Credit Suisse, the investment bank whose shares plummeted to record lows this week over fears it could be on the brink of collapse, is selling the five-star Savoy hotel in the centre of Zurich for as much as 400m Swiss francs (£361m).
The bank, whose stock has fallen by more than 40% in the past six months, said on Thursday it had put the 184-year-old hotel on Paradeplatz in the heart of the city’s financial district on the market as part of a regular review of its global real estate assets. “As part of this process, the bank has decided to start a sales process for the Hotel Savoy,” a spokesperson said. “We will carefully assess all offers and potential investors and communicate any decision in due course.” The news was first reported by the financial news blog Inside Paradeplatz. It said the hotel, which is undergoing a major refurbishment and due to reopen in 2024 as Hotel Mandarin Oriental Savoy Zurich, was the bank’s last remaining “trophy asset” and described its sale as a “king-size distress signal”. “The intended sale of the Savoy shows how serious the situation at the big bank is. Despite the conversion and restart as Mandarin in 2024, [Credit Suisse] apparently wants to part with the noble building in a top location as an emergency,” said the blog, which is written by Lukas Hässig and has broken a string of market-moving stories in Switzerland. “The CS bosses feel compelled to throw everything that still has value on the market. You need liquidity to stay afloat – too many customers are running away.” Credit Suisse has had to urgently raise capital, stop share buybacks and cut its dividend after a serious of crises and scandals. The bank plunged from a profit of Sfr2.7bn in 2020 to a loss of Sfr1.6bn last year, driven mostly by big losses on its investments in the failed supply chain finance group Greensill and the hedge fund Archegos – where US authorities have charged founder Bill Hwang and three others with racketeering and fraud offences after its collapse. Credit Suisse has also paid large fines after admitting to fraud over bonds it issued that were supposed to be used to fund tuna fishing in Mozambique but where some of the proceeds were diverted by one of its contractors in the country to pay kickbacks, including to bankers at Credit Suisse. And its private banking division – traditionally a cornerstone of Swiss banking – has been put under pressure after Suisse secrets, an investigation conducted by a consortium including the Guardian that exposed the hidden wealth of clients involved in torture, drug trafficking, money laundering, corruption and other serious crimes. Credit Suisse shares, which were worth more than Sfr9 in January, collapsed to a record low of Sfr3.5 on Monday, but have since recovered slightly to Sfr4.2.
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The BRICS countries are working on establishing a new reserve currency to better serve their economic interests, ambassador at large of Russia’s Foreign Ministry Pavel Knyazev said this week. It will be based on a basket of the currencies of the five-nation bloc. “The possibility and prospects of setting up a common single currency based on a basket of currencies of the BRICS countries is being discussed,” Knyazev said during a discussion about expanding BRICS and the Shanghai Cooperation Organization.
According to the diplomat, member states are “actively studying mechanisms” to exchange financial information to develop a reliable alternative for international payments. In an effort to reduce reliance on the dollar and euro, BRICS is set to build a joint financial infrastructure that will enable a reserve currency to be created. The group, which comprises Brazil, Russia India, China, and South Africa, has been boosting economic ties, with trade turnover steadily growing despite restrictions brought on by the pandemic and conflict in Ukraine. BRICS had previously said it was working on establishing a joint payment network to cut reliance on the Western financial system. The member countries have also been increasing the use of local currencies in mutual trade. The decision to remove Tesla from the S&P 500 ESG Index earlier this year seems out of tune with the thinking of many. The world’s largest maker of electric cars is a crucial enabler of a shift away from fossil fuels, yet S&P Dow Jones Indices excluded Tesla from the benchmark index over, among other factors, the company’s labour rights record and lack of a low carbon strategy.
