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Tensions went up a notch in a maritime border dispute between China and Vietnam in the South China Sea on Friday, with Hanoi announcing it would carry out live-fire naval drills near disputed island chains.
Vietnam, which has accused China of escalating tensions in the region during two maritime confrontations in recent weeks, warned vessels to stay out of the sea exercise area off its central Quam Nang province on Monday.
China had reacted angrily after Vietnam said a Chinese fishing boat rammed cables from an oil exploration vessel inside its exclusive economic zone on Thursday. Chinese fishing boats were also chased away by armed Vietnamese ships, Beijing said.
Chinese analysts said the long-running sovereignty dispute near the Spratly [in Chinese, Nansha] Islands looks set to get worse.
"Even though both sides [in this dispute] subscribe to international maritime law, they have different interpretations," said Wu Fan, editor of the U.S.-based magazine China Affairs.
"They are both using the interpretation which is in their interest to use, and ignoring the interpretation which isn't."
He said Beijing had started to comb through records dating from pre-1911 Imperial China to find historical backing for its sovereignty claims over the Spratlys, which are thought to be rich in oil and natural resources.
"So the situation between the two sides is becoming more and more [polarized], and more and more serious," Wu said.
He said China's military had designated the South China Sea as one of its core interests last year, and that Beijing is apparently continuing to treat it as such.
Seton Hall University professor Yang Liyu said it would be hard now for either side to back down.
"This is like putting out a fire with gasoline," Yang said.
"This is very likely to get bigger until it affects stability throughout the South China Sea region," he added. "The disputes and clashes are likely to get more and more serious."
"Vietnam isn't going to back down, and China isn't going to back down. Especially not on the island chains."
"No country wants to relinquish sovereignty," he added.
China on Thursday accused Vietnam of "gravely violating" its sovereignty, saying Vietnam's actions had endangered Chinese sailors' lives, and warned it to stop "all invasive activities."
The Philippines —which has called on China and Vietnam to stop adding to tensions —and Malaysia, Brunei, and Taiwan also have rival claims in the area.
Last weekend, hundreds of people in Vietnam protested in front of Chinese diplomatic missions in Hanoi and in Ho Chi Minh City, singing patriotic songs and carried banners supporting Vietnam's claim to the Spratlys and Paracel [In Chinese, Changsha] island chains.
The protests were announced by netizens using social media, including Facebook, text messaging, blogs, and chat forums.
A few days later, more than 200 Vietnamese websites were attacked and some defaced with Chinese flags, according to a state-run Vietnamese Internet security firm.
Among the websites targeted since the beginning of June were the official sites of the ministries of agriculture and foreign affairs. The hackers left some writings in Chinese and Chinese national flags, the Bach Khoa Internetwork Security Center said.
Meanwhile, the U.S.-based petition-hosting website Change.org said more than 100,000 people in 115 countries had joined an online campaign to rename the South China Sea to the Southeast Asia Sea.
“The sea is not restricted to a specific country,” the petition states. “The countries of Southeast Asia encompass almost the entire South China Sea with a total coastline measuring approximately 130,000 kilometers (81,250 miles) long; whereas Southern China’s coastline measures about 2,800 kilometers (1,750 miles) in length.”
Reported by Shi Shan for RFA's Mandarin service. Translated and written in English by Luisetta Mudie.
Russia Joins China In Rejecting U.S. Debt, Buys Gold Instead.
China, the largest foreign holder of U.S. debt, has been concerned about the safety of its U.S. treasury debt holdings for years.
In March 2009, Chinese Premier Wen Jinbao warned Washington that "We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried."
Premier Jinbao's was right to worry about the safety of China's U.S. debt holdings. Since March 2009, the U.S. debt has increased by more than $3 trillion and Congress is now being pressured by the Federal Reserve and the Treasury to increase the national debt limit by another $2 trillion. The parabolic increase in U.S. debt, along with recent downgrade warnings on U.S. debt from the credit rating agencies, must be keeping the Chinese up at night.
