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Archive for November, 2011

The other side of Gold mines in Peru

Friday, November 11th, 2011

Open mine in Madre de Dios

Mother Nature has been extremely generous with Peru, and has presented it with a valuable treasure such as its exuberant Amazon Forest and in the depths of its earth, the presence of the coveted golden mineral, which has given rise to the existence of numerous mines and gold washing places in the country.

Over the years, many national and international companies have heard of the treasures which may be extracted in Peru and have settled in its provinces. In this process methods have evolved and they have the Escuela de Minas, whose object is to train competent professionals, capable of offering a better organisation in order to guarantee the optimum achievement of the mining companies’ aims.

But there is another side to the story, beside the great mining companies and their expensive equipment and potential, sits the illegal extraction of this mineral in far away areas of the Amazon Forest, where control by the Government environmental and financial agencies has proven difficult. There are different reasons why this illicit activity has arisen such as shortage of employment in rural areas, increase in the gold price and tax avoidance which in turn results in an increase in profits. But all this is being done without control and the heads of these illegal extraction operations do not take into consideration environmental conservation issues provoking in turn further erosion (than that caused by any mineral extractions, even when using appropriate means) and an increase in the contamination of rivers as mercury and cyanide are being poured inappropriately into water sources.

In this scenario, problems are not only environmental but also social. According to studies undertaken by Peruvian authorities, the business of illegal extraction creates problems such as child prostitution (in the area known as Madre de Dios, it is thought that over 300 children work in prostitution in bars near the illegal mines) and that others are subject to child labour, having to work from a very early age without being paid for it. Other consequences of illegal extractions are smuggling and illegal trafficking of arms.

It is not just a matter of gold. In these crossroads, the wish of the few to quickly enrich themselves provokes serious problems, which may be more difficult to eradicate than illegal mining itself.

Article by : Lizette Paternina

French banks “ready to fail”

Monday, November 7th, 2011

The stock Market is not the only worry for the BNP Paribas.

The french bank BNP Paribas is taking radical steps to adapt to the economic and regulatory situation.

Interviewed recently, its Managing Director Baudoin Prot announced a write-down of 60% on Greek securities held (however he did say that Greece was not a problem in the past).
More surprising, BNP has implemented a programme for the massive transfer of government bonds held namely in countries such as Italy, Spain or Portugal, as a result generating a loss of 362 million Euros.

This raises two questions.
The first being who is going to buy these bonds that BNP no longer wants? The second question is why BNP in particular, but banks in general, continue to encourage their customers to invest massively in life insurance contracts in Euros even though the great majority are made up of more and more risky government bonds.

The bank reduces its own exposure to sovereign debt but not doesn’t reduce the exposure of private individuals.

Lastly, the follow-up of the strategy for reducing the size of the balance sheet (clearly BNP voluntarily reduces its volume of activity and commitments) includes a massive redundancy plan in the BFI (financing and investments banks) and this will certainly be the first of many which will affect French banks and others around the world in the next few months.

All of these actions have generated a quarterly fall in net profits of 71% . But as the same Baudoin Prot said a few weeks ago: “the only problem for BNP Paribas is its market price”.

Finally, you still need to bare in mind that the important essentials are not affected as the Managing Director declared that “nothing seems to indicate following a path cancelling shareholders’ dividends”.

Phew! I’m greatly reassured. Aren’t you?

Article by Charles Sannat
Director of Economic studies
AuCOFFRE.com

European interest rates to stay low

Friday, November 4th, 2011

Last May in an article with the heading “Has Jean Claude Trichet gone mad”, we explained why the move to increase interest rates initiated at that time had, in our eyes, little chance of being sustainable.

Confirmation came on November 3rd, 2011 with a fall in the official market rate of the European Central Bank, the ECB.

On taking up his post, its new governor, the Italian Mario Draghi, decided for his baptism of fire in the media to lower the interest rate by 0.25 points – this whilst he is supposed to give his first official press conference next Thursday.

What is necessary to understand by the taking of this decision that we had largely anticipated, is that Europe and generally all of the said developed countries have now fallen into the “trap of low rates”.

The best example to illustrate this phenomenon “of the trap of low rates” is of course Japan which for several decades now has been in the situation of financial impossibility with regard to increasing its interest rates.

To finance not the refunding of the debt but solely the interest on the debt, it is vital that the rates should be as close as possible zero. The slightest increase puts the public finances of all nations in danger.

The second reason it is not possible to raise rates is that there is quite simply no growth, nor return to growth, and that here too Japan perfectly illustrates this situation of lack of growth over the very long term.

This decision is excellent for gold. This news is excellent for the banks which will be able to increase their margins through cheaper recapitalization with the ECB and by lending at a higher price to their customers (reconstitution of margins). This news is good for companies because by lowering rates that can make it possible for the euro to drop slightly compared to the dollar giving some breathing space to our exporters. This news is excellent for borrowers at variable rates. This news is excellent to limit and support the risks of a new unavoidable recession (which the ECB expects) in Europe because of the massive austerity plans affecting almost all of the European countries.

