16 January 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped around several dollars above the unchanged mark through all of Far East and early London trading on Friday. It really took off at 1:00 p.m. London time, which was twenty minutes before the COMEX open—and the rally got capped by the not-for-profit sellers at 8:50 a.m. EST as it was about to break above the $1,100 spot price mark. By 10:40 a.m. EST, all the COMEX gains were gone—and the price was forced to chop sideways for the remainder of the New York trading session.
The low and high ticks were reported as $1,076.00 and $1,097.50 in the February contract.
Gold finished the Friday session at $1,088.80 spot, up $10.30 from Thursday’s close. Net volume was pretty heavy at a hair under 150,000 contracts, so “da boyz” were willing sellers all day long, as the Managed Money traders covered short positions and went long themselves, as both the 20 and 50-day moving averages got broken to the upside.
Here’s the 5-minute gold chart courtesy of Brad Robertson—and the commencement of the 1 p.m. GMT rally in London is visible in the first tick after 6:00 a.m. Denver time on this chart, which was 8:00 a.m. EST. Once the rally was capped and sold down by 8:45 a.m. MST—10:45 a.m. in New York—the volume dropped off quite a bit—and then all but disappeared after the COMEX close, which is 11:30 a.m. MST on this chart. The vertical gray line is midnight in New York—add two hours for EDT—and the ‘click to enlarge‘ feature is still M.I.A.
The silver price rallied about a dime by 3:15 p.m. Hong Kong time on their Friday afternoon, but by the noon silver fix in London, it was down a nickel or so on the day. The subsequent rally that began at that juncture got halted in its tracks by JPMorgan et al the moment it touched its 50-day moving average and, like gold, all its COMEX gains were gone by 10:35 a.m. EST. It made one more rally attempt above the $14 spot mark, but that got turned back during the New York lunch hour—and it traded quietly into the close from there. Although silver broke through its 20-day moving average, the HFT boyz and their algorithms were careful to close it below that price.
The low and high ticks were reported by the CME Group as $13.765 and $14.135 in the March contract.
Silver was closed in New York yesterday at $13.91 spot, up 8.5 cents from Thursday. Net volume was pretty decent at just over 40,500 contracts.
Platinum traded flat during the Far East session on their Friday, but began to develop a negative price bias the moment that trading began in Zurich at 10 a.m. Europe time. The low tick came around 11:20 a.m. Zurich time—and the subsequent rally met the same fate in New York as did the rallies in gold and silver. Once the London p.m. gold fix was done, the price got sold down until shortly after 3 p.m. EST, but did recover a bit into the close. Platinum finished the Friday session at $828 spot, down 5 bucks on the day.
The palladium price followed the platinum price for the most part, but the rallies and sell-offs were far more muted—and this precious metal finished the day at $492 spot, up a dollar from Thursday’s close.
The dollar index closed late on Thursday afternoon in New York at 99.07—and continued to chop lower in a fairly wide range once trading began in the Far East on their Friday morning. It fell off a cliff starting around 8 a.m. EST—and the 98.38 low tick came about 8:50 a.m. in New York. It chopped unsteadily higher for the remainder of the day, finishing the Friday session at 98.95—down 12 basis points from Thursday’s close—and another wild ride for the world’s reserve currency.
Here’s the 6-month U.S. dollar chart so you can keep up with the mid-term ‘wild ride’.
The gold stocks gapped up 4 percent at the open, but someone was at the ready to do dump shares in a not-for-profit manner—and the HUI was back into negative territory by 10:35 a.m. The share rallied a bit from that point, but then continued to chop lower for the remainder of the day, as the HUI closed on its absolute low tick—and down 0.50 percent.
It was the same pattern for the silver stocks, except the not-for-profit seller[s] were even more brutal, as once the silver equities were sold into negative territory, the barely got a sniff of green after that. Nick Laird’s Intraday Silver Sentiment Index closed down 0.96 percent, but not on its absolute low tick, which is no consolation whatsoever.
For the week the HUI closed down 9.98 percent, but the silver equities got hammered to the tune of 13.79 percent, even though the silver price didn’t do much on a closing basis week over week.
The CME Daily Delivery Report showed that 2 gold and 11 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. Scotiabank was the stopper on 10 of the silver contracts.
The Preliminary Report for the Friday trading session showed that gold open interest in January rose by 4 contracts, leaving 220 still open—and in silver, January o.i. fell by the 70 contracts that were mentioned in the Daily Delivery Report yesterday—and posted for delivery on Monday. There are 28 contracts still remaining.
There was another very decent deposit in GLD yesterday, as an authorized participant added 124,351 troy ounces. Over in SLV, there was another withdrawal, as an a.p. took out 1,428,891 troy ounces.
Since the beginning of the year, there have been deposits in GLD totalling 500,153 troy ounces. Since the beginning of the year in SLV, there has been 2,994,853 troy ounces of silver withdrawn—and no one other than Ted Butler [and by extension, me] is talking about this. The nut-ball lunatic fringe writes about the craziest stuff that doesn’t have the thinnest patina of truth behind it, but won’t touch this hard fact issue with the proverbial 10-foot cattle prod. And why not?…is the question that still goes begging an answer.
