26 March 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
With the precious metal market shut tight everywhere on Planet Earth on Friday, there’s not much to report from a hard data perspective.
The folks over at the shortsqueeze.com Internet site update the short positions in both GLD and SLV as of March15 on Thursday evening—and I missed that in my column yesterday, so here’s the data now.
The short position in SLV increased from 12.07 million shares/troy ounces, up to 13.57 million shares/troy ounces, which was an increase of 12.46 percent. The short position in GLD rose from 1,187,500 troy ounces, to 1,336,190 troy ounces—and that represented an increase of 12.55 percent. Ted was surprised that the increases weren’t bigger than they were—and I’m sure he’ll more to say about this in his weekly review this afternoon EDT.
Surprisingly enough, there was a sales report from the U.S. Mint on Friday, as they reported selling enough silver eagles—57,500—to make their usual one million coins-per-week quota.
So far this month, the mint has sold 30,500 troy ounces of gold eagles—5,000 one-ounce 24K gold buffaloes—and 3,263,500 silver eagles.
As of yesterday’s sales report, the mint had sold 14,000,000 silver eagles year-to-date. Last week it was 13 million, the week before—12 million, and the week before that, 11 million. I’m sure you see the pattern here.
Gold eagle/buffalo sales are way down for the month—and as Ted has mentioned on a couple of occasions, the big buyer/JPMorgan has obviously stepped back. They will probably re-enter the market after they’ve smashed the price. I’m sure that the mint has been making gold eagles without a let-up regardless of the sales so far—and JPMorgan will swoop in and buy them all, once they’ve done the dirty.
True to their word, the CFTC had the updated Commitment of Traders Report on their website at the usual time yesterday. This was for positions held at the close of COMEX trading on Tuesday—and as you’ve been warned on multiple occasions, it was going to be ugly—and it was all of that. What made the numbers even more incredible is that Ted’s estimates for what they would be, which appeared in the quote in Friday’s column, were right on the money.
In silver, the Commercial net short position blew out by a very chunky 7,218 contracts, or 36.1 million troy ounces. They accomplished this by adding 1,296 contracts to their long positions, but at the same time they increased their short position by another 8,514 contracts—and the difference between those two numbers is the net position.
The Commercial net short position now sits at 386.2 million troy ounces, or 77,242 COMEX contracts. And as ugly as that number is, the Big 8 are net short a hair under 83,000 contracts—which represents 47.2 percent of the entire COMEX open interest in silver. Subtract out the market neutral spread trades—and the Big 8 would be short around 55 percent of the entire open interest in silver. How’s that for a concentrated short position, dear reader???
Ted said that the Big 4 added 2,800 contracts to their already grotesque short position—and the ‘5 through 8’ commercial traders added 800 contracts to their short positions—and the raptors, the commercial traders other than the Big 8, sold another 3,800 contracts of their rapidly-shrinking long position. Ted pegs JPMorgan’s short position at 24,000 COMEX contracts, or 120 million troy ounces of paper silver, which is an increase from the 21,000 contracts JPM held short in last week’s COT Report.
Under the hood in the Disaggregated COT Report, the Managed Money traders added 5,461 contracts to their already huge long positions, but they also added 1,516 contracts to their short position, which I found rather odd, as one would have thought they’d be covering short positions as the silver price rallied. The difference between those numbers is 3,945 contracts of the total 7,218 contract change in the Commercial net short position. The balance of the long positions [7,218-3,945=3,273 contracts] came from the ‘Other Reportables’ and the Nonreportable/small trader category.
Here’s the COT chart for silver with Tuesday’s COT data on the far right-hand side of the chart—and if that doesn’t give you the horrors, I don’t know what will.
In gold, the Commercial net short position rose by 14,463 contracts, or 1.45 million troy ounces—and the Commercial net short position sits at 199,994 contracts, so let’s call it 20.00 million troy ounces. During the reporting week the Commercial traders added 8,471 contracts to their long positions, but they loaded the boat on the short side, as they added 22,934—with the difference between those two numbers being the change in the Commercial net short position for the reporting week.
