25 July 2015 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
After opening ruler flat in Far East trading on their Friday morning, JPMorgan et al, with the HFT boyz and their algorithms in tow, went about setting a new intraday day low in the gold price for this move down. The low tick of the day came minutes after 10 a.m. Hong Kong time. The subsequent rally rolled over at, or shortly before, the London open—and the earlier low was retested around 1 p.m. BST in London trading, about twenty minutes before the COMEX open.
The rally off that double bottom lasted until about 2 p.m. EDT—and then what appeared to be a short covering rally began that got hammered at precisely 2:30 p.m. EDT, the moment that the price had the audacity to break above the $1,100 spot mark—and the gold price was closed just under that mark at 5:15 p.m. EDT.
The low and high ticks were recorded by the CME Group as $1,072.30 and $1,100.90 in the August contract.
Gold closed in New York on Friday afternoon at $1,099.50 spot, up $9.10 from Thursday—and would have obviously closed materially higher if the usual not-for-profit sellers hadn’t shown up when they did. Gross volume was over the moon at 302,000 contracts, but it netted out to 173,000 contracts, which is still very chunky.
Brad Robertson was kind enough to send along the 5-minute gold tick chart—and the volume spike at the new low engineered price tick in Far East trading is more than obvious. Midnight Denver time is the dark gray vertical line, add 2 hours for EDT—and don’t forget the ‘click to enlarge‘ feature.
Silver also had a new low tick placed shortly after 10 a.m. Hong Kong time on their Friday morning as well. The price recovered back to about unchanged about ninety minutes later—and it traded mostly flat until 9 a.m. in London. Then it was taken to the cleaners once again, with the absolute low tick coming at the London p.m. gold fix just minutes after 10 a.m. EDT—3 p.m. BST. It rallied in fits and starts from there—and closed on its high tick of the day. Silver, like gold, would have obviously closed much higher if allowed to do so.
The low and high ticks on Friday were reported as $14.33 and $14.71 in the September contract.
Silver closed on Friday in New York at $14.74 spot, up 8 cents from Thursday’s close. Net volume was pretty heavy at 48,500 contracts—and gross volume was only about 4,000 contracts more than that.
The price patterns in platinum and palladium were very similar to what happened in silver, but there were no new lows set in either of these two precious metals. Platinum closed at $987 spot, up 11 dollars from Thursday—and palladium finished the Friday session at $624 spot, up nine bucks on the day. Here are the charts.
The dollar index closed late on Thursday afternoon in New York at 97.21—and rallied about 10 basis points by around 11:30 a.m. Hong Kong time on their Friday. It had a spike down to the 97.15 mark about thirty minutes before London opened—and the rallied up to 97.58 by 1 p.m. BST, which was 8 a.m. in New York. It rolled over once again, with an down/up spike at 11:15 a.m. EDT that retested the 97.15 low—and from there it chopped quietly lower into the close. The dollar index closed on Friday at 97.26—up 5 basis points from Thursday’s close.
Once again it was obvious that was happening in the currency market was irrelevant when “da boyz” are out and about.
Here’s the 6-month U.S. dollar index chart for reference purposes.
The gold stocks opened down a percent or so—and then chopped sideways until shortly before 2 p.m. EDT—and away they went to the upside as the big [short covering?] rally in gold got under way. The HUI closed almost on its high of the day, up 3.68 percent.
The silver equities opened down a bit as well, but they headed lower before chopping sideways starting around 10:30 a.m. EDT. They rallied back into positive territory also starting minutes before 2 p.m.—and Nick Laird’s Intraday Silver Sentiment Index closed up 1.88 percent.
For the week, the HUI and the ISSI got shelled to the tune of 10.63 and 10.14 percent respectively. Ouch!
The CME Daily Delivery Report showed that 95 gold and 1 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. In gold the only short/issuer was JPMorgan out of its client account—and the biggest long/stopper was Canada’s Scotiabank with 89 contracts. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Friday trading session showed that gold open interest in July remained unchanged at 154 contracts, minus the 95 posted above—and July’s o.i. in silver declined by 73 contracts down to 173 contracts remaining.
Once more there was a withdrawal from GLD. This time an authorized participant took out 143,758 troy ounces. And as of 9:27 p.m. EDT yesterday evening, there were no reported changes in SLV.
Month-to-date 1,006,000 troy ounces of gold have been removed from GLD. Month-to-date 3,500,000 troy ounces of silver have been added to SLV. One again, why this dichotomy? Who is buying all the share of SLV falling off the table and not redeeming them? Why all the so-called precious metal ‘experts’ out there aren’t screaming about this from the rooftops is the $64,000 question that goes begging an answer every single day!
Once again, here are the long-term GLD and SLV charts showing this divergence that nobody expect Ted Butler—and now me, are talking about it.
It was another huge sales day in gold over at the U.S. Mint on Friday. They reported selling a chunky 16,500 troy ounces of gold eagles—and 2,000 one-ounce 24K gold buffaloes. Monday will be the first day in three weeks that there will be silver eagles sold by the mint—and I expect that to be some spectacular number when it’s released.
Month-to-date the mint has sold an eye-watering 143,000 troy ounces of gold eagles, more than double June’s very chunky total of 76,000 troy ounces—and July sales already represent the biggest gold eagles sales month so far this year. These sales blew January’s 81,000 troy ounce sales month totally out of the water—and there’s still five selling days left in the month.
