Anti-Dollar Alliance Prepares Launch Of BRICS Bank (Brazil, Russia, India, China and South Africa)

Three months ago we discussed in detail the growing anti-dollar hegemony alliances that were building across the BRICS countries (Brazil, Russia, India, China and South Africa). Their efforts at the time, to create a structure that would serve as an alternative to the IMF and the World Bank (which are dominated by the U.S. and the EU), appear to be nearing completion. As AP reports, Brazil's President Dilma Rousseff and Russia's Vladimir Putin have discussed the creation of a development bank to promote growth across the BRICS and hope to produce an agreement on the proposed institution at this week's BRICS Summit.

As AP reports,

Brazil's President Dilma Rousseff and Russia's Vladimir Putin have discussed the creation of a development bank to promote growth in Brazil, India, China, Russia and South Africa.

Rousseff received Putin in the presidential palace in Brasilia on Monday, a day before leaders of the five emerging BRICS nations meet in the northeastern city of Fortaleza.

Rousseff told reporters the bank would top the summit's agenda, adding she hoped the event would produce an agreement on the proposed institution.

She said the five countries "are among the largest in the world and cannot content themselves in the middle of the 21st century with any kind of dependency."

Brazil and Russia also signed bilateral accords on air defense, gas and education

The leaders who will be present (not so many big fans of the US there)...

They seem serious:

• *BRICS DEVELOPMENT BANK KEY TO FOSTER GROWTH IN GROUP: BORGES
• *BRICS BANK AT 1ST TO FINANCE EXCLUSIVELY INFRASTRUCTURE:BORGES
• *RUSSIA'S PUTIN SAYS COOPERATION WITH CHINA IS GROWING
• *PUTIN SAYS RUSSIA TO PROMOTE CURRENCY SWAP WITH CHINA: XINHUA

As we concluded previously, as RBTH reports, it seems the BRICS are not slowing down efforts to create their own IMF-alternative...

The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the International Monetary Fund and the World Bank, which are dominated by the U.S. and the EU. A currency reserve pool, as a replacement for the IMF, and a BRICS development bank, as a replacement for the World Bank, will begin operating as soon as in 2015, Russian Ambassador at Large Vadim Lukov has said.

Brazil has already drafted a charter for the BRICS Development Bank, while Russia is drawing up intergovernmental agreements on setting the bank up, he added.

In addition, the BRICS countries have already agreed on the amount of authorized capital for the new institutions: $100 billion each. "Talks are under way on the distribution of the initial capital of $50 billion between the partners and on the location for the headquarters of the bank. Each of the BRICS countries has expressed a considerable interest in having the headquarters on its territory," Lukov said.

It is expected that contributions to the currency reserve pool will be as follows: China, $41 billion; Brazil, India, and Russia, $18 billion each; and South Africa, $5 billion. The amount of the contributions reflects the size of the countries' economies.

...

The creation of the BRICS Development Bank has a political significance too, since it allows its member states to promote their interests abroad. "It is a political move that can highlight the strengthening positions of countries whose opinion is frequently ignored by their developed American and European colleagues. The stronger this union and its positions on the world arena are, the easier it will be for its members to protect their own interests," points out Natalya Samoilova, head of research at the investment company Golden Hills-Kapital AM.

Perhaps the following sums it all up perfectly...

Economists warn the IMF's legitimacy is at stake, and they say U.S. standing abroad is being eroded.

"Eroded" indeed...

*  *  *

Read more here on the BRICS morphing into an anti-dollar alliance...

If the current trend continues, soon the dollar will be abandoned by most of the significant global economies and it will be kicked out of the global trade finance. Washington's bullying will make even former American allies choose the anti-dollar alliance instead of the existing dollar-based monetary system. The point of no return for the dollar may be much closer than it is generally thought. In fact, the greenback may have already past its point of no return on its way to irrelevance.

Just in Modi to press for equal shareholding in proposed BRICS bank TOI
India will press for equal shareholding for its five member countries in the proposed $50 billion BRICS Development Bank so that no shareholder dominates.

London zinc hits near 3-year top on supply worries

* Shanghai zinc hits highest in 17 months
* Zinc, aluminium rallies unlikely to be sustained - Citi
* Aluminium cash prices reach highest vs benchmark since 2012

London zinc prices jumped to their highest level in almost three years on Monday amid prospects of falling mine supply, while copper prices steadied after four weeks of gains.

Given a generally brightening outlook for global demand, investors have been allocating funds to commodities that are expected to be in tight supply.

Zinc prices in both London and Shanghai have jumped more than 4 percent this month, while London copper and aluminium futures have climbed by more than 2 percent over the period.

"There is a structural story that people seem to buy into on zinc because we are losing supply in closures of huge mines such as (Australia's) Century. Then you have the technical signals which are also bullish," said analyst Dominic Schnider of UBS Wealth Management in Singapore.