It was, as Ted Butler said about the Big 8 and the raptors in silver—“The Three Musketeers” in action once again, as it was “all for one—and one for all” as they all went further short, or sold long contracts as the ‘sellers of last resort’ against the Managed Money traders. Ted said the Big 4 traders added about 4,600 short contracts, the ‘5 through 8’ added around 4,300 contracts to their short position—and the raptors also increased their short position by a chunky 5,600 contracts.
Under the hood in the Disaggregated COT Report, it was all Managed Money traders accounting for the weekly change, plus a few hundred contracts more, as they added 15,255 long contracts, plus they added 133 short contracts. The difference between those two numbers being 15,122 contracts. So ‘under the hood’ the numbers in the Managed Money category were even worse than the headline change in the Commercial net short position in the Legacy COT Report, which is never a happy sign.
Here’s the COT chart for gold updated with Tuesday’s data—and it’s terrifying.
Of course, since the cut-off on Tuesday afternoon, JPMorgan et al have had their way with precious metal prices both Wednesday and Thursday—but especially on Wednesday—so there’s been some improvement in the Commercial net short positions in both gold and silver since then.
But with the 50-day moving average still unbroken to the downside, the real contract liquidation by the Managed Money and small traders won’t happen until that occurs—and once that moving average is broken, there’s no telling how low the HFT traders and algorithms can drive the price once the selling avalanche begins.
I’ll have more to say about this in The Wrap.
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 say in every Saturday column—the short 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 short 141 days of world silver production—and the ‘5 through 8’ traders are short 55 days of world silver production—for a total of 196 days, well over 6 months of world silver production, or 450 million troy ounces of paper silver.
In last week’s chart, the Big 8 were short 188 days of world silver production.
And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about a 100 days of world silver production between the two of them—and that 100 days represents about 70 percent of the length of the red bar in silver on Nick’s chart above. The other two traders in the Big 4 category are short, on average, about 20 days of world silver production apiece.
To put it another way, if the short positions of JPMorgan and Scotiabank disappeared off the face of the earth, the rest of the traders in the Commercial category would be net long the silver market, just like the traders in all the other categories are at the moment.
I have a decent number of stories for my Saturday column—and a few of them are ones that I’ve been saving for today because of content or length reasons.
CRITICAL READS
Junk territory: U.S. corporate debt ratings near 15-year low
The average rating on U.S. corporate debt has hit nearly a 15-year low, according to a new report by Standard & Poor’s.
“We believe corporate default rates could increase over the next few years,” according to S&P credit analysts Jacob Crooks and David Tesher.
The average rating on companies that issue debt has fallen to ‘BB,’ or junk status. That is even below the average S&P rating for U.S. corporate debt during and in the aftermath of the financial crisis in 2008 and 2009.
There are already concerns about energy companies defaulting on loans due to low oil prices. But new tech firms like Solera and media companies like iHeart too have had their credit rating downgraded this year, according to S&P.
This news item put in an appearance on the money.cnn.com Internet site at 2:58 p.m. EDT on Thursday afternoon—and I thank Lawrence Clooney for sending it our way. Another link to this story is here.
Behind U.S. GDP Data is Reason for Recession Worry: Weak Profits
On the face of it, the latest government update on how the U.S. economy performed in the fourth quarter looked a bit more encouraging. Growth was revised to a 1.4 percent annualized pace from a previously estimated 1 percent, and the adjustment to gross domestic product was for a good reason — consumer spending rose more than previously thought.
Yet beyond the headline number, there is a reason for some concern. Corporate profits plunged 11.5 percent in the fourth quarter from the year-ago period, the biggest drop since a 31 percent collapse at the end of 2008 during the height of the financial crisis. For 2015 as a whole, pretax earnings fell 3.1 percent, the most in seven years, according to the Commerce Department.
That’s “bad news,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Massachusetts. History shows that when earnings fall, the economy often follows them downward into recession as profit-starved companies cut back on hiring and investment.
