12 September 2015 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price traded sideways until just after 1:30 p.m. Hong Kong time on their Friday afternoon—and at that point the selling pressure began. There was a tiny rally that started about fifteen minutes before the COMEX open, but around 9 a.m. EDT, the HFT boyz and their algorithms showed up. The low tick, slightly below $1,100 spot, came just before or at the London p.m. gold fix—and from there it rallied quietly, but unsteadily into the 5:15 p.m. close of electronic trading.
The high and low ticks were recorded by the CME Group as $1,111.90 and $1,097.70 in the December contract.
Gold closed in New York yesterday at $1,108.70 spot, down $2.20 from Thursday. Net volume was around 108,000 contracts, which was very light considering the price action.
Here’s Brad Robertson’s 5-minute tick chart once again and, for a change, there was some decent volume during the London session as the gold price got sold down quietly. But, for the most part, all the volume that really mattered came between 8:05 a.m. and the 1:30 p.m. COMEX close in New York. After that, it died off to just about nothing. Midnight EDT is the vertical gray line, add 2 hours for EDT—and the ‘click to enlarge‘ feature is helpful with this chart.
In most respects the price action in silver was identical to the price action in gold. The only real difference of note was the fact that the low tick came at 10:30 a.m. in New York—and the HFT boyz couldn’t get the Managed Money to take the bait and go short below the $14.30 spot price. After that, the price rallied in stair-step fashion by quite a bit—and it appears that it would have rallied back to unchanged or higher, but that wasn’t allowed to happen.
The high and low tick in that precious metal were recorded as $14.745 and $14.25 in the December contract.
Silver finished the Friday trading session at $14.615 spot, down 9 cents from Thursday’s close. Net volume was slightly elevated at 38,000 contracts.
I’m including the New York Spot Silver [Bid] chart that shows the trading activity from 1 p.m. in London—which is 8 a.m. on this chart—and the 5:15 p.m. EDT close of electronic trading. Note the failed attempts by ‘da boyz’ to get the technical funds to go further short than the $14.30 spot price mark. The stair-step rally after that was either a very cleverly constructed short covering rally, or evidence that the price was capped on every rally attempt after the low tick. It’s either one or the other. You choose.
Platinum had a very similar price path to gold, including the sell-off that began shortly before 2 p.m. Hong Kong time on their Friday afternoon, along with the low tick which came at, or just after the London p.m. gold fix was done for the day. The subsequent rally got capped at noon in New York—and the price did little after that. Platinum finished the day at $970 spot, down an even 10 bucks from Thursday’s close. It was down 23 dollars at one point.
In the early going, the palladium price, with some minor variations, was following more or less the same price path as platinum. But the low price tick in that precious metal came at the London close—and then around 12:30 p.m. in New York, the price blasted back to unchanged–and then tacked on a few more dollars after that, but was capped before it could intrude on the $600 spot price mark for the second time this week. It was closed at $594 spot, up 4 bucks—and the only precious metal to finish in the green yesterday.
The dollar index closed late on Thursday afternoon in New York at 95.50—and then slid quietly to its 95.33 London low, which occurred at 8:35 a.m. BST. The 95.69 high tick came shortly after 12 o’clock noon in London—and from there it headed lower, with the 95.12 low print coming at 2 p.m. EDT in New York. It crawled higher into the close, finishing the day and the week at 95.21—down another 29 basis points.
And here, once again, is the 6-month U.S. dollar index chart so you can keep up with the medium term trend.
The gold stocks gapped down a percent or so at the open yesterday morning in New York—and sank to their collective lows around 11:10 a.m. EDT. From there they rallied—and barely looked back, closing just off their high tick, and up 0.68 percent.
It was a similar pattern in the silver equities. Their low tick came a few minutes after 11 a.m. in New York—and they rallied with barely a backward glance as well. Nick Laird’s Intraday Silver Sentiment Index closed up 1.34 percent.
I’m not sure what to make of yesterday’s share price action. Considering yesterday’s price action in the metals themselves, I was expecting another down day, but was happy to see a positive close. And not that I wish to be caught looking for black bears in dark rooms that aren’t there, but it’s always possible that “da boyz” were loading up on shares on what would have normally been a down day—and are waiting to sell them into some future rally in order to kill it. John Embry has long been of the opinion that the powers-that-be are dicking with the precious metal equities—and I’m firmly in that camp as well.
For the week, the HUI closed down another 1.31 percent—and the ISSI was lower by an additional 2.54 percent. This isn’t any fun, is it?