Richard Nachbar was kind enough to send us this premium chart for 90 percent silver U.S. coins—pre-1965—and here’s what he had to say in his covering e-mail.
Hi Ed! The recent surge in premiums for the ever-popular benchmark U.S. 90% silver coins (pre-1965 dimes, quarters and half dollars gave us an opportunity to update our in-house proprietary graph. The base-building over the past two years looks far different from the two earlier “goalpost” spikes and declines – the first from the Y2K buildup and the second from the most recent credit crisis. Several major national firms have been paying over 20% premiums this week to obtain product. Remember, the premiums depicted here are WHOLESALE bid prices. Very strong indeed. — Richard
No gold was reported received over at the COMEX-approved depositories on Thursday—and only 4 kilobars were shipped out of the Manfra, Tordella & Brookes, Inc. depository.
It was somewhat busier in silver, as 150,231 troy ounces were reported received—and 301,268 troy ounces were shipped out. There was no activity at the JPMorgan depository—and the link to that ‘action’ is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 4,672 kilobars—and shipped out 9,370 kilobars. The link to that activity, in troy ounces, is here.
The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was pretty much as expected as the Commercial net short positions declined by substantial amounts in all of the Big 6 commodities.
In silver, the Commercial net short position declined by a further 4,422 contracts, leaving the Commercial net short position in silver at 55.8 million troy ounces, the lowest number since June 2013—and Ted says that you’d have to go back to around 2002/2003 to see that number again.
Because the Big 8 traders on the short side, who are normally commercial banks, continue to be contaminated by the largest short holders in the Managed Money category, it’s not possible for Ted to estimate what the Commercial traders are actually short now. This situation applies to the gold COT Report as well.
Under the hood in the Managed Money category in the Disaggregated COT Report, these brain-dead technical funds not only sold 2,201 long contracts, they added another 3,552 short positions as well. Ted says that the net short position in the Managed Money category in silver is now the largest its been in history.
There was a monster improvement in gold as well. In the legacy COT Report, the Commercial net short position dropped by 26,885 contracts, or 2.69 million troy ounces. The Commercial net short position in gold is now down to 2.16 million troy ounces which, is a number I’ve not seen in the fifteen years that I’ve been following the precious metal market.
When I saw this number, I immediately extrapolated the possible improvement in the COT position in gold for the last three trading days since the cut-off—and said to Ted that there was a strong possibility that as of yesterday, the Commercial net short position in gold was effectively zero. He wasn’t prepared to argue that point.
Under the hood in the Disaggregated Report, the Managed Money only accounted for 12,433 of those contacts, as they sold 2,116 longs and went short a further 10,317 contracts. Ted said the Managed Money traders now hold their biggest short position in history, along with their biggest net short position as well. Zero Hedge already has a story about this in the Critical Reads section, as does Bloomberg. The traders in the “Other Reportables” category, along with the small traders in the “Nonreportable” category, made up the difference. Between them they sold 1,952 long contracts—and added a chunky 12,500 short contracts on top of that. The small traders in the “Nonreportable” category are also net short the gold market for the first time that I can remember.
This is the most extreme Commitment of Traders Report that I have seen in my fifteen years writing about it—and I know that Ted will run out of superlatives in his weekly commentary which will be posted on his website this afternoon—and I can hardly wait to read it.
Of course—and not to be forgotten in all this—are the further improvements since the Tuesday cut-off—and as I said a handful of paragraphs ago, it’s a good bet that the Commercial net short position in gold is zero—and silver’s Commercial net short position will be the lowest it been in fifteen years as well.
I’ll have more comments about this in The Wrap.
Here’s Nick Laird’s now-world-famous “Days of World Production to Cover COMEX Short Positions” for all physically traded commodities on the COMEX updated with Tuesday’s COT data—and they are a sight to behold, especially gold and silver—and the dichotomies that exist between them are obvious to anyone except the willfully blind.
It was another big day for gold withdrawals over at the Shanghai Gold Exchange on Friday, July 17. For the week ending on that day, Nick said that they took out 69.175 tonnes, the fifth largest week ever—and here’s his outstanding chart.
Here’s another chart showing the same data. “Week 29” of 2015 was the week ending on July 17, the last withdrawal week from the SGE—and here’s what they’ve been withdrawing each year up to and including that date starting back in 2009. As you can see, the Week 29 increases from year-to-year are substantial—and are “from the lower left, to the upper right” as Dennis Gartman is wont to say from time to time.
I have a lot of stories for you today, including several that I’ve been saving for my Saturday column for length or content reasons. I hope you have enough time in your weekend to read all the ones that interest you.
CRITICAL READS
There Goes The Housing “Recovery” Again: New Home Sales Plunge Most Since 2014
Despite exuberant existing home sales, new home sales crosses back below the 500,000 Maginot Line to 482,000 – the lowest since Nov 2014.
Once again, NAR is back to its old tricks. Previous data was revised dramatically lower as June data missed expectations by the most in a year.
The West region saw new home sales collapse 17%. Perhaps the slide in single-family home starts means something after all?
But the most unsustainable chart of all is the one showing the ever-gaping divergence between actual volumes for houses and artificially high prices. It appears CYNK is not only a feature of the stock market, but the housing market as well.