There was another sales report from the U.S. Mint yesterday. They sold 3,000 troy ounces of gold eagles—and another 500,000 silver eagles.
So far this year, the mint has sold 75,000 troy ounces of gold eagles—23,500 one-ounce 24K gold buffaloes—and exactly 4,000,000 silver eagles. A huge chunk of these sales is by Ted Butler’s ‘big buyer[s]’ as retail sales suck big time.
There wasn’t a lot of activity in gold over at the COMEX-approved depositories on Thursday. Nothing was reported received—and 3,739 troy ounces were shipped out the door. This activity is not worth linking.
But it was another monster day in silver, as 1,210,095 troy ounces were reported received—and 1,890,131 troy ounces were shipped out the door for parts unknown. None of the in/out activity involved JPMorgan, at least not at its official depository in New York—and the link to all this action is here—and it’s definitely worth a look if you have the interest. I know that Ted will have lots to say about this in his mid-week column to his paying subscribers this afternoon.
The manic in/out movement in COMEX silver over the last five years is another hard data point that the nut-ball lunatic fringe pretends doesn’t exist. Why?
Over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, they reported receiving 5,697 kilobars—and shipped out 1,868 of them. All of the activity was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday showed a bit more deterioration in gold and silver than Ted Butler had envisioned. But in all fairness, after such a wild trading pattern during the reporting week, his guesses were close enough.
In silver, the Commercial net short position increased by a smallish 1,763 contracts, or 8.82 million troy ounces. They decreased their long position by 1,990 contract, but also reduced their short position by 227 contract as well. The Commercial net short position now stands at 152.8 million troy ounces.
The Big 4 traders covered 1,200 short contracts—and Ted puts JPMorgan’s short position in silver at 16,000 contracts. The ‘5 through 8’ traders also decreased their short position by 2,300 contracts, but since there’s at least one or more Managed Money traders ensconced in the ‘5 through 8’ category at the moment, this reduction was probably from them. Ted said that the big activity was the raptors [the Commercial traders other than the Big 8] as they sold 3,500 long contracts.
Under the hood in the Disaggregated COT Report, the Managed Money traders increased their short position by 675 contracts—and the non-technical Managed Money traders added 1,333 contracts to their long position, for a difference of only 658 contracts. The rest of the big changes that mattered were in the Nonreportable/small trader category, as they added 1,642 [net] contracts to their long positions—and also added 736 [net] short contracts, for a net change of 906 contracts.
Passing through copper on the way to gold, I see that the Commercial net long position in that metal increased by 11,022 contracts during the reporting week—and that number boosts the total Commercial net long position in that metal up to something north of 48,000 COMEX contracts, or a bit more than 1.2 billion paper pounds of the stuff. That’s a LOT of copper!
In gold, the Commercial net short position in the Legacy COT Report blew out by 24,310 COMEX contracts, which works out to 2.43 million troy ounces of paper gold. They did this by decreasing their long position by 5,453 contracts—and adding a chunky 18,857 contracts to their already gargantuan short position. The Commercial net short position in gold is now up to 4.36 million troy ounces. Off its all-time low by a bit, yes—but on an historical basis, that’s a very low number.
Ted pointed out that it was all a raptor affair in gold as well, as they sold 28,600 long contracts—and under the cover of that, the Big 4 traders covered 500 short contracts—and the ‘5 through 8’ largest traders covered 3,700 short contracts as well. But, like in silver, there’s a possibility that there could be a Managed Money trader in the ‘5 through 8’ category as well.
But under the hood in the Disaggregated COT Report, it was a different story, as the Managed Money traders only accounted for 16,019 contracts [net] of the 24,310 contract total amount. They did this by adding 3,176 longs contracts and reducing their short position by 12,843 contracts. The Nonreportable/small trader category accounted for 6,152 contracts net—and the ‘Other Reportable’ category filled in the rest with 2,139 contracts net.
If you add up all the ‘net’ numbers in those three categories of the Disaggregated Report, they total the Commercial net short position of 24,310 contracts in the Legacy COT Report. That’s the way these reports work.
As for what next week’s report will say, it’s way too soon to tell, as we still have the trading action of Monday and Tuesday of next week to add in—and if the last six weeks of trading in both silver and gold, especially silver, are any indication—anything can happen between now and next Tuesday’s cut-off.
But there’s no question about, it there was deterioration yesterday in both silver and gold. However, Ted said that the deterioration was mostly negated by the negative price action on Wednesday and Thursday.
Here’s Nick Laird’s “Days to Cover” chart for all the physically traded commodities on the COMEX. It shows the days of world production that it would take to cover the short positions of the Big 4 and Big 8 traders in each commodity. My back-of-the-envelope calculation indicates that the two king silver shorts, JPMorgan and Canada’s Scotiabank, are net short about 140 million troy ounces of silver in the COMEX futures market—about 66 days of world silver production—and just under 40 percent of the entire short position held by the Big 8 short holder in total. That is beyond obscene and grotesque. The same can be said about the other three precious metals, especially platinum.
