It's been a busy few days for the precious metals... it seems the physical demand is creeping back into paper prices...

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

If the physical gold market is anywhere near as tight as these two market observers indicate, get ready for some serious fireworks in the precious metals markets. The first video is one that has been making the rounds in recent days. It’s an interview with Mihir Dange, co-founder of commodity trading firm Grafite Capital from the NYMEX, in which he discusses Chinese demand, backwardation and physical supply tightness.

The second video is an interview of Tarek El Mdaka, managing director at Kaloti Jewellery Group in Dubai. While it starts off slow, bear with it, as toward the end he states:

“After this drop [in price] we have 90 days order logbook. So we cannot fill the demand we have at this stage.”

These are must watch videos for anyone interested in the gold market. Enjoy!

Gold rose $13.30 or 1% yesterday, closing at $1,335.50/oz. Silver climbed $0.39 or 1.82%, closing at $21.84. Platinum edged up .2% or $3.24 to $1,500.74/oz, while palladium gained 16 cents to $736.66/oz.

Gold is ticking higher today after it hit a three week high yesterday. Silver climbed another 1%, its highest price in a month as the largest silver backed ETF, iShares Silver Trust, reached a four month high. Platinum hit its highest price in over two months and palladium also climbed. 

Gold prices in India have risen this week, extending gains past their highest level in four months, due to the import duty hike and rupee weakness. India’s consumption of gold rose to 310 tonnes in the second quarter ended June, highest in the last 10 years, despite government curbs to restrict imports to rein in the burgeoning current account deficit. Contrary to expectations that gold imports may fall, India's appetite for bullion may pick-up later in the year due to seasonal demand. Analysts say this could increase further illegal gold supply into India.

The SPDR Gold  ETF saw another day of inflows yesterday, this coupled with last Friday's inflows hitting their most since June 10th added bullish sentiment as did the increased geopolitical risk in Egypt which appears headed for a civil war with implications for the already troubled region.

Gold bullion gained as data showed that global physical demand remains very robust. 

The latest World Gold Council Gold Demand Trends report, which covers the period April-June 2013, confirms again how recent falls in the gold price were due to speculators selling paper gold rather than a decline in actual demand for physical gold.

It highlights, once again, that the price falls have generated significant increases in demand, most notably from store of wealth, jewelry, bullion coin and bar buyers  in Turkey, Dubai and the Middle East, Vietnam, India, China and the rest of Asia.

Meanwhile speculators, primarily banks and hedge funds, exited their positions in the gold ETFs and futures markets. This led to liquidations of just 402 tonnes of ETF gold worth only $18.3 billion.

Support & Resistance Chart - (GoldCore)

To put this number into perspective, demand from India and China alone in Q2 was 310 tonnes and 276 tonnes or 586 tonnes combined. This demand alone vastly outnumbers the ETF outflows. Yet prices fell from $1,598.75/oz (closing price on March 29) to a low of $1,180.50/oz (closing price on June 28) - a very significant fall of 35%.

Monday, April 15 alone saw massive $20 billion paper gold sell orders on the COMEX trigger stop loss selling and unfounded panic in the gold market.

Reports suggest that a futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting. The futures market then saw a further wave of selling of contracts worth some $15 billion, equivalent to 10 million ounces of selling or 300 tonnes, in just 35 minutes.

According to the report:

Globally, jewellery demand was up 37% in Q2 2013 to 576 tonnes (t) from 421t in the same quarter last year, reaching its highest level since Q3 2008. 

In China, demand was up 54% compared to a year ago; while in India demand increased by 51%. 

There were also significant increases in demand for gold jewellery in other parts of the world: the Middle East region was up by 33%, and in Turkey demand grew by 38%.

Bar and coin investment grew by 78% globally compared to the same quarter last year, topping 500 tonnes in a quarter for the first time.  In China, demand for gold bars and coins surged 157% compared with the same quarter last year, while in India it jumped 116% to a record 122t. Taking jewellery demand and bar and coin investment together, global consumer demand totalled 1,083t in the quarter, 53% higher than a year ago.

For the tenth consecutive quarter, central banks were net buyers of gold, purchasing 71t, which reinforces the trend that began in Q1 2011.  

Demand in the technology sector was stable once again, totalling 104t, a rise of 1% on last year.

Meanwhile gold held in gold-backed ETFs, which in 2012 accounted for just 6% of the world’s gold demand, fell by just over 400t, driven by hedge funds and other speculative investors continuing to exit their positions.  This was predominantly in the U.S.

Overall, demand for gold in Q2 2013 was 856t, down 12% on a year ago.

On the supply side, recycling fell 21% in the quarter while mine production was 4% higher than a year ago, at 732t. In total, supply was 6% lower than a year ago.

All available data shows very strong supply and demand fundamentals and yet a huge, historic 35% price fall in the quarter. This lends credence to the allegations of market manipulation put forward by the Gold Anti Trust Action Committee, whistleblower Andrew Maguire, Max Keiser, Zero Hedge and many others in the blogosphere.

NEWS
Demand for physical gold jumps 53% in second quarter - CNBC

Gold gains on U.S. inflation data, SPDR inflows - Reuters

Gold Gains to Three-Week High on Signs of Demand as Dollar Drops - Bloomberg

Paulson & Co cuts gold holdings in second quarter- Reuters

COMMENTARY
Gold Demand Up 53% In Q2 2013 - Strong Growth in China and India - World Gold Council

Video: "We cannot fill the demand we have atthis stage”- Bloomberg

Is This Why Gold Is Spiking? - Zero Hedge

"We No Longer Have Markets, We Only Have Interventions"- Max Keiser

Gold: The Hidden Agenda behind The Bear Raid - Gold-Eagle

Russell - Gold & Some Incredible Surprises Ahead - King World News

For breaking news and commentary on financial markets and gold, follow us on Twitter.

Overnight the emerging market rout continued, with the India Sensex down another 3.18%, the Philippines tumbling 4%, Jakarta down 3.7% and Dubai crashing 7%. A driving factor continues to be the fear over an imminent air campaign launched at Syria, leading both WTI and Brent higher by 1%, and gold finally breaking out above the $1400 tractor beam, and printing at $1412 at last check, a hair away from a 20% bull market from the lows.

In other news, the market is once again "surprised" to learn that Summers, who as we have been showing for over three weeks is the frontrunner for the Fed chair, is the frontrunner for the Fed chair according to CNBC. Of course, there is nothing preventing this from being the latest trial balloon (and nothing that suggest Summers will actually be hawkish as conventional wisdom seems to think: the guy basically works for the financial sector) but futures aren't waiting to find out, and US traders are walking in this morning to a red screen with ES down just over 10 point and sliding. Any minute now the great unrotation from stocks into bonds (10 Year was 2.77% at last check) is about to be unleashed. And if Obama actually goes to war (without talking to Congress of course), watch the bottom fall from the market.

It is shaping up to be one of those days:

Key overnight news bulletin from Bloomberg

• Treasuries gain with JPY and gold as U.S. and its allies move closer to decision on military strikes against Syria’s government.
• India’s rupee tumbled more than 2% to a record low on concern the nation’s current-account deficit will worsen as oil prices climb amid Middle East violence; among major currencies, AUD, NZD fall most vs USD and JPY
• Germany’s Ifo business climate index rose to 107.5 in August, more than forecast and the highest level in 16 months
• Merkel shouted down anti-euro hecklers at a campaign rally in eastern Germany, saying that she won’t let up on demands     for economic overhauls across Europe if she wins a third  term
• The goal of a single rule book for Europe’s banks is splintering even before it’s implemented as northern countries move ahead with tougher requirements to ward off the next boom-to-bust cycle
• Western Asset Management Co. and OppenheimerFunds Inc. are raising funds to profit from the record shift of cash into leveraged loans, the only part of the U.S. corporate debt market to avoid losses since Treasury yields started surging.
• Turkey may struggle to narrow its current-account deficit as mounting tensions with Egypt make it harder for traders to reach the Middle East, the destination for about a fifth of Turkish exports
• U.S. $98b of note auctions begin today with $34b 2Y notes, which yield 0.40% in WI trading; drew 0.336% in July, 0.43% in June
• Sovereign yields mostly lower, EU peripheral spreads wider, led by Greece; Euro Stoxx Banks -2.5%. Nikkei -0.7%, Shanghai Composite gains 0.3%. European stocks, U.S. equity index-futures fall. WTI crude, copper higher fall

Summary of market catalysts the key events with RanSquawk:

• America has issued the strongest signal yet that it intends to take military action against Syria over an alleged chemical weapons attack.
• German IFO - Business Climate (Aug) M/M 107.5 vs. Exp. 107.0 (Prev. 106.2) - IFO says economy has moved up a gear and export optimism is rising.
• CNBC have reported, citing sources, that Obama is to name Larry Summers as the next Fed Chairman, although he is still being vetted for the job.

Market Re-Cap

The release of better than expected German IFO has failed to encourage flows into riskier assets, as safehaven flows continue to dominate amid growing expectations of potential military action by the US. As a result, USD index traded higher, with EUR/USD and GBP/USD both nursing losses of around 50pips. The move lower by GBP/USD saw the pair move below the technically important 200DMA line at 1.5513, while EUR/USD came close to making a test on the shorter 21DMA line at 1.3316. The bid tone in USTs, which in turn encouraged squaring of long USD/JPY positions saw JPY gain ground across the board in Asia and in turn pushed the pair below the 21DMA line at 97.86.

In terms of other asset classes, the flight to quality boosted the price of both gold and silver. Also, comments from South Africa's NUM spokesman, who said that prospects for gold strike remain high, aided the move higher. Potential spill over effects on the neighbouring Turkey saw spot TRY rate print all time record high this morning, with the domestic stock market under pressure as a result. Of note, local stock markets in Dubai and Saudi Arabia have also come under significant selling pressure.

Going forward, market participants will get to digest the release of the latest German IFO survey, S&P/CS housing data from the US, as well as the consumer confidence and then the API report after the closing bell on Wall Street.

Asian Headlines

China's vice finance minister Zhu Guangyao said there was no need for the government to stimulate China's economy and that growth could be supported through structural adjustments. Zhu further stated that China can reach the 7.5% growth target.

EU & UK Headlines

German IFO - Business Climate (Aug) M/M 107.5 vs. Exp. 107.0 (Prev. 106.2)
- German IFO Current Assessment (Aug) M/M 112.0 vs. Exp. 111.0 (Prev. 110.1)
- German IFO Expectations (Aug) M/M 103.3 vs. Exp. 103.1 (Prev. 102.4)

IFO says economy has moved up a gear and export optimism is rising.

Moody's said adjustments in Euro area periphery continue, pre-crisis GDP is unlikely in the medium term and doesn't expect the Euro area periphery to reach these levels before 2016-2017. Moody's further added that the Euro area periphery's positive trade balance since 2011 is the main driver of changes in the current account.

Spanish T-bill auction results:

- Spain sells EUR 1.01bln of 3-month bills, bid/cover 4.5 (Prev. 4.03), avg. yield 0.155% (Prev. 0.442%)
- Spain sells EUR 3.06bln of 9-month bills, bid/cover 1.9 (Prev. 2.27), avg. yield 1.089% (Prev. 1.152%)

Italian bond auction results:

- Sells EUR 2.983bln in 2015 CTZ b/c 1.46 vs. Prev. 1.56, avg. yield 1.871% vs. Prev. 1.867%
- Sells EUR 736mln in 2018 I/L 2.30 vs. Prev. 2.32, avg. yield 2.3% vs. Prev. 2.91%
- Sells EUR 265mln in 2026 I/L 3.23 vs. Prev. 2.32, avg. yield 3.3% vs. Prev. 3.75%

Barclays prelim month-end extensions Euro agg at +0.03yrs

Barclays prelim month-end extensions UK Gilts +0.07yrs

CNBC have reported, citing sources, that Obama is to name Larry Summers as the next Fed Chairman, although he is still being vetted for the job.

Barclays prelim month-end extensions for US Treasuries at +0.11yrs

Equities

The release of better than expected German IFO has failed to encourage flows into riskier assets, as safehaven flows continue to dominate amid growing expectations of a potential military action by the US. The move lower was led by financials and basic materials sectors, with iTraxx sub fin index up around 7bps.

In terms of equity specific news flow, MPs in the UK are stepping up their campaign for a break-up of Royal Bank of Scotland amid suspicions in Westminster that RBS and Treasury officials will try to scupper a good bank-bad bank split. Also, Daily Mail reported that Britain's biggest banks could be forced to pay billions of pounds in fines after accused by Brussels of squeezing out new rivals.

FX

The risk averse sentiment supported flows into the greenback, with EUR/USD and GBP/USD both nursing losses of around 50pips in spite of the release of better than expected German IFO survey. The move lower by GBP/USD saw the pair move below the technically important 200DMA line at 1.5513, while EUR/USD came close to making a test on the shorter 21DMA line at 1.3316. The bid tone in USTs, which in turn encouraged squaring of long USD/JPY positions saw JPY gain ground across the board in Asia and in turn pushed the pair below the 21DMA line at 97.86.

Senior government officials said that India is considering currency swaps with some countries according to Indian TV channels.

Flight to quality related flows also benefited CHF, with EUR/CHF testing the key 200DMA line at 1.2275 in early trade.

RBA's Edwards said that AUD is still too high to aid economic transition.

Commodities

US secretary of state Kerry said Syria chemical attack is undeniable but US allies are compiling and reviewing additional information on Syrian chemical weapons attack and Syria's refusal to allow access to and shelling of chemical weapons attack site are signs regime has something to hide.

- The US-Russia meeting on Syria is said to be postponed and to be rescheduled, according to a State Department Official.

Warplanes and military transporters have begun arriving at Britain's Akrotiri airbase in Cyprus, less than 100 miles from the Syrian coast, in a sign of increasing preparations for a military strike against the Assad regime in Syria.

China oil demand to grow about 3% in 2013, 2014 according to HSBC.

NOC says Libya's Elephant field shut down by protesters yesterday and that Libyan oil output dropped to less than 200,000bpd.

Russia has added about 6.3 tons of gold to reserves in July and country's monthly gold purchases are now at highest since April. Furthermore, Turkey added gold to reserves in July while Mexico sold gold from reserves in July, according to IMF data.

South Africa's NUM spokesman says prospects for gold strike remain high.

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Imagine the scenario. You drive to work this morning and you spend all day slogging away at the office, with sweltering temperatures of 50° C to boot. The only bonus that you have is that you are grinding away in luxurious surroundings. But, when it comes to leaving, the doors are locked, bolted and barred. You can’t get out of the place and nobody gives a damn anyhow. That’s exactly what it’s like at the moment for expats living and working in Qatar. They are at the mercy of their business partners in order to be able to live the country and are to all intents and purposes being held hostage, complacently acceptably condoned by the governments, with little being done by the Western states where those visiting business people come from.

Wealthiest State

Qatar has enough natural gas to make every citizen of the country wealthier than any other in the world. Sheikh Tamim bin Khaifa Al Thani, the Emir of Qatar is a new ambitious determined leader that plans to make Qatar a prominent country in the world. It has close ties with the US since the US Central Command’s Forward Headquarters are located in Qatar along with the Combined Air Operations Center. It has a population of 250, 000 citizens and the rest of the population is made up of Arab nations (13%), Indian subcontinent (24% from India and 16% from Nepal, amongst others) andSoutheast Asia (11% from the Philippines). There are a total of 1.87 million people currently residing in the country, with 65% that are immigrant workers. It’s the home of Al Jazeera and it tops the list of the richest nations in the world today.

• Qatar had a Gross Domestic Product of $91, 600 per capita in 2010.
• It increased to $100, 600 in 2011.
• It reached $102, 800 in 2012.
• By comparison, the USA had a per capita GDP of $50, 700 in 2012.
• 14% of households are millionaires.

Go to Qatar with the fervent desire to earn bundles of cash from the richest nation in the world and you risk losing your dignity, your freedom and even all sense of humanity. Qatar is described as the El Dorado, the Vegas of the Middle East, the place where you can strike it rich in one fell swoop. But, there’s a price for everything; nothing comes free. The propaganda is intensely maintained in the media through the channels that the state of Qatar has managed to get its hands on. People should think twice before being attracted by the Midas touch; they might not turn into very much at all and certainly not gold.

The state of Qatar is organizing the FIFA World Cup in 2022 and as such a hoard of immigrant workers have been taken on in a vision of times gone by with slave drivers forcing the workers to build , unbuild and rebuild. Those workers are driven like slaves and have their basic rights taken away from them.