Tesla board member Hiromichi Mizuno, a Japanese champion of sustainable investment, said that current ESG ratings give too much weight to negative impacts and not enough to positive. There may be some truth here, but it is also clear that a single, data-driven ESG index cannot be everything at once. At a minimum, there should be two distinct ratings: one to reflect a company’s positive impacts and another its negative externalities. Attempting to capture both in one score dilutes the informational value of the final rating: the positives and negatives inevitably cancel each other out, resulting in a rating that fails to represent either and can’t be relied upon to guide capital allocation decisions. One option is to focus the ESG (environmental, social and governance) rating on the negative externalities while using the United Nations sustainable development goals (SDG) framework to assess which business activities are critical to addressing challenges like climate change. Tesla, for example, would have a high SDG score because its revenue comes from selling electric vehicles and other green tech products, which are important in the push to reach net zero carbon emissions. If an investor’s goal is to allocate capital for climate solutions, then the SDG rating should be the driver. If the goal is to invest in companies that behave in an environmentally and socially responsible manner, then the ESG rating should dominate. In practice, the two could be used together. There are technical reasons current ESG ratings don’t fully capture a company’s level of sustainability. One reason is that ratings providers often combine varying environmental, social and governance scores into a headline rating. This approach works better the closer it gets to either end of ESG spectrum. For example, a very high ESG rating usually indicates that a company is performing well across all three pillars. For most companies that fall in the middle, however, the headline ESG rating could be misleading. A company with poor environmental practices could still be included if its environmental score is sufficiently smoothed out by an above-average performance in social and governance terms. This explains why fossil fuel companies with little interest in the energy transition may have an unexpectedly high ESG score, even as a company like Tesla falls down the rankings – and why investors need to pay close attention to ESG fund holdings. It also matters whether companies are scored on a relative or absolute basis. In this scenario, a company that performs poorly on ESG on an absolute basis could get a top rating because its peers are doing even worse. At a portfolio level, such an approach can be meaningless. A portfolio of best-in-class coal mining companies, for example, could appear to be doing better on ESG than one of average finance companies. Michael Saylor is down about a billion dollars on his bitcoin (BTC) bet and just stepped down as CEO at MicroStrategy (MSTR), the software company he founded in the 1980s. Being in a tight spot is familiar territory for the 57-year-old Saylor. After the dot-com bubble burst in March 2000, Jim Cramer, the CNBC host, pointed to the collapse of MicroStrategy as a catalyst. The stock had tumbled 62% in a single day after MicroStrategy announced accounting mistakes, erasing $6 billion from Saylor’s wealth and marking a prominent end to the high-flying days of the early Internet. Later that year, the U.S. Securities and Exchange Commission brought, and then settled, accounting charges against MicroStrategy, Saylor and other company executives. Saylor and MicroStrategy then spent two decades mostly under Wall Street’s radar. Not that he was suffering. MicroStrategy kept plugging away, developing software for businesses. Saylor lived in a Miami Beach, Fla., mansion that looks like a Spanish colonial palace. A recent visit by a CoinDesk reporter revealed painted cherubs on the foyer ceiling, gold paneling and crimson-red wall paper in the dining room, a stage beyond the office library stocked with guitars, drums and whatever else a band might need, and a portrait of Saylor styled like an old English sailor – with laser eyes. A yacht was floating out back, where a crew lived full-time so Saylor could travel whenever he wanted.
