31 October 2015 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price didn’t do much of anything in Far East trading on their Friday, or in morning trading in London. Then shortly after the noon London silver fix, the price rolled over, hitting its interim low shortly before 9 a.m. in New York. The absolute low tick came during a 2-hour down/up move centered around 12 o’clock noon EDT. It traded flat into the close of electronic trading after that.
The gold price traded well within a ten dollar price range yesterday, so I shall dispense with the high and low ticks once again.
Gold finished the trading day in New York at $1,141.70 spot, down $3.80 from Thursday’s close. Net volume was reasonably light at just over 112,000 contracts, but it should be pointed out that a new low was set in gold for this move down yesterday.
The silver price chart for Friday looked like a carbon copy of the gold chart, so I shall dispense with the play-by-play—and the high and lows in this precious metal as well.
Silver closed on Friday at $15.535 spot, down 4.5 cents on the day. Net volume was somewhat elevated at 35,000 contracts—and “da boyz” set new lows in this metal too.
Platinum was up 7 dollars on the day by the Zurich open on Friday morning, but also ran into selling pressure shortly after the noon London silver fix. It was closed just off its low tick of the day at $984 spot, down 6 bucks from Thursday’s close.
Palladium was up 3 dollars by 2 p.m. Hong Kong time on their Friday afternoon—and then it began to rally with some real authority. By shortly after 11 a.m. Zurich time, the price began to go vertical—and at that point, the not-for-profit sellers showed up—and beat it back down to only a 5 dollar gain at $674 spot.
The dollar index closed late on Thursday afternoon in New York at 97.22—and rallied to its 19.32 ‘high’ at precisely 1:00 p.m. in Hong Kong trading on their Friday afternoon—and it was all down hill to its 96.58 low, which came minutes before 11:30 a.m. in New York. The subsequent rally topped out a small handful of basis points above the 97.00 mark, before rolling over a bunch into the close. The dollar index finished the Friday trading session at 96.93—down 29 basis points from its Thursday close.
And here, as always, is the 6-month U.S. dollar chart so you can keep track of the medium term with just a glance.
The gold stocks opened unchanged—and popped into positive territory for about fifteen minutes before heading into negative territory. Then around 10:20 a.m. EDT, they began to chop higher, hitting their high ticks around 1:45 p.m.—and at that point they were up almost 2 percent. But from there, a willing seller showed up and they began to head south with a vengeance. They never looked back, as the HUI closed lower by 2.23 percent—and right on its low tick.
It was similar for the silver stocks, except their sell-off after their foray into positive territory after the open, was much more severe. Despite that, they rallied strongly until 1:45 p.m. in New York—and at that point, the same not-for-profit seller showed up as in the gold equities. Nick Laird’s Intraday Silver Sentiment Index closed down 2.42 percent—and on its low tick as well.
For the week, the HUI closed down 4.80 percent—but for the month it was up 18.53 percent. Nick’s ISSI closed down 6.18 percent on the week, but up 11.25 percent for the month.
The CME Daily Delivery Report showed that zero gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. November is going to be a quiet delivery month, but there are always room for surprises, I suppose.
The CME Preliminary Report for the Friday trading session showed that with October now off the board, gold open interest for November fell by 70 contracts, leaving 293 still open—and in silver, November o.i. fell by 18 contracts down to 11 left. As I said, barring any surprises, the November delivery month will be a yawner.
There was another withdrawal from GLD yesterday, as an authorized participant removed 67,015 troy ounces. And as of 8:01 p.m. EDT yesterday evening, there were no reported changes in SLV.
I will speculate that any shares being sold by SLV holders are being gobbled up by the big short[s] in that ETF—and JPMorgan comes to mind as the usual suspect. And if that’s the case, we’ll probably see more withdrawals from SLV going forward, because JPM won’t want to get caught exceeding the SEC’s 5 percent reporting limit.
The U.S. Mint had a sales report yesterday for the last day of October. They sold 4,500 troy ounces of gold eagles—500 one-ounce 24K gold buffaloes—and 856,500 troy ounces of silver eagles.
Unless they add something to October’s sales on Monday, the current month’s sales stand at 34,000 troy ounces of gold eagles—10,500 one-ounce gold buffaloes—and 3,788,000 silver eagles.
In September, the mint sold 125,000 troy ounces of gold eagles—22,000 one-ounce 24K gold buffaloes—and 3,804,500 silver eagles. And comparing the two months, it’s obvious that the big buyer has stepped away from the table in gold—and Ted is of the opinion that silver eagles sales are not as robust as they could be. That’s either because the ‘big buyer’ has scaled back their purchases, or that the mint has scaled back its production. I know that Ted will have more to say about this in his weekly commentary later today.
It was all zeros in gold over at the COMEX-approved depositories on Thursday—nothing in or out.
For a change, there wasn’t a whole heck of a lot of activity in silver, as 56,742 troy ounces were reported received—and only 63,861 troy ounces were shipped out the door. The link to that activity is here.
