com/2ahPv51

- Eli Lilly and Co Chief Executive John C. Lechleiter will retire at the end of the year, the company said Wednesday, capping nearly four decades at the pharmaceutical manufacturer and an eight-year tenure at its helm. The company's board tapped David A. Ricks, the head of its biomedicines division, as Lilly's next CEO. http://on.wsj.com/2a4FdVs

- A Florida appeals court temporarily lifted the threat of personal bankruptcy hanging over Gawker Media LLC founder Nick Denton as a result of a heated legal battle with former wrestler Hulk Hogan. The judge's ruling Wednesday prevents Terry Bollea, the wrestler's real name, from enforcing a $140 million invasion-of-privacy judgment handed down in Florida earlier this year over sex tape the blog published in 2012. The judgment, which is being appealed, led Gawker to file for Chapter 11 protection last month. http://on.wsj.com/2a5rZaU

NYT

- Federal regulators are preparing to significantly strengthen the rules that govern debt collection in an effort to clamp down on collectors who hound consumers for debts they may not even owe. http://nyti.ms/2ascVH9

- Carlyle Group plans to announce on Thursday that it has appointed Sandra Horbach as one of two co-heads of its main United States buyout arm. The move will make Horbach one of the most senior women in private equity. http://nyti.ms/2asddO1

- Facebook reported second-quarter earnings with strong increases across almost every measure. It said sales totaled $6.44 billion for the quarter, up 59 percent from a year ago, while profit almost tripled to $2.06 billion. The rise was driven by strong mobile ad sales, as well as a steady ascent in its number of users. http://nyti.ms/2asdr7T

- Teva Pharmaceutical Industries won U.S. antitrust approval to buy Allergan's generics business after agreeing to sell 79 generic drugs to rival firms. Federal Trade Commission's Bureau of Competition said in a statement that the settlement "safeguards the competitive availability of these medications for patients across the country who depend on them."http://nyti.ms/2asdwZc

Canada

THE GLOBE AND MAIL

** Canada's federal housing agency has raised new alarms about the country's housing market, warning that euphoria over real estate is spreading beyond detached homes in Toronto and Vancouver to townhouses and condos, and to other cities. (http://bit.ly/2azYzE8)

** Alberta's wildfires took their toll on Suncor Energy Inc in the second quarter. Overall production averaged 330,700 barrels a day, down 41 percent from the same period in 2015. (http://bit.ly/2aiX3rg)

** Macquarie Capital Markets Canada Ltd is losing a veteran energy analyst. Chris Feltin, who has worked in equity research for 12 years at the Australian-owned bank and the Canadian firm it acquired, has decided to take a mid-career break. (http://bit.ly/2ajAgbZ)

NATIONAL POST

** The government of Ontario has named Hudson's Bay Co vice chair Bonnie Brooks as the new Liquor Control Board of Ontario's chair, one day after announcing the launch of an online site where customers will be able to order alcohol. (http://bit.ly/2ay73yM)

** The return of the gold bull market in 2016 is driving massive cash generation for Canada's largest miners of the metal. Barrick Gold Corp, Kinross Gold Corp and Agnico Eagle Mines Ltd reported major improvements in cash flow generation. (http://bit.ly/2ay7Y2a)

Britain

The Times

At least one airport in the south of England is expanding. London City has been given the go-ahead to increase capacity by nearly 40 percent as part of a 344 million pounds ($455.32 million) plan. http://bit.ly/2ayNcwg

Royal Bank of Scotland Group Plc is attempting to settle a multibillion-pound legal claim brought by shareholders who say they were misled into supporting the bank's 12 billion pounds rights issue in 2008. http://bit.ly/2ayPrzF

The Guardian

The UK arm of Spanish bank Banco Santander SA, has admitted it would be able to charge some customers to hold their deposits if interest rates drop below zero, without having to send letters warning them of the possibility in the way that Royal Bank of Scotland has. http://bit.ly/2ayQ0cN

London-based brewer SABMiller Plc has paused integration planning with Budweiser owner Anheuser Busch InBev SA while it reviews its U.S. suitor's improved takeover offer. http://bit.ly/2ayQeAv

The Telegraph

Stockbroker Cenkos is being investigated by the Financial Conduct Authority over its work with Quindell, the insurance outsourcing company at the heart of one of the biggest scandals on the Aim market in recent years. http://bit.ly/2ayRIuJ

GlaxoSmithKline Plc is investing 275 million pounds in three of its manufacturing sites in the UK in one of the biggest business votes of confidence in the country since the result of the EU referendum. http://bit.ly/2ayS6tg

Sky News

The Pinewood film studio that is home to James Bond's movie franchise is in advanced talks to be sold to an international property fund for a price expected to be over 300 million pounds. http://bit.ly/2aySEPJ

McDonald's Corp has announced it will be creating 5,000 new jobs in the U.K. by the end of 2017. The fast-food chain said the roles were in addition to 8,000 new positions that were announced in 2014 - bringing the workforce to more than 110,000. http://bit.ly/2aySqrM

The Independent

House prices growth is expected to slow following the U.K.'s vote to leave the European Union, according to economists. UK house price growth will drop from 6 percent in 2015 to 5.7 percent in 2016, according to the Centre for Economics and Business Research, an economic forecaster. http://ind.pn/2aySjNa

'Peak Gold' is happening which has important ramifications for the gold market and is another long term positive fundamental. This is why we were one of the first analysts to consider the peak gold phenomenon back in 2007 and 2008 (see here) and have considered peak gold frequently over the years.

One of the more astute gold analysts today, Frank Holmes also believes that peak gold is happening and may even have occured in 2015. Peak gold and the fact that total annual global gold production is likely to have peaked is an important supply side factor in the gold market. This is one of the bullish factors which will support prices and indeed should contribute to higher prices in the coming years.

Holmes latest article is a must read:

The Last Known Gold Deposit

“Substance Is Something That Is Real" Like Gold - Tim Price (Zerohedge)

A New Wrinkle In The Paper Gold Con Game (TF Metals Report)

Rickards: World running out of physical gold, so Goldman found a way to create more paper gold (Reuters)

The Last Known Gold Deposit - Holmes (Goldseek)

What’s an Olympic gold medal really worth? (The Australian)

Gold Prices (LBMA AM)

10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce
09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce
05Aug: USD 1,362.60, GBP 1,036.39 & EUR 1,222.53 per ounce
04Aug: USD 1,351.15, GBP 1,016.61 & EUR 1,213.87 per ounce
03Aug: USD 1,364.40, GBP 1,023.16 & EUR 1,218.96 per ounce
02Aug: USD 1,358.15, GBP 1,025.13 & EUR 1,213.10 per ounce

Silver Prices (LBMA)

10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce
09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce
05Aug: USD 20.22, GBP 15.36 & EUR 18.14 per ounce
04Aug: USD 20.16, GBP 15.25 & EUR 18.11 per ounce
03Aug: USD 20.59, GBP 15.43 & EUR 18.39 per ounce
02Aug: USD 20.71, GBP 15.65 & EUR 18.51 per ounce

Recent Market Updates

- Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
- Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
- Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
- Silver Kangaroo Coins – Sales Surge To Over 10 Million
- Trump, Clinton, "Ugliest" Election Coming - Gold's "Summer Doldrums" Prior To Resumption of Bull Market
- Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
- “Could Not Invent A More Bullish Story For Gold Bullion”
- Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money 
- Is Gold Set To Hit $1,500 Per Ounce?
- Why Italy’s bank crisis could be a ‘ticking time bomb’
- Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
- IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout
- Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500

Recent Market Updates

- Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
- Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE

- Silver Kangaroo Coins – Sales Surge To Over 10 Million
- Trump, Clinton, "Ugliest" Election Coming - Gold's "Summer Doldrums" Prior To Resumption of Bull Market
- Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
- “Could Not Invent A More Bullish Story For Gold Bullion”
- Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money 
- Is Gold Set To Hit $1,500 Per Ounce?
- Why Italy’s bank crisis could be a ‘ticking time bomb’
- Gold Holds Near Two-Week Low as Risk Appetite Rises on U.S. Data
- IMF Scraps Forecast for Global-Growth Pickup on Brexit Fallout
- Gold, Trump and Rates: Bank That Foresaw Rally Flags $1,500
- Gold Lower After Central Bank’s Surprise Move
- "We Are On the Cusp of an Explosion in the Silver Price"

A New Wrinkle In The Paper Gold Con Game

Posted with permission and written by Craig Hemke, TF Metals Report (CLICK HERE FOR ORIGINAL)

Here's a story that came out earlier today. Maybe it's just me, but it's easy to see a Bullion Bank plot here. For months, we've documented all of the various points of demand for gold in all its forms. And now, as The Bullion Bank Paper Derivative Pricing Scheme is being stretched to extremes, suddenly the LME wants to offer another form of paper gold with which to screw everyone.

And note who's involved here...not only is it the LME working in conjunction with the Evil Of Evils Goldman Sachs, they're all "working in conjunction" with The World Gold Council. IF ANYTHING SHOULD PROVE FOR YOU ONCE AND FOR ALL THE THE WGC IS A SHADY, NASTY AND WORTHLESS ORGANIZATION, THIS SHOULD DO IT! Here's your link from Reuters detailing the news:

LONDON, Aug 9 The London Metal Exchange (LME) said on Tuesday it is planning to launch spot and futures contracts for gold and silver in the first half of 2017, adding to its list of products which includes copper and aluminum.

The 139-year old exchange is working in collaboration with the World Gold Council, an industry body backed by gold mining companies such as Barrick Gold and Goldcorp, and is supported by five banks and proprietary trader OSTC, which have committed to provide liquidity.

"The initiative has been driven by the need for greater market transparency, to support and aid ongoing regulatory change, provide additional robustness to the precious metals market, broaden market access," the exchange and its partners said in a statement.

Financial market transparency has been a major focus for regulators after evidence of price manipulation in lending rates between banks in the Libor scandal in 2012.

As regulators continue to review commodity markets, the bullion industry is braced for further changes that could ultimately include a mandatory central clearing or more expensive bilateral trading.

Banks and bullion operators have looked for ways to preserve London's role as a major global trading centre, while increasing transparency of a market which can trace its roots back to the 17th century.

The London Bullion Market Association (LBMA), another industry body whose members are mostly banks, refiners and dealers, separately asked exchanges and technology firms in October last year to bid for services such as a gold exchange or a clearing platform.

London currently dominates the global over-the-counter gold trade with an estimated $5 trillion changing hands every year, while New York's Comex contract sets the benchmark for futures.

The LME plans physically delivered spot, futures and options contracts. The gold will be 100 ounces in size (worth around $133,600 at current prices) and silver 5,000 ounces. All contracts will be cleared through LME Clear, the exchange's clearing house, which has an annual traded notional value of $12 trillion.

LIQUIDITY

The World Gold Council CEO Aram Shishmanian said that they had initially engaged with around 30 firms, but only Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis and Societe Generale signed up to support the contracts from the launch day.

After the transformation of precious metals benchmarks in 2014, led by a regulatory drive to make them more robust to attempts of manipulation, banks have become more cautious.

Several of them have run into trouble with regulators over misdemeanours in their precious metals trading business.

The benchmarks are widely used by producers, consumers and investors to trade and value the metal. Gold and silver are among the eight major market benchmarks that are regulated by Britain's watchdog Financial Conduct Authority (FCA).

Frankly, my favorite part of the entire article is this:

Several of them have run into trouble with regulators over misdemeanours in their precious metals trading business.

"Several of them have run into trouble over misdemeanors"....GIVE ME A BREAK. Misdemeanors. That's pretty funny.

Anyway, the new "gold" contract looks to begin trading by summer of next year. (Maybe the entire fraud will have collapsed by then?) Here are the actual specs. Have a look and see if you notice a rather critical distinction/component of this latest fraud:
http://lme.com/metals/precious-metals/gold/

Here, please allow me to help. What word jumps off the page at you from this screenshot below? (Hint: It starts with a "U".)