The Italians had nicknamed Mario Draghi… super Mario! Our new governor of the ECB has only to finally announce an “unconventional program of quantitative easing” to ignite a bullish trend in the financial markets. This barbaric expression simply means that the ECB would use the money printing instrument according to needs. Like Switzerland. Like the USA. Like the United Kingdom.

The message communicated today by Mario Draghi is an important reorientation. We have from now on one certainty. Rates can no longer go up. We expect for the next few months that the money printing machines will be brought into use. If the attacks continue against Italy, it will be the only solution possible.

Until now the Germans totally reject this solution. If the situation worsens, they will have to accept the recourse for the printing of money, or… leave the euro.
Germany’s exit from the euro is the less considered scenario and yet for us it is the one that is most likely to occur.

It would undoubtedly be the best solution to put an end to the European psychodrama.

Translated from an article by Charles SANNAT
Director of AuCoffre.com
Economic studies
www.aucoffre.com

Crisis, what crisis?

Wednesday, November 2nd, 2011

The G20 in Cannes is in crisis as its host President Sarkozy remains distracted by the Greek referendum announcement and the implications for his cunning Franco-German solution, hatched with best chum Chancellor Merkel to the European debt crisis.
The G20 group accounts for 80% of global wealth but also brings together huge differences in perception of where the world is at.

The Chinese have 3 Trillion dollars to help out the troubled western economies if it chooses. But then the Chinese are a nation of savers, hard earned cash they earn from long days of toil, often in self-enterprise ventures, is regularly put aside as investment for their future. On average the Chinese put aside 25% of monthly income for a rainy day. However their view of our crisis is somewhat different as one guy likened it to “ a bankrupt wealthy old man asking a poor man for money”. Some Chinese also remember the past experiences of decadent Western capitalism and imperialism. As Holly Williams from Sky News said “They don’t see why they should invest their hard-earned savings to help out economies and people to continue to have much more than they ever have had or ever will.

It is worth remembering that the average Chinese citizen lives below the poverty line and the new found wealth and middle class does not benefit the majority of China’s population – just like every other country you may care to analyse. The distribution of wealth always remains top heavy to keep our governing powers in the manner they’re accustomed and the bankers with enough profits to pay for it as well as their own hefty bonuses.

If you want to know to whom all the “money” has been paid that has resulted in this planet-sized debt then look no further than Goldman Sachs, their lawyers, all ex-heads of state and the personal fortunes of other prominent world politicians over the last 40 years, the Federal Reserve, the history of the Rothschild fortune and the IMF.

Will this debt ever be properly accounted for or ever paid back? No and No.

That’s why China does not want to lose value of its accrued wealth to the whims of US or European debt. Both lack a credible and coherent plan. Obama and Sarkozy have both got one eye firmly on domestic matters as they prepare for re-election next year.

Greek Tragedy?

The joke is they were all so smug thinking they’d sorted out a plan to buy time with Greece and then Papendréou goes and drops a bombshell with his referendum offer as a democratic gesture to the Greek people – oh yeah!
Trouble is he doesn’t actually care because he has nothing to lose and he knows what is coming as we wrote in “Greeks prepare a coup d’état ?”

He has taken this opportunity, his last on the European and G20 stage, covered by the world’s media, to play centre stage and enjoy his moment. He was called before the Headmaster and Headmistress of the Franco-German alliance, to explain his unilateral approach to life and to discuss the question that will be put on the referendum.
He indicated that sovereignty of Greek affairs remained the jurisdiction of the Greek parliament and its decisions are binding before all others and not open to outside interference. So not your average pro-European stance!! As I’ve said he’s got nothing to lose and knows what is coming.

US upgrades priority on plans for Iran airstrike

I also heard that the US and therefore by default the UK as well are bringing forward their plans to conduct air strikes on Iran. Seems they’re centrifuges are back in business as is the possibility of producing weapons grade nuclear material. Looks like they’ll hit their not-so-secret secret mountain production facilities. Intelligence reports backed up by International Atomic Energy Agency gives this story more than usual credibility. The word on the street is that Obama is nervous.
Israel says report proves “we told you so” for years that Iran posed a significant threat to its existence.

UK General strike will paralyse a nation

In the UK a massive general strike looks set to take place at the end of the month over public sector pension reform plans. The nation could be brought to a standstill with a 3 Million walkout planned. Negotiations between the Government and Trade Union leaders are not making any progress even if there is an improved offer on the table. The taste of austerity is always bitter.

Silvio doesn’t want to spoil a party

Finally Italy rushed out a message on the eve of the G20 to announce a package of austerity measures no doubt to comply with some previous handshake and just to make sure drinks with the others went well in Cannes! We’ll believe them when they’re implemented, successful and have brought about the desired effect.

Ever wondered why the announcements of “new improved measures and offerings to us all” from politicians always get great airtime but we rarely see a “results show” – then again fixing figures is a way of life for some so don’t settle for less than “seeing is believing” proof.

