Friday 18th October 2019

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Posts tagged ‘iran’

The end is still nigh

August 21st, 2019

So James Rickards found time to write another doomsday survival guide

by Greg Klein

So James Rickards found time to write another doomsday survival guide

 

St. John wrote just one Book of the Apocalypse but James Rickards has finished six so far. His most recent, Aftermath: Seven Secrets of Wealth Preservation in the Coming Chaos, offers a warning and advice for the economic end times that he considers imminent. Exactly how and when that’ll happen, he doesn’t say. But this book continues his exposé of the world’s monetary system: “the real system as distinct from the one elites would have you believe exists.”

What Aftermath offers in addition to Rickards’ trademark pitch for gold are some very general tips on investment and asset allocation—so general, however, that they hardly merit a book. This volume’s strength comes in its essays, discussions and digressions on a variety of (usually related) topics.

Among the most important is public debt, primarily that of the U.S. Long unsustainable, the burden groans under a 300% increase over 20 years, currently fuelled by Donald Trump’s revival of trillion-dollar deficits. He gets away with it, though: “Entitlements and defense both get to gorge at the trough, so there’s no dissension in D.C. The only loser is the country.”

So James Rickards found time to write another doomsday survival guide

Among the less-acknowledged causes of American debt are student loans, “now more than 50 percent larger than the junk mortgage pile in the last financial crisis” and growing. Also growing are the default rates, already more than three times that of mortgages at the height of the 2007-to-2008 crisis.

Debt hardly distinguishes the U.S. from other countries, and the entire world remains at risk from contagious sovereign defaults in emerging countries. Rickards’ at-risk list might surprise some readers.

China is a Ponzi like Madoff. China has trillions of dollars in external dollar-denominated debt, wealth management products, bank loans, intercompany loans, and other financially engineered arrangements that can never be repaid. If everyone with a claim on China wanted her money back, China couldn’t come close to satisfying even a small portion of those seeking liquidity.

…. Apart from borrowed money, wasted infrastructure investment, and fictitious accounting, there is no Chinese economic growth miracle.

While the U.S. denominates its debt in U.S.-printable U.S. dollars, money-creation won’t work forever. The only thing supporting fiat currency is confidence, and that can’t last, Rickards argues. History, psychology and common sense demonstrate that “confidence in money is fragile, easily lost, and impossible to regain.”

Spreading to all reserve currencies, “this loss of confidence will be exacerbated by malicious efforts on the part of Russia, China, Turkey, Iran, and others to abandon dollars entirely and to bypass the U.S.-dollar payments system.”

This accumulation of risk factors is entirely new, and outside the experience of any trader or quant.

Contagion demonstrates one danger of interconnected systems, but exceedingly complex technology and financial instruments intensify the peril. Flash crashes only hint at the possibilities, Rickards suggests. “Markets now confront a lethal brew of passivity, product proliferation, automation, and hypersynchronous behavioral responses. This accumulation of risk factors is entirely new, and outside the experience of any trader or quant.”

Getting back to currencies, the author presents intriguing evidence that a gold standard is actually in place. Using research from D.H. Bauer, Rickards says that special drawing rights, the International Monetary Fund reserve asset that’s speculated to replace the U.S. dollar as the world currency, have been pegged to gold. Bauer’s data shows yellow metal hovering around SDR900, fluctuating no more than SDR50 in either direction.

 An important pillar of a global monetary reset seems already in place.

Rickards blames China. “Even if the peg is nonsustainable in the long run, it’s a clear short-run signal that China is betting on the SDR and gold, not the yuan or the dollar. An important pillar of a global monetary reset seems already in place.”

Sometimes digressive in his subject matter, Rickards’ other topics include an interesting perspective on the Uranium One purchase. He served on a CIA advisory board as manoeuvres by Frank Giustra and Bill and Hillary Clinton led to the company’s takeover by Rosatom. “It’s as if the deal were being handled inside the intelligence community on a special track, precisely to avoid the analysis our group was formed to provide.”

Another digression looks at the disturbing prevalence of surveillance, data mining and choice architecture to monitor and manipulate citizens. “Neofascist” China plans 600 million surveillance cameras, digital facial and gait recognition software and internet monitoring to reward its people for good deeds or penalize them for offences ranging from smoking in public to tweeting verboten thoughts.

