The Israel Deception

Is the return of Israel in the 20th century truly a work of God, or is it a result of a cosmic chess move to deceive the elect by the adversary?

Monday, October 22, 2018

U.S. seeking to bully SWIFT into becoming an economic weapon which could lead to a showdown between Trump and the EU

The way that President Trump has alienated so many nations over Iran, one has to truly wonder if his real intention is to force everyone into abandoning the dollar entirely.  Because that is what appears to be where Washington is heading as the Treasury Department is right now in the process of trying to bully the authorities over SWIFT to turn the global messaging system into an economic weapon.

To achieve the US goal of further isolating Iran from the global financial community, Mnuchin said that the U.S. Treasury was already in negotiations with the Belgian-based financial messaging service SWIFT which intermediates the bulk of the world’s cross-border dollar-denominated transactions, on disconnecting Iran from the network. Washington has been pressuring SWIFT to cut Iran from the system as it did in 2012 before the nuclear deal. 
Validating European concerns that the US can and will weaponize the dollar at will and use the reserve currency as a global bargaining chip, Mnuchin's threats confirmed that although the United States does not hold a majority on SWIFT’s board of directors, the Trump administration could impose penalties on SWIFT unless it disconnects from Iran, pressuring it to comply with US demands. 
"I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism,” he said, “Our focus is to make sure that the sanctions are enforced." - Zerohedge
Interestingly, if this is truly Trump's gambit to force de-dollarization on the rest of the world then it appears to be working.  Because not only have two of the biggest economies in the world (Russia and China) already created their own alternative to SWIFT which would allow nations like Iran to transact in cross-border payments outside the dollar, but Europe is also rushing headlong towards the creation of their own system which would subsequently make the SWIFT system close to obsolete.

Nations all around the world shoring up their currencies and central bank reserves by dumping dollars and accumulating gold

It is unfair to say that India is new to the game of gold accumulation, but what is different this time is that a large amount of buying is coming from the country's own central bank.

In a sudden sea-change from the recent past where the Reserve Bank of India (RBI) was trying to dissuade the use of gold in their economy in exchange for fiat currency, a new report is out showing that the central bank is now actually dumping its dollar reserves (Treasuries) in order to help shore up the Rupee while also accumulating gold as a replacement reserve asset.

The Reserve Bank of India (RBI) is cutting down on its holding of US Treasuries, joining a number of countries which have been dumping US debt to bolster domestic economies. 
The country’s share of US sovereign debt saw a gradual decline from $157 billion in March to $140 billion as of the end of August, according to the latest US Treasury report. RBI needed US dollars to sell in the market to stop the steep slide of its currency, the rupee. The bank has sold foreign currencies worth $18.6 billion in the spot market since April to rein the value of the rupee. 
Foreign portfolio investors (FPI) have pulled out more than $10 billion of their investments in the Indian markets since April. That has resulted in rupee losing more than 10 percent in value against the dollar. 
“If FPI flows do not revive amid an US-China trade war, the RBI may need to sell another $10-15 billion by March,” said Bank of America Merrill Lynch. According to its report, there could be more pressure on India's central bank to sell US bond holdings in order to meet the dollar demand. 
Experts say the RBI may be using part of the sales proceeds of the US bonds to buy gold. Statistics showed that the bank’s gold reserves grew to 18.64 million troy ounces in August from 18.01 million troy ounces in March 2018. – Russia Today
However India is not the only country to be rushing to accumulate gold in the global de-dollarization movement.  And with the U.S. right now in negotiations with SWIFT to turn the reserve currency into a full on economic weapon, we can expect to see even more nations besides the emerging market ones to follow this trend of dollar divestiture.
Countries around the world are turning to gold as uncertainty about the global economy rises. Trade wars and the aggressive policies of the United States are making emerging economies withdraw from dollar assets, analysts told RT. 
“The aggressive US policy in recent years has forced some countries to look for an alternative to the dollar and replenish their gold reserves. Worries about the future growth of global economy are an additional incentive for purchases. Many question Donald Trump’s protectionism.”  
There are signs that the global financial system dominated by the US dollar could collapse, says financial institute FinIst analyst Denis Lisitsyn. These signs include the uncontrolled emission of money from different countries, an increase in US interest rates, trade wars, the rapid rise in energy prices, geopolitical tensions in Syria, Iraq, the war in Yemen, he says. 
“Many countries are buying gold in advance. They understand that paper money is constantly eaten up by inflation, equities will sharply fall in price in case of a crisis, and foreign deposits can be arrested, confiscated or frozen,” he said. 
Hungary, Poland, Russia, China, India, Turkey, Saudi Arabia are all hoarding gold, notes Vladimir Rozhankovsky, LIFA, expert at the International Financial Center. - RT

'Alien invasion' from Honduras moving faster than humanly possible to be at the border on election day

In what started as a couple of thousand of Hondurans suddenly getting the idea they could trek thousands of miles northward to freely cross over into the United States has morphed into a full fledged 'Alien invasion' that appears to be a ploy to influence the mid-term elections on Nov. 6.