The other thing I just noticed about this chart is that the short positions of the ‘5 through 8’ traders—the difference between the green bars and red bars in each of the precious metals—in both gold and platinum, but particularly gold—is the smallest I can remember, as the short position continues to get more and more concentrated in the Big 4 Commercial traders/banks.
One of the first things I get on Friday evening as I’m pounding away on Saturday’s column is the weekly withdrawal chart from the Shanghai Gold Exchange courtesy of Nick Laird. It never arrived last evening—and my query of “What did the SGE chart look like this week?” met with the following reply.
“I don’t know – I have not [done it] and will not be posting it till I check and verify.”
“The SGE has changed the format of the weekly details—and the number they posted for the first week of deliveries I think is a mistake.”
“It shows deliveries of 238.16518 tonnes – six times normal.”
“Also of interest is they are now showing silver deliveries 37.23 tonnes…..a new entry.”
“It might be till next week when they correct the data – I don’t know….cheers!“
I have a decent number of stories today, including a few I’ve been saving for today’s column for length and/or content reasons. The final edit is yours.
CRITICAL READS
Dow plunges nearly 400 points as oil prices sink
The Dow Jones Industrial Average dropped almost 400 points Friday, falling below 16,000, as oil prices sank below $30 a barrel.
The index fell to 15,988 at the closing bell, down more than 390, or 2.39%.
“Oil is the root cause of today,” said Dan Farley, regional investment strategist at the Private Client Reserve at U.S. Bank. “People are uncertain, and when they’re uncertain they’re scared.”
The price of crude oil fell to its lowest level since 2003. Benchmark U.S. crude fell $1.62, or 5.2 percent, to $29.58 a barrel in New York. Brent crude, a benchmark for international oils, fell $1.43, or 4.6 percent, to $29.45 a barrel in London.
As many pundits have made abundantly clear lately, the U.S. equity market are monstrously overpriced—and what happened to the oil price yesterday was only a small part of the reason that the equity market tanked the world over on Friday. This foxnews.com story appeared on their Internet site yesterday sometime after the markets closed—and I thank Roy Stephens for sending it along.
U.S. Holiday Retail Sales Rose 3%, Missing Projection
U.S. holiday sales rose a less-than-forecast 3 percent, the National Retail Federation said, as merchants coped with unseasonably warm weather and a shift to spending on services.
Holiday spending, which the group had projected to rise 3.7 percent, grew to $626.1 billion in the period, which spans November and December. Non-store sales, an indicator of e-commerce transactions, increased 9 percent to $105 billion, the NRF said. The figures exclude spending on automobiles, gasoline and restaurants.
Faced with mild weather and high inventories, retailers slashed prices to lure shoppers in the 2015 holiday season. As consumers shifted spending to experiences and services, such as restaurants, shows and nail salons, more retailers added promotions like free shipping.
“Make no mistake about it, this was a tough holiday season for the industry,” NRF Chief Executive Officer Matthew Shay said in a statement.
This Bloomberg story showed up on their website at 7:41 a.m. MST on their Friday morning—and it’s the first of three stories I found in a special edition of the King Report yesterday.
Walmart to Close 269 Stores as Retailers Struggle
Walmart, whose supercenters once transformed the way Americans shop, announced on Friday that it would close a record number of stores in the United States and overseas, as it fights to hold its ground in a retail landscape under siege by the behemoth Amazon.
The giant retailer, based in Bentonville, Ark., said in a statement that it would shutter 154 stores in the United States, or about 3 percent of its locations, as well as 115 stores overseas. It will also end its Walmart Express small-store format, which failed to catch on in urban areas. As many as 10,000 employees could lose their jobs in the United States and 6,000 elsewhere, it added.
The closures underscore the turmoil faced by brick-and-mortar retail across a variety of fronts. Web merchants are gobbling up a growing share of shopping dollars, their vast online catalogs rendering Walmart’s sprawling superstores increasingly less relevant. And consumers are spending less on traditional retail items like apparel.
According to one estimate, Amazon accounted for almost a quarter of all retail sales growth last year. Other retail stalwarts, including Macy’s, Sears and J. C. Penney, are also shuttering stores after a weak holiday sales season.
This story was everywhere yesterday—and this iteration appeared on The New York Times website.
U.S. freight volume falls for first time in almost three years: Kemp
Freight volumes in the United States have fallen year on year for the first time since 2012 and before that the recession of 2009, according to the Bureau of Transportation Statistics.
The total volume of freight moved by road, rail, pipeline, inland waterways and as air cargo in November 2015 was 1.1 percent lower than in the corresponding month a year earlier.
Freight demand growth has been slowing since the start of last year but the slowdown intensified in the second half and November marked the first time that year-on-year growth turned negative.
Volumes have been hit by a combination of factors. Coal shipments to power producers have fallen as a result of cheaper natural gas and stricter environmental regulations.
Exports of manufactured products and basic commodities are down thanks to a stronger dollar which has made U.S. producers less competitive in global markets.
This Reuters article, filed from London, put in an appearance on their Internet site at 11:28 a.m. GMT on their Friday morning, which was 6:28 a.m. in New York—EST plus 5 hours. It’s courtesy of Brad Robertson via Zero Hedge.
