Prime XM and CNS in latency network battle over 1.5 ms

PrimeXM is a company providing FOREX brokers with an aggregation engine and access to liquidity  providers.   Some broker’s MT4 servers are located at PrimeXM. 

As you know, CNS provides hosted virtual desktops for FOREX traders.  PrimeXM has been directly connected to our network in NYC and UK, which we call “ON NET” for some time now.  Through these connections, CNS traders utilizing brokers hosted with PrimeX M have been enjoying ultra-low latency and high redundancy connectivity to their FOREX brokers.  This is no doubt a mutual benefit to all parties involved, including the brokers (PrimeXM customers) and the end-traders.

Additionally, the CNS network will soon directly connect to nearly 5000 ISP’s and corporate networks and PrimeXM, thru their ON NET connectivity, stood only to gain from their free connection to the CNS network.  This type of connectivity would normally cost thousands of dollars each month.

Typically the cost of connecting each network in a mutually beneficial peering arrangement is split down the middle  (the datacenter charges a  fee).  However, Instead of splitting the monthly cost for the PrimeXM  x-connects in NYC and UK,  CNS has been paying the full fee as a courtesy from the start.

Late yesterday we were notified by PrimeXM that they intend to charge a flat monthly fee to all external hosting providers that utilize  PrimeXM's network as of July 1st.  This does not include the cross connect fee.

We believe any fee to PrimeXM is unreasonable given the great mutual benefits the ON NET connectivity provides.  CNS is bringing traders closer to the brokers, who are PrimeXM customers.  Some of these brokers include:

ADS Securities
Armada Markets
Bank Direct FX
Benchmark Group
Blackwell
DCFX
Divisa Capital
Ethos
FinFX
Finotec
ForexFS
FXCM Mena
Forex.com (UK)
GoMarkets
LMAX
Sensus Captial markets
Synergy FX
Traders Trust

Unless PrimeXM changes their position, ON NET connectivity to these brokers will be terminated on August 1st.   Traders utilizing these brokers will still be able to connect to their broker, however latency is expected to increase to somewhere between 1-1.5ms.

We should extend some caution:  PrimeXM has threatened to cut the x-connects this coming weekend, but are now setting the date as August 1.  We will update you again if anything changes.

If you disagree with this decision by PrimeXM then please contact your broker right now and let them know.  The brokers are PrimeXM customers and are in the best position to make PrimeXM understand the errors in their decision.

We are now reaching out to individual brokers.  We will post updates to this developing situation on our Helpdesk News Page.

Sincerely,

Barry Bahrami
CEO

CNS Responds to PrimeXM Statement

I'm not sure how PrimeXM could possibly be subsidizing any VPS company.  In our case, the opposite is true.  We have been providing PrimeXM with free ON NET access to thousands of CNS traders for some time - at our own expense.  This has made PrimeXM more attractive to end brokers - PrimeXM customers - who have mutual subscribers with CNS.  Certainly there are many traders who would not be with any PrimeXM broker if it was not for CNS.  If Mr. Diethelm can't understand that then maybe his brokers will help him grasp it.  At the end of the day, he is degrading their quality of service too while giving a competitive advantage to our other connected brokers at the same time.

If you look at the Comcast/Netflix dispute, it was the ISP  connecting all the end-users to the content provider that demanded - and received - a fee from the content provider.  In this case, I believe Mr. Diethelm got it backwards.  It is CNS who is bringing thousands of  traders to PrimeXM, not the other way around.

Mr. Diethelm has told me that their hosting end has made losses and they need to break even.  While I can understand that, I don't believe he fully understands his own business and how this technology works.  We do not charge brokers to connect to ON NET because it makes good business sense – but it is very costly.

He also does not understand that in his business, hosting may be a loss leader.  That is, they would not have the back-end – from which they are likely making hundreds of thousands of dollars each month for a decent sized broker - if it were not for the hosting.  Instead, Mr. Diethelm wants to split it and somehow make the hosting side pay for itself.  If real world business could only be so easy….  It would be like KFC charging for napkins.