The CME Daily Delivery Report showed that zero gold and 13 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. The short/issuer was ADM out of its client account—and it was “all the usual suspects” as long/stoppers once again—Canada’s Scotiabank, JPMorgan out of its in-house trading account—and the Japanese bank Mizuho in its client account. The contracts involved were 7, 4 and 2 respectively.
The CME Preliminary Report for the Friday trading session showed that September gold open interest declined by another 30 contracts, leaving 110 still open—and in silver, o.i. declined by 82 contracts, leaving 463 left.
There were no reported changes in GLD yesterday—and as of 7:01 p.m. EDT yesterday evening, there were no reported changes in SLV, either.
After three days of very decent sales reports from the U.S. Mint in a row, they had nothing to say for themselves yesterday.
Month-to-date the mint has sold 50,500 troy ounces of gold eagles—10,000 one-ounce 24K gold buffaloes—and 1,245,000 silver eagles. Considering the fact that the mint is, unofficially, back on rationing, any calculation of the silver/gold ratio from these numbers would be meaningless.
After a fairly busy week in gold, the COMEX-approved depositories took a bit of a breather. On Thursday, nothing was reported received once again—and 12 kilobars were shipped out of the Manfra, Tordella & Brookes, Inc. depository.
But the continuing psychotic action in silver more than made up for it once again, as a staggering 1,901,364 troy ounces of that precious metal were reported received—and a whopping 1,450,097 troy ounces were shipped out the door. Of the amount received—698,012 troy ounces ended up in JPMorgan’s depository once again. All six depositories had movement yesterday. The link to yesterday’s action is here—and it’s definitely worth a look once again.
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 2,294 kilobars—and shipped out 789. All of the activity was at Brink’s, Inc. once again—and the link to that, in troy ounces, is here.
I remember Ted mentioning that it was almost a record for turnover, even considering the fact that it was a holiday-shortened week. And as Ted also mentioned yesterday—and I quote: “I’d like to hear one plausible sounding explanation as to why the COMEX would falsify warehouse movement—and just in silver—not copper, gold, platinum or palladium.” This is hard for the nut-ball lunatic fringe so-called ‘analysts’ to deal with, as they never discuss it at all. And that goes for the dichotomy between the physical metal held in GLD vs. the amount held in SLV as well. And let’s not forget that the data in the COT Report and the monthly companion Bank Participation Report, as they point directly at the guilty parties. If they were false or doctored in any way, they wouldn’t even hint at any impropriety on the behalf of the Big 8 traders, or the ‘3 or less’ U.S. banks.
Before leaving the COMEX warehouse issue, here’s the chart for the JPMorgan silver depository since its inception just days before the May 1 drive-by shooting in that precious metal that we all remember so well. They are the tallest hog at the silver trough, a regular black hole/roach motel for silver—the stuff goes in and hardly ever comes out.
The Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was a bit of a disappointment in silver, as the deterioration was a bit more than I was hoping to see—but it was a very good report for gold.
In silver, the Commercial net short position increased by a very decent 2,994 contracts, or 14.97 million ounces of paper silver. The new Commercial net short position now sits at 127.8 million troy ounces.
They accomplished this by decreasing their long position by 2,072 contracts—and also adding 922 short positions.
Under the hood in the Managed Money category, they increased their long position by 2,498 contracts—and covered 1,087 short contracts.
It’s my opinion that the current COT Report in silver is market neutral at best. Using the past as prologue it’s certainly within the realm of possibility that JPMorgan could improve their short position by at least 50,000 contracts if they, their HFT buddies—and their algorithms, really got vicious. We’ve seen it before—and recently—and it’s unknown at this point if we’ll revisit the previous levels held by JPMorgan et al in the near future. Time will tell.
In gold, the Commercial net short position declined by a very decent 13,109 contracts, or 1.31 million troy ounces of paper gold. They decreased their net short position by purchasing 8,755 long contracts—and covering/selling 4,354 short contracts. This leaves the Commercial net short position at 5.60 million troy ounces, which is a very low figure by historical standards, but well off the lows that we experienced just three short weeks ago.
Under the hood in the Disaggregated COT Report, the Managed Money traders only added 43 contracts to their collective long positions, but added 13,815 short contracts.
One could call the gold COT bullish on the basis of this data, but if there’s a need to control prices, or hammer them lower with next week’s Fed meeting in the wings, there’s room for the bullion banks to do the dirty in gold, as well as in silver. Time will tell here, as well.
So in both gold and silver, the reasons that prices rose and fell was almost entirely accounted for by the interaction between the Commercial traders on one side—JPMorgan et al, the Big 8—and the dumb-as-dirt technical funds that exclusively follow chart patterns and moving averages. As I’ve said on numerous occasions, “da boyz” are continuing to run the technical funds around by the nose for fun, profit—and price management.