This 4-chart Zero Hedge news item showed up on their website at 10:08 a.m. EDT on Friday morning—and I thank reader M.A. for today’s first story. The charts are worth a quick look.
They Never Learn—Pension Funds Hunting Yield Return to Bonds Tied to Risky Loans
Pension funds seeking higher returns as global central banks suppress interest rates have stepped up their purchases of securities that bundle high-risk corporate loans.
The funds acquired about 8 percent of the top-rated U.S. collateralized loan obligation notes issued in the first half of this year and 7 percent of the riskier mezzanine slices of the deals, according to Citigroup Inc. data. That compares with “minimal” amounts a few years ago.
“Yield-starved pension funds have made an arrival into the CLO space and seem to be here for the loan haul,” Citigroup analysts including Ratul Roy and Maggie Wang wrote in a report Tuesday.
The renewed pension-fund buying of CLOs, which slice high-yield loans into securities with varying risks, is helping to support a market that fuels lending to indebted companies, including those backed by private-equity firms. U.S. issuance exceeds $63 billion this year, according to data compiled by Bloomberg, after a record $123.6 billion were sold in 2014.
Great shades of 2007!!! That’s the last time I heard of these type of high-risk securities. This Bloomberg story from Thursday, which was posted on David Stockman’s website yesterday, was sent to me by Roy Stephens.
In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation
“Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies.”
“Traders at some of these primary dealers talked with counterparts at other banks via online chatrooms and swapped gossip.”
Sound familiar?
Those quotes are from a 61-page complaint filed in the Southern District of New York wherein Boston’s public sector pension fund accuses all U.S. primary dealers (the cabal of usual suspect dealer banks that transact directly with Treasury and “have a special obligation to ensure the efficient function” of what was formerly the deepest, most liquid market on the planet) of colluding to manipulate the $12.5 trillion U.S. Treasury market.
The alleged scheme was remarkably simple and involved precisely the same sort of conspiratorial, chat room shenanigans employed by the very same banks who, at various times, have colluded to rig FX, gold, various -BORs, ISDAfix, and pretty much everything else.
In short, the banks simply conspired to keep the spread between the when issued price and the price at auction as wide as possible, thus inflating their profits at the expense of everyone else where “everyone else” includes institutional investors and hedge funds all the way down to retirees and Main Street in general.
This is another Zero Hedge story from yesterday. This one put in an appearance on their website at 7:48 a.m. EDT—and it’s the second offering of the day from reader M.A.
USGS Scientist: Major Quake on California’s Hayward Fault Expected ‘Any Day Now’
The fault that produced a 4.0-magnitude earthquake in Fremont early Tuesday morning is expected to produce a major earthquake “any day now” and Bay Area residents should be prepared, a U.S. Geological Survey scientist said.
The 2:41 a.m. earthquake on the border of Fremont and Union City occurred on the Hayward Fault at a depth of 5 miles. The epicenter was at a spot just north of the intersection of Niles Canyon Road and Mission Boulevard.
The quake caused some BART delays early Tuesday while work crews checked the tracks, but appears to have caused no major damage. At least 13 smaller quakes or aftershocks had been reported near the same location as of 6:42 a.m., the largest of which was a 2.7-magnitude at 2:56 a.m.
While damage from the quake was minimal, scientists warn that a much larger one is expected on the Hayward Fault, which extends from San Pablo Bay in the north to Fremont in the south and passes through heavily populated areas including Berkeley, Oakland, Hayward and Fremont.
This very interesting story, filed from San Francisco, showed up on the cbslocal.com Internet site on Tuesday at 1:09 p.m. PDT—and I found it in Wednesday’s edition of the King Report. For content reasons it had to wait for today’s column. It’s worth reading if the subject interests you.
Calling End to Latin American Currency Rout a Fool’s Errand
The $5.3 trillion foreign-exchange market is losing confidence in the ability of Latin America’s leaders to turn the region’s flagging economy around.
Brazil’s real is the world’s worst-performing major currency this year, plunging 21 percent. Mexico’s peso is at a record low. Venezuela’s black-market bolivar has depreciated so much that a monthly minimum wage now fetches just over $11.
The worst may be yet to come. Already reeling from a rout in commodities that has slowed growth to little more than a standstill, the region is now being rocked by corruption scandals in the two biggest economies: Brazil and Mexico. Strategists at Morgan Stanley said in a July 15 report they couldn’t find one Latin American currency to recommend.
“It’s hard to say anything positive,” Win Thin, the New York-based global head of emerging-market strategy at Brown Brothers Harriman & Co., said by telephone. Countries that boomed with the surge in commodities prices are “now seeing the other side.”
This Bloomberg article showed up on their website at 7:00 p.m. MDT on Thursday evening—and was updated yesterday afternoon. It’s the first contribution of the day from Patricia Caulfield.
Doug Noland: Same Old, Same Old
There are ominous parallels to the late-twenties. The “Roaring Twenties” were a period of growing global imbalances and market instability, along with mounting deflationary pressures. There was the Fed’s infamous “coup do whiskey” that spurred the fateful 1927 to 1929 speculative run in U.S. markets. Cross-border financial flows turned increasingly destabilizing.