Century mine is the world's second largest zinc mine, and is scheduled to run dry in three years. It yielded 105,279 tonnes of zinc in the first quarter, down 31 percent from the previous quarter and 21 percent on a year ago. [ID:nL3N0DH0G6]

Zinc futures on the London Metal Exchange (LME) rose to $2,325 a tonne, the loftiest since August 2011. Prices could target $2,450 in the short to medium term, Schnider said.

Shanghai zinc ended up 0.9 percent at 16,410 yuan

($2,600) a tonne, having earlier reached 16,550 yuan a tonne - the highest since February 2013.

But uncertain demand from China, the world's top consumer of most commodities, is expected to cap gains in metal prices

"Sluggish growth in galvanised steel sheet production in China year to date ... and subdued Chinese construction do not support a bullish demand picture," Citi said in a research note.

"We expect a short-term correction and as such we forecast zinc to trade at around $2,000-2,200/t on a 3-6 month view."

Markets will be watching for China's money supply figures this week which may flag an improvement in factory activity in the coming months.

China's fiscal expenditure surged 26.1 percent in June from a year earlier to 1.65 trillion yuan ($265.84 billion), reflecting government efforts to speed up spending to shore up the economy.

China's GDP and industrial output figures on Wednesday this week will also give fresh direction.

LME copper was barely changed at $7,150 a tonne by 0723 GMT, after ending marginally higher last week. The most-traded September copper contract on the Shanghai Futures Exchange slipped by 0.2 percent to 50,670 yuan a tonne.

Reflecting improved investor appetite for copper, hedge funds and money managers raised their bullish bets on copper futures and options in the week to July 8, according to data from the Commodity Futures Trading Commission. In aluminium, prices have been driven by scant spot market supplies, which propelled cash prices to the highest against the benchmark since December 2012 on Friday .

LME aluminium was up slightly at about $1,946 per tonne, after rising for the past two weeks.

Higher cash prices will curb marginal profits for some financing deals that have locked metal away from the market, suggesting more stocks may be delivered to LME inventories.

"Producer selling appears to have capped the recent rally," Citi said. "We now see little prospect of prices now sustaining upside moves outside a $1,850-$1,950/t price range in H2."

CME Group Cutting Margins For Gold, Silver, Copper Futures

 CME Group is lowering margins for gold, silver and copper futures on the Comex division of the New York Mercantile Exchange.

The new rates will be effective as of the close of business on Monday, according to a notice from CME Group. The exchange operator said the changes were the result of “the normal review of market volatility to ensure adequate collateral coverage.”

Margins act as collateral on futures trades. CME Group also changed margins for electricity, equity-index, ethanol, natural gas futures and a number of other products.

In the case of the main 100-ounce gold-futures contract, CME Group trimmed the “initial” margin for new  speculative trades to $5,940 from $6,600. The “maintenance” margin for existing speculative trades, plus all hedge positions, was cut to $5,400 from $6,000.

For the 5,000-ounce silver contract, CME Group lowered the initial speculative margin to $8,250 from $9,075. The  margin requirement for maintenance speculative positions, plus all hedge trades, was lowered to $7,500 from $8,250.

For the Comex copper contract, the initial speculative margin was cut to $2,970 from $3,300. The margin for maintenance speculative and all hedge positions was reduced to $2,700 from $3,000.

CME Group also lowered the margins for the smaller-sized gold, silver and copper products, as well as aluminum and iron ore.

Peru set to become world’s second largest copper producer in 2016

Peru is on track to double its current copper production by 2016 and so recover the second position among the world’s largest production of the industrial metal, the Minister of Energy and Mines said.

The country’s total production will hit 2.8 million tonnes in 2016, up from 1.4 million tonnes in 2013, thanks to five major projects slated to begin operations that year

During a visit to Freeport-McMoRan Copper & Gold’s (NYSE:FCX) Cerro Verde copper complex, about 30 km southwest of Arequipa, minister Eleodoro Mayorga Alba said the country’s total production will hit 2.8 million tonnes in 2016, up from 1.4 million tonnes in 2013, thanks to five major projects slated to begin operations that year, OutletMinero (in Spanish) reported.

Freeport-McMoRan’s Cerro Verde’s $4.6 billion expansion, scheduled for completion during the first quarter of 2016, is one of those key projects, Mayorga Alba noted.

Work at Cerro Verde is 22% complete and the extended mine will start initial production in the second half of 2015, the minister added.

Another card up Peru’s sleeve is Southern Copper’s (NYSE:SCCO) controversial $1 billion Tía María mine, which is expected to begin production in March 2016.

Currently China is the second largest producer of the red metal, with an annual output of about 1.6 million tonnes per year, well below the nearly 5.8 million annual tonnes produced by Chile, the world’s leader, based on data provided by CRU Consulting.

