ZeroHedge

Zero Hedge is an English-language financial blog – founded in 2009 – that aggregates news and presents editorial opinions from original and outside sources. The news portion of the site is written by a group of editors who collectively write under the pseudonym “Tyler Durden” (a character from the novel and film Fight Club).

Is This The Reason Why Bitcoin Just Spiked 15% Off The Lows

Update: one reason given for the sharp, 15% rebound in cryptocurrencies from this morning’s lows, is that according to Caixin, China has give two of the largest Chinese exchanges, Huobi and OKCoin until the end of October before closing. As Bloomberg notes, China’s Regulator has given Huobi.com and OkCoin the extra month to prepare closure, as the two exchanges’ trading platforms and investor base are relatively large, and they never dealt with controversial Initial Coin Offerings, or ICOs. More Google translated from Caixin:

the two platforms … had not done ICO or on-line coins, so the relevant departments decided to give Huobi and OKCoin 1 month time buffer Period, that is to say to the end of October and then shut down, but the specific program is still under study.

Additionally, Caixin adds that the regulator is still studying details of the exchange halt plan.

Could this be indicative of China getting cold feet over the exchange ban? It is unclear, although judging by the sharp snapback in cryptocurrencies, quite a few people appear to believe so.

* * *

It appears BTFDers are not just attracted to massively over-valued tech stocks…

 

Of course, amid insane volatility, this bounce could just as easily be gone in minutes.

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Ethereum (ETHUSD) Testing 61.8% Fib Retrace of 2 Month Upchannel

Ethereum (ETHUSD) is falling more than 10% today as at the time of writing, after getting rejected Tuesday at the point ETHUSD broke below prior upchannel support (on the daily chart).  Upchannel support breaks tend to be followed by at least one attempt to break higher back into the upchannel, which offer a high probability short setup as these reclaims of prior upchannel support are often fleeting as seen with Tuesday’s rejection.  Further downside may be limited today though as the steeply downsloping daily RSI and Stochastics are deeply oversold, and may soon find a bounce.  ETHUSD is also testing the 61.8% Fib retrace of the 2 month long upchannel, suggesting potential near-term support in the next day or so.  Any bounce off the 61.8% Fib will be increasingly regarded as a dead cat bounce, likely not lasting more than several days into mid next week given the longer term bearish implication of the weekly RSI and Stochastics turning lower from overbought levels, and the weekly MACD negatively crossing.

ETHUSD (Ethereum) Weekly Technical Analysis

 

ETHUSD (Ethereum) Daily Technical Analysis

 

Bitcoin (BTCUSD) is falling over 8% today as at the time of writing, after getting rejected Tuesday near the point BTCUSD broke below prior upchannel support (on the daily chart).  Upchannel support breaks (on daily charts) tend to be followed by at least one attempt over a span of days to break higher back into the upchannel.  These bounces tend to offer a high probability short setup as these reclaims of prior upchannel support are often fleeting as seen with Tuesday’s rejection.  Given the steeply downsloping daily RSI, Stochastics and MACD, there is still more downside pressure today, although with BTCUSD testing the 50% Fib retrace of the 2 month long upchannel, near-term support at this 50% Fib should not be ruled out for today or tomorrow.  Any bounce off the 50% Fib will be increasingly regarded as a dead cat bounce, and will likely be shortlived (not lasting more than several days into mid next week) given the longer term bearish implication of the fatigued weekly RSI and Stochastics turning lower from overbought levels, and weekly MACD poised to negatively cross.

 

BTCUSD (Bitcoin) Weekly Technical Analysis

 

BTCUSD (Bitcoin) Daily Technical Analysis

Click here for today’s technical analysis on GBPAUD

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It’s Official: “Long Bitcoin” Is The Most Crowded Trade On Wall Street

… at least according to BofA’s latest, just released monthly Fund Managers Survey, in which 181 participants with $549bn in AUM responded to dozens of questions, among which “what do you think is the most crowded trade.” In September, for the first time ever, the top answer, per 26% of respondents, was Bitcoin, (which as BofA handily reminds us was up as much as 344% YTD), #2 was “long Nasdaq” (up 20% YTD) according to 22% of fund managers, while the “Short US Dollars” (-11% YTD) was third at 21%. Note: long US$ was most crowded trade as recently as Mar’17.

Of course, this does not mean that everyone is long bitcoin; it just means that everyone thinks everyone else is long bitcoin…

Another notable change in September: “central bank policy mistake” is no longer the biggest tail risk – that honor now belongs to North Korea by some margin (34% of respondents) , followed by Fed/ECB policy mistake (21%) and Chinese Credit Tightening (15%).

 

Looking ahead, the smartest people on Wall Street said that over the next 6 months, a recession would be the most surprising event (54% of respondents), while an equity bubble least surprising (net -30%).

Finally, in terms of most over and undervalued assets, volatility was declared by far the most overvalued (54%), with sterling, oil, Italian equities and Chinese banks in distant 2nd through 5th slots.

Meanwhile, on macro, FMS growth optimism continues to sag (+62% in Jan to +25% today) but profit hopes rose a tad this month (+34%)…greater conviction in EPS than GDP; notable divergence in FMS perceptions of fiscal policy (“easy”) vs. flatter yield curve shows US tax reform most obvious catalyst for steeper US curve.