Here’s Nick’s “Days of World Production to Cover COMEX Short Positions” for the Big 4 and Big 8 traders—and the four precious metals are still nailed to the right-hand side of this chart. With the exception of cocoa once in a while, this chart has looked like this for fifteen years.
Nick Laird passed around a couple of charts early on Friday evening. The first one shows the price of gold in Brazilian reals—and as you can see, it’s a great time to be in the precious metals in that country, as your purchasing power isn’t being whittled away by owning this particular fiat currency. This applies to any fiat currency of course, except the U.S. dollar at the moment.
And here is the recent withdrawal from the Shanghai Gold Exchange for the week ending Friday, September 4. They only withdrew 36.807 tonnes but, as Nick pointed out, it was only a 3-day work week in China, so the number is understandable. And I’m waiting with great interest to see what next week’s withdrawal will show, as they may have some catching up to do. The ‘click to enlarge‘ feature is helpful here.
I don’t have a large number of stories for you today—and that suits me just fine, and you as well I hope.
CRITICAL READS
Liar Loans Redux: They’re Back and Sneaking Into AAA Rated Bonds
The pitch arrived with an iconic image of the American Dream: a neat house with a white picket fence.
But behind that picture of a $2.95 million home in Manhattan Beach, California, were hints of something darker: liar loans, those toxic mortgages of the subprime era.
Years after the great American housing bust, mortgages akin to the so-called liar loans — which were made without verifying people’s finances — are creeping back into the market. And, like last time, they’re spreading risks far and wide via Wall Street.
Today’s versions bear only passing resemblance to the ones that proliferated in the mid-2000s, and they’re by no means as widespread. Still, they reflect how the business is starting to join in the frenzy that’s been creating booms in everything from subprime car loans to junk-rated company bonds.
This Bloomberg story appeared on their Internet site back on Tuesday—and it’s worth reading. I thank Roy Stephens for today’s first news item.
Big banks in $1.865 billion swaps price-fixing settlement
Twelve major banks have reached a $1.865 billion settlement to resolve investor claims that they conspired to fix prices and limit competition in the market for credit default swaps, a lawyer for the investors said on Friday.
The settlement in principle was disclosed at a hearing before U.S. District Judge Denise Cote in Manhattan.
“We think it’s historic,” Daniel Brockett, the investors’ lawyer, said in an interview. “It’s one of the largest antitrust class-action settlements, and an extraordinary result for the class.”
The defendants include Bank of America Corp, Barclays Plc, BNP Paribas SA, Citigroup Inc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc, HSBC Holdings Plc, JPMorgan Chase & Co, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG.
Other defendants are the International Swaps and Derivatives Association (ISDA) and Markit Ltd, which provides credit derivative pricing services.
This Reuters article, filed from New York, showed up on their Internet site at 3:07 p.m. on Friday afternoon EDT—and I found it embedded in a GATA release.
New rules coming from CFTC to protect market from ‘Flash Boys’
The Commodity Futures Trading Commission is working on rules to contain risks in the futures markets resulting from the use of algorithmic trading strategies.
According to CFTC Chairman Timothy Massad, automated trading accounts for more than 70% of the volume in futures markets. So-called high-frequency trading has captured the public eye after the Michael Lewis book “Flash Boys” as well as the 2010 flash crash, which had its origins in both the stock and futures market.
“We are currently working on some additional proposals to make sure there are adequate risk controls at all levels, and to minimize the chance that algorithmic trading can cause disruptions or result in unfairness,” Massad said in a little-noticed speech to the Beer Institute this week.
Massad said that those proposals are expected to be issued for comment this fall.
This news item put in an appearance on the marketwatch.com Internet site at 11:39 a.m. EDT yesterday morning—and Richard Saler, who sent me this article, commented that “Surely there will be exemptions for gold and silver.”
Architects and Engineers: Solving the Mystery of Building 7 on 9/11 — Ed Asner
This is the original video that YouTube took down, without notice, on or about Feb 20, 2015 – which left the following notice for those who follow one of thousands of locations of the YouTube link out there on the internet:
“This video has been removed as a violation of YouTube’s policy against spam, scams, and commercially deceptive content”
Which makes no sense whatsoever given the scientific evidence that this documentary sticks to. Of course we are appealing the action to the extent that we can and will take legal steps as well. The video had over a million and a half views prior to be taken down.
