Closing Bond Prices and Yields

			Change
** YIELD     From WSJ
U.S. 3 Month			0/32	0.048
U.S. 2 Year			-1/32	0.339
U.S. 5 Year			-9/32	1.316
U.S. 10 Year			-17/32	2.422
U.S. 30 Year			-1 23/32	3.519
Germany 2 Year			-6/32	0.257
Germany 10 Year			-31/32	1.669
Italy 2 Year			-18/32	2.289
Italy 10 Year			-2 5/32	4.538
Japan 2 Year			0/32	0.130
Japan 10 Year			-7/32	0.842
Spain 2 Year			-9/32	2.261
Spain 10 Year			-2 14/32	4.829
U.K. 2 Year			-3/32	0.500
U.K. 10 Year			-1 10/32	2.295**

Market Indicators on Extreme Fear Territory

Fear and Greed Index    Goes from  Extreme Fear 0 to  Extreme Greed  100

Now Extreme Fear    16        20.06.13

 Indicators

Junk bond Demand                        Neutral

Market Momentum                         Fear

Put and Call Options                      Extreme Fear

Safe Heaven Demand                    Extreme Fear

Market Volatility                           Extreme Fear

Stock Price Breadth                      Extreme Fear

Stock Price Strength                      Extreme Fear

The market Volatility Index  VIX closed at  20.49   with an increase of  23.10% today

New Economic Scenario

 Fed Chairman statement, after the FOMC meeting, that the  economy is in a better shape,confirms what the markets had been anticipated lately, that the Federal Reserve will start to scale back its bond purchasing program

  Mr Bernanke hinted yesterday that the Fed might finish its quantitative program by mid-2014.
Because of the short term production overcapacity, high unemployment and low inflation and the policy of back to normalcy on  interest rates in the US and  a softer Chinese economy. We would expect
lower commodity prices, lower local  currencies and bond prices in emerging countries and developing countries.
   Before the carry trade was to change US$ dollars to local currencies in emerging countries, and take advantage of their higher interest rates, plus the local currency appreciation  that was the norm in the previous scenario.
  Now the new scenario, as far as there is no change in policies towards return to normalcy in interest
rates, means a flight to quality, the safe haven is now the US dollar,that means  the return of hegde funds from emerging and developing countries, to the US which is having a slow recovery, that could
get better later in the year and even more in 2014 as the IMF suggests.

Market Rout on the price of Commodities

Commodities market meltdown, after Federal Reserve Chairman said yesterday that they could tap
their 85 billion bond market purchases later this year.

ETF      Commodity      Price            

GLD      Gold                125.17         -4.18%

SLV       Silver                 19.28         -6.41%

JJC         Copper              37.71        -2.38%

PPLT    Platinum          135.36          -2.63%

REMX  Rare Earth           9.81          -3.25%

British Banks Still Undercapitalized

Britain’s banks have plans to raise nearly £14 billion by the end of the year to plug a black hole in their balance sheets, the regulator said today.

The Prudential Regulation Authority said that the aggregate

 capital shortfall at British banks at the end of last year was

£27.1 billion, higher than the £25 billion estimate in March.

''Britain's banks still have too little capital'', Mr. King said. 

"There is clearly some way to go before we can claim to have a really well-capitalized banking system."

Mr. King said the global economy remains plagued by economic imbalances and warned recovery is likely to be "a bumpy ride."

He ''urged bankers and policy makers not to forget the lessons of the crisis and to press on with reforms''.

"We cannot be complacent. As the memories of the crisis fade, and those who saw it at firsthand retire, it is vital that the 'audacity of pessimism' is not lost," Mr. King said.

HSBC´s preliminary Manufacturing Purchasing Managers´ index fell to 48.3

China's manufacturing sector has slowed further in June, according to HSBC's preliminary results from its monthly survey, released Thursday. The "flash" version of HSBC manufacturing Purchasing Managers' Index fell to a nine-month low of 48.3, down from May's final reading of 49.2. 

Christine Lagarde Calls for Greater Regional Economic Cooperation in Asia

 IMF visit to Malaysia November 2012

Christine Lagarde, Managing Director of the IMF, highlighted  the increasing leadership role that Asia plays in the global economy.

