Japanese institutional investors crash hedge fund short positions in gold and silver with a tsunami of money
Posted on 10 April 2013
A tsunami of money is crashing the short positions in gold and silver held by global hedge funds which veteran gold traders think is going to result in a massive leap for gold and silver prices over the coming months. The hedge funds simply did not forecast the Bank of Japan printing money on the scale it announced last week.
Japanese institutions are reverting to the well-known ‘carry trade’ whereby they borrow cheaply in yen and invest overseas in assets with higher returns. That is not so difficult when Japanese money costs a fraction of one per cent and many other asset classes still pay more but there is a severe devaluation downside risk.
QE boosts gold and silver
The QE1 and QE2 money printing programs totalling $2.5 billion from the Federal Reserve took silver prices from $8 to $50, a stunning 525 per cent increase in 30 months from the low point of 2008. Gold was up $680 to $1,923 in 35 months, gaining 183 per cent.
Top trader Dan Norcini told KWN today that Japan’s $1.4 billion-a-year QE program sets the gold and silver market up for similar gains today. That would mean silver trading at around $135 an ounce and gold up to $2,800.
There is no reason why prices should not overshoot to the upside this time around. History seldom repeats itself exactly and the expansion of the monetary base is now entering a dramatic new phase.
George Soros and Bill Gross are warning that the Bank of Japan is taking a big risk. If too much money leaves Japan then inflation will rage out of control and the bond market will crash. That would leave the Japanese economy in a worse and not better state. At the moment the sugar rush of QE is creating a mini-boom especially in the stock market.
But boom could soon turn to bust as market forces reassert themselves. Another very good reason for Japanese financial institutions to get some precious metals on to their balance sheets before things turn belly up.
The land of the falling yen could quickly become a hellish place for investors with wealth destruction on a massive scale. Money switched into gold and silver now could be used to buy back other assets at much cheaper prices after the crash.
Statistics: Posted by yoda — Thu Apr 11, 2013 12:17 am
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The Great Cyprus Bank Robbery Shows That No Bank Account, No Retirement Fund And No Stock Portfolio Is Safe
The global elite have now proven that when the chips are down they are going to go after any big pile of money that they think they can get their hands on. That means that no bank account, no retirement fund and no stock portfolio on earth is safe. Up until now, most people assumed that private bank accounts were untouchable and that deposit insurance actually meant something. Now we see that there is no pile of money that is considered “off limits” by the global elite and deposit insurance means absolutely nothing. The number one thing that any financial system depends on is faith. If people do not have faith in the safety and stability of a financial system, it will not work. Well, the people that rule the world have just taken a sledgehammer to the trust that we all had in the global financial system. They have broken the unwritten social contract that global banking depends on. So now we will see a run on the banks, and this will not just be limited to a few countries in southern Europe. Rather, this will be worldwide in scope. Yoda may have put it this way: “Begun, the global bank run has.” All over the world, frightened people are going to start pulling money out of the banks. A lot of that money will go into gold, silver and other hard assets. And as money starts coming out of the banks, this could cause many of the large banks that have been teetering on the edge of disaster to finally collapse.
Many of you may not believe that they would ever come after bank accounts, retirement funds or stock portfolios in the United States.
Many of you may be entirely convinced that the Great Cyprus Bank Robbery could never happen in America.
Well, where do you think this whole plan was dreamed up?
It was the IMF that reportedly pushed the hardest for the wealth tax in Cyprus, and the IMF is headquartered right in the heart of Washington D.C.
Almost every nation on the planet has to deal with the IMF. It is an organization that is dominated by the United States and that is always involved when there is an international debt crisis.
If the IMF thinks that it is a great idea to steal from bank accounts to solve a financial crisis in Cyprus, why wouldn’t they impose a similar solution in other countries in the future?
And if bank accounts are no longer safe, are there any truly safe places to put your money?
You can trust the politicians when they tell you that an unannounced “wealth tax” will never happen where you live if you want, but that is the exact same lie that the politicians in Cyprus were telling their people until the day that it happened. The following is from an article in the Cyprus Mail…
And after all, President Anastasiades had emphatically declared in his inauguration speech that “absolutely no reference to a haircut on public debt or deposits will be tolerated,” adding that “such an issue isn’t even up for discussion.” Finance Minister Michalis Sarris made similarly reassuring statements, arguing that it would be lunacy for the EU to impose such a measure because it would threaten the euro system.