Over at the COMEX-approved gold kilobar depositories in Hong Kong their Thursday, they reported receiving 2,807 kilobars—and shipped out 9,703 of them. All of that rather chunky action occurred at Brink’s, Inc. once again—and the link to that, in troy ounces, is here.
Well, my attempt to handicap yesterday’s Commitment of Traders Report, for positions held at the close of COMEX trading on Tuesday, was another dismal failure, as there were increases in the Commercial net short position in both gold and silver.
In silver, the Commercial net short position increased by another 2,573 contracts, or 12.9 million troy ounces. They did this by selling 1,139 long contracts—and adding 1,434 contracts to their short position. The Commercial net short position in this precious metal now stands at 346.9 million troy ounces, an absolutely frightful number.
Ted says that the Big 4 traders added about 600 contracts to their already awesome short position, but the ‘5 through 8’ large traders actually covered about 2,000 short contracts—and I know that Ted will have something to say about that in his column today as well. The remaining Commercial traders—the small traders, Ted Butler’s raptors—sold about 4,000 long contracts for a profit. Ted left JPMorgan’s short position unchanged for the week at 25,000 contracts, or 125 million troy ounces.
Under the hood in the Disaggregated COT Report it was even worse, as the technical funds in the Managed Money category not only added 2,282 contracts to their long position, they sold 3,169 short contracts as well, for a total swing of 5,451 contracts to the long side—more than double the amount that the Commercial traders went short.
Passing through copper on the way to gold, I see that the Commercial net short position in that metal increased as well—by 2,596 contracts.
In gold, the Commercial net short position in that precious metal increased by 2,548 contracts, or 254,800 troy ounces. The Commercial net short position is now up to 16.58 million troy ounces.
Ted and I both got distracted by the goings on in the Disaggregated Report—and I never got the changes in the short positions in the Big 4, the ‘5 through 8’ traders, or the raptors. But the increase wasn’t overly large—and split up three ways, the changes in each wouldn’t have been material anyway. At least that’s the excuse I’m using—and I’m sticking to it.
Under the hood in the Disaggregated COT Report, Ted and I thought there was a reporting error of some sort. The technical fund traders in the Managed Money category decreased their short position by 6,287 contracts, which sounds believable. But the report also shows that they decreased their long positions by 8,539 contracts, which is hardly likely given the price environment. The numbers in the “Other Reportables” and “Nonreportable” categories are open to question as well, so I’m going to pass on these—and wait for what Ted has to say, as both of us were discussing these numbers about twenty minutes after they came out—and he may have different thoughts now that he’s had more time to think about it.
Since the Tuesday cut-off for the above COT Report, Ted said that the Commercial net short positions in both metals deteriorated substantially on the Wednesday price run-up to the 2 p.m. EDT Fed ‘announcement’—and he was wondering out loud on the phone yesterday whether or not the sell-off at 2 p.m. on the Fed news, plus the declines of both Thursday and yesterday, have been enough to erase the Wednesday morning deterioration in the Commercial net short positions in both gold and silver.
What he’s saying in other words is that despite the down days of Wednesday afternoon, Thursday and Friday, the current structure of the COT Report as of the COMEX close on Friday, may not have changed at all since the Tuesday cut-off.
That is not good news at all, as the numbers in the current COT Report were horrid in both metals, particularly in silver.
Of course we’ve still got Monday and Tuesday to go, so until we get the data from those two days—and then await the COT Report on October 6—we won’t know for sure.
Here’s Nick’s famous “Days of World Production to Cover COMEX Short Positions” in all the physical commodities that are traded on the COMEX. As I said last week—and it’s just as applicable this week—the short position of the Big 8 Commercial traders in silver is only four days worth of world silver production off its previous week’s record high in the current era. And as I said in last Saturday’s column, “the short position of the Big 8 traders in silver [mostly U.S. and non-U.S. banks] is at a high not seen since the middle of 2008.” That still stands as of this COT report as well.
The ‘Big 4’ traders are short 136 days of world silver production—and the ‘5 through 8’ traders are short an additional 61 days of world silver production. So the ‘Big 8’ are short 197 days of world silver production—almost seven months.
And just as a point of interest, of the 197 days of world silver production held short by the Big 8 traders—60 days of that amount represents JPMorgan’s 25,000 contract short position—and almost half of the short position held by the Big 4 traders. You couldn’t make this stuff up!
Nick sent around the weekly withdrawals from the Shanghai Gold Exchange for the week ending 23 October—and the magic number was 56.98 tonnes. Here’s his excellent chart showing that—and the ‘click to enlarge‘ feature is useful here.
I’ve got a very decent number of stories for you today, including some that I’ve been saving for Saturday’s column. I hope you have enough time this weekend to read the ones that interest you.
CRITICAL READS
Chevron will cut up to 7,000 jobs as impact of falling oil prices continues
The plummeting price of oil has ripped into the once booming U.S. energy industry so dramatically that the oil sector has laid off 87,000 people so far this year. Chevron became the latest company to dismiss workers on Friday, announcing that it would lose between 6,000 and 7,000 jobs – the second four-figure round of dismissals at the company since July.