Since 2012, global central banks have been unrelentingly generous with their Whiskey shots. The results have been troublingly late-twenties-like. Over-liquefied markets have gone wild, masquerading as a “bull market.” And as inflationary Bubbles have run roughshod through global securities markets, real economies have continued to stagnate. Imbalances have expanded. Structural maladjustments have significantly worsened. Global “money” and Credit have deteriorated profoundly. Global financial flows have turned hopelessly dysfunctional.
It appears that global markets are heading right into another bout of market tumult, with EM again in the crosshairs. There’s just an astounding amount of suspect debt in the world and too deep structural impairment. And, sure, we’ll all be focused on the inevitable policy responses: I’ll assume some Fed official(s) will broach the possibility of restarting QE if “financial conditions tighten.” The BOJ and ECB will consider boosting their QE programs. The Chinese will propose even greater amounts of spending, liquidity and market support. And will the same old same old matter much beyond sparking one and two-day panic-buying market convulsions?
It sure appeared that bulls were caught flatfooted for this week’s market downdraft. The view has been that the resilient U.S. economy was largely immune to emerging markets and global issues. This week provided evidence of U.S. corporate earnings vulnerability that to this point has remained largely unappreciated. The view has been that U.S. Credit is largely impervious to global issues. Cracks may be surfacing in this fallacy as well.
Doug weekly Credit Bubble Bulletin is always a must read for me—and this is no exception as we turn into the home stretch. I found it on his website very late last night MDT.
‘Hundreds’ of migrants now target Eurotunnel every night
Passenger and freight services were again hit by delays on Friday as the firm tried to run services on one of the busiest days for holiday travel.
Eurotunnel said police were being called each night to remove migrants from its Coquelles base.
The operator briefly suspended services just before midnight on Friday.
The company’s director of public affairs, John Keefe, said hundreds of people were being removed from around the terminal perimeter, the railway or platforms each night.
He said people were so desperate to reach the U.K. they were prepared to throw themselves at trains travelling at 90 mph.
This longish news item appeared on the bbc.com Internet site yesterday sometime—and it’s certainly worth reading if you have the time and the interest. I thank Patricia Caulfield for her second offering of the day.
Italy Leans While Greece Tumbles
Viewed from Berlin or London, the financial woes of Italy and Greece can look dangerously similar. Both sit on mountains of public debt and suffer from double-digit unemployment. So why hasn’t Italy had to shutter banks, submit to austerity measures in return for emergency loans, and contemplate an exit from the euro?
For now Italy is chugging along, paying its debts and selling bonds. Its benchmark stock index is up 25 percent this year. It’s emerging from a record recession even as Greece enters a new slump after a brief rebound in 2014. Rome-based Eni, Europe’s No. 4 oil company, is pumping 1.7 million barrels per day globally and says output will keep rising. Finmeccanica sells helicopters to corporations and armed forces from the U.K. to China. Carnival cruise liners are made in Fincantieri’s Trieste shipyard. Italian luxury goods, from Fendi to Ferrari, are at the top of consumer shopping lists. Among European manufacturers, Italy trails only Germany in production.
The Greeks? They’ve got “tourism and shipping and little else,” says Marc Ostwald, a fixed income strategist at ADM Investor Service in London. Greek exports fell 7.5 percent in the first quarter, while Italy’s rose more than 3 percent. Tourism in Italy generated about €34 billion ($37.1 billion) last year, almost triple what it did in Greece.
This interesting Bloomberg piece showed up on their Internet site at 1:01 p.m. Denver time on their Thursday afternoon—and Patricia Caulfield sent it to me very early on Friday morning.
The Grecian Kabuki Theatre: 6 Stories
1. Lagarde Push for Greece Debt Relief Challenges Merkel: Bloomberg 2. Greece braces for troika creditors’ return to Athens: The Guardian 3. Greece grapples with massive migrant influx as Syria conflict exacerbates crisis: The Guardian 4. The Greek crisis is shaking the IMF to its core: BBC 5. Greek bail-out talks delayed by Troika security fears: The Telegraph 6. Greece edges closer to third bailout as it formally requests IMF help: The Guardian
All of the above stories are courtesy of Patricia Caulfield, for which I thank her on your behalf
MPs’ Crimea visit – ‘not all well within French political class over anti-Russian sanctions’
The first visit of French lawmakers to the Crimea since its reunion with Russia shows that there is a schism in France and all over the E.U. with regard to the policy of sanctions against Russia, political commentator John Wight told Russia Today.
A group of French MPs is visiting Crimea. They’re the first major delegation of European politicians to visit the peninsula since it reunited with Russia after a referendum.
RT: What does this visit of high-profile officials mean?
John Wight: It shows that all is not well within the French political class over the sanctions and the policy being followed by the Hollande government towards Russia. As is no surprise given that France is the second largest investor in Russia after Germany: 1,200 French companies were doing business in Russia and with Russia before the sanctions began in 2014. We’re looking at the cost of enumerable French jobs to the sanctions. This obviously had the deleterious impact on the French economy. And not to mention I think more important is the grievous impact its having on global security given the rise of terrorism across the world and the fact that Russia is a major economy, a major country, advanced country, and the idea they can be treated as an outcast going forward is really unsustainable and unrealistic.