During the dark days of the global financial crisis, it was Asia that kept the flame alive, accounting for about two-thirds of global growth, she said in a speech on “Asia and the Global Economy: the Promise of Integration” at the Global Public Lecture hosted by the Malaysia Economic Association. “Clearly, the momentum is here, the dynamism is here, and the future starts here.”
Ms. Lagarde also emphasized the virtues of economic cooperation, particularly trade and finance, within Asia. “There is no question about it: looking ahead, Asia can benefit from opening even more doors to trade.”
She noted that more than 90 percent of ASEAN cross-border portfolio investment flows are with advanced economies outside Asia. “Asia—with its current account surpluses—is simply not investing enough of its savings in itself,” she said.
Greater regional financial integration could open up a host of new benefits. Ms. Lagarde noted that it can boost domestic demand—partly by making it easier for small businesses in countries like Malaysia to gain access to credit. It can make economies safer, by allowing more insurance against volatility and adverse developments. And greater access to financial services by the poor can reduce inequality, she said.
“Here, Asia has a unique opportunity to get financial integration right—avoiding the missteps and excesses of the west,” Ms. Lagarde said.
Asia has a major and highly-respected voice in global economic governance, including through the G20 where it has six members. And Asia also plays an increasingly important role in the IMF.

In this regard, Ms. Lagarde noted that the membership came together to boost the IMF’s firepower by $461 billion—bringing the Fund’s total lending power to over $1 trillion. “I am very appreciative that Asia played such a leading role in building that financial firewall.” “It is a vote of confidence in the Fund,” she said. More than that, it is a vote of confidence in partnership, in solidarity, in the idea that by helping others, you are also helping yourself,” Ms. Lagarde concluded.

Russia hints nuclear arms cuts will not come easy

From Reuters

Russia voiced concern on Wednesday about U.S. missile defenses and high-precision conventional weapons, signaling that nuclear arms cuts proposed by President Barack Obama are likely to face formidable obstacles.

In a speech in Berlin, Obama said he wanted to reduce the strategic nuclear weapons the United States deploys by a third and would seek to negotiate cuts with Russia. The former Cold War foes possess the vast majority of the world's nuclear weapons.

But Russian President Vladimir Putin reiterated Moscow's concerns about the anti-missile shields the United States and NATO are deploying, and said the development of high-precision non-nuclear weapons could upset the strategic balance.

"These weapons are approaching the level of strategic nuclear arms in terms of their strike capability. States possessing such weapons strongly increase their offensive potential," Putin said at a meeting on defense issues in the Russian city of St Petersburg.

"How can we take the idea of strategic nuclear weapons reductions seriously when the United States is building up its ability to intercept these strategic nuclear weapons?" he said.

"These things clearly do not go together. It's obvious that Russia's highest political leadership cannot take such proposals seriously," Rogozin told reporters.

Federal Reserve upgraded their view on economic recovery in the US economy,but kept their bond buying program unchanged

From the WSJ

''Federal Reserve officials on Wednesday upgraded their assessment of the economic recovery and Chairman Ben Bernanke said the central bank could begin pulling back its $85 billion-per-month bond-buying program later this year.

"Labor market conditions have shown further improvement in recent months," the Fed said in its formal policy statement, though it noted that unemployment remains "elevated." Fed officials also noted that they see "the downside risks to the oulook for the economy and the labor market as having diminished since the fall."

But Mr. Bernanke made clear at the outset of his press conference that he and other officials believe the economy is on a better path. He said the program of bond buying could be completed by the middle of next year as the jobless rate reaches a projected 7%.

Despite its upbeat view of the economy, the Fed gave a slight nod to recent soft inflation readings, saying that "inflation has been running below" the central bank's 2% target, although it added that "[l]onger-term inflation expectations have remained stable."

However, he said a wind-down would be contingent on the steady growth the Fed has been seeing and said there is no trigger for a reduction in purchases. He also said the Fed could ramp up its buying, even after cutting, if conditions warrant. "Our policy is in no way predetermined," he said, noting that the Fed might decide to shift from this plan if the economy doesn't measure up to the Fed's expectations.