Global copper producers —being Chile's Codelco the largest, followed by Freeport-McMoRan, Glencore (LON:GLEN) and BHP Billiton (ASX:BHP)— plan expansions of mine capacity that would add between 1.1m tonnes and 1.3m tonnes of copper per year to the market until 2016.

Such increases would be roughly equivalent to the annual output of Chile's Escondida, the world’s largest mine, which provides about 5% of the world supply.

Peru’s steady growth in recent years has been largely driven by mineral production. Last year the country injected $9.7 billion to the local economy coming from mining, jumping 14% when compared to 2012.

Authorities have said they expect to reach similar levels by the end of this year, as there is still there is plenty for everyone to get a descent piece of the resources pie. Peru holds13% of the world's copper reserves, 4% of gold, 22% of silver, 7.6% of zinc, 9% of lead and 6% of tin reserves, official figures (in Spanish) show.

A Significant Decline is Coming to The Stock Market

Last week we wrote that a trend turn is coming to stocks. Stocks immediately declined sharply. However, we believe there is a much larger decline coming and that it could start soon. Didn't it already start this past week? Maybe, maybe not. This past week's decline has several "corrective" characteristics that suggest it is not the big decline we expect to start. There could be more upside before that large sell-off begins. What we can ascertain this weekend is that a significant decline is not far away. If it started last week, a much deeper decline is on its way. If it did not start last week, it could start very soon. Here is some of the evidence why we believe a significant decline should be underway within a few weeks:

Above we see that there is a Bearish Divergence between the S&P 500 and Demand Power. The Divergence is maturing, suggesting a top is close at hand and a significant decline should begin soon.

Above we see that there is a Bearish Divergence between the NASDAQ 100 and its Demand Power Measure. The Divergence s maturing, suggesting a top is close at hand and a significant decline should begin soon.

Above we see that there is a Bearish Divergence between the S&P 500 and the NYSE 10 Day Average Advance/Decline Line Indicator. The Divergence is maturing, suggesting a top is close at hand and a significant decline should begin soon.

Above, we see similar Bearish Divergences with their 10 Day Average Advance/Decline Line Indicators and prices for the small cap Russell 2000 and also the NASDAQ 100. These divergences are maturing, suggesting a top in stocks should arrive over the next two weeks, with the start of a strong decline.

Robert McHugh

CME / Thomson Reuters win race to replace London silver fix

As anticipated earlier this week, the race to replace the London silver price fix is finally over, as the London Bullion Market Association (LBMA) has chosen the joint Chicago Mercantile Exchange/Thomson Reuters bid to replace the current 117-year-old price process, which formally ends on August 14.

The LBMA said the joint tender met the requested criteria, in that it was electronic, auction-based and auditable, while remaining tradeable with an increased number of direct participants.

In a statement Friday, the LBMA said the joint tender met the requested criteria, in that it was electronic, auction-based and auditable, while remaining tradeable with an increased number of direct participants.

At present, the silver fix is set each day at noon by three large banks, which are Deutsche Bank, HSBC and Scotiabank by way of a daily conference call.

The CME Group will provide a price platform and methodology, while Thomson Reuters will be responsible for administration and governance, it added.

Thomson Reuters already works with the LBMA to administer Gold Forward Offered Rates (GOFO), a rate used in swap deals.

The association will develop a process of accreditation for silver price participants, with the legal aspects of this division of responsibilities to be finalized prior to the new price mechanism going live.

Financial benchmarks have come under strong scrutiny from regulators around Europe and the United States since 2012, when it became public that British banks had rigged the London Interbank Offered Rate (Libor).

Gold near 3.5-month high on Portugal bank worries

Gold fell for the first time in three days Friday but continued trading near a 3.5-month high with demand steady on investor concern about Portugal's biggest bank.

Spot gold changed hands at $1,336.00 an ounce around 2:20 p.m. Eastern Standard Time, up 70 cents from Thursday's close of $1,335.30. Earlier Thursday it reached $1,345, its highest level since mid-March.

Meanwhile on Friday, gold futures for August delivery traded around $1,337 per ounce on New York's COMEX.

Gains in European shares following declines Thursday put some downward pressure on the yellow metal. But market participants remain worried about the euro zone's financial health as trading in Banco Espirito Santo's stock has been suspended.

In times of political or financial turmoil, investors seek a safe haven in gold, whose price was pushed up sharply during the European debt crisis.

Escalating violence in Israel and the US Federal Reserve's benign stance on interest rates are also supporting gold.

Indian duty

Also Thursday, India maintained a 10% duty on bullion imports. That prompted jewellers awaiting a reduction of the duty to resupply.

India raised the duty last year sparking a dramatic increase in gold smuggling, which yesterday's move may exacerbate.

Precious metals have outperformed other commodities this year with double digit gains for gold and palladium and a strong performance for silver and platinum.