Most plans for catastrophe will fall apart in the first five minutes of being needed.

He also criticizes some alternative end time strategies. “Most plans for catastrophe will fall apart in the first five minutes of being needed.” Survivalists holed up in bunkers will face “pop-up militias,” he warns. The ultra-rich, with plans to flee to their luxurious New Zealand estates, haven’t considered how they’ll get to the airport, how they’ll refuel their private planes en route, whether they’ll get past the NZ military on arrival, or how they’ll ensure the loyalty of their private security guards. The catastrophe will be worse than they imagine.

Even so, too many of his digressions are unnecessary, such as his tedious account of being locked out of his car, an unnecessarily long rebuttal of behavioural psychology and the rather weird discussion of finite size involving King Kong, Godzilla, skyscrapers and whales.

“Investors should not focus on the cause of the collapse (it’s a long list and the timing is uncertain),” he notes. Certainly the book’s rambling nature belies any sense of urgency. He even hopes to finish another volume before the catastrophe finally hits. That would be his seventh on the subject since 2012.

‘The Asian century’

April 4th, 2019

East has surpassed West, whether the West knows it or not, says Peter Frankopan

by Greg Klein

East has surpassed West, whether we know it or not, says Peter Frankopan

“Silk roads” can refer to the process of connecting people and cultures
through trade, according to Peter Frankopan’s recently published book.

 

Less than two years ago tensions along an especially sensitive border area sparked fighting between Chinese and Indian troops. Outside Asia, who knew? “As most of the world focused on the Twitter account of the US president and the circus surrounding Brexit, the threat of the two most populous countries on earth going to war was not just a possibility, it looked like becoming a fact,” writes Peter Frankopan. An uneasy truce eventually stalled hostilities but the West’s ignorance of the wider world remains. That’s both symptom and cause of the West’s decline, the author says.

The decisions being made in today’s world that really matter are not being made in Paris, London, Berlin or Rome—as they were a hundred years ago—but in Beijing and Moscow, in Tehran and Riyadh, in Delhi and Islamabad, in Kabul and in Taliban-controlled areas of Afghanistan, in Ankara, Damascus and Jerusalem. The world’s past has been shaped by what happens along the Silk Roads; so too will its future.—Peter Frankopan

Relatively few Westerners realize the extent of China’s Belt and Road Initiative. Actually a complex suite of alliances concerning resources, infrastructure, trade, security and even culture, the BRI forms just part of an Asian awakening that’s shifting the planet’s centre of importance while strengthening Eastern influence beyond Asia and Africa to make inroads into Europe, the Americas, the Arctic, cyberspace and outer space.

That’s the message of historian Frankopan’s latest book, The New Silk Roads: The Present and Future of the World. While present and future aren’t normally the precinct of historians, it was historical perspective that brought Frankopan to the topic. In context, Western global supremacy has been a recent, short-lived development.

Since announcing the BRI in 2013, China has promised nearly $1 trillion, mostly in loans, for about 1,000 projects, Frankopan reports. That money could “multiply several times over, to create an interlinked world of train lines, highways, deep-water ports and airports that will enable trade links to grow ever stronger and faster.”

That would enhance China’s access to, and control over, resources ranging from oil and gas to mines and farmland; provide markets for Chinese exports including surplus steel, cement and metals, as well as manufactured goods; create projects for Chinese contractors; secure foreign ports and other strategic commercial and military locations; and build closer foreign alliances for geopolitical as well as economic benefits.

Backed by Chinese money and local sovereign debt, Chinese companies have pushed roads, railways, power plants, grids and pipelines through Africa and Asia at a much faster rate than ever seen through Western aid. Of course that can put the supposed beneficiaries at the mercy of their Chinese creditors.

East has surpassed West, whether we know it or not, says Peter Frankopan

In 2011, for example, China forgave neighbouring Tajikistan’s infrastructure-related debt in exchange for several hundred square kilometres of territory. A $7-billion rail line in Laos represents over 60% of the country’s GDP. A rail-building boom in Angola left citizens with a per capita debt to China of $754 out of a per capita income of $6,200. In 2017 a Chinese company got a 99-year lease in lieu of debt on the Sri Lankan port of Hambantota, a strategic site for both commercial and military reasons. Other ports in Maldives, Vanuatu, the Solomon Islands and Djibouti could face a similar fate.