Instead of saving money during a cash crunch, Mr. Diethelm seems determined to waste it.  By cutting the free connection PrimeXM is receiving from CNS, IP traffic will simply route around to their  paid Internet interfaces - increasing  their Internet transit costs.  On the other hand, our network will directly connect to nearly 5000 ISP's and corporate networks by end of this month and so all he is really doing is saving CNS money on x-connect fees and shooting himself in the foot at the same time.  If there is a complaint to be levied regarding networking costs, it should be coming from us.   The cost of operating our network likely dwarfs what PrimeXM pays to operate theirs.

Mr. Diethelm has the real-world model all backwards and I don't believe any VPS hosting provider will agree to pay these fees.  Certainly any new fees will need to be covered by the end-traders and I'm not willing to do that.  It would be wrong.  At this point, CNS will dispute a new fee from PrimeXM to any currently connected VPS provider.  It would set a very bad precedent  in which the only possible outcome is higher fees to end-traders.  We  are just not willing to go down that road.

Barry Bahrami
CEO

UPDATE:

I just read Mr. Swann's response in its entirety. Our previous response only addressed the points in the article. I should address a couple points:

Despite their claims, I don't believe any VPS provider has agreed to their fee.  We also do not pay fees for any of our other x-connects to other providers.  They obviously appreciate the mutual business we bring each other.

When Mr. Diethelm contacted me that morning, he informed me that they would be cutting the x-connects this coming weekend. Clearly - we have an obligation to inform our subscribers and partner brokers, most especially after his reckless reply of a "disconnect this weekend". It demonstrates some concerning and unpredictable behavior. And so I believe informing our subscribers and partner brokers was the proper course of action. (1-1.5ms is a lot to some traders.)

I can post the entire transcript of our email conversation if it becomes necessary. I prefer they rescind the decision so we can all get on with more productive business.

Finally - as it relates to support: Really the only time CNS Support needs to contact PrimeXM is due to a technical issue on their side. It's usually initiated by a trader with one of their brokers. They should be happy to resolve their issues. The fact is our connections save PrimeXM money and bring in traffic that generates revenue for them. Trades start at the traders terminal, not PrimeXM. PrimeXM should welcome the connectivity we provide.

Click here to order a VPS at CNS

Russia Halts Gas Supplies To Ukraine

After weeks of worthless foreplay whose outcome was known from the beginning despite just as worthless EU middleman Oettinger assuring everyone a deal was imminent any second now, overnight we got the long-anticipated mutual defection outcome and - as we warned - negotiations between Gazprom and Ukraine/EU fell apart with the Russian energy giant halting supplies to Ukraine unless Kiev prepays any and all gas deliveries from now on. Gazprom said it hadn't received payment for a debt it put at $4.458 billion by the Monday deadline it had set. "Ukraine will receive gas only in the amounts it has paid for," Gazprom said.

The reason for the collapse in talks: Kiev wants to pay $268.5 per 1,000 cubic meters of gas - the price it had been offered when Yanukovich was in power - but, in a compromise last week, said it would agree to pay $326 for an interim period until a lasting deal was reached. Moscow had sought to keep the price at the 2009 contract level of $485 per 1,000 cubic meters, but had offered to waive an export duty, bringing down prices by about one-fifth to $385, which brings it broadly into line with what Russia charges other European countries.

In other words, the delta was less than $60, and certainly a "fair" offer to Ukraine considering it is what Europe pays. However, it wasn't low enough for Kiev, which certainly is out of money once again having to spend the bulk of its IMF/EU aid to keep its military armed, and the only logical outcome - one in which the country would no longer receive something for nothing - transpired.

This hardly will be surprising to anyone: moments ago Gazprom CEO Miller added that Ukraine is unable to pay for its gas obligations in arrears, something the Ukraine side had confirmed previously when Miller added Kiev had been pumping Russian gas in its underground storage facilities at a blistering pace preparing for just this eventuality.

End result, a few hours ago, Gazprom made the following announcement: "Today, from 10:00 a.m. Moscow time, Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies ... Starting today, the Ukrainian company will only get the Russian gas it has paid for."