What brought Saylor back to center stage was bitcoin. His fear of inflation drove him in 2020 to start investing MicroStrategy’s cash in the original cryptocurrency. The company’s cash flows started getting routed to bitcoin. He lined Wall Street bankers’ pockets by selling debt to raise money to buy bitcoin. In the process, he audaciously turned his sleepy software company into a bitcoin vault. In all, MicroStrategy has spent about $4 billion on digital assets. MicroStrategy’s stock became a proxy for holding bitcoin. The stock price moves up and down in lockstep with bitcoin’s movements.He became something like a bitcoin preacher spouting religiously fervent praise. His grandiose predictions included one that bitcoin will eventually be worth $100 trillion, roughly what all stocks in the world are collectively worth now. “After scientifically studying everything on Earth, I’ve concluded bitcoin is the best inflation hedge,” he told CoinDesk during a November interview at the Miami Beach mansion. “We buy bitcoin as fast as we can with whatever money we find lying around.” His advice as bitcoin was near its record high? “If you have bitcoin, don’t sell it. If you don’t have bitcoin, buy it. And if your bitcoin is moving around, wait.” Fast forward to today. MicroStrategy’s stock has lost about two-thirds of its value since peaking last year, dragged down by the current bitcoin bear market. This week, Saylor handed the CEO title to Phong Le, who had been MicroStrategy’s president, and shifted into an executive chairman role, pledging to put all his focus on bitcoin investing. Le now runs the legacy software business. Saylor wasn't immediately available for an interview for this story. So who is Michael Saylor? Born in Lincoln, Neb., into a military family, Saylor grew up around bases. That included Wright-Patterson Air Force Base near Dayton, Ohio. He attended the Massachusetts Institute of Technology on an Air Force scholarship and became an Air Force second lieutenant. He launched MicroStrategy in his early 20s after convincing his employer, DuPont (DD), to give him $100,000 and free office space and computer equipment, Saylor told Charlie Rose during an interview in February 2000. Saylor’s quirkiness was visible back then, offering a glimpse of what was to come with bitcoin. “I think you're going to see over the next decade that people are going to use software to route traffic on every major highway,” he told Rose 22 years ago. “We're going to use it to determine what hospital we go to or what drug we take. We're going to use it to arbitrage out all the spreads in the interest rates in the finance market and get us a better deal from our bank and probably a better trade in the stock market.” But he immediately noted the serious potential downsides of technology, too, about a month before his stock plunged. “If the software crashes, the civilization comes to a grinding halt in the same way that if you shut down air traffic control at a major airport, traffic will come to a grinding halt,” Saylor told Rose, adding, “And that’s what’s exciting about technology.” One trend in the precious metals markets which has yet to get widespread coverage but deserves more attention is the plummeting inventories of physical silver in the London vaults of the London Bullion Market Association (LBMA). These comprise vaults in and around London run by the bullion banks JP Morgan, HSBC and ICBC Standard Bank, as well as the London vaults of three security operators, Brinks, Malca-Amit and Loomis. London sub-Billion Market Association. Haemorrhaging Quietly, and almost under the radar, the quantity of silver held in the LBMA vaults has been consistently haemorrhaging for 7 straight months now. Latest data from the LBMA as of the end of June 2022 shows that the LBMA vaults now hold only 997.4 million ozs of silver (31,023 tonnes). Compared to the end of June 2021 when LBMA silver inventories stood at 1.18 billion ozs (36,706 tonnes), the LBMA vaults’ June 2022 month-end silver inventories are now 182.7 million ozs (5,683 tonnes) lower than a year ago, in other words a whopping 15.48% lower compared to June 2021. Notably, most of this freefall in London silver holdings has occurred since the end of November 2021, with LBMA silver inventories having consistently fallen each and every month since then. From the end of November 2021 when the LBMA London vaults reported holding 1.17 million ozs of silver (36,422 tonnes), silver inventories have fallen by a cumulative 173.5 million ozs (5,398 tonnes). That’s a 14.82% drop over 7 months from end of November 2021 to the end of June 2022. In addition, these June 2022 LBMA silver holdings are the lowest LBMA silver inventories since December 2016 and the first time since November 2016 that the LBMA silver inventories have fallen below 1 billion ozs. Over the exactly 6 year period since monthly LBMA silver inventory data was first published in July 2016, there has never before been a 7 month period (nor a 6 month period) in which the