20 February 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was sold down in fits and starts throughout Far East trading on their Friday, with the low tick of the day coming at 10 a.m. GMT in London. The subsequent rally ran into a willing seller at, or just after, the noon London silver fix. From that point it got sold down until shortly after 9 a.m. in New York. It then rallied a bit until London closed at 11 a.m. EST—and then didn’t do much until some kind soul peeled five or so dollars off the price in after-hours trading in New York. Instead of a slightly positive close, gold ended down on the day.
The low and high ticks were reported as $1,220.60 and $1,235.30 in the April contract.
Gold was closed yesterday afternoon at $1,226.00 spot, down $4.70 from Thursday’s close. Net volume was huge once again at 175,500 contracts.
The silver price traded all over the place within a twenty cent range on Friday—and any budding rally ran into the usual not-for-profit sellers before they got too far, including the one at exactly 3 p.m. in electronic trading. That closed silver in the red as well.
The low and high tick were reported by the CME Group as $15.29 and $15.495 in the March contract.
Silver finished the Friday session in New York at $15.315 spot, down 6.5 cents from Thursday’s close. Net volume was nothing special at just under 31,500 contracts—and roll-over volume was about twenty-eight percent of gross volume. I expect the roll-over volume in silver to rise substantially next week, as every trader that’s not standing for delivery in March, has to roll or sell their March contract by the close of COMEX trading on Friday.
Platinum traded five dollars either side of unchanged on Friday—and both rally attempts were dealt with in the usual manner by “all the usual suspects“. After the second rally was capped at noon in New York, the price also got driven down for a loss on the day, as this precious metal was closed at $937 spot, down 6 dollars from Thursday.
The palladium price action was a quieter version of the platinum price action. At noon EST it too was sold down for a loss on the day, closing back below the $500 mark at $497 spot, down 4 bucks.
The dollar index closed late on Thursday afternoon in New York at 96.84—and made it as low as the 96.69 mark by 1 p.m. Hong Kong time on their Friday afternoon. The index chopped higher in a very wide range from that point—and all three rallies above the 97.00 mark were sold off. The 97.17 high tick came minutes after 8:30 a.m. in New York—and by minutes after the COMEX close, it was down the 96.58 mark—and didn’t do much after that. It closed the Friday session almost on its low tick at 96.59—down 25 basis points from Thursday.
Here’s the 5-day dollar index chart—and as I pointed out in yesterday’s column, the 97.00 level has been a tough nut to crack to the upside. It remains to be seen if the powers-that-be can pull it off.
And here, once again, is the 6-month dollar index chart so you can keep track of the world’s reserve currency in the medium term. It sure isn’t acting like a reserve currency should—and as I’ve said before on several occasions, it’s just the best looking horse in the glue factory.
The gold stock opened down, but rallied into positive territory right away, but couldn’t hold on once the London p.m. gold fix was done. By 10:45 a.m. they were below their opening prices—and then spent the rest of the New York session chopping quietly higher. The shares would have probably finished close to unchanged had the not-for-profit seller turned up in the COMEX futures market at 3 p.m. EST in the thinly-traded after hours. The deliberate sell-off took the shares with them, as the HUI closed lower by 1.68 percent.
The silver equities traded in somewhat similar fashion, as Nick Laird’s Intraday Silver Sentiment Index closed lower by 1.95 percent.
For the week, the HUI closed lower by 0.37 percent—and the ISSI closed up 8.04 percent. Year-to-day the HUI is up by 42.75 percent—and the ISSI by 26.90 percent. [NOTE: Russia’s gold reserves updated in The Wrap on Saturday afternoon EST]
The CME Daily Delivery Report showed that 75 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. Canada’s Scotiabank, along with Citigroup out of its client account, were the two biggest short/issuers with 39 and 35 contracts respectively. HSBC USA stopped 60 for its own account—and ABN Amro stopped 13 for its client account. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Friday trading session showed that gold open interest in February fell by 31 contracts, leaving 247 left—minus the 75 mentioned above. And there’s still 1 lonely silver contract to deliver this month.
There was a huge deposit in GLD yesterday, as an authorized participant added 621,531 troy ounces. And as of 7:20 p.m. EST yesterday evening, there were no reported changes in SLV—which is just the way that JPMorgan wants to keep it, I’m sure.
Year-to-date there has been 2,912,705 troy ounces of gold added to GLD. That’s a huge amount. During that same time period, the net withdrawals from SLV have totalled 6,845,978 troy ounces.