So the new, "physically-settled" LME gold contract is one where "seller transfers unallocated gold to...the LPMCL member bank (Goldman)...and buyers receive unallocated gold at any LPCML member bank (Goldman)". THAT SOUNDS LIKE A GREAT FREAKING DEAL! WHERE DO I SIGN UP?

But, seriously, what a gigantic SCAM this all is! These Banks will do literally ANYTHING to perpetuate their Paper Derivative Pricing Scheme. This latest move to collect gold and fees while scamming investors into believing that they own "physical gold" is just another example. And again, that the WGC is "collaborating" in this con should tell you all you need to know about that organization, too.

You don't own it unless you hold it. Period, end of story. Sadly, as we've come to learn over the years, everything else is just a Banker scheme to screw you.

Please email with any questions about this article or precious metals HERE

A New Wrinkle In The Paper Gold Con Game

Posted with permission and written by Craig Hemke, TF Metals Report (CLICK HERE FOR ORIGINAL)

Soros bearish turn was reported over two months ago, when the WSJ reported that the recently hacked billionaire had returned to active investing at his Soros Fund Management with "Big, bearish" bets on economic turmoil. Yesterday, in his latest 13F we got confirmation of just that when the hedge fund revealed that it had doubled the amount of its SPDR Puts to 4 million, or a notional equivalent of $839 million as of June 30, up from $431 million as of Q1.

While the actual notional amount is a far cry from previous nominal holdings, which peaked in June 2014, as a percentage of total assets, the bearish bet - which comes with the usual caveat that this position was actual as of 45 days ago and so much may have changed since then - was near a record high as a percentage of total Soros assets, which in Q2 were $4.7 billion, down substantially from the Q2 2014 peak of $13.2 billion.

This bearish bias may explain the recent turmoil at Soros' hedge fund, where as reported last week, CIO Scott Bessent stepped down after only 8 months at the job.

And in other notable position moves, Soros Fund Management sharply cut its shares in gold in the second quarter.  The fund reduced its holdings in SPDR Gold Trust to 240,000 shares worth $30.4 million, from 1.05 million shares worth $123.5 million in the first quarter. Soros also drastically cut its stake in Barrick Gold Corp to 1.07 million shares worth $22.9 million, from 19.4 million shares in the first three months of 2016, the filing showed.

It appears that Soros is taking at least one part of Tepper's advice, namely the hunker down in cash. As to Soros' alleged bearishness, he can't possibly be anywhere near as gloomy as Icahn, who as we reported last week, kept his net short exposure at a record -149%.

The BIS-network dupes the gold mining industry

Posted with permission and written by Nico Simons, Money Insights (CLICK FOR ORIGINAL)

In our paper from March 23, 2016 we concluded that JPM [J. P. Morgan] in cooperation with the BIS [Bank of International Settlements] controls the dollar gold price by using their very dominant position in gold derivatives in the US Banking System. JPM held during 1999 – 2014 an average of 3.262 paper metric tons gold (derivatives) available for interventions on the development of the dollar gold price with the BIS as counterparty. Furthermore we concluded that the paper volume sets the dollar gold price and that there is almost no influence on the dollar gold price from the physical supply and demand. Overall the conclusion is that there is no free market for gold.

In our paper from March 23, 2016 we explained that JPM and the BIS are operating agents for the BIS network to maintain the confidence in the dollar and therefore manipulate the dollar gold price. We spoke about the artificial price drop in 2013 and the possible following dishoarding by private holders.

In this paper we will analyze the financial position of three leading mining companies considering the manipulated dollar gold price. We analyzed the annual statements of Barrick, Newmont and Goldcorp with their key business in gold mining (other products are by-products) and a combined market-share 2015 of 15,3% on gold mining worldwide. We concluded that there is in retrospect a combined average dollar gold price 2013 - 2015 needed of $ 1.890 per ounce to get break even (= the point of balance making neither a profit nor a loss). The realized combined average dollar gold price 2013 – 2015 is $ 1.274 per ounce. On any sold ounce gold the combined three mining companies loose more than dollar $ 600 per ounce, or 48%. It goes without saying that they struggle to stay in business.

1. The analyzed gold mining companies

Barrick, Newmont and Goldcorp

Barrick Gold Corporation is the largest gold mining company in the world, with its headquarters in Toronto, Ontario, Canada. Barrick employs approximately 27.000 employees and contractors worldwide. Market-share Barrick 6,0% of the new produced gold 2015.

Newmont Mining Corporation is the world’s second largest producer of gold, with its headquarters in Greenwood Village, Colorado, USA. Newmont employs approximately 34.000 employees and contractors worldwide. Market-share Newmont 5,7% of the new produced gold 2015.

Goldcorp is a gold producer headquartered in Vancouver, Britisch Columbia, Canada. Goldcorp employs approximately 14.000 employees and contractors worldwide. Market-share Goldcorp 3,6% of new produced gold 2015.

2. The (combined) yearly net income/loss

Since 2013 net loss

The next table is based upon the (consolidated) statements of income (or loss) listed in the companies annual reports.

The gold mining industry is clearly no steady making money industry. We will analyze this later.

3. The combined all-in company costs and the dollar gold price per ounce

Loss since 2013, even though the change of mindset.

Based upon the annual accounts we combined the figures from Barrick, Newmont and Goldcorp regarding average realized dollar gold price per ounce and the all-in company costs per ounce through the years 2002 -2015.

What we see is that there is a kind of balance between the dollar gold price and the all-in company costs per ounce gold through the years 2002 – 2012, but from 2013 – 2015 there is a strange disconnection.

It’s very clear that the combined all-in company costs are higher than the combined average realized dollar gold price per ounce. Since 2013 every ounce is sold with loss.

Companies aim for a profitable production. Only that way they can stay in business.

Regarding this issue in April 2013 Jamie Sokalsky, CEO of Barrick, wrote: “Over the past decade, our industry has been focussed on increasing gold production, often without regard for the costs. In essence, this was growth for growth’s sake”. And Peter Munk, Founder and Chairman of Barrick, wrote “Barrick is leading the change from a focus on growth, in favour of maximizing free cash flow and growing rates of return”.

Since 2013 Barrick uses aggressive cost management, meaning: reducing costs and an ongoing review of costs is an integral part of the management of business.

The gold mining industry doesn’t seem to succeed in the objective for a profitable production so far.

In our view this is another indication that there is almost no influence on the dollar gold price from the physical supply and demand. The paper volume sets the (manipulated) dollar gold price.

4. The disconnection between the all-in company costs and the realized dollar gold price

Net loss per ounce gold US $ 622, or 48%

The following table shows us the combined nett loss of Barrick, Newmont and Goldcorp over the years 2013 – 2015, divided by the produced ounces gold. This is the combined nett loss per ounce. If we add up the combined average realized dollar gold price, the sum shows the combined all-in company costs from Barrick, Newmont and Goldcorp together.

What we see in retrospect is that a dollar gold price 2013 – 2015 of $ 1.890 is needed to get break even.

The average realized dollar gold price 2013 - 2015 was $ 1.274 per ounce. Ergo, the average net loss was US $ 622 per ounce, or 48%.

5. The view of the World Gold Council

WGC 2012: “Higher gold price needed to stay in business”

The World Gold Council is the marketing development organisation for the gold industry. The World Gold Council has 18 members, including Barrick, Newmont and Goldcorp.

World Gold Council CEO Aram Shishmanian said on May 14, 2012 that because of the sharp increase in mining costs the dollar gold price needed to reach $ 3.000 an ounce in 2017 for the industry to stay profitable and stay in business.

6. How long can this go on?

The BIS-network keeps a lid on the dollar gold price (see our paper dated October 7, 2015). Since 2013 the dollar gold price per ounce gold is lower than the all-in company costs per ounce gold. The question is how long this can go on.

Every year the loss per ounce continues will cost the gold mining industry worldwide 60 Billion dollar.

Worldwide mine production 2015: 3.100 tons

Worldwide mine production 2015: 99.688.000 ounces

Loss per ounce: $ 600

Total loss worldwide mine production: 60 Billion dollar

Please email with any questions about this article or precious metals HERE

The BIS-network dupes the gold mining industry

Posted with permission and written by Nico Simons, Money Insights (CLICK FOR ORIGINAL)

Submitted by Mac Slavo via SHTFPlan.com,

There are few people as knowledgeable about  global commodities markets, fundamentals, cycles and the effects of investor sentiment on price movements as Jim Gowans. He is the former Co-President of mega-mining company Barrick Gold, the former President of De Beers Canada, and currently serves as the President and Chief Executive Officer of mineral exploration firm Arizona Mining.

In a recent interview with SGT Report Gowans warns that economic and monetary fundamentals suggest we have some deep rooted problems with no resolution in sight. Having personally witnessed the effects of Zimbabwe’s hyperinflation , Gowans notes that when currencies around the world finally collapse from the weight of unlimited quantitative easing, paper money as we know it today will no longer be a viable mechanism for trade. When that inevitable day comes for the U.S. dollar, the general populace will have no choice but to replace it with “in-kind” commodities like gold that will be used for trading for essential goods.

I was living in Africa, in Botswana, and looking over across the border into Zimbabwe watching hyperinflation to the point where people were collecting million dollar bills that were worth nothing… ZimDollars they called it… I had a few friends of mine in Zimbabwe that were trillionaires…

 

In Zimbabwe they went to the U.S. dollar… in other places they’ll go to in-kind commodities like gold. 

Watch the full interview with Arizon Mining’s Jim Gowans:

(Watch at Youtube)

Gowans says that mining is simply not sustainable for the companies who produce gold if the price is $1100 per ounce or lower, which explains why we’ve see a powerful up-trend in precious metals since the start of 2016:

You just look at the world economies and you know that the fundamentals are there for a significant change in gold price… it wasn’t sustainable at around $1100 or $1150… It doesn’t surprise me at all… I think you’re going to see gold start to rise again because of the fundamentals in the world economy.

 

...

 

I think a move has begun… When you have bonds at negative interest rates you know there’s something fundamentally wrong with the economy. That’s a statement of the relative safeness of currencies… when people actually feel they can buy that bond and pay money to keep it in that bond just because it’s a safer haven than other investments then that’s pretty bad.

Deep pocketed global investors and Wall Street institutions have certainly taken notice of the impending meltdown of global currencies and economies. That’s why people like George Soros, Stanley Druckenmiller and Carl Icahn are rapidly shifting capital into precious metals.

That’s telling us people are concerned about currencies… When you see gold and silver equities, and those are just proxies for the metal, it’s a much more convenient way to invest than owning physical… They see gold and silver as a much more reliable investment than bonds from all the central banks and the like… that’s what’s been driving gold and silver equities. 

Keeping in mind that absolutely nothing has changed for the better since the Crash of 2008 and that the Federal Reserve has hinted at even more large-scale central bank intervention, we can reasonably conclude that the situation is about to get even worse.

That, of course, can mean only one thing: the price of commodities, especially safe haven assets like gold and silver, will continue to rise.

By the SRSrocco Report,

The situation Americans face in the future will be nothing like anything they have experienced in the past.  While we have seen old footage and heard stories about the Great Depression (starting in 1929), we have no idea how bad things really were during the 1930's.

At that time, approximately 25% of the American population were farmers.  Thus, when things really got bad, folks in the cities could move out and stay with their families or relatives on the country farm.  This is not an option for most Americans today as only 2% of the population are farmers and ranchers (source).

After WWII, Americans left the farms in large numbers for the allure of the great life in the cities and suburbs.  For decades, living in the city or suburb offered Americans a much easier way of life as the United States had plenty of cheap energy and resources to tap into.