The company is cutting investment by a fourth. “With the lower investment, we anticipate reducing our employee workforce by 6,000-7,000,” the chairman and CEO, John Watson, said in a statement.
Watson said the company was “focused on improving results by changing outcomes within our control.”.
Oil prices have fallen from $115 just over a year ago to under $50 this month causing woes across a once-booming industry. Cheaper energy prices fuelled a 64% drop in third-quarter profit at Chevron, the US’s second-biggest oil company behind Exxon Mobil. Earlier this week Royal Dutch Shell announced an $8bn loss, caused in part by lower energy prices.
This oil-related news item put in an appearance on theguardian.com Internet site on 7:24 p.m. GMT on Friday evening, which was 3:24 p.m. in Washington—EDT plus 4 hours. I thank Patricia Caulfield for today’s first story.
Bailing out the Bakken: The Government Bails out the Bakken Oil Producers
The Boom in the Bakken came as a result of the Shale Revolution and the development of horizontal drilling and fracturing technology.
In 2004, the horizontal rig count was a mere 108 and comprised only 10% of total rigs used by onshore US drillers. That number increased to 966 in early 2011, capturing 55% of the US onshore market. Although the horizontal rig count is now down to 591, the unconventional—or, as I call them, “the new normal”—rigs make up 77% of total rigs currently in use in the US.
For over a year, I have publicly urged everyone to ignore the “traditional” rig count numbers. They are meaningless. One new rig can do today what it took three rigs to do just five years ago. Too bad the mainstream media doesn’t report the rig count the way I do—counting only the rigs that matter.
The horizontal fracturing bonanza brought on record oil production from layered tight oil formations in the Bakken and the underlying Three Forks formation. The Bakken is world class and it’s here to stay—but now, not without government support.
This commentary by Marin appeared on the katusaresearch.com Internet site yesterday—and I thank Scott Otey for passing it along yesterday. It’s worth reading if you have the interest.
Inside the Secretive Circle That Rules a $14 Trillion Market
Fifteen of the biggest players in the $14 trillion market for credit insurance are also the referees.
Firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. wrote the rules, are the dominant buyers and sellers and, ultimately, help decide winners and losers.
Has a country such as Argentina paid what it owes? Has a company like Caesars Entertainment Corp. kept up with its bills? When the question comes up, the 15 firms meet on a conference call to decide whether a default has triggered a payout of the bond insurance, called a credit-default swap. Investors use CDS to protect themselves from missed debt payments or profit from them.
Once the 15 firms decide that a default has taken place, they effectively determine how much money will change hands.
And now, seven years after the financial crisis first brought CDS to widespread attention, pressure is growing inside and outside what’s called the determinations committee to tackle conflicts of interest, according to interviews with three dozen people with direct knowledge of the panel’s functioning who asked that their names not be used. Scandals that exposed how bank traders rigged key interest rates and fixed currency values have given ammunition to those who say CDS may also be susceptible to collusion or, worse, outright manipulation.
I posted this very long Bloomberg article in my column on Thursday, but mentioned that for length reasons that I would be including it in Saturday’s column as well—and here it is. If you didn’t read it then, you should read it now if you have the interest, that is—and I thank West Virginia reader Elliot Simon once again for bringing it to our attention.
Civil-military relations: Who will fight the next war?
Failures in Iraq and Afghanistan have widened the gulf between most Americans and the armed forces.
Cruising a Walmart in Clayton County, Georgia, with Sergeant Russell Haney of U.S. army recruiting, it would be easy to think most Americans are aching to serve Uncle Sam. Almost every teenager or 20-something he hails, in his cheery Tennessee drawl, amid the mounds of plastic buckets and cut-price tortilla chips, appears tempted by his offer. Lemeanfa, a 19-year-old former football star, says he is halfway sold on it; Dseanna, an 18-year-old shopper, says she is too, provided she won’t have to go to war. Serving in the coffee shop, Archel and Lily, a brother and sister from the U.S. Virgin Islands, listen greedily to the education, training and other benefits the recruiting sergeant reels off. “You don’t want a job, you want a career!” he tells them, as a passer-by thrusts a packet of cookies into his hands, to thank him for his service.
Southern, poorer than the national average, mostly black and with longstanding ties to the army, the inhabitants of Clayton County are among the army’s likeliest recruits. Last year they furnished it with more soldiers than most of the rest of the greater Atlanta area put together. Yet Sergeant’s Haney’s battalion, which is responsible for it, still failed to make its annual recruiting target—and a day out with the unit suggests why.
This very interesting article, showed up on the economist.com website last Saturday—and for both length and content reasons, had to wait for today’s column. I thank Patricia Caulfield for her second offering in today’s column.
U.S. on the Road to Third World: Paul Craig Roberts
In 2004 Senator Charles Schumer and I predicted that the consequence of jobs off-shoring would be that the U.S. would become a Third World country in 20 years and the U.S. is well on course to meeting the forecast.