Since the rallies in both gold and silver began at the beginning of the year, gold is up roughly $160 the ounce as of yesterday’s close in New York—and silver about $1.60 per ounce. And why the dichotomy in metal inflows into GLD vs. the outflows from SLV? That’s still a question that only Ted Butler is asking—and that still goes begging an answer.
There was no sales report from the U.S. Mint.
Month-to-date the mint has sold 62,000 troy ounces of gold eagles—12,500 one-ounce 24K gold buffaloes—and 2,972,000 silver eagles. Year-to-date those numbers are 186,000…46,500…and 8,926,500 respectively
There was no in/out activity in gold over at the COMEX-approved depositories on their Thursday.
But there was decent action in silver, as only 2,042 troy ounces were received, but 780,103 troy ounces were shipped out the door. Virtually all of the ‘out’ activity was at CNT and Canada’s Scotiabank—and the link to all that action is here.
It was very busy at the COMEX-approved gold depositories in Hong Kong on their Thursday, as 5,000 kilobars were reported received—and 5,062 were shipped out the door. All of the activity was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
Despite Ted Butler’s hopes for a positive surprise in yesterday’s Commitment of Traders Report, it was anything but, as there was big deterioration in the short positions in both silver and gold.
In silver, the Commercial net short position blew out by 8,353 contracts, or 41.8 million troy ounces. They added 201 long contracts, but also increased their short position by a monstrous 8,554 contracts. The difference between those two numbers is the change in the Commercial net short position for the week. The Commercial net short position now sits at 350.3 million troy ounces of paper silver.
Ted said that the Big 4 increased their short position by 4,300 contracts—and he pegs JPMorgan’s short position at maybe a bit more than 24,000 contracts, up 4,000 contracts during the reporting week. The ‘5 through 8’ traders actually covered about 1,200 short contracts—and Ted’s raptors, the Commercial traders other than the Big 8, sold about 5,300 long contracts.
Under the hood in the Disaggregated COT Report, the Managed Money traders increased their long position by 1,849 contracts—and they also reduced their short position by 6,128 contracts—for a total change of 7,977 contracts. So their activity made up for almost the entire increase of the 8,353 contract Commercial net short position. The 376 contract difference came from the ‘Other Reportables’ and the ‘Non Reportable’ traders.
Ted also pointed out that the Big 8 traders are net short 47.7 percent of the entire COMEX open interest in silver, which currently stands at 166,645 contracts. 47.7 percent of that number is about 79,500 contracts. Ted’s back-of-the-envelope calculation shows that if you remove the spread trades from total open interest, the Big 8 are short about 56 percent of the open interest in silver. Eight traders out of thousands—how outrageous and manipulative is that?
One more thing. The total short position in silver the Commercial category is 114,700 contracts. The Big 8 traders hold 69 percent of those short positions all by themselves. That means that the other 36 traders in the Commercial category [there are 44 in total] are short the balance [31 percent] between them, which works out to less than 1 percent per trader on average.
Yet the CFTC and the CME Group say everything is fine—and miners just sit there like dorks. With the exception of the guys and girls over at First Majestic Silver, they don’t even want to look at the evidence, let alone do anything about it.
In gold, the Commercial net short position increased by 27,061 contracts, or 2.71 million troy ounces. They did this by increasing their short position by 33,504 contracts, but like in silver, they also added to their long positions as well to the tune of 6,443 contracts. Subtract those two numbers and you have the change in the Commercial net short position for the reporting week. The Commercial net short position now stands at 13.20 million troy ounces. This is an historically low number, but miles off its absolute low from about six months ago.
Ted said that the Big 4 traders added about 7,900 contracts to their short positions, the ‘5 through 8’ traders increased their short position by only about 700 contracts—and Ted’s raptors sold another 18,500 long contracts. It was, as Ted is wont to say from time to time—“all for one, and one for all” against the Managed Money and small traders.
Under the hood in the Disaggregated COT Report, the Managed Money traders added 5,160 long contracts—and also covered 15,217 short contracts. That was 20,377 contracts in total—and almost all the rest [about 7,000 contracts worth] mostly came out of the hides of the small traders in the ‘Nonreportable’ category.
In a word, the COT Report was a disaster, especially in silver according to Ted. The only thing that might soften these numbers to a certain extent is the chance that all of Tuesday’s big down-draft in prices in both gold and silver didn’t make it into the report. But, having said that, there’s no reason that JPMorgan et al couldn’t harvest the Managed Money and small traders for fun, profit and price management purposes at any time.