Matter-a-fact, after the 1930's Great Depression, U.S. oil production continued to increase for nearly 40 years:

Even though U.S. oil production declined some years (1930-1970), overall growth steadily increased in a linear fashion.  However, the recent surge in U.S. oil production (2007-2015), mainly due to the ramp up of expensive shale oil, moved up exponentially and will likely decline in the same fashion.  This will have a profoundly negative impact on the U.S. economy and financial system.

Furthermore, the U.S. was able to pull itself out of the Great Depression due to the fact that it was just starting to tap into its huge reserves of cheap, high EROI (Energy Returned On Investment) oil supplies.

For example, the massive Lakeview Gusher in California (1910) had an estimated EROI of 35,000/1 (source):

Basically, for one barrel of energy equivalent consumed to drill the Lakeview Gusher, it provided 35,000 barrels of oil.  Today, Shale Oil comes in at whopping 5/1 EROI and Oil Sands in Canada is about 4-5/1 EROI.

The EROI of U.S. Oil & Gas in 1930 was 100/1.  This includes exploration and production.  According to white paper, A New Long Term Assessment Of Energy Returned On Investment (EROI) For U.S. Oil & Gas Discovery and Production,the U.S. oil industry in 1919 was finding 1,200 barrels of oil for each barrel of oil equivalent energy it consumed in exploration.  Today it has fallen to less than 5/1.

As the U.S. oil and gas EROI declined, especially after 1970, the United States continued to thrive due to the Petro Dollar system and the ability to import high EROI from the Middle East and other oil exporting nations.  Unfortunately, this is not a situation that will continue for much longer as the massive debt in the system is unsustainable.

Comparing U.S. Debt 1929 vs Today

It's quite interesting to see how much of a change has occurred since the Great Depression.  While things were very bad for Americans in the 1930's, the amount of U.S. public debt per person was very low versus today:

According to several sources, the U.S. population was 122 million in 1929 while total public debt was $16.9 billion.  Thus, the average debt per American in 1929 was $139.  Compare that to a population of 320 million and $19.4 trillion in debt at an average $60,625 per American today.

NOTE:  A few readers suggested that I adjust for inflation in this example.  So, if we take $139 in 1929 and adjusted for inflation today, it would be worth $3,288.  So, the net difference would be nearly 20 times higher.

What is interesting about total U.S. debt is that after each World War, the total level of debt declined for several years.  For example, after the end of World War I, total U.S. debt fell from $27.4 billion in 1919 to $16.1 billion in 1930 (source).  This was also true after World War II when total U.S. debt fell from a high of $269 billion in 1946 to a low of $252.7 billion in 1949.  Over the next several, as total U.S. debt continued to increase, there were a few years that experienced declines (1951, 1956 & 1957).

However, after 1957, there wasn't a single year that total U.S. debt declined.... it continued to increase for 58 consecutive years:

I believe the reason total U.S. debt was able to decline after each World War and during a few years in the 1950's, was due to the relatively high EROI of U.S. oil and gas.  Moreover, as cheap domestic U.S. oil production peaked in 1970, oil imports had to increase to supply the ever-growing sprawl of the AMERICAN LEECH & SPEND SUBURBAN ECONOMY.

At the peak, the U.S. imported a staggering 14.1 million barrels a day of oil in 2005 (net imports).  This accounted for nearly three-quarters of total U.S. oil consumption.  Again, the Petro-Dollar system allowed the United States to exchange U.S. Treasuries (paper IOU's) for oil.

As U.S. oil consumption declined after the 2008 Investment Banking and Housing collapse on top of increasing domestic shale oil production, net imports fell to a low of 4.1 million barrels a day in May 2015.  However, according to the EIA - U.S. Energy Information Agency's recent update (Aug 24th), net oil imports jumped to 6.6 million barrels a day (source).

So, now that U.S. oil production has declined 12% from its peak last year, imports are again on the rise.  Unfortunately, many oil exporters in the future will likely not take U.S. Treasuries or Dollars for oil.  This will cause serious trouble for Americans as U.S. oil production continues to collapse over the next 5-10 years.

While U.S. debt has exploded, so has the value of gold.

Homestake Mining 1929 vs Barrick Gold Today

If we compare the two largest mining companies in the U.S., we can see what a difference has taken place since 1929.  I was able to obtain several older annual reports from Homestake Mining, which was the largest gold producer in the country during 1929.

Here is a rare copy of Homestake Mining's 1929 Annual Report:

According to the USGS 1929 Gold & Silver Annual Report, Homestake Mining produced 312,328 oz of gold in 1929.  As we can see on the top of the annual report, Homestake Mining processed 1,437,935 tons of ore which resulted an average yield of 0.22 ounces per ton (oz/t).

Now, if we compare that to Barrick that produced 6.1 million oz of gold in 2015 while processing a staggering 139 million tons of ore, their average yield was a pathetic 0.04 oz/t:

When Homestake Mining was producing gold in 1929, it was extracting nearly enough gold per ton to make an 1/4 oz Gold Eagle (0.27 oz) versus Barrick in 2015 that wouldn't have enough metal to make half of an 1/10 Gold Eagle (0.11 oz) (source).

Furthermore, Homestake Mining paid its shareholders a staggering $1.7 million in dividends on total revenues of $6.5 million that year.  Thus, Homestake Mining's dividends were 26% of total revenue in 1929 and each investor received a stunning $7 per share.

Now, let's look how this compares to Barrick.  Barrick paid a total of $160 million in dividends in 2015 on total revenues of $9 billion.  Which means, Barrick's dividends were less than 2% of total revenues while investors received a paltry 14 cents for each share.

What a difference, eh?  By the way, Homestake Mining only had a little more than 251,000 outstanding shares versus Barrick's 1,165 million.... LOL.  So, if an individual had 100 shares of Homestake Mining in 1929, they would have received $700 versus Barrick's investors receiving $14.  The math is certainly not good for modern gold mining investors.

If we compare the cost to mine gold at Homestake Mining 1929 vs. Barrick Gold Q2 2016, there is a significant difference.  According to my adjusted income approach in calculating an estimated break-even for gold mining for each:

Homestake Mining 1929: = $17.33 oz (based on $20.63 spot in 1929)

Barrick Gold Q2 2016: = $1,152 oz (based on $1,259 spot in Q2 2016)

Even though Homestake Mining's 1929 margin of a 16% profit was only twice as high as Barricks Q2 2016 margin of 8%, we can clearly see the real winners were the Homestake Mining shareholders who made 50 times more money in dividends than Barrick's shareholders.

NOTE:  The margins were simply calculated by taking the cost of production by the spot price in both examples.

As we can see, producing gold for its shareholders was a much better deal for Homestake Mining investors than for Barricks.  Furthermore, a Dollar could buy a lot more gold in 1929 than it can today.

U.S. Gold Certificates 1929 vs Federal Reserve Notes Today

Prior to President Roosevelt confiscating gold in 1933, the U.S. Treasury issued Gold Certificates.  Thus, any American could go into a bank prior to that period and turn in their paper Gold Certificate and demand actual gold.  Today, if you tried to do that at any bank, they would bring everyone out from the back and laugh at you.

Below are two $20 bills.  The top is a $20 Gold Certificate and the bottom is a $20 Federal Reserve Note:

The $20 Gold Certificate was printed in 1929, and the $20 Federal Reserve Note was printed 80 years later in 2009.  Both are bills, but one was backed by real gold and the other is now backed by $19.4 trillion in U.S. Public Debt.  That is why it's called a "Note."

We must remember, a "Note" is an obligation.  When you take out a home mortgage or car loan, it can be also called a "Note."  So, all those Federal Reserve Notes we keep in our wallet or purse are debts or obligations we owe, rather than an asset such as a Gold Certificate that represents physical gold.

Here is another Gold Certificate printed in 1928:

This $1,000 Gold Certificate was rare and even rarer today.  Of the 84,000 printed that year, there are only 200 available today to collectors (source).  The value of this $1,000 bill today ranges from $4,000 to over $20,000 depending on the condition.  So, not only did this $1,000 Gold Certificate represent a lot of value in gold at the time, it's worth 4 to 20 times more today.

If an American took that $1,000 bill and went to the bank to demand gold bullion in 1929, he or she would receive (50) $20 gold coins.  The amount of gold in a typical $20 St. Gaudens gold coin was 0.967 oz. (source).  So, even though the spot price of gold in 1929 was $20.63, when we multiply it by 0.967, we end up with almost $20.

Regardless, that $1,000 Gold Certificate in 1929 would enable the holder to a nice bag full of 50 gold coins.  The average cost of a new car in 1929 was $643 and a new median home price was $7,246.  Today, $643 would only pay half of the taxes on a $25,000 car.  Furthermore, $7,246 would be less than a third of one percent of a down payment for the typical $250,000 house today.

Lastly, $1,000 today in (10) $100 bills won't even buy you one ounce of gold.  All you could get today for $1,000 is 3/4 oz gold compared to 50 oz in 1929.

What a change in 85 years... eh?

Americans are in real trouble and I don't continue to say that just to be pessimistic or negative.  U.S. oil production is about to collapse while total U.S. public debt of $19.4 trillion turns out to be a staggering $60,625 for each American.  There is no way this debt will ever be repaid.

Some investors and analysts believe there should be a "Debt Jubilee" or a wiping out of debt so we can start fresh.  I would like to remind these "Einsteins" that wiping out debt also wipes out the supposed assets on the other side.  When assets implode, so will the capital available to the market for future economic activity.

Anyhow, U.S. debt will implode due to the collapse of U.S. domestic oil production on top of falling oil imports in the future.  This will create an event in history that will make the population understand the value of GOLD & SILVER once again.

While Americans have been suffering 45 years of Gold & Silver Monetary Amnesia, PRECIOUS METALS RELIGION will finally wake up the living dead.  However, when this occurs, I would imagine most Americans will be caught by surprise as many will be wondering why their Banks are closed for an extended "Holiday" and their brokers are no longer taking their calls.

While I have tried to wake up family and friends about whats coming, I hate to say...

GOD HATH A SENSE OF HUMOR.....

Lastly, if you haven't checked out our new PRECIOUS METALS INVESTING section or our new LOWEST COST PRECIOUS METALS STORAGE page, I highly recommend you do.

Check back for new articles and updates at the SRSrocco Report.

"He who holds the gold makes the rules?" notes SHTFPlan.com's Mac Slavo...

Fresh attempts at containing Russia and continuing the empire have been met with countermoves. Russia appears to be building strength in every way. Putin and his country have no intention of being under the American thumb, and are developing rapid resistance as the U.S. petrodollar loses its grip and China, Russia and the East shift into new currencies and shifting world order.

 

What lies ahead? It will be a strong hand for the countries that have the most significant backing in gold and hard assets; and China and Russia have positioned themselves very well. Prepare for a changing economic landscape, and one in which self-reliance might be all we have.

As The Free Thought Project's Jay Syrmopoulos warns,Russia is Hoarding Gold at an Alarming Rate — The Next World War Will Be Fought with Currencies

With all eyes on Russia’s unveiling their latest nuclear intercontinental ballistic missile (ICBM), which NATO has dubbed the “SATAN” missile, as tensions with the U.S. increase, Moscow’s most potent “weapon” may be something drastically different.

The rapidly evolving geopolitical “weapon” brandished by Russia is an ever increasing stockpile of gold, as well as Russia’s native currency, the ruble.

Take a look at the symbol below, as it could soon come to change the entire hierarchy of the international order – potentially ushering in a complete international paradigm shift – and much sooner than you might think.

The symbol is the new designation of the Russian ruble, Russia’s national currency.

Similar to how the U.S. uses the dollar sign ($), the U.K. uses the pound sign (£), and the European Union uses the euro symbol (€), Russia is about to begin exporting its symbol internationally.

