Friday Road Trip 10/2/2015

Bix Weir

Glencore, Metal Derivatives, Conspiracies & The End Game

Remember Marc Rich? Many know him as the rich donor that Bill Clinton pardoned in his final act as President on January 20, 1999. That's pretty much all your "Average Joe" knows. If you want to know the real Marc Rich read the book "Metal Men" by A. Craig Copetas and you will get a better understanding of this unique individual.

Marc Rich was born Marcell David Reich but changed his name to present himself as more Anglo-American and less of the poor Jewish immigrant that fled from Germany...he claimed it would be better for business. This name change wasn't the only facade he would portray over the years.

Marc Rich was by far the most successful physical commodity trader in the world from the early 1970's until the day he died in Switzerland in June 2013. There is no disputing that fact. But during that time he and the small group of traders that he trained racked up a laundry list of crimes around the world that would make Al Capone blush. In 1983 he was indicted on 65 criminal counts including racketeering, money laundering, tax evasion and trading with Iran during the US hostage crisis. Facing charges that would have amounted to over 300 years in prison he fled to Switzerland where he ran his global operations for another 18 years until Bill Clinton mysteriously pardoned him and his colleagues in 2001 for reasons unknown to the public.

The true story - the conspiracy story - is that Marc Rich controlled the backbone of the commodity rigging operations run by a group I have come to call the "Bad Guys." As large financial institutions and central banks ran the computer controlled price rigging operations, Rich and his traders were hired, as needed, to control the physical side of these covert operations.

Here's a short list of the Crimes and Conspiracies he played a key part of: hired by Henry Kissinger and the Israeli Mossad in the 1970's to help rig the oil markets in order to set up Petro-Dollar; hired by George Bush Sr. as part of "Project Hammer" to economically destroy the Soviet Union; hired by Bill Clinton in the 1990's to rig the gold and silver markets for the "Strong Dollar Policy" in exchange for the pardons of himself and Pincus Green(Rich's right hand man) also exonerating his accomplices Ivan Glasenberg (now CEO of Glencore) and Claude Dauphin (Majority owner and Chairman of Trafigura who just suspiciously DIED on September 30, 2015).

Although it is still unknown to the public to what extent he played, Marc Rich was knee deep in the Bernie Madoff scandal which was much, much more extensive than the mainstream media portrayal of it as a $65B Ponzi Scheme run by a single person. The Madoff con was how the "Bad Guys" got paid via market rigging programs run out of the secretive 17th floor below the Madoff Investment Securities offices located on floors 18 & 19 of the "Lipstick Building" on 3rd Avenue, NYC. Marc Rich and friends controlled the commodity side of that operation.

If above information isn't enough to make you feel ill, in the 1990's then-Rep. Bob Wise, D-W.Va, unearthed evidence in hearings from the early 1990s which showed that while Rich was still a fugitive the U.S. Mint was a large customer buying metal from one of his companies. The US Mint issued at least 21 separate contracts for various types of metal to the company. Also, in 1988, the US Defense Logistics Agency lifted its bar on contracting with Rich's company while he was still under indictment...so much for being on "America's 10 Most Wanted" list! There were/are people in the US Treasury and at the US Mint that were kneed deep in this global con game.

So what does all these past misdeeds of Marc Rich have to do with the current situation for commodity investors?

That's easy...Glencore PLC is headline news these days and is sitting on suspected derivative losses in the billions. The global financial system is on a "Death Watch" and many are likening the ramifications of Glencore imploding as the next "Lehman Moment".

Let's put the conspiracy pieces together - Glencore at one time was called Marc Rich & Co and owned and operated by the very same Clinton Pardon recipient, Marc Rich. According to court documents from around the world, Rich hired and trained the most unscrupulous, oops, I mean successful commodity traders alive today. Many in the commodity industry call them "The Rich Boys". These are NOT business men but covert commodity trading racketeers who have no county, follow no laws and have no allegiance to anyone. These people can be bought by the highest bidder to do the more unsavory deeds in the underbelly of the already shady physical commodity world. Oil out of Iran, Toxic chemical "disposal" off the Ivory Coast, commodity market price rigging for profit and/or "on consignment" - you name it. Glencore is still headed by one of the co-conspirators in the US indictments against Rich's company, their CEO Ivan Glasenberg.