At this point, politicians in Cyprus have been given two very unappealing options. Either they vote yes on the wealth tax and destroy all faith in the banking system of Cyprus, or they vote no and they are forced out of the eurozone. In either case, we will probably see the financial system of Cyprus collapse and their economy plunge deep into depression.
At this point, the vote has been delayed until Tuesday. Apparently some additional “arm twisting” was required to get the needed votes.
And there have been proposals to change the terms of the wealth tax. Reportedly, some politicians want to impose a maximum rate of up to 15 percent on bank accounts of over 500,000 euros so that the rate on smaller accounts can be decreased.
It has also been announced that the earliest that banks in Cyprus will reopen will be Thursday.
But what is happening in Cyprus is small potatoes compared to how this will affect the rest of the world. The entire planet is watching this unfold, and as a recent article by Lucas Jackson described, faith in the global financial system is being greatly shaken…
It would be hard to over-emphasize how significant the Cyprus situation is. The EU demonstrated under no uncertain circumstances that they will destroy the rule of law to maintain their own power. It was a recognition of tyranny that many of us have always assumed was the case but yesterday became reality.
The damage done here is not related to the size of the haircut – currently discussed between 3 and 13% – but rather that the legal language which each and every investor on the planet must rely on in order to maintain confidence in the system has been subordinated to the needs of the powerful elite. To the power elite making the major decisions in DC, London, Berlin, France, Brussels, et. al., laws are like ice cream, easily melted.
Which begs the question, who is next? Will it be Portugal? Greece? Spain? Italy? France???
Will they impose a “one-time” tax on your bank account? Your house? Your stocks and bonds? Retirement accounts?
The global elite have declared open season on all large piles of money, and now many people all over the world will consider taking money out of the bank to be the rational thing to do. This will especially be true in countries in southern Europe since they would probably be the next to have wealth confiscated.
This is so abundantly clear that even Paul Krugman of the New York Times understands this…
It’s as if the Europeans are holding up a neon sign, written in Greek and Italian, saying “time to stage a run on your banks!”
Tomorrow and the days immediately following should be very interesting.
The global elite have truly “crossed the Rubicon” by going after private bank accounts. It is almost as if they purposely chose the most damaging solution possible to the financial crisis in Cyprus.
Many in the financial world are absolutely stunned by all of this. For example, David Zervos is describing this move as a “nuclear war on savings and wealth“…
All of us should really take a moment to consider what the governments of Europe have done. To be clear, they initiated a surprise assault on the precautionary savings of their own people. Such a move should send shock waves across the entire population of the developed world. This was not a Bernanke style slow moving financial repression against risk free savings that is meant to stir up animal spirits and force risk taking. This is a nuclear war on savings and wealth – something that will likely crush animal spirits. This is a policy move you expect from a dictatorial regime in sub-Saharan Africa, not in an EMU member state. If the European governments can clandestinely expropriate 7 to 10 percent of their hard working citizen’s precautionary savings after the close of business on a Friday night, what else are they capable of doing? Why even hold money in a bank account? Are they trying to start a bank run?
So what motivated the global elite to do this?
According to CNBC, one of the motivations was to go after the Russians that had been using the banking system of Cyprus to launder money…
Indeed, the IMF is reported to have been keen on the levy as a way to stem the flood of Russian money into the island over the last few years which has prompted concerns over money laundering.
Russian money accounts for about 25 percent of all money in the banking system of Cyprus, and obviously the Russians are quite upset by what the IMF and the EU have decided to do. Even Vladimir Putin is loudly denouncing this move…
Russian President Vladimir Putin called the tax “unfair, unprofessional and dangerous,” according to a statement posted on the Kremlin website. Russian companies and individuals have $31 billion of deposits in Cyprus, according to Moody’s.