After the failed “reset” in U.S./Russian relations by the Obama administration, and the continued deterioration of the countries relationship, Washington began targeting entire sectors of the Russian economy, as well as specific individuals, meant to impose an economic burden so severe that it would force Moscow into compliance.

Instead of decimating Russia, what it precipitated was a Russian response of gradually weaning themselves off of the hegemony of the U.S. petrodollar, and working with China to create an alternative to the SWIFT payment system that isn’t solely controlled by Western interests (see Asian Infrastructure Investment Bank, New Development Bank).

According to the Corbett Report:

New reports indicate that China is ready to launch its SWIFT alternative, and for those who have their ear to the ground this is the most significant move yet in the unfolding process of de-dollarization that is seeing the BRICS-led “resistance bloc” breaking away from the financial stranglehold of the US-led “Washington Consensus.”

 

For those who don’t know, SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and is shorthand for the SWIFTNet Network that is used by over 10,500 financial institutions in 215 countries and territories to transmit financial transaction data around the world. SWIFT does not do any of the clearing or processing for these transactions itself, but instead sends the payment orders that are then settled by correspondent banks of the member institutions. Still, given the system’s near universality in the financial system, it means that virtually every international transaction between banking institutions goes through the SWIFT network.

 

This is why de-listing from the SWIFT network remains one of the primary financial weapons wielded by the US and its allies in their increasingly important financial warfare campaigns.

Recently, financial guru Jim Rickards, author of the book “Currency Wars,” wrote that “Russia is poised for a major comeback in its economy. Russian bonds and stocks and the Russian currency, the ruble, will all benefit.” Rickards believes a “strong turnaround” is coming within Russia, and that this comeback will benefit the ruble.

While still suffering from the economic warfare being waged by the U.S., Russia has realized that as long they are subservient to the petrodollar, there remains a clear and present danger of the Russian economy being devastated by the whims of Washington.

The Bank of Russia, that nation’s central bank, is extremely clear about its mission, and monetary policy declaring on its website:

Monetary policy constitutes an integral part of the state policy and is aimed at enhancing well-being of Russian citizens. The Bank of Russia implements monetary policy in the framework of inflation-targeting regime, and sees price stability, albeit sustainably low inflation, as its priority. Given structural peculiarities of the Russian economy, the target is to reduce inflation to 4% by 2017 and maintain it within that range in the medium run.

In layman’s terms, that means that monetary policy, similar to nuclear weapons and the military, are “an integral part of the state policy” in Russia. While many analysts have noted the increased build-up in Russia’s military arsenal, seemingly few have highlighted the massive build-up of Russian gold reserves over the past decade.

Below is a chart showing Russian gold reserves between 1994 and last year, 2015:

Since 2006, there has been a year-on-year increase that reveals a significant upward trend. The chart clearly reveals that Russia’s state policy of increasing state monetary assets, in the form of gold. Additionally, the Russian government has been converting state rubles into gold assets. From 2006 to 2015, Russia’s state holdings of gold tripled.

Within just the past year Russia has substantially increased its gold holdings

According to the Business Insider:

In July of this year, the central bank of Russia added 200,000 ounces of gold to its reserves. The one-month uptick in Russian gold reserves — 200,000 ounces — is approximately equal to the entire annual output of Barrick Gold’s Turquoise Ridge gold mine in Nevada.

 

At that same rate — 200,000 ounces per month — in a mere five months, Russia would add to state gold reserves the equivalent of the entire annual output of Barrick’s massive Goldstrike mine in Nevada.

Currently, Russian gold reserves rank seventh in the world. It’s clear that there is a concerted effort by Russian authorities to build up the country’s gold reserves as part of a national strategy to negate the effects of economic warfare waged by the United States.

Rickards, in his 2011 book “Currency Wars,” theorized that Russia and China could combine their gold reserves to form a global gold-backed currency to compete against the U.S. dollar. Currently, Russian reserves stand at roughly 1,500 tonnes, with Chinese reserves totaling over 1,800 tonnes (according to China — it’s likely more), which would amount to a combined total of roughly 3,300 tonnes of gold.

The U.S. is about to lose overarching control of policymaking within the International Monetary Fund (IMF), thus the U.S. lockup on global gold is about to vanish, according to Business Insider.

Imagine for a moment the distinctly real possibility that Russian-Chinese alliance could exercise indirect (or even direct) control over the IMF’s gold reserve of over 2,800 tonnes. Russian, Chinese and IMF gold combined would equal roughly 6,100 tonnes, and would allow for direct competition with the U.S. gold reserves, estimated at 8,100 tonnes.

Russia and China have realized that the petrodollar is wielded by Washington as it’s weapon of choice when opposing a well-armed state, and clearly see the writing on the wall – thus working together to create a new global financial paradigm.

The reality is that the United States is $20 trillion dollars in debt, and eventually the time will come when the U.S. economy begins to implode — and all the fiat currency people are stuck holding will essentially be worth nothing more than the paper it’s printed on. Hard assets, such as gold and silver, should be bought and taken custody of while there is still an opportunity to do so, as a means of hedging against the potentially disastrous results of the U.S. using the petrodollar as a “weapon.”

Ultimately, the United States, Russia and China are all controlled by centralized power-hungry tyrants attempting to command powerful global bureaucracies like the IMF, the World Bank, SWIFT, New Development Bank and the Asian Infrastructure Investment Bank.

It’s not Russian nuclear weapons that people should fear, as the policy of mutually assured destruction essentially voids any benefit of a state launching a first-strike nuclear attack. The true threat to America is our economic house of cards, built upon the back of a neoliberal trade policy that puts the “rights” of corporations over that of people.

The gold price should rise in the medium and long term on global risks and the Trump Presidency, according to leading research consultancy Capital Economics.

The recent sharp gold price fall is again causing jitters among some investors who forget that gold remains more than 14% higher in dollar terms, 16.5% higher in euro terms and 36% higher in sterling terms year to date. Thus, gold is outperforming most stock market indices so far this year.

Capital Economics commodities economist, Simona Gambarini suggests in the World Gold Council's 'Gold Investor October 2016' newsletter there is further upside to the gold price even if US interest rates begin to rise. Hence its continuing importance as a diversification and as a safe haven asset.

"Going forward, lingering global risks should ensure that demand for gold as a safe haven asset remains elevated even in light of Fed tightening.”

Gold is likely to benefit from Trump's presidency for four reasons:

1. More aggressive fiscal policy could increase domestic demand and inflation. Many investors argue that gold is a good hedge of inflation, although its inflation-adjusted performance shows otherwise. Still, there could be strong demand for gold. If the Federal Reserve raises interest rates in response to higher inflation, higher inflation should keep real rates low, supporting gold; gold does not bear any interest.
2. If the protectionist policies that Trump threatened (like tariffs on China) trigger a trade war, US exports would suffer, and an economic slowdown would help lift gold prices.
3. Similarly, Trump's geopolitical policies could cause more uncertainty, prompting some investors to buy gold for safety.
4. Trump has touted a return to a gold-based monetary system. That's very unlikely, however.

In short, the bullish view on gold under Trump rests on the expectation that his policies would keep the world on edge, and that his fiscal spending plans would accelerate inflation. Gambarini forecasts that gold will rally to $1,450 per ounce by the end of 2017.

Once again it is time to fade the noise and fearful sentiment in the gold market and focus on the long term diversification benefits of gold.

Read full excellent 'Gold Investor October 2016' here

Gold and Silver Bullion - News and Commentary

Gold crawls away from lowest in over 5 mths on bargain-hunting (Reuters.com)

Asian Currencies Tumble to Seven-Year Low Amid Stock Outflows (Bloomberg.com)

Hedge Fund Gold Buyers Caught Out by Trump Vote as Prices Plunge (Bloomberg.com)

Soros Sells Off Gold ETF, Doubles Stack In Barrick Gold (Bloomberg.com)

Mnuchin Said to Be Top Treasury Pick Among Trump's Advisers (Bloomberg.com)

What Trump’s Stunning Upset Means for Markets (GoldSeek.com)

Why gold should still be the winner from a Trump presidency (TrustNet.com)

Greenspan Sees Bond Yields Climbing as High as 5 Percent Again (Bloomberg.com)

Ireland facing into a ‘perfect storm’ of economic unrest following Trump victory and Brexit result (IrishExaminer.com)

Will Trump ride to Europe’s rescue? (DavidMCWilliams.ie)

Gold Prices (LBMA AM)

15 Nov: USD 1,228.90, GBP 998.86 & EUR 1,138.70 per ounce
14 Nov: USD 1,222.60, GBP 997.80 & EUR 1,136.53 per ounce
11 Nov: USD 1,255.65, GBP 999.19 & EUR 1,154.45 per ounce
10 Nov: USD 1,280.90, GBP 1,034.07 & EUR 1,175.48 per ounce
09 Nov: USD 1,304.55, GBP 1,050.42 & EUR 1,176.84 per ounce
08 Nov: USD 1,284.00, GBP 1,034.26 & EUR 1,162.02 per ounce
07 Nov: USD 1,286.80, GBP 1,036.13 & EUR 1,162.50 per ounce

Silver Prices (LBMA)

15 Nov: USD 17.00, GBP 13.68 & EUR 15.80 per ounce
14 Nov: USD 17.20, GBP 13.73 & EUR 15.95 per ounce
11 Nov: USD 18.59, GBP 14.73 & EUR 17.09 per ounce
10 Nov: USD 18.75, GBP 15.11 & EUR 17.20 per ounce
09 Nov: USD 18.81, GBP 15.12 & EUR 16.96 per ounce
08 Nov: USD 18.26, GBP 14.72 & EUR 16.54 per ounce
07 Nov: USD 18.22, GBP 14.67 & EUR 16.47 per ounce

Recent Market Updates

- President Trump – Why Market Loves Him and Experts Wrong
- ‘Helicopter Money President’ Trump To Create Inflation and Gold Will Rise
- Central Bank Gold Demand continues in Q3
- Trump Victory Sends Gold Surging 5%
- An uncertain election outcome looks good for gold
- Ignore past elections, this one’s too uncertain
- Gold may be the only winner in US elections
- The London Gold Market – ripe for take-over by China?
- Diwali, Gold and India – Is Love Affair Over?
- Silver Krugerrands By South African Mint Coming Soon – Massive Clearance Sale on Gold Krugerrands
- Trump “Will Probably Win” and Gold “May Rise $100” Overnight – Rickards
- World Is Out of Weapons
- Gold Is The “Kardashian of Commodities” – Herbert & Keiser Interview Skoyles

• British PM May fires starting gun on Brexit (Reuters); Britain Starts ‘Historic’ Brexit Process (BBG)
• Firms stack up Brexit warnings as May triggers divorce talks (Reuters)
• Huge range of sterling forecasts clouds horizon for Brexit talks (Reuters)
• Merger of Deutsche Börse and LSE Blocked by EU Regulator (WSJ)
• After crippling cost overruns, Toshiba's Westinghouse files for bankruptcy (Reuters)
• Manafort Received Loans From Former Trump Adviser (WSJ)
• The Great Nevada Lithium Rush to Fuel the New Economy (BBG)
• More States Weigh Expanding Medicaid After Health Bill’s Demise (WSJ)
• Germany to block right-winger from ceremonial post in parliament (Reuters)
• FDA Approves Drug for Primary Progressive Multiple Sclerosis (WSJ)
• Behind Trump Rally Resilience Is Unusually Firm Profit Outlook (BBG)
• Stores Serving Immigrants Feel Pinched by Trump Moves (WSJ)
• Police union warns Trump 'sanctuary city' cuts could risk safety (Reuters)
• German engineering association sees potential upswing in U.S. (Reuters)
• Malaysia inspects North Korean coal ship for possible U.N. sanctions breach (Reuters)
• Amazon and Facebook Hit Unexpected Obstacle in India: China (WSJ)
• Islamic State shelling stops work on damaged Syrian dam (Reuters)

Overnight Media Digest

FT

- UK government dropped plans to privatise Channel 4 but is increasing pressure to move its operations in part or full from London. In the coming weeks, a government consultation will be published which will examine whether Channel 4 should relocate some or all of its staff.