Even so, something like 85% of BRI projects “have proceeded without difficulty,” Frankopan states. China conducts many of its most opportunistic acquisitions openly, like buying a controlling interest in Piraeus, the Athenian port since antiquity. Other seaport purchases have taken place in Spain, Italy and Belgium.

Strategic ports and an alliance with Pakistan help position China in the Indian Ocean, while China continues to expand its South China Sea presence by building artificial islands for military bases. This isn’t just “the crossroads of the global economy” but a ploy to extend military power thousands of miles farther, according to a U.S. Navy admiral. China’s ambitions continue in the disputed East China Sea, location of the 2010 Senkaku conflict, in which China’s rare earths tactics demonstrated yet another weapon in the country’s arsenal.

As an economic powerhouse as well as a “geopolitical alternative to the US,” China can profit from American sanctions on countries like Iran. Russia too challenges U.S. policies towards countries like Saudi Arabia and Turkey, while the latter shows its willingness to trade with Iran and buy arms from Moscow.

Military co-operation can create unlikely allies. Last summer, in Russian’s largest war games since 1981, Beijing contributed 30 fighter jets and helicopters along with more than 3,000 troops. Included in the exercises were simulated nuclear attacks.

While futurologists and networking pioneers often talk about how the exciting world of artificial intelligence, Big Earth Data and machine learning promise to change the way we live, work and think, few ever ask where the materials on which the digital new world [depends] come from—or what happens if supply either dries up or is used as a commercial or a political weapon by those who have a near-monopoly on global supply.—Peter Frankopan

Even India, America’s strongest Asian ally and the Asian country most wary of Chinese expansion, stands to undermine U.S. influence with proposed transportation connections and free trade with Iran and Afghanistan.

Yet obvious perils weaken any notion of a united Asia working harmoniously towards a common goal. Russian-Chinese military co-operation doesn’t preclude Moscow stationing its 29th Army 3rd Missile Brigade, with nuclear missile capabilities, near the Chinese border.

Time will tell whether other countries can overcome the Eurasian chaos that inspired this maxim of Canadian miners: “Never invest in a country with a name ending in ‘stan’.”

Then there’s extremist Islam. Uighurs from western China have fought in Syria for the Islamic State in numbers estimated “from several thousand to many times that number.” China risks wider Muslim anger by running a gulag archipelago for Muslims. The country’s Xinjiang Uygur Autonomous Region hosts “the largest mass incarceration of a minority population in the world today.”

Oddly enough for someone who knocks Western insularity, Frankopan seems to share the current preoccupation with the U.S. president. Among Frankopan’s criticisms of the West is its supposed opposition to immigration, even though that’s a marginal position within liberal countries but official policy in most of the East.

Nor does Frankopan mention the weird ideological zealotry that threatens to destabilize if not destroy the West from within.

Still, history’s greatest value might be perspective on the present. This historian’s view of the present and future can help Westerners understand their not-so-esteemed status in the Asian century.

Authors William Dalrymple and Anita Anand consider responses to India and Pakistan’s rival claims to the Koh-i-Noor diamond, now part of Britain’s Crown Jewels

October 17th, 2017

…Read more

Pomp and plunder

September 23rd, 2017

Indians increasingly dominate diamonds, but their most fabled stone remains elusive

by Greg Klein

Maybe it’s fitting that Indians, said to be the first to truly appreciate the gems, have returned to such prominence in the global diamond trade. The country’s alluvial finds constituted the world’s main source until supplanted by Brazil in the early 18th century. Although Indians originally held rubies and emeralds in even higher esteem, their admiration for diamonds spread to neighbouring cultures and beyond. The story of the Koh-i-Noor shows how one stone came to be associated not only with beauty, majesty and mystery but, more recently, with controversy too.

Indians increasingly dominate diamonds, but their most fabled stone eludes them

By no means the largest diamond ever found, it’s nevertheless been credited with good luck and blamed for misfortune. Some viewers found it dazzling for its brilliance, others were disappointed by its dimness. But it passed through a number of empires, often amid horrific bloodshed, before ending up in Britain’s Crown Jewels. Authors William Dalrymple and Anita Anand recount the rock’s odyssey in their recently published Koh-i-Noor: The History of the World’s Most Infamous Diamond.