Crisis, what crisis?

So the world, its economies, all nations and globalization are working fine and there’s nothing to worry about – fine – and remember in this case do nothing, just enjoy every moment of a beautiful daily life.

If you thought for one minute this may be in jeopardy would you insure against it? Just like you would a car against an accident so you can afford to replace it if necessary, or against a fire so you could rebuild your home?

How do you insure yourself against a crisis?

Transform some of your wealth into an inflation-proof, crisis-proof physical asset to protect yourself against devalued or worthless currencies, loss of income and employment, contagion, bank collapse and debt default.
The problem with hindsight is that it’s too late to take preventative action. Only acting before the event gives insurance cover so find out about owning gold and gold coins as a real alternative for a safe place to store wealth.

Greeks prepare a coup d’état ?

Wednesday, November 2nd, 2011

The problems for Greece just seem to get worse and with an insurmountable burden of debt, repayments and austerity measures there seems to be no reasonable or predictable way out for Greece for decades if not longer.
So they feel backed into a corner with little or no choice and therefore nothing much left to lose.
The announcement of a Greek referendum announced out of the blue by the Prime Minister seemed to surprise all the European Heads of State yet they have been in direct dialogue with him and each other constantly – so why haven’t they talked about it before?

Hidden agenda

Papandréou is gettin ready for action and implementation using the referendum as a smoke-screen.
It is no surprise therefore to learn that in the past couple of days the Greeks have replaced all of their senior military commanders; The Army, the Airforce and the Navy have all seen their chiefs sacked and replaced with officials much closer to the Papandréou cause – FACT. They have also removed various other members of the military hierarchy just below the Chiefs to ensure a thorough clearout of all positions of importance and their replacements are all hand picked partisans.

Referendum ou coup d’état?

So what lies behind his surprise decision to conduct a referendum of the people over the bailout proposals from the EU? Is it simply a return to democratic values, has he lost the plot? He has no other viable options?
In short he is preparing for a military coup d’etat which will impose strict marshall law on the streets, force people to work and result in Greece absolving itself of all known debt (how convenient), leaving the euro and the European Union. It is also possibly the only chance left to Greece which will otherwise be burdened with debt, austerity and a miserable existence for at least fifty years.

Think of it as logical – no more debt, no more EU rules, no more French and German rescue plans – just back to zero (which is better than where they are now at minus a Trillion euros and mounting with interest!)
This whole crisis has been a joke and the politicians and bankers continue to flood the media with lies that everything will be alright.
The Greeks are bust several times over and will never repay this debt , the interest or the loans it has received since the EU first bailed out their fraudulent, corrupt, chaotic, dishonest and shrinking economy.

It’s like someone having spent the night in a casino gambling away their fortune for their own private personal greed and gain nut because they didn’t win, lost everything the Casino says it’s OK and let’s you off with all the losses you owe them. Of course casinos are not this accommodating and you’ll end up crippled or worse for your troubles if you don’t honour your debt.
There again Greece, honour and debt appear here for the first time in a sentence otherwise they have no place together.

So what happens next?

Sarkozy and Merkel will continue to lie to the world that they have “the plan” to save everyone, Europe, the Greeks, the banks etc etc.
In reality their G20 is a scam and the promises they made last week to raise €1000 Billion for European bailouts to come is flawed – talk is so cheap with Sarkozy and he has a history of making great TV promises with a view to getting his face on TV a little more but the promises never arrive until he reiterates the same thing a year later as a new promise (usually most of the TV watching “sheep” have forgotten what he said before and of course the media play along with him as they must).

A military Junta in Europe

Greece will find it tough to go it alone but what other realistic chance does it have or does it deserve? None.
The problem does not end there because what will be the effect from the Billons of written-off Greek debt?
French banks will collapse, maybe British and German too. European states will have even more debt from the money they gave to bailout the Greeks which they will obviously never see again but still have to create / print / pretend to have had in the first place.
Once again their credibility will be demonstrated as none existant but they will continue to lie to anyone that listens – everything is alright! Yes, we remember they said that in 2008.

What is extraordinary is that the masses (or sheep) continue to believe in their politicians and bankers like it were some ordained right they have to tell us what to do. Fact is both will do anything they can to benefit themselves and very little to really help any of us. Their power and money are an addiction that needs feeding and they are forever hungry.

Don’t be a fool forever- make your own decisions and don’t believe everything fed to you by the TV.

Remember that it is not in the interest of governments to tell you the whole truth – they cannot afford for you to know that!

When crisis hits

No banks, no cash, no petrol, no shopping, no wages, no credit cards, no invices paid – what then – anarchy, civil unrest, violence, robbery?
It will be survival of the fittest and the protected.
What insurance do you have against a world in crisis, civil unrest and without paper or plastic money?
The only way to survive will be to barter with what you have – this works if you have something valuable to trade like silver coins or even gold. If you don’t have something valuable start planting seeds to grow the food you will need to live – that is of course if you have a garden.

Source AFP