Qatar might be at the top of the list of richest nations in the world, but it’s pretty damn poor with regard to workers’ rights and even human rights. But, what can be expected from a country that has a ruling family that has a hereditary title and has had its country in their grasp since the mid-nineteenth century? What can be expected from a country that has the major and most important key positions in the country and the government handed out in true fashion of nepotism to family members of the ruling Al Thani dynasty? The only time privileges are changed and old orders knocked out is when there is a coup d’état (a peaceful one is de rigueur); wars and revolts cost money and that would be a waste, so the ousted Emir usually goes peacefully and anyhow he’s your father usually (Sheikh Hamad bin Khalifa Al Thani overthrew his own father and took the country in 1995).

Kafala

The workers have their rights taken away and they are trapped in a Kafala from which there’s no possible escape. Kafala is literally a procedure of adoption in Muslim law that allows someone to be adopted but to maintain their own name as full adoption is legally impossible. The adopted person will not have the full rights regarding inheritance as a legitimate child that is born to the family. The adoption procedure has been extended to business and any foreigner that wishes to work in Qatar must be ‘adopted’ and surrenders all rights to their sponsor.

The Kafala allows workers to be maintained in servitude to an employer or to a business partner, with passports that are confiscated to stop them leaving the country and with courts that are banned so they have no access to legal recourse. If your sponsor does not provide the visa to allow you to exit the country, then you end up staying put until he allows you to, or until you give him what he wants from you.

More than a million workers are forced into labor by slave-drivers with immense wealth. Their salaries are unpaid or paid late, they are denied basic freedoms and yet they are building the multi-billion dollar World Cup 2022infrastructure of luxury hotels and football stadiums.

There was already great controversy over the granting of the World Cup to Qatar since it was amidst accusations of corruption, underhand tactics and bribery as well as pressure on certain people. A secret meeting between the Emir of Qatar and the French President Nicolas Sarkozy in 2010 ensured that the French would vote for Qatar. One French footballer got $15 million for his support (Zinedine Zidane) and Michel Platini was told to vote for Qatar by the French President. Qatar bought the French football team Paris Saint Germain in return.

Just last year a prominent US businessman (Nasser Beydoun) in Doha was held hostage in economic slavery and indentured servitude for 685 days. He had been trying to get out of Qatar ever since he resigned from his job in 2009 as CEO of a group of restaurants in the country. The exit visa was refused by the group Wataniya Restaurants that had sponsored him to work there. He was sued for $13 million and detained in the country. He was found innocent and allowed to leave after 685 days. He stated: “Though this battle is over the war has just started. The people who held me hostage have a profound immorality, cold egotism and an utter disregard of justice and humanity.”

Beydoun is not the only one that is making the economic slavery hot the headlines in the media these days as more and more cases come to light. There is the case of the Belgian, Philippe Bogaert, that went to Doha to work as a TV producer and that has been refused an exit visa for the past two years. If a project fails, then it’s the foreigner that is considered to be responsible and he is sued to pay the money back, holding the visa as ransom to get exactly what is wanted. Boagaert is being sued for over $4.2 million.

Without your sponsor’s say-so it is impossible to do anything in the state of Qatar. You can’t drive a car, you can’t rent or buy a house and you can’t even open a bank account.

Other countries have adapted the work laws in their countries and Bahrain has done away with the Kafala, for example. The United Arab Emirates has a free zone that doesn’t apply the Kafala to attract foreign business people to work in Dubai. But, have things changed there? In Bahrain for example the Labor Market Regulatory Law came into force in April 2009. But, essentially very little has changed. The migrant workers are still expected to have a sponsor. The only gain that they have made is to be able to change employer much more easily than before (i.e. without the consent of the employer a worker can change jobs today).

The governments of these countries do very little to protect migrant workers and they do even less to apply and implement the changes in the law when they have been made. Withholding salaries is widespread. Forced labor without payment has transformed these people into economic slaves for the sole benefit of accruing more wealth and yet we do nothing. Western governments sit complacently and forget the workers that are in these countries slaving away. Qatar has enough money and has enough investment in our countries for the governments not to rock the boat. If it rocks too much, the oil will spill and we wouldn’t want that, would we? Al Jazeera makes sure that the Western governments do little else than look on and watch. 220 million people watch Al Jazeera English alone in more than100 countries. It is watched 2.5 million times on YouTube and is the most watched TV channel there. That’s a powerful tool to be reckoned with.

In the meantime, the economic slavery continues and Qatar is a five-star oil-rich state as a result of the masses grinding away of those held hostage

Septaper Will Open Floodgates | How Sinister is the State? | Food: Walking the Breadline | Obama NOT Worst President in reply to Obama: Worst President in US History?

New Revelations: NSA and XKeyscore Program | Obama's Corporate Grand Bargain Death of the Dollar | Joseph Stiglitz was Right: Suicide | China Injects Cash in Bid to Improve Liquidity

Technical Analysis: Bear Expanding Triangle | Bull Expanding Triangle | Bull Falling Wedge | Bear Rising Wedge | High & Tight Flag

In August 2012, when isolating one of the various reasons for the latest housing bubble, we suggested that a primary catalyst for the price surge in the ultra-luxury housing segment and the seemingly endless supply of "all cash" buyers (standing at an unprecedented 60% of all buyers lately as reported by Goldman) is a very simple one: crime. Or rather, the use of US real estate as a means to launder illegal offshore-procured money. We also identified the one key permissive feature which allowed this: the National Association of Realtors' exemption from Anti-Money Laundering provisions. In other words, all a foreign oligarch - who may or may not have used chemical weapons in their past: all depends on how recently they took their picture with the Secretary of State - had to do to buy a $47 million Florida house, was to get the actual cash to the US. Well good thing there are private jets whose cargo is never checked.

This is how we framed the problem last August:

... a foreigner who may or may not have engaged in massive criminal activity and/or dealt with Iran, Afghanistan, or any other bogeyman du jour at some point in their past, and is using US real estate merely as a money-laundering front perhaps? Sadly, we will never know. Why? As explained before, it is all thanks to the National Association of Realtors - those wonderful people who bring you the existing home sales update every month (with a documented upward bias every single time) - which just so happens is the only organization that actively lobbied for and received an exemption from AML regulation compliance. In other words, unlike HSBC, the NAR is untouchable, even if it were to sell a triplex to Ahmedinejad on West 57th street.

 

As a reminder, here is where the NAR stands on the issue of its most generous clients possibly being some of the worst criminal known to man, courtesy of Elanus Capital:

Many of you reading this will undoubtedly have spent time in an international bank and been forced to sit through countless hours of “know your client” and AML training. Fascinating to note that the National Association of Realtors lobbied for and received a waiver from such regulation. That’s right, realtors actually went to the U.S. government and said: we want to be able to help foreign business oligarchs and other nefarious business people launder money through the real estate markets of the United States – and prevailed.

 

Here's their official position:

 

"NAR supports continued efforts to combat money laundering and the financing of terrorism through the regulation of entities using a risk-based analysis. Any risk-based assessment would likely find very little risk of money laundering involving real estate agents or brokers. Regulations that would require real estate agents and brokers to adopt anti-money laundering programs may prove to be burdensome and unnecessary given the existing ML/TF regulations that already apply to United States financial institutions."

 

Hat’s off to the NAR – that is some serious doublespeak. My translation: We’ll support you as long as we don’t have to support you.

If after skimming the above, readers are still confused what the reason is for the luxury segment of the US housing market continuing to rise in price even as all other segments of the quadruplicate US housing market as explained here languish, we suggest rereading it as many times as necessary.

It appears that a year later this too hypothesis has been proven. Earlier today the Post reported that "U.S. authorities announced Tuesday that they are seeking forfeiture of pricey Manhattan real estate linked to a fraud they say was uncovered by a whistleblowing Russian lawyer before he died behind bars. A civil forfeiture complaint filed against the assets of a Cyprus-based real estate corporation and other holding companies alleges that some of the proceeds from the $230 million tax fraud in Russia were laundered through the purchase of four luxury condominiums located in a Wall Street doorman building and two commercial spaces in prime locations in midtown and Chelsea."

The lately ubiquitous was quick to take credit:

“Today’s forfeiture action is a significant step toward uncovering and unwinding a complex money-laundering scheme arising from a notorious foreign fraud,” U.S. Attorney Preet Bharara said in a statement. “While New York is a world financial capital, it is not a safe haven for criminals seeking to hide their loot, no matter how and where their fraud took place.”

Oh but it is because quite simply nobody cares where the money comes from, the NAR is exempt from doing even the most cursory background check, and as long as the prevailing average home price rises, everyone is happy.

What is curious is where the source of the info came from:

The whistleblower, Sergei Magnitsky, was a lawyer for U.S.-born British investor William Browder. He alleged in 2008 that organized criminals colluded with corrupt Russian Interior Ministry officials to claim a fraudulent $230 million tax rebate after illegally seizing subsidiaries of Browder’s Hermitage Capital investment company.

 

He subsequently was arrested on tax evasion charges and died in prison in November 2009 of untreated pancreatitis at age 37. His death prompted widespread criticism from human rights activists, and the Russian presidential human rights council found in 2011 that he had been beaten and deliberately denied medical treatment.

 

Browder, who has campaigned to bring those responsible for Magnitsky’s death to justice, has claimed that one of the corrupt tax officials bought luxury real estate in Moscow, Dubai and Montenegro and wired money through her husband’s bank accounts worth $39 million.

That this is the first of many such money laundering schemes to be exposed is obvious to anyone. With the recent witchhunt of Russian, and other billionaires, in Europe following the Cyprus debacle, it is only logical that the vast majority parked their cash in what until now, was the last safe use of illicit funds: US real estate, where the policy don't ask, don't tell is more alive now than ever, and has spawned countless HGTV (and CNBC) shows highlighting the resurgent New York City (and other high end cities') housing market.

The bigger question is just how far will Bharara take this, and comparable such future actions. And more importantly, how will the panicked NAR lobby respond if suddenly a key source of "all cash, sight unseen" buyers disappears. Finally, if indeed money laundering is no longer possible into US real estate, kiss yet another of the several key spokes (alongside foreclosure stuffing, the private equity REO-to-Rent investment wave and the Emerging Market capital flow crisis) of the artificial housing recovery goodbye. Why?

Apartments in the luxury 35-story Manhattan high-rise can sell for more than $3 million, according to real estate websites. Amenities include a gym, a pool and rooftop deck.

Now take this single example and multiple by hundreds and thousands of times.

• Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
• Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
• Five years after Lehman, risk moves into the shadows (Reuters)
• U.S. shares raw intelligence data with Israel, leaked document shows  (LA Times)
• Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
• Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
• Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
• Brussels probes multinationals’ tax deals (FT)
• Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
• Tablet sales set to overtake PCs (FT)
• The end of angst? Prosperous Germans in no mood for change (Reuters)
• Mondelez strikes deal to chew into Twitter’s social media knowhow (FT)
• Australia’s Jobs Drop Underscores Challenge for Abbott (BBG)
• Chicago Mayor Emanuel apologizes for past police torture (Reuters)

Overnight Media Digest

WSJ

* With a U.S. attack on Syria on hold, Western-backed rebels said they feared they had lost their best chance of promptly ousting President Bashar al-Assad and sidelining Islamist extremists.

* The Obama administration plans to block the construction of new coal-fired power plants unless they are built with novel and expensive technology to capture greenhouse gases.

* Verizon Communications $49 billion bond offering sparked a frenzy across Wall Street on Wednesday as investors clamored to buy a piece of the largest corporate debt sale in history.

* SEC officials will question top exchange executives on Thursday morning about the most recent computer glitch to rattle the markets, as regulators seek tougher standards for trading systems that have drawn objections from the industry. The meeting comes nearly three weeks after the latest major market failure, at the Nasdaq Stock Market, and isn't widely expected to yield new rules for exchanges immediately.

* A U.S. appeals court suggested it might give Apple a second crack at making a case that Google's Motorola Mobility copied iPhone patents.

* Pandora Media appointed Brian McAndrews to be its new CEO, president and chairman as the online radio company faces the threat of Apple's new iTunes Radio service.

* MiMedx is scrambling to reassure investors after the FDA raised questions about key products it makes, all of which come from the human placenta. The company's travails have shed light on a little known segment of the medical-products business. A few companies including MiMedx have worked up treatments using amniotic tissue, but the government appears to be taking a closer at whether their processing should force them to be regulated as drugs.

* A Dish Network Corp director who resigned in recent weeks did so amid a disagreement over the company's handling of a bid for a telecommunications firm that could deliver hundreds of millions of dollars of personal profits to Dish Chairman Charlie Ergen, people involved in the situation said.

* Vivendi SA moved closer Wednesday to reshaping itself as a smaller media company, beginning a process to spin off its biggest telecommunications unit while simultaneously calming a simmering leadership dispute.

* Private-equity firms KKR & Co and Sycamore Partners are considering a joint bid for Jones Group Inc , the footwear and apparel maker that has put itself up for sale, people familiar with the matter said.

* Time Warner Cable Inc's chief operating officer, Rob Marcus, said Wednesday that the cable operator lost customers as a result of the recent month-long blackout of CBS Corp programming on its systems in some major markets

FT

Morgan Stanley is being sued by an ex-auditor, claiming that senior executives and audit officers ignored and "whitewashed" his concerns that the bank was taking on too much credit risk before the global financial crisis.

A German labour court on Wednesday ordered Deutsche Bank to rehire four traders that it wrongfully dismissed during an internal probe into the global Libor scandal.

The European Commission will next week announce that London will remain the primary authority for Libor, despite plans earlier in the year to put the lending rate under the direct control of a European supervisor in Paris.

Leading global grains exporter Cargill said on Wednesday that its Chief Executive Greg Page is set to leave more than two years ahead of his mandatory retirement age, to be replaced by David MacLennan, the agribusiness' president and chief operating office.

A group of creditors - including hedge fund Cube Capital - on Wednesday commenced legal proceedings against the Indonesian Bakrie family in a payment dispute over a $155 million bond issued by Bakrieland Development, a property affiliate.

NYT

* Several big life insurers are going to have to set aside a total of at least $4 billion because New York regulators believe they have been manipulating new rules meant to make sure they have adequate reserves to pay out claims. The development stems from contentions by insurance companies that states' regulations are forcing them to hold too much money in reserve.

* Facebook Inc, which has repeatedly tripped over its own feet when changing its privacy practices, has stumbled yet again. The Federal Trade Commission said on Wednesday that it had begun an inquiry into whether the social network's proposed new privacy policies, unveiled two weeks ago, violated a 2011 agreement with regulators. Under that agreement, the social network is required to get the explicit consent of its users before exposing their private information to new audiences.

* With the introduction of a cheaper iPhone on Tuesday, Apple Inc took a step toward catering to China, the world's largest smartphone market and one that is crucial to the company's future. But the cost of the phone - more than $700 in China - will still keep Apple's phones beyond the reach of most Chinese consumers.

* Pandora Media Inc on Wednesday named Brian McAndrews, a technology and digital advertising executive, its chief executive and chairman. He succeeds Joseph Kennedy, who announced his resignation in March after nine years with Pandora, a leading Internet radio service.

* On Wednesday, the three largest record companies - Sony, Universal and Warner, along with ABKCO, an independent that controls many of the Rolling Stones' early music rights - sued Sirius XM Radio Inc in a California court, saying that the satellite service used recordings from before 1972 without permission.

* California's top lawmakers on Wednesday pledged their support for a plan to raise the minimum wage in the state to $10 an hour, which could soon give California workers the highest minimum pay rate in the country.

* William Ackman expanded his campaign against Herbalife Ltd on Wednesday, questioning the independence of its auditor, PricewaterhouseCoopers, and warning of "serious accounting" issues at the company. Ackman, the hedge fund billionaire who runs Pershing Square Capital Management, questioned whether PricewaterhouseCoopers has a conflict of interest because of nonauditing work it performed for Herbalife, the nutritional supplement company.

Canada

THE GLOBE AND MAIL

* The Parti Québécois is pushing the private sector to adopt its proposed charter of values as a model to create a more secular workplace. The charter, which would regulate religious-based clothing for public employees, has been met with mixed reactions, including concerns in the private sector that it sends a negative signal to would-be immigrants.

* Russian President Vladimir Putin warned on Wednesday against a U.S. strike on Syria, saying such action risked escalating the conflict beyond that country and unleashing terrorist attacks. Writing in the New York Times, Putin said there were "few champions of democracy" in the 2-1/2-year-old civil war in Syria, "but there are more than enough Qaeda fighters and extremists of all types battling the government."