While revelling in the myths, legends, propaganda and guesswork associated with the stone, the writers try to set the historical record straight with previously untranslated documents and new gemmological research that reconstructs the Koh-i-Noor as a rough stone.

Ancient accounts refer to a number of large Indian diamonds which could include the Koh-i-Noor. Some were bigger and believed to transmit supernatural power, but the Koh-i-Noor eventually prevailed as the most renowned. Even so, the first definite written reference doesn’t come until the mid-18th century, referring back to northern India’s 17th-century Mughal emperor Shah Jahan.

Such was his captivation for precious stones that they all but monopolized his attention at a banquet featuring a dozen dancing girls of “lascivious and suggestive dress, immodest behaviour and posturing.” In 1635 he made the Koh-i-Noor the centrepiece of his Peacock Throne. An especially lavish piece of furniture meant to evoke the Koranic Solomon’s throne, it cost twice as much to build as the Taj Mahal.

Indians increasingly dominate diamonds, but their most fabled stone eludes them

The Queen Mother’s crown features the Koh-i-Noor
within a Maltese cross between two fleurs-de-lys.

Eventually the Mughals dismantled their seat of ostentation and the Koh-i-Noor became in turn a symbol of power for Persians, the Durrani Empire of Afghanistan and the Sikh empire, as each looting victor became a looted victim. Finally an 1849 treaty ending the Second Anglo-Sikh War ordered a terrified 10-year-old Maharajah Duleep Singh to surrender the celebrated stone to Queen Victoria.

Surviving a perilous voyage, the rock went on display to widespread public anticipation at the 1851 Crystal Palace Great Exhibition. It bombed.

Prince Albert tried to enhance the stone’s effect with gas lamps and angled mirrors. That fizzled too, as the props “turned the display into a sauna, causing visitors to swoon after only a few minutes. The press began to blame the Koh-i-Noor for being difficult, as if it were some kind of contrary and disappointing child.”

Albert then summoned experts who agreed that the diamond “was flawed at its very heart. Yellow flecks ran through a plane at its centre, one of which was large and marred its ability to refract light.” The authorities disagreed, however, on whether the gem could be re-cut without wrecking it. Eventually two of the world’s top pros arrived from Amsterdam and set to work with a state-of-the-art steam-powered grinder in a specially designed shop.

Their bill, for a few months of work, amounted to over a million pounds in today’s terms. Despite assurances to the contrary, moreover, they savaged the stone’s size from 190.3 carats to 93 carats. But dazzle it did. With an unusual symmetry of 33 facets each above and below the gem’s “table,” the cutters redeemed both the stone’s beauty and its public image.

Indians increasingly dominate diamonds, but their most fabled stone eludes them

It helped Victoria dazzle too, in those years before she went into morbid mourning. Waltzing with Napoleon III before 1,200 guests at Versailles, she wore a white satin gown and a diadem adorned with almost 3,000 small diamonds. Among them, the great K “gleamed like a third eye.” Other royal figures ordered it mounted and re-mounted on various regalia until the Queen Mother had it placed in its current crown. She sported the headgear at her daughter’s coronation. But for some reason (maybe trepidation about its supposed curse, the authors suggest), Elizabeth II has never worn it.

Since then, calls for its return have come from competitors, among them India, Pakistan and even the Taliban.

“Others have suggested that it be cut up once again and a piece each given to all those countries that make a credible argument for its return—including modern-day Iran and Afghanistan. But it is most unlikely that such Solomonic wisdom would ever be entertained by the British, nor indeed would it satisfy any of the various parties involved.”

The most persistent calls come from Indians. Equally tenacious has been Britain in its refusals. On a 2010 visit to Punjab, the authors relate, then-PM David Cameron said, “If you say yes to one you suddenly find the British Museum would be empty.”

Yet the country where the great diamond first came to prominence returned to diamond prominence itself late last century. Ironically that happened not due to gems of magnificence but through smaller, lower-quality stones originating in other countries and disdained by the rest of the trade. Through such humble beginnings, the west coast city of Surat now handles more than 80%, or even 90%, of the world’s cutting and polishing work. Mumbai, 290 kilometres south, hosts the world’s biggest diamond bourse. In the world diamond-sorting capital of Antwerp, Indians conduct about three-quarters of the business.

As for rough supply, Rio Tinto NYSE:RIO walked out on the country’s best hope for a major diamond mine in February, when the company handed ownership of the Bunder deposit, once anticipated for 2019 production, to the state government of Madhya Pradesh.