This short interview appeared on the Russia Today website at 4:37 p.m. Moscow time on their Friday afternoon, which was 9:37 a.m. EDT in Washington—EDT+7 hours. It’s the second offering of the day from Roy Stephens.
Cuteness cubed: Siberian tiger gives birth to triplets in Crimea zoo
Three Siberian tigers, also known as Amur tigers, were born in the Taigan Safari Park in Russia’s Crimea. Visitors of the animal park can already have a look at the cute rare cubs exploring their enclosure.
The mother gave birth to the three cubs several days ago, and starting from Monday the park’s visitors can watch the tiny tigers making their first clumsy moves. The cubs’ eyes are not fully open yet, but they all are in good health and their mother is taking good care of them, the zookeepers say.
Although newborn triplets are not rare for the breed, with Siberian tigers usually giving birth to up to four cubs, unfortunately it’s not often that the whole litter survives. This time, all three cubs are feeling well – and the park employees are now thinking of the names for the new tiger family.
This Russia Today article showed up on their website on Tuesday evening Moscow time—and had to wait for today’s column. The 48 second video clip of the three cubs/kittens is too cute for words—and I thank reader M.A. for sharing it with us.
Ukraine amasses up to 7,000 troops on border with Transdniestria — republic leader
Ukraine concentrates its armed forces and equips firing points on the border with Transdniestria, from 5 to 7 thousand troops are currently deployed there, head of the unrecognized Transdniestrian Moldovan Republic Yevgeny Shevchuk told the Rossiya 24 TV channel on Friday.
“After the events in Ukraine, we feel the pressure of some negative factors. One of them is the concentration of the Ukrainian Armed Forces, the National Guard, reinforcement and expansion in the number of Ukrainian frontier guards along the border, additional equipment of engineering constructions, the digging of trenches… Some firing points are equipped along the border, and substantial amounts of troops are being concentrated – according to our estimates, from 5 to 7 thousand are deployed in close proximity to the border with Transdniestria,” he said.
On May 21, 2015, Ukraine’s Verkhovna Rada denounced the agreement with Russia on transit of the Russian military personnel and cargo via Ukraine’s territory, and on May 29 head of the Ukrainian State Border Service Viktor Nazarenko told Ukraine’s Channel Five that Russia’s military threat was coming from Transdniestria.
The above three paragraphs are all there is to this brief TASS new item that was filed from Moscow and posted on their Internet site at 5:34 p.m. local time, which was 10:34 a.m. EDT in Washington. I thank Roy Stephens for sending it.
Oil and gas crunch pushes Russia closer to fiscal crisis
Russia has fallen into full-blown depression and faces a mounting fiscal crisis as oil and gas revenues plummet.
Output from country’s state-owned gas giant Gazprom has collapsed by 19pc over the past year as demand shrivels in Europe, falling to levels not seen since the creation of the company at the end of the Cold War.
A report by Sberbank warned that Gazprom’s revenues are likely to drop by almost a third to $106bn this year from $146bn in 2014, seriously eroding Russia’s economic base.
Gazprom alone generates a tenth of Russian GDP and a fifth of all budget revenues. It will be several years at best before the country benefits from a new pipeline deal with China.
This commentary by Ambrose Evans-Pritchard was posted on The Telegraph‘s website at 7:42 p.m. BST on their Thursday evening—and I thank Patricia Caulfield for sharing it with us.
India-Russia Joint Defense Manufacturing off to a Roaring Start
India-Russia defence ties reached a new high recently, when the countries unveiled a big- ticket joint production project.
The announcement of joint production of helicopters in India dispelled fears that the bilateral defence relations are in a quagmire. The timing of the announcement particularly after the visit of Indian Prime Minister Narendra Modi to Russia, and his meeting with Russian President, Vladimir Putin, is no less significant.
Modi has already declared that Russia is the primary defence supplier of India, and, in this context, it will not be a surprise if more defence deals are announced in coming months.
The likely transfer of technology in building the helicopter will be advantageous for India. India’s indigenous defence industry is at an infant stage, and Russia’s transfer of technology would boost the indigenous industry. The transfer coupled with a possible license would boost India’s production capability.
This article put in an appearance on the russia-insider.com Internet site around 10 a.m. Moscow time on their Friday afternoon—and it’s courtesy of reader M.A.
The Guardian‘s view on Turkey’s air strikes against Isis: dangerous territory
A potentially momentous shift in the Middle East was signalled this week as Turkish warplanes attacked Islamic State positions in Syria and the Ankara government finally agreed that the US can use Turkish bases for its missions against Isis. A big security sweep, detaining people suspected of being Isis agents and Kurdish militants, accompanied these military moves. If Turkey continues in this new direction, the air campaign against Isis will be strengthened and the flow of people, money and arms through Turkey to Isis in Syria will be curtailed. But the way in which both Isis and the Kurdistan Workers’ party, or PKK, have both been targeted suggests the outcome may also be complicated and dangerous on the ground in Turkey itself.
The problem is that Ankara has been trying to keep Isis and the PKK in play against each other. Although it has been conducting negotiations with the PKK, the long-established and substantial Kurdish separatist movement in Turkey, and its imprisoned leader Abdullah Öcalan, since 2012, it has also been looking the other way and perhaps has even been helping, as Isis has battled the PYD, the PKK’s sister party in Syria. Such a contradictory policy, the left hand not knowing what the right hand was doing, was almost bound to go wrong at some stage. The Turkish government may thus have acted now because it feared an outbreak of hostilities between the PKK and Isis on Turkish soil after a suicide bombing attack earlier this week, attributed to Isis, which killed 32 people in a town near the Syrian border. That was followed by PKK attacks on Turkish police, supposedly for failing to protect Turkish Kurds.