What is also interesting is that “Mean reversion” has become a contrarian theme as investors cut expectation of higher bond yields: rotation back to QE themes of scarce “growth”  & “yield” (e.g. EM), away from “value” (Japan, banks) as investors shun mean reversion, slash expectations for “much higher” bond yields (+26% last Nov to 5%); energy (“value”) UW largest since Mar’16, utilities (“yield”) UW smallest since Aug’16.

To summarize: most on Wall Street are short volatility even as they suspect everyone else of being long bitcoin (explaining the tepid performance by the hedge and mutual fund community), nobody expects a recession although most admit the equity market is a bubble, and most are hopeful that the economy will surprise to the upside even as earnings outperformance is taken for granted.

Good luck trading that.

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Buy Gold for Long Term as “Fiat Money Is Doomed”

Buy Gold for Long Term as “Fiat Money Is Doomed” 

 – Buy gold for long term as fiat money is doomed warns Frisby
– Gold’s “winning streak” will continue in long term
– September is traditionally a good month for gold, as we head into the Indian wedding season
– “It’s just a matter of time before gold comes good again…”

by Dominic Frisby, Money Week

Today folks, by popular demand, we’re talking gold.
It’s had a nice summer run.
What now?

 

Gold has been buoyed by the North Korea scare

Let’s start with an update. Back in July I suggested a flip trade: buy then in anticipation of a rally, sell in the autumn. But I also ventured that a proper, multi-year bull market in gold, such as the one we saw in the 2000s, was a way off.

The price then was $1,230 an ounce. As I write, we’re a couple of dollars shy of $1,340. We’ve had a $110 rally. Aren’t I a genius?

So what do we do now? Buy more? Sell? Hold?

Let’s have a lively debate.

The first observation I’d make is that a good $30 to $40 of today’s price is war premium. A certain North Korean has been firing missiles and exploding bombs. The world has, quite understandably, got nervous. And a certain American has been positing (with some justification) various potential responses on Twitter.

Is this North Korean affair going to die down and fade away, or is it going to escalate?

Regular readers of this column will be aware that I know the answer to most things, but I confess that here I fall short. This is something of which only a select group of informed North Korean insiders will have concrete knowledge.

But how this affair pans out will determine gold’s direction in the short term. If it escalates, gold goes up. If it doesn’t, then that $30 or $40 of war premium will be given back.

I’d wager that this is just noise, albeit rather scary noise, and that it will pass. But this is no more than a guess, and not even an informed one.

Aside from North Korea, over the last 45 years, September has proved a good month for gold, rising by an average of about 2.5%. The given reason for this is that gold buying increases as we head into the Indian wedding season, which runs from October to December. Indians are the biggest buyers of physical metals. About a third of global physical gold demand comes from India, half of which is spent on jewellery for their ten million weddings each year.

However, over the past five years, the reverse has been the case. September has been a bad month for gold with falls averaging around 1.5% for the period. That might be simply because we have been in a bear market. It might be because Indian gold-buying has been upset by various changes in legislation and new taxes, and is down some 10%-15% from the heady heights of 2010 and 2011.

Gold has the potential to roar higher – but it could easily stall, too

I was intrigued by this chart (chart above) from Jordan Roy-Byrne over at the Daily Gold. In the top pane you see the gold price since last 2009. In the bottom one you see the net speculative position of Comex traders.

Currently, the net speculative position has hit 248,000 contracts, which amounts to an open interest of 46%. You can see by the red arrows Jordan has drawn that the 55% marked the 2011 top, the 2012 top and the 2016 top.

If the net speculative position rises to that level from here I would venture that that is a level from which to be selling quite aggressively.

In the longer term, there are constructive things to see in the chart. The 2017 low was higher than the 2015-16 low. Each of the 2017 lows has been higher than the last. However, for me to come out and declare myself a full-blown bull, I’d like to see us break above the 2016 highs around $1,370. For us to make a higher high, in other words.

That high is not far off – only $30. But until that point, I’m going to take the cautious-and-hope-I’m-wrong stance and say we are still trading in a range, and no new multi-year bull market has yet begun.

From a Comex point of view there is room to go higher – gold is hot, but not yet bubbly. From a seasonal point of view there is also room to go higher. The same applies from a trend point of view – and certainly from a Korean point of view.

An ongoing stand-off out east could cause another $30 surge from here. Speculative interest could grow. And this whole thing could run out of steam in a few weeks’ time close at the 2016 highs. That would make my buy-in-July-sell-in-the-autumn call look like genius.

Then again, we might be near $1,450 before speculative interest gets to the scary 55% mark. And that would make for a nice higher high, within a new price-definable bull market.

Finally, on the downside for gold (and the upside for the rest of us), this whole Korean thing could blow over, and with it, this summer’s renewed interest in gold.

I’m hedging my bets as you can guess. My inner trader says take some money off the table now, and leave a bit to ride out the next few weeks. What happens in Korea defines where we go next.

My inner investor, however, says own gold.

Fiat money is doomed. It’s just a matter of time before gold comes good again. But don’t expect to be a millionaire by tomorrow.