Gazprom also warned EU on "possible gas transit risks", meaning since all the gas sent to Europe transits Ukraine, it was quite possible Kiev would simply continue to siphon off Russian gas without paying for it. The problem there, however, is that the parties impacted would be Ukraine's BFFs: Germany, central Europe, and, of course, the UK. And what better way to sow discord among otherwise bosom friends than have them start fighting for Russia's energy scraps...

And now the question: how long before Ukraine's alleged 14 BCM in gas held in storage runs out and Kremlin once again has all the leverage. According to simple estimates, a few months at most, and certainly just in time for Ukraine's winter.

Reuters has more:

Gazprom said on Monday it had filed a lawsuit at the Stockholm arbitration court to try to recover the debt, while Ukraine's Naftogaz said it was filing a suit at the same court to recover $6 billion in what it said were overpayments.

A source at Gazprom said supplies to Ukraine had been reduced as soon as the deadline passed. EU data suggested that volumes were broadly stable as of 0630 GMT (7.30 a.m. BST), but it could take hours for data on Russian gas flows via Ukraine to reflect any reduction in supply in Slovakia or elsewhere.

Any reduction of supply could hit EU consumers, which get about a third of their gas needs from Russia, around half of it through pipelines that cross Ukraine. Earlier price disputes led to the 'gas wars' in 2006 and 2009 and Russian accusations that Ukraine stole gas destined for the rest of Europe.

"The gas for European consumers is being delivered at full volume and Naftogaz Ukraine is required to transit it," Gazprom spokesman Sergei Kupriyanov told reporters.

Ukraine's Naftogaz declined to comment, saying it would issue a statement later in the day, but its pipeline operator Ukrtransgaz said it was operating normally.

The "market" was quick to react and "punish" Gazprom:

Russian shares fell on the talks' collapse, which will increase tensions between Moscow and the West and could make it harder to arrange a truce in east Ukraine, where Ukrainian troops are fighting rebels who want the region to be absorbed by Russia.

At 0740 GMT, the dollar-denominated RTS index was down 2.2 percent at 1344 points, while the rouble-based MICEX slid 1.7 percent to 1,476 points, with investors fearful of growing tensions after the failure of talks.

Western countries see the talks as a gauge of Putin's willingness to compromise and had been looking for signs that he was trying to avert the threat of more Western sanctions.

Tensions were already high following Russia's annexation of Crimea after Moscow-leaning president Viktor Yanukovich was ousted and pro-Western leaders took over power in Kiev.

And now that Russia has not only cut off Ukraine but is allegedly once again piling up troops at the border following this weekend's bloodiest escalation yet, it is surely time to BTFD and BTFATH at the same time, because very soon it will surely be time for "Mr Chairman/woman to get to work" and inject gobs more liquidity to give the impression that all is still well.

http://www.zerohedge.com/news/2014-06-16/russia-halts-gas-supplies-ukraine

Even US corporations are fleeing the dollar Titanic

The U.S. dollar is being increasingly dropped as the currency for settling international trade. But perhaps the latest trend provides the most startling evidence yet that the dollar is doomed as the world reserve currency. 

The Financial Times reported today that U.S. corporations are using the Chinese renminbi to buy imports over three times more than they had the previous year:

China's renminbi is rapidly displacing the US dollar as a trading currency not only in Asia and Europe but now also in the US home market.

The value of renminbi payments between the US and the rest of the world rose by 327 per cent in April this year from the same month a year ago (see chart) as more US corporations switched to using the Chinese currency to pay for imports from China, according to data from SWIFT, the international currency settlement firm.

First, US importers can slash the cost of imports from China by agreeing to trade in renminbi rather than US dollars, Lodge said. Second, a recent surge in the popularity of a host of renminbi-denominated financial market instruments are making it easier for US corporates both to hedge currency risk and to earn an investment return from the renminbi they hold.

U.S. corporations are just following the global trend where the largest economies in the world are jumping from the dollar Titanic. Last April, the world's 12th-ranked economy, Australia, joined a growing list of nations that have agreed to bypass the dollar in bilateral trade with China. China, ranked 2nd behind the U.S., also has similar agreements with Japan (3rd), Brazil (6th), India (9th), and Russia (10th). 