* An armored car guard who gunned down four crewmates on the job has been handed the toughest sentence in Canada since the country's last execution, but it is not enough for some family members of his victims. An Edmonton judge agreed on Wednesday to a plea deal that gives 22-year-old Travis Baumgartner a life sentence with no chance of parole for 40 years.

Reports in the business section:

* BlackBerry Ltd is stepping up its lobbying efforts in Ottawa in a bid to smooth regulatory hurdles if the company can find a foreign buyer for its struggling business. The Waterloo, Ontario-based smartphone maker recently added the Investment Canada Act to its discussion topics with government officials under the lobbying registry, which previously included a number of topics ranging from intellectual property legislation to tax policy, law enforcement and other subjects.

* Alberta natural gas prices, already under pressure after recent changes to pipeline transport rates, have weakened against a backdrop of mild weather and bulging inventories, a potential hit on the province's finances even as oil markets look brighter.

* Bombardier Inc's rail division continues to expand its signaling business by winning its first major contract in the Eastern European country of Azerbaijan. The Berlin-based division of the train and plane maker is part of a consortium awarded a $288 million contract to supply signaling equipment for a 503-kilometre line to Azerbaijan Railways.

NATIONAL POST

* It could be called a storm in a coffee cup, but New Brunswick's Green Party leader wants Quebec-style sign legislation requiring all businesses to post signs in French as well as English. David Coon was spurred into action after Seattle, Washington-based Starbucks Corp opened a coffee shop in the city and provided customers with menus in English only.

* The wrangling over transit in Scarborough shows no sign of abating, with Mayor Rob Ford disputing whether the city should pay for any subway cost overruns, and the Toronto Transit Commission chairwoman delivering her strongest rebuke yet of the route favored by the province.

FINANCIAL POST

* Canada's largest oil company has added its voice to those playing down the importance of Keystone XL, as the U.S. government weighs approval of the contentious pipeline. "The belief is that the industry will get access to markets" with or without the pipeline, Suncor Energy Inc chief executive Steve Williams said on Wednesday.

* Irving Oil Co could be facing some hefty fines after it was determined the crude oil involved in the Lac-Mégantic disaster had been improperly labeled. The Transportation Safety Board said on Wednesday its investigation into the July 6 Lac-Mégantic derailment, in which 47 people died, determined the oil contained in the railcars was mislabeled and more flammable than previously thought.

* Low interest rates are helping to boost property markets across the globe and Canada is no exception, says a new report from the Bank of Nova Scotia. However, future gains in Canada are no guarantee, the report from economist Adrienne Warren says.

China

CHINA SECURITIES JOURNAL

-- China built 3.6 million units of low-cost apartments in the first eight month of this year. The government plans to build 4.7 million units of such apartments in 2013.

-- China will soon approve license of 4G mobile communication, said Zhang Xiaoqiang, deputy director of the National Development and Reform Commission.

SHANGHAI DAILY

-- Unilever Plc plans to build a fourth factory in China, Zeng Xiwen, the firm's vice president for North Asia, said.

CHINA DAILY

-- China needs to make greater efforts to ensure migrant workers' social inequalities are rectified so they can enjoy the same services as urban residents, the paper said in an editorial.

PEOPLE'S DAILY

-- China will increase investment in education sectors to raise the standard of education of financially stricken students, the State Council of China said.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Allstate (ALL) upgraded to Outperform from Market Perform at Wells Fargo
Cardinal Financial (CFNL) upgraded to Outperform from Market Perform at Keefe Bruyette
Cash America (CSH) upgraded to Outperform from Market Perform at JMP Securities
Constant Contact (CTCT) upgraded to Buy from Neutral at Janney Capital
Encana (ECA) upgraded to Outperform from Sector Perform at RBC Capital
Mobile Mini (MINI) upgraded to Outperform from Neutral at RW Baird
Polycom (PLCM) upgraded to Outperform from Market Perform at Raymond James
Portland General Electric (POR) upgraded to Buy from Hold at KeyBanc
Umpqua Holdings (UMPQ) upgraded to Outperform from Sector Perform at RBC Capital
Zynga (ZNGA) upgraded to Equal Weight from Underweight at Evercore

Downgrades

AB InBev (BUD) downgraded to Reduce from Neutral at Nomura
Arch Capital (ACGL) downgraded to Market Perform from Outperform at Wells Fargo
Associated Banc-Corp (ASBC) downgraded to Underperform at Raymond James
Cliffs Natural (CLF) downgraded to Market Perform from Outperform at FBR Capital
Netflix (NFLX) downgraded to Equal Weight from Overweight at Morgan Stanley
Symantec (SYMC) downgraded to Equal Weight from Overweight at Morgan Stanley
Travelers (TRV) downgraded to Market Perform from Outperform at Wells Fargo
Weatherford (WFT) downgraded to Market Perform from Outperform at Raymond James
Weatherford (WFT) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Barnes Group (B) initiated with a Buy at Deutsche Bank
CNA Financial (CNA) initiated with an Outperform at William Blair
Expedia (EXPE) initiated with a Neutral at Janney Capital
NeoStem (NBS) initiated with a Buy at MLV & Co.
Packaging Corp. (PKG) initiated with a Market Perform at Wells Fargo
RockTenn (RKT) initiated with an Outperform at Wells Fargo
Tree.com (TREE) initiated with a Buy at Needham

HOT STOCKS

America Movil (AMX) said discussions continue with KPN (KKPNY)
Carl Icahn told CNBC he bought more Apple (AAPL) stock yesterday as price fell
SAIC (SAI) sees $25B in new market opportunities following spin-off
Qualcomm (QCOM) announced new $5B share repurchase program
Philip Morris (PM), others (MO) prevail in settlement payment dispute
HP (HPQ) announced HP Chromebook14 (GOOG) powered by Intel (INTC) processor
Facebook CEO Zuckerberg: 'Home' service takeoff proceeding slower than expected
Dunkin' Brands (DNKN) to enter U.K. market
Weatherford (WFT) selling 38.5% Borets JV stake to partner
IAC (IACI) said to be considering Daily Beast sale after Tina Brown's departure, Bloomberg reports
DTE Energy (DTE) said cable failure occurred on electric system that serves Detroit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
ChinaEdu (CEDU), Vera Bradley (VRA)

Companies that missed consensus earnings expectations include:
Evolution Petroleum (EPM), Men's Wearhouse (MW)

NEWSPAPERS/WEBSITES

• Bank executives (C, JPM, BBT) have been hoping they could dull the pain of a plummeting mortgage-refinance market by shifting focus to loans for home purchases. That’s not working out. The Mortgage Bankers Association said mortgage applications fell 13.5% in the week ended Sept. 6 from the previous week. The data reflect a 20% drop in refinancing and a 3% decline in purchase loans, the Wall Street Journal reports
• Michael Dell is set to win a bruising, year long battle for control of his company. His next task—getting Dell Inc. (DELL) growing again—may be even tougher, the Wall Street Journal reports
• Societe Generale (SCGLY) is exploring the sale of its Asia private banking arm, sources say, seeking to exit a market where small managers are getting hit by rising costs and competition. The Singapore-based division could bring about $600M, Reuters reports
• Sharp Corp. (SHCAY)  plans to raise up to $1.7B as it seeks to pay down debt after a rescue last year and shore up its tattered finances, sources say, Reuters reports
• While the cheaper of Apple’s (AAPL) new iPhones disappointed critics who say it’s not priced low enough, in Europe it may still help carriers achieve what’s become rare in a region where wireless devices outnumber people: finding new customers, Bloomberg reports
• California Governor Brown said he’ll approve regulations for hydraulic fracturing criticized by environmental groups as the state prepares for development of the largest shale-oil reserves in the U.S., Bloomberg reports

SYNDICATE

Chemical Financial (CHFC) files to sell $50M of common stock
Global Brass & Copper (BRSS) files to sell 5M shares for holders
Glu Mobile (GLUU) files to sell common stock
Golub Capital (GBDC) files to sell 3M shares of common stock
Kilroy Realty (KRC) files to sell 4.5M shares of common stock

Originally posted at: CapitalistExploits.at

Over-burdensome regulation and massive liability exposure is stifling business and creativity, slowing the flow of capital globally and stagnating economic growth.

Let's look at the facts...

The IMF has downgraded its forecasts for global economic growth from its July World Economic Outlook Update. The world economy is now expected to grow at 2.9 percent in 2013, down from 3.1 per cent in the IMF's July Update. The forecast for 2014 has been downgraded to 3.6 per cent from 3.8 per cent.

Here's how the IMF expects major economies to perform this year and next year:

• United States 1.6%, then 2.6%
• Euro Area –0.4%, then 1.0%
• Germany 0.5%, then 1.4%
• France 0.2%, then 1.0%
• Italy –1.8%, then 0.7%
• Spain –1.3%, then 0.2%
• Japan 2.0%, then 1.2%
• United Kingdom 1.4%, then 1.%
• Canada 1.6% ,then 2.2%

Impressive? Hardly.

Not surprisingly, The IMF further notes that emerging market economies will still continue to account for the bulk of global growth in 2013 and 2014. (We've recently backed a new website that covers the emerging and frontier markets)

What's causing this slowdown? One of the culprits is burdensome and incomprehensible regulation.

In the US over-regulation and the fear of "guilty until proven innocent" has had a devastating effect on small business. A recent survey showed that 75% of Americans said they associate regulations most with unnecessary red tape, restrictions that lack common sense, or higher costs for American goods.

Where does all this red tape come from?

According to the American Bar Association, in the United States there are currently over 1,268,011 million licensed attorneys. The ABA says that approximately 8% of them work in private industry. That's over 100,000 attorneys working in US businesses.

For those wondering why the US government is shut down, mired in pointless stalemate again, and again, and again, I submit the following:

More than twice that percentage, roughly 18%, or over 228,000 work in government! The split is roughly 1/3 each for
federal, state and local government according to the US Bureau of Labor Statistics (BLS). These are 2010 numbers by the way, so it's likely only gotten worse!

In regards to elected officials in the United States, according to the Congressional Research Service 170 members of the House and 60 Senators are attorneys.

Out of a total of 435 U.S. Representatives and 100 Senators (535 total), attorneys comprise the biggest voting block of one type, making up 43% of Congress. Sixty percent of the U.S. Senate is attorneys. 37.2% of the House of Representatives are attorneys.

There are 81 Republican attorneys in Congress who list "lawyer" as their profession. There are 123 Democrat attorneys in Congress that list "lawyer" as their profession.

One could argue that those that make the laws should be versed in the law. Fair enough. But, on the flip side this has resulted in monstrosities like The Patriot Act. It's 342 pages long.

Then there is the IRS tax code. According to the CCH Standard Federal Tax Reporter, as of 2013, it now takes 73,954 regular 8-1/2" x 11" sheets of paper to explain the complexity of the U.S. federal tax code!

NTU Policy Paper #131, A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens, reports that:

"The most recent estimate of the current paperwork burden generated by the Treasury Department, nearly all accounted for by the Internal Revenue Service (IRS), now totals 6.7 billion hours, according to data from the Office of Management and Budget (OMB). That is the equivalent of about 3.35 million employees working 40-hour weeks year-round with just two weeks off. Incredibly, that is more than the number of workers at the
four biggest retailers among Fortune 500 companies – more than all the workers at Wal-Mart Stores, McDonald’s, Target, and Kroger combined! It’s more than triple the number of workers employed at the top four banks – Bank of America Corp., Wells Fargo, Citigroup, and J.P. Morgan Chase & Co."

It's no wonder that economic growth has ground to a virtual halt!

We have friends and colleagues in all corners of the world...London, Hong Kong, Singapore, Tripoli, Dubai, Athens, Taipei, Perth, Manila, Ulaanbaatar and even Washington DC. Most of them are entrepreneurs, freelancers, or business leaders in some shape or form.

They contact us regularly to keep us abreast of what they're up to, and provide us perspective on what's happening in their neighbourhood. Most of the time it's fairly normal stuff, but once in a while we hear of something that's just too ridiculous, and to relevant not to shine a light on.

First, apologies to our attorney friends. We're not blaming you for all our ills, but certainly the profession in general plays a large role in suppressing creativity and slowing business down.

In speaking to one of our colleagues recently, who shall remain anonymous, they relayed the following example to us:

"I can barely even give property by property data for my investors any longer. I've been working with lawyers all week on how to provide data. We wasted 5 hours discussing what footnotes are needed to accompany a phrase in our corporate presentation, "unlock substantial value in our development assets."

They hit me with the following:

• is there value there?
• is it substantial?
• is there a 3rd party that we can pay to prove that?
• what are the risks to the company if the value is only moderate and not substantial?
• how will we unlock it?
• if it will not be immediately unlocked, maybe we shouldn't use the active
  tense and instead say "we hope to one day potentially unlock some of the latent proposed value that may be in property assets that we believe we control, assuming the following set of circumstances and conditions are
  reached....."
• are development assets really what we claim?
• can you call them development assets if you don't yet have the permits to develop them?"

Our colleague then commented, "You should do an article on how the meaning of one 8 word sentence wasted my whole afternoon!" GREAT idea!

Now some of the questions posed by the attorneys in the above example are reasonable. As investors we want to know the companies we are invested in are doing their homework and reporting accurately. But, this should clearly illustrate the inefficiency of our current system.

I've cited US statistics in this post, but most western governments are suffocating their citizens with needless regulation and oversight, much of which is really just a direct result of the fact that all of those attorneys NEED SOMETHING TO DO!

As a point of law, all people are presumed to know the law and ignorance of the law is not a valid defence. I challenge anyone reading this, attorneys included, to explain to us HOW society is supposed to function under this growing and needless repression?

- Mark

"Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress." - Martin Luther King, Jr.

Submitted by Claude Salhani via OilPrice.com,

Petro-dollars, the word used to describe the billions of dollars earned from the sale of oil and natural gas, have helped change the shape and future of many counties in the Middle East, usually for the better, but not always.

In a few short years Petro-dollars have helped shape the Gulf states into the modern and futuristic looking cities of the future that one finds in today’s architecture in Dubai, Doha and Riyadh.

But now those petro-dollars are being used to shape the political future of the region and to model specific policies in a number of countries, such as Syria, for example, where petro-dollars are hard at work today.

Saudi Arabia, for example is investing billions of its petro–dollars in an attempt at shaping the Syrian political landscape more in its favor and away from the Muslim Brotherhood, an organization that the Saudi and other Gulf states regard with contempt and fear. 

But after its brief string of successes in Egypt, Tunisia, Palestine, Syria, and to a lesser degree, Turkey, the MB now appears to be on the retreat.

Among the first signs that not all is well in the house of fundamental Islam comes amidst reports that Khaled Mashaal, the leader of Hamas is seeking to relocate from his current base in Doha, the capital of the oil and gas rich Gulf state of Qatar.

Although Hamas is denying this rumor, the Palestinian Islamist movement had also denied in the past similar reports that it was relocating to Qatar from Damascus in 2012, as indeed it had.
Should this report prove to be true it would sustain the fact that the Brotherhood is indeed on the retreat.

In the past 12 months alone the Brotherhood has suffered a number of serious setbacks. The group went from winning an election to holding power in Egypt, to being once again banned and driven underground.

In Tunis, similarly, the MB government that was voted into power after the fall of Zein el Adedine bin Ali, is now on the way out, as popular protests, much like in Egypt have forced the changes to take place.

And the inroads the MB was making in Syria seems to have receded after the intervention of Saudi Arabia. The petro-dollars are at work once again supporting the anti-Assad regime, but not those who tend to be too conservative and that the Saudis and the Emiratis know only too well will one day turn against them.

Riyadh, for one, is not about to forget the lesson of the returning “Afghan Arabs” that nearly toppled the royal house of Saud.

Riyadh also had to apply pressure on its smaller neighbor, Qatar, and “convince” the ruler Emir Hamed Bin-Khalifa, a strong supporter of the Muslim Brotherhood to step down in favor of his son, Tamim. The precise circumstances and reasons for the Qatari’s ruler sudden departure from power remain a mystery to this day.

With the son now in charge in Doha, Qatar’s financial support of the Brotherhood is virtually drying up.

In retrospect perhaps the rapid advance of the Muslim Brotherhood was a tad too fast in a part of the world that is unaccustomed to change. This rapid gallop frightened the ultra-conservatives regimes in Riyadh and Abu Dhabi, who then took steps to rectify what they did not like.

In the months that followed, the Brotherhood was forcibly removed from power in Egypt with help of Saudi and UAE petro-dollars.