From Money Week

 

News and Commentary

Gold retreats from 1-year high as dollar gains ground (Reuters.com)

Asia Stocks Rise, Dollar Rebounds as Irma Weakens (Bloomberg.com)

Weakening but still potent Irma aims full force at Florida’s Gulf Coast (Reuters.com)

Hurricane Irma Makes Florida Landfall as $200 Billion Threat (Bloomberg.com)

Venezuela’s Maduro says will shun U.S. dollar in favor of yuan, other currencies (Reuters.com)

Source: Bloomberg

Gold Trading Volumes Hit Record High As Dollar Crashes (ZeroHedge.com)

Here Is The Real Reason Why Draghi Won’t Provide Any Details Today – Blain (ZeroHedge.com)

Eight Silver Bullion Banks Against The World (SilverSeek.com)

Trust issues? China targets a $3 trillion shadow banking industry (Reuters.com)

Gold’s winning streak will continue in long term – Frisby (MoneyWeek.com)

Gold Prices (LBMA AM)

11 Sep: USD 1,338.75, GBP 1,015.31 & EUR 1,114.24 per ounce
08 Sep: USD 1,350.90, GBP 1,026.82 & EUR 1,120.71 per ounce
07 Sep: USD 1,340.45, GBP 1,026.52 & EUR 1,119.54 per ounce
06 Sep: USD 1,340.15, GBP 1,028.03 & EUR 1,122.11 per ounce
05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce
04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce
01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce

Silver Prices (LBMA)

11 Sep: USD 17.85, GBP 13.51 & EUR 14.86 per ounce
08 Sep: USD 18.21, GBP 13.80 & EUR 15.09 per ounce
07 Sep: USD 17.79, GBP 13.59 & EUR 14.85 per ounce
06 Sep: USD 17.77, GBP 13.62 & EUR 14.90 per ounce
05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce
04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce
01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce


Recent Market Updates

– Conor McGregor – Worth His Weight In Gold?
– Gold Has 2% Weekly Gain,18% Higher YTD – Trump’s Debt Ceiling Deal Hurts Dollar
– ‘Things Have Been Going Up For Too Long’ – Goldman CEO
– Physical Gold In Vault Is “True Hedge of Last Resort” – Goldman Sachs
– Bitcoin Falls 20% as Mobius and Chinese Regulators Warn
– Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response
– Precious Metals Outperform Markets In August – Gold +4%, Silver +5%
– 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders
– Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards
– Gold Surges 2.6% After Jackson Hole and N. Korean Missile
– Diversify Into Gold On U.S. “Political Instability” Advise Blackrock
– Trump Presidency Is Over – Bannon Is Right
– The Truth About Bundesbank Repatriation of Gold From U.S.

Important 

For your perusal, below are our    in 2017:

Essential  To Storing Gold In Switzerland

Essential  To Storing Gold In Singapore

Essential  to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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Bitcoin Falls 20% as Mobius and Chinese Regulators Warn

Bitcoin Falls 20% as Mobius and Chinese Regulators Warn

– Bitcoin falls 20% as Mobius and Chinese regulators warn
– “Cryptocurrencies are beginning to get out of control” – warns respected investor Mark Mobius
– Mobius believes governments will begin to clamp down on cryptocurrencies sparking rush to gold

– Yesterday China’s PBOC ruled Initial Coin Offerings (ICOs) are illegal and all related activity to halt
– China is home to majority of bitcoin miners
– Paris Hilton latest celebrity to support an ICO
– Gold’s return of 16% YTD look ‘dull’ or ‘stable’?

– Bitcoin fell 23%, now down 16% from $5,000 high

Editor: Mark O’Byrne

Bitcoin in USD 1 Year (Coindesk)

An ICO – “unregulated issuances of cryptocoins where investors can raise money in bitcoin or other [cryptocurrencies]”
Financial Times

Just as you thought you were getting your head around bitcoin and all the other hundreds of cryptocurrencies out there, the financial headlines are screaming at you about something called initial coin offerings or ICOs. Now you don’t really know what’s going on.

The latest news in the crypto world is that the People’s Bank of China (PBOC) announced yesterday that ICOs (Initial Coin Offering) are illegal and that all related fundraising activity should cease immediately.

But what is an ICO?

An ICO is like an IPO but kind of in reverse.  It is a tool that trades future cryptocoins in exchange for cryptocurrencies of immediate, liquid value. You exchange bitcoin or ethereum with the underlying company in exchange for a new token, say ‘ISawYouComing Coin’

A more formal explanation is offered by Travis Scher:

An ICO is a crowdsale of cryptographically secured blockchain tokens to fund the development and operation of one of three types of blockchain projects:

A platform-layer blockchain (such as ethereum or Lisk)

An organization that operates on a blockchain (known as a decentralized autonomous organization (‘DAO‘), or a centrally organized distributed entity (‘CODE‘)

A decentralized application (‘dapp’) that runs on a platform-layer blockchain. Tokens that fund these are sometimes known as appcoins. 

So far in 2017 $1.366 billion has been raised in ICOs. In global market terms they are still relatively small. But when you consider that US startups raised just $11 billion through IPOs in the second-quarter of this year then you can appreciate the rapid growth in the space.

The largest ICO so far this year has been by Tezos to fund its new blockchain tech which is still alpha testing. They raised $232 million worth of bitcoin (BTC) and ether (ETH) coins.

To be clear, to partake in an ICO does not automatically grant you ownership or shareholder rights to the underlying company, as would happen in an IPO. Instead you are exchanging money for a token that may or may not succeed in the future.