Further, the BRICS nations appear ready to shake up the 'world order' with the deployment of their own development bank as reported today byAl Jazeera:

After more than six decades of dictating development policy in much of the emerging world, the Western-led International Monetary Fund and World Bank may soon have some competition.

The BRICS nations - Brazil, Russia, India, China and South Africa - are reportedly close to finalizing their long-awaited development bank and currency reserve, each valued at $100 billion, in what has been billed as a historic challenge by the world's emerging economies to a global financial architecture that has been dominated by the U.S. and Western Europe since its post - World War II inception.

The IMF and World Bank also appear to be pushing for a global economic "reset". "We need to push the reset button. The world is still much too much caught in a crisis-management mode," said Klaus Schwab founder of the World Economic Forum earlier this year. 

A sentiment echoed by IMF head Christine Lagarde during the same event: 

It's only been on year since China formally called for a new global currency citing similar concerns, as reported by the Associated Press:

China is calling for a global currency to replace the dominant dollar, showing a growing assertiveness on revamping the world economy ahead of next week's London summit on the financial crisis.

The surprise proposal by Beijing's central bank governor reflects unease about its vast holdings of U.S. government bonds and adds to Chinese pressure to overhaul a global financial system dominated by the dollar and Western governments. Both the United States and the European Union brushed off the idea.

The world economic crisis shows the "inherent vulnerabilities and systemic risks in the existing international monetary system," Gov. Zhou Xiaochuan

Additionally, in the midst of this global currency shakeup former Federal Reserve chairman Paul Volcker has hinted at a new Bretton Woods to prevent "destructive financial crisis." 

Volcker said in his Bretton Woods speech this past May:

Was the exorbitant privilege of the dollar as a reserve currency also a dangerous temptation to procrastinate - an impediment to timely policy adjustments, risking eventual breakdown?....

A new Bretton Woods conference? We are long ways from that. But surely events have raised, whether we want to admit it or not, some fundamental questions that have been ignored for decades.

Maybe the reset is happening right in front of us. If U.S. companies choose to abandon dollars for imports, the dollar is in very big trouble, and China may get their wish of a new global currency after all - the renminbi.

http://www.sott.net/article/280341-Even-US-corporations-are-fleeing-the-dollar-Titanic

Venezuela Hookers Now Make More As FX Traders

"The dollar is king these days, but having them comes at a price," notes one working girl as Venezuelan prostitutes can more than double their earnings by moonlighting as currency traders, "yes, we got dollars to afford the things our families need, but we have to sell our bodies for it." The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, said Steve Hanke; as Bloomberg notes, those with access to dollars such as prostitutes, tour agents, airport taxi drivers and expatriates are able to shield themselves from inflation by trading their greenbacks at ever higher rates. Those who can’t are seeing their living standards decline. Socialism at work...

As Bloomberg reports,

The bolivar has fallen to 71 to the dollar from 23 on the black market since President Nicolas Maduro succeeded his mentor Hugo Chavez in April 2013. The government tightened currency handouts to stem the outflow of foreign reserves, which are near a decade low. The official exchange rate, reserved for imports of food and medicine, is 6.3 bolivars per dollar.

The dollar shortage is turning Venezuela into a two-tier society similar to the Soviet Union and Cuba, said Steve Hanke, professor of applied economics at Johns Hopkins University in Baltimore. Those with access to dollars such as prostitutes, tour agents, airport taxi drivers and expatriates are able to shield themselves from inflation by trading their greenbacks at ever higher rates. Those who can’t are seeing their living standards decline.

In a country where prostitution is legal, it is the black market in dollars that Maduro has called “perverse,” saying it was designed by the bourgeoisie to destroy his Socialist government.

And so, as one prostitute explains, "greenbacks are king"...

The arrival of a Liberian-flagged freighter with Ukrainian, Arab and Filipino sailors spells one thing for Elena -- dollars.

Within hours of hearing of the ship’s imminent arrival, she has packed her bags and is heading to the crumbling city of Puerto Cabello. It is a 450-kilometer (280-mile) journey from her home in the Western state of Zulia that Elena finds herself doing more often now as Venezuela’s economy contracts, the bolivar slumps and prices soar.