U.S. Industrial production fell at an annual rate of 3.4 percent — Federal Reserve
Industrial production declined 0.4 percent in December, primarily as a result of cutbacks for utilities and mining. The decrease for total industrial production in November was larger than previously reported, but upward revisions to earlier months left the level of the index in November only slightly below its initial estimate. For the fourth quarter as a whole, industrial production fell at an annual rate of 3.4 percent. Manufacturing output edged down in December. The index for utilities dropped 2.0 percent, as continued warmer-than-usual temperatures reduced demand for heating. Mining production decreased 0.8 percent in December for its fourth consecutive monthly decline. At 106.0 percent of its 2012 average, total industrial production in December was 1.8 percent below its year-earlier level. Capacity utilization for the industrial sector decreased 0.4 percentage point in December to 76.5 percent, a rate that is 3.6 percentage points below its long-run (1972–2014) average.
That’s all there is to this brief item that appeared on the federalreserve.gov website yesterday, but it’s all you really need to see, as it proves that the U.S economy has been in a recession for some time—and getting worse. This in another item that I found in that special edition of the King Report on Friday.
Goldman to settle federal mortgage probe for $5.1 billion
Goldman Sachs Group has agreed to settle a government investigation into how it handled mortgage-backed securities for about $5.1 billion, the firm said Thursday.
The investment bank will pay a $2.39 billion civil penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief, Goldman said in a news release. The latter will include principal forgiveness for underwater homeowners and distressed borrowers, the firm said.
The accord, which has yet to be finalized, would resolve claims by the Department of Justice and several state attorneys general, and would reduce Goldman’s fourth-quarter profit by about $1.5 billion, the banking giant said.
Another licensing fee I’m sure. This news item showed up on the cbsnews.com website very early on Thursday evening EST—and it’s another article from Brad Robertson via Zero Hedge.
It’s Only One Percent: Obama’s “Boil the Frog” Approach to Gun Control — James Perloff
They say if you want to boil a frog, you can’t just toss him in boiling water. Instead, you put him in lukewarm water, and gradually turn up the heat. That way, the frog never realizes he’s been boiled. The Powers That Be (PTB) have exercised the “frog” axiom throughout history.
Take income tax. Though now an accepted way of life, income tax wasn’t always around. The original U.S. Constitution excluded it; in 1895 the Supreme Court ruled it unconstitutional.
Therefore the only way the PTB could establish income tax was by legalizing it through a Constitutional Amendment. That Amendment was introduced in Congress by Senator Nelson Aldrich, who also introduced the original legislation which ultimately became the Federal Reserve Act. He was David Rockefeller’s maternal grandfather.
Why did Americans accept income tax? Because it was initially only one percent of a person’s income for salaries under $20,000 (the equivalent of around $500,000 in today’s dollars). Senator Aldrich and other supporters of the tax gave assurances it would never go up. So patriotic Americans said: “If Uncle Sam needs one percent of my salary, and I can always keep the rest, it’s OK by me!”
But you know what happened. Congress later dolefully informed Americans it needed to raise taxes a smidgen. A few smidgens later and, depending on bracket, typical working Americans lose 15, 25, 28 or 33 percent of their income to federal tax. Income tax would never have passed had Americans known it would reach these levels. So the PTB boiled the frog: start low, gradually increase heat.
This essay by James showed up on his Internet site jamesperloff.com earlier this week—and for both content and length reasons, had to wait for my Saturday column.
British Film Destroys Official 9/11 Story — Paul Craig Roberts
I don’t suppose that any of you are sufficiently gullible to believe the official 9/11 fairy tale. If some of you are still trapped within the Matrix, here is a two hour British film that should spring you free.
From my standpoint the problem of this film is not its veracity. The problem with the film is that on occasion film-making technique gets precedence over clarity of explanation.
Another problem is that the film director forgets that he is presenting a false flag event when he criticizes authorities for not arresting the perpetrators prior to the event. If 9/11 was a false flag event, there are no terrorist perpetrators to have arrested.
Well, they can arrest Dick Cheney and GWB for a start—and those two are just ‘jacks for openers’. This short commentary [plus the link] appeared on Paul’s website on Thursday—and falls into the absolute must watch category for an serious student of the New Great Game, because 9/11 was Ground Zero for the start of it all. This all feeds nicely into the Doug Casey piece that follows this. It’s another contribution from Roy Stephens.
Doug Casey: The Ascendance of Sociopaths in U.S. Governance
As any intelligent observer surveys the world’s economic and political landscape, he has to be disturbed – even dismayed and a bit frightened – by the gravity and number of problems that mark the horizon. We’re confronted by economic depression, looming financial chaos, serious currency inflation, onerous taxation, crippling regulation, a developing police state, and, worst of all, the prospect of a major war. It seems almost unbelievable that all these things could affect the U.S., which historically has been the land of the free.
How did we get here? An argument can be made that things went bad because of miscalculation, accident, inattention, and the like. Those elements have had a role, but it is minor. Potential catastrophe across the board can’t be the result of happenstance. When things go wrong on a grand scale, it’s not just bad luck or inadvertence. It’s because of serious character flaws in one or many – or even all – of the players.