Could we move higher in price from here, you ask? Sure, but the warning flags are now snapping in the breeze.
The possibility exists that the powers-that-be could get over run. Sure, but there’s not a hint of that in any of the data that I’ve seen—and as Ted Butler has been saying for more than ten years now, if they do, it will be for the very first time.
Here’s Nick’s chart showing the COT structure for gold, complete with the data from yesterday’s COT Report. As you can see, we don’t have far to go before we get extremely overbought—and we know what happens then, unless it’s different this time, which I doubt. I’ll have more on this in The Wrap.
And here’s the same chart for silver—and as you can tell, it’s as ugly as it can get.
Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data. 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 physically traded commodity on the COMEX.
As I said in last Saturday’s column—the positions of the Big 4 and 8 traders in silver continues to redefine the meaning of the words ‘obscene’ and ‘grotesque.’ This week, the Big 4 are now short 132 days of world silver production—and the ‘5 through 8’ traders are short 56 days of world silver production—for a total of 188 day, more than 6 months of world silver production.
And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 97 days of world silver production between the two of them—and JPMorgan is short 57 days of world production all by itself. That 97 days represents about 73 percent of the length of the red bar in silver. The other two traders in the Big 4 category are short, on average, about 18 days of world silver production apiece.
I have a decent number of stories for your weekend reading pleasure—and I’ll happily leave the final edit up to you.
CRITICAL READS
David Stockman CNBC Interview: “I don’t Know What the Bulls Are Smoking”
Anyone who believes that the global economy isn’t crashing must be delirious, according to David Stockman.
The former director of the Office of Management and Budget argues that a rapidly deteriorating economic environment is going to send stocks and oil prices spiraling even lower than they already have.
“I think your traders are smoking something stronger than what I can legally buy here in Colorado,” Stockman said Thursday on CNBC’s “Futures Now.”
“Everywhere trade is drying up, shipping rates are at all-time lows,” he said. “There is a recession that’s going to engulf the entire world economy, including the United States.”
Amen to that, bro! This commentary, along with three embedded CNBC video clips totalling about five minutes, showed up on David’s website yesterday sometime—and I thank Roy Stephens for today’s first news item. Another link to this story is here.
Corporate defaults are on the rise, with 3 more this week
Less than two months into 2016, and corporate defaults are on the rise.
Three U.S.-based oil and gas companies defaulted this week, lifting the global tally for 2016 to 19, according to Standard & Poor’s.
Not surprising given the pressure on oil prices, the energy sector continues to account for the bulk of the defaults at six, followed by metals and mining at four, said Diane Vazza, head of global fixed income research. “Volatile oil and commodity prices have led to higher levels of both downgrades and defaults in these sectors since late 2014,” Vazza said.
The remaining defaults span a range of sectors from media to banking to consumer goods.
This news item put in an an appearance on the marketwatch.com Internet site at 11:54 a.m. EST on Friday morning—and I thank Scott Linn for sharing it with us. Another link to this article is here.
Deere’s sales miss, lowers outlook for full year
Deere & Co., the world’s biggest seller of tractors and harvesting combines, pulled in its forecast for the year as the company continues to struggle with slumping farming and equipment markets.
Sales fell 13%, worse than the 11% decline Deere had predicted. Shares in the company, down 12% over the past 12 months through Thursday’s close, slipped 2% in pre-market trading.
As the downturn in the global farm-machinery market stretches on, the Moline, Ill. company’s results have been hit. After a long stretch of elevated machinery sales powered by rising farm commodity prices and tax breaks on machinery investments, equipment sales have sunk as the global economy slows, crop prices drop and the dollar pressures revenue.
The latest quarter’s results reflect the continuing impact of that downturn, said Chief Executive Samuel Allen, who also pointed to weakness in construction equipment markets.
This is another story from the marketwatch.com Internet site. This one appeared there at 7:34 a.m. on Friday morning EST—and it’s courtesy of Scott Linn as well. Another link to this news item is here.
GM selling long-term bonds to help pay for pensions
General Motors has begun offering 20-year and 30-year notes to raise money to contribute to its U.S. hourly workers’ pension plan and other corporate purposes.
The automaker filed documents Thursday with the Securities and Exchange Commission, but those papers didn’t disclose an amount to be raised. Moody’s Investor Services rated the debt Ba1 and said it would be for $2 billion in senior unsecured credit.