On January 6, 2004, Senator Charles Schumer and I challenged the erroneous idea that jobs off-shoring was free trade in a New York Times op-ed. Our article so astounded economists that within a few days Schumer and I were summoned to a Brookings Institution conference in Washington, DC, to explain our heresy. In the nationally televised conference, I declared that the consequence of jobs off-shoring would be that the US would be a Third World country in 20 years.
That was 11 years ago, and the U.S. is on course to descend to Third World status before the remaining 9 years of my prediction have expired—and the evidence is everywhere.
This commentary by Paul was posted on the sputniknews.com Internet site at 9:19 p.m. Moscow time on their Thursday evening, which was 2:19 p.m. in Washington—EDT plus 7 hours. It’s definitely worth reading—and it’s courtesy of U.K. reader Tariq Khan.
Another recession is coming – the only question is how bad
According to the late, and great, American economist Rudi Dornbusch “none of the U.S. expansions of the past 40 years died in bed of old age; every one was murdered by the Federal Reserve”. What he meant by this was that all US business cycles are brought to an end not by natural causes but by the actions of the Fed in raising interest rates. The art of the central banker is to take away the punch bowl before the party gets going, but few succeed; invariably they leave it too late, so that when they do apply the brakes, the economy crashes.
With the Fed’s Open Market Committee again hinting at a rate rise by the end of the year, are not policymakers in danger of repeating the same mistake? I believe they are – that recession risk in the U.S. and in Britain is substantially underestimated both by policymakers and the markets.
No recession is ever predicted by official forecasting; it would be an admission of failure if it was, for the whole purpose of economic policy making is to keep things just right – not too hot and not too cold. Ultimately, the policymakers always fail. Gordon Brown, the last U.K. prime minister, preposterously boasted that he had abolished boom and bust. Alan Greenspan, former Fed chairman, likewise believed he could defy the gods. Both were in for a rude awakening, having failed to notice the mega-boom their policies helped create in financial services.
This commentary showed up on the telegraph.co.uk Internet site at 5:43 p.m. GMT on Thursday evening—and it, too, is worth reading. It’s the first of two stories that I found in yesterday’s edition of the King Report.
People in Sweden are hiding cash in their microwaves because of a fascinating — and terrifying — economic experiment
Sweden is shaping up to be the first country to plunge its citizens into a fascinating — and terrifying — economic experiment: negative interest rates in a cashless society.
The Swedish central bank held its benchmark interest rate at -0.35% today, the level it has been at since July.
Although retail banks have yet to pass on that negative to rate to Swedish consumers, the longer it’s held there the more financial pressure there is for banks to pass the costs onto their customers. That’s a problem because Sweden is the closest country on the planet to becoming an all-electronic cashless society.
Remember, Sweden is the place where, if you use too much cash, banks call the police because they think you might be a terrorist or a criminal. Swedish banks have started removing cash ATM machines from rural areas, annoying old people and farmers. Credit Suisse says the rule of thumb in Scandinavia is: “If you have to pay in cash, something is wrong.”
This Business Insider story appeared on the financialpost.com Internet site on Thursday morning EDT—and I thank my daughter Kathleen for sharing it with us.
Portugal risks becoming ‘ungovernable’ as conservative government set to collapse after just 11 days
Portugal risks becoming “ungovernable” as Leftist forces prepare to topple the returning government of prime minister Pedro Passos Coelho after just 11 days, the country’s president has warned.
Mr Passos Coelho – whose pro-bail-out coalition presided over four years of austerity policies – was sworn into office on Friday after his ruling coalition finished first in recent elections, but lost its parliamentary majority.
The appointment was met with controversy after the country’s president vowed to block an alliance of Leftist, anti-EU parties from taking the reins of office. The coalition of Socialists, Communists and the radical Left have vowed to bring down the minority government when a parliamentary vote is held on November 10.
A collapse would make it the shortest government in Portugal’s 40 years of post-war democracy.
This news story showed up on the telegraph.co.uk Internet site at 4:00 p.m. GMT on Friday afternoon in London, which was noon in New York. I thank U.K. reader Tariq Khan for his second contribution of the day.
‘Star Wars’ villain Emperor Palpatine wins seat on Ukrainian city council
A man running for a Ukrainian city council seat under the name of Emperor Palpatine, the villain from the Star Wars films, won with more than 54 percent of votes.
Aleksandr Borovik, 25, who used the Sith Lord’s name and costume in his campaign for the Odessa city council, was one of nearly 50 candidates in the election to use names taken from the Star Wars films.
Borovik, who identified himself as holding the position of “emperor” for “LLC Palpatine Finance Group,” won more than 54 percent of votes for his seat.
Odessa has recently seen a surge in Star Wars-related news after a statue of Vladimir Lenin was transformed into Darth Vader last week, and a man in a Chewbacca costume was arrested while campaigning for city council candidate Darth Vader.
This UPI story, filed from Odessa in the Ukraine, certainly falls into “you can’t make this stuff up” category—and it was posted on their website yesterday sometime—and I thank Roy Stephens for digging it up for us.
Obama orders U.S. special forces to ‘assist’ fight against Isis in Syria
Barack Obama has ordered up to 50 special operations troops to Syria, U.S. officials announced on Friday, in an apparent breach of a promise not to put U.S. “boots on the ground”, to fight Islamic State militants in the country.