The Fed's more optimistic view of the economy was also reflected in its revised economic projections, which were also released Wednesday. Fed officials saw unemployment falling slightly faster and hitting lower than they did in their previous forecasts, from March. For instance, by the end of 2014, they see the jobless rate hitting between 6.5% and 6.8%, an improvement from March when they saw it hitting between 6.7% and 7% by then. At the end of last year, the forecast was 6.8% to 7.3%.

Despite the lower expected unemployment rate, Fed officials still expect to keep short-term interest rates low until 2015, their projections showed. Fourteen Fed officials said they didn't expect to start raising rates until 2015, compared to 13 who said so in March''.

Honeywell shifting from supporting China Airlines,to domestic production and engineering development.

''Honeywell Aerospace, the United States-based aviation parts maker and a major supplier to China's domestic commercial aircraft, the C919, is upbeat about the much-anticipated jet's maiden flight in 2015, a senior executive of the company said.
"We are on schedule" with the Commercial Aircraft Corp of China's plan for the first flight, John Bolton, president of the air transport and regional strategic business division at Honeywell Aerospace, told China Daily during the Paris Air Show, which opened on Monday.

The US-based company has also been vying to supply its electric taxiing system, jointly developed with French aircraft and rocket engine producer Safran SA.

The product, which is being demonstrated at the Paris Air Show, will enable aircraft to taxi under electrical power while the main engines remain off. The product is aimed at improving airline operating efficiency and cutting fuel consumption.

Apart from its partnership with COMAC, Honeywell has been seeking greater collaboration with other Chinese airplane manufacturers to capitalize on burgeoning demand in the Chinese aviation industry.

Honeywell has shifted its business focus in China from supporting Chinese airlines to domestic production and engineering development, as China is expected to join the US and Europe as the third pillar of the global aviation industry'.

World Bank: Global Warming may cause severe problems in India,Sub-Saharan Africa and South Asia

''WASHINGTON: Global warming could lead to more extreme droughts in large parts of India, resulting in widespread food shortages and hardship in the country, in the next few decades, a new World Bank report warned today. 

The impact of a possible global temperature rise of 2 degrees Celsius in the next few decades threatens to trap millions of people in poverty, according to the report. 

The soaring temperatures will also drive regular food shortages in Sub-Saharan Africa. 

Shifting rain patterns in South Asia due to warming could leave some parts under water and others without enough water for power generation, irrigation, or drinking, the report said. 
More extreme droughts in large parts of India could lead to widespread food shortages and hardship," the report said. 

Another impact of climate change could be degradation and loss of reefs in South East Asia possibly resulting in reduced fish stocks and coastal communities, while cities could be more vulnerable to increasingly violent storms, it said''. 

Slowing growth on FDI in China?

''Growth of China's foreign direct investment in May dropped to just under 0.3 percent, an indicator that global companies remain hesitant to expand in China amid its economic slowdown.

According to the Ministry of Commerce, FDI was up just 0.29 percent from a year earlier to $9.26 billion, compared with a 0.4 percent increase in April and the slowest growth since February.

But Shen Danyang, spokesman for the ministry, rebutted the notion that the nation is losing its appeal to multinationals as an FDI destination.

He said that "from a global perspective, China's FDI trend remains comparatively stable and good ... and positive growth (in FDI) for four consecutive months, to a large extent, shows the recognition of global investors on the competitiveness of the Chinese economy and the nation's investment environment".

FDI in 2012 hit a record high of $111.7 billion. The nation has remained the most attractive FDI destination among developing countries for more than a decade.

But 2012 was the first year that the nation saw a drop in its annual FDI since 2009.

According to the ministry, during the first five months of 2013, FDI was up just slightly more than 1 percent from a year earlier to $47.6 billion, mainly led by developed nations and regions.

Investment from the United States was up by 22.6 percent, and that from the European Union increased 24.1 percent from January to May.

During a meeting with executives from more than 10 multinational companies that were to attend the Fortune Global Forum 2013 in Chengdu earlier this month, Premier Li Keqiang tried to clear up the foreign businesses' doubts by saying that "China has the ability and conditions" to sustain economic growth and "China will be committed to deepening the reform and opening-up policy".

Li encouraged the foreign companies to "cash in on the huge opportunities resulting from the nation's economic development and efforts toward industrialization and urbanization".

Abenomics positive short term results.