On Saturday, the Wall Street Journal reported that Russia also decided that holding U.S. debt has become too risky. In comments to Dow Jones, Arkady Dvorkovich, chief economic adviser to Russian President Medvedev, said "The share of our portfolio in U.S. instruments has gone down and probably will go down further." According to the Wall Street Journal, Russia has already reduced its holdings of U.S. debt from $176 billion last fall to $125 billion in April of this year.
Besides diversifying into other currencies such as the Canadian and Australian dollar, Russia has also been substantially increasing its purchases of gold. Recent reports from the World Gold Council and IMF show that Russia recently bought 50 tons of gold bringing its total gold holdings to almost 670 tons.
If Russian economic advisor Dvorkovich looks at the above chart of U.S. debt, he may well decide to run to the exits and dump all of Russia's U.S. debt holdings.
The United States has truly entered the Bizarro stage of national finance. As the exponential increase in U.S. debt moves the Nation ever closer to a debt crisis, Fed Chairman Bernanke and Treasury Secretary Geithner are predicting dire consequences if Congress does not increase the U.S. debt limit. Should it really be a surprise that two of the world's biggest holders of U.S. debt are heading for the exits?
Gold Demand Trends - Very Bullish. The World Gold Council has just published the latest issue of Gold Demand Trends full year 2010. This article sets out the key factors that drove gold demand in 2010, together with expectations for 2011. The key aspects of the report are summarized below.
Global gold demand in 2010 reached a 10 year high in tonnage and an all time high in value, with strong demand across all sectors.Gold demand for the year reached a ten year high with annual demand of 3,812.2 tonnes worth approximately US$150 billion.
Key factors • The jewellery sector enjoyed a strong recovery in 2010, with annual demand 17% higher than in 2009. Asian consumers drove jewellery demand, particularly in China and India.
Chinese demand is expected to continue to increase rapidly during 2011 as economic growth in China remains strong, while Indian gold jewellery demand is likely to remain resilient and grow.
• Asian consumers led demand with the revival of the Indian market and strong momentum in Chinese gold demand, which together constituted 51% of total jewellery and investment demand during the year.
• A structural shift in central bank policy towards gold meant that in 2010 central banks became net buyers of gold for the first time in 21 years, removing a significant source of supply to the market.
• Investment demand was down 2% compared with 2009, but was the second highest year on record at 1,333 tonnes, which equated to US$52 billion. Investment demand for gold as a foundation asset in portfolios is likely to remain strong, fuelled by ongoing uncertainty surrounding global economic recovery and fiscal imbalances, as well as fear of impending inflationary pressures and currency tensions.
Gold demand statistics for full year 2010 • Gold demand in 2010 reached a 10 year high of 3,812.2 tonnes. Demand was up 9% year-on-year, and marginally above the previous peak of 2008 despite a 40% increase in the annual average price level between 2008 and 2010. In value terms, total annual gold demand surged 38% to a record of US$150 billion.
• Jewellery demand was remarkably robust in the face of record prices in the majority of currencies. Annual demand for gold jewellery rose 17% from 1760.3 tonnes in 2009 to 2059.6 tonnes. The rise in annual average prices over the same period was 26%. In value terms, this resulted in record annual jewellery demand of US$81 billion.
• Investment demand, comprising bar and coin demand, ETFs and similar products, but excluding OTC investment demand, remained stable in 2010, down just 2% from the exceptional levels seen in 2009. This equated to a 23% rise in value terms from US$43 billion in 2009 to US$52 billion in 2010. Physical bar demand was particularly strong during the year, recording an annual gain of 56% at 713.2 tonnes.
• Demand for gold ETFs and similar products totalled 338.0 tonnes during 2010 or 9% of total demand. Although this was 45% below the 2009 peak of 617.1 tonnes, it was nevertheless the second highest annual figure on record. As at the end of 2010, total gold holdings in ETFs and similar products stood at 2,175 tonnes with a US$ value of $96 billion.
• Demand for gold used in technology was 419.6 tonnes, 12.4% higher than in 2009 as the electronics segment fuelled recovery in the sector, with demand returning to long-term trend levels. Demand soared by 41% year-on-year in US$ terms to a record US$17 billion.