- Britain’s second high-speed rail link, HS2, is being pressured by engineering firm Mace to remove contractor CH2M, which won a 170 million pound contract last month to design the second phase of the 56 billion pound HS2. Mace, threatening legal action, said that HS2’s new chief executive, Mark Thurston, was a former CH2M employee — as was his predecessor, Roy Hill, who filled the role on a temporary basis.

- In a survey by activist hedge fund Elliott Advisors, 25 percent of Akzo Nobel’s shareholders want Akzo to engage with U.S. rival PPG in its 22.4 billion euro pursuit of the company. Akzo's board dismissed two offers in three weeks, citing factors such as potential job cuts, antitrust concerns and a poor cultural fit between the two businesses.

- British Prime Minister Theresa May signed the historic letter signalling Britain’s exit from the EU on Tuesday evening. The official Article 50 exit process will begin on Wednesday when British ambassador to the EU, Tim Barrow, would present the letter of withdrawal to European Council President Donald Tusk.

NYT

- Reversing clean power rules may lead to more drilling and pipelines, but economics and state initiatives still favor natural gas and renewable energy. nyti.ms/2nKunOA

- South Korea's Samsung Electronics Co Ltd is considering offering refurbished models of its canceled smartphone, a move that has raised eyebrows in the technology world. nyti.ms/2nyOf6O

- Didi Chuxing, a company in China that last year bested Uber in that huge ride-sharing market, is in negotiations to get SoftBank of Japan to take part in a multibillion-dollar investment round, according to people familiar with the talks. nyti.ms/2owh1m3

- Tencent Holdings Ltd, one of China's internet giants, has acquired a 5 percent stake in Elon Musk's electric-car maker Tesla Inc, according to a filing with the United States Securities and Exchange Commission on Tuesday. nyti.ms/2owF6sU

- BlackRock Inc is merging many actively managed mutual funds with peers that rely more on algorithms and models to pick stocks. nyti.ms/2nyJ6M6

- The U.S. Food and Drug Administration approved on Tuesday the first drug to treat a severe form of multiple sclerosis, offering hope to patients who previously had no other options to combat a relentless disease that leads to paralysis and cognitive decline. nyti.ms/2o53aGN

Canada

THE GLOBE AND MAIL

** U.S. President Donald Trump signed an order Tuesday aimed at boosting coal-fired electricity and unraveling key elements of his predecessor's climate-change policies – a move that will increase political pressure on Prime Minister Justin Trudeau's own climate agenda. https://tgam.ca/2o6hoY6

** The Ontario government is taking steps to boost consumer confidence in the industry for newly-built homes in the province. A new standalone regulator will provide better oversight of home builders, Minister of Government and Consumer Services Tracy MacCharles said. https://tgam.ca/2o6at0U

** Canada is bracing for an intense global technology race as Ottawa, the provinces and corporations pump hundreds of millions of dollars into the burgeoning artificial intelligence sector in a bid to keep the country competitive as it faces technological changes in the year ahead. https://tgam.ca/2o676aa

NATIONAL POST

** Two Canadian gold giants, Barrick Gold Corp and Goldcorp Inc, will form a partnership in Chile's gold belt in a multi-faceted deal that will see Goldcorp commit nearly $1 billion as miners look for creative solutions to find and fund new sources of growth. http://bit.ly/2o6aeD3

** The Federal Court of Canada has ruled that cabinet ministers are not entitled to wait "as many years as they see fit" before responding to valid requests from the public. http://bit.ly/2o6lE9P

** Boston Pizza is banking on a tech-forward urban restaurant concept as casual dining chains across the country are struggling to hold on to customer traffic. http://bit.ly/2o6asdn

Britain

The Times

* Tesco Plc Chief Executive Dave Lewis has declared the crisis at the supermarket chain over and said it is "moving on" after agreeing to pay about 235 million pounds ($292.6 million) to settle a false accounting investigation. http://bit.ly/2o46XUO

* Square Inc, the payments company led by Twitter Inc Chief Executive Jack Dorsey said on Tuesday it had officially launched in UK after a pilot project. http://bit.ly/2o8y2a1

The Guardian

* Scottish First Minister Nicola Sturgeon has won a key Holyrood vote on her plans for a second independence referendum, triggering accusations from UK ministers that her demands are premature. http://bit.ly/2odEk4N

* The European parliament will veto any Brexit deal that prevents European Union citizens who move to the UK during the next two years from having the same rights to live and work in Britain as those already in the country. http://bit.ly/2nqD2n4

The Telegraph

* Virgin Media has launched an internal investigation and suspended staff over concerns they may have exaggerated the progress of its 3 billion pound Project Lightning network expansion project. http://bit.ly/2nK3JFm

Sky News

* British Prime Minister Theresa May will issue an appeal to the country to "come together" as she formally launches the process for the UK to leave the European Union. http://bit.ly/2o4kJqA

* Leading business groups in UK and Europe will plead this week for a smooth Brexit based on a commitment to free trade amid renewed warnings about the consequences of failing to secure a deal. http://bit.ly/2ow8QWX

The Independent

* As Prime Minister Theresa May prepares to trigger Article 50 on Wednesday, former business secretaries Michael Heseltine, Peter Mandelson and Vince Cable told the Independent leaving with no arrangement in place would be disastrous for British firms and jobs. http://ind.pn/2mNLe3L

* Uber Technologies Inc said it is ending operations in Denmark in April as a result of new taxi laws, marking the latest setback for the U.S.-based ride hailing company. http://ind.pn/2ndHwf7

• Futures flat as Trump tax plan awaited (Reuters)
• Trump’s 15% Tax Plan May Just Be His Opening Gambit (BBG)
• Budget Director, After Health-Law Missteps, Preps for Spending Battle (WSJ)
• 100 Days: Trump's victories dimmed by misfires (Reuters)
• White House Intervened to Toughen Letter on Iran Nuclear Deal (WSJ)
• Trump Changing Tactics on Tax After Health-Care Failure (BBG)
• Is Justin Trudeau the Anti-Trump? (BBG)
• Oil prices slip on bulging U.S. crude stockpiles, ample supplies (Reuters)
• Congress moves closer to avert shutdown (Reuters)
• Hungarian opposition struggles to build on anti-Orban sentiment (Reuters)
• FCC Chief Poised to Roil Capital With Net Neutrality Rollback (BBG)
• Currency Moves Suggest U.K. Data Seen Before Release (WSJ)
• America’s Rich Get Richer and the Poor Get Replaced by Robots (BBG)
• China's biggest property markets still hot, prices may rebound if curbs lifted (People's Daily)
• French intelligence says Assad forces carried out sarin attack (Reuters)
• America’s $1.2 Billion Mexico Milk Trade Is Now at Risk (BBG)
• Express Scripts Faces a Future Without Its Biggest Customer (WSJ)
• Europe’s Car Makers See Light at the End of the Tunnel (WSJ)
• South Korea court says Uber violated transport law, latest setback for U.S. firm (Reuters)
• Tesla Restores Auto-Brakes Amid Consumer Reports Downgrade (BBG)
• Turkey says detains 1,000 'secret imams' in police purge (Reuters)
• China seeks to cement globalization credentials at Silk Road summit (Reuters)
• Climate Evangelists Are Taking Over Your Local Weather Forecast (BBG)
• Syrian refugees must buy travel papers - from Assad (Reuters)
• EU Ankara negotiator calls for suspension of Turkey accession talks (Reuters)

Overnight Media Digest

WSJ

- An African-American on-air host for Fox News has joined a group of current and former employees suing the cable channel and some of its senior executives for alleged racial discrimination. http://on.wsj.com/2q5rycu

- Yahoo Inc Chief Executive Marissa Mayer is set to reap some $187 million from her shareholdings as a result of the internet company's sale of its core business to Verizon Communications Inc according to securities filings. http://on.wsj.com/2q5gQm2

- Express Scripts Holding Co, the largest administrator of prescription-drug benefits in the U.S., is facing an identity crisis as it grapples with replacing $17.1 billion in annual revenue following the loss of its biggest customer, health-insurer Anthem Inc. http://on.wsj.com/2q5i8hd

- Uber Technologies Inc on Tuesday detailed ambitious plans to take to the skies with flying cars, as the ride-hailing company is reeling from a series of controversies including a lawsuit that could impede its crucial self-driving vehicle initiative. http://on.wsj.com/2q5idl1

FT

Uber Technologies Inc said it would demonstrate flying vehicles by 2020 in Dubai and the Dallas-Fort Worth area, with full-scale operations by 2023. The ride-hailing service is partnering with aircraft companies including Embraer SA to make the flying taxis.

Alitalia is preparing for special administration proceedings after workers rejected its latest rescue plan, making it impossible for the loss-making Italian airline to secure funds to keep its aircraft flying.

Palantir Technologies entered into a consent decree with the U.S. Labor Department to resolve charges it discriminated against Asian applicants in hiring for engineering jobs. Palantir agreed to pay $1.6 million and offer positions to eight extra Asian job applicants.

NYT

- Eleven current and former Fox News employees filed a class-action lawsuit in New York against the network, accusing it of "abhorrent, intolerable, unlawful and hostile racial discrimination". http://nyti.ms/2q5o49U

- Despite the turmoil that has engulfed Wells Fargo & Co in the past year, shareholders voted to re-elect all of the bank's 15 directors during a raucous annual meeting on Tuesday. But some of the board members edged in just barely, signaling that many shareholders want further changes to the bank's leadership. http://nyti.ms/2q5vIBc

- Newly released police documents claim that David Dao, the passenger who was shown being dragged off a United Airlines flight on April 9 in widely shared videos, behaved violently toward the officers removing him, but his lawyer dismissed this account as "utter nonsense". http://nyti.ms/2q5ob55

- Chobani LLC, the yogurt company, has filed a lawsuit against Alex Jones, the high-profile conspiracy theorist and the host of a popular right-wing radio show, for posting what it called false news reports about the company and its owner. http://nyti.ms/2q5gxrv

- A group including Derek Jeter and Jeb Bush, the former Florida governor and presidential candidate, has reached a tentative agreement to buy the Miami Marlins, according to two people briefed on the situation who requested anonymity because the deal is not official. http://nyti.ms/2q53iqY

Canada

THE GLOBE AND MAIL

** Halfway through the British Columbia election campaign, leaders of the three major parties are heading into a TV studio on Wednesday for the second debate, that could be a turning point ahead of voting on May 9. https://tgam.ca/2pyPRzs

** Great-West Lifeco Inc is making sweeping changes to its Canadian business, cutting staff as it moves to reduce costs in an increasingly competitive industry. https://tgam.ca/2pyzVNI

** Barrick Gold Corp shares slid 11 percent on Tuesday as investors reacted to the gold miner's first-quarter results, which missed production and earnings estimates and revealed higher operating costs. https://tgam.ca/2pyPWmX

NATIONAL POST

** The Canada Pension Plan Investment Board is taking a stake in Nord Anglia Education Inc, a company that runs international private schools, with an eye to consolidating the fragmented global market for schools that serve the children of expatriates. http://bit.ly/2pyDOCp

** Grocer Metro Inc surprised the market again on Tuesday, eking out a higher-than-expected second-quarter profit despite a period of corrosive food price deflation and intense rivalry between Canada's supermarket chains. http://bit.ly/2pyCf7o

Britain

The Times

Royal Bank of Scotland Group Plc has hit a brick wall in its attempt to resolve the U.S. investigation into its mis-sale of toxic mortgage securities because of changes at the Department of Justice since the election of President Donald Trump. http://bit.ly/2pguujt