For Moody’s, Ba1 is the same rating it gave to GM’s existing $7 billion worth of senior unsecured notes. That is the highest rating for speculative-grade corporate debt that carries “substantial credit risk.”
But the rating agency said in a statement that it expects GM will strengthen its performance in North America and Europe and will keep a strong position in China.
“GM’s rating could improve if the company remains on its current trajectory for improved performance for 2016 that could support additional positive rating action,” Moody’s said in a statement.
The above five paragraphs are all there is to this brief news item that showed up on the Detroit Free Press website at 10:22 a.m. EST yesterday morning. It was subsequently posted on the usatoday.com Internet site. This article makes it three in a row from Scott Linn.
Why the President Isn’t All That Important — George Friedman
As an outsider to the investment community, I am constantly struck by its obsession with politics… and particularly with the role of the president. Attention and money flow to candidates in the belief that there is a unique importance to the president in shaping the republic’s future.
I find that interesting because, in my view, the American president is one of the least powerful national leaders in the world. This is particularly true in domestic affairs where he is a very visible, but a rather minor player in crafting policy. Russian President Vladimir Putin or Chinese President Xi Jinping are obviously more powerful than the American president. But so is British Prime Minister David Cameron, who operates in a parliamentary system where his ability to pass legislation is far greater than the American president’s.
The president represents one of three branches of government, presiding over 50 states, which also have their own rights to legislate. All legislation must pass through Congress.
Both the Senate and House of Representatives have the power to determine whether legislation is adopted or rejected. The speaker of the House can frequently choose simply not to allow a bill to come to a vote. In the Senate, any senator can prevent a bill from coming to a vote by speaking incessantly, and a handful of senators can take the floor and block the vote.
The president can veto legislation, but Congress can override the veto. The president cannot compel action or control the outcome.
This interesting essay by George showed up on the mauldineconomics.com Internet site on Monday—and for length and content reasons had to wait for my Saturday column. I thank Roy Stephens for sending it along. Another link to this article is here.
Puerto Ricans Suffer as Creditors Feast on Debt Colony
Just an hour before my wife an I landed in her native Puerto Rico last month, the island’s government had defaul
ted on $1 billion in bond interest payments. It was the second default in five months for the cash-strapped government whose debt now totals $72 billion. None of this was evident as we waded through the crowds in Rafael Hernández airport in Aguadilla, which had been converted into a civilian airport after the closure of Ramey Air Force Base 40 years earlier. People hugged their relatives, welcoming them back home or bidding them farewell. It was a normal scene you’d see at any airport in the world. But the situation in Puerto Rico is not normal, and you don’t have to spend long there to see how regular people are suffering more every day under the crushing burden of debt.
You notice every time you make a purchase at the store or get the check at a restaurant. The sales tax in Puerto Rico now stands at 11.5 percent, after being raised 64 percent in July from 7 percent. The measure was approved by the island’s governor, Alejandro García Padilla, in conjunction with a package of austerity measures to raise money to pay the interest on the island’s debt to creditors.
This might not sound like an astronomical amount, but the impact is felt more in Puerto Rico than it would be in any of the states. Sales taxes are regressive. People with lower incomes spend more of their earnings on things that are taxed than those who can afford to store their income as savings. This means the lower your income, the harder you will be hit by the sales tax.
This very interesting, but not surprising article showed up on the counterpunch.org Internet site on Wednesday—and I decided to wait for today’s column to post it. I thank Patricia Caulfield for bringing it to our attention. Another link to this story is here.
E.U. deal gives U.K. special status, says P.M.
David Cameron says a deal struck with E.U. leaders will give the U.K. “special status” and he will campaign with his “heart and soul” to stay in the union.
The PM said the agreement, reached late on Friday after two days of talks in Brussels, would include a seven-year “emergency brake” on welfare payments.
He added the deal included changes to E.U. treaties and would be presented to his cabinet on Saturday at 10:00 GMT.
E.U. exit campaigners said the “hollow” deal offered only “very minor changes“.
This news story was filed on the bbc.com Internet site yesterday morning, but has been revised a few times since I got around to posting it in today’s column. I thank Patricia Caulfield for this story as well—and another link to it is here. For a different spin on this, here’s a Russia Today piece headlined “Decent compromise? Deal on U.K. ‘special status’ in E.U. gets unanimous support“—and I thank Roy Stephens for this one.
Why the Euro Is a Doomed Currency: Doug Casey
For a long time, I’ve advocated that the world’s governments should default on their debt. I recognize that this is an outrageous-sounding proposal.