Prostitutes more than double their earnings by moonlighting as currency traders in Puerto Cabello. They are the foreign exchange counter for sailors in a country where buying and selling dollars in the streets is a crime -- and prostitution isn’t. Greenbacks in the black market are worth 11 times more than the official rate as dollars become more scarce in an economy that imports 70 percent of the goods it consumes.

“The dollar is king these days, but having them comes at a price,” Elena, who uses an alias to protect her identity, said late last month in a room she rents in a Puerto Cabello brothel. “Yes, we got dollars to afford the things our families need, but we have to sell our bodies for it.”

The benefits of the trade are stacked around Elena’s room in the Blue House brothel -- bags of rice, flour, sugar and cooking oil -- products that other Venezuelans have to line up for hours to buy at regulated prices in shops, if they can find them at all.

FX traders have been jailed and businesses demanding too high a profit margin shut down but prostitution thrives...

Officials have tried jailing traders, shutting down brokerages and setting up four parallel exchange systems to stem the rise of the unofficial rate in the 11 years since Chavez began controlling the bolivar’s price.

Prostitution has become the only boom industry in Venezuela’s biggest port.

Officials have tried jailing traders, shutting down brokerages and setting up four parallel exchange systems to stem the rise of the unofficial rate in the 11 years since Chavez began controlling the bolivar’s price.

“We can make more in two hours here than working in a shop in a month,” said a prostitute who calls herself Giselle, as she sipped a 12-year-old whiskey in Club 440 striptease joint.

And it's unlikely to end soon...

The percentage of households living below the poverty line rose six percentage points to 27.3 percent in the second half of last year, the first increase since 2010

For women like Giselle, Elena and Paola, prostitution for dollars has become a lifeline keeping them from poverty.

“We haven’t studied, we have no education. What would we do now if we stopped?” said Giselle. “Work for a minimum wage that doesn’t even pay for food? If we wouldn’t be here working the scene, we would be living on the streets.”

http://www.zerohedge.com/news/2014-06-09/venezuela-hookers-now-make-more-fx-traders

EES: Euro goes negative on deposit rate

For some, today a surprise move from the ECB making the Euro the first major currency with a negative deposit rate.  Mario Draghi reduced the deposit rate to -.10 pc from zero - meaning that instead of receiving interest for depositing Euros you pay - and slowly your account is drained to nothing (although at this rate it would take 1000 years, not considering compounding.

From Bloomberg:

The European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy.
ECB President Mario Draghi reduced the deposit rate to minus 0.10 percent from zero, making the institution the world’s first major central bank to use a negative rate. Policy makers also lowered the benchmark rate to 0.15 percent from 0.25 percent. Draghi will hold a press conference at 2:30 p.m. in Frankfurt.

According to the above EUR/USD daily chart, traders reacted mildly considering the EUR/USD recent drop from 1.40 highs.  The bigger question, if this downtrend will hold 1.34/1.35 support here, defining a range as appears in the chart.

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Draghi Disappointment Fears Spike: FX Volatility Surges To 30-Month Highs

While US equity implied volatility has been flat to slightly higher in the last week (as stocks have soared), FX volatility has remained near record lows... until today. Ahead of Draghi's big day tomorrow, EURUSD implied volatility has spiked from around 5 to over 17 - its highest since Dec 2011 - as investor anxiety over Draghi disappointing mixes with a record high short position in EUR FX Futures... it seems more than a few are concerned that Draghi's promise is more hope than reality.

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China Scrambling After "Discovering" Thousands Of Tons Of Rehypothecated Copper, Aluminum Missing

"Banks are worried about their exposure," warns one warehousing source, "there is a scramble for people to head down there at the minute and make sure that their metal that they think is covered by a warehouse receipt actually exists."

The rehypothecated catastrophe that we discussed in great detail here (copper financing), here (all commodities), and here (global contagion) appears to be gathering speed as the China's northeastern port of Qingdao has halted shipments of aluminum and copper due to an investigation by authorities after they found "there is a discrepancy in metal that should be there and metal that is actually there."