The Pentagon has also been “consulting” with the Iraqi prime minister, Haider al-Abadi, to establish a special operations task force to fight Isis “leaders and networks” across the Syrian border in Iraq, a senior administration official told The Guardian on Friday.
But the White House insisted that its overall strategy to combat Isis remained the same and said the special forces troops would be helping coordinate local ground forces in the north of the country and other non-specified “coalition efforts” to counter Isis rather than engaging in major ground operations.
This news item, co-filed from Washington and New York, appeared on The Guardian‘s website at 6:50 p.m. GMT on their Friday evening, which was 2:50 p.m. in Washington. I thank Patricia C. for this story as well.
Syria decision the latest blow to Obama’s Middle East legacy
The decision to deploy US troops to Syria is seen in Washington as one of profound political consequence – both for the credibility of Barack Obama’s presidency and possibly for new peace talks aimed at ending the five-year war – but yet of limited military significance.
Administration officials were left squirming on Friday to explain how sending special forces to work alongside Syrian rebels fighting the Islamic State was compatible with Obama’s earlier promises not to “put boots on the ground” in Syria or “engage in combat operations” against Isis.
White House spokesman Josh Earnest claimed there was still a difference of “night and day” compared with the Bush administration’s invasions, but in the space of a few short weeks a central promise of Obama’s presidential campaign has been undermined: first by conceding that he will not meet his pledge of removing troops from Afghanistan before he leaves office and now by acknowledging a long-term ground presence is necessary not just in Iraq, but Syria too.
Earnest would not say whether the deployments were permanent or would be bolstered, insisting: “I don’t want to try to predict the future here.”
This is the second story in a row from theguardian.com Internet site—and the second contribution in a row from Patricia Caulfield. This one was posted there at 8:40 p.m. GMT on their Friday evening, which was 4:40 p.m. EDT.
Who in their right mind would want to visit Dubai?
Sterile and morally destitute, Dubai shows what happens when you chase heavy pay cheques at the cost of all else, says Alex Proud. London, take note…
As the days draw in and the nights get colder, my thoughts turn to Dubai.
I hasten to add my thoughts do not turn to Dubai (or DOO-Boyyyy as many of its fans call it) as a potential vacation destination for the Proud family. Rather, I find myself thinking of it as an eternal, enduring mystery. Namely, why anyone would want to visit this ghastly place?
It’s not just the onset of autumn either. The other reason I’ve been thinking about Dubai is that the Saudis are getting all sorts of bad press at the moment. I despise Saudi Arabia. It’s a hideous, brutal, oil-rich theocracy that exports terrorism. But you know what? It really doesn’t really pretend to be anything else. You know where you stand with Saudi Arabia.
Dubai, on the other hand, markets itself as fun in the sun, a kind of Las Vegas on the Persian Gulf. Yet it has far more in common with Saudi Arabia than you’d imagine. Before you say, “But Alex, Dubai is the forward looking part of the Middle East that wants to engage with the world,” I invite you to consider the case of Marte Deborah Dalelv.
This very interesting story was posted on The Telegraph‘s website way back on Monday, October 19—and certainly falls into the must read category, at least that’s my opinion. Reader U.D. sent it around last Saturday—and for obvious reasons had to wait for this Saturday’s column.
Energy subsidies will test Saudi’s pain threshold
Saudi Arabia faces an unenviable decision: cut energy subsidies, or concede defeat in its oil price war. Its decision to consider the former will test the kingdom’s pain threshold.
Oil prices of around $50 a barrel are a problem for Saudi, which already foregoes a chunk of potential revenue by providing its own people and companies with low-cost electricity, fuel and gas. Based on estimates from the International Monetary Fund, the cost is $107 billion a year – equivalent to $3,395 per person.
That is punching a hole in Saudi’s finances. The International Monetary Fund forecasts that the Saudi budget could blow out to 20 percent of GDP this year. Cheap energy has also encouraged heavy use. Demand in the kingdom is rising by an annual rate of 8 percent, diverting crude oil that might otherwise be sold at higher prices via export. A plan to replace many oil-burning power plants with cheaper natural gas and eventually nuclear is years, and billions of dollars of investment, away.
This short Reuters article put in an appearance on their website on Thursday sometime—and it certainly falls into the must read category. I thank Richard Saler for his first offering in today’s column.
S&P Downgrades Saudi Arabia on Slumping Crude, Ballooning Fiscal Deficit
We expect the Kingdom of Saudi Arabia’s (Saudi Arabia’s) general government fiscal deficit will increase to 16% of GDP in 2015, from 1.5% in 2014, primarily reflecting the sharp drop in oil prices. Hydrocarbons account for about 80% of Saudi Arabia’s fiscal revenues.
Absent a rebound in oil prices, we now expect general government deficits of 10% of GDP in 2016, 8% in 2017, and 5% in 2018, based on planned fiscal consolidation measures.
We are therefore lowering our foreign- and local-currency sovereign credit ratings on Saudi Arabia to ‘A+/A-1’ from ‘AA-/A-1+’.