However, the debts accumulated by the governments of the U.S., Japan, Europe and dozens of other countries constitute a gigantic mortgage on the next two or three generations, as yet unborn. Savings are proof that a person, or a country, has been living below their means. Debt, on the other hand, is evidence that the world has been living above its means. And the amount of government debt and liabilities in the world is in the hundreds of trillions and growing rapidly, even with essentially zero percent interest rates. This brings up several questions: Will future generations be able to repay it? Will they be willing to? And, if so, should they? My answers are: No, no and no.
The “should they” is one moral question that should be confronted. But I’ll go further. There’s another reason government debt should be defaulted on: to punish the people stupid enough, or unethical enough, to lend governments the money they’ve used to do all the destructive things they do.
I know it’s most unlikely you’ve ever previously heard this view. And I recognize there would be many unpleasant domino-like effects on today’s overleveraged and unstable financial system. It’s just that, when a structure is about to collapse, it’s better to have a controlled demolition, rather than waiting for it to collapse unpredictably. That said, governments will perversely keep propping up the house of cards, and building it higher, pushing the nasty consequences further into the future, with compound interest.
With that in mind, a few words on the euro, the E.U. and the European Central Bank are in order.
This commentary appeared on the internationalman.com Internet site yesterday—and it’s definitely worth reading. Another link to this article is here.
George Soros: A psychopath’s psychopath
According to Soros, Russia’s strategy is to “avoid collapse by making the E.U. implode first – by exacerbating the migration crisis and stoking Islamophobia”.
On February 11, The Guardian ran an article by George Soros which had run a day earlier here entitled “Putin is a bigger threat to Europe’s existence than Isis.”
After a quick check of my vital signs, I confirmed that I was indeed awake and the article was real and in The Guardian not The Onion. Before I look at the tissue of untruths which make up the substance of Soros’ article, a few general words about psychopaths are in order.
I have met a few psychopaths in my life – a pernicious but small-time example is a real-estate “salesman” in Spain who cost my family a great deal of time and money. The real problem with psychopaths – big-time and small-time – is not primarily that they do bad things, but that we – non-psychopaths – are ill-prepared to deal with the fundamental difference between us and them.
We – people with operational consciences – think (wrongly) that everyone is like us. We are shackled to the assumption that just because we would not do unspeakably evil things – or would be unable to live with ourselves if we did – all other people work the same way. They do not.
This opinion piece, which I’m in complete agreement with, put in an appearance on the Russia Today website last Saturday—and for length and content reasons, it’s another essay that had to wait for today’s column. It’s a must read in my opinion—and I thank Roy Stephens for finding it for us. Another link to this commentary is here.
Stephen Cohen: Not This Many Troops on Russia’s Border Since Hitler Attacked USSR
The venerable Stephen Cohen lays into Hillary, Obama and the NATO military build-up against Russia with Russia Today‘s Ed Schultz (formerly of MSNBC).
The U.S. and its NATO vassals continue to live in a fantasy land of Russian threats. But Barack Obama apparently can’t decide if Russia is a threat or not.
In March 2014 Obama declared Russia a “regional power” which was threatening neighboring countries “out of weakness.” Yet now he says Russia has the “second most powerful military in the world.”
Wow, Vladimir Putin has engineered a remarkable climb in Russia’s strength in only 2 years.
This 8:45 minute video clip was posted on the russia-insder.com Internet site sometime on Friday Moscow time—and I thank Larry Galearis for sending our way. It’s certainly worth watching for any serious student of the New Great Game. Another link to this interview is here.
The Russia/Ukraine/Turkey/Syria Imbroglio: John Batchelor Interviews Stephen F. Cohen
Although largely masked by the tumultuous events in Syria, last week also saw an amazing historical meeting of the church leaders of the Eastern Orthodox and Catholic churches, who initiated a détente. This represents their first since their schism of the eleventh century. The meeting in Havana, February 12, between the two church leaders were directly linked with the concerns about Syria and the predatory impact of ISIS against Christians in that region. Cohen considers this a most positive turn. There is also news from Ukraine where in-fighting in the Rada (parliament) in Kiev has hit new adversarial heights as the economy hits new economic lows. Cohen discusses the level of corruption of the oligarchs controlling parliament, corruption that is so pervasive that the IMF cannot make loans to a government that would simply steal all the money. This is black humour at its best.