TOKYO (AP) -- Japan's trade deficit rose nearly 10 percent in May to 993.9 billion yen (nearly $10.5 billion), highlighting the challenge Prime Minister Shinzo Abe faces in revitalizing manufacturing as industries increasingly shift production offshore.

Rising costs for imports due to the cheaper yen matched a 10 percent rebound in exports from a year earlier, , the Finance Ministry reported Wednesday.

A weakening in the yen's value has pushed up costs for imports of crude oil, natural gas and other commodities for this resource-scarce nation, but the deficit in May was bigger than most economists' estimates.

The May data(also) show Japan's efforts to boost trade with the rest of Asia are yielding results, with exports rising 11 percent to 3.2 trillion yen ($33.7 billion), as imports climbed nearly 10 percent to 2.98 trillion yen ($31.4 billion).

Exports to China rose 8.3 percent in May from a year earlier to 1.05 trillion yen ($11 billion) while imports jumped 15 percent to 1.46 trillion yen ($15.4 billion), leaving a deficit of 410 billion yen ($4.3 billion).

Increasingly, Japanese companies are expanding their manufacturing in Southeast and South Asia, partly to tap new, faster growing markets and partly to hedge risks from their already huge commitments in China, given the threat of anti-Japanese moves due to a festering territorial dispute with Beijing.

Economists say Abe must move ahead with promised tax cuts and deregulation to spur investment and hiring by corporations that complain inflexible labor laws and high taxes and wages are hurting their competitiveness.
Japan's economy grew at a 4.1 percent annual rate in the first quarter of the year and is forecast to continue its recovery this year, boosted by government stimulus spending and aggressive monetary easing aimed at ending two decades of stagnation.

G8 urges Japan to fix budget

''Japan was urged to follow up on massive central bank stimulus with structural reforms and measures to tackle its budget deficit.

The G8 also said Japan needed to address the challenge of defining a credible medium-term fiscal plan.

"Japan's growth will be supported by its near-term fiscal stimulus, bold monetary policy and recently announced strategy for promoting private investment," it said. "However it will need to address the challenge of defining a credible medium-term fiscal plan."

From Reuters In California more scrutiny from politicians as companies make initial attempt to tap shale oil

''California state legislators on Tuesday told regulators and oil industry lobbyists they wanted more information about the use of acid to increase flows in wells in a technique that is used more often in the state than the controversial fracking method.

California's century-old oil sector has come in for greater scrutiny as companies make early attempts to tap the Monterey shale, a deep formation that holds an estimated 15 billion barrels of oil - twice that of North Dakota's widely publicized Bakken shale.

Fracking - a technique that uses pressurized water to crack open rock formations and allow oil to flow to wells - may have become a better-known term because of its use around the country to extract shale gas and oil but the use of acid appears to be more extensive in California.

Oil companies in the state use hydrofluoric or hydrochloric acid to clean out well bores and to fracture solid rock. The technique is relatively old but its use has increased in the past decade.

"We have to get this right," state Senator Fran Pavley, who chairs the senate committee on natural resources and water, said at the hearing in Sacramento. "Regulators must also keep pace with changing technologies."

Environmentalists have focused on the danger that acid jobs present to workers and want more research on potential ecological damage.

Many millions of people could be affected by oil development in the Monterey shale, which runs across a vast expanse of the state from Los Angeles to south of San Francisco''.

The Debate over Debt and Growth

This article was published in the New York Times.

By Robert Polin and Michael Ash

''THE debate over government debt and its relationship to economic growth is at the forefront of policy debates across the industrialized world. The role of the economics profession in shaping the debate has always come under scrutiny.

In particular, attention has focused on the findings of the Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff, whose 2009 book, “This Time Is Different: Eight Centuries of Financial Folly,” received acclaim for its use of hard-to-find historical data to draw conclusions about the origins and nature of financial crises and how long it takes to recover from them.

Ms. Reinhart and Mr. Rogoff have published several other papers, including a 2010 academic article, “Growth in a Time of Debt.” It found that economic growth was notably lower when a country’s gross public debt equaled or exceeded 90 percent of its gross domestic product.