Meanwhile the Dalrymple/Anand book has reportedly spawned renewed activity in the search for India’s alluvial diamonds, maybe even another Koh-i-Noor, with all its blessings and curses.

Infographic: Countries of origin for raw materials

November 16th, 2016

Graphic by BullionVault | text by Jeff Desjardins | posted with permission of Visual Capitalist | November 16, 2016

Every “thing” comes from somewhere.

Whether we are talking about an iPhone or a battery, even the most complex technological device is made up of raw materials that originate in a mine, farm, well or forest somewhere in the world.

This infographic from BullionVault shows the top three producing countries of various commodities such as oil, gold, coffee and iron.

Infographic Countries of origin for raw materials

 

The many and the few

The origins of the world’s most important raw materials are interesting to examine because the production of certain commodities is much more concentrated than others.

Oil, for example, is extracted by many countries throughout the world because it forms in fairly universal circumstances. Oil is also a giant market and a strategic resource, so some countries are even willing to produce it at a loss. The largest three crude oil-producing countries are the United States, Saudi Arabia and Russia—but that only makes up 38% of the total market.

Contrast this with the market for some base metals such as iron or lead and the difference is clear. China consumes mind-boggling amounts of raw materials to feed its factories, so it tries to get them domestically. That’s why China alone produces 45% of the world’s iron and 52% of all lead. Nearby Australia also finds a way to take advantage of this: It is the second-largest producer for each of those commodities and ships much of its output to Chinese trading partners. A total of two-thirds of the world’s iron and lead comes from these two countries, making production extremely concentrated.

But even that pales in comparison with the market for platinum, which is so heavily concentrated that only a few countries are significant producers. South Africa extracts 71% of all platinum, while Russia and Zimbabwe combine for another 19% of global production. That means only one in every 10 ounces of platinum comes from a country other than those three sources.

Graphic by BullionVault | posted with permission of Visual Capitalist.

December 23rd, 2015

The five biggest China deals this year NAI 500
Ron Paul: Who needs the Fed? GoldSeek
B.C. mines inspector makes 19 recommendations over collapse of tailings pond Stockhouse
Eric Coffin calls out the Fed’s biggest mistake and what you can do to protect your portfolio Streetwise Reports
Iran is a complicated opportunity for mining, business experts warn Industrial Minerals
Is this just the beginning of the euro crisis? Equities Canada

December 22nd, 2015

The five biggest China deals this year NAI 500
Ron Paul: Who needs the Fed? GoldSeek
B.C. mines inspector makes 19 recommendations over collapse of tailings pond Stockhouse
Eric Coffin calls out the Fed’s biggest mistake and what you can do to protect your portfolio Streetwise Reports
Iran is a complicated opportunity for mining, business experts warn Industrial Minerals
Is this just the beginning of the euro crisis? Equities Canada

December 21st, 2015

Ron Paul: Who needs the Fed? GoldSeek
B.C. mines inspector makes 19 recommendations over collapse of tailings pond Stockhouse
Eric Coffin calls out the Fed’s biggest mistake and what you can do to protect your portfolio Streetwise Reports
Iran is a complicated opportunity for mining, business experts warn Industrial Minerals
Is this just the beginning of the euro crisis? Equities Canada
Commodity faithful see some hope next year after 2015 heartbreak NAI 500

December 18th, 2015

B.C. mines inspector makes 19 recommendations over collapse of tailings pond Stockhouse
Eric Coffin calls out the Fed’s biggest mistake and what you can do to protect your portfolio Streetwise Reports
Iran is a complicated opportunity for mining, business experts warn Industrial Minerals
Is this just the beginning of the euro crisis? Equities Canada
John Mauldin interviews George Friedman GoldSeek
Commodity faithful see some hope next year after 2015 heartbreak NAI 500

December 17th, 2015

Eric Coffin calls out the Fed’s biggest mistake and what you can do to protect your portfolio Streetwise Reports
Iran is a complicated opportunity for mining, business experts warn Industrial Minerals
U.S. Fed raises interest rates for first time in seven years Stockhouse
Is this just the beginning of the euro crisis? Equities Canada
John Mauldin interviews George Friedman GoldSeek
Commodity faithful see some hope next year after 2015 heartbreak NAI 500