Copper prices are tumbling already (despite Gartman's most recent prognostication on Dr. Copper's China recovery meme) as the world's 7th largest port disallows any shipments until the probe is complete.

"It's such a massive port I would think virtually everybody has exposure," warned one analyst, adding that this will be bearish for metals as "a lot of Western banks will try to offload material and try not to deal with Chinese merchants."

Reuters reports,

China's northeastern port of Qingdao has halted shipments of aluminium and copper due to an investigation by authorities, causing concern among bankers and trade houses financing the metals, trading and warehousing sources said on Monday. Port authorities could not immediately be reached for comment. China has a public holiday on Monday.

"We were told we can't ship any material out while they do this investigation," a source at a trading house said. The port of Qingdao is China's third-largest foreign trade port and the world's seventh-largest port, trading with 700 ports in more than 180 countries, according to its website (www.qdport.com/).

"Banks are worried about their exposure," one warehousing source in Singapore said.

"There is a scramble for people to head down there at the minute and make sure that their metal that they think is covered by a warehouse receipt actually exists," he said.

Metal imports have been partly driven in China as a means to raise finance, where traders can pledge metal as collateral to obtain better terms. In some cases the same shipment can be pledged to more than one bank, fuelling hot money inflows and spurring a clampdown by Chinese authorities.

"It appears there is a discrepancy in metal that should be there and metal that is actually there," said another source at a warehouse company with operations at the port.

"We hear the discrepancy is 80,000 tonnes of aluminium and 20,000 tonnes of copper, but we hear that the volumes will actually be higher. It's either missing or it was never there - there have been triple issuing of documentation," he said.

Beijing last year set new rules to curb currency speculation amid signs that hot money inflows helped push the yuan to a series of record highs. The rules required banks to tighten the management of their foreign exchange lending and types of clients that are able to access those loans.

"It's such a massive port I would think virtually everybody has exposure," the trading source said.

"Once the investigation is over, it could be bearish for metals. I think that a lot of Western banks will try to offload material and try not to deal with Chinese merchants," the trading source added.

Critically - this is a major problem for any shadow-banking credit creation process as if the rehypothecated commodity-backed CCFDs are ultimately unwound, 1) someone will not get their collateral (payment problems - bailouts?), 2) less real collateral means less real credit expansion (which banks can;t fill because the firms that use this method of financing are anything but creditworthy), and 3) liquidation of any assets will proceed rapidly...

Goldman concludes that "an unwind of Chinese commodity financing deals would likely result in an increase in availability of physical inventory (physical selling), and an increase in futures buying (buying back the hedge) – thereby resulting in a lower physical price than futures price, as well as resulting in a lower overall price curve (or full carry)." In other words, it would send the price of the underlying commodity lower.

Finally, as we showed before when it comes to commodity financing deals, in terms of total notional value, both copper and aluminum pale by comparison to the one metal most used (by value) in China as a funding substitute: gold

As we commented previously:

When we previously contemplated what the end of funding deals (which the PBOC and the China Politburo seems rather set on) may mean for the price of other commodities, we agreed with Goldman that it would be certainly negative. And yet in the case of gold, it just may be that even if China were to dump its physical to some willing 3rd party buyer, its inevitable cover of futures "hedges", i.e. buying gold in the paper market, may not only offset the physical selling, but send the price of gold back to levels seen at the end of 2012 when gold CCFDs really took off in earnest.

In other words, from a purely mechanistical standpoint, the unwind of China's shadow banking system, while negative for all non-precious metals-based commodities, may be just the gift that all those patient gold (and silver) investors have been waiting for.  This of course, excludes the impact of what the bursting of the Chinese credit bubble would do to faith in the globalized, debt-driven status quo. Add that into the picture, and into the future demand for gold, and suddenly things get really exciting.