Richard Gage, AIA
Architects & Engineers for 9/11 Truth
In memory of that day back in 2001, I present this 15-minute youtube.com video clip which falls into the absolute must watch category. I thank Brad Robertson for bringing it to my attention—and now to yours. Also worth watching is this 5:15 minute Alex Jones commentary involving Jim Rickards. It’s entitled “9/11 Profits Of Doom“—and was posted on the youtube.com website yesterday—and is definitely worth watching as well. It’s courtesy of Brad Robertson too.
Brazilian bonds sink prior to downgrade
Brazil’s recent downgrade to junk will come as little surprise to market observers given the increasingly bearish sentiment seen in Brazilian sovereign bonds.
Brazilian CDS spreads at 371bps, twice where they stood a year ago
The Markit iBoxx USD Brazil Sovereigns Index crossed the 6% threshold for the first time
Local bonds still offer positive total return for the year despite a 2% spike in yields ytd
Brazil’s ongoing struggles came to a head today when US rating agency Standard and Poor, downgraded its debt rating to junk. Competing rating agencies, Fitch and Moody’s continue to rate Brazilian debt as investment grade, yet ongoing political strife and budget deficit forecasted to hit 9% of GDP the suggest these ratings could come under strain.
This article was posted on the markit.com Internet site on Thursday sometime—and it’s the second contribution of the day from Richard Saler.
As a Boom Fades, Brazilians Wonder How It All Went Wrong
The president of Brazil should have been ecstatic. She had just won re-election after an intense campaign in which she fiercely defended her role in making Brazil, for a few fleeting years, a rising star on the global stage.
But in the days after her victory last October, President Dilma Rousseff was worried, confronted in private deliberations with her closest advisers by signs that Brazil’s triumphs were at risk of coming undone.
“We went too far,” Aloízio Mercadante, Ms. Rousseff’s chief of staff, acknowledged publicly this month, describing the sense of alarm as the dust settled after the election and Ms. Rousseff and her aides grappled with the weaknesses in Brazil’s economy.
It was not just the drop in global prices for Brazilian commodities like iron ore, the slumping demand in markets like China, or even the brewing corruption scandal at the national oil company that were hurting the country. Ms. Rousseff’s own economic policies were taking a toll, too, officials concede.
This interesting article showed up on The New York Times website on Thursday—and it’s another offering from Roy Stephens.
Migrants, Refugees, Clandestines and…Jihadis — Pepe Escobar
The plight of the refugees could become the perfect excuse to precipitate a new R2P (responsibility to protect) war; Libya remixed, with fighting ISIL barely disguising the real agenda: regime change in Damascus.
So Europe has suddenly, miraculously “discovered” that the civil war/proxy war raging in Syria since early 2011 has hemorrhaged into an extremely serious refugee crisis.
European Sturm und Drang on what to do about the refugee drama is unprecedented in modern times. Bitterness permeates the fault lines separating fear and intolerance from generosity and solidarity.
Among quite a few progressive circles, there are widespread fears that the current Western media campaign centered on the plight of refugees may be a catalyst to prepare European-wide public opinion for an all-out war in Syria before the end of 2015.
This very interesting commentary by Pepe appeared on the sputniknews.com Internet site at 1:27 p.m. EDT on their Friday afternoon, which was 6:27 a.m. in Washington—EDT plus 7 hours. I thank U.K. reader Tariq Khan for sending it our way.
Eastern Europe Bashes West as Putin Gas Link Plan Splits E.U.
Eastern European nations set to lose billions of dollars in natural gas transit fees are lambasting western Europe for striking another pipeline deal with Russia that will circumvent Ukraine.
The prime ministers of Slovakia and Ukraine criticized an agreement between western European companies from Germany’s EON AG to Paris-based Engie with Russian pipeline gas export monopoly Gazprom PJSC to expand a Baltic Sea link. Western European leaders and companies are “betraying” their eastern neighbors, Slovakia’s Robert Fico said after meeting Ukraine’s Arseniy Yatsenyuk in the Slovak capital of Bratislava on Thursday.
Gazprom and EON, Engie, Royal Dutch Shell Plc, OMV AG and BASF SE signed an agreement last week to expand Nord Stream by 55 billion cubic meters a year, which would double its capacity to almost 30 percent of current EU demand. Ukraine, already struggling to avoid a default amid a conflict with Moscow-backed separatists in its east, is set to lose $2 billion a year in transit fees while Slovakia would lose hundreds of millions of euros, the leaders said.
“They are making idiots of us,” Fico said. “You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation.”
This very interesting news item appeared on the Bloomberg Internet site at 3:27 a.m. Denver time on their Friday morning—and was subsequently updated about seven hours later. It’s worth the read if you have the interest—and I thank Patricia Caulfield for sharing it with us.