Earlier this month, we posted a working paper, co-written with Thomas Herndon, finding fault with this conclusion. We identified a spreadsheet coding error — which Ms. Reinhart and Mr. Rogoff promptly acknowledged — that affected their calculations of growth rates for big economies since World War II. We also asserted that the two of them erred by omitting some data and improperly weighting other statistics.In an Op-Ed essay and appendix last week, Ms. Reinhart and Mr. Rogoff denied those accusations.

We believe the debate has been constructive, because it has brought greater clarity over the ideas shaping austerity policies in both the United States and Europe.

Our critique of Ms. Reinhart and Mr. Rogoff — one they have not adequately rebutted — emphasizes the fact that the relationship between public debt levels and G.D.P. growth varies substantially by country and over time.

Especially significant here is the pattern for the most recent decade in their postwar data set: 2000 to 2009. There is no evidence in these most recent years for any drop-off at all in economic growth when public debt exceeds 90 percent of G.D.P. While Ms. Reinhart and Mr. Rogoff have been commended for tracking down historic economic records going back centuries, we believe that the correlation between debt and growth over the last decade is more informative and useful for assessing present-day policy concerns than data from the post-World War II era or, say, the Industrial Revolution.

We agree with Ms. Reinhart and Mr. Rogoff that the United States and Europe face extremely difficult challenges in trying to recover from the 2007-8 financial crisis and the Great Recession that followed. Sadly, in our view, they abetted, or at least failed to stop, the use of their scholarship by politicians who latched on to their findings — in particular the now discredited 90 percent figure — to call for severe cuts in government budgets and services, layoffs of public-sector employees and tax increases.

What this debate has demonstrated is that policy makers cannot defend these austerity measures on the grounds that public debt exceeding 90 percent of G.D.P. will consistently produce sharp declines in economic growth.

History suggests that there is some threshold beyond which piling on public debt definitively yields lower economic growth, but there is no consensus on what that threshold is, and the evidence suggests, in any event, that the United States and Europe are not anywhere close to it".

Robert Pollin and Michael Ash are professors of economics at the University of Massachusetts, Amherst.

From Reuters. Moody's could cut his Brazil's investment-grade credit rating

"Moody's is paying close attention to trends in the country's debt-to-gross domestic product ratio and potential growth dynamics now that the economy risks posting a third straight year of sub-par growth, senior credit officer Mauro Leos said in a telephone interview on Monday.

"The focus is on growth and fiscal policy," Leos said. "If there are indications that the debt-to-GDP ratio may not continue to decline as it has been the case, based on recent numbers, then it will be more difficult to support the contention that the outlook is positive."

An outlook revision could undermine investors confidence in Brazil at a time when doubts over the sustainability of President Dilma Rousseff's economic policies are mounting. Fellow rating company Standard and Poor's on June 6 revised its outlook on Brazil's "BBB" rating to negative, citing the country's eroding fiscal and growth trends.

After expanding an average 3.6 percent over the past decade, growth in Brazil's economy slowed to 1.8 percent since 2011 in the wake of supply bottlenecks and low levels of investment. The economy grew only 0.9 percent last year.

Central bank data show net public sector debt to GDP ratio has fallen steadily in the past decade to around 35 percent.

But Leos took into account another yard stick -- gross debt to GDP. He noted Brazil's gross debt to GDP ratio has remained at around 60 percent in the past two years-- above the level of countries rated the same level".

BoF Survey Fund managers allocations to emerging markets equities at its lowest point since December 2008

From Reuters

"The survey, which polled 248 managers with $708 billion in assets, found that a net 25 percent placed emerging markets as the region they would most like to underweight in the coming 12 months, the lowest ever reading.

Last week, emerging markets stocks posted their fifth straight week of losses''.

''The fears over China come after a Reuters poll on Tuesday signaled more optimism among equity analysts, and Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, reckoned the survey response looked overdone''.

"The lows in emerging market equity and commodity allocations suggest the market has over-positioned itself for a shock from China," he said. China was considered the greatest tail risk among those polled, followed by a potential failure of stimulus measures in Japan.

ast week, emerging markets stocks posted their fifth straight week of losses.

The fears over China come after a Reuters poll on Tuesday signaled more optimism among equity analysts, and Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research, reckoned the survey response looked overdone.

"The lows in emerging market equity and commodity allocations suggest the market has over-positioned itself for a shock from China," he said. China was considered the greatest tail risk among those polled, followed by a potential failure of stimulus measures in Japan.