This longish Zero Hedge piece [with lots of charts] put in an appearance on their Internet site at 3:33 p.m. on Friday afternoon EDT—and it’s the second contribution in a row from Richard Saler.
Indonesia’s Forest Fires Take Toll on Wildlife, Big and Small
A disoriented, pregnant orangutan, her treetop home in Indonesian Borneo reduced to charred wood, is rushed to a rehabilitation center by conservationists, who dodged walls of fire and toxic smoke.
Veterinarians care for 16 abandoned baby orangutans already living at the center. The babies had developed respiratory infections because of haze from the fire, delaying the conservationists’ continuing attempts to teach them how to live on their own in the wild.
Long-awaited heavy rains this week in the Indonesian regions of Sumatra and Kalimantan appeared to be the beginning of the end of the mass forest fires that have raged since late August, Indonesia’s worst such disaster in at least 20 years.
While plenty has been written about the economic costs of the fires and the human suffering they have caused — hundreds of thousands of people sickened by the haze in Indonesia and Southeast Asia, and a regional price tag that one expert estimated at more than $14 billion — so far, scientists and environmentalists can only speculate about the extent of the damage to wildlife, including endangered species like the orangutan.
This very unhappy story, filed from Jakarta, appeared on The New York Times website yesterday sometime—and I thank Patricia Caulfield for finding it for us.
The Empire Barks and the Caravan Passes — Pepe Escobar
The U.S. Navy chose a jolly good way to celebrate the week when the Beijing leadership was discussing the road map for China to become “moderately prosperous society” by 2020.
They launched a military provocation in the South China Sea. Or, according to Pentagonese newspeak, they “challenged” Chinese “claims” in the “contested waters”.
The proverbial Empire of Chaos lackeys — Australia, Japan, Philippines — endorsed it. Indonesia, in a sober assessment, essentially branded it a needless provocation.
At least Adm. Harry Harris, at the head of the US Pacific Command, will meet in early November in Beijing with top Chinese military leaders to defuse the proverbial “tensions” in the South China Sea — created by the usual suspects.
This commentary by Pepe was posted on the sputniknews.com Internet site at 3:04 p.m. Moscow time on their Friday afternoon, which was 8:04 a.m. in Washington—EDT plus 7 hours. I thank Tariq Khan for bringing it to my attention—and now to yours.
In Victory for Philippines, Hague Court to Hear Dispute Over South China Sea
The Philippines has won an important ruling in its case against China over disputed parts of the South China Sea, with an arbitration court in the Netherlands saying it has jurisdiction in the case and will hold hearings.
The Permanent Court of Arbitration in The Hague issued the ruling on Thursday, in proceedings that China has boycotted since the Philippines, an ally of the United States, filed suit at the court in 2013.
The ruling was a blow to China, which had hoped the court would reject jurisdiction, allowing Beijing to continue making a case that its claims in the South China Sea are based on history rather than legal precedent.
The Philippines welcomed the decision on Friday and said it was prepared to argue the merits of its case before the tribunal. “Our people can be assured that those representing our country have been continuously preparing for this,” said Abigail Valte, a spokeswoman for the Philippine president, Benigno S. Aquino III.
This is another article from the pages of The New York Times. This one, filed from Beijing, appeared there website on Friday sometime—and it represents the final offering of the day from Patricia Caulfield, and I thank her on your behalf.
Owning Half of Japan’s ETF Market Might Not Be Enough for Kuroda
Japan’s central bank already owns more than half of the nation’s market for exchange-traded stock funds, and that might just be the start.
The Bank of Japan will boost stimulus on Friday, according to 16 of 36 economists in Bloomberg’s latest survey, with 12 saying it would do so by increasing its annual ETF-buying budget. With 3 trillion yen ($25 billion) a year in existing firepower, the BOJ has accumulated an ETF stash that accounted for 52 percent of the entire market at the end of September, figures from Tokyo’s stock exchange show.
Policy makers weighing a deeper foray into equities shows how the world’s third-biggest stock market has become one of the most important Abenomics battlegrounds. The Topix index is up 21 percent since the central bank unexpectedly tripled its ETF budget almost a year ago, and Citigroup Global Markets Japan Inc.’s Tsutomu Fujita says there’s room for them to triple it again. For Amundi Japan Ltd., expanding the program would do more harm than good.
This Bloomberg article was posted on their Internet site at 6:17 p.m. Denver time on their Thursday evening—and it’s certainly worth reading, and the chart is worth the trip all by itself. This is the second story that I ‘borrowed’ from yesterday’s edition of the King Report.
BoJ Refrains From Adding Stimulus Even as Inflation, Growth Wane
The Bank of Japan declined to step up its monetary stimulus Friday even as it postponed its time-frame for reaching a 2 percent inflation target for the second time this year.
BoJ Governor Haruhiko Kuroda and his fellow board members said in a report detailing updated economic projections that the slide in oil prices was to blame for reduced consumer-price forecasts for the coming two years. The bank now sees the inflation target reached around the six-month period through March 2017. At the start of this year, the expectation was for the goal to be realized in the fiscal year through March 2016.