LBMA silver holdings fell consistently each and every month. The only partially comparable time period across the data series was when LBMA silver holdings fell consistently in each of 5 months between April and August 2020, and that was during the LBMA – COMEX (Exchange for Physical (EFP)) crisis when the LBMA bullion banks in panic mode were forced to transport huge amounts of silver (and gold) bars from the LBMA London vaults to the COMEX vaults in New York to meet the delivery requirements on futures contracts so as to prevent gold and silver prices moving into real price discovery mode. Over that 5 month period between April and August 2020, the LBMA silver inventories dropped by 102.2 million ozs (i.e. a drop of 8.7%). But to put it into context, the current haemorrhaging of silver from London of 182.7 million ozs that has been ongoing since June 2021 is now approaching a figure that is twice as large as the April – August 2020 LBMA silver vault outflows from London. Lack of Underpinning
On its website, the LBMA disingenuously claims that the silver (and gold) held in its London vaults “provide an important insight into London’s ability to underpin the physical OTC market.” What the LBMA doesn’t say however, is that of the 31,023 tonnes of silver that it claims was held in the LBMA London vault warehouses at the end of June 2022, a massive 19,422 tonnes, or 62.6% of this total, represented silver held in the LBMA London vaults that was owned by Exchange Traded Funds (ETFs) such as the iShares Silver Trust (SLV), the Wisdomtree Physical Silver ETC (PHAG), and the Aberdeen (abrdn) Physical Silver Shares ETF (SIVR). The current and open fraud regarding the paper gold price in the COMEX market is now as plain to see as the open desperation in the global financial system, which is unravelling in real-time all around us. As risk assets tumble foreseeably into bear territory before a headwind of deliberately rising rates, precious metals have seen headline-making falls as well. Tracking the Paper Gold Price —The Standard Answer In prior reports, we’ve noted that precious metals typically behave sympathetically when markets tank; thereafter, gold then surges north. We saw this pattern in October of 2008 and March of 2020. Furthermore, when a Hawkish Fed pursues a temporary yet face-saving policy of rate hiking and quantitative tightening, this makes the USD the relatively stronger horse in the global currency glue factory. And a relative rise in the USD, of course, is a headwind to gold. Explaining the Paper Gold Price —The Rigged Answer But let’s get to the real heart of the matter, namely: Legalized paper gold price manipulation (i.e., fraud) in the COMEX market, a topic we’ve addressed more than once. As we’ve openly argued for years, nothing embarrasses an otherwise discredited fiat currency like a rising gold price. As I’ve described it, rising gold prices are a middle finger to debased currencies whose declining purchasing power are the DIRECT result of the failed and drunken monetary policies (i.e., mouse-click trillions) of a central bank near you. Or as Ronan Manly more distinctly observed: “Gold to central bankers is like sun to vampires.” And that, folks, is precisely why the big banks (under the direction of the BIS) are deliberately (and if law school serves me correctly) as well as fraudulently manipulating the paper gold price. Facts vs. Manipulation In the first quarter of 2022, we saw record high purchases of ETF gold, physical gold and central bank gold. Even Goldman Sachs’ head of commodity research was targeting $2400 gold this year. Instead, the gold price has been falling as gold demand has been rising. Huh? It reminds me of 2008 when mortgages were defaulting en masse yet the ABX index for sub-prime mortgages was rising. In short, complete (and temporary) manipulations were going on behind the curtains of a few wayward banks, including Morgan Stanley. Today’s gold behavior (i.e., surreal manipulation) is no different and no less of an insult to the natural forces of supply and demand, which central bankers have attempted to destroy for well over a decade. But the jig will soon be up on these masters of open fraud and Wall Street socialism. The Paper Gold Price & The Horse’s Mouth For now, and in case you fear I’m just acting as a “gold bug” apologist, let’s go straight to the horse’s mouth and examine the confessions and facts of open price manipulation in the precious metal markets. And I swear, you really can’t make this stuff up, it’s just that obvious and distorted. In a recent article by Peter Hambro published by the British news site, Reaction, a 3rd generation gold insider (Petropavlovsk, Bank Hambros) made the open secret of paper gold price manipulation abundantly clear and incontrovertible. It’s also worth adding that Mr. Hambro’s entire career was that of an heir to a banking dynasty all too familiar with the insider machinations of the London bullion markets and London Stock Exchange. In short, when Mr. Hambro discusses