Allocations to commodities reached a record low with a net 32 percent of those surveyed holding underweight positions.

Manish Kabra, equity strategist at Bank of America Merrill Lynch, outlined the implications of what looks like a disconnect.

"It's the sentiment that is running out of anything that is linked to emerging market or thecommodity cycle. If China actually surprises on the upside in the coming months there is a big bounce ready to come," 

From Reuters New Mining Bill in Brazil proposing new royalties up to 4%, double the current rate.

"Brazil unveiled today, a bill to reform the country's  mining code, proposing tthe increase of new royalties of up to 4%, double the current rate.
President Dilma Rousseff said royalties would be calculated on gross income rather than net earnings.
The bill also proposes creating a new mine regulatory agency, rules requiring holders of mining rights to develop their claims or lose them, and an auction system for some mining rights with concessions of 40 years, renewable for 20.
Rousseff, in a televised announcement, said the government wants mining companies to have contractual stability and security, and for concession renewals to be contingent on meeting investment and environmental goals.
The bill suggests royalty divisions between local and federal government be maintained, with 65 percent for municipalities affected by mining, 23 percent for producing states and 12 percent for the federal government".

The True All-In Cost To Mine Gold

"For gold equity investors, understanding these costs are important because it gives insight into how much the industry spends to produce each ounce of gold versus a specific company. This allows investors to compare a specific company to the industry as a whole and benchmark its performance.
If it costs more to mine a commodity than the market is willing to pay for it, eventually producers will stop producing the commodity and close up shop. This does not mean that the price of gold cannot fall below the cost of production; it means that it would be unsustainable for it to stay there for long periods of time. Thus providing a long-term floor for the price of the commodity. 

Publicly traded gold companies offer investors a quick non-GAAP formula to give investors a glimpse at their costs per ounce called "cash costs." This measure may vary slightly from company to company (it is non-GAAP after all) but it is generally their "mining costs" (cost to operate their mines, process the ore, pay miners, etc.) divided by the amount of gold equivalent ounces 
produced.
But unfortunately this measure is misleading, and selectively reports some costs and ignores other, which ends up not giving investors a true picture into the cost it takes to produce an ounce of gold.
Some miners have begun to offer a new measure of costs called the "all-in sustaining cash costs''

Calculating the True Mining Cost of Gold - Our Methodology

To calculate the true costs to mine each ounce of gold, we use the total costs reported for the quarter (revenues minus net income before taxes) and then we add taxes to come up with total costs. Finally, we remove gains/losses on derivatives and gains/losses on extraordinary investments, since these really have nothing to do with running and sustaining the company.

Then we calculate the number of gold-equivalent ounces produced by converting all by-product metals (such as silver, copper, zinc, etc) into gold by dividing the gold price by the price of the by-product. For example, if gold is trading at $1650 and silver $30, then every 55 ounces of silver would convert into one gold-equivalent ounce. We like using the average LBMA cost for the reporting quarter or year. Finally, when doing year-over-year comparisons, we use the same conversion ratio even if the price of the byproduct was different in the different quarter. The reason we do this is because this allows an even comparison when determining the cost of production - we do not want one quarter's jump in copper prices to affect a year-over-year comparison in gold prices.

What are the Industry's Gold Costs?

We have compiled all the numbers for gold companies we analyze for 2011 and 2012.  The companies included (with links to their associated detailed calculation pages) are:Barrick Gold (ABX), Goldcorp (GG), Yamana Gold (AUY), Newmont Mining(NEM), Agnico-Eagle (AEM), Eldorado Gold (EGO), Gold Fields (GFI), Allied Nevada Gold (ANV), Randgold (GOLD), Alamos Gold (AGI), Kinross Gold(KGC), and Iamgold (IAG).

The first thing gold investors should note is that the true all-in costs to produce an ounce of gold (excluding write-downs) was $1287 for 2012, which is around a 10% increase in costs over 2011. The true gold cost of $1287 is much higher than the reported "cash costs" (under $1000 for most miners) and gives gold miners very limited profit at current gold prices ($1400 per ounce as of the publishing of this article). This gives investors a much better picture that aligns with gold miner share prices and earnings, which have both been dropping - when considering margin pressures this makes sense.