And you haven’t heard a lot about this in the western media, but the Russians have actually stepped forward and have offered to help Cyprus out of this jam. For example, there are reports that Russian investors are interested in buying the two banks that were the primary cause of this bailout…
Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.
And according to Sky News, Gazprom has offered Cyprus a very large sum of money for the right to explore their offshore gas reserves that have not been developed yet…
The uncertainty comes as Russia’s finance minister said his country would consider restructuring its loans to Cyprus.
Russian energy giant Gazprom has also reportedly offered financial assistance to Cyprus in exchange for access to the island’s gas reserves.
So far the government of Cyprus has rejected the help of the Russians, but could they change their mind at some point? Apparently the Russians are offering enough money to completely fund the bank bailout…
According Greek Reporter, Gazprom made an offer over the weekend to the Cypriot government to fund the bank restructuring planned under the Cypriot bailout (which is set to cost up to €10bn) in exchange for exclusive exploration rights for Cypriot territorial waters. How reliable this story is remains to be seen, but it does hint at the geopolitical tension which we have been warning about.
Gazprom is known to be very close to the Russian government and despite Russian President Vladimir Putin overtly slamming the deposit tax – calling it “unfair, unprofessional and dangerous” - it is unlikely that they would let this opportunity pass untouched. Fortunately, the Cypriot government is said to have rejected the deal off the bat, but if displeasure towards the eurozone and the EU grows, the Russian option may become increasingly appealing.
It will be very interesting to see what happens.
Meanwhile, some European officials are already suggesting that other nations in southern Europe should have a “wealth tax” imposed upon them. The following comes from an article by Paul Joseph Watson…
Joerg Kraemer, chief economist of the German Commerzbank, has called for private savings accounts in Italy to be similarly plundered. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product,” he told Handelsblatt.
A “tax” of 15 percent on all financial assets?
Could you imagine if you woke up one morning and the government had decided to suddenly steal 15 percent of all the money that you had in bank accounts, retirement funds and stock portfolios?
If I had a bank account in Italy I would be very nervous right about now.
Under normal circumstances these kinds of things don’t happen, but governments will use an “emergency” to justify all kinds of things. I recently came across an article that included a great quote by Herbert Hoover that put this beautifully…
“Every collectivist revolution rides in on a Trojan horse of ‘emergency’. It was the tactic of Lenin, Hitler, and Mussolini. In the collectivist sweep over a dozen minor countries of Europe, it was the cry of men striving to get on horseback. And ‘emergency’ became the justification of the subsequent steps. This technique of creating emergency is the greatest achievement that demagoguery attains.”
This is what the elite love to do.
They love to create order out of chaos.
And this is just the beginning. The Great Cyprus Bank Robbery was just a beta test for what is coming next.
As the global financial system crumbles, the global elite are going to target our bank accounts, our retirement funds and our stock portfolios. You might want to start thinking about how you will protect yourself.
So what are your thoughts on all of this? Please feel free to post a comment with your thoughts below…
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The 16,000-hectare farm which Första AP-fonden bought in Australia in December was one of a clutch of purchases of farmland, worth some $100m, by the pension fund.
The Swedish fund, which manages some E30bn in pension savings, revealed that it "invested in about 15 agricultural properties in Australia, and a dozen agricultural properties in New Zealand".
The New Zealand farms alone cost SEK333m ($52m), the fund, known as AP1, revealed in its the annual report.
The properties included eight dairy farms totalling more than 3,200 hectares bought from the empire of Graeme Hart, a former truck driver who, through his Reynolds packaging empire, has risen to become Australasia’s richest man, with a fortune estimated last week by Forbes at $5.3bn.
While AP1 did not detail the acquisition cost of its Australian purchases – bought through a subsidiary named First Australian Farmland, and managed by Victoria-based AAG Investment Management – it valued the division’s new investments at SEK311m ($49m).
That takes the total value of its farmland deals last year to about $100m.
The Australian farms purchased were "mainly grain, meat, wool and milk" producers, with the New Zealand operations "concentrated in milk production", AP1 said.
The group in December purchased a 16,000-hectare farm near Henty in New South Wales, for a price believed to be about $7m.