gold price manipulation, it’s worth listening. A Chart Says a Trillion+ Words More importantly, and for those who prefer facts over human confessions or “gold bug whining,” the following chart from the U.S. Office of the Comptroller of the Currency (OCC) clearly reveals the extreme extent by which just a handful of highly pocketed (and central bank supported) banks like JP Morgan and Citi can use extreme turns of derivative-based leverage to short (i.e., keep a permanent boot to the neck of) the paper gold price: That rising bar on the far right is nothing more than crime scene evidence. As Hambro remarks, a long history of media and bank supported mis-information has tried to keep a lid on the desperate attempts by just a small number of BIS minion banks like JP Morgan and Citi to effectively prevent free market price discovery on the paper gold price. Despite thousands of daily long contracts (i.e., buy orders) in the OTC forward contract markets, if just 7-8 banks wish to use massive leverage (rising bar on the right) to short the same metal, they can effectively fix the gold price via artificial manipulation of derivatives contracts, to which only a small number of banks have access. All of this open yet legalized fraud is managed by the central-banks central bank, namely the Swiss-based Bank for International Settlements. The Jig (Rig) is Up We may be a bit jaded and realistic, but that doesn’t make us naive. Gold will get the last and honest laugh over such a corrupt and dishonest “policy.” As central banks continue to lose more and more credibility, and as investors become more and more fluent in, and aware of, the absurdity of the lies that have been sold to us for years by central bankers and MMT midgets who claim that a debt crisis can be solved with more debt, which is then paid for with trillions created out thin air, the system unwinds. As the inevitable inflation crisis emerges from precisely such absurd “policies,” the central bankers can no longer blame the obvious and long-dated/repressed inflationary consequences of their drunken monetary policies on a virus or Putin. Nor can they continue to peddle the lie that inflation was merely “transitory,” a fact we made clear long before Powell confessed it was not so. Stated otherwise, more and more folks are catching on to the fraud. The math plainly shows that expanding the broad money supply (and central bank balance sheets from $6T to $36T in just over a decade) is the real cause of the inflation in your neighbourhood and the debasement in your wallet. The First Cracks & the Last Straws
Geopolitical shifts, assassinated prime ministers, fired prime ministers, angry truck drivers, stormed capitals and Sri Lankan protestors are just the first tragic cracks in a growing social unrest driven by declining wealth and growing wealth disparity, all classic and historic symptoms and patterns of when a debt crisis leads to a political crisis, and sadly (and ultimately) more centralized controls over our markets and lives. But as even Hambro observes, eventually the last straw breaks the back of a rigged camel, and the “straws blowing in the wind are often said to presage great tempests and I believe that {the chart above] shows just such a straw.” Years of distorted, rigged and entirely reckless debt-and-print polices have made global economies and currencies weaker, not stronger. Dying Faith, Rising Gold After years of profligate central bank policies, the so-called “developed economies,” which are now little more than glorified banana republics, are losing credibility, options and most importantly public faith. This is critical. In the end, when faith in a system ends, so does its currency. We’ve written before how impossible it is to market time “the end of faith,” but charts like the one featured herein help to point out the rigging and hence accelerate the inevitable end to derivatives-based fraud, centralized price-fixing and, eventually, the OTC casino in particular. Meanwhile, the current buy window for repressed precious metals is remarkable, and once central banks cripple the markets to their deflationary pain points, chaos will return, along with the inflationary money printers—all of which will send precious metals higher and fiat currencies and markets to their mean-reverting lows. Thanks to Matthew Piepenburg Bitcoin fell sharply on Monday, as the sell-off across cryptocurrencies showed no sign of abating and US firm Celsius Network froze withdrawals. The cryptocurrency lending platform, which has around 1.7m customers, also froze swap and transfers between accounts, blaming “extreme conditions market conditions". In a blogpost, it said: “We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations. “We’re taking this necessary action for the benefit of our entire community in order to stabilise liquidity and operations while we take steps to preserve and protect assets. “There is a lot of work ahead as we consider various options, this process will take time, and there may be delays.”