• India was the strongest growth market in 2010. Total annual consumer demand of 963.1 tonnes registered growth of 66% relative to 2009, which was largely driven by the jewellery sector. In value terms this was worth US$38 billion.
• China was the strongest market for investment demand growth. Annual demand for small bars and coins increased by 70% year-on-year, totalling 179.9 tonnes, which is worth approximately US$7 billion.
• Total supply is estimated to have increased marginally, 2% higher year-on-year for the full year 2010, with a number of new projects across a range of countries and regions contributing to higher levels of mine supply. Within total supply, recycled gold, which accounts for 40%, fell 1% compared with the previous year to 1,653 tonnes.
The Film Determined to find the law that requires American citizens to pay income tax, producer Aaron Russo ("The Rose," "Trading Places") set out on a journey to find the evidence. This film which is neither left, nor right-wing is a startling examination of government. It exposes the systematic erosion of civil liberties in America since 1913 when the Federal Reserve system was fraudulently created. Through interviews with U.S. Congressmen, a former IRS Commissioner, former IRS and FBI agents and tax attorneys and authors, Russo connects the dots between money creation, federal income tax, and the national identity card which becomes law in May 2008. This ID card will use Radio Frequency Identification (RFID) chips which are essentially homing devices used to track people. This film shows in great detail and undeniable facts that America is moving headlong into a fascist police state. Wake up! ------ Dear Lovers of Liberty, the struggle is just beginning! Get ready... Are you aware by May of 2008 the law will require you to carry a national identification card? Are you aware that there are plans being developed to have all Americans embedded with a Radio Frequency Identification (RFID) computer chip under their skin so they can be tracked wherever they go? Are you aware the Supreme Court has ruled that the government has no authority to impose a direct unapportioned tax on the labor of the American people, and the 16th Amendment does not give the government that power?
This list shows how countries stack up in terms of gold reserves.
As you can see, only 1.6% of China's foreign reserve holdings are in gold. They still hold over a trillion is in US debt. But they're actively working on diversifying that "overweight" asset allocation, as over any extended period its value has dropped.
Back in April, I wrote about how some analysts say China may spend up to $1 trillion of their foreign reserves:
China has been moving away from the dollar, and into alternative stores of wealth for years now. But $1 trillion into gold? If it happens, such a large move would further threaten the dollar's status as reserve currency. It would also provide further buying pressure in gold for years to come (as the dollar crumples into a pitiful heap on the floor).
In an otherwise quiet article about central banks today, Bloomberg quoted an analyst who says China may use up to a third of their $3 trillion in foreign reserves to purchase gold.
China has been moving away from the dollar, and into alternative stores of wealth for years now.
But $1 trillion into gold? If it happens, such a large move would further threaten the dollar's status as reserve currency. It would also provide further buying pressure in gold for years to come (as the dollar crumples into a pitiful heap on the floor).
China, which has just 1.6 percent of its reserves in gold, may invest more than $1 trillion in bullion, [Michael Pento of Euro Pacific Capital] said. “China wants to be an international player, and they need to own more gold than they currently have.”
...“China is out to have more gold than America, and Russia is aspiring to the same,” [Robert] McEwen, [the chief executive officer of producer U.S. Gold Corp] said yesterday in an interview in New York. “When you have debt, you don’t have a lot of flexibility. China wants to show its currency has more backing than the U.S.”
...China, with more than $3 trillion in foreign-currency reserves, plans to set up new funds to invest in precious metals, Century Weekly reported this week. Russia purchased 8 tons of gold in the first quarter.
This is a big reason gold and silver are headed higher. Occasional dips are inevitable, of course. When they happen bears will declare the bubble popped (after a one-week correction).
Then the uptrend will continue, intact. And they'll say, "bubble! bubble bubble bubble bubble, bubble!", again.
And gold bugs will be laughing all the way to the vault.
That's how I see it, anyway. Could be wrong, it's happened before. But, I did say the same thing when gold was $1140 in Why I'm Buying the Gold Dips in December 2009: "The bottom line is that Bernanke and crew actually want inflation. It's easier than the alternatives: raising taxes or slashing spending. And it will help erase debts. It will also wipe out the savers and reward the borrowers — but that seems to be the path we're on, like it or not.