In an interesting observation from economist Jim Rickards this morning, it would take the average healthy person approximately two months to walk from Honduras to the U.S. border.  However when you calculate the actual pace in which they are moving, it appears now that most of the pictures being shown by the press are little more than propaganda and that the migrants are stealthily traveling by some forms of motorized vehicles to ensure they reach the border in the next 15 days.

It's about 1,500 miles from Guatemala to Texas. At 30 miles per day (a healthy clip) it would take almost two months to walk. So, if these people show up before the election, they didn't walk, they drove. These crowd photos are fake news. – Jim Rickards
In addition, a video emerged over the weekend showing migrants receiving payments from what appears to be members of an NGO to fund their trip and incentivize their breaking of international laws.

President Trump through intelligence sources has already discovered that this Caravan has been infiltrated with many non-Hondurans, including potential terrorists, criminal elements, and even so-called 'refugees from Syria'.  And if accurate, it would mean the same organizations who paid for the migrant invasion into Europe is helping to fund this political scheme to influence the upcoming elections.

When you add in the suspicious killing of Jamal Khashoggi last week, coupled with the increased violence being perpetrated by the Democratic left against conservatives over the past several months, then one has to question every single anomalous event occurring in the leadup to Nov. 6 as being suspect rather than simply a random act.

Friday, October 19, 2018

Shotgun Economics update for October 19 2018 - Financial Markets and Economic Wrapup

Thursday, October 18, 2018

All of a sudden gold has not only disconnected from the Chinese Yuan, but it is also moving with and not against the dollar

For most real gold investors, understanding that the market runs via manipulation in the paper markets is a long held reality.  However 2018 has seen some interesting anomalies take shape which include the price of gold moving in lockstep with the Chinese currency.

Chart courtesy of Kitco

Yet with the sudden and recent moves upward by gold over the past week, which saw it break out of a long three month range and climb back above its 50 day moving average, an alternate dichotomy has also taken place as the gold price appears to not only have disconnected with the Chinese Yuan, but it is also moving with, rather than against, the U.S. dollar.
Yesterday, when looking at a chart of gold priced in yuan, a level which the PBOC appeared to be far more concerned about than the yuan-dollar exchange rate, we asked if the Chinese central bank had "lost control", because after managing to "peg" its currency at roughly 8,300 Yuan per oz of gold in Q3, something snapped this week when the PBOC appeared to lose its ability to managed the peg. 
Whether due to desperate liquidity needs elsewhere or defending stocks as they begin to freefall, the Yuan suddenly plunged back to 8,500 per oz of gold. 
Just 24 hours later, the topic of the Yuan gold peg "breach" prompted Nomura's Bilal Hafeez to observe that "Something is going on in CNY." 
As the Nomura strategist writes in an email to clients, even though the dollar has not moved much against the euro or yen today, "the Chinese yuan is falling to new lows against the dollar. Not only that, but the tight gold-CNY relationship I flagged last week appears to breaking down with CNY much weaker than it should be." - Zerohedge
Yuan - Gold peg breakout:

Dollar chart:

Gold chart:

While this divergence between gold and both currencies may simply be an anomaly, it does signal a serious warning for China who are now back to fighting a currency war directly against the dollar, rather than through the ability to use the gold markets as a buffer as was part and parcel for most of 2018.

Wednesday, October 17, 2018

Shotgun Economics update for October 17 2018 - Financial Markets and Economic Wrapup

Canada turns over a new leaf as nation set to become better known for cannabis than for maple syrup

Perhaps Canada should declare a proclamation changing the Maple Leaf on their flag to that of a Cannabis Leaf as on Oct. 17 the nation became the first to officially legalize marijuana across its domain.

Canada on Wednesday became the first major world economy to legalize recreational marijuana, beginning a national experiment that will alter the country’s social, cultural and economic fabric, and present the nation with its biggest public policy challenge in decades. – NY Times
Canada is the first country to accept the economic and medicinal potential that cannabis provides, and is at the forefront of not only recognizing its potential as both an import and export industry, but also as a segment of the economy that could spawn massive growth in areas such a cuisine, medicine, and recreation.

Additionally, Canada is also permitting its mail system to process shipments directly to consumers which adds the potential for online commerce expansion in this burgeoning industry.
Legal cannabis is set to usher in a wave of high-value, age-restricted parcels in the mail system, and delivery companies say they’re ready. 
The test of the system will come as Ontario relies entirely on the postal system for deliveries when pot is legalized on Wednesday while other provinces expect to see a fair portion of sales from online. 
All provinces will require strict age verification of deliveries, but a combination of existing practices and new systems will help Purolator with the challenge, said Ramsey Mansour, vice-president of corporate strategy and marketing at the company. – Global News
Legalization of both hemp and cannabis could very soon blossom into a trillion industry, and be a much safer alternative to the monopolies held by Big Pharma and Big Agriculture.  And just like in how alcohol prohibition failed because you can't legislate morality, it may be only a matter of time before nations like the U.S., Mexico, and even the EU find the political will to legalize cannabis in their own domains. 