‘Stable and safe returns’
The fund said that the shift into farmland represented an effort to diversify risk, and tap into an asset which has historically shown little correlation with mainstream financial investments, so limiting the damage to the overall portfolio from a setback in markets.
"Over the past four years, the fund has taken advantage of investment opportunities that arose in the aftermath of the financial crisis," AP1 said.
"The purpose of the agricultural investment is to provide long-term stable and safe returns and, through a different pattern of returns, complement to the rest of the portfolio."
The fund also sees gricultural investment as a hedge against climate change. Its research had shown that climate change and its influence on investment can have a crucial impact on the fund’s long-term returns.
"One way to reduce climate risks in the portfolio is to invest in ‘climate-smart’ assets ," including farming, "to make the return on the fund’s portfolio less sensitive to climate change".
Statistics: Posted by yoda — Mon Mar 11, 2013 10:17 am
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Sprott Debuts Physical Platinum-Palladium Fund
Posted on December 26, 2012 by Stoyan Bojinov
As the end of the year draws closer, tensions in Washington D.C. are starting to boil as gridlock may push us over the much-feared “fiscal cliff” and back into recession. Diminishing hopes that policymakers can strike a deal before the deadline has kept a lid on confidence while prices have remained fairly stable, which may be setting up stock markets for a disastrous open in 2013. Amid the mixed landscape, Toronto-based Sprott Asset Management rolled out a physical platinum and palladium fund on the NYSE [for more economic news and analysis subscribe to our free newsletter].
Sprott’s Physical Platinum and Palladium Trust (SPPP) marks another stride forward in the democratization of the commodity asset class. Investors should note, however, that amid the wave of ETF launches, Sprott’s offering is actually a closed-end fund. This means that SPFF can trade at a premium or a discount to its NAV for prolonged periods of time since the number of shares outstanding is static when compared to an ETF, which instead relies on the dynamic creation/redemption mechanism [see 3 Forgotten Ways To Play The Mining Industry].
SPPP comes with a 0.50% annual price tag, which is quite competitive considering that its closest ETF-counterparts both charge a steeper fee. Like other Sprott metals funds, SPPP boasts a redemption feature that allows investors to redeem their shares for physical platinum and palladium, a feature that some find incredibly appealing.
Ways To Play
Investors looking to gain exposure to platinum and palladium, but who wish to steer clear of futures contracts, may opt for two existing exchange-traded funds offered through ETF Securities:
•Physical Platinum Shares (PPLT): This ETF is designed to track the spot price of platinum bullion and charges 0.60% in annual expense fees.
•Physical Palladium Shares (PALL): This ETF is designed to track the spot price of palladium bullion and also features a price tag of 0.60%.
Don’t forget to subscribe to our free daily commodity investing newsletter and follow us on Twitter @CommodityHQ.
Disclosure: No positions at time of writing.
This entry was posted in Investment Vehicles, Palladium, Platinum and tagged PALL, PPLT, sppp. Bookmark the permalink
Statistics: Posted by DIGGER DAN — Mon Jan 28, 2013 2:37 am
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Qatar sovereign wealth fund pulling money out of financial markets at the moment
Posted on 29 September 2012
The head of the Qatar sovereign wealth funds told CNBC yesterday that he is a seller at the moment. When the world’s most avaricious buyer turns seller then you have to ask what is holding these markets up.
Maria Bartiromo talked global politics, oil and gas along with Qatar’s key sovereign wealth fund investments with Qatari Prime Minister Sheikh Hamad Bin Jassim Bin Jabr Al Thani .
‘There are some questions with no answer,’ he said. ‘It is natural to me for Asia to slow down, is it a soft landing or not? The central banks and governments have to come together but politicians have to make it happen.
‘At the moment we sell, not a lot because I believe the market will soften… We try to be very cautious. But our strategic holdings stay and we will buy more when markets go down…’
His Highness also discussed how the civil war in Syria could be stopped… and his hopes for a US-led, post-presidential election solution for the region.
Statistics: Posted by yoda — Sat Sep 29, 2012 7:49 am
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New York Fed Releases Staff Report on Money Market Fund Reform
July 19, 2012
The Federal Reserve Bank of New York today released a staff report describing how a proposal for money market mutual fund (MMF) reform would make the financial system safer and more fair, reducing systemic risk and protecting small investors who do not redeem quickly from distressed funds.