In the 1990's Glencore was privately owned by Marc Rich but was split into two companies with the exodus of a few of "The Rich Boys" who start an identical operation called Trafigura. Having the two companies kept the spotlight off the Marc Rich entity but it is not hard to imagine these two management teams worked together to foment their market manipulations and operations. In 2011 Glencore went public and Trafigura was kept private to avoid the scrutiny of the regulators and law enforcement. They not only liked the privacy - they needed it.

For over 40 years Marc Rich's companies traded, conspired and rigged commodity markets with practical immunity. Setting up each market rigging operation by either holding back physical inventories or flooding the physical markets with product depending where there was money to be made. Although physical commodity trading can be a great way to make money if you control the majority of the inventory, the real money was to be made in leveraged futures and options contracts...especially when you can significantly influence the supply of physical inventories. Knowing the future outcome of every futures or options bet on commodities can be very lucrative.

Fast-forward to today and it is clear that something has gone wrong at Glencore and Trafigura. Their game is no longer working and being massively leveraged commodity derivative players is not a good thing for "The Rich Boys." Glencore has lost 65% of it's market cap in less than 3 months with a sudden 29% drop on Monday (9/28/15). Their debt is ballooning at over $30B and revenues are falling off a cliff. The rating agencies are threatening a downgrade from their investment grade BBB rating unless they sell off assets to reduce their debt load and there are rumors that this downgrade would trigger significant metal collateral calls. The problem is that this forced liquidation goes against any good trader's Modus Operandi - NEVER SELL AT THE BOTTOM OF A MARKET!...especially if it would blow up your derivative book.

Trafigura is no better off but they are private and less is known about their problems. In January they were estimated to have $20B in debt but with a much weaker cash flow than Glencore. Again, rumors of collateral calls are spreading. But there is something else happening at Trafigura, the founder and largest shareholder(and one of the original Rich Boys), Claude Dauphin, turned up dead on September 30th (the last day of the 3rd Quarter) in Bogota, Columbia. The company said he died after a battle with cancer but he lived in Switzerland and France - not Columbia. Hmmm. I wonder if he really died or just disappeared to the same tropical island that many rich criminals go for their "afterlife"!

Given the wild stock price fluctuation with Glencore and the rampant speculation about the demise of Trafigura I would venture to say that the commodity rigging game that has been so successful for these people for so many years is now coming to a ugly end. Both companies are well versed in the use of leverage to make enormous amounts of money in any rigged market. Since they had never lost at this game in the past, they most likely were leveraged to the hilt when their trusty operations failed them.

So let the collateral calls begin. Make "The Rich Boys" deliver the physical metal they used as collateral to leverage their nefarious deeds as this was always the End Game for those calling for the end of metal price manipulation - Metal Delivery.

Like all financial conspiracies, the ramifications won't hit the mainstream media until weeks or even months after the damage is done. It was true for Lehman Brother, Enron, AIG and Madoff Investments...but in the end we will find out the truth and then all my friends at GATA and those traveling with me on "Road to Roota" can finally say...

"WE TOLD YOU THE MARKETS WERE RIGGED!!"

May the Road you choose be the Right Road.

Bix Weir

*For more information on this conspiracy and many secrets visit: www.RoadtoRoota.com

Glencore May Get a Secret Bailout But What About the Counterparties?

So many people are assuming that Glencore will get a secret bailout to "save the system". This may be true but that will not stop the carnage as ALL physical commodity companies that play in the derivative markets are on their knees!

Chinese Cash Flow Shocker: More Than Half Of Commodity Companies Can't Pay The Interest On Their Debt
http://www.zerohedge.com/news/2015-10-01/chinese-cash-flow-shocker-more-half-commodity-companies-cant-pay-interest-their-debt

Earlier today, Macquarie released a must-read report titled "Further deterioration in China's corporate debt coverage", in which the Australian bank looks at the Chinese corporate debt bubble (a topic familiar to our readers since 2012) however not in terms of net leverage, or debt/free cash flow, but bottom-up, in terms of corporate interest coverage, or rather the inverse: the ratio of interest expense to operating profit. With good reason, Macquarie focuses on the number of companies with "uncovered debt", or those which can't even cover a full year of interest expense with profit.

So even if Glencore and Trafigura get secret bailouts from their derivative problems there's still the matter of their counter parties defaulting.

And don't forget that in August of 2009 China stated publicly that they "reserve the right" to default on any derivative contracts.