So is there a root cause of all the problems I’ve cited? If we can find it, it may tell us how we personally can best respond to the problems.
In this article, I’m going to argue that the U.S. government, in particular, has been overrun by the wrong kind of person. It’s a trend that’s been in motion for many years but has now reached a point of no return. In other words, a type of moral rot has become so prevalent that it’s institutional in nature. There is not going to be, therefore, any serious change in the direction in which the U.S. is headed until a genuine crisis topples the existing order. Until then, the trend will accelerate.
This absolute must read commentary by Doug was posted on the internationalman.com Internet site yesterday morning.
Time for Canadians to get real about economic challenges: Gary Lamphier — The Edmonton Journal
If there’s a possible silver lining to the horrific start to 2016, it’s this: Canadians may finally awaken to the depth of the economic mess we’re in, and start to get real about what’s needed to address it.
That includes Prime Minister Justin Trudeau and his cabinet, who have appeared overwhelmed by the speed of events.
While federal Finance Minister Bill Morneau stubbornly professed his “optimism” about the state of the economy just a couple of days ago, the Bank of Canada was busy ratcheting up the anxiety index, noting that hiring and investment plans as well as consumer confidence are all tanking.
No wonder investors are fleeing Canada’s battered stock market. Toronto’s lead equity index fell another 203 points Wednesday, pushing it deeper into bear market terrain, while all three major U.S. equity indexes slid into official “correction” territory.
This no-punches-pulled commentary appeared on the Edmonton Journal website on Thursday—and is worth reading, especially if you live in Canada. I thank Roy Stephens for sharing it with us.
Scrap guarantees for savers’ deposits to avoid banking crises, says U.K. think tank
Savers’ deposits should no longer be guaranteed by the Government, as this insurance has made the UK more prone to banking crises, a think tank has warned.
The Center for Policy Studies (CPS) said that after 40 years of “increasingly frequent, increasingly severe” banking crises, it was time to consider the abolition of deposit insurance, which guarantees the first £75,000 of each person’s combined savings at banks and building societies.
The CPS claimed in a new report that scrapping deposit protection would bring about “an end, in perpetuity, to the need for the state bail-outs of U.K. banks” and reduce the “moral hazard” it has produced.
Without the availability of a Government guarantee for their savings, consumers would “be required to become, more risk-aware in their choice of bank”.
Well, dear reader, there isn’t a snowball’s chance in hell that this idea will ever gain any traction, so I suggest this ‘think tank’ find something better to do. This story appeared on the telegraph.co.uk Internet site at 5:00 a.m. London time on their Friday morning, which was midnight in New York. I thank U.K. reader Tariq Khan for finding it for us.
The Ukraine Imbroglio: John Batchelor Interviews Stephen F. Cohen
I have mixed feelings about this podcast, Ed. I think it is somewhat too esoteric for many listeners unless they have a very great interest in the more modern history of Russia and NATO. A lot of it is discussion about a German newspaper interview with Putin where (as usual) he is quite candid about NATO, Russian actions and even its mistakes with the West.
There are a few points, however, of greater interest like Merkel pressuring Kiev late last December to finish up the political negotiations required for Minsk2—and softening support in Germany and elsewhere in the E.U. for NATO, and how any kind of economic association with Ukraine (as a failed state) is unlikely now. The last quarter or so of the broadcast is the most topical.
As for [my] GBSG [Gold Bug Support Group] who also get these posts, I consider this still an important listen. I would reference this commentary with the earlier Orlov e-mail where the concept of Washington ‘failures’ are discussed in a different context than most would think conventional. The failure of Washington’s goals on one level seems certain – a political and economic failed state is not usually an asset to and Empire unless the consequences of failure to other sovereign competitors like the E.U. and Russia put those states in a state of weakness too. We should be reminded that Ukraine has a population of some 40 million people, a percentage of who may find themselves in their own refugee stream to neighbouring countries. One could therefore make an argument that Washington wins something regardless. But failure as measured by humanitarian loses to meddling by the Empire is how we should define evil AND failure. Unfortunately the trolls that run the Empire do not use those aspects in their criteria to judge their own efforts. – Larry
This 40-minute audio interview put in an appearance on the audioboom.com Internet site on Tuesday—and I thank Ken Hurt for the link, but most of all I thank Larry Galearis for the above executive summary. It’s a must listen for any serious student of the New Great Game.
4.5 million Russian tourists won’t visit Turkey this year
Turkey expects to lose 4.5 million tourists from Russia this year, as tourism has been badly hit by the Russian crisis and regional uncertainties, said the Turkish Culture and Tourism Minister Mahir Unal.
The number of Russian visitors declined by 18 percent to 3.6 million in the first eleven months last year compared to the same period of 2014. The number of total foreign arrivals dropped by 1.4 percent in the same period, according to the data revealed by the Tourism Ministry last month.
Russia’s travel agencies canceled Turkish packages after Moscow introduced sanctions against Ankara following the downing of a Russian warplane in Syria. The measures targeted the Turkish tourism industry and exports to Russia.
Russia represented the second largest source of tourists for Turkey after Germany.