So if tens of thousands of tons of copper and aluminum are suddenly "missing", one can assuredly say: "at least the gold is still there." Right?

http://www.zerohedge.com/news/2014-06-04/china-scrambling-after-discovering-thousands-tons-rehypothecated-copper-aluminum-mis

'Two Weeks' To Prepare For Cyber Attack On Bank Accounts - UK Government

Today’s AM fix was USD 1,244.25, EUR 914.42 and GBP 742.26 per ounce.Yesterday’s AM fix was USD 1,244.75, EUR 915.26 and GBP 743.49 per ounce. Gold fell $7.70 or 0.62% yesterday to $1,243.10/oz. Silver slipped $0.06 or 0.32% to $18.75/oz.

Gold fell to the lowest since February 3 and prices completed a sixth day of declines for the longest losing run since August. Gold bullion in Singapore traded sideways around the $1,244/oz level prior to ticking slightly higher to over $1,246/oz at the open in London (0800 BST). Silver for immediate delivery rose 0.5% to $18.849 an ounce after sliding to $18.635 on May 30, the lowest since June 2013. Platinum traded at $1,437.75 an ounce from $1,435.56 yesterday, when prices fell to a three-week low of $1,433.

Palladium added another 0.2% to $833.74/oz. The metal climbed to a 34 month high of $845.24 an ounce on May 28 amid a strike in South Africa and prospects of further sanctions against Russia, the world’s biggest producers.

Gold held near a four-month low as risk appetite saw advances in the dollar and global equities. The Standard & Poor’s 500 Index reached a new record high and the dollar climbed to a two-month high against 10 major counterparts.

Gold declined 3.3% in May, the biggest monthly drop this year, despite quite strong fundamentals.  The euro also weakened 1.7% versus the dollar in May and there is speculation that the European Central Bank will become even more dovish when policy makers meet this Thursday, June 5. Goldman alumni Draghi adopting an even loose monetary policy should support gold prices.

Gold in U.S. Dollars - 5 Years - (Thomson Reuters)

On Friday, the U.S. nonfarm payrolls data will be watched for signs regarding the fragile U.S recovery. As usual, a good jobs number should see gold sold by traders and a poor jobs number should see gold buying.

Gold remains 3.6% higher this year partly due to robust global demand and due to heightened geopolitical risk.

Since May 29, the 14 day relative-strength index has been below the level of 30 that suggests a potential impending rebound to technical analysts.

'Two Weeks' To Prepare For Cyber Attack On Bank Accounts -  UK Government
Computer users are being urged to protect their machines from malware which could allow hackers to steal financial data, access banks accounts and withdraw savers funds.

British investigators have been working with the FBI to trace the hackers behind an attack, which they expect to take place in the next fortnight.

Between 500,000 and one million machines have so far been infected worldwide, according to court documents.

U.S. officials have accused a Russian hacker of masterminding the scam - and prosecutors say those involved have already raked in more than $100 million (£60 million).

The National Crime Agency (NCA) is now warning of a "powerful computer attack". It is urging people to back up important files and make sure their security software and operating system are up to date.

Two pieces of malware software known as GOZeuS and CryptoLocker are responsible for the alert.

They typically infect a computer via attachments or links in emails. If a user clicks on GOZeuS, it silently monitors activity and tries to capture information such as bank details.

"(The links or attachments) may look like they have been sent by genuine contacts and may purport to carry invoices, voicemail messages, or any file made to look innocuous," the NCA warned.

"These emails are generated by other victims' computers, who do not realise they are infected, and are used to send mass emails creating more victims."

The Cryptolocker malware is activated if the first attack is not profitable enough. It locks a user from their files and threatens to delete them unless a "ransom" of several hundred pounds is paid.

Some 234,000 machines were hit by Cryptolocker - bringing in $27m (£16m) in payments - in its first two months, the US Justice Department said. More than 15,500 computers in the UK are infected and "many more" are at risk, according to the NCA.

Stewart Garrick, a senior investigator with the NCA, told Sky News the threat was mainly against individuals or businesses running Windows-based computers.

We have long warned of the vulnerability of having all your investments and savings in electronic format. The nature of our modern financial and banking system exposes investors and savers to new risks that were not there a generation ago.