This editorial appeared on theguardian.com Internet site at 7:04 p.m. BST on their Friday evening, which was 2:04 p.m. EDT in Washington. It’s another contribution from Patricia Caulfield, for which I thank her.
The Turkish Enigma: George Friedman
In my “Net Assessment of the World,” I argued that four major segments of the European and Asian landmass were in crisis: Europe, Russia, the Middle East (from the Levant to Iran) and China. Each crisis was different; each was at a different stage of development. Collectively the crises threatened to destabilize the Eurasian landmass, the Eastern Hemisphere, and potentially generate a global crisis. They do not have to merge into a single crisis to be dangerous. Four simultaneous crises in the center of humanity’s geopolitical gravity would be destabilizing by itself. However, if they began to merge and interact, the risks would multiply. Containing each crisis by itself would be a daunting task. Managing crises that were interlocked would press the limits of manageability and even push beyond.
These four crises are already interacting to some extent. The crisis of the European Union intersects with the parallel issue of Ukraine and Europe’s relation to Russia. The crisis in the Middle East intersects with the European concern over managing immigration as well as balancing relations with Europe’s Muslim community. The Russians have been involved in Syria, and appear to have played a significant role in the recent negotiations with Iran. In addition there is a potential intersection in Chechnya and Dagestan. The Russians and Chinese have been advancing discussions about military and economic cooperation. None of these interactions threaten to break down regional boundaries. Indeed, none are particularly serious. Nor is some sort of inter-regional crisis unimaginable.
Sitting at the center of these crisis zones is a country that until a few years ago maintained a policy of having no problems with its neighbors. Today, however, Turkey’s entire periphery is on fire. There is fighting in Syria and Iraq to the south, fighting to the north in Ukraine and an increasingly tense situation in the Black Sea. To the west, Greece is in deep crisis (along with the E.U.) and is a historic antagonist of Turkey. The Mediterranean has quieted down, but the Cyprus situation has not been fully resolved and tension with Israel has subsided but not disappeared. Anywhere Turkey looks there are problems. As important, there are three regions of Eurasia that Turkey touches: Europe, the Middle East and the former Soviet Union.
This long essay by George appeared on the stratfor.com Internet site on Tuesday—and for length and content reasons had to wait for today’s column. It’s certainly worth reading if you’re a serious student of the New Great Game. It’s another offering from reader M.A.
We Kurds are the antidote to Isis – but we need Britain and Baghdad to help
The grotesque massacres by Islamic State in Tunisia, France, Kuwait and Kobane in Syria confirm deepening fears about its global reach. The victims tell us much about the perpetrators: 30 British sunbathers, Shias at prayer, and 200 Kurdish men, women, and children sleeping in their beds.
To defeat Isis we need a mixture of more inclusive Iraqi politics and increased western military commitment. Politically this means an ideological struggle led by Muslims who have no sneaking regard for Isis. At the forefront is the Kurdistan region, a sworn enemy of Isis, with which we now share a 650-mile border. Kurdistan promotes women’s rights and seeks to root its patriotism in a pluralist definition of tolerance. Most Kurds are Sunni Muslims but we positively celebrate being home to Shia Muslims, Christians, Yezedis and others. Sadly, our Jewish compatriots left many years ago thanks to a fascistic mindset throughout Iraq’s history, which did us all great damage.
Unfortunately, Baghdad is not playing its role, thanks to a centralised approach that treats Kurds and Sunni Arabs as second-class citizens. To offer an alternative to Isis, they should implement Iraq’s democratic and federal constitution. Iraq must be a bi-national Arab-Kurdish state that is decentralised and democratic. Only by respecting regional autonomy can Baghdad offer a lasting political deal that is attractive to Sunni Arabs who currently believe they are better off with Isis than Baghdad. Only by sticking by such a deal can Baghdad hope to turn the Sunni Arabs against Daesh as they previously rejected al-Qaida during the surge in 2007.
This commentary put in an appearance on The Guardian‘s website at 11:18 a.m. BST on Thursday—and it’s courtesy of Patricia Caulfield, who sent it to me yesterday morning.
What Should We Do if the Islamic State Wins?
It’s time to ponder a troubling possibility: What should we do if the Islamic State wins? By “wins,” I don’t mean it spreads like wildfire throughout the Muslim world, eventually establishing a caliphate from Baghdad to Rabat and beyond. That’s what its leaders say they are going to do, but revolutionary ambitions are not reality and that possibility is particularly far-fetched. Rather, an Islamic State victory would mean that the group retained power in the areas it now controls and successfully defied outside efforts to “degrade and destroy” it. So the question is: What do we do if the Islamic State becomes a real state and demonstrates real staying power?