Kuroda defended the decision to keep policy unchanged, saying that the central bank isn’t losing credibility and that its actions so far — implementing an unprecedentedly large monetary stimulus program — are having the intended effects. The timing of reaching the inflation target depends on oil, he told reporters in Tokyo. Kuroda, 71, reiterated that the BoJ won’t hesitate to adjust policy if necessary.
This is another Bloomberg news item. It showed up on their website at 9:24 p.m. MDT on Thursday, but was updated about seven hours later. If you read the previous Bloomberg article on Japan, this is worth skimming as well. I thank Richard Saler for his third and final contribution to today’s column.
Developing or Developed? — Doug Noland
Bubbles always feed – and feed off of – good stories. Major Bubbles are replete with great fantasy. Even as China’s Bubble falters, the recent “risk on” global market surge has inspired an optimism reawakening. August has become a distant memory.
In the big picture, the “global government finance Bubble – the Granddaddy of all Bubbles” is underpinned by faith that enlightened global policymakers (i.e. central bankers and Chinese officials) have developed the skills and policy tools to stabilize markets, economies and financial systems. And, indeed, zero rates, open-ended QE and boundless market backstops create a “great story”. Astute Chinese officials dictating markets, lending, system Credit expansion and economic “transformation” throughout a now enormous Chinese economy is truly incredible narrative. Reminiscent of U.S. market sentiment in Bubble years 1999 and 2007, “What’s not to like?”
Never have a couple of my favorite adages seemed more pertinent: “Bubbles go to unimaginable extremes – then double!” “Things always turn wild at the end.” Well, the “moneyness of Credit” (transforming increasingly risky mortgage Credit into perceived safe and liquid GSE debt, MBS and derivatives) was instrumental the fateful extension of the mortgage finance Bubble cycle. At the same time, Central banks and central governments clearly have much greater capacity (compared to the agencies and “Wall Street finance”) to propagate monetary inflation (print “money”). Most importantly, this government “money” and the willingness to print unlimited quantities to buttress global securities markets now underpin securities markets on a global basis (“Moneyness of Risk Assets”). And unprecedented securities market wealth underpins the structurally impaired global economy.
Doug’s weekly Credit Bubble Bulletin is always must reading for me—and I might suggest that it should be for you as well.
Sprott Money News interviews Eric Sprott
Listen to Eric Sprott share his thoughts on the ongoing weakness in the global economy, the results of the recent Federal Reserve meeting, and this week’s movements in the precious metal market.
This 8:25 minute audio interview with Eric by host Geoff Rutherford showed up on the sprottmoney.com Internet site yesterday afternoon—and it’s worth your time if you have any left.
Platinum, palladium ETFs eye biggest monthly outflow on record
Platinum- and palladium-backed exchange-traded funds tracked by Reuters are facing their biggest monthly outflows since the data series began in 2010, after prices of the white metals slid to multi-year lows earlier this year.
Platinum-backed funds have seen outflows of just over 160,000 ounces so far in October, taking their holdings to their lowest since early 2014 at 2.232 million ounces.
The bulk of the selling was seen from the Johannesburg-listed NewPlat ETF operated by Absa Capital, which has seen its holdings fall 134,000 ounces this month.
This interesting Reuters news item, filed from London, appeared on their website at 10:46 a.m. EDT on Friday morning—and it’s another item I found posted on the Sharps Pixley website.
Even Dennis Gartman openly suspects that the gold market is rigged
In his Friday commentary to his subscribers, Mr. Gartman had this to say…
As for the precious metals, the selling late Wednesday and all day yesterday was indeed severe, and even our positions in gold/euro and gold/yen have seen severe damage wrought upon them.
We find it hard to believe that the mere suggestion by the Federal Open Market Committee in its post-meeting communique on Friday that “liftoff” on the overnight Fed funds rate may take place at its December meeting can be responsible for this sort of egregious, serious, and now relentless selling, and we are almost of the mindset associated with the likes of the gold bugs and GATA that some malevolent “force” was behind the selling.
However, we are not going to travel down that road at the moment and sit tight with our positions, believing that the continued “experiments” with QE undertaken by the Bank of Japan and the European Central Bank shall work to the detriment of their currencies and to the support of gold. Nonetheless, the last 36 hours have been terribly dismaying.
If you think it’s bad now Dennis, wait until your buddies over at JPMorgan really lay the lumber to the gold price—and unless they get over run this time around, that’s precisely what will happen. Mr. Gartman’s “long of gold” position will be history in a millisecond. This brief commentary appeared in a GATA release that Chris Powell filed from New Orleans yesterday.
Indian gold imports 730 t YTD. So is it really the top consumer? — Lawrence Williams
India has now released its official figure for gold imports in August. Prior non-official estimates had put this at 140 tonnes and the official figure is a close 138 tonnes. Now we also have an unofficial estimate for September of a significantly lower 67 tonnes and while some have seen this as an indicator of Indian gold imports tanking – if one looks at the latest chart from Nick Laird’s Sharelynx.com site showing month by month imports for the past five years up until August, one can also see that Indian monthly import figures are hugely variable and 67 tonnes is actually a reasonable figure and certainly doesn’t yet suggest that demand is particularly weak given the very strong August figure – the fifth highest in the past five years.
