The Failure Of A Gold Refinery

By Keith Weiner – Re-Blogged From Gold Eagle

So this happened: Republic Metals, a gold refiner, filed bankruptcy on November 2. The company had found a discrepancy in its inventory of around $90 million, while preparing its financial statements.

We are not going to point the Finger of Blame at Republic or its management, as we do not know if this was honest error or theft. If it was theft, then we would not expect it to be a simple matter of employees or management walking out the door with the gold. $90 million is about 2.6 tons. Unless it happened very slowly, over many years, that seems like a lot of gold to disappear. And if it occurred over years, why didn’t regular audits and other internal controls catch the discrepancy until now?

Continue reading

Advertisements

China Stops Deleveraging, Tells Cities To Ramp Up Spending

By John Rubino – Re-Blogged From Dollar Collapse

China’s growth over the past decade has been not just impressive, but historically unprecedented. No single country has ever added this many factories, roads, airports and entire new cities in so short at time.

But the transformation has come at a cost, in the form of a debt bubble that’s starting to look unstable. Beginning in 2015 non-performing loans and bond defaults both started trending upward and are now close to levels at which the risks become systemic. The following three charts tell that tale:

Continue reading

Rules Still Matter

By Andy Sutton & Graham Mehl – Re-Blogged From Silver Phoenix

While economics is a science and should be treated as such, economic forecasting is both a science and an art at the same time. However, anyone can forecast. Just like anyone can forecast the weather. To do so accurately and furthermore to do so frequently is a true talent. We think of it along the lines of the ability to hit a major league fastball; a gift granted to maybe 1 in 500 or a thousand babies each year. Then add to that the ability to hit a major league fastball for an average of .300 over an entire career and we’re talking a few babies in an entire generation.

Economic forecasting is no different. Anyone can take the classes, read the textbooks by all the proper authors, write the research papers, the thesis, and the dissertation, and still muddle around in the dark for the entirety of a career, issuing bum forecast after bum forecast. We would surmise at that point that there might be a problem with the assumptions going into the exercise of forecasting. Think of the scientist who starts conducting chemistry experiments without knowing Boyle’s Law or the Ideal Gas Law, etc. Or maybe has no clue about Avagadro, let alone the number ascribed to him. Your scientist is going to waste a lot of time and produce nothing of value.

Continue reading

Another Election Year, Another Bunch Of Fake Growth Numbers

By John Rubino – Re-Blogged From http://www.Gold-Eagle.com

Some pretty good economic reports have energized various parts of the financial markets lately. Consumer spending is up, GDP is exceeding expectations and even factory orders, that perennial downer, popped this morning.

In response the dollar is soaring and interest rates are at breaking out of their multi-decade down-channel. The economy is clearly recovering, implying a return to normality. Right?

Nah, it’s just the usual election year illusion. When the presidency is at stake the party in power always pumps up spending in an attempt to put people back to work and create the impression of a well-run country whose leaders deserve more time in the spotlight. After the election, spending returns to trend and the resulting bad news gets buried in “political honeymoon” media coverage.

Continue reading

Divergent Themes In Late 2016

By Andy Sutton & Graham Mehl – Re-Blogged From http://www.Silver-Phoenix500.com

Despite the arrogance, hubris, and lying (obviously – its election season!), we have never seen a cycle that has be more absent in terms of policy details worthy of analysis. Outrageous claims about job creation, making America strong, and so forth are issued, but there is no substance. We have tried on numerous occasions to find enough specifics to even perform cursory analysis and it is just not there. It is very reminiscent of Nancy Pelosi telling America in 2010 that if they wanted to read the healthcare bill they had to pass it first. This is what passes for economic jurisprudence in the Republic the founders gave us all those years ago.

Rest easy good friends, this is not an article about the election. Andy said he’d rather watch goat races in Antarctica and frankly we think many people might be inclined to join us rather than hear another word about the election. We have long stated that this country will not rise from the ashes by the presence of a single person at the top, but rather from the millions below. That’s where the power is.

Continue reading

Government Stimulus is an Oxymoron

By Michael Pento – Re-Blogged From PentoPort

The accumulation of Debt, at its very essence, is simply borrowing consumption from the future. And this is true on any level of debt, be it either public or private. Just as savings is deferred consumption, the exact opposite is true for debt. Therefore, it can only be beneficial in the long-term if it leads to an expansion of productivity in the present. If the funds borrowed do not improve output per unit of labor it is much more difficult to pay back that debt and any perceived benefit ends up being nothing more than an ephemeral illusion.

This is the reason why public debt is the most pernicious variety. The problem with government spending is that it mostly amounts to little more than hole-digging and filling. Borrowing money to pay people to empty the ocean onto the beach may temporarily increase employment and demand in the economy. But since this is merely state directed busy work, it does not grow the economy and expand productivity. Thus, the result is a rise in the debt to GDP ratio.

The 2008 financial crisis led to the passage of the Troubled Asset Relief Program, referred to as TARP, the American Recovery and Reinvestment Act and a rapid increase in government transfer payments, which produced multiple years of record deficits. The accumulation of those deficits sent the U.S. National debt to GDP ratio leaping from 64% in 2007, to over 104% today.

Continue reading

Housing Bubble II – It’s Happening Again

By Andy Sutton & Graham Mehl – Re-Blogged From http://www.Gold-Eagle.com

This will be a bit different article because we are not reporting on something that has already happened; we’re dealing with something that is ongoing and developing. Graham will handle roughly the first half of the article, then Andy will handle the second. Please bear with us as we try to break this editorial into two distinct pieces. You’ll understand as you read it why we chose to handle this in such a fashion.

Since everything in the blogosphere goes by what is officially declared by who, so forth, and so on, ditto, ditto, etc, etc, we are officially declaring there is yet ANOTHER bubble – this one in housing. Again. Perhaps ‘still’ is the proper word rather than ‘again since the first one never really was totally washed out of the system. As an addendum to our very well-received ‘American Economics’ piece, we’ll add a corollary: binges are good, purges are not to be tolerated unless absolutely necessary. If a purge becomes necessary, it will be only enough to give the Proletariat the idea that the problem is actually gone. A purge will never last longer than is absolutely necessary since that might affect consumer spending and the consumetariat’s voracious appetite for debt and financial self-mutilation.

Continue reading