"China's SOE regulator, the State-owned Assets Supervision and Administration Commission (SASAC), had told the financial institutions that SOEs reserved the right to default on contracts"

http://in.reuters.com/article/idINPEK33016020090829

So no, a secret bailout of "The Rich Boys" will not save the system.

And if the Good Guys decide to downgrade Glencore in the next few weeks that guarantees that total destruction of the company on collateral calls...and there goes the heart of the gold and silver rigging operations!

EVEN MORE ON GLENCORE...

A trader ALWAYS lies to the public in favor of their derivative book so GUESS which way the Glencore Derivative Book is weighted when it comes to gold and silver!!!

Analyzing this Reuters article what strikes me is a classic Losing Trader Bravado...

Trading in the spotlight as Glencore seeks way out of crisis
http://finance.yahoo.com/news/trading-spotlight-glencore-seeks-way-060513210.html

By Jessica Jaganathan, Libby George and Dmitry Zhdannikov

LONDON (Reuters) - As Glencore's stock went into free fall in August in the face of heavy debts and shrinking earnings, its chief Ivan Glasenberg had a defiant message - traders can beat weak commodity prices during market downturns.

But while analysts and investors were trying to figure out how trading could save a company in crisis, several traders were leaving the firm after what industry sources said were trades that failed to reward the big risks taken and the large amounts of capital employed.

The departures of Edmund Lau and Tay Meng Yee from Glencore's fuel oil desk in Singapore in August and this month's departure of the global head of fuel oil, London-based Yannick Fedele, came after Glencore bet big in the world's top fuel oil and ship refueling market in Singapore.

Industry sources say Glencore, together with a number of rivals, wrongly bet on a bull market for fuel oil. Sources close to Glencore say money wasn't actually lost, the products desk would expand and Fedele's departure was not linked to the events in Singapore.

But whatever the result, it shows that the bet on trading as a savior in a crisis is far from straightforward and will require all the skill and experience of hundreds of traders to prove that Glencore's unique model works.

Glasenberg's model was based on expanding the huge merchant of oil, coal, metals and grains into production by borrowing over $30 billion to buy coal and copper mines.

The idea was simple - during commodity price booms coal and copper generate huge returns. During downturns, trading would pay the bills as it thrives on market volatility.

As mining normally generates around three quarter of Glencore's earnings, trading was generally ignored by the market after Glencore's record $10 billion share placement in 2011, which turned Glasenberg and fellow traders into billionaires.

But as commodities began their slide last year, trading came under the spotlight.

In March, Glasenberg predicted confidently that oil trading - the historic core of the company which began as Marc Rich in the 1970s and was renamed Glencore in the 1990s - could "blow out the lights in 2015".

In the second quarter, oil trading still performed well but Glencore blamed "market headwinds in aluminum and nickel" for lower than expected trading earnings of $1.1 billion, down from $1.5 billion in the first half of 2014.

However, if a year ago trading represented 40 percent of the overall adjusted earnings before interest and tax (EBIT), this year trading made almost 80 percent of EBIT in the first half.

BRAVE BET

Reliance on trading is set to rise in the second half when Glencore expects it to deliver $1.4-$1.5 billion on the back of improvement in metals and agriculture.

"Trading is often similar to betting. Glencore has done it well for decades and they have one of the most talented teams. But to actually guarantee certain performance for trading is a bit brave," said a top executive at a rival.

Glencore well knows that trading is a risk-taking business.

When in 1993, the founder of Glencore and U.S. fugitive Marc Rich tried to corner the zinc market, the attempt went wrong, costing the company $170 million. It led to a revolt against Rich and a management buyout, which saw the company renamed Glencore and Glasenberg ultimately taking over.

More recently, Glencore lost up to $300 million in a very volatile cotton market in 2011. Glencore was not the only casualty and many rivals were also hurt.

Beyond 2015, Glencore is confident it can earn even more from trading with its own estimates ranging between $2.7 billion and $3.7 billion a year as it boosts its presence in key markets. Glencore trades over three percent of oil globally.

BLACK BOX

Glencore market jitters focus on a straightforward dilemma: will the company earn enough to service its debt when China is cutting its use of coal and copper?

Glencore has pledged to cut its net debt to $20 billion from $30 billion so even if copper and coal prices remain low and its earnings drop, it can service its debt and keep an investment grade rating.

But there are also a myriad of unknowns which are atypical for a FTSE 100 company.

Most analysts say that even though they understand Glencore's mining division, their models are of no use to calculate forward earnings of the trading division as Glencore discloses very little, like private rivals such as Vitol.