Given how many thousands of cryptos are currently competing with one another this is a real punt. Investors have to make sure they spend a huge amount of time researching the underlying blockchain, the market, the team etc. You should only go for an ICO if you have a very significant appetite for risk, no concerns about losing your capital and love a good flutter.

Sound little too new and Wild West? You’re not the only one who thinks so and there is plenty of evidence to back up your concerns.

There is no regulation ensuring that those offering the ICO do so in a responsible manner as per other fundraising activities.

A quick search of ICO fraud and you will be confronted with many articles (all from 2017) reporting on various ICO scams. Plus Paris Hilton has just jumped in on one…not to cast aspersions but, but, but…it is …

So what’s the deal? A $2bn+ fundraising market and no regulation?

In a brilliant report by Smith+Crown it is explained how the usual rules of fundraising can be avoided by ICOs:

Most ICOs today are marketed as ‘software presale tokens’ akin to giving early access to an online game to early supporters. In order to try to avoid legal requirements that come with any form of a security sale, many ICOs today use language such as ‘crowdsale’ or ‘donation’ instead of ICOs.

Don’t forget the bitcoin and cryptocurrency industry is also relatively unregulated. By allowing it to grow organically and without various regulatory restrictions we have seen major shakeouts in the industry and it has forced its members to pull up their socks and seek out regulation.

However ICOs are now at a point where they are no doubt attracting unsophisticated investors. I have met many people who are worried they have missed out ‘on the bitcoin thing’ and believe that by getting in on an ICO they might be getting ahead of the game.

These same people tend to know little about blockchain instead stating that it is ‘the next big thing’ and just have major FOMO.

Without regulation there is little protecting newbie investors.

What’s the difference between an ICO scam and all the other’s we’ve seen before now? Matt Levine of Bloomberg explains it perfectly:

‘an ICO scam is subtly different from a gold-mining scam in that, with an ICO scam, you can do a scam ICO. You don’t have to get a publicly listed company and pump and dump its stock: You can just say “I’m doing an ICO, here’s the address to send money,” and people will send you money if you have scammed them correctly. Lord knows, it happens often enough. This does not work as well with gold: You can’t say “I found some gold, please buy some,” because buyers will want to see the gold. (Well, there are gold scams like that, but they seem harder to pull off.) With an ICO you may have to write a white paper explaining your token, but the quality bar for that is low, certainly lower than faking up some bars of gold. Lower even, I would think, than faking up a public company, making false filings with the SEC, doing wash trades to pump the stock higher, and then dumping it at the right moment on unsuspecting buyers.’

The government clampdown

But this may now be about to come to an end. Seven-China based regulators took sweeping action against ICOs, putting both the practice and the future of the underlying tokens at risk.

A joint statement released by the regulators explained:

[ICO financing] is a kind of non-approved illegal open fund raising behavior, suspected of illegal sale tokens, illegal securities issuance and illegal fund-raising, financial fraud, pyramid schemes and other criminal activities.

Subsequent statements have ordered that all fundraising activity cease and all completed ICOs be refunded.

China is not the world’s biggest coin offering market but does account for 25% of the capital raised in the last year. There are 43 ICO platforms in China. By mid-July this year these platforms had raised 2.6 billion yuan ($399 million) from 105,000 investors.

The China decision is not totally unexpected and comes on the back of both the US and Canadian regulators voicing similar concerns about ICOs.

In the US the SEC has mentioned these potential ‘pump and dump schemes’ whilst the Canadians have suggested that ‘most ICOs need oversight.’ Both have referred to the tokens as potentially being ‘unlicensed securities.’

Just last week the SEC suspended trading of shares in four companies that had been talking up ICO-related activity. The four firms (First Bitcoin Capital Corp., CIAO Group, Strategic Global, and Sunshine Capital).

None of the four firms are currently big deals by any means but it didn’t stop them from announcing as such. CIAO Group, for example  announced a”$530 Billion [!!!] Blockchain and Cryptocurrency Target Market Collaboration” this summer.

A total scam

Not everyone running an ICO is out to scam you. One of the dangers of the press coverage is that its getting to be a little like the initial coverage of bitcoin, i.e. if you’re using it you must be a crook.

This is certainly not the case for all entrepreneurs offering an ICO. ICOs can be an easy way to raise money.  Even the SEC explained that not all ICOs are not intrinsically bad, stating that they “may provide fair and lawful investment opportunities.”

Anyone who has run a start-up knows how tough and time-consuming it is to raise capital. Should the ICO do well then the broad distribution of the token can provide some pretty powerful momentum for your business.

It is also an interesting way for the bitcoin millionaires to use their new-found wealth. In the same way we see Silicon Valley entrepreneurs re-invest their wealth into startups, we see a similar effect taking place in the crypto world.

However, they are unregulated with a serious lack of control regarding valuation, marketing and ethics.

Worse than the dot com bubble

We have seen a number of bubbles over the years, people still speak of the dot com bubble. Then of course there was the global real estate bubble that helped trigger this whole financial mess.

With both situations inexperienced investors thought they had found quick and easy ways to make money. This in itself isn’t how investing is supposed to work.

A recent Sovereign Man blog explained this well:

There’s a token issued by Stratis, for example, that is up 101,168% since its ICO last summer. The NXT token is up 672,989%.

Those are not type-o’s.

There’s another token that’s actually called “Fuck” which is up 370% in the last 24 hours.