And thanks to petro-dollars also supplied by Saudi Arabia and the UAE, the Muslim Brotherhood no longer seems to be about ready to remove Syrian President Bashar Assad from power. Not that the Saudis of the Emiratis have any great affection for Assad, quite to the contrary, they would like to see him go. And their petro-dollars are making sure of that.

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

I have been cursed at a Chinese border. In Dubai, my passport was studied by three veiled women for over an hour and my suitcase completely dismembered. In the Philippines I had to bribe someone in order to get my visa extended for a few days. Borders, they can be tough, especially in countries known for corruption.

 

But never, ever, will I return to the United States of America.

 

- Excerpt from a must read article by Niels Gerson Lohman

Recently, one of my best friends from college had a horrific experience at the Canadian border. He told me he would write about his experience and allow me to post it on this site, so I hope to have that up in the near future. In the meantime, please take the time to read the story of Niels Gerson Lohman, a Dutch writer, designer and musician who had such a horrific experience at the border he has vowed to never return to these United States. This is an utter embarrassment and reminds me a lot of one of the more popular posts ever on this site:  Why I’m Leaving America by Michael Fielding.

From the Huffington Post:

After a year of traveling, I had planned a last, short trip. I was going to take the train from Montreal to New Orleans. The travels I had been undertaking earlier this year had brought me to places that were meant to form the background of my second novel.

 

This trip, however, was for my dad. He, a trumpet player, loved New Orleans and had died a year ago. It felt like the first sensible trip I undertook this year. I had been searching for ways to forget about the last hours at his deathbed. He had been ill for 15 years and his body just would not give up. It was a violent sight. I had decided the trip to New Orleans would put an end to those memories.

 

The customs officer walked by and asked everybody on the train a few questions. Where they were from, where they were heading. The usual stuff. Everybody who was not a U.S. or Canadian citizen was to head for the dining car to fill in an additional green form.

 

I had not finished my novel yet, but my passport was complete. It was filled with pretty stamps. He did not like the stamps.

 

First, he saw my Sri Lankan stamp. The customs officer raised his eyebrows.

 

“Sri Lanka, what were you doing over there?”

 

“Surfing. Traveling. My best friend lives there. He is an architect.”

 

The officer flipped on, seemingly satisfied. Secondly, he found my stamps from Singapore and Malaysia.

 

“What were you doing over there? Singapore and Malaysia? Aren’t those countries Islamic?”

 

Looking over my shoulder, his eyes searched for his colleague’s confirmation.

 

“Malaysia, I think so, yeah. But not Singapore. It’s a melting pot. A very futuristic city. Airconditioned to the ceiling. To Singapore I went mostly for the food, to be honest.”

 

“Sure.”

 

“I’m sorry?”

 

“Nothing. And how about Malaysia?”

 

I explained flights departing from Malaysia were cheaper compared to Singapore. That I only went there for a few days, but also, a little bit, for the food. The customs officer went through some more pages. Then he found my Yemeni visa. He put my passport down and stared at me.

 

“What the hell were you doing in Yemen?”

 

“I went to the island Socotra, it’s not on mainland Yemen. It’s a small island closer to Somalia. A very special place, some call it ‘Galapagos of the Middle East.’ I think 85 percent of the plants and animals there, are indigenous.”

 

In the five hours that followed, I was questioned twice more. During the first round I told, amongst others, my life’s story, about my second novel’s plot, gave my publisher’s name, my bank’s name and my real estate agent’s name. Together we went through all the photos on my laptop and messages my phones had been receiving for the past months. They wrote down the names of everybody I had been in touch with. In my pirated software and movies they showed no interest.

 

“So… what’s the verdict?”

 

“We are under the impression you have more ties with more countries we are not on friendly terms with than your own. We decided to bring you back to the Canadian border.”

 

They brought me back. In the car, no words were said. It was no use. I was defeated. To the Canadian border they said:

“We got another one. This one is from the Netherlands.”

Yep, you got him alright cowboy. Thanks for embarrassing an entire nation.

The Canadian officer looked at me with pity. She asked if there was anything I needed. I said I could use some coffee and a cigarette. She took my passport to a back room and returned within five minutes, carrying an apologetic smile, a freshly stamped passport, coffee, a cigarette, and a ticket to the next bus back to Montreal.

This ladies and gentlemen, is what we have become.

Full article here.

Gold slipped to one week lows today despite the U.S. Federal Reserve vowing to maintain its ultra loose monetary policies. Speculators may be taking profits from a recent run up in prices.

Gold in GBP, 5 Year - (Bloomberg)

Gold has risen 8% since hitting a three month trough on October 15 as value buyers bought gold.

The Fed yesterday sounded a bit less optimistic about economic growth as it announced plans to keep buying $85 billion of U.S. bonds per month. The central bank noted that the recovery in the housing market had lost some steam and suggested some frustration at how poorly the labour market remains.

Many of the world’s largest banks have been accused of manipulating the $5.3 trillion a day global foreign exchange market. Citigroup Inc. (C:US) and JPMorgan Chase & Co. (JPM:US) are putting their top London currency dealers on leave as regulators and the U.S. Justice

Department are probing the manipulation of foreign exchange rates. The investigation began examining the traders’ use of an instant-message group. The roster of banks in the group changed as the men moved firms and also included Barclays Plc, Royal Bank of Scotland Group Plc and UBS AG.

The five firms account for about 47% of the massive foreign exchange market. Two other traders, who weren’t part of the conversations and who asked to not be identified because they do business with those involved, said that they and others in the market referred to the message group as “The Cartel.”

Despite a slight drop in physical demand from China in recent days, physical gold demand remains robust in India, the Middle East and amongst coin buyers in western markets.

Demand for gold in the Middle East remains robust and there has been an eightfold increase or 700% increase in demand in recent years. Geopolitical uncertainty in the region, from Libya to Egypt to Syria and Iraq and Iran is leading to demand for bullion.

Thus, the Dubai Gold & Commodities Exchange plans to list a spot gold contract in the second quarter of next year. The bourse, which offers gold and silver futures, is talking to local merchants and industry organizations and aims to get regulatory approval for the product by early 2014, Chief Executive Officer Gary Anderson told Bloomberg. Demand for bullion in Dubai expanded eightfold in the last six to 10 years, he said.

Dubai accounts for about 25% of global physical gold trade and the United Arab Emirates will grow as a precious metals trading hub partly because of its location near the largest consuming nations, according to the Dubai Multi Commodities Centre, which owns a majority stake in the DGCX.

The size of the spot gold contract will probably be 1 kilogram (32 ounces). While there are “no concrete plans” yet for other precious metals products, a silver spot contract and platinum and palladium contracts may be possible in the future, Anderson said.

Gold in EUR, 5 Year - (Bloomberg)

Sales of gold coins and bars recovered in October, figures from two of the world’s leading mints show, suggesting physical buyers remain robust despite bullion's 20% fall this year.

While overall volumes remain well below this year's peak, they are on track for a very robust year that will be close to or surpass levels seen in 2011.

Gold has fallen out of favour with speculators and some investors on expectations that the Federal Reserve will soon start scaling back its money printing programme. However, data regarding physical demand from Asia and mints around the world, shows that store of wealth demand remains very robust and physical buyers are using price weakness to keep accumulating bullion.

Australia's Perth Mint gold sales – including the iconic Australian kangaroo coin series – up to October 25 reached 75,040 troy ounces, according to preliminary numbers obtained by CNBC.

They are on track for a near 10% month on month gain from 68,488 ounces in September.
Perth Mint gold sales surged to a record in April this year after the peculiar ‘flash crash’ that saw gold plummet in minutes due to a massive bout of concentrated selling on the COMEX. April sales surged to over 111,505 ounces which was more than double the sales in March.

Smart money accumulated on the dip, again.

Meanwhile, sales of American Eagle gold coins more than tripled on month in October to 46,500 ounces. While they remain well off the 209,500 ounce high recorded in April, according to daily updated numbers obtained from the U.S. Mint's website, they are also on track for another good year.

April represented a banner month for sales in both the Perth Mint and the U.S. Mint after buyers jumped at the opportunity to accumulate gold coins, following gold's biggest ever one day loss on April 15, when it tumbled $125. The concentrated selling on the COMEX precipitated the month's sharpest decline since December 2011 and led to further allegations of manipulation of gold prices by Wall Street banks.

Physical demand from store of wealth buyers in Asia and internationally who continue to ‘stack’ or gradually accumulate physical coins and bars is supporting gold  and silver at these levels and should contribute to higher prices in the coming months.

Gold is down 20.2% year to date but has advanced 14% since reaching a 34 month low in June as lower prices led to increased demand for gold jewelry, bars and coins, particularly in Asia.

Download GoldCore’s Essential Guide To Silver Eagles here

Today’s AM fix was USD 1,311.25, EUR 971.30 and GBP 817.08 per
ounce.
Yesterday’s AM fix was USD 1,314.25, EUR 972.94 and GBP 823.47 per
ounce.

Gold inched down $0.60 or 0.05% yesterday, closing at $1,314.20/oz. Silver
slid $0.22 or 1.01% closing at $21.62. Platinum climbed $6.55 or 0.5% to
$1,450.25/oz, while palladium rose $7.46 or 1% to $745.25/oz.

Gold
in USD, 1 Year - (Bloomberg)

Gold has had five consecutive days of weakness as a stronger greenback has
led to traders selling gold on the COMEX. Even though the U.S. Fed maintained
their ultra loose monetary policies last week, maintaining $85 billion a month
in bond purchases, gold has lost its shine with momentum driven and computer
driven traders and hedge funds.

The sharp rise in the gold mining shares yesterday, the XAU was up 2.5% and
the HUI was up 2.9%,  was encouraging for gold.

Declines are likely to be limited as lower prices is leading to physical
buying globally. While much of the focus continues to be on ETF selling and
Indian and more recently Chinese demand, some market participants fail to
realise the extent of global demand which remains broad based. This is seen in
the recent gold data out of Dubai and Turkey.

Turkey’s gold imports jumped more than threefold in October to 15.98 metric
tons, from 4.8 tons in September, according to the Istanbul Gold Exchange’s
website. That’s the highest since July, the data shows.

Turkey has already imported 251.4 metric tonnes in 2013, year to date,
meaning that it will come very close to or surpass the record import year in
2005 when 269.5 metric tonnes of gold were imported (see table below).

Year to date imports are more than double the amount of gold imports in 2012
and more than triple those in 2011.

Turkey’s gold sales to neighboring Iran declined to $1.5 billion so far this
year from a record $6.5 billion for all of last year. This may indicate a fall
in demand from Iran or that Iran is now importing gold from other countries such
as Dubai in the UAE.

Istanbul
Gold Exchange

Gold is being remonetised and becoming money again in Turkey. Unlike India
which has embarked on a campaign of repression against gold, the Turks are being
far more enlightened. They are allowing the considerable and growing gold
holdings of the population to be remonetised in order stimulate demand and grow
the economy. 

The country's central bank last year allowed commercial banks to hold a
portion of their lira reserves in gold and banks are making it easier to buy
gold in Turkey..

Some Turkish banks are now offering customers the ability to use their gold
based deposits for collateral on gold backed loans and using gold as access to
Turkish Lira or for access to credit cards.

Isbank and Turkiye Garanti Bankasi AS, the country’s biggest lender by market
value, offer gold-backed loans, where customers can bring jewellery or coins to
the bank and take out loans against their value. Garanti also has a credit card
linked to gold deposit accounts.

Government efforts to help ease the nation’s current account deficit are
encouraging householders to bring their gold coins which it is estimated that
there are $302 billion of hidden gold
stashed in homes in Turkey.

This hidden gold is second only to the U.S., and Turkish gold based deposit
accounts have grew 15% this year calculated until the end of July, which is a 3
fold increase in standard savings accounts according to the Turkish Central
Bank.

The gold accounts give customers an amount in Turkish lira equivalent to the
weight of the precious metal they deposit in the bank. Bank customers can then
withdraw cash or take out loans, while the bank is able to sell or hold onto the
gold.

Turkiye Is Bankasi AS (ISCTR), Turkey’s largest bank by assets, said gold
deposits increased 10 times in the two years through June.

The campaign by Turkey’s banks, featuring ads for “golden age” accounts and
products such as gold gift checks, is targeted at Turks who traditionally give
gold coins or jewellery as presents at weddings, births and circumcision
ceremonies. The custom gained popularity a decade ago as Turkey’s inflation rate
topped 70%, making gold an attractive store of wealth.

The World Gold Council estimates that by bringing 5,000 metric tons (5,512
tons) of gold bullion into the banking system -- an amount greater in value than
Ireland’s GDP, Turkey aims to reduce gold imports and external borrowing.

Government statistics cite Turkey’s current-account deficit, has narrowed its
gap 23% from $77 billion (2011) to $59 billion (ending August). Record gold
sales from Turkish companies to the United Arab Emirates and Iran increased its
exports. Exports of precious metals to the UAE and Iran, climbed to $9.2 billion
(ending August 2012) from $645 million last year driven by western sanctions on
Iran.

Many of the gold exported is coming from the population that are shifting
their gold stash from their homes to the banks since Turkish gold production is
only 25 metric tons.

The Turkish Government endeavours include the August 16th central bank
decision to raise the proportion of reserves lenders can keep in gold to 30%
from 25%, having increased its efforts to get more bullion out of the homes and
into the monetary system.

IMF
Turkey Gold in Mill Fin Troy Oz

Banks are diversifying and offering diversification with a range of gold
related services.

Turkey’s regulators have been discussing planned legislation to enable
customers to buy or sell gold at bank branches or transfer gold into other
accounts, according to an Aug. 29 report in Milliyet, a daily newspaper. Bank
Asya has said it will soon start purchasing and selling bullion at its
branches.

Jewellers in Istanbul’s Grand Bazaar, one of the world’s largest covered
markets, have opposed the move. They say banks buying and selling gold would cut
their revenue and push them into underground trading, according to
Bloomberg.

The 6th century-old Grand Bazaar houses 4,000 jewellers, and about 1.5 metric
tons of scrap gold is processed into bullion there every day, according to
Istanbul Gold Exchange data. Transaction volume totalled 8.5 billion liras ($4.7
billion) last year.
The move by the Turkish banks may soon be followed by
desperate banks in other emerging and developed markets.

Turkey has been aggressively adding to its gold reserves in recent years and
now has the world's 11th-largest gold reserves. Its holdings rose to 15.762
million ounces or over 490 tonnes at the end of September (see chart above).

Gold is gradually being remonetised again in Turkey and this trend will soon
be seen globally.

With gold soon to become a Tier 1 asset, banks will attempt to get a
significant amount of investment grade gold bullion onto their balance sheets in
order to buttress them.

Download
GoldCore’s Essential Guide To Silver Eagles here.

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While the public's attention has been focused recently on revelations involving currency manipulation by all the same banks best known until recently for dispensing Bollinger when they got a Libor end of day print from their criminal cartel precisely where they wanted it (for an amusing take, read Matt Taibbi's latest), the truth is that manipulation of FX and Libor is old news. Time to move on to bigger and better markets, such as physical commodities, in this case crude, as well as Interest Rate swaps. And, best of all, the us of our favorite manipulation term of all: "banging the close."

The story of crude oil manipulation, primarily involving Platts as a pricing intermediary, has appeared on these pages in the past as far back as a year ago, and usually resulted in either participant companies, regulators or entire nation states doing their best to brush it under the rug. However, it is becoming increasingly more difficult to do so as the following Bloomberg story demonstrates.

Four longtime traders in the global oil market claim in a lawsuit that the prices for buying and selling crude are fixed -- and that they can prove it. Some of the world’s biggest oil companies including BP Plc (BP/), Statoil ASA (STL), and Royal Dutch Shell Plc conspired with Morgan Stanley and energy traders including Vitol Group to manipulate the closely watched spot prices for Brent crude oil for more than a decade, they allege. The North Sea benchmark is used to price more than half the world’s crude and helps determine where costs are headed for fuels including gasoline and heating oil.

 

The case, which follows at least six other U.S. lawsuits alleging price-fixing in the Brent market, provides what appears to be the most detailed description yet of the alleged manipulations and lays out a possible road map for regulators investigating the matter.

 

The traders who brought it -- who include a former director of the New York Mercantile Exchange, or Nymex, one of the markets where contracts for future Brent deliveries are traded - - allege they paid “artificial and anticompetitive prices” for Brent futures. They also outline attempts to manipulate prices for Russian Urals crude and cite instances when the spread between Brent and Dubai grades of crude may have been rigged.