What confuses the market further are huge commodities inventories that Glencore traders are sitting on.

The inventories stood at $18 billion as of June 30, down from $19.5 billion a year earlier, but whether they are oil or copper or aluminum is anyone's guess.

Technically, inventories could be added to Glencore's debt - bringing the total to a huge $50 billion - although the company argues inventories could be sold and turned into cash at any moment and therefore should not be counted as debt.

"All inventories are fully hedged. So in case they were to be sold overnight, the company would mitigate all price risks," a source close to the company said.

However, confusion over the way trading operates has repeatedly caused huge volatility of Glencore's stock even in the absence of hard news.

The stock tanked 29 percent on Monday after bank Investec said it saw a scenario under which Glencore would direct all its earnings toward debt repayment.

Last week, Goldman Sachs said that because Glencore's trading relied heavily on short-term credit, its financing costs would soar if it were to lose its rating.

Glencore points that it had available undrawn credit facilities and cash of as much as $10.5 billion at the end of June, compared to its $3 billion minimum threshold requirement.

"Even if we were to lose our investment grade rating, the overall costs for the group would increase by just $5 million a year," one source close to Glencore said.

END

There will be more revealed about Glencore as the system melts down.

Keep an eye out.

Understanding the Grand Canyon Gold Conspiracy

It's time we speak the TRUTH about the Grand Canyon gold. Here was my interview with Elijah Johnson last week on the topic:

Pretty amazing stuff but it gets better. I have been living and breathing the Grand Canyon gold and have come to many interesting conclusions. First of all, the fact that the US found massive amounts of gold in the Grand Canyon does not mean that we could actually GET THE GOLD. Don't get me wrong, from the evidence I have collected we tried our darnedest to mine it but in the early 1900's we ran into huge problems. First this area is NOT easy to get to. Not at all. As a matter of fact here is some footage from 1911-1920 taken by the original guides of the US Government to get people down the river.

Grand Canyon [Kolb Collection]
http://archive.library.nau.edu/cdm/ref/collection/cpa/id/61149

Here is the raw footage and you can tell the trip is almost impossible:

END

Interesting stuff but it dawns on me the extreme cost of getting the gold out of the canyon may have been the ultimate road block back then. And there are many things that happened since that lead me to believe that the mining operation suffered a catastrophic landslide that had sealed the gold away from the miners of the time until the technological advancements of equipment and machinery could catch up.

For one - there is Roota's Cave of flowers that suffered the same fate in the Fed Boston Comic...

https://www.bostonfed.org/education/pubs/wishes.htm

Crazy stuff right? But that's not all. I've talked about the similarities between a movie called "MacKenna's Gold" and the discoveries in the late 1990's of articles from the Phoenix Gazette hidden Egyptian cities hidden Grand Canyon here:

http://www.crystalinks.com/gc_egyptconnection.html

"The entrance is 1,486 feet down the sheer canyon wall. Above a shelf which hid it from view from the river, was the mouth of the cave."

"There are steps leading from this entrance some thirty yards to what was at the time the level of the river."

Also the NY Times article of gold in the grand canyon that I uncovered from 1912 here:

Tell of Vast Riches in the Grand Canyon
http://query.nytimes.com/mem/archive-free/pdf?_r=2&res=940DE7D71F31E233A2575AC1A9609C946396D6CF

Note the descriptions of the gold...

"indications of good values of gold in large bodies of silt in the chasm"

"when the whole field has been developed the supply of gold in the world will have been increased by billions" (note only 980M had been mined in history at that time)

"mountainous deposits of maul silts that contain the wealth"

"Exposed to sight are billions of yards of this silver containing more billions of dollars of wealth of precious metal than the human eye can possibly grasp in computation"

END

So you got all that? Cave in the side of the cavern wall. Steps leading up to the cave. Vast gold riches in the silt. More gold than the human mind can grasp.

Do you have that picture in mind?

Now let's watch the end of MacKenna's gold. Mind you this movie was made in 1969...decades before the Phoenix Gazette article was dug up and even longer before I found the NY Times article about vast golden treasure in the Grand Canyon...

Did you see all of it?! The gold in the silt, the cave in the wall, the stairs in the wall - all of it?

Why is it significant?

In 1969 when the movie was made NONE of the above information had been discovered!! The Phoenix Gazette article was found in the 1990's and I found the Grand Canyon Gold article in 2010. Before that it was all supposed to be "unknown."