August saw both China and Japan dump Treasuries which adds another catalyst to rising bond rates

One of the primary things that has kept inflation from raging across the U.S. economy over the past decade as the Fed conducted a historic amount of monetary expansion has been America's reliance upon foreign entities being willing to purchase dollars and dollar based assets.  But unfortunately for the U.S., the days of mindless acceptance of the dollar by nations has crossed the Rubicon.

Besides Russia dumping the majority of their dollar reserves since the beginning of the year, a growing number of countries have simply chosen to stop their accumulation of dollars which has forced the Fed to often have to buy its own bond issuance to protect the market.  And now we are finding out that the two biggest holders of Treasuries are becoming net sellers as both China and Japan sold off dollars in August for the first time in several months.

China and Japan – the two main holders of the US Treasury securities – have trimmed their ownership of notes and bonds in August, according to the latest figures from the US Treasury Department, released on Tuesday. 
China’s holdings of US sovereign debt dropped to $1.165 trillion in August, from $1.171 trillion in July, marking the third consecutive month of declines as the world’s second-largest economy bolsters its national currency amid trade tensions with the US. China remains the biggest foreign holder of US Treasuries, followed by long-time US ally Japan. 
Tokyo cut its holdings of US securities to $1.029 trillion in August, the lowest since October 2011. In July, Japan’s holdings were at $1.035 trillion. According to the latest figures from the country’s Ministry of Finance, Japanese investors opted to buy British debt in August, selling US and German bonds. Japan reportedly liquidated a net $5.6 billion worth of debt. 
Liquidating US Treasuries, one of the world's most actively-traded financial assets, has recently become a trend among major holders. Russia dumped 84 percent of its holdings this year, with its remaining holdings as of June totaling just $14.9 billion. With relations between Moscow and Washington at their lowest point in decades, the Central Bank of Russia explained the decision was based on financial, economic and geopolitical risks. – Russia Today
As an ever growing number of nations begin to reject the dollar as a medium of exchange for trade, holding dollars in reserve is rapidly becoming unnecessary.  And this de-dollarization policy is certainly creating a huge problem now in the bond markets, and a major reason for the dangerous spike in yields which could prove disastrous for the U.S. and its ability to cover and expand their debt requirements.

Tuesday, October 16, 2018

How ironic is it that Russia has become the world's most stable economy after dumping their dollar reserves and swapping them out with gold

If we were to ask you what you thought of a country that has little debt, record low unemployment, 3.1% expected economic growth, and an economy that produces the two most important commodities in the world, which nation would you guess fits this description?

Additionally, what if we mentioned that this country has also been under intense economic sanctions for the past five years?

If you guessed Russia then you are absolutely correct.  And perhaps what is most ironic is that they are achieving this at a time when most of the world's other economies are teetering on the cusp of recession, enduring a growing debt crisis, or dealing with tightening liquidity.

Russia is financially stable despite sanctions, President Vladimir Putin said at a meeting with Central Bank officials on Tuesday. Higher reserves and falling dependence on oil are the key factors, according to the president. 
“The financial market remains stable. That is thanks to the joint actions of the government and the Central Bank. Our foreign exchange reserves have increased by 5.7 percent since the beginning of this year and are already at $459 billion,” Putin said. 
Russian foreign reserves consist of foreign exchange, special drawing rights (SDR) holdings, the reserve position in the IMF, and monetary gold. They reached their highest level before the global crisis of 2008 at $598 billion. 
The economy shows growth, too, Putin noted. “In general, the picture in the Russian economy is generally positive. Industrial growth for eight months amounted to 3.1 percent, including manufacturing production that grew by 3.8 percent,” the president said. 
Putin also noted the consistently low inflation and unemployment. “In August, unemployment fell to 4.6 percent, which is a record low, and inflation in September was 3.4 percent.” – Russia Today
Russia, even more than China, has led the way in global de-dollarization and cutting off as many strings in which the United States could use to put more economic pressure on the Eurasian power.  And by diversifying their primary industries now with agricultural exports, they have also been able to protect themselves from the gambit used by Washington back in the late 1980's to bring about the fall of the Soviet Union.

27 years after that fall, it is perhaps apropos that Russia is the one leading the way in helping to bring down the U.S. by attempting to cut off its power not through oil, but in their control over the global reserve currency.  And a big part of this has been in their decision to dump their dollar reserves in exchange for gold, and set themselves up to be a huge winner during the next global currency reset.