The Ukraine Imbroglio: John Batchelor Interviews Stephen F. Cohen
The broadcast begins with Ukraine Crisis and increasing tensions between Russia and NATO and expanding to global tensions centred upon Syria. Firstly the two pundits visit Kiev where Poroshenko attempts to diddle with Russia’s veto power in the U.N. Security Council, woos Christine Lagarde, head of the IMF, over restructuring Ukraine’s $18 b. debt, and finally France’s President Hollande makes statements about supporting Minsk2 and lifting the Russian sanctions. Once more Stephen F. Cohen deals with each point pointing out the absurdities of Kiev’s positions and the pressing need to resolve the crisis for the EU, Russia and, yes, Ukraine’s economy and humanitarian crisis.
Next the discussions shift to the Syrian Crisis and mounting refugee problems from the M.E. to the Black Sea Basin – a crisis presently larger than that following WW2. Cohen notes that Russia is given no credit in the USA for handling up to two million displaced Ukrainians and humanitarian support. The involvement of Russian forces directly in Syria is also discussed. Why is the USA so opposed to Russia fighting ISIS? Cohen, as usual, explains the complexities for both Washington and Russia, and ends up highly critical of Washington foreign policy. Even the monetary and energy sectors are looked at when the Saudi/Russian relationships are factored into the equation. Cohen notes the direction of Russia and China to dump the dollar in oil trade – leaving the Saudis to make a difficult decision,…
The last portion adds to the worries of the new arms race and how the war party in NATO has continued to play a role. We now have a new Cold War that has expanded to the East. We now find a new arms role expanding in turn with China and even M.E. countries developing militarily with increasingly sophisticated weaponry. As usual there is much more than this in the podcast.
This 39:40 minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday. The first person through the door with the link was Ken Hurt, but I thank Larry Galearis for all of the text you see above.
Why Putin won’t be helping OPEC to cut oil production
Few things have more potential to spook the oil market than the prospect of Russia joining forces with OPEC. Speculation that such a move was afoot last month drove crude to its biggest three-day gain in 25 years.
Despite the market buzz, there are sound economic and technical reasons why this is unlikely to happen.
“Russia and OPEC have talked about cooperation in cutting production many times in the past, but the results of that were always dismal and disappointing,” said Nordine Ait-Laoussine, president of Geneva-based consultant Nalcosa and former energy minister of Algeria. “Russia has assumed that when oil prices go down, OPEC countries are in a weaker position and are more likely to be the first to cut its production, and they always did.”
Russia vies with Saudi Arabia and the U.S. for the title of world’s largest oil producer. When Venezuelan President Nicolas Maduro said last week he had agreed with his Russian counterpart Vladimir Putin on “initiatives” to bring stability to the oil market, he was attempting to resuscitate a plan to boost prices that went nowhere in November.
This Bloomberg story was picked up by the mineweb.com Internet site at 3:04 p.m. BST on their Friday afternoon—and it’s another contribution from Patricia Caulfield.
Goldman Sachs: Oil May Fall to $20 as Global Surplus Expands
The global surplus of oil is even bigger than Goldman Sachs Group Inc. thought and that could drive prices as low as $20 a barrel.
While it’s not the base-case scenario, a failure to reduce production fast enough may require prices near that level to clear the oversupply, Goldman said in a report e-mailed Friday. The bank cut its forecast for Brent and WTI crude through 2016 on the expectation that the glut will persist on OPEC production growth, resilient non-OPEC supply and slowing demand expansion.
“The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016,” Goldman analysts including Damien Courvalin wrote in the report. “We continue to view U.S. shale as the likely near-term source of supply adjustment.”
This story showed up on the newsmax.com Internet site at 9:45 a.m. on Friday morning EDT—and I thank Brad Robertson for this one.
Snowden’s Great Escape
Snowden’s Great Escape is a breathtaking account of the NSA’s frantic search for Edward Snowden and the striking plan that enabled his remarkable disappearing act.
In addition to Snowden, other notable figures who have been interviewed for the doc include Bolivian president Evo Morales, former NSA director Michael Hayden, former German justice minister Sabine Leutheusser-Schnarrenberger, WikiLeaks co-founder Julian Assange and his adviser Sarah Harrison, Guardian correspondent Ewen MacAskill, Hong Kong lawmaker Regina Ip, and journalist Glenn Greenwald and his Hong Kong lawyer Robert Tibbo.
The film takes the form of a fast-paced documentary thriller, and focuses on Snowden’s escape from Hong Kong to Moscow after leaking a cache of secret NSA documents to journalist Greenwald and filmmaker Poitras.