Shortly afterwards, cryptocurrency exchange Binance halted the withdrawal of bitcoins. The company insisted customer funds were safe, and blamed the move on a backlog in the company’s systems. As at 1430 BST, bitcoin had lost 12% and was trading at its lowest levels since the end of 2020, tumbling below $24,000 to reach $23,375.9. Ethereum, the second largest token after bitcoin, was 16% lower, at $1,205.15. The value of the digital asset market has now fallen below $1trn to touch a low of $940bn. Like traditional assets, cryptocurrencies have become vulnerable to the weakening global economic outlook alongside concerns about the market's stability. The sell-off then ramped up on Friday, following weaker-than-expected inflation numbers in the US, and after ethereum’s developers announced that a long-awaited transition to version 2.0 had been postponed. Marcus Sotiriou, analyst at GlobalBlock, said: “Despite the fear, uncertainty and doubt the Celsius debacle has caused, the sell-off started at the beginning of the weekend after US inflation data was released. “I think this is a bigger contributor to the decline, as its results in a more hawkish Federal Reserve. It is now forced to remove more liquidity from the market, to bring down inflation. When liquidity is removed, risk-on asets are hit the hardest, which includes crypto.” Walid Koudmani, chief market analyst at xtb, said: “Almost all altcoins are wiping out gains made in 2020 as sentiment around cryptocurrencies was worsened on Friday by alarming data from the US economy. “It is not very surprising to see such a strong downturn as we have noticed an increased correlation over the last few years between traditional stocks, which have also tanked recently, and the cryptocurrency market.” A 1955 Mercedes-Benz, one of only two of its kind, was auctioned off earlier this month (May 20, 2022) for a whopping €135 million (US$143 million), making it the most expensive car ever sold, RM Sotheby's announced Thursday. The Mercedes-Benz 300 SLR Uhlenhaut was sold to a private collector, the classic car auction company said in a statement, fetching almost triple the previous record price for a car, which was set in 2018 by a 1962 Ferrari 250 GTO that went for over $48 million. The invitation-only auction took place on May 5 at the MercedesBenz Museum in Stuttgart, Germany, the auction house said, adding that the vehicle's high price places it in the "top 10 most valuable items ever sold at auction in any collecting category". According to an AFP ranking of artworks sold at auction in recent years, the 300 SLR ranks sixth or seventh, with the all-time record being held by Leonardo da Vinci's "Salvator Mundi", which sold in November 2017 for $450.3 million.
The car is one of just two prototypes built by the Mercedes-Benz racing department and is named after its creator and chief engineer, Rudolf Uhlenhaut, according to RM Sotheby's. "The private buyer has agreed that the 300 SLR Uhlenhaut Coupe will remain accessible for public display on special occasions, while the second original 300 SLR Coupe remains in company ownership and will continue to be displayed at the Mercedes-Benz Museum in Stuttgart," the auction company added. According to RM Sotheby's and press reports, the 300 SLR, recognisable by its unusual lines and butterfly doors, was modelled on the W196 R Grand Prix race car, which won two Formula 1 world championships in 1954 and 1955 with Italian Juan Manuel Fangio in the driver's seat. But in June 1955, tragedy struck the Mercedes-Benz team, when at the 24 Hours of Le Mans race, a crash of one of its 300 SLR vehicles killed French driver Pierre Levegh and 83 spectators. That tragedy -- the deadliest in the history of motor racing -- forced the company to withdraw from the sport for years. RM Sotheby's said the proceeds from the auction will be used to establish a worldwide Mercedes-Benz Fund that will fund environmental science and decarbonisation research.