That possibility is looking more likely these days, given Baghdad’s inability to mount a successful counteroffensive. If MIT’s Barry Posen is correct (and he usually is), the Iraqi Army no longer exists as a meaningful fighting force. Not only does this reveal the bankruptcy of the U.S. effort to train Iraqi forces (and the collective failure of all the commanders who led this effort and kept offering upbeat assessments of progress), but it also means that only a large-scale foreign intervention is likely to roll back and ultimately eliminate the Islamic State. This will not happen unless a coalition of Arab states agrees to commit thousands of their own troops to the battle, because the United States will not and should not do the fighting for states whose stake in the outcome exceeds its own.
Don’t get me wrong — I’d be as pleased as anyone if the Islamic State were decisively defeated and its violent message utterly discredited. But one needs to plan not just for what one would like to see happen, but also for the very real possibility that we can’t actually achieve what we want — or at least not at a cost that we consider acceptable.
This essay appeared on the foreignpolicy.com Internet site back on June 10, but I thought it worth posting for anyone interested in what’s going on over there. It’s another offering from Patricia Caulfield on Tuesday that had to wait for today’s column.
The Eurasian Big Bang: How China and Russia Are Running Rings Around Washington
Let’s start with the geopolitical Big Bang you know nothing about, the one that occurred just two weeks ago. Here are its results: from now on, any possible future attack on Iran threatened by the Pentagon (in conjunction with NATO) would essentially be an assault on the planning of an interlocking set of organizations — the BRICS nations (Brazil, Russia, India, China, and South Africa), the SCO (Shanghai Cooperation Organization), the EEU (Eurasian Economic Union), the AIIB (the new Chinese-founded Asian Infrastructure Investment Bank), and the NDB (the BRICS’ New Development Bank) — whose acronyms you’re unlikely to recognize either. Still, they represent an emerging new order in Eurasia.
Tehran, Beijing, Moscow, Islamabad, and New Delhi have been actively establishing interlocking security guarantees. They have been simultaneously calling the Atlanticist bluff when it comes to the endless drumbeat of attention given to the flimsy meme of Iran’s “nuclear weapons program.” And a few days before the Vienna nuclear negotiations finally culminated in an agreement, all of this came together at a twin BRICS/SCO summit in Ufa, Russia — a place you’ve undoubtedly never heard of and a meeting that got next to no attention in the U.S. And yet sooner or later, these developments will ensure that the War Party in Washington and assorted neocons (as well as neoliberalcons) already breathing hard over the Iran deal will sweat bullets as their narratives about how the world works crumble.
With the Vienna deal, whose interminable build-up I had the dubious pleasure of following closely, Iranian Foreign Minister Javad Zarif and his diplomatic team have pulled the near-impossible out of an extremely crumpled magician’s hat: an agreement that might actually end sanctions against their country from an asymmetric, largely manufactured conflict.
This longish commentary by Pepe Escobar was posted on the tomdispatch.com Internet site on Thursday—and is another one of those stories that had to wait for my Saturday column. It’s a must read for any serious student of the New Great Game—and I thank reader M.A. for sending it along.
China’s Global Ambitions, With Loans and Strings Attached
Where the Andean foothills dip into the Amazon jungle, nearly 1,000 Chinese engineers and workers have been pouring concrete for a dam and a 15-mile underground tunnel. The $2.2 billion project will feed river water to eight giant Chinese turbines designed to produce enough electricity to light more than a third of Ecuador.
Near the port of Manta on the Pacific Ocean, Chinese banks are in talks to lend $7 billion for the construction of an oil refinery, which could make Ecuador a global player in gasoline, diesel and other petroleum products.
Across the country in villages and towns, Chinese money is going to build roads, highways, bridges, hospitals, even a network of surveillance cameras stretching to the Galápagos Islands. State-owned Chinese banks have already put nearly $11 billion into the country, and the Ecuadorean government is asking for more.
Ecuador, with just 16 million people, has little presence on the global stage. But China’s rapidly expanding footprint here speaks volumes about the changing world order, as Beijing surges forward and Washington gradually loses ground.
This very long essay put in an appearance on The New York Times website yesterday sometime—and I thank Patricia Caulfield for bringing it to our attention.
War between China and Japan ended 70 years ago, but fighting continues
There is little room for subtlety at the Museum of Chinese People’s Resistance Against the Japanese Invasion.
Ahead of the 70th anniversary of the “Chinese People’s Anti-
Japanese War and the World Anti-Fascist War Victory Commemoration Day,” as the end of World War II is known here, the museum has an array of wartime Japanese artifacts — including flags, medals and guns — in a special display case under a glass floor.
“We want to keep Japan under our feet,” Li Yake, a 22-year-old college student doing a summer internship at the museum, said as she led visitors around the exhibition.
Adults and children posed for photos atop the glass display case, smiling and making a V sign with their fingers, while one man carefully lined up a shot of his foot over a Japanese flag.
This very interesting article showed up on The Washington Post‘s website on Wednesday—and it’s another one of those stories that had to wait for Saturday’s column. Once again it’s courtesy of Patricia Caulfield.
Emerging market currencies crash on Fed fears and China slump
The currencies of Brazil, Mexico, South Africa and Turkey have all crashed to multi-year lows as investors flee emerging markets and commodity prices crumble.
The drastic moves came as fears of imminent monetary tightening by the US Federal Reserve combined with shockingly weak figures from China, which stoked fears that the country may be sliding into a deeper downturn and sent tremors through East Asia, Latin America and Africa.