Prudent diversification today, involves owning some actual physical gold and silver coins and bars in your possession or in allocated, segregated accounts that can be taken delivery of with a phone call.

http://www.zerohedge.com/contributed/2014-06-03/two-weeks-prepare-cyber-attack-bank-accounts-uk-government

EES: FX Volatility down

In the above 4 hour chart of EUR/USD - look the downtrend of the ATR (Average True Range).

Is this the beginning of summer doldrums, just a slow couple of weeks, or EUR/USD locked in a battle between east / west?  Although not leading news, the situation between US & Russia continues to worsen (although more behind the scenes) today with the US Treasury announcing "Weapons of Economic Mass Destruction" and a recent leaked plan for US first strike on Russia.

Meanwhile, the Ruble is up, and EUR/USD is mostly unchanged, since it's fall from the 1.40 barrier.

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Obama Administration Prepares To Unleash Weapons Of Mass Wealth Effect Destruction On Russia

As Senator Ron Johnson so appropriately blasted, "I'm not sure sanctions had any effect whatsoever other than, you know, the Russians have mocked them," and so it is that the Treasury's (little heard of) "Terrorism and Financial Intelligence" division is preparing to unleash its most deadly weapons yet - an arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies. It appears clear that while the US dropped speech-bombs and sanction-mines, proclaiming the disastrous economic significance of these efforts, Russian stocks soared (vastly outperforming the US) and the Ruble strengthened... and so - as undersecretary David Cohen tells the WSJ, "What we've done over the past 10 years is to create a new method of projecting U.S. power..." e.g. sell non-US stocks (thus buy US stocks).

While the US equity market has already become a monetary policy tool, it appears now it is a global geopolitical force for good too...

As The Wall Street Journal reports,

the Obama administration is trying to shore up international support for a growing arsenal of financial weaponry aimed at hitting foreign adversaries with limited cost to allies.

As the administration prepares for a possible next round of sanctions against Russia, it is increasingly relying on an obscure unit inside the Treasury Department—a group of sanctions architects and financial sleuths in the Office of Terrorism and Financial Intelligence—to play a leading role in U.S. foreign policy.

...

Founded to disrupt terrorist financing after the attacks of Sept. 11, 2001, the Treasury office now plays a central role in exerting pressure overseas as the American public has little appetite for military intervention.

"What we've done over the past 10 years is to create a new method of projecting U.S. power," Mr. Cohen said in an interview. "We do that in a way that is unique in the world."

His office includes an intelligence shop that scours bank reports and spy agencies' gleanings for financial patterns that could threaten U.S. security, making Treasury "the only finance ministry in the world with an in-house intelligence unit," Mr. Cohen said.

...

"We have become proficient at reducing collateral damage," Treasury Secretary Jacob Lew said in remarks to be delivered Monday at a conference hosted by the Center for Strategic and International Studies that is looking at the office's work in its first decade. "But we cannot escape the fact that when we deploy these methods, there will be those who will unintentionally pay a price."

But it seems not everyone is so excited about the threat of this obscure war-mongering from the US Treasury...

Some of the resistance Treasury faces comes from U.S. businesses that worry about the fallout. Meddling with an economy as big as Russia's, for instance, could trigger significant losses for U.S. businesses if their work is affected by the sanctions, or if Moscow decided to retaliate.

...

Leaders of several European countries, including Hungary, have opposed tough sanctions on Russia, a major energy supplier on the continent, and their reluctance weighs on the sanctions policy of the EU, which makes such decisions by consensus. German firms have complained openly about the prospect of losing business in Russia.

Still, despite the massive outperformance of Russian stocks (and the Ruble) since sanctions began, Obama is proclaiming his actions as a major factor in Putin's retreat...

Still, Mr. Obama last week credited the sanctions and other measures the international community took against Russia with serving as a key "counterweight" to Russian troops on the border with Ukraine, most of which are now believed to have moved away.

So perhaps that explains the shocking decoupling surge in US equities this week as bonds rallied , volatility rose, and Russia stocks leaked lower...

Welcome to the new order... where elites wage wars on the stock exchanges... while real blood flows on the streets

http://www.zerohedge.com/news/2014-06-01/obama-administration-prepares-unleash-weapons-mass-wealth-effect-destruction-russia

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