The paper discusses a proposal to mitigate the vulnerability of MMFs to runs by introducing a “minimum balance at risk” (MBR) that that would provide a disincentive to withdraw funds from a troubled money fund. The MBR would be a small fraction of each shareholder’s recent balances that would be set aside in the event that they withdrew from the fund. Most regular transactions in the fund would continue as before, but redemptions of the MBR would be delayed for thirty days. The delay would ensure that redeeming investors remain partially invested in the fund long enough to share in any imminent portfolio losses or costs arising from their redemptions.
At present, investors in a troubled fund have a strong incentive to run because those that are first to the exit can get out with 100 cents on the dollar, leaving other investors in the same fund to bear any losses. The MBR proposal would substantially reduce the incentive to run and ensure more equitable distribution of any loss among investors in a fund. Under the proposal discussed in the paper, as long as an investor’s balance exceeds the MBR, the rule would have no effect on transactions and no portion of any redemption would be delayed if the remaining shares exceed the minimum balance.
Additionally, MBRs could strengthen market incentives for early market discipline for MMFs by clarifying that investors cannot quickly redeem all shares from a fund during a crisis. Investors would have strong incentives to identify potential problems well before any losses are realized. Furthermore, by discouraging investors from redeeming shares in a troubled MMF, the MBR would help the fund avoid the need for fire sales of assets to raise cash – an effect that not only benefits the fund and its investors, but also reduces contagion risk throughout the system.
"Further reform of money funds is essential for our nation’s financial stability. Proposals currently under consideration, that are consistent with the basic idea discussed in this staff report, would make the financial system much safer. I strongly endorse their adoption," said William Dudley, president of the New York Fed. Mr. Dudley noted that small investors could be exempted from the requirement to maintain a minimum balance as they were less prone to withdraw their money at the first sign of trouble.
The report, “The Minimum Balance at Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market Funds,” is coauthored by Patrick McCabe, Marco Cipriani, Michael Holscher, and Antoine Martin. Patrick McCabe is a senior economist in the Research and Statistics Division at the Board of Governors of the Federal Reserve; Marco Cipriani is a senior economist in the Research and Statistics Group at the New York Fed; Michael Holscher is an officer in the Markets Group at the New York Fed; and Antoine Martin is an assistant vice president in the Research and Statistics Group at the New York Fed.
The Minimum Balance at Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market Funds
Statistics: Posted by yoda — Fri Jul 20, 2012 7:39 am
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By Saijel Kishan – Jun 14, 2012 Hedge-fund manager Paul Sinclair is the latest casualty of Europe’s sovereign-debt turmoil, almost six thousand miles away from the epicenter of the crisis.
Sinclair, who is based in Los Angeles, is liquidating his $458 million health-care equities fund, Expo Capital Management LLC, after more than five years, as political decisions made on the other side of the globe have undermined his stock picks and spurred losses for a second year.
.“I don’t have an edge on Greek elections, the Spanish banking system, what the European Central Bank, the International Monetary Fund, the Chinese government, Angela Merkel, or the U.S. Federal Reserve will do,” he said in a telephone interview yesterday.
Sinclair, 41, said that over the past year he’s found it increasingly difficult to make money because of the macroeconomic environment, and that investing in health care since 2004 has left him “physically and mentally exhausted.” He said he chose to return money to investors, which he plans to do by the end of the month, rather than hold cash and charge them fees.
Billionaire energy trader John Arnold, former Morgan Stanley co-president Zoe Cruz, and Duke Buchan III are among managers who have shuttered hedge funds in the past year as Europe’s sovereign-debt crisis has roiled global markets. The industry last month posted its biggest loss since September as stocks slumped on concern Greece may exit the euro and the global economy is weakening.
“It’s a confluence of tricky markets, super-cautious investors and a tough fundraising environment that’s making it a difficult time for hedge-fund managers,” said Steven Nadel, a partner at New York-based law firm Seward & Kissel LLP, which advises hedge funds.