Akzo Nobel NV attempted to trump activist investor Elliott Advisors as it denied its request for a shareholder vote on the removal of its chairman. http://bit.ly/2pg0RPy

The Guardian

McDonald Corp's is to offer 115,000 UK workers on controversial zero-hours contracts the option of moving to fixed contracts with a minimum number of guaranteed hours every week. http://bit.ly/2pg1nwY

The boss of Costa Coffee owner Whitbread Plc has welcomed the proposals being discussed to avoid labour shortages in cafes and restaurants following Brexit, such as the idea of "barista visas". http://bit.ly/2pgflyx

The Telegraph

Four UK construction hubs are being sought by Heathrow to allow components of its 16 billion pounds ($20.53 billion)expansion project to be built away from the airport. http://bit.ly/2pgjLWj

Research by risk consultancy Control Risks has found that a quarter of large companies spend less than $25 a year per staff member on compliance, and a similar proportion have five or fewer people in their compliance teams. http://bit.ly/2pgnTp6

Sky News

Confectionery giant Nestle SA is planning to cut 298 jobs in a shake-up of UK sites as it moves some production to Poland. The Swiss firm said the roles affected were mainly at plants in York and Fawdon, in Newcastle-upon-Tyne, with sites at Halifax and Girvan in Ayrshire also involved. http://bit.ly/2pgsBn7

Philip Green has complained of being used as a "political football" after MP Frank Field warned he might still be stripped of his knighthood despite his 363 million pounds BHS pension scheme settlement. http://bit.ly/2pgkpTJ

The Independent

The respected chair of the House of Commons Treasury Select Committee, Andrew Tyrie, will stand down from Parliament at the general election. http://ind.pn/2pgi4bi

Britain can make up for all of the exports that it will lose as a result of Brexit by building on underdeveloped links with countries such as India, Canada and Israel, according to think tank Open Europe. http://ind.pn/2pg2L2E

Submitted by Ronan Manly, BullionStar.com

Infographic website Visual Capitalist recently published an eye-catching infographic on behalf of Sprott Physical Bullion Trusts which featured 4 well-known billionaire investors and their supposed investments in gold. The infographic is titled “Why the World’s Billionaire Investors Buy Precious Metals” and can be seen here.

The 4 investors profiled in the infographic are:

• Jacob Rothschild (Lord), chairman of London-based investment trust RIT Capital Partners Plc
• David Einhorn, president of Manhattan-based hedge fund firm Greenlight Capital
• Ray Dalio, chairman and CIO of hedge fund firm Bridgewater Associates, Westport (Connecticut)
• Stanley Druckenmiller, chairman and CEO of Manthattan-based Duquesne Family Office (and formerly of Duquesne Capital Management)

Overall, four very famous investors, and four names that should at least be vaguely familiar to almost anyone who has a passing interest in financial markets and investing.

For each of the 4 billionaires, the Sprott infographic provides a few quotes about their views on gold and then moves on to record their recent ‘Moves’ into ‘gold’, or in some cases their recent readjustments of existing ‘gold’ exposures.

However, the trouble with this infographic is that although it’s visually appealing, nowhere does it mention how these famous investors achieve their exposures to ‘gold’, i.e. what form their gold investments take.

This is something which is also regularly bypassed in financial media articles, especially those published by Bloomberg, articles which refer to hedge fund managers such as Druckenmiller, or John Paulson, or Ray Dalio buying ‘gold’, but which all too often are too lazy to do basic research into the actual trades that these hedge fund managers execute to acquire their positions in ‘gold’ and whether these positions are actually in real physical gold or in some form of synthetic or derivative or paper gold.

In fact, the first comment posted on the Visual Capitalist website under said Sprott infographic when it was published asks exactly this question:

“I’d like to know if they are holding physical bullion, presumably in guarded safe vaults, or just paper.”

Given that the infographic is ‘Presented by’ Sprott Physical Bullion Trusts, one might assume that Rothschild, Einhorn, Dalio and Drukenmiller are all investing in physical bullion.

But are they? This is the question I set out to answer and which is documented below. Some of my findings may surprise you.

The Rothschilds: Jacob & RIT Capital Partners

First port of call, the Rothschilds of St James’s Place in London. Given that the Rothschilds are probably the richest family in the world and have been involved in the gold market for hundreds of years, you might assume that the family of the Five Arrows knows a thing or two about the difference between real gold bars and paper gold. And presumably they do. However, no one seems to have told this to the day-to-day managers of RIT Capital Partners Plc, the Rothschild controlled investment vehicle quoted in Sprott’s infographic.

Investment trusts are actually public limited companies (Plcs) which are structured as closed-ended investment vehicles. These vehicles issue a certain number of shares that can then be publicly traded. RIT Capital Partners plc, formally called the Rothschild Investment Trust (hence the name RIT), trades on the London Stock Exchange. Jacob Rothschild (The Lord Rothschild) is chairman of RIT Capital Partners Plc.

As a publicly traded vehicle, RIT Capital Partners Plc publishes annual and half-yearly reports, and is therefore more transparent than its hedge fund brethren. RIT’s latest report, an annual report for year-end 2016, was published on 28 February 2017.

Strangely, although the Sprott infographic was only published on 7 June 2017, it quotes not from the annual report for year-end 2016 but from RIT’s half-yearly report to 30 June 2016, which was published on 15 August 2016.

The Sprott infographic states:

“In a 2016 shareholder update [Jacob] Rothschild outlined bold changes to the RIT Capital Partners’ portfolio, including…increased exposure to gold and precious metals to 8%”

Similarly, in the RIT Chairman’s Statement (page 2) of the 30 June 2016 report, Jacob Rothschild said “We increased gold and precious metals to 8% by the end of June.”

Glancing at either the Chairman’s statement or the Sprott infographic, you might think ‘ok, so RIT holds (or held) 8% of its portfolio in gold and precious metals’. However, this is not the case, a fact which becomes clear when we look at the Investment Portfolio (holdings) of RIT that are detailed in the same report.

Jacob Rothschild, RIT Capital Partners

RIT is a global investment fund whose holdings span equities, hedge fund investments, private investments, real assets, credit, and bonds. It’s ‘gold’ and ‘precious metals’ holdings are listed under ‘Real Assets’. The entire RIT portfolio is worth £2.73 billion.

The Real Assets section of the RIT report to 30 June 2016 (on page 6 of the report, page 8 of the pdf) lists relevant gold-related line items as:

• “BlackRock Gold & General Fund”, described as “Gold and precious metal equities”, valued at £22.9 million, and representing 0.9% of the NAV, with a fund weight of 0.83%
•  “Gold Futures” with a description “Long, 6.0% notional“, valued at £7.6 million, represents 0.3% of the NAV
• “Silver Futures with a description “Long, 1.2% notional” valued at £7.6 million, representing 0.0% (rounded) of the NAV

These are the only gold-related investments in the entire RIT portfolio. Therefore, could this 8% that Jacob Rothschild refers to as “we increased gold and precious metals to 8% by the end of June” be a combination of a 6% notional long on gold futures, a 1.2% notional on long silver futures, and a 0.8% fund weight in gold mining equities through the BlackRock Gold & General Fund holding?

In short, the answer is Yes.

Firstly, looking at the BlackRock Gold & General Fund, this is a UCITS equity fund which exclusively invests in the shares of gold and silver mining companies such as Newcrest, Newmont, and GoldCorp and which is benchmarked against the FTSE Gold Mining Index (an equity index). However, the BlackRock website reminds us that “The Fund does not hold physical gold or metal.” Like all equity investments, this fund exposes its holders to equity risk, currency risk, sectoral risks (in this case the mining sector), possible gold hedging risks, and the general corporate risks that come with stock specific investing in any publicly quoted company, some of which cannot be diversified through portfolio investing.

Next up are the precious metals futures line items. In investment portfolios, notional is literally the gross exposure of a position. In this case, the RIT portfolio being long 6.0% notional in gold futures just means that the portfolio’s notional exposure to gold (via the gold futures position) represented (on 30 June 2016) an amount which was 6.0% of the total (gross) exposure of the portfolio. This is also a leveraged position since it was acquired via the purchase of exchange traded futures and the maintenance of these futures via margin. The amount reflected in the NAV for this position just refers to the margin.

I also checked with RIT investors relations as to whether Jacob Rothschild, when he stated that RIT holds gold, was actually referring to these gold futures positions. RIT investor relations responded:

“Yes, we do refer to long gold futures exposure as “holding gold”. We take this view since we are confident that gold futures are acting as a suitable proxy for gold both from a regulatory perspective and in terms of where we are in the cycle.

However, it should be clear to all that holding gold futures is not the same thing as holding vaulted physical gold. Gold futures may provide exposure to the US Dollar price of gold, but that’s about it, and even if they can be theoretically exercised into physical gold on the COMEX or ICE platforms, no one uses them for this purpose. For example, only 0.04% of COMEX gold futures contracts result in physical delivery each year.

Gold futures also entail exchange risk, risk of not being able to exercise for delivery, margin risk, forced cash settlement risk, etc etc. Gold futures are also derivatives that can come into existence in massive quantities as long as there are counterparties to take the other side of the futures trades.

Allocated physical gold on the other hand is an asset which exists in limited quantities, has no counterparty risk, has intrinsic value and has been used as money and as a store of value for thousands of years.

The “regulatory perspective” that RIT refers to just seems to mean that the fund’s exposure ticks various compliance boxes and is an acceptable security from a compliance and regulatory perspective.

The “where we are in the cycle” phrase probably refers to the interest rate cycle in terms of interest rate movements, inflation, real interest rates etc, but surely this is irrelevant because if you really believe that gold futures prices are a perfect proxy for gold prices, then the existence of a “cycle” and the phases of such a cycle become irrelevant to the investment decision?

In summary, it should be clear that RIT Capital Partners Plc does not hold any gold or other precious metals, because it merely holds gold futures and units in a BlackRock fund which itself only holds gold and silver equities (common shares) and which does not hold physical gold.

Just for completeness, let’s turn to the latest annual report from RIT for year-end 2016 that Sprott did not refer to. Has anything changed compared to 30 June 2016? At year-end 2016, according to Jacob Rothschild:

“We continue to hold gold and gold mining shares amounting to 6% of the portfolio.“

Therefore, by the end of 2016, by RIT’s logic, it now had a 6% exposure to gold (and the exposure to silver futures had disappeared). However, as per the 6 month earlier period, this was really a) exposure to the US dollar price of gold via gold futures and b) an exposure to the common equity of publicly-traded gold mining companies through the BlackRock fund investment.

In the Real Assets section of the RIT annual report (page 13 of the report, page 15 of the pdf), it lists:

• “BlackRock Gold & General Fund”, with a description “Gold and precious metal equities” valued at £20.3 million, representing 0.9% of the NAV, and with a fund weight of 0.7%
• “Gold Futures” with a Description “Long, 5.7% notional” representing (0.2%) of the NAV

Again, the 6% Rothschild reference includes the 5.7% long notional on gold via the gold futures, the BlackRock fund with a weight of 0.7%, and possibly the (0.2%) NAV (margin), which altogether net to approximately 6% when rounded down. Since 8% sounds better than 6%, Sprott may have chosen to reference the 30 June 2016 RIT report and not the more recent 30 December 2016 RIT report as this would make Rothschild appear more bullish on gold.

David Einhorn and Greenlight Capital

Hedge funds by their nature are very secretive, and because they are private pools of capital, they have no obligation to report detailed holdings even to their clients, let alone to the general public. Some of the justifications for hedge fund secrecy include preventing other trading parties adversely trading against them and preventing competitors replicating their positions. Note, hedge funds still have to report equity holdings to the US SEC and they do this via their quarterly 13F form submissions, which can be viewed on the SEC EDGAR website about 6 weeks after quarter end.