A Datacenter – But for Gold
From the photos, you can see that the gold storage vault of the Portuguese central bank has a very orderly design, with tall racks of bars (maybe 30 rows high) laid out in close proximity to each other to form a number of aisles and corridors. It almost has a datacenter feel to it, except instead of servers and routers, there are gold bars. Commenting on the visit, reporters Sandra Afonso and Marta Grosso from Radio Renascença wrote: : “This Tuesday, on a guided tour, journalists were able for the first time to take photographs of the gold in the Casa Forte de Reserva, located in Carregado. Much gold is stored in these facilities: 13,666 bars, totaling 173 tons. Each bar weighs about 12 pounds. In Carregado, there are still 406 bars that belong to the European Central Bank (ECB), but are in the custody of the Bank of Portugal (BdP). “Interestingly, most of the gold is abroad. We have 186 tonnes in custody at the Bank of England, one of the main gold custody and gold transaction locations. We have a significant part of our gold there: around 49%”, said Hélder Rosalino [Banco de Portugal director]” Interestingly, the Banco de Portugal’s Carregado vault claims to be storing about 5 tonnes of gold which belongs to the European Central Bank (ECB). This is gold that was transferred by the Banco de Portugal to the ECB in 1999 as part of the creation of the Euro when each founding central bank member transferred foreign reserve assets to the ECB, 15% of which had to be in the form of physical gold.“
Like anything in the central bank gold world, there is no transparency into the claimed gold of any of these central banks nor any independent physical audits of the gold bars they claim to hold, so when talking about relative rankings, we will just have to go with the figures of the IMF / World Gold Council. Just Outside Lisbon The Banco de Portugal maintains that just over 45% of its total gold reserves, or 127.6 tonnes (5,549,238 ozs), is held in the form of gold bars in its vault in Carregado, and it was these gold bars which the Portuguese reporters and photographers were briefly shown in what the Reuters report about the visit called a ‘Rare Glimpse'. But apart from Reuters, a whole host of Portuguese media seemed to be present for the tour of the vault, judging by the extensive coverage this gold vault ‘tour’ received in the Portuguese media. So it is these reports of the Portuguese media which we turn to get more details about the Carregado vault and what the media saw. And since there were photographers present, quite a few photographs of the gold were taken, a selection of which are included below. The Banco de Portugal’s Carregado Complex is a 67,000 square metre compound in an industrial part of the town which is surrounded by high walls and barbed wire, and which is guarded by machine gun toting members of Portugal’s National Republican Guard, and their four-legged friends, German Shepherds. As well as the gold vault, this Carregado Complex, built in 1995, is where the Portuguese central bank prints Euro banknotes, so there are said to be more than 200 bank employees working in this operational centre.
Apart from the 172.6 tonnes (45%) of Portuguese gold in the Carregado vault near Lisbon, the Banco de Portugal maintains that another 186.4 tonnes (48.7%) of its gold is stored in the Bank of England in London, with an additional 20 tonnes (5.2%) stored with the Bank for International Settlements (BIS), and the remaining 3.7% tonnes (1%) now stored at the Banque de France in Paris after having been moved in 2021 from the vault of the Federal Reserve Bank of New York (FRBNY). So overall, the split is 45% of Portugal’s gold is supposedly stored in Portugal, with the remaining 55% stored abroad. Bitcoin, the world’s largest cryptocurrency by market value, dropped below $33,000 during Monday trading, according to data from cryptocurrency news portal CoinDesk, losing half of its value since its peak six months ago. At 10:55 GMT, it was down nearly 5.5%, trading at $32,800, the lowest level since last July. Bitcoin hit an all-time high of $68,990 in November. The dip comes as part of a wider crypto market collapse, which has wiped out almost $300 billion from the value of cryptocurrencies over the last four days. The second-largest coin, Ethereum, is down by 13% since last week, Solana – by more than 16%, and Terra (LUNA) – by more than 25%.
Panic over soaring consumer prices and fears over the impact the crisis in Ukraine will have on the world economy have been named as reasons behind the crypto market crash, which is accompanied by a wider drop in stock markets around the world. Last week, central banks in the US, UK, and other nations raised interest rates in an attempt to curb inflation, which has been rising at the fastest pace in decades, leading to warnings of recession. China's "zero coronavirus" policy is facing a serious dilemma. The authorities there have imposed extremely severe movement restrictions to try and stamp out all traces of the virus, and this has got some results. But the long lockdown in Shanghai, the country's largest hub of international commerce, is inevitably starting to put a drag on the economy.