Sinclair said he has most of his liquid net worth invested in his fund and was no longer comfortable putting it at risk when markets are subject to the actions of policy makers globally.
He said he plans to spend the rest of the summer sleeping and relaxing and may take up a new hobby, according to a June 9 e-mail he sent to clients. Sinclair said he would continue to follow the health-care industry and is keen to see how it is shaped by a U.S. Supreme Court decision on President Barack Obama’s health law overhauls and the November presidential elections.
Returning client money “is an unusual move but fair and would be welcomed by investors,” said Graziano Lusenti, founder of Nyon, Switzerland-based Lusenti Partners, which advises clients on investing. “Most hedge funds would try to hold onto the money for as long as they can.”
Liquidations in the hedge-fund industry rose to 775 last year, the most since 2009, according to Hedge Fund Research Inc., a Chicago-based research firm.
Fortress Investment Group LLC, based in New York, last month said it will liquidate its $500 million commodities fund run by William Callanan after losing almost 13 percent in the first four months of the year.
Arnold also said the same month that he plans to close Centaurus Energy Master Fund in Houston. Cruz, the former Morgan Stanley executive, is liquidating her $200 million hedge fund after losing 8 percent last year.
Buchan, a New York-based hedge-fund manager, cited the European debt crisis as one of the reasons behind the closing of his equity hedge fund Hunter Global Investors LP.
“Markets seem to be driven more by the latest news out of Europe than by a company’s earnings prospects,” he said in a Dec. 8 investor letter. “We have not weathered the ensuing volatility well.”
At least three hedge funds run by former Moore Capital Management LLC traders have shuttered in the past seven months after losing client money. They are Salute Capital Management, run by Lev Mikheev, Avesta Capital Advisors LLC, founded by William Tung and Tim Leslie’s JCAM Global fund.
Sinclair’s Expo Health Sciences Fund lost about 6 percent this year through May, after falling 8.7 percent in 2011, the hedge fund’s first year of negative returns, he said in an e- mail. The fund has returned about 50 percent since its 2007 inception, net of fees.
Hedge funds slumped 2.9 percent in May and 1.3 percent this year, according to data compiled by Bloomberg. They lost 5.8 percent last year and a record 19 percent in 2008, the data show.
The turmoil in the global markets has spurred stocks across industries to rise and fall in tandem. The relationship between price fluctuations for health-care stocks and the rest of the market has tightened. The 30-day correlation coefficient between the MSCI World Index and its members in that industry is 0.92, compared with the average since 1995 of 0.73, according to data compiled by Bloomberg. Readings of 1 mean prices are moving in lockstep.
Sinclair employed a seven-person team with offices in San Francisco. Before he started his hedge fund, Sinclair worked at Vantis Capital Management LLC, a hedge fund in Pasadena, California, where he managed a health sciences fund from about two years until the end of 2006, when the firm shut down. He was previously at Merrill Lynch & Co., within the bank’s health-care investment banking group, and before that at investment bank Donaldson Lufkin & Jenrette.
Sinclair received a masters of business administration from Stanford Graduate School of Business in 1999 and graduated with a bachelors degree in business economics from the University of California in 1994.
Statistics: Posted by yoda — Thu Jun 14, 2012 11:03 am
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The Financial Times:
US equity funds see biggest outflows of 2012: US equity funds suffered their worst outflows of the year in the week to Wednesday as investors became decisively risk-averse following a five-day losing streak for US equities. The S&P 500 fell 4.3 per cent in the five trading days to Tuesday, giving back a third of its gains from a stellar first quarter, although it has since regained some of that ground. Investors responded by withdrawing more than $7bn from US exchange-traded and mutual funds that invest in equities, the largest outflow since mid-December, and equivalent to almost 1 per cent of the assets invested in such funds, according to data from Lipper. It was the third successive week of outflows from equity funds and by far the largest.
The story above refers to Lipper data. The chart above shows Investment Company Institute (ICI) data. Although they are two different sources, they generally tell the same story.
While domestic outflows (second panel in green) are the largest of 2012, they still pale in comparison to the outflows of last summer.
Statistics: Posted by yoda — Fri Apr 13, 2012 1:37 pm
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