I posted this video in last Saturday’s column, but the version Roy Stephens sent me was only available for viewing in Canada. I have the youtube.com version in today’s column, so anyone can view it. Watching this absolutely riveting 58:12 minute movie/documentary is like eating cashews or macadamia nuts—once you start, you just can’t quit. I thank Paul Ziesmer for sending me the link that appears here.
Next Steps in Putting Iran Nuclear Deal Into Effect
With Senate Democrats blocking passage of a resolution disapproving of the Iran nuclear deal, the attention will shift from the halls of Congress to the nations and international agencies that must put the accord into effect. Here’s what happens next.
Q. What is the first thing that will happen?
A. The agreement is to be formally adopted on Oct. 19 — 90 days after it was endorsed by the United Nations Security Council. That is the day Iran and the six world powers that concluded the accord — the United States, Germany, Britain, France, Russia and China — are to start taking steps to comply, although most of the early burden falls on Iran.
Q. When does the agreement actually take effect?
A. That does not happen until “implementation day.” Nobody knows for sure when that may be. American experts say it will take six to nine months for Iran to carry out the initial nuclear steps that are required for the accord to take effect. Iran insists it can act more quickly.
This rather brief Q&A-style article put in an appearance on The New York Times website on Thursday sometime—and it’s another offering from Patricia Caulfield.
For China, Migrant Crisis Is Someone Else’s Fault, and Responsibility
Earlier this year, as war-dazed Syrians fled to Europe and the Rohingya ran from murder in Myanmar, European diplomats suggested to their Chinese counterparts it might be good to talk about migration. There was a perfect opportunity: the 17th E.U.-China Summit in Brussels in June.
The Chinese demurred and suggested instead talking about the safer topic of disability, said a European diplomat familiar with the situation who spoke on the condition of anonymity.
The message: China is reluctant to get involved in efforts to solve humanitarian crises that it believes are not of its own making.
Although China sent ships to evacuate its own citizens caught up in the fighting in Libya in 2011 and this year in Yemen, it believes the migrant crisis sweeping Europe is mostly the fault, and responsibility, of the United States and Europe, for trying to foment political change in countries such as Syria and Libya.
‘‘A part is due to a minority of so-called ‘democrats’ in those countries, who are determined to subvert stable authoritarian rule there,’’ Tian Wenlin, a scholar at the China Institutes of Contemporary International Relations, wrote in People’s Daily. ‘‘The main reason, however, is that the United States and Europe took the opportunity to carry out ‘regime change,’’’ Mr. Tian wrote.
This “Letter From China” put in an appearance on the sinosphere.blogs.nytimes.com Internet site at 5 p.m. EDT on Thursday afternoon—and it’s the final offering of the day from Patricia Caulfield—and it’s definitely worth reading, especially for any serious student of the New Great Game.
Doug Noland: China Hardens Peg and Brazil Goes to Junk
The crisis is taking a decisive turn for the worse in Brazil. On the back of S&P downgrading Brazilian debt to junk, the country’s CDS surged to multi-year highs. The Brazilian banking and corporate sectors have been in a six-year debt fueled borrowing binge. It’s all coming home to roost.
The degree of market complacency remains alarming. The bullish view holds that Brazil, China and others retain sufficient international reserves to defend against crisis dynamics. But with EM currencies in virtual free-fall and debt market liquidity disappearing, it sure looks and acts like an expanding crisis.
So far, it’s a different type of crisis – market tumult in the face of global QE, in the face of ultra-low interest rates and the perception of a concerted global central bank liquidity backstop. It’s the kind of crisis that’s so far been able to achieve a decent head of steam without causing much angst. And it’s difficult to interpret this bullishly. If Brazil goes into a tailspin, it will likely pull down Latin American neighbors, along with vulnerable Indonesia, Malaysia, Turkey and others. And then a full-fledged “risk off” de-risking/de-leveraging would have far-reaching ramifications, perhaps even dislocation and a collapse of the currency peg in China. China does have a number of major trading partners in trouble. Hard for me to believe the sophisticated players aren’t planning on slashing risk.
Doug’s weekly Credit Bubble Bulletin is always a must read for me—and this one is no exception. It was posted on his Internet site very late on Friday evening Denver time.
The danger of eliminating cash — Alasdair Macleod
In the early days of central banking, one primary objective of the new system was to take ownership of the public’s gold, so that in a crisis the public would be unable to withdraw it.
Gold was to be replaced by fiat cash which could be issued by the central bank at will. This removed from the public the power to bring a bank down by withdrawing their property. A primary, if unspoken, objective of modern central banking is to do the same with fiat cash itself.