Sometimes hedge fund stars will drop hints about some of their positions or engage with the financial media, but this is mainly to talk their positions and trading books up. Often however, the “partner letters” (similar to shareholder letters) that hedge fund partnerships send to their clients / investors will give some indication as to their positions and asset allocations, and for whatever reason, some of these letters seem to make it into the public domain pretty quickly. Note that most hedge funds are established as Limited Liability Companies (LLCs), a structure which supports the partnership model.

Following Jacob Rothschild, next up on the Sprott infographic is hedge fund manager David Einhorn and his Greenlight Capital hedge fund firm. Greenlight, as a hedge fund firm, runs a series of funds that invest in equity, debt etc but also include global macro and that are known as the “Greenlight Capital funds” a.k.a. “The Partnerships”. There are at least 6 funds in this group, maybe more.

The Sprott infographic refers to a recent gold-related ‘Move’ that Einhorn that made as follows:

“In early 2017, Einhorn mentioned on an earnings call that he was:…Keeping gold as a top position”

More recently, Greenlight again refers to its gold positions in a partners letter dated 25 April 2017, in which it wrote that “gold gave us a small profit in macro”, and that:

 “Gold remains a long-term position with a thesis that global fiscal and monetary policies remain very risky”

So we can assume that Einhorn maintains a gold exposure of some sort. Since there was no information in the above partner letter as to what exactly Greenlight refers to as a gold position, and nothing that I could find on the web, I did what any junior Bloomberg reporter should but doesn’t do, and shot off an email to Greenlight asking how Greenlight Capital attains its long gold exposure? Surprisingly, or maybe not, within about 20 minutes Greenlight answered with a short and sweet one-liner:

 “We hold physical allocated gold in all our funds.” 

This response came from the top of the Greenlight tree, close to Einhorn. Hint David Einhorn only follows three accounts on Twitter, one of which is Donald Trump another of which is the Einhorn Trust. So now we know that at least one major hedge fund firm holds physical allocated gold.

On a side note, Greenlight also offers two funds called Greenlight Capital (Gold), LP and Greenlight Capital Offshore (Gold), Ltd. These two funds actually offers investors a gold class which denominates investments in that class in gold rather than USD. This is similar to a USD denominated fund offering shareholders a EUR or CHF class, the only difference being that this class is in gold. 

Ray Dalio and Bridgewater

Bridgewater Associates, based in Westport in Connecticut, runs some of the largest and most well-known individual hedge funds such as the global macro Pure Alpha as well as other well-known funds called ‘The All Weather’  and ‘Pure Alpha Major Markets’. Ray Dalio is founder, chairman and chief investment officer (CIO) of Bridgewater.

In the Sprott infographic, the gold ‘Move’ which they chose to highlight Dalio for was that:

“In 2016, Dalio said it is prudent to have a ‘well-diversified portfolio’ that is 5-10% gold”

However, unlike the other investors profiled, i.e. Rothschild, Einhorn, and Druckenmiller, who had investment decisions attributed to them that involved taking or extending long positions, there is nothing, at least in the infographic, that refers to Dalio taking on or amending a gold position.

When Dalio refers to gold, which he has done publicly on a number of occasions, he tends to do so in generalistic terms such as the following comments which were taken from Dalio’s appearance at the CEO Speaker Series conversations organised by the Council on Foreign Relations (CFR):

“And so gold is one of the currencies. So we have dollars, we have euros, we have yen and we have gold.”

“Now, it [gold] doesn’t have a capacity — the capacity of moving money into gold in a large number is extremely limited.”

“I think … there’s no sensible reason not to have some — if you’re going to own a currency, … it’s not sensible not to own gold”

“I don’t want to draw an inordinate amount of attention to gold”

“a certain limited amount, at least passably, should be in gold, just like you would hold a certain amount in cash”

“Now, it depends on the amount of gold, but if you don’t own, I don’t know, 10 percent in — if you don’t have that and then it depends on the world, then you — then there’s no sensible reason other than you don’t know history and you don’t know the economics of it.”

 

Ray Dalio, Bridgewater Associates

 

Dalio frequently, in various forums, demonstrates his understanding of the historical importance of gold in the monetary system. Based on the language that Dalio uses about capacity of the gold market and his appreciation of the history of gold, my hunch is that Bridgewater does hold physical gold in a similar manner to how Greenlight Capital holds gold.

Dalio has also gone on record with Tony Robbins hinting at a gold allocation that he would use for an “all weather fund”. This is not the Bridgewater All Weather Fund, but it could be something similar. Dalio’s recommended asset allocation that he gave Robbins was:

• 30% Stocks
• 40% Long-Term Bonds
• 15% Intermediate-Term Bonds
• 7.5% Gold
• 7.5% Commodities

Although it is quite tricky to contact Bridgewater, I did manage to find Dalio’s email (somehow or other) and like an aspiring Bloomberg reporter (or not), I shot off an email to Dalio asking:

“Does Bridgewater hold physical gold in its funds (e.g. Pure Alpha, All Weather, and Pure Alpha Major Markets) or some other type of long gold exposure?” 

The same day, I received back an automated response:

______________________________________________________________________

Message from "Ray Dalio"
______________________________________________________________________

I recognize from your email address that this is the first message I have received from you since Bridgewater Associates began using Sender Address Verification (SAV).

Your message is very important to me.  Like you, we are very concerned with stopping the proliferation of spam.  We have implemented Sender Address Verification (SAV) to ensure that we do not receive unwanted email and to give you the assurance that your messages to me have no chance of being filtered into a bulk mail folder.

By pressing REPLY and SEND to this message your original message will be delivered to the top of my inbox.  You need only do this once and all future emails will be recognized and delivered directly to me.
...

Thank you!

Ray Dalio

However, after replying as per the instructions above using the verification address, there was no further response from Bridgewater. Maybe he is on vacation!

So the jury is still out on how Bridgewater acquires its exposure to gold, assuming that its funds actually have exposure to gold. But my guess is that at least some of Bridgewater’s funds do hold gold, and probably hold real physical allocated gold.

Stanley Druckenmiller and Duquesne

Finally, the Sprott infographic features Stanley Druckenmiller, founder and former chairman and president of Pittsburgh-based Duquesne Capital Management, and also former portfolio manager of Soros’ Quantum Fund. In 2010, ‘Stan’ Druckenmiller wound down Duquesne Capital since he claimed it was becoming harder to deliver consistently high returns, but he continued to manage his own wealth through Duquesne Family Office LLC, which is based out of Manhattan.

According to the infographic, in early 2017 Druckenmiller said:

“Gold was down a lot, so I bought it.”

Stan Druckenmiller, Duquesne

This quote was reported in a 8 February 2017 Bloomberg article which itself was based on a CNBC interview from 7 February:

“I wanted to own some currency and no country wants its currency to strengthen,” Druckenmiller said Tuesday in an interview. “Gold was down a lot, so I bought it.” 

As per usual, Bloomberg doesn’t bother to find out or mention what form of gold exposure Druckenmiller was referring to in that interview.

Strangely, Bloomberg says that Druckenmiller bought gold in late December and January having previously sold his ‘gold’ on election night in November when Trump was elected. I say strangely because Druckenmiller is known for getting his US dollar ‘gold exposure’ via the gold-backed ETF the SPDR Gold Trust (GLD). However, the Duquesne Family Office 13F filings with the SEC don’t show GLD activity in Q4 2016 or Q1 2016.

Looking at recent Duquesne Family Office 13F filings which show reportable equity holdings (including GLD since GLD is a listed security and is basically like a share), the last time Duquesne Family Office had a long exposure to the SPDR Gold Trust was in Q1 2016 when it held 2,016,000 call options on the SPDR Gold Trust (Cusip 78463V907) which at the time had a notional exposure of $237.16 million. Druckenmiller had purchased 2,880,000 call options on GLD during Q2 2015 but reduced this to 2,016,000 calls during Q1 2016. Duquesne has not held any SPDR Gold Trust shares or options since Q1 2016.

However, looking at the Duquesne 13F filings for Q3 2016, Q4 2016 and Q1 2017, there are some interesting changes in reported holdings of some gold mining equities over this period.

As of the end of September 2016, Duquesne reported holding 1.8326 million Barrick Gold shares and 530,800 Agnico Eagle Mines shares. Then, as of the end of December 2016, neither of these stocks appeared on the Duquesne 13F list.

However, as of the end of March 2017, both Barrick and Agnico reappeared on Duquesne’s filing, with Druckenmiller’s family investments holding 2.85 million Barrick Gold shares, and 882,900 Agnico Eagle Mines shares. Barrick Gold, headquartered in Canada, is the world’s largest gold mining company. Agnico Eagle, also headquartered in Canada, is another large gold mining company.

The timing of Druckenmiller saying that he sold his ‘gold’ on election night in November 2016 and the bought gold in late December 2016 and January 2017 fits very well with the Duquesne trades of selling Barrick Gold and Agnico Eagle so that they appeared in the Q3 13F, but not in the Q4 13F and then reappeared in the Q1 2017 13F. If this is the case, then Druckenmiller’s Duquesne does not hold gold but holds gold mining equities, and Druckenmiller’s recent references to buying gold are really references to holding common shares in publicly-traded gold mining companies.

Duquesne, however, could hold other ‘gold exposures’ such as gold futures or even real physical allocated gold. But due to the non-obligation of these investment pools to report holdings, this is unclear.

I also sent an email to Stan Druckenmiller at his Duquesne address, asking him:

“Does Duquesne Family Office hold physical gold as part of its exposure to gold within its investments, or is the exposure some other type of long gold exposure such as the gold-backed ETF GLD?”

However, as of the time of writing, Druckenmiller has not responded.

Druckenmiller’s gold exposure via GLD calls between Q2 2015 and Q1 2016 also deserves some commentary. Readers of this website will know that holding a gold-backed ETF such as GLD is not the same as owning real physical gold. Although the Trust behind GLD holds gold bars, GLD units just provide exposure to the US dollar price of gold and there is no conversion option into real gold. With GLD, the holder is a shareholder and not a gold holder. There are many other concerns with GLD, all of which are documented on a BullionStar infographic.

However, Duquesne’s ‘exposure’ is even more removed from gold since it took the form of a derivative (call option) on an underlying (GLD) which itself does not provide ownership of any gold to the holder. So in some ways this could be called a second order derivative.

Paulson & Co

Although Sprott’s infographic doesn’t feature John Paulson of hedge fund firm Paulson & Co, maybe it should have. However, on second thoughts maybe not, because Paulson & Co is currently the 6th largest institutional holder of SPDR Gold Trust (GLD) shares, which as explained above, is not the same as owning real physical gold. According to its latest 13F filing, Paulson & Co holds 4,359,722 GLD shares worth a sizeable $500 million.

According to HedgeTracker, the PFR Gold Fund has a “long-term strategy focus investing in mining companies and bullion-based derivatives“, so again you can see that this is nothing to do with owning and holdings real physical allocated gold.

Conclusion

After this whirlwind tour, we know the following:

RIT Capital Partners Plc claims to hold gold but really holds a) gold futures which provide notional long gold exposure and b) a BlackRock fund which invests in gold mining shares.

Greenlight Capital holds allocated gold in all of its hedge funds (and they are good about replying to emails).

Bridgewater Associates probably holds gold exposure across at least some of its funds. Given Ray Dalio’s grasp of the importance of real physical gold, I would be surprised if Dalio’s funds do not hold real physical gold. But Dalio is a hard man to track down, so the jury is still out on this one.

Stan Druckenmiller’s Duquesne Family Office had a large exposure to the SPDR Gold Trust via call options in 2015 and early 2016 but then closed this exposure. Duquesne also invests in gold mining equities Barrick Gold and Agnico Eagle Mines, and this could be what Druckenmiller is referring to when he said he sold and then bought back gold.