Gold mining investors should be very cautious about which miners to invest their money in. It will be a very ugly environment for gold miners until the gold price recovers, and some face significant liquidity pressures and we expect mine closures if gold stays below $1400 for very long. Look for miners that have low cost structures and have a lot of cash on their balance sheets, which can help them weather this storm. Avoid miners that have high production cost structures, low cash, and high debt these are the types of companies that will struggle to survive.

 GOLD may fall to the $1200's due to aggressive short-term trading, but it is not sustainably produced at these levels. Analysts calling for gold to fall below $1000 per ounce on a longer-term basis simply do not understand the industry and its cost structure. At those levels only a small percentage of gold mining is profitable and many mines would be shuttered and projects cut".

Source Hebba Investments, Seeking Alpha June 17, 2013

           

BBC reports G8 leaders agree tax evasion measures

Leaders of the G8 major economies have agreed new measures to clamp down on money launderers, illegal tax evaders and corporate tax avoiders.

LOUGH ERNE DECLARATION 

Private enterprise drives growth, reduces poverty, and creates jobs and 

prosperity for people around the world. Governments have a special 

responsibility to make proper rules and promote good governance. Fair taxes, 

increased transparency and open trade are vital drivers of this. We will make a 

real difference by doing the following:

1. Tax authorities across the world should automatically share information 

to fight the scourge of tax evasion.

2. Countries should change rules that let companies shift their profits across 

borders to avoid taxes, and multinationals should report to tax authorities 

what tax they pay where.

3. Companies should know who really owns them and tax collectors and 

law enforcers should be able to obtain this information easily. 

4. Developing countries should have the information and capacity to collect 

the taxes owed them – and other countries have a duty to help them.

5. Extractive companies should report payments to all governments - and 

governments should publish income from such companies.

6. Minerals should be sourced legitimately, not plundered from conflict 

zones. 

7. Land transactions should be transparent, respecting the property rights of 

local communities. 

8. Governments should roll back protectionism and agree new trade deals 

that boost jobs and growth worldwide.

9. Governments should cut wasteful bureaucracy at borders and make it 

easier and quicker to move goods between developing countries.

10.Governments should publish information on laws, budgets, spending, 

national statistics, elections and government contracts in a way that is 

easy to read and re-use, so that citizens can hold them to account.

18 June 2013

New York Times Reports Initial talks for a trade treaty between the U.S. and EU

 ''European Union leaders and President Obama announced on Monday the start of negotiations for a far-reaching trans-Atlantic trade deal.
Mr. Obama said that the first round of talks would begin next month in Washington between the United States and the 27-nation Europe Union. “The U.S.-E.U. relationship is the largest in the world — it makes up almost half of global G.D.P.,” Mr. Obama said, referring to gross domestic product. “This potentially groundbreaking partnership would deepen those ties.”
A trade pact between the United States and the European Union has long been an ambition of policy makers. According to the European Commission, the executive arm of the bloc, such a deal would allow European companies to sell an additional 187 billion euros, $250 billion, worth of goods and services a year to the United States''.

WSJ reports today China's Central Bank reluctance to add liquidity

''In a sign that China's central bank isn't going to relax the pressure soon, the People's Bank of China refrained from adding cash to the financial system Tuesday. It normally conducts so-called open market operations on Tuesdays and Thursdays by adjusting short-term loans to commercial lenders, which controls the supply of credit''.
''An interbank benchmark for funding costs called the seven-day repo rate was at 6.82% Tuesday, close to the 6.89% rate at Monday's close and a record 6.90% on Friday. It had averaged around 3.30% this year before the liquidity crunch began at the end of last month''.

''Analysts also say the cool response from the central bank may mean it regards the current funding squeeze more as a brief episode affecting only certain parts of the economy. Complicating the picture, data Tuesday showed property prices continued to rise in May, which may hobble policy makers' appetite to ease credit as they attempt to clamp down on the stubbornly high real-estate prices that risk a bubble.

"The authorities have plenty of firepower to address the liquidity problem and provide liquidity to the interbank market," said Fitch Ratings senior director Charlene Chu. She says that because the central bank isn't pumping cash into the system, that suggests it is tolerant of the situation so far''.