There are of course other reasons for this course of action. Governments insist that they need to be able to trace all private sector transactions to ensure that criminals do not pursue illegal activities outside the banking system, and that tax is not evaded. For the government, knowledge of everything individuals do is necessary control. However, in the monetary sense, anti-money laundering and tax evasion are not the principal concern. Central banks are fully aware that the financial system is fragile and could face a new crisis at any time. That’s why cash in their view must be phased out.
I had a U.K. reader send me this commentary a week ago—and I gave some excuse as to why I didn’t want to post it. I’d forgotten about it entirely until Brad Robertson thrust it under my nose yesterday—and after sober second thought, here it is. It’s certainly worth reading if you have the time.
Geoff Rutherford Interviews Eric Sprott
Listen to Eric Sprott share his views on eye-opening findings in the physical markets of gold and silver; with particular focus on Indian precious metal demand, COMEX inventories, and the discussion of physical shorts in the market.
This 7:12 minute audio interview conducted by host Geoff Rutherford was posted on the sprottmoney.com Internet site on Friday afternoon EDT—and it’s worth your while.
Reflections in a Golden Eye: Tightness in the gold and silver coin and bullion markets
“My baseline is they [the Chinese] have been buying and the Indians have been buying in enormous quantities. It’s virtually impossible to get physical gold in London to ship to those countries. We get permanent requests from Russia, would we please sell our physical gold to India and China. Because there is no physical, only endless promises. And I really worry that the market, that paper market, could be stamped on and people will say ‘sorry we’ll have a financial close out,’ and it’s all over.” — Peter Hambro, Petropavlovsk, 9/9/2015
“The cost of borrowing physical gold in London has risen sharply in recent weeks. That has been driven by dealers needing gold to deliver to refineries in Switzerland before it is melted down and sent to places such as India, according to market participants. ‘[The rise] does indicate there is physical tightness in the market for gold for immediate delivery,’ said Jon Butler, analyst at Mitsubishi. The move comes as Indian gold demand picked up in July, with shipments of gold from Switzerland to India more than trebling. Most of that gold is likely to originally come from London before it is melted down into kilobars by Swiss refineries, according to analysts.” — Henry Sanderson, Financial Times, 9/2/2015
This commentary by Michael Kosares appeared on the usagold.com Internet site yesterday.
Crossing Borders with Gold and Silver Coins: A Glimpse of Things to Come — Doug Casey
It’s well-known that you have to make a declaration if you physically transport $10,000 or more in cash or monetary instruments in or out of the US, or almost any other country; governments collude on these things, often informally.
Gold has always been in something of a twilight zone in that regard. It’s no longer officially considered money. So it’s usually regarded as just a commodity, like copper, lead, or zinc, for these purposes. The one-ounce Canadian Maple Leaf and US Eagle both say they’re worth $50 of currency.
But I’ve recently had some disturbing experiences crossing borders with coins. Of course, crossing any national border is potentially disturbing at any time. You might find yourself interrogated, strip searched, or detained for any reason or no reason. But I suspect what happened to me in three of the last four borders I crossed could be a straw in the wind.
This must read commentary was posted on the internationalman.com Internet site yesterday—and I thank their senior editor Nick Giambruno for bringing it to my attention—and now to yours.
U.S., European gold coin sales surge in third quarter
Gold coin sales in the United States and Europe have surged in the third quarter, with sales from the U.S. Mint reaching levels not seen since the price crash of 2013, as low prices and a series of market shocks fuel retail buying.
Sales of gold American Eagles have nearly trebled year on year in the third quarter with most of September still to go, reaching 322,000 ounces. That’s the highest of any quarter since the gold crash of 2013.
“The industry has been on an absolute tear for the last three months,” Scott Spitzer, chief operating officer at Manfra, Tordella & Brookes in New York, said. “Every time there’s been a break in the price and there’s been volatility, there has been enormous growth in retail interest.”
This Reuters story, co-filed from London and New York, put in an appearance on their website at 2:45 p.m. BST in London yesterday afternoon—and I found it on the Sharps Pixley website.
The PHOTOS and the FUNNIES
The WRAP
One thing that can’t be denied is that we are in a pronounced shortage in many retail forms of silver, led by Silver Eagles and 90% “junk” coins, the premiums of which have jumped to the highest levels since 2008. Premiums and delayed delivery times have stretched to extreme levels on most retail forms of silver. This is no minor matter. There are many rushing to declare that this is not a “real” silver shortage, but merely represents a temporary production bottleneck caused by an inability to produce the blanks the Mint needs to stamp out Silver Eagles. (Junk coins, of course, haven’t been minted for more than 50 years and it does look like they will never be truly available except at some sharply higher price of silver).