The returns are absurd… especially considering the assets are priced in Ether or Bitcoin, which have also soared to all-time highs.

So on top of a 1,000% return in Bitcoin, ICO investors have also made a 100,000% return in the token.

But I’m hearing exactly the same cackling that I heard from the real estate bubble days more than a decade ago.

– It’s soooo easy to make money in ICOs. 
– It’s a foregone conclusion that the tokens will go up in value.

Sorry, but it just doesn’t compute.

If the tokens represent ownership in a business, then the only thing that matters is whether or not the underlying business performs well.

Does the company have a compelling long-term strategic plan?

More importantly– are the managers successfully implementing the plan and achieving milestones?

Is the company on a path to financial sustainability?

Nobody seems to be paying attention to these details. They just buy tokens with the expectation that the price will rise.

And even if a business performs well, it’s ridiculous to think that a startup company can be worth 100,000% more in a year. Or nearly 700,000% more in a couple of years.

To put these numbers in context, Peter Thiel invested $500,000 in Facebook back in 2004 as the company’s first big investor. In 2012 he sold most of it for $1 billion.

That’s a return of 200,000% in eight years… pretty tame by ICO standards.

Does gold look dull or just stable?

Earlier this year the bitcoin price surpassed that of gold for the first time. When it had previously reached parity with the precious metal it had subsequently experienced a fall back in price. Since then it has slowly but with major volatility recovered in price and reached a high of $5,000 last Saturday (Sept 2).

Bitcoin’s stellar performance has prompted some respected investors to suggest that gold will be replaced by either bitcoin or another cryptocurrency.

Many of the arguments for this surround the potential convenience of bitcoin plus the returns that investors have experienced over this period of time. Some have dubbed gold as ‘dull’ in comparison.

The problem is that one is bought by and trusted by central banks, the other isn’t. Not only that but the infrastructure forming around bitcoin and its contemporaries is making regulators increasingly nervous rather than reassured.

When governments get nervous about an industry it’s a bad sign for those hoping a cryptocurrency will succeed. In order to succeed a cryptocurrency needs a strong infrastructure surrounding it.

Legendary investor Mark Mobius believes this is good news for gold. He told Bloomberg:

“Cryptocurrencies are beginning to get out of control and it’s going to attract the attention of governments around the world,” Mobius said. “You’re going to get a reversion back to gold because people are going to wonder, can I really trust these currencies?”

Currently it isn’t so much the cryptocurrencies that are getting out of control but instead part of the infrastructure. However this in itself get people nervous and wondering if they can trust a crypto as a store of value and medium of exchange.

“People need a means of exchange and they need to trust that,” said Mobius, who was interviewed before China’s announcement. “Right now the trust is good — with bitcoin people are buying and selling it, they think it’s a reasonable market — but there will come a day when government crackdowns come in and you begin to see the currency come down.”

That day is here now.

News and Commentary

Gold eases from near 1-year high as dollar steadies (Reuters)

Safe Havens Maintain Gains as Korea Threats Linger (Bloomberg)

Gold Prices Jump On Fresh North Korean Fears, Long Positions Increase Further (Economics Calendar)

Perth Mint Silver sales slump to one-year low; Gold sales down 2.3% (Scrap Register)

China’s virtual coin fundraising ban just the start of tighter regulations (Reuters)

Source: Zerohedge.com

We’re addicted to debt and headed for a crash. It could be worse than 2007 (The Guardian)

The Return of Meltdown Risk? (Handelsblatt)

The Decline and Fall of America (In Numbers) (Medium.com)

Ethereum, Bitcoin Crash After China Declares Initial Coin Offerings Illegal (Zerohedge)

Mobius Foresees Cryptocurrency Crackdown Sparking a Rush to Gold (Bloomberg)

Gold Prices (LBMA AM)

05 Sep: USD 1,331.15, GBP 1,029.51 & EUR 1,120.43 per ounce
04 Sep: USD 1,334.60, GBP 1,030.98 & EUR 1,120.53 per ounce
01 Sep: USD 1,318.40, GBP 1,020.18 & EUR 1,107.98 per ounce
31 Aug: USD 1,305.80, GBP 1,013.17 & EUR 1,098.31 per ounce
30 Aug: USD 1,310.60, GBP 1,014.93 & EUR 1,096.71 per ounce
29 Aug: USD 1,323.40, GBP 1,020.34 & EUR 1,097.36 per ounce
25 Aug: USD 1,287.05, GBP 1,003.90 & EUR 1,090.90 per ounce

Silver Prices (LBMA)

05 Sep: USD 17.88, GBP 13.80 & EUR 15.03 per ounce
04 Sep: USD 17.80, GBP 13.75 & EUR 14.95 per ounce
01 Sep: USD 17.50, GBP 13.53 & EUR 14.69 per ounce
31 Aug: USD 17.34, GBP 13.47 & EUR 14.62 per ounce
30 Aug: USD 17.44, GBP 13.49 & EUR 14.60 per ounce
29 Aug: USD 17.60, GBP 13.59 & EUR 14.62 per ounce
25 Aug: USD 17.02, GBP 13.26 & EUR 14.40 per ounce