Besides, do you really think they will allow America's debt to be paid off with dollars worth more rather than less?
Of course not. Devaluing our currency and printing money are part of a strategy. A reckless and morally hazardous one, but still a strategy.
So that's why I still am bullish on precious metals. I'm hoping for a nice pullback in gold and silver. It'll be a great buying opportunity. Once everyone realizes that the Fed's printing presses are just getting warmed up, it'll be off to the races again."
The time will eventually (and sadly) come to sell significant amounts of precious metals, but I just don't see us being close to that point yet. Inning 4 or 5, if this were a ballgame, perhaps? "
Lots more printing ahead, though it's hard to say how much. My view has been that we see at least QE5 (possibly under a different name) and $3,500 gold and $150 silver before things top out.
It all depends on how much inflation the public will take before it declares shenanigans; forcing spending cuts and a tightening of monetary policy.
Then - after a (hopefully brief) adjustment period - America and the world will be on a path to sustainable growth. A time to move from being overweight in metals, and shift into stocks and real estate. Updated 4/30/2011 for clarity.
China encouraging citizens to buy Silver and Gold
Chinese consumers rushing to buy gold in China even at record high price
China Focus: Inflation in China
China 'IS' discreetly buying 'LOTS OF GOLD' (confirmation from the horse's mouth)
Gold Aimed at $6,500/oz, Silver... $600/oz
Share220 Posted by Wealth Wire - Tuesday, May 17th, 2011
By Greg McCoach
Get ready. We are now entering the final stages in the collapse of the U.S. dollar...
And it's not going to be pretty.
The massive increases in money supplies will tank the value of the dollar and erode the very fabric of America's economic security.
As a result, gold and silver prices are will no doubt skyrocket, despite the short-term major volatility we've recently seen.
Many investors have been rushing to me asking if it's too late to buy precious metals with gold in the $1,500/oz range and recently spiking to nearly $50/oz. I keep telling them the same thing...
Despite whatever the price of gold or silver is today, both metals will be worth more than twice as much within 12 months.
That means $3,000 gold this time next year! After that, I think gold could break $6,500 an ounce.
And as you know, silver's gains will be much greater. When the bull market is all said and done, there's no doubt we could be looking at silver prices exceeding $600 an ounce.
And we can all thank the crooks in D.C. for it...
In his first ever press conference after a policy meeting two weeks ago, Bernanke told us all the ways he has saved our economy.
What a crock!
The Federal Reserve can't prevent the coming financial meltdown.
So far this year, the U.S. Treasury has raised $293 billion in net cash by selling debt securities. And so far this year, the Federal Reserve has purchased a net $330 billion of Treasury notes and bonds.
This translates to the Fed providing 100% of the net new cash the Treasury has raised this year — plus another $37 billion needed to mop up even more mess!
But who will buy Treasuries when the Fed doesn’t? China? Germany? Japan? You? Me?
Going to Hell in a Hand Basket
We are now getting very close and even accelerating toward the end game for the U.S. dollar and the American Empire as we know it. Have your life boats ready.
It won't be much longer before people really start buying both gold and silver to protect themselves from this enviable collapse.
The only way out of our dilemma, absent very large entitlement cuts, is to default in one (or a combination) of four ways:
Outright via contractual abrogation (surely unthinkable)
Surreptitiously via accelerating and unexpectedly higher inflation (likely, but not significant in its impact)
Deceptively via a declining dollar (currently taking place in front of our very eyes)
Stealthily via policy rates and Treasury yields far below historical levels (paying savers less on their money and hoping they won’t complain)
I would bet on a combination of deception, betrayal, and trickery.
Following the Smart Money
This past month, the University of Texas bought a billion dollars' worth of gold and is having it stored in a private depository. This is huge news.
More and more, the intelligent group of our population is starting to figure things out. Unfortunately, however, the unsuspecting masses are being led perfectly by the well-oiled government/media propaganda machine like sheep to the slaughter.