I believe those downplaying the current shortage in many retail forms of silver are underestimating its significance. While I still believe the current bout of shortage was kicked off by JPMorgan, it looks more intense than any I’ve seen in the past (and I’ve seen a few). Admittedly, this round of retail shortage hasn’t lasted for very long time wise (only a month or two), but for the first time I recall, dealers are running out of lower premium substitutes for Eagles and 90% coins and, as a result, losing sales. This is not a circumstance that can last indefinitely without impacting wholesale prices eventually. And I’m pretty sure that when a wholesale shortage does arrive, the naysayers will likely characterize it as a temporary bottleneck in getting 1,000 oz bars from the mines and refiners to the market, as there’s plenty of silver ore in the ground.
Should retail silver demand remain strong, sooner or later, demand is going to be directed to larger denominations, first to 100 oz bars of silver (which is occurring) and eventually to the form of silver that matters most – 1,000 oz bars. Sure, all things equal, I would rather have two monster boxes of Silver Eagles (500 to a box) than a 1,000 oz bar; but at some high level of premium and delivery delay, a lower cost bird-in-the-hand becomes attractive. I think we may be there already, or very soon. — Silver analyst Ted Butler: 05 September 2015
Today’s pop ‘blast from the past’ dates back to 1978—and was this American rock band’s debut single. It was a huge success—and the rest, as they say, is history. The link is here.
Today’s classical ‘blast from the past’ is something I stumbled over when I was looking for something else. This is the second movement of Mozart’s Concerto for flute, harp, and orchestra, K. 299/297c. Mozart composed the concerto in April 1778, during his six-month sojourn in Paris. But it’s not just the music that’s fantastic, it’s the 9-year old Russian harpist, Alisa Sadikova, that’s playing it. She’s as cute as can be—and is gifted beyond words. If you ever wondered what a child prodigy looks like, she is one. The flautist is no slouch, either. The link is here. And while I’m at it, here she is at the tender age of 7 years playing the incredibly difficult first movement of Georg Friedrich Händel‘s harp concerto—and the link to that is here. The instrument just dwarfs her—and I’m surprised that she can reach all the necessary strings at that age. Amazing!
Well, there’s not much to add to what I’ve already said about the precious metal price movements at the top of this column. JPMorgan et al were out there hunting for the sell stops in all four yesterday. They got gold below the $1,100 spot mark—and silver down to $14.30.
Here are the 6-month charts for all of the Big 6 commodities once again.
As I mentioned in my discussion on the Commitment of Traders Report further up, there’s still room to the downside if the powers-that-be want to finish the job they started—35 to 40 bucks in gold and maybe 60 or so cents in silver—if they want to slam the Manged Money traders back on the extreme short side where they were three short weeks ago. But can they, or will they? Beats the heck out of me, but one should put nothing past these bastards.
As Ted Butler has mentioned, everywhere you look, the dichotomy between the paper price of the Big 6 commodities and the physical market is so wildly out of balance from a price perspective, that he can’t understand why this hasn’t blown sky high already. I, along with a lot of other people, couldn’t agree more.
Next week will certainly be interesting—and I get the impression that there will be some sort of denouement when the Fed reaches a decision either way on Wednesday.
Everyone is wringing their hands about the world-wide deflationary forces that threaten to consumer the financial markets—and the central banks have been frantically trying to ignite inflation with rampant money printing, but that isn’t working—and won’t work. A showcase for that would be Japan, as over two decades of financial legerdemain had produced no results—and an interest rate increase at this juncture would add even more fuel to the deflationary fire.
If they’re really serious about inflation, it has to be ignited in the commodities at this juncture—and that inflationary spiral would certainly be lead by the precious metals. And as I said in last Saturday’s missive, a broad move to hard assets could be lethal to the banking system if allowed to run wild.
There’s no easy way out—and as a matter of fact there is no way out, a real Sophie’s Choice. The Fed and the central banks of the world have only three choices; leave rates unchanged and muddle along like Japan, raise rates and suffer the consequences of an uncontrollable deflationary spiral, or let commodity price run—and hope they can stop inflation before it gets away on them.
Whatever path is taken, I expect it will be a whole new ball game starting from the time the Fed announces its decision on Wednesday. And if word gets out early, it’s entirely possible that events will overrun them.
As Jim Rickards said “The system is highly unstable—and if confidence is lost, it can melt down very quickly.”
What a mess—and the central banks of the world, led by the Fed, have nobody to blame but themselves.
I’m done for the day—and the week. See you on Tuesday.
Ed
The post U.S. and European Gold Coin Sales Surge in Third Quarter appeared first on Ed Steer.