Recent Market Updates

– Gold Surges To $1338 as U.S. Warns of ‘Massive’ Military Response
– 4 Reasons Why “Gold Has Entered A New Bull Market” – Schroders
– Gold Reset To $10,000/oz Coming “By January 1, 2018” – Rickards
– Gold Surges 2.6% After Jackson Hole and N. Korean Missile
– Diversify Into Gold On U.S. “Political Instability” Advise Blackrock
– Trump Presidency Is Over – Bannon Is Right
– The Truth About Bundesbank Repatriation of Gold From U.S.
– Cyberwar Risk – Was U.S. Navy Victim Of Hacking?
– Global Financial Crisis 10 Years On: Gold Rises 100% from $650 to $1,300
– Mnuchin: I Assume Fort Knox Gold Is Still There
– Buffett Sees Market Crash Coming? His Cash Speaks Louder Than Words
– Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High
– Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard

Important 

For your perusal, below are our    in 2017:

Essential  To Storing Gold In Switzerland

Essential  To Storing Gold In Singapore

Essential  to Tax Free Gold Sovereigns (UK)

Please share our research with family, friends and colleagues who you think would benefit from being informed by it.

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Ethereum, Bitcoin Crash After China Declares Initial Coin Offerings Illegal

Ethereum and bitcoin are crashing this morning, after China confirmed its recent threat of an ICO crackdown (reported here last Monday) when the central bank said on Monday that initial coin offerings are illegal and disrupt financial markets, according to statement on China’s central bank website. The PBOC also asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.

The crackdown was announced in a statement on the PBOC’s website in which the central bank said that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said that organizations or individuals that completed initial coin offerings should return the money raised, in move “to protect investors’ rights and properly handle risks,” though it didn’t specify how the money would be paid back to investors.

Taking the recent SEC crackdown on Initial Coin Offerings several steps further, the PBOC also said digital token financing and trading platforms are prohibited from doing conversions of coins with fiat currencies. Digital tokens can’t be used as currency on the market and banks are forbidden from offering services to initial coin offerings, and are also also banned from offering pricing and information services on coins. Most importantly was the PBOC’s determination that “digital token can’t be used as currency on the market” and its warning that “China will strictly punish over sustained offerings and law violations in completed ones.”

The central bank’s Monday directive made no mention of cryptocurrencies such as ether or bitcoin. Bitcoin tumbled over 8%, the most since July on a closing basis, to $4,480. Ethereum was down more than 11% Monday, to just above $310, after trading nearly $400 last week.

“This is somewhat in step with, maybe not to the same extent, what we’re starting to see in other jurisdictions – the short story is we all know regulations are coming,” Jehan Chu, managing partner at Kenetic Capital in Hong Kong, which invests in and advises on token sales, told Bloomberg. “China, due to its size and as one of the most speculative IPO markets, needed to take a firmer action.”

As described previously, ICOs are controversial digital token sales that have seen unchecked growth over the past year, raising $1.6 billion and surpassed traditional venture capital raising pathways. They have been deemed a threat to China’s financial market stability as authorities struggle to tame financing channels that sprawl beyond the traditional banking system. Widely seen as a way to sidestep venture capital funds and investment banks, they have also increasingly captured the attention of central banks that see in the fledgling trend a threat to their reign.

While hardly the world’s biggest coin offering market, China accounts for about a quarter of the blockchain based capital raising activity YTD: there were at least 43 ICO platforms in China as of July 18, according to a report by the National Committee of Experts on the Internet Financial Security Technology. Sixty-five ICO projects had been completed, the committee said, raising 2.6 billion yuan ($398 million).

Incidentally, just as we speculated in late July, when the SEC announced its own crackdown on initial coin offerings, a move we deemed would be beneficial in the long run for weeding out the various criminal and ponzi schemes that have proliferated in the unregulated market, so today’s move by China is seen by some as favorable for blockchain dynamics:

“This is a positive move given the rapid proliferation of low quality and possibly fraudulent coin sales promising the moon,” said Emad Mostaque, London-based co-chief investment officer at Capricorn Fund Managers Ltd. “There is tremendous value in the model but we need to see more separation of high quality, ethical offerings versus those seeking to circumvent securities law for a quick buck.”

Indeed, the SEC signaled greater scrutiny of the sector when it warned that ICOs may be considered securities, though it stopped short of suggesting a broader clampdown. The regulator reaffirmed its focus on protecting investors, however, and said issuers must register the deals with the government unless they have a valid excuse. The vast amount of money amassed in a short span of time has also attracted cyber criminals, with an estimated 10 percent of money intended for ICOs looted away by scams such as phishing this year, according to Chainalysis, a New York-based firm that analyzes transactions and provides anti-money laundering software.

China will likely eventually allow token sales, according to Chu of Kenetic Capital, however only on approved platforms, and may even vet projects individually. “I think they will allow the sale of tokens in a format which they deem safe and more measured,” he said.

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Red Cross Admits It Doesn’t Know How Hurricane Harvey Donation Money Is Spent

Authored by Carey Wedler via TheAntiMedia.org,

Though the Red Cross has a historical reputation for providing relief to victims of natural disasters and other emergencies, the organization’s practices have tarnished its name over the last few years.

Amid the catastrophic earthquake in Haiti in 2010, the Red Cross reportedly accepted nearly $500 million in relief money but built only six homes with the funds even though they claimed they had provided homes to 130,000 people. These failures prompted some Haitians to advise the world against donating funds to the Red Cross.