But the world worries mostly centre upon the Syrian War where NATO could be on the verge of being dragged into a war. Although Secretary of State, Kerry and Russian Foreign Minister, Lavrov began political negotiations for a ceasefire with the participants (but not ISIS), a mini détente focused on Syria, the idea has come under fire from the war party in Washington. As if this was not complicated enough Cohen also mentions the possibility (given American MSM support and statements by people like Senator McCain) that some elements in Washington would rather see Assad and Russia defeated and a Syria run by ISIS rather than ISIS defeated at all. Cohen admits to a great difficulty in working out the complexities without information about the games being played behind the scenes that makes in depth understanding by mere mortals most difficult. Basically we have a conflict of interest with Turkey as a NATO member supporting ISIS and at odds with the national interests of NATO European members and Washington (ostensibly) who are enemies of ISIS. To make matters worse the Saudis, who are allies of Washington, also support ISIS. The only thing they all have in common is that they all oppose the government of Syria and its allies – including Russia.
Cohen worries about the next sequence of events now evolving. This past week Turkey has been shelling Kurdish pro Assad forces in Syria, and large numbers of Turkish (and some report Saudi forces, including air) are forming up on the Turkish side of the border with Syria. If events proceed with the usual military progression to an actual invasion it will mean that a NATO member, Turkey, and a long ally of the US, Saudi Arabia, will be entering Syria to fight, not against ISIS, but to fight against the Syrian Army – which means to fight against Russia. If Turkey’s Erdogan attempts to involve NATO in his aggression through an Article 5 appeal, Cohen feels that European members can keep NATO in abeyance with legal delays (probable given the likelihood of negative reaction from E.U. countries to Turkey’s behaviour), the real danger is there are no rules in international affairs in the New World (Dis)Order, and with so many warring parties already in Syria, American “advisors” (and soon to include Canadian “advisors”) this is a most dangerous mix of circumstances.
I agree entirely with Cohen and will add that on the political side within the various governments and considering their various agendas it is next to impossible to tell whether the war parties will prevail or the moderates will. The questions revolve around how compromised are the governments of Europe in following Washington’s war aspirations and what are Washington’s real aspirations; how much is NATO similarly compromised; how far will the Saudis commit to supporting Turkey given its finances; how far will Turkey pursue a war agenda given its finances and given that it is already involved in its own civil war with its own Kurd population? And is the confusion of the mix a danger in itself? In summery those fighting on the Assad side of the war represent International Law and a clear firm policy of resistance to aggression; those on the other side, the opposite of this. As Cohen keeps saying, there are no rules anymore. I say that here is as accurate a description of good and evil as one can expect to see in international politics.
This 40-minute weekly audio interview was posted on the audioboom.com Internet site on Tuesday. It’s a must listen for any serious student of the New Great Game. I thank Ken Hurt for the link, but the biggest thanks is reserved for Larry Galearis for the extensive executive summary posted above. Another link to this interview is here.
Russia to initiate U.N. Security Council meeting over Turkey’s plans to send troops to northern Syria
A U.N. Security Council meeting is to be called at Russia’s request on Friday to discuss Ankara’s plans for a ground operation in Syria, the Russian Foreign Ministry has said.
Turkey’s actions in the region are threatening Syrian sovereignty, Moscow said, adding it would table a resolution demanding its prevention.
Moscow is concerned about the escalation of tensions on the Syrian-Turkish border, and “Turkey’s announced plans to put boots on the ground in northern Syria,” Maria Zakharova, Russian Foreign Ministry spokesperson, said on Friday, adding that the situation in the region is worrying because Islamic State (IS, formerly ISIS/ISIL) fighters are entering Syria and creating terrorist bases there.
“It undercuts efforts to launch a political settlement in the Syrian Arab Republic,” Zakharova said, announcing that Russia plans to call a Security Council meeting to discuss the situation.
This news item showed up on the Russia Today website at 3:27 p.m. Moscow time on their Friday afternoon—7:27 a.m. in Washington—and was updated about an hour later. It’s another contribution from Roy Stephens—and it’s worth reading. Another link to this article is here.
NATO Warns Turkey It Won’t Support Ankara in Conflict With Russia
As Turkey pushes to deploy ground forces across its border to remove the legitimate government of Syrian President Bashar al-Assad, the Turkish government is, again, threatening the world with war.
Ankara’s aggression seems partially based on the assumption that, should conflict erupt, Turkey will be supported by its NATO allies. According to Article 5 of the NATO treaty, the collective defense clause would be invoked if any member state is attacked.