 

The oil companies and energy-trading houses, which include Trafigura Beheer BV and Phibro Trading LLC, submitted false and misleading information to Platts, an energy news and price publisher whose quotes are used by traders worldwide, according to the proposed class action filed Oct. 4 in Manhattan federal court.

The method of manipulation is a well-known one to regular readers: spoofing.

Over 85 pages, the plaintiffs describe how the market allegedly showed that the Dated Brent spot price was artificially driven up or down by the defendants, depending on what would profit them most in swap, futures or spot markets. They allege the defendants used methods including “spoofing” - - placing orders that move markets with the intention of canceling them later. Platts’ methodology “can be easily gamed by market participants that make false, inaccurate or misleading trades,” the plaintiff traders alleged. BFOE refers to the four oil grades -- Brent, Forties, Oseberg and Ekofisk -- that collectively make up the Dated Brent benchmark.

Ironically, spoofing is one of the primary mechanisms by which the HFT cabal has also benefitted, and been able to, levitate the market to ever record-er highs on ever lower volume. That, and Bernanke of course.

What do the plaintiff's allege?

Kovel represents plaintiffs Kevin McDonnell, a former Nymex director, as well as independent floor traders Anthony Insinga and Robert Michiels, and John Devivo, who held a seat on Nymex and traded for his own account. The complaint says the plaintiffs are among the largest traders of Brent crude futures contracts on Nymex and the Intercontinental Exchange. The four, who don’t specify the amount they are claiming in damages, seek to represent all investors who traded Brent futures on the two exchanges since 2002.

 

The plaintiffs allege that in February 2011, defendants manipulated the trade of Forties-blend crude, one of four grades used by Platts to determine the Dated Brent benchmark, which represents the price of physical cargoes for delivery on the spot market.

 

Shell offered to sell shipments to keep the price of Forties “artificially low,” according to the plaintiffs.

 

Morgan Stanley (MS) was the only buyer for one of four such orders, or cargoes, totaling 2.4 million barrels of oil, the traders said. The Feb. 21, 2011, transaction was prearranged to set a lower price for Dated Brent, according to the complaint.

So how was such wholesale manipulation able to continue for over a decade? Simple - same reason why nobody "knew" anything about the Libor cabal until recently - alligned financial interests of every participating party, in this case Platts, a unit of McGraw Hill Financial - the same parents as Standard & Poors rating agency - and all the other major commodity players in the space.

“By BFOE boys,” the plaintiffs said in their complaint, “this trader was likely referring to the cabal of defendants, including Shell, which controlled the MOC process.” The claimants also alleged that in September 2012, Shell, BP, Phibro, Swiss-based Vitol and Netherlands-based Trafigura rigged the market through “a combination of spoofing, wash trades and other artificial transactions” in the Platts pricing process.

 

The defendants pressured the market downward at the start of the month by colluding to carry out irregular and “uneconomic” trades, according to the lawsuit. They drove prices higher later that month, it said.

 

The four traders said Platts was “reluctant to exclude” the irregular trades because BP and Shell are “significant sources of revenue” to Platts.

Or, said simpler, don't ask, don't tell, and keep cashing those checks.

Full lawsuit can be read below:

* * *

And in other news, the CFTC just charged DRW Investments with price manipulation by way of "banging the close" in Interest Rate Swap Futures Markets.

Defendants allegedly manipulated the IDEX USD Three-Month Interest Rate Swap Futures Contract by “Banging the Close”

 

The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil enforcement action in the U.S. District Court for the Southern District of New York against Donald R. Wilson (Wilson) and his company, DRW Investments, LLC (DRW). The CFTC’s Complaint charges Wilson and DRW with unlawfully manipulating and attempting to manipulate the price of a futures contract, namely the IDEX USD Three-Month Interest Rate Swap Futures Contract (Three-Month Contract) from at least January 2011 through August 2011. The Complaint alleges that as a result of the manipulative scheme, the defendants profited by at least $20 million, while their trading counterparties suffered losses of an equal amount.

 

According to the Complaint, in 2010 the Three-Month Contract was listed by the International Derivatives Clearinghouse (IDCH) and traded on the NASDAQ OMX Futures Exchange, and was publicized as an alternative to over-the-counter, i.e., off-exchange, products. Wilson and DRW believed that they could trade the contract for a profit based on their analysis of the contract. At the end of 2010, Wilson caused DRW to acquire a large long (fixed rate) position in the Three-Month Contract with a net notional value in excess of $350 million. The daily value of DRW’s position was dependent upon the daily settlement price of the Three-Month Contract calculated according to IDCH’s methodology. As Wilson and DRW knew, the methodology relied on electronic bids placed on the exchange during a 15-minute period, the “settlement window,” prior to the close of each trading day. In the absence of such bids, the exchange used prices from over-the-counter markets to determine its settlement prices. Wilson and DRW anticipated that the value of their position would rise over time.

 

The market prices did not reach the level that Wilson and DRW had hoped for and expected, according to the Complaint. Rather than accept that reality, Wilson and DRW allegedly executed a manipulative strategy to move the Three-Month Contract market price in their favor by “banging the close,” which entailed placing numerous bids on many trading days almost entirely within the settlement window, none of which resulted in actual transactions as DRW regularly cancelled the bids. Under the exchange’s methodology, DRW’s bids became the settlement prices, and in this way DRW unlawfully increased the value of its position, according to the Complaint.

But the take home message here is simple: no matter the pervasive manipulation everywhere else, and seemingly by everyone including such titans of ethical fortitude as Steve Cohen, gold is not, repeat not, never has been, never will be manipulated.

• What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
• Japan's Banks Find It Hard to Lend Easy Money (WSJ)
• U.S. Military Eyes Cut to Pay, Benefits (WSJ)
• Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
• Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
• Russian Tycoon Prokhorov to Buy Kerimov's Uralkali Stake (WSJ)
• Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
• Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
• Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
• SAC Capital's Steinberg faces insider trading trial (Reuters)
• Six killed as tornadoes rip through U.S. Midwest (Reuters)
• High-Risk Patients Fuel More Health-Law Worry (WSJ)
• Greece has fired or suspended 116 tax inspectors, deputy minister says (Kathimerini)
• J.P. Morgan Reaches $4.5 Billion Settlement With Investors (WSJ)
• Iceland Tells Hedge Funds Not to Bet on 75% Claims Writedown (BBG)

Overnight Media Digest

WSJ

* The U.S. military's top commanders, amid a shrinking Pentagon budget, have agreed to a plan that would curb the growth of pay and benefits for housing, education and health.

* The Obama administration's overtures to Iran are straining the U.S. alliance with Israel in ways not seen in decades, compounding concerns about the White House's ability to manage the Middle East's proliferating security crises.

* The dearth of borrowers illustrates the reality behind Japan's economic-policy experiment: It is easier to increase the money supply than to get people to put the cash to work.

* The asset-management industry is pushing back against a powerful, yet little known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers.

* Boeing formally launched its 777X jetliner with record orders, as jet-buying commitments at the Dubai Airshow for Boeing and rival Airbus highlighted the growing ambition of Persian Gulf airlines.

* The committees that control consolidated data feeds for Nasdaq OMX Group and NYSE Euronext are nearing agreement on a plan to back up their data streams, according to people familiar with the matter.

* More than 15 percent of the factories in Wal-Mart Stores Inc's initial round of safety inspections in Bangladesh failed their audits and had to make improvements to keep doing business with the giant retailer.

* Suntech Power Holdings Co, mired in more than $2.3 billion in debt, would pay back about 30 percent of what it owes to Chinese creditors in a deal that would also keep its solar-equipment factories humming under new management.

* Bloomberg LP's news division will lay off about 50 people or about 2 percent of its newsroom, according to people familiar with the company's plans, the latest financial news and data provider to make job reductions

FT

The chair of the European Banking Authority has warned that Europe's ability to deal effectively with the next financial crisis risks being undermined, if decision-making is not streamlined and nationalist tendencies contained.

Gulf airlines splashed out over $150 billion on new plane deals on day one of the Dubai Airshow, underlining their status as powerful forces in global aviation.

Less than a week after Barclays slashed 1700 jobs at its UK branches, the bank's global retail head has warned of further job cuts as the bank tries to trim its cost-heavy high-street business.

Edmond de Rothschild is preparing to launch a London-based merchant banking business this week as the Franco-Swiss private banking group seeks to turn London into its fourth major business centre.

Directors' pay at the UK's biggest listed companies has risen 14 percent, as company bosses reap the benefits of a windfall from long-term incentive plans.

Former U.S. Treasury Secretary Timothy Geithner is joining private-equity firm Warburg Pincus as president and managing director.

NYT

* The push to reshape financial oversight hinges on negotiations in the coming weeks over the so-called Volcker Rule, a regulation that strikes at the heart of Wall Street risk-taking.

* Mobile games are a major growth opportunity, and analysts say a recent flop underscores the challenges Walt Disney faces in a shifting marketplace.

* As many as 4.8 million people could be affected by expiring jobless benefits through 2014, and there is little sign that Congress will act before it adjourns in two weeks.

* J. Craig Venter, the maverick scientist, is looking for a new world to conquer - Mars. He wants to detect life on Mars and bring it to Earth using a device called a digital biological converter, or biological teleporter.

* The flood of orders at the Dubai Airshow, including the sale of 225 of Boeing's new 777X jets, highlighted how the big money in aviation is shifting to the Middle East and Asia.

* Timothy Geithner will join the private equity firm Warburg Pincus as president, the firm said on Saturday. It would be his first prominent position since leaving office as Treasury secretary this year.

* Were the young founders of Snapchat, a mobile-messaging start-up, delusional for turning down a multibillion-dollar buyout offer? Greedy to think they might get more later? Or courageous to chase their dreams? The decision they faced - to cash out or remain independent - is one that all successful technology entrepreneurs eventually confront.

Canada

THE GLOBE AND MAIL

* In a historic showdown, Rob Ford faces formal repudiation from Toronto city council, which will vote on Monday on a motion stripping him of virtually all of his powers as mayor, after three tumultuous weeks of disclosures over his use of crack cocaine and alcohol.

* A line of severe storms swept across southern and eastern Ontario Sunday night, bringing heavy rain and winds gusting to 90-kilometres an hour.

Reports in the business section:

* On two week-long trips to Australia in the past month, the CEO and vice-chairman of Saputo Inc has travelled hundreds of kilometres in the state of Victoria to meet with dairy farmers who own shares of Warrnambool Cheese and Butter Factory Co.

* Malaysia's Petronas is lining up Asian energy players to help build a Canadian liquefied natural gas megaproject, but there is a catch. Before anyone joins the ownership team, the prospective partners must sign long-term contracts to buy LNG.

NATIONAL POST

* Canada's auditor general has found that the billions of dollars set aside for the federal government's shipbuilding plan won't be enough to get the navy the vessels it was promised, or needs.

* A lawyer representing embattled Toronto Mayor Rob Ford said Sunday it was "highly unlikely" he would seek a court-ordered injunction to block Toronto city council from moving forward Monday with a motion to further diminish the mayor's power.

FINANCIAL POST

* It's not exactly the 11th province just yet, but Canadian companies have been gobbling up property in the United States like never before.

* The highly anticipated next-generation gaming consoles from Sony Corp and Microsoft Corp are expected to re-energize earnings growth and boost share prices across the industry.

China

SHANGHAI SECURITIES NEWS

- Insurance regulators are considering accelerating the establishment of shipping insurance pilot programs in the Shanghai Free Trade zone, and plan to establish an offshore insurance market.

CHINA SECURITIES JOURNAL

- An official with the State-owned Assets Supervision and Administration Commission (SASAC) and enterprise reform gave an interview to the China Securities Journal in which he said reforms would concentrate on institutions managing state-owned enterprises.

- Alibaba's payment unit has partnered with Intime Retail (Group) Co Ltd to allow customers at Intime's department stores to shop using their mobile phones, potentially leading to a shake-up of China's Point of Sales (POS) market.

SECURITIES TIMES

- There will be 570 million people in China who use their mobile phones to access the Internet by the end of this year, according to a forecast by consultancy iMedia Research.

CHINA DAILY

- The end of the controversial "reform through labour" detention system, announced after the third party plenum, is expected to come no earlier than the end of November.

- The Chinese small and medium enterprise (SME) confidence index from Standard Chartered declined to 52.04 in the third quarter, down from the previous quarter, as small businesses remain cautiously optimistic. The article said surveys indicate SMEs are having an easier time getting loans this year.

SHANGHAI DAILY

- China is set to have the largest number of lung cancer patients in the world by 2025, according to experts at a forum in Beijing.

PEOPLE'S DAILY

- In an editorial, People's Daily called on China to further liberate people's mind, social productivity and vibrancy.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Baxter (BAX) upgraded to Outperform from Neutral at Credit Suisse
Diebold (DBD) upgraded to Buy from Hold at KeyBanc
Goldcorp (GG) upgraded to Buy from Neutral at Citigroup
Kirkland's (KIRK) upgraded to Buy from Neutral at SunTrust
Kosmos (KOS) upgraded to Buy from Neutral at Mizuho
Lamar Advertising (LAMR) upgraded to Overweight from Equal Weight at Evercore
MSC Industrial (MSM) upgraded to Buy from Hold at BB&T
PS Business Parks (PSB) upgraded to Outperform from Market Perform at BMO Capital
Penn National (PENN) upgraded to Outperform from Market Perform at Wells Fargo
PennantPark Floating Rate (PFLT) upgraded to Outperform at Keefe Bruyette
Sappi Ltd. (SPP) upgraded to Buy from Sell at UBS
Swift Transportation (SWFT) upgraded to Outperform from Neutral at RW Baird
Vitamin Shoppe (VSI) upgraded to Conviction Buy from Buy at Goldman

Downgrades

Alpha Natural (ANR) downgraded to Sell from Neutral at Citigroup
Bill Barrett (BBG) downgraded to Neutral from Buy at Goldman
Bona Film (BONA) downgraded to Market Perform from Outperform at Cowen
CONSOL Energy (CNX) downgraded to Neutral from Buy at Citigroup
Commercial Metals (CMC) downgraded to Neutral from Buy at Citigroup
Corporate Office (OFC) downgraded to Market Perform from Outperform at BMO Capital
GSE Holding (GSE) downgraded to Market Perform from Outperform at Cowen
Halcon Resources (HK) downgraded to Sell from Neutral at Goldman
Interactive Brokers (IBKR) downgraded to Market Perform at Keefe Bruyette
MercadoLibre (MELI) downgraded to Underweight from Equal Weight at Morgan Stanley
Microsoft (MSFT) downgraded to Underperform from Neutral at BofA/Merrill
NVIDIA (NVDA) downgraded to Underweight from Equal Weight at Morgan Stanley
Nucor (NUE) downgraded to Neutral from Buy at Citigroup
Renewable Energy (REGI) downgraded to Hold from Buy at Canaccord
SuperValu (SVU) downgraded to Sell from Neutral at Goldman
Synchronoss (SNCR) downgraded to Neutral from Outperform at RW Baird
Walter Energy (WLT) downgraded to Neutral from Buy at Citigroup

Initiations

Cyberonics (CYBX) initiated with a Buy at Citigroup
Gaming and Leisure Properties (GLPI) initiated with a Neutral at Credit Suisse
Gastar Exploration (GST) re-initiated with an Outperform at Imperial Capital
Stonegate Mortgage (SGM) initiated with an Outperform at FBR Capital

HOT STOCKS

JPMorgan (JPM) reached $4.5B agreement with 21 institutional investors
Lloyds (LYG) sold asset management business to Scottish Widows Investment Partnership
Boeing (BA) launched 777X program at Dubai Airshow with over $95B in agreements
GE (GE) received $26B in agreements at Dubai Air Show
Royal Bank of Scotland (RBS) said making progress on IP&ED unit sale
FDA classified Medtronic's (MDT) voluntary field action on guidewires a Class I recall
Media General (MEG), DISH (DISH) reached retransmission consent agreement
Insight (NSIT) announced it will be reseller of Google Chromebooks (GOOG)
Oracle (ORCL) acquired Bitzer Mobile, terms not disclosed