Assuming the September estimates are correct, this will bring Indian gold imports for the first three quarters of the year to a little over 700 tonnes, making the likely total for the year between 900 and 1,000 tonnes – a similar figure to that predicted by Rajesh Khosla, the head of Indian/Swiss gold refining jv MMTC Pamp, back at the beginning of August. Obviously imports for the final quarter of the year will be significant here, but these can be heavy in the heart of the Indian Festival and wedding seasons which are now getting under way and tend to peak at Dhanteras/Diwali – 9 to 13 of November this year.
This commentary by Lawrie appeared on the Sharps Pixley website yesterday—and you should recognize the chart, as it was in my Friday column as well. Both Lawrie and I are on Nick’s rather large distribution list. This is definitely worth reading.
Spectacular gold withdrawals in Shanghai as Russian bank joins exchange — Koos Jansen
Gold researcher and GATA consultant Koos Jansen reports that withdrawals from the Shanghai Gold Exchange continue at a spectacular pace—and that Russia’s VTB Bank has joined the exchange, the first Russian bank to do so.
Jansen’s report is posted on the Singapore-based Internet site bullionstar.com—and it’s a must read. I found this embedded in another GATA release that Chris filed from New Orleans yesterday.
The PHOTOS and the FUNNIES
Here are a couple of more shots from my Thursday outing in one of the local ravines here in Edmonton. This fellow is a male downy woodpecker—and I’d guess he’d be something under 6 inches/15 cm. long. They are ubiquitous in North American, except the desert southwest. He came to my ‘bait’, but left with nothing, as he was more interested in the suet cage hung in a tree about a meter away. But I got these two photos, and that’s all that mattered. The ‘double-click to enlarge’ feature brings them both up to full-screen size.
The WRAP
Regulated futures contract markets were created by congress to allow legitimate producers and consumers of commodities the ability to lay off price risks to willing entities, collectively referred to as speculators. Under the CFTC’s watch, speculators have come to so dominate the price of silver, that there is little remaining legitimate hedging taking place on the COMEX. The COMEX has become, in essence, a purely speculative exchange in which large traders dictate prices to real world producers, consumers and investors.
Two distinct classes of speculative traders have come to dominate COMEX silver futures trading – asset managers (hedge funds) running outside investor capital on a price momentum basis and large banks which serve as the counterparties to these technically oriented asset managers. Regularly published CFTC data indicate that these two groups of traders typically account for more than 90% of all net positions transacted in a typical price cycle. In other words, the world price of silver is determined by the alternating buying and selling by no more than 100 large derivatives traders on the COMEX; to the virtual exclusion of real world silver producers and consumers.
Worse, there has evolved a remarkable concentration among the banks and financial institutions who buy and sell from the managed money traders, inviting comparisons with the most extreme instances of antitrust behavior. The most recent data from the CFTC, as of Oct 20, indicates that 8 or less traders hold a net short position in COMEX silver futures of nearly 424 million ounces of silver, or more than 50% of world annual mine production and 60% of all net COMEX positions. In terms of world annual production, no commodity comes close to the concentrated short position in COMEX silver. In contrast, the concentrated short position in crude oil futures is less than 3% of world annual production. — Silver analyst Ted Butler: 28 October 2015
Today’s pop ‘blast from the past’ is something I posted several years back—and it’s long overdue for a revisit. It’s a 1981 rock classic—and this American band’s greatest hit—and what at hit it was! The link is here.
Today’s classical ‘blast from the past’ is Mozart’s clarinet concerto in A major, K. 622, which he composed in 1791 shortly before he passed on. It premiered in Prague on October 16 of that year.
Since several notes throughout the piece go beyond the conventional range of the A clarinet, it was presumed that it was intended to be played on the basset clarinet, a special clarinet that had a range down to low (written) C, instead of stopping at (written) E as standard clarinets do.
Here’s Sharon Kam with the basset clarinet—and she’s accompanied [appropriately enough] by the Czech Philharmonic Orchestra. Manfred Honeck conducts—and the link is here. Turn up the sound—and watch it full screen, as it’s a first-rate HD recording.
With the exception of palladium, it was more salami slicing to the down side in the other three precious metals. Copper suffered the same fate. They weren’t big slices, but with a butt-ass ugly COT Report overhanging the market, the trend is clear.
Here are the 6-month charts for the Big 6 commodities so you can see how these engineered price declines are proceeding.
It’s obvious that in order to protect the current financial and monetary system, the world’s central banks are at battle stations against the real wealth-producing class of all countries on Planet Earth—and both Alan Greenspan and Peter Warburton understood the dangers all too well.
Greenspan with his essay “Gold and Economic Freedom” that appeared in Ayn Rand’s 1967 classic non-fiction book “Capitalism, the Unknown Ideal“—and Warburton with his 2001 tome “<b