But European leaders have made it abundantly clear that they have no interest in participating in a war of Turkey’s making.
“NATO cannot allow itself to be pulled into a military escalation with Russia as a result of the recent tensions between Russia and Turkey,” Luxembourg Foreign Minister Jean Asselborn told Der Spiegel.
This news item appeared on the sputniknews.com Internet site minutes after midnight Moscow time on their Saturday morning, which was minutes after 4 p.m. in Washington—EDT plus 8 hours. Once again I thank Roy Stephens for digging it up for us. Another link to this story is here.
Collapse of Iraqi Kurdistan
It used to be presented as a huge success story. We were told that in the middle of a ravished Middle East, surrounded by despair, death and pain, a land of milk and honey was shining brightly like a torch of hope.
Or was it more like a delicious cake surrounded by rot? This exceptional place was called Iraqi Kurdistan, or officially the “Kurdistan Region.”
This is where the victorious global capitalism has been injecting “massive investments,” while the West was “guaranteeing security and peace.”
This very interesting boots-on-the-ground commentary appeared on the Russia Today website last Sunday—and for length and content reasons, had to wait for today’s column as well. It’s worth reading if you have the interest—and I thank U.K. reader Tariq Khan for sharing it with us. Another link to this essay is here.
China’s PBOC injects another $1.53 billion in cash
The People’s Bank of China injected 10 billion yuan ($1.53 billion) in short term loans to commercial banks on Friday, The Wall Street Journal reported. The new issue of reverse-repurchase agreements brings the total injection of cash by China’s central bank this week to 150 billion yuan, as the PBOC attempts to maintain liquidity in the country’s financial system.
This 1-paragraph news item put in an appearance on the marketwatch.com Internet site in the wee hours of Friday morning EST—and it’s the final offering of the day from Scott Linn—and I thank him on your behalf. The link to the WSJ article is embedded in the story.
Doug Noland: Crisis Management
The current global backdrop remains alarming and, especially on bad days, darn right frightening. Yet as a macro analyst of Credit, money and the markets, I’m the proverbial kid in a candy store.
De-risking/de-leveraging and attendant market tumult (once again) reached the point of provoking concerted global crisis management measures. Japanese stocks surged 6.8% this week, with Chinese shares up 3.5%. The Mexican peso rallied 3.6%.
Inflationism was never going to work. And here we are after seven years of ongoing monetary stimulus and deficit spending – and the calls for more grow only louder. QE had no chance of success. Here we are in 2016 and inflated global securities and derivatives markets are more dangerous than ever. Inflating away debt problems was destined for failure. The world has added tens of Trillions of additional debt since 2008 and global Credit is more fragile than ever.
The precarious nature of “Terminal Phase” Credit Bubble excess is a fundamental CBB tenet. At this point, China is putting the historic U.S. mortgage finance Bubble to shame. The “Terminal Phase” sees underlying systemic risk expand exponentially. Not only does the quantity of Credit expand rapidly. The underlying quality of this Credit suffers progressive late-cycle deterioration. Think of 2006’s Trillion dollars of subprime mortgage derivatives. There’s just no escaping Credit Bubble reality: the more protracted the Terminal Phase, the more disastrous the consequences.
Another must read Credit Bubble Bulletin commentary from Doug. This weekend’s edition was posted on his website just before midnight Denver time last night. Another link to his CBB is here.
Gold price over $1,200 has bullion buyers sure rally will continue
Bad news for stock markets is often a good time for one of the world’s oldest commodities, and this year is no exception as gold has rallied almost 20 per cent since the start of 2016.
The price of an ounce of gold bullion has risen from a little over $1,000 U..S. an ounce in late December to above $1,200 U.S. Thursday, through a period when every single major stock index has fallen.
That’s part of a widespread flight to safety that has seen investors dump anything perceived as risky — stocks, oil and currencies like the Canadian dollar — and put their money into investments that are perceived to be safer.
“Investors are suddenly waking up to the risks in the market, pretty much like what happened in 2008,” said Robert Cohen, a portfolio manager at Scotiabank’s Dynamic Funds.
This gold-related news item showed up on the cbc.ca website yesterday at 5:00 a.m. EST—and I thank David Caron for passing it around. Another link to this article is here.
Gold Bulls Feast as More Central Banks Drive Rates Below Zero
Gold bears for years fed off the prospects for higher borrowing costs. Now bulls are thriving in a world where negative rates are becoming commonplace.