NEWSPAPERS/WEBSITES

• The Dubai Airshow is shaping up to be an order extravaganza for Boeing (BA), but that doesn't mean rival Airbus (EADSY) has ceded the field, and has reported respectable numbers  as well, the Wall Street Journal reports
• The asset-management industry (BLK) is pushing back against the Financial Stability Oversight Council, a powerful, yet little-known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers, the Wall Street Journal reports
• Capital ratios at U.S. banks have strengthened and bank lending is quite strong, Boston Fed President Eric Rosengren said today at a financial regulation conference in the United Arab Emirates, Reuters reports
• Daimler (DDAIF) and its Chinese partner BAIC Motor will sign a new strategic cooperation agreement tomorrow, with Daimler becoming an “important partner” with shareholding rights, Reuters reports
• Google (GOOG) is opening showrooms called Winter Wonderlabs in six U.S. cities, promoting its latest products and stepping up retail efforts against Apple (AAPL) and Microsoft (MSFT) as the year-end holiday shopping season gets under way, Bloomberg reports
• Salesforce.com (CRM )introduced an overhauled version of its mobile software, seeking to ensure clients and partners will be able to use more features of the company’s sales, marketing and customer service software, Bloomberg reports

BARRON’S

Kimberly Clark (KMB) shares expensive despite spin-off
Blount (BLT) could offer a dividend buyback
Carlyle Group (CG) could return over 20% next year
Discovery (DISCA) could rise 20%
US Airways (LCC) could reward investors (AAMRQ)

SYNDICATE

Ascent Capital Group (ASCMA) files to sell 253,333 shares for holders
MetLife (MET) files automatic mixed securities shelf
The Bancorp (TBBK) files $100M mixed securities shelf
UPS (UPS) files automatic mixed securities shelf

• JPMorgan $13 Billion Mortgage Deal Seen as Lawsuit Shield (BBG)
• J.P. Morgan Is Haunted by a 2006 Decision on Mortgages (WSJ)
• World powers, Iran in new attempt to reach nuclear deal (Reuters)
• Keystone Foes Seek to Thwart Oil Sands Exports by Rail (BBG) - mostly Warren Buffet?
• How Would Fed Deal With Debt Ceiling Crisis? Look to Minutes for Clues  (Hilsenrath)
• Anything to prevent the loss of prop trading: 'Volcker Rule' Faces New Hurdles (WSJ)
• BOE Sees Case for Keeping Record-Low Rate Beyond 7% Jobless (BBG)
• Obama Backs Piecemeal Immigration Overhaul (WSJ)
• Abenomics Seen Cutting Japan Bad-Loan Costs to 2006 Low (BBG)
• Bernanke Signals Fed Target Rate to Stay Low Long After QE (BBG)
• As Trader’s Trial Begins, Name of One Insider Stands Out (NYT)
• U.S. Companies Split on Tax Plan (WSJ)
• Sinopec in talks on Canada site for LNG project (Reuters)
• Zurich Insurance Exiting New China Life (WSJ)

Overnight Media Digest

WSJ

* President Obama, in an interview, said he would accept a piecemeal approach to revamping the immigration system, a shift from calls for comprehensive reform.

* The discovery of a 2006 meeting in which JPMorgan executives decided to continue selling shoddy mortgage securities despite red flags led to the biggest settlement between the government and a U.S. company.

* Two top regulators are raising new-and late-objections to the Volcker rule, arguing it is too soft on banks and threatening to further delay its implementation beyond the year-end deadline set by the Obama administration.

* Devon Energy is nearing a deal to buy GeoSouthern Energy for approximately $6 billion.

* Johnson & agreed to pay at least $2.5 billion to resolve thousands of lawsuits filed by patients who alleged they were injured by the company's artificial hips.

* A Senate committee chairman released a sweeping proposal to overhaul the U.S. system for taxing corporations' overseas profits, aiming to improve American firms' global competitiveness while reducing their ability to dodge taxes offshore.

* Fed Chairman Ben Bernanke said that short-term interest rates may stay low "well after" the jobless rate falls below 6.5 percent, the latest effort by the central bank to assure markets that rates will remain low.

* Banks including Barclays Plc that are enmeshed in the global investigation into potential manipulation of foreign-exchange markets are looking into the possible roles played by their salespeople, according to people familiar with the matter.

* Top officials of the federal agency that regulates vehicle safety said Tuesday they support efforts by auto makers and digital technology companies to develop cars that can drive themselves, but cautioned it will be years before regulators are comfortable allowing fully autonomous vehicles on the road.

FT

JPMorgan Chase agreed to pay $13 billion for mis-selling mortgage securities, in a landmark settlement with the U.S. Department of Justice and state authorities.

Fund managers in the U.S. have been making multi-billion-dollar bets on the recovery of eurozone banks over the past four months, believing that Europe's stuttering economic recovery will soon gather pace.

A spate of scandals at the Co-operative Bank, the financial services arm of the UK's largest co-operative, has suddenly tarnished the reputation of mutual and co-operative ownership in the United Kingdom.

Rupert Murdoch and Wendi Deng Murdoch are moving towards an 'amicable' divorce settlement this week, according to people familiar with the situation.

Mail.ru, Russia's largest internet company, is expanding into the United States, by keeping its data centres in the Netherlands.

About a quarter of staff at stockbroker Oriel Securities have left the company in the past few months, highlighting the difficulties of the small-cap broking sector.

NYT

* President Obama is receiving surprising support among some states on allowing the renewal of canceled insurance plans: Of the 13 states that have said they will allow it, all but four are led by Republicans.

* JPMorgan Chase and the Justice Department reached a record $13 billion settlement on Tuesday, wrapping up a series of state and federal investigations that offer a rare glimpse into Wall Street's mortgage machine before the financial crisis, when it churned out billions of dollars in securities that later imploded.

* In a speech in Washington, the central bank's chairman, Ben Bernanke, said that even as the stimulus wound down, efforts would remain in place to keep interest rates low.

* Jefferson County, Alabama, will ask a federal court on Wednesday to approve its plan for exiting bankruptcy, including court oversight for a period of 40 years.

* A proposal from Max Baucus, chairman of the Senate Finance Committee, seeks to start the process of lowering corporate tax rates while slowing the flow of jobs and money abroad.

* Johnson & Johnson and lawyers for patients injured by a flawed hip implant announced a multibillion-dollar deal on Tuesday to settle thousands of lawsuits, but it was not clear whether the deal would satisfy enough claimants.

* After a third battery fire in a Tesla car in six weeks, the National Highway Traffic Safety Administration said Tuesday that it had started a formal investigation.

* The chairman of the Federal Communications Commission said on Tuesday that the agency would begin "a diverse set of experiments" next year that would begin to move the nation's telephone system from its century-old network of circuits, switches and copper wires to one that transmits phone calls in a manner similar to that used for Internet data.

Canada

THE GLOBE AND MAIL

* Less than 24 hours after its debut on Monday night, Sun News axed "Ford Nation", its highly touted TV talk show starring Toronto Mayor Rob Ford and Councillor Doug Ford, despite record ratings for the network.

* Still reeling from its $1 billion gas-plant debacle, Ontario's Liberal government says it will avoid making commitments for large-scale new power projects.

Reports in the business section:

* Relations between the Canadian federal government and the wireless industry have sunk to a historic low, raising the prospect that Canada's Big Three carriers will face increasing pressure from regulators on issues such as domestic roaming charges.

* An order from low-cost airline flydubai announced at the Dubai Air Show illustrates one of the problems Bombardier Inc faces trying to crack the Airbus-Boeing duopoly with its single-aisle C Series aircraft.

NATIONAL POST

* Toronto city hall has begun the transition to a new world order as key members of Mayor Rob Ford's staff moved to the office of newly empowered Deputy Mayor Norm Kelly. Ford's chief of staff Earl Provost moved to the deputy mayor's office by his own accord, Kelly told reporters Tuesday afternoon.

* Architect Frank Gehry says there are only two buildings in Toronto worth saving: Old City Hall and Osgoode Hall. Everything else is fair game to be torn down, Gehry suggested to Toronto and East York Community Council on Tuesday morning.

FINANCIAL POST

* TransCanada Corp is playing up anxiety over crude-carrying trains in an explicit warning that the growing number of tank cars crisscrossing the continent poses a risk to public safety.

* Canada's billionaire Weston family is bolstering its luxury presence yet again in preparation for the debut of Nordstrom and this country's looming luxury showdown.

China

PEOPLE'S DAILY

- The ruling Communist Party of China set up a special group to go around the country to promote the leadership's latest reform plan, seen as the boldest reforms planned in three decades.

CHINA DAILY

- The northeastern city of Harbin in Heilongjiang province has been hit by its heaviest snowfalls since records began after snow fell for nearly 60 hours, leaving snow piled as high as 50 millimetres in some areas. The storm caused four deaths in neighbouring Jilin province but no casualties were reported in Heilongjiang.

SHANGHAI SECURITIES NEWS

- The plan announced by the Chinese leadership this month to quicken the pace of economic reforms, including stepping up the pace to make the Chinese currency yuan fully convertible, heralds a new phase of active cross-the-border capital flows in and out of China, economists say.

- The Shanghai International Energy Trading Centre, a unit of the Shanghai Commodity Exchange, will start operations on Friday, the latest step taken by the exchange to prepare the launch of China's first crude oil futures, possibly in the first half of next year.

CHINA SECURITIES JOURNAL

- More and more Chinese are now trading bitcoins, with the daily volume of Chinese trading even exceeding that on the professional platforms of Mt.Gox and BitStamp on Monday, statistics issued by Bitcoinity.org showed.

- Despite a consolidation of China's stock market on Tuesday, stock index futures continued trading in premiums against spots, indicating optimism sparked by the country's latest bold reform plan still prevails the markets.

SECURITIES TIMES

- Yields of China's benchmark 10-year government bonds have hit multi-year highs recently due to the central bank's tight liquidity stance and are likely to rise above the main 5-percent resistance soon.

CHINA BUSINESS NEWS

- Some Chinese banks are set to suffer losses in the looming bailout plans of Suntech Power, with policy bank China Development Bank possibly losing 1.6 billion yuan ($262 million).

SHANGHAI DAILY

- Anhui province is experimenting with letting farmers mortgage or transfer control of the publicly owned land they farm as China tries to finds ways to create a land market. However, the farmers will not be granted ownership of the land.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Best Buy (BBY) upgraded to Buy from Neutral at Citigroup
Cabot Oil & Gas (COG) upgraded to Outperform from Market Perform at Bernstein
Green Plains (GPRE) upgraded to Overweight from Neutral at Piper Jaffray
Layne Christensen (LAYN) upgraded to Neutral from Sell at UBS
Mobile TeleSystems (MBT) upgraded to Equal Weight from Underweight at Barclays
ONEOK Partners (OKS) upgraded to Neutral from Sell at Goldman
Pearson (PSO) upgraded to Buy from Neutral at BofA/Merrill
priceline.com (PCLN) upgraded to Conviction Buy from Buy at Goldman

Downgrades

Boeing (BA) downgraded to Perform from Outperform at Oppenheimer
C.H. Robinson (CHRW) downgraded to Hold from Buy at Deutsche Bank
Dick's Sporting (DKS) downgraded to Underperform from Market Perform at BMO Capital
Heartland Payment (HPY) downgraded to Market Perform from Outperform at Wells Fargo
Patterson Companies (PDCO) downgraded to Neutral from Buy at UBS
WhiteHorse Finance (WHF) downgraded to Hold from Buy at Wunderlich
Workday (WDAY) downgraded to Market Perform from Outperform at Cowen

Initiations

Allegion (ALLE) initiated with an In-Line at Imperial Capital
Computer Programs (CPSI) initiated with a Hold at KeyBanc
Dunkin' Brands (DNKN) initiated with a Neutral at Buckingham
FEI Company (FEIC) initiated with a Neutral at Goldman
Flowserve (FLS) initiated with an Outperform at Cowen
IDEX Corp. (IEX) initiated with a Market Perform at Cowen
ITT Corp. (ITT) initiated with a Buy at Stifel
Laredo Petroleum (LPI) initiated with an In-Line at Imperial Capital
Mueller Water (MWA) initiated with a Market Perform at Cowen
Nuverra Environmental (NES) initiated with an Outperform at Cowen
Pall Corp. (PLL) initiated with a Neutral at Goldman
Pennaco Energy Inc Pentair (PNR) initiated with a Buy at Stifel
Rentech Nitrogen (RNF) initiated with a Market Perform at BMO Capital
Starbucks (SBUX) assuming coverage with a Buy at Buckingham
Symmetry Medical (SMA) initiated with a Buy at Wunderlich
Twitter (TWTR) initiated with a Neutral at BTIG
Vitacost.com (VITC) initiated with an Outperform at Imperial Capital
Watts Water (WTS) initiated with a Market Perform at Cowen
Xylem (XYL) initiated with an Outperform at Cowen

HOT STOCKS

Novatek, Gazprom (OGZPY) purchased Eni (E) stake in SeverEnergia for $2.94B
JPMorgan to pursue WaMu receivership funds in separate litigation
Yahoo (YHOO) raised share buyback program by $5B
GE Capital Real Estate (GE) to acquire portfolio of commercial property loans valued at GBP1.4B from Deutsche Postbank
J&J's (JNJ) DePuy announced $2.5B U.S. settlement to compensate hip system patients
ONEOK Partners (OKS) to invest an additional $650M-$780M in Williston Basin
National Health Investors (NHI) to acquire 25 independent living facilities for $491M

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Sociedad Quimica (SQM), Gladstone Capital (GLAD), La-Z-Boy (LZB), Xueda Education (XUE)

Companies that missed consensus earnings expectations include:
Lowe's (LOW), America's Car-Mart (CRMT), Oculus (OCLS)

Companies that matched consensus earnings expectations include:
Staples (SPLS), Model N (MODN)

NEWSPAPERS/WEBSITES

• Two top regulators, the SEC and and the Commodity Futures Trading Commission, are raising new--and late--objections to the "Volcker rule," arguing it is too soft on banks and threatening to further delay its implementation beyond the year-end deadline set by the Obama administration, the Wall Street Journal reports
• Electronics retailers (BBY, WMT, SNE, MSFT, RSH, SPLS) are bracing for a tough holiday season, as already narrow profit margins are expected to be shaved even thinner, the Wall Street Journal reports
• Short-seller Jim Chanos of Kynikos Associates said that shares of international oil majors like Exxon Mobil (XOM) increasingly look like a value trap for investors as cash flows decline and return on capital slides. His comments came a week after Warren Buffett (BRK.A) disclosed a large position in Exxon, Reuters reports
• Sharp Corp. (SHCAY) may get an original equipment manufacturing  deal to make copy machines under the Hewlett-Packard (HPQ) brand, sources say, Reuters reports
• Bank of America Corp. (BAC) exceeded $15.06 yesterday, the price on the day before Brian T. Moynihan became CEO about four years ago. The  lender rose 1.9%, bringing this year’s gain to 31%. That follows last year’s 109% advance, the best in the DJIA, as Moynihan eased investor concern that mortgage costs would force the bank to issue more stock, Bloomberg reports
• Four Senate Republicans say they’re inclined to support Janet Yellen to be chairman of the Federal Reserve, leaving her nomination one vote short of the 60 needed for confirmation, Bloomberg reports

SYNDICATE

Aeterna Zentaris (AEZS) files to sell common stock and warrants
Atlantic Coast Financial (ACFC) files to sell $42M in common stock
Campus Crest (CCG) files to sell 9.95M shares of common stock for holders
Ceragon Networks (CRNT) files to sell common stock
Clovis (CLVS) files to sell 3.72M shares of common stock for holders
Cytori Therapeutics (CYTX) files to sell 8M shares of common stock for holders
Demandware (DWRE) 3.3M share secondary priced at $57.00 per share
Gladstone (GOOD) files to sell common stock
Graphic Packaging (GPK) to sell 47.87M common shares for holders
National Health Investors (NHI) files to sell 4.5M shars
Northwest Biotherapeutics (NWBO) to offer common stock and warrants
Norwegian Cruise Line (NCLH) files to sell 22M shares for holders
SeaWorld (SEAS) files to sell 15M shares of common stock for holders
Seaspan (SSW) files to sell 3.5M shares of common stock
Spark Networks (LOV) proposes secondary offering of common stock
Yahoo (YHOO) files to sell $1B of convertible senior notes due 2018

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

The absurd “War on Gold” that India has launched this year has been covered many times on this site. From the moment I read about it, it was obvious that if Indians want their gold, the Indians will have their gold. You can’t break thousands of years of tradition and culture because of the ignorant whims of a few bureaucrats.

Earlier today, Reuters published an article detailing the extent to which Indian smugglers will go in order to bring the money of kings into the country. This includes hiding it in underwear, swallowing it whole and even painting gold staples gray. What is most disturbing is the lengths authorities are willing to go to in order to stop a supposedly free people from buying a brick of metal. From Reuters:

(Reuters) – Indian gold smugglers are adopting the methods of drug couriers to sidestep a government crackdown on imports of the precious metal, stashing gold in imported vehicles and even using mules who swallow nuggets to try to get them past airport security.