China's harsh lockdown measures are premised on successes in tamping down the outbreak in Wuhan, Hubei province, where the virus was first reported. The measures got infections under control far more quickly than in Europe or the United States, and boosted Chinese President Xi Jinping's power at home. Then came the highly infectious omicron variant. Omicron spread, and the prevention methods focused on containment that were effective in Wuhan have had far less impact. In Shanghai, residents are barred from going outside, and even getting food is becoming more difficult. There have been cases reported of people with chronic health conditions dying because they could not access proper treatment. And some analysis suggests that these severe movement limitations have been expanded to cover dozens of cities. The resulting blow to the Chinese economy has been significant. The supply chain has been badly disrupted by production halts and clogged logistics channels. Economic growth for the January to March quarter was sluggish, falling far below the annualized target of "about 5.5%." Many observers both at home and abroad are sounding the alarm, but President Xi has insisted that "victory is a matter of sticking to" the lockdown measures. His stance is a marked contrast to the shift in other countries toward "living with the coronavirus." Each country is faced with deciding how to prevent the virus's spread. China, as the most populous nation on Earth, has not been able to build a healthcare system capable of covering all its many citizens. We understand that the prospect of an infection wave would be highly disconcerting to Chinese authorities. However, international cooperation is indispensable for any effort to confront a global pandemic. And China, as the world's second-largest economy in an era when countries are ever more dependent on one another, has a major role to play. One major worry is that continuing the "zero coronavirus" policy will become an end in itself for the Chinese government. We wonder if so much stock has been put into this policy as proof of the Chinese Communist Party's fitness to rule, that it has become difficult for the government to respond flexibly to changes in the situation. One senior Chinese government official stated emphatically that "it is a mistaken idea to try to live with the virus." However, the coronavirus crisis is likely to be with us for the long haul, and we are at a point where a flexible approach taking both the virus and the functioning of society is called into account. Obsessing over past success could very well damage the "stability" so prized by the Xi government. On Tuesday 26 April in an interview with newspaper Rossiyskaya Gazeta (RG), the Secretary of the Russian Federation’s Security Council, Nikolai Patrushev, said that Russian experts are working on a project to back the Russian ruble with gold and other commodities. The interview, which is in Russian, can be seen on the RG website here.
. For those who don’t know the name Nikolai Patrushev, Patrushev is one of the Russia’s most powerful security/intelligence officers and a close ally of Putin. After serving between 1999 and 2008 as Director of the Russian Federal Security Service (FSB) (the successor organization to the KGB), Patrushev moved to being Secretary of the Russian Security Council since 2008. In fact, Patrushev took over as Director of the FSB in 1999 from the previous incumbent, Vladimir Putin. The Security Concil of the Russian Federation is chaired by Putin, with Patrushev as Secretary, overseeing the Security Council and answering directly to Putin. The deputy chairman of the Security Council is Medvedev Dmitry, the former Russian president and prime minister. Among the other member of the Security Council are current Russian prime minister Mikhail Mishustin, and Russian foreign minister Sergei Lavrov. So when Nikolai Patrushev says that Russia is working on a plan to back the ruble with gold and commodities, it is not just anyone saying this, it is being said by the highest echelons of the Russian Government. A New Gold Standard? In late March when the Bank of Russia offered to buy gold from Russian banks at a fixed price of 5000 rubles per gram, this was the first step in linking the ruble to gold. That move also put a floor price under the ruble and acted as a catalyst for the ruble to re-strengthen ground against the US dollar that had been lost in late February / early March. During the same week in late March, Putin also informed the global market that non-friendly importers of Russian gas would have to pay for Russian natural gas using rubles. That move (which we are now seeing playing out in the EU) was the other side of the equation, linking the ruble to commodities. What we are seeing now is Nikolai Patrushev and the Kremlin confirming this simple equation of linking the Russian ruble to gold and commodities. In other words, the beginning of a multilateral gold and commodity backed monetary system, i.e. Bretton Woods III. |
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