This news item was posted on the Russia Today website at 1:28 p.m. Moscow time on their Friday afternoon, which was 5:28 a.m. in New York—EST plus 8 hours. It’s the first of two in a row from Roy Stephens.
Dollar-needy Turkey tightens foreign currency rules
Unable to stop the economic hemorrhage sparked by the flight of foreign investors and money, Turkey’s government has tightened the country’s 26-year liberal foreign exchange rules. Travelers exiting Turkey are now required to make declarations of cash and credit cards or face sanctions on charges of money laundering and smuggling.
The flight of foreign investors and foreign capital from Turkey gathered speed in late 2014. Last year, it accelerated further amid increasing economic and political risks and controversial government moves, including the seizure of private companies, among them media outlets, through an increasingly politicized judiciary and the use of supervisory bodies as a tool to bully business people. Investor confidence was further shaken by a protracted election process — an inconclusive vote July 7 followed by snap polls Nov. 1 — coupled with the resumption of armed conflict with Kurdish militants, deadly terrorist attacks and heavy-handed security crackdowns.
After the Justice and Development Party (AKP) reclaimed its parliamentary majority Nov. 1, optimists argued that the continuation of one-party government, as opposed to the coalition the June 7 result had dictated, would restore both political and economic stability. This, however, did not happen. The Istanbul Stock Exchange saw net foreign sales of a staggering $1.13 billion in November and $640 million in December. In the last week of December alone, foreign investors sold $195 million worth of stock shares and Turkish treasury bonds. The Fed’s rate hike also stoked the flight of and demand for foreign currency, while further weakening the Turkish lira.
All these factors forced the government to make some serious amendments in the foreign currency regime in late December.
This story, filed from Ankara, showed up on the al-monitor.com Internet site on Friday sometime—and I thank Roy Stephens for finding it for us.
Saudi King to abdicate throne in favor of son: Report
A report says Saudi King Salman bin Abdulaziz Al Saud plans to renounce power in favor of his son, who is currently the second in line to the throne but is widely believed to be the real ruler.
The report by the Institute for [Persian] Gulf Affairs quoted multiple highly-placed sources as saying that the ailing 80-year-old ruler has been seeking to transfer power to his son Mohammed, the deputy crown prince and defense minister.
The sources did not give a specific date for the abdication but said the issue will be concluded within a matter of weeks.
According to sources familiar with the matter, the current crown prince Mohammad bin Nayef will also be removed from his positions as the crown prince and the minister of interior.
I would guess there’s some truth to this, but with Saudi politics being what they are these days, you just never know. This story appeared on the Iranian website presstv.ir late Friday morning Tehran time. I thank U.K. reader Tariq Khan for sharing this news item with us.
Arthur Berman: Why the Price of Oil Must Rise
Geologist Arthur Berman explains why today’s low oil prices are not here to stay, something investors and consumers alike should be very aware of. The crazy-low prices we’re currently experiencing are due to an oversupply created by geopolitics and (historic) easy credit, not by sustainable economics.
And when the worm turns, we are more likely than not to experience a sudden supply shortfall, jolting prices viciously higher. This will be a situation not soon resolved, as the lag time for new production to come on-line will be much longer than the world wants:
The same things that always drive prices in the end it’s always about fundamentals. The markets are peculiar and they change every day. But the fundamentals of supply and demand at some point markets come back to those and have to adjust accordingly. Not on a daily basis, maybe not even on a monthly basis. But eventually they get it right. So this oil price collapse is really straight forward as far as I can tell, and it has to do with cheap stupid money because of artificially low interest rates that resulted in over-investment in oil — as well as lots of other commodities that are not in my area of specialty, but that’s what I see. And over-investment led to over-production and eventually over-production swamped the market with too much supply and the price has to go down until we work our way through the excess supply.
We started this conversation with your important observation that we’re only talking about a million or million and a half barrels a day of oversupply. So we could go from over-supply to deficit pretty quickly, because we’re not investing in finding that additional couple of million barrels a day that we need to be discovering. So we’re deferring major, major investments. We’re not just deferring exploration; we’re deferring development of proven reserves. Capital cuts across the world represent 20 billion barrels of development of known proven reserves. And so we will get to a point, and we will, we most certainly will, where suddenly everybody wakes up and says “Oh my God we don’t have enough oil! We’re now half million barrels a day low.” And what will happen? The price will shoot up. That’s the way commodity markets work. And everybody will say “Whoopee! Let’s get back to drilling big time.” Well there’s a big lag. There’s a huge time lag between when the price responds and people actually get around to drilling and they actually start bringing the oil onto the market and it becomes available as supply, because they’ve been asleep at the wheel for you know for how many months or years. And so you know you can’t just turn a valve and all of a sudden everything is okay again
This 56-minute audio interview appeared on the Peak Prosperity website last Saturday–and it showed up on the Zero Hedge Internet site one on Tuesday—and for obvious length reasons, it had to await today’s column.
Layoffs Loom in China as Growth Slows
While most of the world has fixated on the plunging Shanghai and Shenzhen stock exchanges and Beijing’s missteps managing the currency, China’s labor market has become increasingly fragile. As wage arrears and layoffs grow, unrest in factories and on construction sites is spreading.