 

Stung by rules imposed this year to cut a high trade deficit and a record duty on imports, dealers and individual customers are fanning out across Asia to buy gold and sneak it back into the country.

 

Sri Lanka, Thailand and Singapore are the latest hotspots as authorities crack down on travelers from Dubai, the traditional source of smuggled gold.

Stop one and another will rise. As always.

In a sign of the times, whistleblowers who help bust illegal gold shipments can get a bigger reward in India than those who help catch cocaine and heroin smugglers.

Because that makes a so much sense.

“There has been a several-fold increase in gold smuggling this year after restrictions from the government, which has left narcotics behind.”

 

That suggests official data showing a sharp fall in gold buying, which has helped narrow India’s current account gap, may significantly underestimate the real level of gold flows.

 

Last week, Sri Lanka limited the amount of jewellery its residents can take out of the country and it will try to monitor whether they bring it back. Pakistan banned all gold imports in August for a month as it believed much was being smuggled on into India.

 

Indian gold premiums have soared to $130 an ounce over London prices due to the supply crunch, compared with about $2 an ounce in Hong Kong, Singapore and Thailand.

 

In June, a passenger flying from Dubai was caught at New Delhi airport with about 755 grams (1.7 lbs) of solid gold staples painted grey.Officials stopped the man because the cardboard boxes he was carrying were stapled far more than seemed necessary.

Simply genius.

“We are trying to plug all the loopholes. We have strengthened our anti-smuggling staff and installed door metal detectors,” said S.A.S. Navaz, deputy commissioner of customs in the south Indian city of Kochi. “We are spending sleepless nights.

Sleepless nights because citizens want to buy a piece of yellow metal. You might have bigger problems than gold champ.

In an effort to change that, Mumbai customs offers a reward of up to 50,000 rupees per kg of bullion seized for informers in gold smuggling cases. Cocaine and heroin informers get only up to 40,000 rupees and 20,000 rupees respectively.

Idiots.

Full article here.

With home prices in the UK driving people to live in boxes and Bob Shiller worried about the US, Bloomberg's Niraj Shah notes that the Knight Frank global house price index has risen to a record. The index, now 4% above the previous high in Q3 2008 is led by China and Emerging Nations (with Europe weakest) as investor speculation amid central bank liquidity fuels yet another bubble (that no one could see coming again).

Via Bloomberg's Niraj Shah (@economistniraj),

Record High for Global Index

Global house prices are gaining traction. Values rose an annual 4.6 percent in the third quarter compared with 1.7 percent in the same period in 2012, and the index is 12.7 percent above its financial-crisis low in 2009. Prices in more than 69 percent of the countries tracked by the index grew in the year through September, compared with 55 percent two years ago. The Knight Frank index incorporates house prices in 53 countries.

China, Emerging Countries Lead Price Growth

Prices in China rose the most, gaining 21.6 percent. Emerging economies made up the rest of the top five, with Taiwan, Indonesia, Turkey and Brazil recording price growth of more than 10 percent. The U.S., the biggest housing market, grew an annual 11.2 percent. The only countries outside Europe to experience declines were Japan, South Korea and New Zealand. Dubai recorded the largest growth rate for a city with 28.5 percent.

Europe Remains Weakest Region

While average values rose in every region, European property prices were the weakest performers in the year through October. Prices increased 0.8 percent in Europe, compared with 17.9 percent in the Middle East. Fourteen of the 17 countries experiencing annual price declines were in Europe. Average prices in Europe resumed growth in the second quarter.

European Prices Diverge

There is a widening divergence between countries in Europe. Annual house prices in Germany rose the most in the third quarter — 11.2 percent — while prices plunged 19.7 percent in Croatia over the same period. Ireland achieved the biggest turnaround, with values rising 4 percent in the three months through September. Property values were falling at a rate of 5.4 percent each quarter less than two years ago.

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

Watching Indian bureaucrats attempt to halt more than one billion human beings’ desire for gold has been one of the more entertaining and pathetic stories of all of 2013. It is one that I have covered on many occasions, the latest being my post from earlier this month:  Gold Smuggling Increases 7x in India and Surpasses Illegal Drug Trade.

Well it appears the trend continues, potentially at an accelerated rate, as we just learned that, incredibly, “almost every passenger on a flight from Dubai to Calicut was found carrying 1kg of gold.” As I have said many times in the past, if an Indian wants their gold, they will have their gold.

CHENNAI: Faced with curbs on gold imports and crash in international prices leaving it cheaper in other countries, gold houses and smugglers are turning to NRIs to bring in the yellow metal legally after paying duty. Any NRI, who has stayed abroad for more than six months, is allowed to bring in 1kg gold.

 

It was evident last week when almost every passenger on a flight from Dubai to Calicut was found carrying 1kg of gold, totalling up to 80kg (worth about Rs 24 crore). At Chennai airport, 13 passengers brought the legally permitted quantity of gold in the past one week.

 

“It’s not illegal. But the 80kg gold that landed in Calicut surprised us.We soon got information that two smugglers in Dubai and their links in Calicut were behind this operation, offering free tickets to several passengers,” said an official. The passengers were mostly Indian labourers in Dubai, used as carriers by people who were otherwise looking at illegal means, he said. “We have started tracing the origin and route of gold after intelligence pointed to the role of smugglers,” he said.

 

Reports from Kerala said passengers from Dubai have brought more than 1,000kg of gold in the last three weeks. People who pay a duty of Rs 2.7 lakh per kg in Dubai still stand to gain at least Rs 75,000 per kg, owing to the price difference in the two countries. Gold dealers in Kerala say most of this gold goes to jewellery makers in Tamil Nadu and Andhra Pradesh.

 

These government measures to control the current account deficit did not reduce the demand for gold in the market.“RBI tried to discourage gold purchases because it doesn’t have the utility of other commodities like oil or copper. It mostly sits there in lockers. But when the gold imports through proper channels have come down, merchants have started depending on illegal channels to meet the demand from consumers,” he said.

As expected, a gigantic fail, but at least it served to enrich smugglers from across the region.

Full article here.

Download GoldCore Outlook For 2014

CONTENTS
- Introduction
- Review of 2013
- Gold and Silver Have Torrid Year - Fall 27% and 35% Respectively
- Year Of Paper Selling But Robust Physical Demand - Especially From China
- Highlights Of Year - German Gold Repatriation, Record Highs In Yen, Huge Chinese Demand
- Lowlights Of Year - Massive Paper Sell Offs in April/June and Cypriot Deposit Confiscation
- Syria and the Middle East
- U.S. Government Shutdown and $12 Trillion Default Risk
- Continuing Central Bank Demand
- Regulatory Authorities Investigate Gold Rigging

Outlook 2014
- Geopolitical Tensions - The Middle East, Russia, China, Japan and the U.S.
- Ultra Loose Monetary Policies Set To Continue with Yellen as New Federal Reserve Chair
- Eurozone Debt Crisis Again - UK, U.S. Japan and China Also Vulnerable
- Enter The Dragon - Chinese Gold Demand Paradigm Shift To Continue
- Death Of Indian Gold Market Greatly Exaggerated
- Long Term (2014-2020) MSGM Fundamentals

Conclusion

Introduction
Happy New Year. We would like to take this opportunity to wish our clients and subscribers a prosperous, healthy and happy 2014.

With 2013 having come to a close, it is important to take stock and review how various assets have performed in 2013, assess the outlook in 2014, and even more importantly, the outlook for the coming years.

2013 was the year of the speculator and the year of the risk asset, such as equities, with global stocks doing well in the sea of liquidity and cheap money created by central banks.
Surprisingly to many gold bulls, these favourable monetary conditions did not lead to higher precious metal prices. Gold and particularly silver had a torrid year and significantly underperformed the vast majority of equity and bond markets.

The MSCI World Index was up 23% and the S&P 500, the Nasdaq and the FTSE were up 32%, 35% and 14% respectively.

MSCI World Index - 1970 to January 3, 2014 - Bloomberg

Bond investors did not fare as well as interest rates began to rise from all-time record lows. As bond prices fell, interest rates rose. The bellwether 10-year Treasury note closed the year at 3.028%, which was up from 1.76% at the start of 2013 and the highest since July 2011.

US 10 Year Note - 1964 to January 3, 2014 - Bloomberg

The Barclays US Aggregate bond index, which is dominated by Treasury, mortgage and corporate bonds and is the leading benchmark followed by institutional money, is set to record its first negative year of total returns since 1999. The bond market’s major benchmark registered a total return of minus 2.1% for 2013. It is only the benchmark’s third annual negative total return since 1976, according to Barclays.

REVIEW OF 2013

Gold and Silver Have a Torrid Year - Fall 28% and 36% Respectively
Gold fell in all major currencies in 2013 and fell 28% in dollar terms for its first annual price fall since 2000. Gold fell 40% in pound terms, 45% in euro terms. Gold fell much less in Japanese yen terms and was 16% lower in yen as the yen continued to be devalued and debased.

Silver was down by 36% in dollar terms and by more in the other currencies; silver had its poorest annual performance since 1984.

Gold came under pressure in the first half of 2013 and saw falls from near $1,700/oz at the start of the year to $1,180/oz by mid-year. Indeed, gold’s low for the year took place on June 28th, which was the last day of trading in Q2, and an important time frame for those evaluating gold’s longer term performance.

The price falls in the first half took place despite a positive fundamental backdrop and despite the risk of contagion in the Eurozone - especially from Spain, Italy and Greece. This risk was so great in the early part of the year that it led George Soros to warn in February that the Eurozone could collapse as the U.S.S.R. had.

In March, Cyprus was the first country to experience a bank bail-in of depositors, where both individual and corporate account holders, experienced capital controls and a confiscation of nearly 50% of their deposits. In June and then again two weeks ago, the EU confirmed that depositors will be bailed in when banks are insolvent.

International monetary and financial authorities globally, including the ECB, the Bank of England and the Federal Deposit Insurance Corporation (FDIC), have put in place the regulatory and legal framework for bail-in regimes in the event of banks failing again.

Are Your Savings Safe From Bail-Ins

Gold saw a bit of a recovery in the third quarter with gains in July and August as gold interest rates went negative, bullion premiums in Asia surged and COMEX inventories continued to fall. Silver surged 12% in 5 trading days in mid August due to record silver eagle coin demand and ETF demand.

UK gold 'exports' to Switzerland increased greatly during the year due to demand for allocated gold in Switzerland due to Switzerland’s tradition of respecting private property throughout the centuries and its strong economy. However, more importantly, UK gold exports to Switzerland were due to the significant increase in store-of-wealth demand from China and many countries in Asia.

Institutional gold in the form of London gold delivery bars (400 oz) was exported to Swiss refineries in order to be recast into one kilogramme, 0.9999 gold bars used on the Shanghai Gold Exchange and in the Chinese market.

However, this was not enough to prevent further falls in the final quarter and in recent days when gold has again tested support at $1,200/oz.

Year Of Technical, Paper Selling But Robust Physical Demand

German Gold Repatriation
The year began with a bang, when news broke on January 17 that the German central bank was attempting to repatriate Germany’s gold reserves. The Bundesbank announced that they will repatriate 674 metric tons of their total 3,391 metric ton gold reserves from vaults in Paris and New York to restore public confidence in the safety of Germany’s gold reserves.

Bundesbank - Goldbarren

The repatriation of only some 20% of Germany's gold reserves from the Federal Reserve Bank of New York and the Banque of Paris back to Frankfurt was meant to allay increasing German concerns about their gold reserves. But the fact that the transfer from the Federal Reserve is set to take place slowly over a seven year period and will only be completed in 2020 actually led to increased concerns. It also fueled concerns that the unaudited U.S. gold reserves may be less than what is officially recorded.

What was quite bullish news for the gold market, saw gold quickly rise by some $30 to challenge $1,700/oz. The news was expected to help contribute to higher prices but determined selling saw gold capped at $1,700/oz prior to falls in price in February.

Paper Selling On COMEX
Gold’s falls in 2013 can be attributed in large part to paper selling by more speculative players on the COMEX. This was graphically seen in April when there was a selling raid on the COMEX which led to a huge price fall of nearly 15% in two days prior to the emergence of “extraordinary” demand for gold internationally.

The sell off came as demand in Europe began to pick up due to concerns that the Cypriot deposit confiscation may be a precedent that could be seen in other EU countries.

The speed and scale of the sell off was incredible and even some of the bears were surprised by it. Many questioned the catalysts for the $150 two day sell off. The sell off was initially attributed to an unfounded rumour regarding Cyprus gold reserve sales - this was soon seen to be a non-story. The Cyprus rumour did not justify the scale of the unprecedented sell off.
Reports suggested that a single futures sell order worth $6 billion, equal to 4 million ounces or 124.4 tonnes of gold, by a large investment bank sent prices plummeting. The futures market then saw a further wave of selling of contracts worth some $15 billion, equivalent to 10 million ounces of selling or 300 tonnes, in just 35 minutes.
Gold futures with a value of over 400 tonnes were sold in a handful of trades in minutes. This was equal to 15% of annual gold mine production. The scale of the selling was massive and again underlines how one or two large banks or hedge funds can completely distort the market by aggressive, concentrated leveraged short positions.

Investment banks and hedge fund speculators can manipulate the paper or futures gold price in whichever direction they want in the short term due to the massive leverage they can utilise. The events in April further bolstered the allegations of manipulation by the Gold Anti-Trust Action Committee (GATA).

Significant Demand For Physical Gold Globally
Gold prices fell very sharply despite very high demand. However, the gold price decline was arrested by the scale of physical demand globally. This demand was particularly strong in the Middle East and in Asia, particularly China but was also seen in western markets with government mints reporting a surge in demand in 2013.

This demand for physical gold was seen in western markets throughout the year. In April, the US Mint had to suspend sales of small gold coins; premiums for coins and bars surged in western markets due to high demand.

Mints, refineries and bullion brokerages were quickly cleared out of stock in April and COMEX gold inventories plummeted. There were gold and silver coin and bar shortages globally.

This continued into May as investors and savers globally digested the ramifications of the Cypriot deposit confiscation. The crash of the Nikkei in May also added to physical demand in Japan and by nervous investors internationally.

This led to all time record gold transactions being reported by the LBMA at the end of May.

Chinese demand remained very robust and Shanghai Gold Exchange volumes surged 55% in one day at the end of May - from 10,094 kilograms to 15,641 kilograms. There were “supply constraints” for gold bars in Singapore and bullion brokers in Singapore and India became sold out of bullion product at the end of May.

This, and concerns about a very poor current account deficit and a possible run on the Indian rupee, prompted the Indian government to bring in quasi capital controls and punitive taxes on gold in June. Ironically, this led to even higher demand for gold in the short term and much higher premiums in India. Longer term, it has led to a massive surge in black market gold buying with thousands of Indians smuggling in gold from Bangkok, Dubai and elsewhere in Asia.

June saw another peculiar sudden 6% price fall in less than 24 hours. This again contributed to increased and very robust physical demand. U.S. Mint sales of silver coins reached a record in the first half of 2013 at 4,651,429 ounces and the UK’s Royal Mint saw a demand surge continuing in June after demand had trebled in April.
Asian markets continued to see elevated levels of gold buying. Gold demand in Vietnam was so high that buyers were paying a $217 premium over spot gold at $1,390/oz. Premiums surged again in China as the wise Chinese ‘aunties’ and wealthy Chinese continued to buy gold as a store of wealth.

Despite very high levels of demand for gold, in Asia especially, gold languished and sentiment in western markets continued to be very poor with gold falling to the lows of the year on June 28th.

July saw continuing strong demand for gold internationally as volumes surged to records on the Shanghai Gold Exchange (SGE). Premiums rose and feverish buying left many of Hong Kong’s banks, jewellers and even its gold exchange without enough gold bullion to meet demand.

In August, demand remained elevated and gold forward offered rates (GOFO) remained negative and became more negative. This showed that physical demand was leading to supply issues in the highly leveraged LBMA gold market or the institutional gold bar market.

Today, as we enter the New Year gold, forward offered rates (GOFO) remain negative, meaning banks, which had lent their customers gold to obtain a positive return, and therefore increase the "paper" gold supply, will take the gold back. This should limit the amount of gold on the market and increase the gold price.

Chinese buyers are of increasing importance but it is important to note that physical demand rose significantly throughout the world in 2013 despite falling prices. This is seen in the levels of demand experienced by leading bullion dealers, refiners and government mints. This is clearly seen in the data released by the Perth Mint and the U.S. Mint which both saw increased demand for physical gold coins and bars in 2013. Other mints have yet to report their numbers.