The organization was accused of diverting resources and supplies to bolster its public image during Hurricane Sandy. As an investigation by NPR and ProPublica found:

The Red Cross national headquarters in Washington ‘diverted assets for public relations purposes.’  

 

A former Red Cross official managing the Sandy effort says 40 percent of available trucks were assigned to serve as backdrops for news conferences.

The outlets reported that [d]istribution of relief was ‘politically driven instead of [Red Cross] planned,’” noting many organizational failures.

Further, a report released last year by Iowa Sen. Chuck Grassley found that 25% of funds donated to aid in relief for victims of the earthquake was actually spent on internal costs. That amounted to roughly $124 million.

Now, amid the hurricane in Texas, the Red Cross is admitting it currently doesn’t know how the funds it’s receiving are being spent.

NPR’s Morning Edition interviewed Red Cross executive Brad Kieserman to ask how the funds will be distributed.  Kieserman said that as of Wednesday morning, “had spent $50 million on Harvey relief, mainly on 232 shelters for 66,000 people.”

Through donations, how much of every dollar goes to relief? NPR’s Ailsa Chang asked him.

But he responded without actually providing an answer to her question:

Yeah, I don’t think I know the answer to that any better than the chief fundraiser knows how many, how much it costs to put a volunteer downrange for a week and how many emergency response vehicles I have on the road today. So I think if he was on this interview and you were asking how many relief vehicles in Texas, I don’t think he’d know the answer and I don’t know the answer to the financial question I’m afraid.”

She pressed him about the Red Cross’ previous failures and misallocation of resources. According to NPR’s transcript:

Is that still happening? Such a substantial percentage of donations going to internal administrative costs, rather than to relief?

 

“Kieserman: It’s not something I would have any visibility on. I can talk about what it costs to deliver certain relief services.

 

“Chang: Yeah.

 

“Kieserman: But the way the internal revenue stream works, uhh …

 

“Chang: You don’t know what portion of that amount.

 

“Kieserman: Not really.

 

“Chang: You don’t know what portion of that total amount is for relief.

 

“Kieserman: No, I really don’t. I wish I could answer your question, but it’s not something I have visibility on in the role that I play in this organization.

The executive ultimately claimed that “The folks I work for are very, very attentive to cost effectiveness and cost efficiencies in making sure that as much as every dollar that we spend on an operation is client-facing.”

Slate reporter Jonathan Katz also reported the organization declined to disclose how much money they had spent or raised so far. Katz ultimately urged readers not to contribute to the Red Cross.

The Red Cross continues to face criticism and urgings for individuals who want to help to take their donations elsewhere. The Independent reports that over the weekend, Dan Gillmor, author and professor at Arizona State University’s Walter Cronkite School of Journalism, advised against donating to the Red Cross. Many other social media users have expressed similar sentiments.

Despite the Red Cross’ failings, however, there are still many organizations doing important work.

The group A Just Harvey Recovery lists a number of local efforts accepting contributions. The Cajun Navy, a volunteer effort that previously rescued victims of Hurricane Katrina and the Louisiana floods last year, has also been working round the clock in Texas and is accepting donationsThere are many organizations and shelters working locally to provide relief and essential services. If you would like to contribute or volunteer, you can find some of them herehere and here.

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Six Banks Join UBS’s “Utility Coin” Blockchain Project

Here’s a piece of news that the remaining human members of Wall Street’s FX sales and trading desks probably don’t want to hear.

According to the Financial Times, six of the world’s largest banks have decided to join a blockchain project called “utility coin” that will allow banks to settle trades in securities denominated in different currencies without a money transfer. What’s worse, the banks expect to begin live-testing the project late next year.

Here’s the FT:

“Barclays, Credit Suisse, Canadian Imperial Bank of Commerce, HSBC, MUFG and State Street have teamed up to work on the “utility settlement coin” which was created by Switzerland’s UBS to make financial markets more efficient.

 

The move comes as the project shifts into a new phase of development, in which its members aim to deepen discussions with central banks and to work on tightening up its data privacy and cyber security protections.”

The project’s managers say they’ve already involved representatives from various central banks…

“Hyder Jaffrey, head of strategic investment and fintech innovation at UBS, said: “We have been in discussions with central banks and regulators and we will continue that over the next 12 months with the aim of a limited ‘go live’ at the back end of 2018.”

Here’s a brief explanation of how it’s expected to work , courtesy of the FT:

“The utility settlement coin, based on a product developed by Clearmatics Technologies, aims to let financial groups pay each other or to buy securities, such as bonds and equities, without waiting for traditional money transfers to be completed.

 

Instead they would use digital coins that are directly convertible into cash at central banks, cutting the time, cost and capital required in post-trade settlement and clearing.

 

The coins, each convertible into different currencies, would be stored using blockchain, or distributed ledger technology, allowing them to be swapped quickly for the financial securities being traded. Existing members of the project are Deutsche Bank, Banco Santander, BNY Mellon and NEX.”

Initially, utility coin will be used primarily for interbank payments, the banks told the FT. Say two institutions owed one another sums denominated in two different currencies. They could settle those payments in utility coin instead of routing payments through an interbank broker. This will only hasten the declining employment of human currency traders, as fewer trades executed via traditional systems means even less business and even more pressure to automate.