The Bank of Japan adopted negative rates last month to spur growth, joining central banks in Denmark, the euro area, Sweden and Switzerland. With about a quarter of the world economy facing negative rates in some form and growth faltering, gold has become one of this year’s best investments.
It’s a big turnaround for the metal which slid to a five-year low in December as the Federal Reserve readied for its first rate increase in almost a decade. With China’s slowdown roiling markets, there’s less chance the Fed will move again until next year. Negative rates mean depositing cash would leave investors with less than when they started, making traditional stores of value such as gold more appealing.
“Leave a million dollars with a bank, and in a year, you get only something like $990,000 back,” Marc Faber, the publisher of the Gloom, Boom & Doom Report, said by phone. “I would rather want to own some solid currency, in other words gold.”
This gold-related news item appeared on the Bloomberg website at 5:01 p.m. Denver time on Thursday afternoon—and it’s something I borrowed from a Mark O’Byrne commentary on the goldcore.com Internet site yesterday. Another link to this story is here.
Gold from Venezuelan reserve lands in Switzerland — Koos Jansen
Gold researcher and GATA consultant Koos Jansen reports that 36 tonnes from Venezuela’s gold reserve arrived in Switzerland in January as the suffering country’s insolvent socialist regime began liquidating its last monetary assets to delay restoration of a market economy.
Jansen disputes a Reuters report that asserting that the Venezuelan gold will not hit the market. His commentary is headlined “Venezuela Exported 36 Tonnes of Its Official Gold Reserves to Switzerland In January” and it was posted on the bullionstar.com Internet site. I found this story in a GATA release yesterday—and another link to this article is here.
The PHOTOS and the FUNNIES
The WRAP
I suppose it is possible for the COMEX commercials to get overrun to the upside after the technical funds have purchased gold and silver futures contracts, as nothing is impossible. But, as I think I may have previously reported, any commercial short overrun is not likely to come from a contract delivery default. For one thing, the biggest buyers (the technical funds) aren’t interested in taking physical delivery on futures contracts – it’s not part of their usual operation.
Further, should an “outsider,” technical fund or other speculator, take a large futures position with the intent of demanding physical delivery (perhaps intending to “goose” prices), unless a COMEX insider was the big buyer/instigator, there would be an immediate and aggressive backlash from the exchange and the CFTC. Not only has a deliberate delivery short squeeze by an outsider never succeeded (to my knowledge), this is also an issue in which I’ve had personal experience (orange juice 30 years ago). I don’t believe a speculator would be allowed to bust the COMEX via delivery default. And from an objective perspective of how markets are supposed to function, I don’t think a speculator should be allowed to roil the markets in such a manner.
Where I can see the commercial shorts getting overrun is if a physical shortage develops away from COMEX derivatives trading and creates a rush by new buyers (not technical funds) for futures contracts not to trade, but for the express purpose of securing physical metal. The regulators could and would block such buyers if the buyers’ intent was strictly for speculative gain. But I can see little justification or practicality in the regulators blocking legitimate industrial consumers from buying futures contracts in order to secure needed physical supply. If such buyers were blocked from taking physical delivery on COMEX futures contracts, in an instant the world would know the extent of the physical shortage. — Silver analyst Ted Butler: 17 February 2016
Today’s pop ‘blast from the past’ is a 1978 disco hit that’s never going to go away, ever! I’ve lost track of the number of times I’ve danced my brains out to this tune—and feel free to do the same now if the spirit moves you. The link is here.
Here’s a classical piece that I’m sure I hadn’t heard in at least 50 years—and when I heard it on the radio on Thursday, today’s classical selection was immediately cast in stone. It’s a joyful virtuoso violin showpiece by Romanian composer and violin virtuoso Grigoraş Ionică Dinicu that he composed in 1906 for his own graduation from the Bucharest Consevatory of Music. Here’s an arrangement for full orchestra—and it’s definitely worth two minutes of your life. The link is here. And for you purists out there, here’s the Jasha Heifetz version for violin and piano—and it’s linked here. It’s wonderful too!
As far as I was concerned, yesterday’s price action was another exercise in price management by ‘da boyz’ in their usual subtle manner, which extended into the not-so-subtle manner in after-hours trading. Once again gold volume was sky high, but silver volume was nothing special. I have to agree with Ted that JPMorgan is trying to keep all and sundry as far away from the silver market as possible. But for what reason—and for how long—remains unknowable.
Here are the 6-month charts for the Big 6+1 commodities once again.
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