This is going to be a terrible reality for so many unfortunate Americans who have no idea as to what is coming shortly down the road.
And you can rest assured the politicos in Washington will do what all politicians do when they are trapped in such a manner: lie, cheat, steal, spin the facts, cover their asses at all costs, abuse their power, and misinform on a massive scale.
But even with the help of the government-controlled media, the time of consequences can no longer be held at bay.
Free market forces will win; governments, banksters, and their power structures will come tumbling down just as we have been seeing elsewhere around the world these past six months.
The spoils will go to those who were prepared and understood the debacle years before it hit.
The precious metals and the junior mining shares will reward those who understood, and punish those who didn’t.
Yes, the precious metals market will be extremely volatile in both directions at times, but buy the dips as gold and silver will keep heading to higher and higher ground.
As long as the Fed and U.S. government follow the course of “Quantitative Easing” or anything like it, you can rest assured that gold and silver prices will soar!
If you leave your money in U.S. banks in dollars, you will lose most of the purchasing power of your money.
Use the downside volatility to buy any dips you see in the metals. Whether you bought gold at $600, $1,000, or $1,500 an ounce, it really won’t matter much when gold is trading at $6,500 an ounce or more.
The same thing can be said for silver. Don’t worry so much whether you bought at $25 or $50; silver will be priced in the hundreds of dollars an ounce, possibly $600 or more as the silver to gold ratio descends to 15 to 1, and possibly even 10 to 1.
In fact I believe silver stocks will actually be one of the biggest winners over the next 24 months.
Time is of the essence.
The lies of the Fed and the U.S. gov't are becoming bigger and more complex, their noses growing longer and longer as the fiat currency-economic-insanity comes to a head.
Massive Solar Flare Misses Earth, More To Come
Friday, June 10th, 2011
It wasn't the solar flare itself that shocked scientists, it was the amount of plasma ejected out into space that was unusual. It may have been the largest such "coral mass ejection" (CME) event in recorded history.
"We've never seen a CME this enormous", said astrophysicist Phillip Chamberlin of NASA's Solar Dynamics Observatory, according to National Geographic.
As part of an 11-year cycle, he sun is heading into a period of heightened activity which will peak some time from 2013 to 2014.
The June 7 event missed earth, but experts such as Mr. Chamberlain warn that the coming solar storms could disrupt the world's growing technological infrastructure. More from Nat Geo:
The ejection of particles burst from the right limb of the sun and sprayed into space, so the blast will miss Earth—though the explosion may brighten auroras near Earth's poles, Chamberlin said.
But he warned space-weather experts are concerned about future solar events.
The sun's 11-year cycle of activity, driven by tangled surface magnetic fields, will hit its maximum in late 2013 or early 2014. Magnetic messiness will peak around that time and prompt nasty solar storms.
In 1953, Harry Markowitz developed an ingenious approach to managing investment portfolios that has since been dubbed Modern Portfolio Theory (MPT). Rather than trying to predict individual stock price movements using fundamental or technical analysis, he concentrated on looking at the performance of a portfolio based on the combination of its components' risk and return.
Unfortunately the underlying calculations required to implement his theory were onerous and not conducive to solving by hand. Therefore it wasn't until the late 1970s, when computers started to show up everywhere, that MPT took off. Markowitz went on to win the Nobel Prize for Economics in 1990 for his contribution of MPT.
Markowitz and Modern Portfolio Theory, conference LIVE!!! (Part 1)
Lessons From the Father of Modern Portfolio Theory
By June 30, 2011, America will face its toughest decision in more than 200 years. Either declare our nation insolvent, or send the price of everything you buy through the roof. But in this video I'll show you exactly how you could avoid America's...
China, Russia Could Make U.S. Stealth Tech Obsolete
It’s been a pillar of the U.S. military’s approach to high-tech warfare for decades. And now, it could become obsolete in just a few years.
Stealth technology — which today gives U.S. jets the nearly unparalleled ability to slip past hostile radar — may soon be unable to keep American aircraft cloaked. That’s the potentially startling conclusion of a new report from Barry Watts, a former member of the Pentagon’s crystal-ball-gazing Office of Net Assessment and current analyst with the Center for Strategic and Budgetary Assessments in Washington.