Worker protests and demonstrations doubled last year, to 2,774, with December’s total of more than 400 such incidents, setting a monthly record. The protests come as China’s slower growth crimps profits and concerns about poor policy making saps investor confidence. “The increase in strikes and protests began last August around the time of the yuan devaluation and subsequent stock market crash and continued to build during the final quarter of the year, as the economy has showed little sign of improvement,” says Geoffrey Crothall, communications director at the Hong Kong-based workers’ advocacy organization China Labour Bulletin.
That’s worrisome for China’s Communist Party, which came to power in 1949 claiming to represent the working masses. In a sign of its nervousness, Beijing on Jan. 8 formally arrested four labor organizers in Guangdong, amid a broad crackdown on rights activists. “The situation is not so good these days,” Zhang Zhiru, a Shenzhen-based labor campaigner, said in a text message. “It is not convenient to accept interviews from the foreign media.”
This Bloomberg article put in an appearance on their Internet site at 12:42 p.m. Denver time on Thursday afternoon—and it’s the final offering of the day from Roy Stephens.
BoJ’s Kuroda says no plan to ease policy now
Bank of Japan Governor Haruhiko Kuroda said on Friday he had no plan to expand monetary stimulus now, blaming sharp declines in oil costs for keeping consumer inflation distant from the bank’s ambitious 2 percent target.
While he maintained his optimistic view of the economy, Kuroda stressed his resolve to ease monetary policy further if risks threaten achievement of the BOJ’s price target.
“The underlying price trend is improving steadily,” Kuroda told parliament, expressing hope that record corporate revenues and a tightening labor market will gradually push up wages.
“I don’t have plans for further monetary easing at the moment. But we’re ready to adjust policy without hesitation if there is any change in the broad price trend,” he added.
The remarks, made in response to a question by an opposition lawmaker, pushed down Japanese stocks on disappointment that no immediate monetary stimulus was forthcoming.
As Bill King said yesterday—“The BoJ chief opined that Japan’s GDP potential growth was 0.5% or less. This is a reluctant admission that Japan’s horrid demographics is, and will continue to limit economic growth – and there is nothing QQE can do to change it.” This Reuters news item, filed from Tokyo, was posted on their website at 4:49 a.m. EST on Friday morning—and is another item I found it in a special supplementary edition of the King Report yesterday. It’s worth reading.
Doug Noland: Cracks at the ‘Core of the Core’
The world has changed significantly – perhaps profoundly – over recent weeks. The Shanghai Composite has dropped 17.4% over the past month (Shenzhen down 21%). Hong Kong’s Hang Seng Index was down 8.2% over the past month, with Hang Seng Financials sinking 11.9%. WTI crude is down 26% since December 15th. Over this period, the GSCI Commodities Index sank 12.2%. The Mexican peso has declined almost 7% in a month, the Russian ruble 10% and the South African rand 12%. A Friday headline from the Financial Times: “Emerging market stocks retreat to lowest since 09.”
It is the “Core of the Core” that now concerns me the most. It is here where Federal Reserve (and global central bank) policies have left their greatest mark. It is at the “Core of the Core” where momentous misconceptions and market mispricing have become deeply entrenched. It’s the “Core of the Core” that has attracted enormous amounts of “money” over recent years. It’s also here where I believe leverage has quietly been used most aggressively. Over recent years it became one massive Crowded Trade. Now the sophisticated players must contemplate beating the unsuspecting public to the exits.
Back in 2000, Dallas Fed president Robert McTeer suggested that our economy’s ills would be rectified “if everyone would hold hands and buy an SUV.” And for the next 15 years Fed policies did the unimaginable in the name of (indiscriminately) stimulating growth of any kind possible. And if epic mortgage finance Bubble financial and economic maladjustment was not enough, the past seven years have seen the type of financial folly and egregious wealth redistribution that tear societies apart.
The bottom line is that Bubbles destroy and redistribute wealth, though the true effects are masked for a while by inflated securities and asset markets – along with resulting unsustainable spending patterns and economic activity. Regrettably, years of policy mismanagement, gross financial excess, deep structural maladjustment and the most imbalanced economy in our nation’s history will now come home to roost. At this point, I cannot confidently forecast how quickly the bust will unfold. I do, however, believe this process has begun as Bubbles falter at the “Core of the Core.”
Doug’s weekly Credit Bubble Bulletin this week certainly falls into the must read category—and I found it on his website late last night MST.
World’s Largest Miner Books Massive $7.2 Billion Write-down on U.S. Shale “Assets”
Late last month, Freeport McMoRan co-founder and executive chairman James R. Moffett was shown the door.
Moffett, known as the “last of the old-time wildcatters”, was a legend in the industry but made a fatal mistake in 2013: he paid $2.1 billion for McMoRan Exploration Co (an oil-and-gas company the parent company had separated from in the 1990s), and $6.9 billion for Plains Plains Exploration & Production.
As WSJ put it, “the deals in part were a bet that oil prices would remain high.” Well, they didn’t, and the gamble ended up increasing the combined entity’s debt fivefold and Carl Icahn is now pushing Freeport to dump the “high cost” assets.