Amazing stuff if you ask me. And if the scope of that rock slide in the movie is even close to what actually happened when they were trying to mine the gold out of the Grand Canyon you can see one of the reasons why the gold extraction stopped.

Amazingly again...the Fed Boston comics allude to this very topic in Roota's Teacher's Guide on page 4..

"Will the Pebblepeople try to develop new ways of obtaining colored flowers? Will they form corporations to explore the caves thoroughly in the hope of finding new entrances to Colorland? Will local carpenters race to build ladders tall enough to reach the hole in the ceiling of the sunlit cave? Will engineers compete in developing new drilling methods to bore more holes in the ceiling to let in more sunlight for a larger crop of flowers? And will the lure of simply being able to own as many flowers as one wants be enough to stimulate all this economic development?"

The Road to Roota: A Teacher's Guide
https://www.bostonfed.org/education/pubs/roota.pdf

So should we all pack our bags and go on an adventure into the Grand Canyon in search of this gold and ancient underground cities? Well, considering that a majority of the Grand Canyon if STRICTLY OFF LIMITS it a tough call.

Grand Canyon Restricted Areas
http://www.nps.gov/grca/learn/management/upload/2015-grca-supt-compendium.pdf

Truthfully, I'd think twice about trying to find it. Listen to this interview as this couple spent many years researching the cave in the side of the cliff only to find that it was "inaccessible" and the stairs from below the cave had been cemented over.

Not only that but the river that held all the gold that lead into the Colorado River, according to a source that went there in the 1960's, is no longer there! Another rock slide supposedly cut off the connection and it is now unreachable. This same source claims it doesn't matter as the US Marines have the Grand Canyon on lock down so nobody goes where they are not supposed to. Make of it what you will but I don't think they will say a word about it until it is time.

But let's not stop there...there's more. Of course, always more!

There are more clues as to what happened after the collapse of the Grand Canyon gold operations. For one - the 1933 Gold Confiscation which coincided with the end of the 20 years charter for the Federal Reserve. Interesting.

More? How about all those 1934 Gold Backed Bonds that have been uncovered lately? TRILLIONS of dollars worth of US Bonds found in Asia. They can't be real, can they? Sure, they could be fakes but for what purpose? It would have cost a fortune to have these made, and why if nobody would accept them? Look at these cases and bonds. They sure look authentic to me.

If they are real, the US Government didn't have that much gold in their vaults at the time. Not even close - if they were real why would so many other countries accept them...

Unless they all KNEW what the US had in the ground. Unless they KNEW that at some point in the future the US could back up ALL their gold promises to redeem these bonds in GOLD.

Surely these coded gold bars allude to some kind of secret deal with China...

https://www.reddit.com/r/UnresolvedMysteries/comments/216wmk/chinese_gold_bar_cipher/

Most people think the 300,000,000 on this bar is a US Dollar figure but what if it wasn't? What if it was for 300,000,000 OUNCES OF GOLD FROM THE GRAND CANYON!

What else makes me suspect that these coded bars are related to the Grand Canyon? How about the other bars that clearly have MOUNTAINS and CANYONS on them and show something buried in the mountain!

http://www.iacr.org/misc/china/

Sure, just speculation but what the US did after they printed these bonds is NOT speculation.

The US shut down their gold mines and shipped all the mining equipment to RUSSIA!!!

Enter Major Jordan's Diaries:

Here's more proof that unless you know about the secret gold none of this would make sense...

Planning for Economic Collapse
http://www.etherzone.com/2003/burn011003.shtml

Now that the insiders had a firm control over the economy, in October, 1942, they had the War Production Board issue Order No. L-208. This outrageous piece of governmental tyranny, made it completely illegal for gold miners in this country to get gold mining equipment which they had already ordered, or which they might order in the future. Further, it made owners of existing gold mines subject to a $10,000 fine and possible prison terms if they used the gold mining equipment they already owned. It should come as no surprise that this brought gold mining in this country to an immediate halt.

There will be more information coming out about the Grand Canyon AFTER the crash...our future is buried there!

BIX WEIR INTERVIEW: Silver Eagle Shortage Conspiracy

GREG HUNTER INTERVIEW: Implosion and Restart of the Financial System Coming

Full Scope of Yellen Meltdown

This is hard to watch...

That's it for me this week. Keep an eye out for further collapses.

Bix

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