The Caixin/Markit manufacturing survey for China fell to a 15-month low of 48.2 in July, with a sharp drop in new export orders. Danske Bank said the slide “pours cold water” on hopes of a quick recovery from the slump seen earlier this year.
This Ambrose Evans-Pritchard commentary appeared on the telegraph.co.uk Internet site at 9:48 p.m. London time on Friday evening—and the stories from Patricia just keep on coming.
Commodities collapse: It’s not just about gold — Lawrence Williams
Believe it or not, gold and silver have actually been two of the best performing metal commodities in dollar terms so far this year. Yes their prices have fallen since the markets opened for the New Year on January 2, but gold is only down 7.3% year to date and silver 6.1%. Yet reading the international media one would gain the impression that the gold price, in particular, had been absolutely decimated by the recent falls.
But how about other metals commodities? Platinum and palladium are both down around +/- 20% year to date, yet both were tipped by analysts to comfortably outperform their precious metals peers. This just shows how wrong even the most qualified and experienced analysts can be at specific points in time!
And as for base metals, these have mostly also fared far worse than gold and silver – considerably so in many cases. Copper and aluminium are the two most heavily used in industry and these are down year to date 16% and 12% respectively – so in this context gold and silver haven’t actually performed too badly at all.
The question is, though, where do commodity prices go from here. Analysts are mixed on their predictions (all in dollar terms) – many seeing something of a pick up ahead in industrial metals, although for gold there appears to be continuing gloom from the mainstream forecasters who seem to be falling over each other to forecast lower and lower gold prices this year – some seeing gold falling to $800! But the realisation of how blatant the latest price take-down was has even brought the recognition of gold price manipulation into the minds of the deniers, and presumably the regulators too. The kind of activity seen on the COMEX and Shanghai Futures exchanges, gives all markets a bad name and hopefully we may see a clampdown on this kind of trading designed purely to move markets and which could perhaps implement a more level playing field for all investors.
Amen to that, dear reader, but it ain’t going to happen on the COMEX/CRIMEX any time soon—and that’s where all the real price-related action took place. This commentary by Lawrie was posted on the mineweb.com Internet site at 2:48 p.m. London time yesterday afternoon—and it’s the final offering of the day from Roy Stephens.
World Gold Council dismisses gold price plunge
On Thursday, the World Gold Council published a fairly involved statement responding to this week’s attack on the gold market, acknowledging the suspiciousness of the trading that began the attack last Sunday night but dismissing it as the doings of speculators and emphasizing what the council considers the favorable fundamentals for gold, as if fundamentals might prevail any time soon against surreptitious trading by central banks.
The council’s statement is posted in PDF format at GATA’s Internet site on Friday—and I thank Chris Powell for “all of the above”.
GATA secretary/treasurer Chris Powell interviewed on growing obviousness of central bank attacks on gold
Interviewed on Friday by Mike Gleason of Money Metals Exchange, Chris Powell commented on the increasing obviousness and desperation of central bank attacks on the gold market, the grudging recognition by market observers that someone really is manipulating the market, the willingness of the monetary metals mining industry to die quietly, the worthlessness of such an industry, and the refusal of the World Gold Council to represent gold investors and its own mining company members.
The interview is 19 minutes long and can be heard at the moneymetals.com Internet site. I found this interview embedded in a GATA release from yesterday.
The Gold Chronicles: July 16, 2015 Interview with Jim Rickards
This 51 minute audio interview with Jim was posted on the physicalgoldfund.com Internet site back on July 16—and I thank Harold Jacobsen for sending it my way on Monday. For length reasons only, it had to wait for today’s column.
Global economic termites are eating away gold price foundations
In the early 1960s, Sheikh Shakhbut bin Sultan al-Nahyan was on the brink of watching his dynasty become one of the richest on the planet. The ruler of the small Bedouin emirate of Abu Dhabi was just beginning to realise the extent of the vast oil wealth which lay under the deserts of his Arabian enclave.
Executives from oil companies queued up at his palace gates for an audience with the potentate, who had grown up in a period when piracy was still not unheard of in the azure waters of the Gulf. However, there was a big problem holding back Sheikh Shakhbut and the emirate from benefiting fully from the potential riches of oil. He only trusted gold.
A traditionalist, Sheikh Shakhbut was known to demand payment for oil royalties in the form of bullion, as had been common practice in the Gulf.
His love of gold was such that he is understood to have kept his treasury’s entire horde of gold coins in a wooden chest under his bed. This obviously caused a problem, as the piles of gold stacked up as ever more oil flowed from under Abu Dhabi’s deserts.
Here’s another piece of main stream trash about the gold market from a so-called analyst that knows less about the gold market than you do, dear reader. One wonders how he holds his job at The Telegraph with a piece of garbage like this. It ain’t worth your time—and I thank Patricia Caulfield for sharing it with us.
Dear CFTC: Here is Today’s Illegal “Spoofing” in Gold Futures
The last time we presented unmistakable spoofing in gold futures on April 28 of this year, which happened just days after the CFTC came down on Nav Sarao as the scapegoat for the May 2010 flash crash in which he was accused of spoofing the E-mini future and as a result has been in prison ever since – it resulted, literally 2 days later, to the CME accusing Nassim Salim and Heet Khara of rigging the gold market using precisely this manipulative method.
Considering today’s price action, if one were asked whether