To be sure, even after the “utility coin” system is up and running, a broader use-case could still be years away. As the FT notes near the end of the story, the coins can only be used to settle trades involving securities that are trading on a blockchain. While a few companies (notably Overstock.com) have successfully issued blockchain-based assets, it could be years – or even decades – before blockchain systems supplant the current market infrastructure.

“Before the coins could be used for settling securities trades, he said the securities themselves will need to be transferred to blockchain systems, otherwise the benefits of speed and reduced capital requirements will be lost.”

Assuming it happens at all. Even if the changeover were to be gradual, it would still require the cooperation of banks, exchanges, brokers, clearing houses etc. This remains unfeasible from a technology perspective. And even once blockchains can reliably achieve economies of scale, any kind of transition would probably take years.
 

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Cyber-Criminals Abandon Bitcoin; Homeland Admits “It’s A Lot More Legitimate Than People Think”

Regulators in the US, Europe and Asia who’ve sought to crack down on bitcoin – many of these regulators are also proponents of a “cashless society” – have been dealt a stunning setback by an unlikely defender of the pioneering digital currency: The US Department of Homeland Security.

To wit, one anonymous DHS source told CNBC that bitcoin has become “a lot more legitimate” than many believe.

“We’re getting a lot better through law enforcement tracking those [criminals] and holding the exchanges more accountable,” the Homeland Security official said. “I think [bitcoin]’s a lot more legitimate than people give it credit for.”

Another source told CNBC that criminals have backed away from using the digital currency as bitcoin transactions have become much easier for authorities to trace. Earlier this month, the IRS announced that it had developed, with the help of bitcoin security firm Chainalysis, a tool to unmask the owners of bitcoin wallets.

“Although hard numbers on criminal activity in digital currencies are difficult to pin down, Shone Anstey, co-founder and president of Blockchain Intelligence Group, estimates that illegal transactions in bitcoin have fallen from about half of total volume to about 20 percent last year.

 

“Now it’s significantly less than that,” he told CNBC earlier this month, noting that overall transaction volume has grown globally.”

Bitcoin is vulnerable to law enforcement because each user must display a public ID, a complex cryptographic combination of numbers and letters, in order to tansact in bitcoin. By tracing the movement of coins between accounts, CNBC explains, intelligence and security agencies can follow the money and arrest the criminals when they try to withdraw their ill-gotten games in US dollars, or another fiat currency.

Last month, US authorities partnering with Interpol and local law enforcement shut down AlphaBay and Hansa, two of the largest dark-web marketplaces for drugs and illegal goods. Before that, they took down BTC-E, a shadowy digital-currency exchange, arrested its Russian-born founder and seized the company’s website.

Another cybersecurity expert who spoke with CNBC noted that, when a user tries to convert bitcoin into cash, the digital-currency’s veneer of anonymity disappears.

“Bitcoin basically introduced a situation where we could bypass the money mules,” said Rickey Gevers, cybercrime specialist at RedSocks Security, which detects and fights against malware.

 

But, Gevers said, “in the beginning [bitcoin] looks very anonymous, and in the end it doesn’t look very anonymous.”

Paul Triolo, a consultant at Eurasia Group, said bitcoin has “changed quite a bit” since it was first launched in early 2009. It’s now primarily used by legitimate investors, not dark-web criminals.

“The whole use issue of digital currencies has become a big industry. Bitcoin isn’t this weird, odd currency that’s being used on the dark web,” said Paul Triolo, practice head of geotechnology at consulting firm Eurasia Group.

 

“Since the early days of bitcoin on some [levels], the world has changed quite a bit.”

Instead of bitcoin, the DHS told CNBC it’s focusing on other cryptocurrencies like Ethereum and Monero. For those who are unfamiliar with the latter, it’s one of a handful of digital currencies featuring enhanced privacy controls. For example, Monero scrambles a user’s public ID, making it more difficult for authorities to trace transactions.

Even the European Union admitted that bitcoin was never popular with organized crime groups, which overwhelmingly prefer payment in large-denomination bills like the 500-euro note, production of which has been discontinued by the ECB, part of the European elites’ war on cash.

Still, global authorities remain skeptical. Earlier this week, Russia signaled an about-face when the country’s deputy finance minister told local media that the ministry of finance and central bank were seeking to “regulate” digital currencies by forcing users to execute trades on the country’s public stock exchange, allowing the government to monitor transactions.

In the US, the SEC decreed last month that digital currencies are financial securities that must be registered with the agency. However, the ultimate significance of the agency’s ruling remains unclear.

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And The Nation That ‘Cannot Live Without The Internet’ The Most Is…

Have you ever thought about what life would be like without the internet?

Given the volume of time people spend immersed in their smartphones, iPads and laptops, an unconnected life is pretty hard to imagine these days. For the majority of millennials, the time before the world wide web is now nothing more than a distant memory, a memory that’s been eviscerated by the ubiquity and life-changing impact of connected technology.

Interestingly, Statista’s Niall McCarthy notes that it isn’t just millennials who are losing touch with a world without smartphones, emails and social media. Research from Ipsos has found that society in general just can’t live without the internet.

Infographic: Where People Can''t Live Without The Internet  | Statista

You will find more statistics at Statista

18,180 people were surveyed across 23 countries, with more than two thirds of them saying they cannot imagine a life that isn’t prefixed by www dot.

While 73 percent of Americans said they cannot imagine an unnconnected life, the highest share was recorded in India at 82 percent.

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