Paulson is a big fan of the SPDR Gold Trust, a vehicle which is in no way the same as owning physical gold, because it merely provides exposure to the US dollar price of gold.

If and when the paper gold market implodes and the price of real physical gold diverges from the paper price of gold, the world’s billionaire investors will need to line up their ducks and explain to their partners and shareholders if they actually hold tangible physical gold bars, and if not why not.

This article originally appeared on the BullionStar website under the title "Are the World’s Billionaire Investors Actually Buying Gold?"

• U.S. Warns North Korea It’s Ready for War Over Missiles (WSJ)
• U.S., South Korea stage show of force against North Korea (Reuters)
• UN to Meet on North Korea as U.S. Confirms Rocket Was ICBM (BBG)
• Trump talks tough, options limited (Reuters)
• North Korea, Putin Meeting Top Agenda For Trump’s Tripa (WSJ)
• Ahead of fractious G20, Germany and China pledge new cooperation (Reuters)
• Crude Tumbles After Russia Opposes Deeper Production Cuts (BBG)
• Fed Signals Autumn Decision on Balance-Sheet Reduction (WSJ)
• Euro zone businesses lost some momentum in June but still strong (Reuters)
• Shopping-Mall Owners Pay Up to Stay Relevant in the Amazon Era (BBG)
• Traders Brace for Comeback of Volatility (BBG)
• Thieves take computers from South Africa's elite police unit (Reuters)
• Trump-Putin Talks Raise Anxiety Ex-Spymaster Will Get Upper Hand (BBG)
• Higher Health Costs Challenge Republican Senators (WSJ)
• U.S. prosecutors ask judge to silence Shkreli during trial (Reuters)
• Islamic State fights fiercely in shrinking Iraqi and Syrian strongholds (Reuters)
• China’s $162 Billion of Dealmaker Debt Raises Alarm (BBG)
• Why the Robot Takeover of the Economy Is Proceeding Slowly (BBG)
• Norway's Housing Market Downturn Gathers Pace Amid Bubble Fears (BBG)
• New York City police officer killed in `unprovoked attack,' police say (Reuters)
• Qatar’s Antagonists Huddle on Next Steps as Deadline Expires (BBG)

Overnight Media Digest

WSJ

 forced to scrub launch of a large commercial communications satellite, when an automated system aborted the launch within seconds of liftoff. on.wsj.com/2tOJ6vH

- Samsung Electronics Co is developing a voice-activated speaker powered by its digital assistant Bixby. The English-language version of Bixby has been delayed and many of the features and other specifications are yet to be decided. on.wsj.com/2sonxO8

- JPMorgan Chase & Co made a preliminary approach to acquire UK payments business Worldpay Group Inc potentially marking one of the biggest deals for a U.S. bank since the financial crisis. on.wsj.com/2tGi4Ge

- A court in Shanghai froze nearly $181 million in assets partially owned by Jia Yueting, the founder of LeEco Holdings, over a missed interest payment, and an additional $2.3 billion worth of shares in the firm's listed unit. on.wsj.com/2sEoyG3

FT

- Talks on restoring power-sharing in Northern Ireland have been extended until after the summer after UK and Irish governments called time on an inconclusive political talks process on Tuesday.

- Worldpay on Tuesday said it received separate takeover approaches from JPMorgan Chase and Vantiv . JPMorgan made a cash takeover offer that carries a substantial premium to Worldpay’s pre-bid share price, while Vantiv has called for a predominantly share-based merger at a lower premium.

- Chief Executive of Tesco Bank Benny Higgins said he would retire in February next year after almost a decade of being on the job.

- Former chief executive of UK defence contractor BAE Systems Ian King is moving into corporate finance as a senior adviser to boutique advisory firm Gleacher Shacklock.

NYT

- The administration of U.S. President Donald Trump on Tuesday confirmed North Korea's claim that it had launched an intercontinental ballistic missile, and it told Pyongyang that the United States would use "the full range of capabilities at our disposal against the growing threat." nyti.ms/2tLk4xv

- Uber suffered a blow to its expansion plans in Europe on Tuesday after a senior adviser to the region's highest court said that the ride-hailing service should have to abide by tough rules governing taxi services. nyti.ms/2tfla2V

- Worldpay Group Plc, Britain's largest payment processor, said on Tuesday that it had received preliminary approaches about a potential takeover from U.S. credit card technology firm Vantiv Inc and JPMorgan Chase Bank . nyti.ms/2uIc1hx

- The European Union and Japan have signaled that they plan to announce a broad agreement on trade on Thursday, a pointed challenge to U.S. President Trump, who is scheduled to attend a meeting of world leaders in Germany the next day. nyti.ms/2sopOJi

- Locked in a confrontation with its neighbors, Qatar said on Tuesday that it would dramatically increase its production of natural gas. nyti.ms/2uo65uG

Canada

THE GLOBE AND MAIL

** New rules to combat airline pilot fatigue are being attacked from both sides, with industry advocates predicting an expensive pilot shortage and pilots unions saying the regulations don't go far enough to protect safety. tgam.ca/2tg5lJj

** Nearly 5 percent of homes sold in the Golden Horseshoe region were purchased by foreign buyers, according to a month's worth of new data from the Ontario government that reveals the role international investors have played in the area's overheated real estate market. tgam.ca/2tfDvgo

** Vehicle sales surpassed the 200,000-level in June – the second-straight month above that mark – providing another signal to the Bank of Canada that the Canadian economy is ripe for a rise in interest rates. tgam.ca/2tg2VdH

NATIONAL POST

** Canada's transportation ministry on Tuesday announced details around a C$2.1 billion ($1.62 billion) infrastructure program aimed at bolstering Canada's aging trade corridors, in a bid to free up long-standing trade snarls along prominent export and import routes. bit.ly/2tg4vwr

** Ottawa is cracking down on which financial services companies can use the words "bank""banker" and "banking" to describe their business, a move that has drawn criticism from the country's credit unions. bit.ly/2tfGhSQ

Britain

The Times

Nearly 2 billion pounds was added to the stock market value of Worldpay Group Plc today after the payments processing group revealed that it had received two takeover approaches. Worldpay said it had received "preliminary approaches" from Vantiv Inc, a U.S. rival, and from JPMorgan Chase & Co. (bit.ly/2tJFFp5)

The chief executive of Tesco Bank, owned by Britain's biggest retailer Tesco Plc, is to leave after almost a decade in charge of the lender. Benny Higgins will also give up his position as group strategy director of the supermarkets group and as a member of its executive committee. (bit.ly/2tOmbAG)

The Guardian

HBOS took a 240 million pounds hit in 2007 after discovering a "serious control breakdown" in its Reading operation, according to information published by the City regulator for the first time. (bit.ly/2snKu3T)

Mike Ashley, the controversial billionaire founder of Sports Direct International Plc, allegedly secretly paid his former chief executive 1 million pounds-a-year out of his personal funds in order to keep down the pay of other staff. (bit.ly/2tFS2Tv)

The Telegraph

The management of stricken gold mining company Acacia Mining Plc has been excluded from talks with the Tanzanian government about resolving a tax dispute after its majority shareholder Barrick Gold Corp intervened. (bit.ly/2tevlER)

British biotech company Angle Plc has unveiled the trial results of a potential breakthrough blood test for diagnosing ovarian cancer. Angle said its new test proved 95 percent accurate at detecting cancerous cells in the bloodstream in a study of 400 patients in Europe and the United States. (bit.ly/2unngfB)

Sky News

A telecoms infrastructure group positioning itsel‎f as a rival to BT Group Plc's Openreach division will announce on Wednesday that it is doubling its market value through an ambitious share sale. CityFibre will say that it is raising up to 200 million pounds through a placing of equity with new and existing investors. (bit.ly/2tJrT5Q)

TPG and Advent International, the private equity groups, have tabled takeover offers for Rapha, the upmarket cycling brand. (bit.ly/2snHxAk)

The Independent

Consumer goods giant Nestle SA has pledged to slash sugar in its cereals by a further 10 percent across the United Kingdom by the end of next year as part of a major drive to make some of its most popular breakfast foods healthier. (ind.pn/2tMCu10)

World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF

 - World’s largest hedge fund Bridgewater buys $68 million of gold ETF in Q2
- Investors poured $870 million into SPDR Gold in Q2
- Billionaire Paulson keeps 4.36 million shares in SPDR Gold
- “Risks are now rising and do not appear appropriately priced in” - warns Dalio on Linkedin
- Investors should avoid ETFs and paper gold and own physical gold
- Given negative interest rates, companies should consider allocating some of corporate deposits to physical gold as done by Munich Re

From Bloomberg:

Hedge-fund managers including billionaire John Paulson are being rewarded as investor worries over everything from uneven economic data to U.S.-North Korean tensions fuel a rally in bullion.

At the end of June, Paulson & Co. owned 4.36 million shares of SPDR Gold Shares, a U.S. government filing showed Monday. That’s unchanged from the three months through March. Bridgewater Associates, the world’s largest hedge fund, added the ETF to its portfolio in the quarter, with the purchase of 577,264 shares valued at $68.1 million, a regulatory filing showed Aug. 10. Templeton Global Advisors Ltd. boosted its stake in Barrick Gold Corp.

Investors poured $870 million into SPDR Gold in the second quarter, taking the fund’s total assets to $34 billion as U.S. inflation continued to undershoot the Federal Reserve’s target, putting at risk policy makers’ projection for rising interest rates. While the prospect of monetary policy tightening remains, investors recently turned their focus on geopolitical strains as North Korea’s Kim Jong Un threatened the U.S. territory of Guam, boosting demand for bullion as a haven.

“Prospective risks are now rising and do not appear appropriately priced in,” billionaire Ray Dalio, who manages Bridgewater, said in a LinkedIn post, as he recommended investors allocate 5 percent to 10 percent of their assets to gold.

Dalio also flagged rising odds that the U.S. Congress may fail to raise the debt ceiling, “leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system.”

 Full article on Bloomberg here

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News and Commentary

Gold falls on easing North Korea tensions, strong U.S. data (Reuters.com)

Gold prices inch up ahead of minutes from latest Fed meeting (Reuters.com)

Asian Shares Mixed, Korea Advances as Calm Returns (Bloomberg.com)

UK car lenders vulnerable after surge in risky loans - BoE (IrishTimes.com)

‘Deep’ Subprime Car Loans Hit Crisis-Era Milestone (Bloomberg.com)

Bank of America Warns of an ‘Ominous’ Sign for Stocks (Bloomberg.com)

Investors should be looking at gold (Barrons.com)

UK debt tide is rising – how can you avoid drowning? (TheGuardian.com)

Prepare for negative interest rates in the next recession - Rogoff (Telegraph.co.uk)

US dollar's fall could become a self-fulfilling prophecy (SCMP.com)

Own a few bitcoin but realise it is speculation (StansBerryChurcHouse.com)

Gold Prices (LBMA AM)

16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce
09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce
08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce

Silver Prices (LBMA)

16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce
10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce
09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce
08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce

Recent Market Updates

- Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
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- Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
- Great Disaster Looms as Technology Disrupts White Collar Workers
- Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
- Silver Mining Production Plummets 27% At Top Four Silver Miners
- Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
- Gold Coins and Bars See Demand Rise of 11% in H2, 2017
- Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
- What Investors Can Learn From the Japanese Art of Kintsukuroi
- Bitcoin, ICO Risk Versus Immutable Gold and Silver
- This Is Why Shrinkflation Is Making You Poor
- Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble

Important Guides

For your perusal, below are our most popular guides in 2017:

Essential Guide To Storing Gold In Switzerland

Essential Guide To Storing Gold In Singapore

Essential Guide to Tax Free Gold Sovereigns (UK)

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