The Perth Mint of Western Australia reported yesterday that they saw a very significant increase in sales in 2013 despite the falling prices. Gold sales from the Perth Mint, which refines most of the bullion from the world’s second-biggest producer Australia, climbed 41% last year.

Sales of gold coins and minted bars totalled 754,635 ounces in 2013 from 533,333 ounces a year earlier, according to data from the mint.

Silver coin sales surged 33% to about 8.6 million ounces from 6.5 million ounces in 2012, according to the Perth Mint.

Gold bullion sales expanded 12% to 58,944 ounces in December from 52,700 in November and about 51,778 ounces in December 2012, according to data from the mint. Gold sales fell to as low as 30,430 ounces in August and peaked at about 112,575 in April, when gold was hammered 14% lower on the COMEX in just two days.

Silver coin sales were 845,941 ounces last month from 807,246 in November and 452,389 a year earlier, it said.

The U.S. Mint also saw an increase in physical gold sales and sold 14% more American Eagle gold coins last year and sales climbed 17% to 56,000 ounces in December from November, according to data on the mint’s website as reported by Bloomberg.

Syria and the Middle East
Even bullish developments such as the prospect of war in Syria at the end of August, only led to small, short term price gains. War in Syria and in the Middle East, pitching the U.S. and western allies against China and Russia was expected by many to lead to "market panic" and to propel gold "much, much higher," in the words of astute investor Jim Rogers.

Only the fact that President Obama and the U.S. were confronted with opposition by people internationally against another war and were outmaneuvered diplomatically, prevented the war with Syria.

The war had the potential to destabilise the region with ramifications for oil prices and the global economy.

U.S. Government Shutdown and $12 Trillion Default Risk
Another very bullish development for gold came in late September and early October with the U.S. budget negotiations and government shutdown.

They highlighted the dire U.S. fiscal position and the complete failure of the American political and economic class to deal with their extremely precarious financial position in any meaningful way. The U.S. government is essentially bankrupt with a national debt of over $17 trillion and unfunded liabilities of between $100 trillion and $200 trillion.

In the coming months and years, it will lead to a lower dollar and much higher gold and silver prices.

However, in the year of paper gold selling that was 2013, even this did not lead to higher gold prices.

Continuing Central Bank Gold Demand 
All year, central banks continued to accumulate gold with Russia, Kazakhstan, Azerbaijan, Kyrgyz Republic, Turkey and other central banks continuing to diversify their foreign exchange reserves.

U.S. Federal Reserve employees in underground vault holding monetary gold

Central banks continued to be strong buyers of gold in 2013, albeit the full year data may show demand was at a slightly slower rate than the record levels seen in recent years. Q4 2013 will be the 12th consecutive quarter of net purchases of gold by central banks.

Total official central bank demand continued at roughly 100 tonnes every single quarter. However, this does not include the ongoing clandestine and undeclared purchases of gold by the People’s Bank of China. Conservative estimates put PBOC demand at 100 tonnes a quarter or at over 400 tonnes for the year. More radical projections are of demand of over 1,000 tonnes from the PBOC in 2013.

Regulatory Authorities Investigate Gold Rigging
Peculiar, single trade or handful of trades leading to sudden gold price falls were common in 2013 and contributed to the 28% price fall.

Therefore, those who have diversified into physical gold will welcome the move by the German financial regulator BaFin to widen their investigation into manipulation by banks of benchmark gold and silver prices. In December, the German banking regulator BaFin demanded documents from Germany's largest bank, Deutsche Bank, as part of a probe into suspected manipulation of the gold and silver markets.

The German regulator has been interrogating the bank's staff over the past several months. Since November, when the probe was first mentioned, similar audits in the U.S. and UK are also commencing.

Precious metal investors live in hope but their experience of such investigations is that they are often very lengthy affairs with little in the way of outcome, disclosure or sanction. The forces of global supply and demand, one anemic, the other very high, are likely to be more important and a valuable aid to gold and silver owners in 2014 and in the coming years. As ultimately, the price of all commodities, currencies and assets is determined by supply and demand.

Janet Yellen Becomes Fed Chair

At year end came confirmation that cheap money uber dove Janet Yellen was set to take over from Ben Bernanke as Chair of the Federal Reserve. Gold bulls cheered loudly at her appointment thinking that Yellen’s appointment would lead to a recovery in oversold gold prices. However, even this bullish development did not help embattled gold prices.

OUTLOOK FOR 2014

Introduction

2013 was a year of calm in the world of finance. 2014 may not be so calm and there is a risk of renewed turbulence on global financial markets. There are many unresolved risks which were present in 2013 but did not come to the fore and impact markets as they could have.

The Eurozone debt crisis is far from resolved and there remains an underappreciated risk of sovereign crises in other major industrial nations.

There are far more positives for gold than negatives and the positives include ultra-loose monetary policies, risk of sovereign and banking debt crises and systemic or contagion risk, the increasingly uncertain political and military situation globally and of course increased demand for gold from the Middle East, much of Asia and particularly China.

Download GoldCore Outlook For 2014

Yesterday we covered the supply side of the gold market from the perspective of global mints, which were kind enough to advise that they "can’t meet the demand, even if we work overtime." Today, courtesy of Bloomberg, we take a closer look at the demand aspect of the physical gold market, which as most know by now can be described with just one word: China.

But first, while we already know that global mints are working 24/7 and still are unable to meet record demand, in spite or or due to, plunging prices of paper gold, here is how the market looks from the perspective of one of the biggest gold refiners in the world: MKS SA's PAMP refiner in Switzerland, "whose bullion sales to China surged to a record as demand rose for coins, bars and jewelry. PAMP Managing Director Mehdi Barkhordar, who credited China’s “insatiable” appetite for a sales boost of as much as 20 percent last year, remains optimistic even as growth in the world’s second-largest economy slows. “The demand in China is off its peak, but still respectable,” he said last week."

Off its peak? Really - where? Certainly not in Singapore where the largest provider of precious-metals logistics and storage, Brink's, is adding room on top of a vault the company opened in 2012 at the Singapore Freeport building next to Changi International Airport, with a sleek, modernist lobby and a twisting, polished-steel sculpture by Ron Arad that stands 5 meters high. Inside, the gold bars are protected by prison-like barriers, two body scanners and 8-ton, fireproof gates.

Explain to us how this is "off its peak":

“We need additional capacity, so we have to take further space,” said Baskaran Narayanan, the 45-year-old Singapore general manager for Richmond, Virginia-based Brink’s. “There’s a surge in demand for precious metals in Asia, and one can see the focus and movement from the west to the east.”

 

A new Brink’s vault in Singapore set to open by March will be the company’s fifth in the city state, said Narayanan, who spent two decades in the security industry. The 154-year-old company also is adding space in Hong Kong and mainland China to meet growing storage demand, said Guy Bullen, the firm’s senior vice president for the Asia-Pacific region. Brink’s said Asia-Pacific revenue grew 12 percent to $128.9 million in the first nine months of 2013, more than any other region. Deutsche Bank said in June it started a storage facility in Singapore that can hold as much as 200 tons, its largest outside London. UBS, Switzerland’s biggest bank, opened one to keep bars for its wealth-management clients in Asia. In Shanghai, Malca-Amit Global Ltd. opened a vault in November that can store 2,000 tons, or a pile valued at $80 billion.

Oh, that kind of "off its peak" - we get it now.

Of course, the biggest paradox is that China continues to be grateful to the US momentum-investing community, which continues to dump paper-gold representations such as the GLD ETF, and as Bloomberg reports, "investor sales through gold ETPs wiped $73.4 billion from the value of the funds last year and holdings reached the lowest since October 2009 this month, data compiled by Bloomberg show. The SPDR Gold Trust, the largest gold ETP and which is listed in New York, accounted for 64 percent of global sales last year." And as a result of the ongoing liquidation of paper gold, those who couldn't care less about monthly or annual momentum-boosted P&L (so eliminate the entire US hedge fund community), and just care about buying brick after brick of physical gold at the lowest possible prices are thanking their lucky stars they have a bunch of dumb 2 and 20 chasing paper sellers to do their job for them, especially if and when the PBOC does announce the real amount of gold reserves it has accumulate over the past five years (which are now order of magnitude above the official ~1000 tons of gold last disclosed in 2009).

So going back to the Chinese demand, and the entire topic of west to east gold migration, here is what we know.

“In the western world, we’ve enjoyed a popular bull market in gold, mainly via the gold ETFs, and it appears to be over,” Morris said. “In China, there are a large number of new outlets, including many banks in the provinces, that are selling gold bars. Many Chinese people, who’ve had limited access to gold in the past, think it’s a good idea to have a bar or two as a long-term investment.”

 

The U.K. shipped 1,291 tons to the refining hub of Switzerland last year through November, more than the previous seven years combined and equal to more than five months of mine output, according to data from European Union statistics service Eurostat and Barclays Plc. Macquarie Group Ltd. says that’s a sign of the movement from west to east.

And once in Switzerland, the gold is refined, processed and sold onward to...

Hong Kong exported a record 1,108.8 tons to China in 2013, more than double the total in 2012, according to data from the Hong Kong Census and Statistics Department. Mainland China doesn’t publish the data.

 

Consumer purchases of gold in China surged 30 percent in the 12 months through September to 996.3 tons, overtaking demand in India, where usage gained 24 percent to 977.6 tons, the World Gold Council estimates. In the first nine months of 2013, China was at 797.8 tons, already eclipsing its full-year record of 778.6 tons, set in 2011, and full-year usage may exceed India’s all-time high 1,006.5 tons in 2010.

Oh, that "off the peak."  Ok then. And let's not forget that while Chinese gold demand is at an absolutely all time record high (and thank you BIS operative Benoit Gilson and Mikael Charoze for those well-timed gold slams), another place that is just waiting for the opportunity to buy as much gold as it legally can is the former larget gold buyer in the world - India.

India’s government choked off inbound shipments by raising import taxes on gold three times last year to help pare a trade imbalance that has weighed on the national currency, the rupee. The 24 percent rise in Indian jewelry, bar and coin purchases to 977.6 tons in the 12 months through September lagged the 30 percent gain to 996.3 tons in China, the gold council said.

How much latent demand is there? A lot: 'Premiums in India reached a record $160 above the London price in December." In fact, demand is so great even with restrictions, that refiners have been forced to add work shifts! Nobody complaining about raising the minimum wage here...

“India will consume gold for a long, long time because, for the Indian farmer, gold is one of his best assets,” said Barkhordar, who runs the PAMP refinery in Switzerland. “He will keep this gold for his daughter’s dowry, but he can also use it in case he’s short of cash for the next crop.”

 

The surge in orders meant some parts of the refinery worked three shifts instead of the usual two, Barkhordar said. It takes five to six working days to turn mined or scrap gold into a bar, he said. The 200 or so employees at the 110,000-square-foot PAMP facility, located about 3 miles from the Argor-Heraeus SA and Valcambi SA refineries, make bars ranging from 0.3 gram to 12.5 kilograms.

And finally, there is the biggest wildcard of all: the Arabs, who have untold wealth in fiat and otherwise electronic format that one day soon, supposedly before the markets crash and the western central banks lose control, need protection.

Trade also has expanded in Dubai. The emirate accounts for about 25 percent of global physical gold trading, and bullion demand grew eightfold in the past six to 10 years, said Dubai Gold & Commodities Exchange Chief Executive Officer Gary Anderson. The DGCX plans to list a spot gold contact this year to add to its futures offering.

The bottom line comes from Jeremy East, who moved to Hong Kong from London in June and is head of metals trading at Standard Chartered Plc. "Many of the positive drivers for gold prices in the past five years have started to disappear. At the same time, we have seen a significant increase in physical demand for gold in Asia, especially China. The expectation is that Asia is going to play a much bigger role for setting the international prices for gold and also for the whole metals complex going forward."

Of course it will, but for now it is counting its lucky stars that courtesy of ETFs, the BIS and various central and private banks desperate to make their worthless pieces of fiat paper appear valuable by manipulating the price of gold lower, it can accumulate gold at such a torrid pace and at such blue light special prices. It knows very well this won't last. However, in the meantime it will remove as much deliverable product from the paper gold market that when the real delivery demands begin (wink wink Bundesbank), then the real fun starts.

17 years ago, the first major Emerging Market crisis started in Thailand, leading to the Russian default and the collapse of LTCM ushering in the era of Too Big To Fail. This time, all the world needed for the second major EM crisis, was for Ben Bernanke to announce he is giving global central planning a break (because one can be certain the Untaper will be right back on the agenda as soon as the S&P enters a bear market). Ironically, Thailand has largely been insulated from the EM decimation, even through it is now in as bad a political shape as it ever was, and one day ahead of the February 2 general elections things are getting from bad to worse. AFP reports that explosions and heavy gunfire rattled Bangkok Saturday as pro- and anti-government protesters clashed on the eve of controversial Thai elections seen as unlikely to end a cycle of violence in the kingdom after months of opposition rallies.

So far the market has discounted the political tensions' impact on the economy, but that may change soon, especially if tomorrow's election fails to stabilize the unstable political situation. "Tensions are high in the capital ahead of snap elections on Sunday, which opposition demonstrators have vowed to block as they seek to prevent the likely re-election of Prime Minister Yingluck Shinawatra."

Tensions reached a breaking point hours ago when bystanders, security personnel and journalists raced to take cover in a shopping mall after a masked gunman man began spraying bullets from an assault rifle during confrontations between government supporters and opposition demonstrators, according to an AFP reporter.

AFP reports from the ground:

At least six people were injured as a busy intersection in a northern suburb of the capital was turned into a battle zone with volleys of sustained gunfire ricocheting off buildings for over an hour in a daylight attack that sent shockwaves across the city.

 

Bangkok has been rocked by weeks of sometimes bloody political violence during rallies by a loose coalition opposed to Yingluck and the enduring influence of her brother Thaksin Shinawatra -- a former premier ousted by the military in 2006.

 

Saturday's clashes happened after demonstrators blocking ballot boxes from being delivered from the Lak Si district office -- one of 50 in the capital -- were confronted by a group of some 200 government supporters, some armed with sticks and metal bars. At least two explosions were heard in the area before the firing began.

 

"The clash point is the intersection, gun shots seemed to be fired from both sides," said Sunai Phasuk, a senior researcher with New York-based Human Rights Watch, who was at the scene. He said a reporter was among the injured.

 

The firing started after talks between the rival groups broke down in the area, which is roughly split between Yingluck's supporters and those backing the opposition protests, Sunai added.

 

"This is what we forecast for tomorrow. Tensions could flair up into violence very easily," he told AFP, adding that protesters had been evacuated and tensions appeared to have calmed after nightfall. At least 10 people have been killed and hundreds injured in clashes, grenade attacks and drive-by shootings since the opposition rallies began three months ago.

 

The unrest is the latest round of political instability to hit Thailand since royalist generals ousted Thaksin seven years ago, unleashing a cycle of sporadically-violent street protests.

If there is any silver lining about the current cycle of violence is that so far it has not reached the proportions of the 2010 clashes when a military crackdown on pro-Thaksin Red Shirts demonstrating against the previous government left more than 90 people dead and nearly 1,900 injured.

The backdrop to the protests is a years-long political struggle pitting the kingdom's royalist establishment -- backed by the courts and the military -- against Thaksin, a billionaire tycoon-turned-politician. The current protesters are mainly made up of Thaksin's foes in the Bangkok middle classes and southerners, backed by factions in the elite.

 

They are demanding Yingluck's elected government step down to make way for an unelected "people's council" that would oversee loosely defined reforms to tackle corruption and alleged vote-buying.

 

"The government is corrupt. If we let the vote go on then they will come back, so we should not hold the election," said opposition protester Sirames, who gave only one name, at the Lak Si office before the violence broke out.

 

Yingluck's opponents say she is a puppet for her elder brother Thaksin Shinawatra, who lives in Dubai to avoid a prison term for graft. Around 130,000 police are set to protect 93,000 polling stations across the country on Sunday.

 

Yingluck is likely to win the poll, helped by strong support in Thaksin's north and northeastern heartlands.

 

But uncertainty hangs over the results, with unrest threatening polling and several constituencies without a candidate. Authorities on Saturday said protesters were also blocking ballot boxes being delivered to polling stations across southern Thailand -- the stronghold of the opposition Democrat Party.

While the probability of a deadly escalation tomorrow is slim - for now - the last thing the EMs need at this point is the flaring of risk at yet another key focal point, especially one that has so much deja vu emotional significance for market participants. We will keep an eye on Thailand over the next 24 hours and update as needed.