“The advantages of stealth … may be eroded by advances in sensors and surface-to-air missile systems, especially for manned strike platforms operating inside defended airspace,” Watts cautions in his 43-page report The Maturing Revolution in Military Affairs (.pdf), published last week.
That could come as a big shock to the U.S. Air Force, which has bet its future on radar-dodging technology, to the tune of half-a-trillion dollars over the next 30 years. The Navy, on the other hand, might have reason to say, “I told you so.”
That is, if Watts’ prediction comes true — and that’s a big “if,” the analyst admits.
“In recent years there has been speculation that ongoing advances in radar detection and tracking will, in the near future, obviate the ability of all-aspect, low-observable aircraft such as the B-2, F-22 and F-35 Joint Strike Fighter, aka JSF, to survive inside denied airspace,” Watts writes, referring to America’s stealth bombers and fighter jets.
Stealth-killing advances include VHF and UHF radars being developed by Russia and China, and a “passive-detection” system devised by Czech researchers. The latter “uses radar, television, cellular phone and other available signals of opportunity reflected off stealthy aircraft to find and track them,” Watts explains.
These new detection systems could reverse a 30-year trend that has seen the U.S. Air Force gain an increasing advantage over enemy defenses. That phenomenon began with the introduction of the F-117 stealth fighter in the late 1980s, followed by the addition of the stealthy B-2 (pictured) in the ’90s and, more recently, the F-22.
So far, the Air Force has only ever fielded a few hundred stealth aircraft, requiring it to constantly upgrade some nonstealthy fighters. But the flying branch plans to purchase more than 1,700 F-35s (at more than $100 million a pop) from Lockheed Martin in coming decades, plus up to 100 new stealth bombers. In that sense, the stealth era is only now truly dawning — just as effective counter-measures are nearly ready, Watts points out.
In that sense, the Air Force’s stealth gamble could turn into very, very long odds.
Comparatively, the Navy has played it safe. At the same time the Air Force was investing its research and development dollars in stealth, the Navy has taken a different approach to defeating enemy defenses. Where the Air Force plans to slip past radars, the Navy means to jam them with electronic noisemakers or destroy them with radar-seeking missiles. That’s why the only radar-killing planes in the Pentagon inventory belong to the Navy — and why, until the forthcoming F-35C, the Navy has never bought a stealth fighter.
Nowhere is that philosophical difference more apparent than in the Pentagon’s on-again, off-again effort to develop jet-powered killer drones. The Navy’s X-47 drone, built by Northrop, is minimally stealthy. Boeing’s Phantom Ray, intended mostly for Air Force programs, is arguably as stealthy as an F-35 in certain scenarios.
There’s still a chance the Air Force’s bet on stealth could pay off, Watts writes. That largely depends on two capabilities planned for the F-35.
First, there’s “the JSF’s sensor suite and computational power,” which Watts explains “can be easily upgraded over time due to the plane’s open avionics architecture, giv[ing] the F-35 an ability to adjust its flight path in real time in response to pop-up threats, something neither the F-117 nor the B-2 have been able to do.”
Second, the F-35’s radar, a so-called “electronically scanned array,” could in theory be used to jam an enemy radar or even slip malicious software code into its control system.
Neither of these capabilities is actually a form of stealth, per se. Rather, they would complement the F-35’s ability to absorb or deflect radar waves. Described uncharitably, the Air Force has had to add nonstealthy skills to its stealth fighters, just to help them survive.
Watts doesn’t address one other way the Air Force could preserve its stealth advantage: by speeding up the development of drone aircraft — which, by virtue of their smaller size, have the potential to be much stealthier than any manned aircraft.
It’s also worth noting that America’s biggest rivals don’t doubt the continuing relevance of stealthy planes. Russia and China have both unveiled new stealth-fighter prototypes in the last two years.
The way Watts describes it, the “end of stealth” is just one of the many big changes that could occur in near-future warfare — big emphasis on “could.” “The honest answer to the question about how fundamentally war’s conduct will change — and how soon — remains: It depends.”