Freeport wasn’t the only mining giant to make an ill-timed bet on US oil and gas assets. BHP Billiton, the world’s largest miner, spent $20 billion buying U.S. assets in 2011, making it the largest overseas investor in U.S. shale. Now, as “lower for longer” turns to “lower for longer-er”, the company is set to take a huge write-down on its U.S. onshore portfolio.
How huge, you ask? $7.2 billion huge (or $4.9 billion after taxes) on assets the company was carrying at just over $20 billion. The company now values its U.S. assets at $16 billion. “While we have made significant progress, the dramatic fall in prices has led to the disappointing write down announced today,” CEO Andrew Mackenzie said. “However, we remain confident in the long-term outlook and the quality of our acreage. We are well positioned to respond to a recovery.”
This article was posted on the Zero Hedge website at 9:52 a.m. on Friday morning EST—and it’s courtesy of Richard Saler.
Over 1,000 jobs threatened as Eldorado Gold calls for “rule of law” in Greece
Saying a three-year building permit delay reflects a much wider problem, Eldorado Gold on January 11 once again threatened to suspend its Greek projects. The company now wants a clear commitment to due process before it invests more money in the country.
Over 600 employees and contractors will lose their jobs with the suspension of the advanced-stage Skouries gold-copper project, where the company has already sunk around US$300 million. Another 500 jobs at Olympias, a gold-silver-lead-zinc past-producer also on northern Greece’s Halkidiki peninsula, depend on an installation permit arriving in Q1. As for the nearby Stratoni silver-lead-zinc mine, Eldorado “will continue to evaluate our investments.” Its other northern Greece projects remain on care and maintenance due to two-year delays over an environmental decision for Perama Hill and a drill permit for the Sapes project.
The company says its decisions result from “actions and/or inactions of the ministry and other agencies regarding the timely issuance of routine permits and licences, which is not only a legal responsibility but also a contractual obligation of the Greek state.”
This gold-related news story showed up on the resourceclips.com Internet site on Tuesday—and I thank Brad Robertson for bringing it to my attention—and now to yours.
India’s Banks to Launch 2nd Tranche of Gold Bonds on January 18
The second tranche of the gold bond scheme will remain open until January 22, Economic Affairs Secretary Shaktikanta Das said in a tweet.
Prime Minister Narendra Modi on November 5 launched the gold schemes to wean investors away from physical gold.
India imports about 1,000 tonnes of gold every year and the precious metal is the second-highest constituent of the import bill after crude oil.
The scheme is aimed at reducing demand for gold in physical form by encouraging people to buy the commodity in dematerialized or paper form.
This PTI [Press Trust of India] story, filed from New Delhi, found a home over at the timesofindia.com Internet site at 8:31 p.m. IST on their Thursday evening—and it’s something I found in a GATA release yesterday. Chris Powell’s headline to this story reads “Indian government.: Buy our paper gold so we can drive gold’s price down“.
The ‘face value’ and ‘legal tender’ coins that you can’t cash in: Has the Royal Mint been misleading special coin buyers?
The Royal Mint is suffering a backlash after it sent a memo to banks telling them not to accept high-value ‘legal tender’ commemorative coins over the counter.
Buyers have flocked to the special edition coins in recent years, with many believing they would always be worth their face value, but This is Money readers have hit out as banks have now been told to stop cashing them in.
At the weekend, we revealed on how one reader was left with £29,300 worth of commemorative coins after HSBC, which had accepted them in the past, suddenly refused them.
This interesting, but not surprising story showed up on thisismoney.co.uk Internet site on Thursday—and it’s something I found on the Sharps Pixley website last evening.
Tennessee Bill would Exempt Gold and Silver Bullion from Tax; Take Small Step Toward Ending the Fed
A Tennessee bill would exempt gold and silver bullion from sales tax, taking a small step toward nullifying the Federal Reserve’s monopoly on money.
Introduced by Sen. Frank Niceley, Senate Bill 1610 would exempt the sale of all gold, silver and bullion that is used as a medium of exchange or sold “based on their intrinsic value as precious metals” from state sales tax.
This would remove one of the greatest roadblocks for the use of gold and silver as money in Tennessee.
The legislation would take a small step toward breaking the Federal Reserve’s monopoly on money by making it easier for Tennesseans to use gold and silver in transactions. Should they start doing so, this would introduce competition into the monetary system and build a strong alternative to Federal Reserve Notes (dollars) when doing business.
This story, filed from Nashville, put in an appearance on the tenthamendmentcenter.com Internet site on Thursday sometime—and it’s the second precious metal-related story in a row that I found on the Sharps Pixley website.
The PHOTOS and the FUNNIES
Yesterday’s column featured three photos of Charlie Russell and his up close and personal experiences with grizzly bears. I neglected to link his website in Friday’s column—and I shall make amends now, as the link is here.
The WRAP
If it wasn’t COMEX positioning behind the move in silver to $50 by the end of April 2011, then what the heck caused the price to soar? Well, since there are only two things that can move silver prices – COMEX paper positioning, or developments in the physical market – by process of elimination, the answer becomes obvious. Physical mark