No! Really? I’m sure glad that there are reporters out there with such a keep grasp of the obvious. This Bloomberg piece was posted on their Internet site at 10:42 a.m. on Friday morning Denver time—and I found it on Doug Noland’s website last night when I was checking for his latest CBB—and as of 8:46 p.m. MDT last night, there was nothing there except last week’s column. Another link to this Bloomberg article is here. [Doug’s column is posted further down. – Ed]
Dollar General to add nearly 2,000 stores by fiscal 2017
Dollar General Corp. keeps steamrolling ahead.
The chain, based in Goodlettsville, Tennessee, said that it plans to add about 2,000 stores over the next two years, bringing its total count to more than 14,000 stores.
During the Great Recession, Dollar General, along with other dollar chains, attracted legions of followers looking to save money. It capitalized on its appeal by expanding offerings of name-brand goods.
Its attraction persisted among shoppers who continue to look for deals and also want convenience. Dollar stores have become an increasing threat to Wal-Mart Stores Inc.
As the recession/depression grinds on, more and more consumers find themselves at the bottom of the socioeconomic pecking order—and it’s at time like these that bargain stores thrive. You just know how bad things are when they’re even threatening the bottom-fishing Wal-Mart. This story appeared on thecabin.net Internet site at 7:42 p.m. on Thursday evening EDT—and it’s the second contribution of the day from Lawrence Clooney. Another link to this article is here.
Jim Rickards: This is a ‘sure sign’ of global recession
It’s always important to keep an eye on the central banks.
Yet we are picking up signals from a source even more powerful than central banks. This source is the specter of global recession.
It’s one thing for central banks to fight currency wars while the world is growing. That’s just a matter of stealing growth from your trading partners. When the pie is not growing fast enough, you can grab a bigger slice from the person sitting next to you with a cheap currency.
What happens when the whole pie is shrinking?
That’s what a recession is. In that environment, currency wars become much nastier and coordination breaks down.
This commentary by Jim showed up on thecrux.com Internet site on Thursday sometime—and I thank Harold Jacobsen for sharing it with us. Another link to this article is here.
Doug Casey and the War on Cash: “We Are Truly on the Edge of a Precipice”
Louis James: There have been a lot of government moves recently, making it harder for people to do business in cash. What do you think, are the days of anonymous paper money numbered?
Doug Casey: It’s funny. First, there was a war on gold. Now, there is definitely a war on cash. It was inevitable. It’s part of a long-standing trend toward more state control of people’s finances. In modern times, this started back in 1970 with the so-called Bank Secrecy Act, which required U.S. persons to report the existence of any foreign bank or brokerage accounts. Of course, in those days, bank secrecy still existed, so many Americans simply violated the law.
That was followed by the Money Laundering Control Act of 1986. “Money laundering” is an artificial, arbitrary, made-up crime. This law opened the door to everyone having to explain where their money came from. In a free society, the only crimes considered real are those that involve aggression against another person or his property.
The screws were further tightened with the Orwellian “Patriot Act” in 2001, which torqued both of these measures up.
But things started getting really serious with the Foreign Account Tax Compliance Act of 2010 (FATCA). That made it mandatory, in effect, for all foreign financial institutions to report Americans who have bank or brokerage accounts. Of course, OECD countries and others had to jump on the bandwagon, making FATCA a global phenomenon.
This Doug Casey interview is certainly worth reading—and it’s something that was posted on the internationalman.com Internet site on Friday morning EDT. Another link to this interview is here.
The 2016 Presidential Race: Do Our Votes Matter? — James Perloff
My friend Rachael McIntosh was an alternate delegate at the 2012 Republican Convention in Tampa, Florida, representing Ron Paul for the state of Rhode Island.
Rachael had worked for a private defense contractor for years. Awakened by the corruption and darkness she witnessed, she left the defense industry, and began working tirelessly toward getting Ron Paul elected. She has fictionalized her experiences in a superbly written trilogy of novels, Security through Absurdity.
The Tampa convention was supposed to begin on Monday, August 27. Ron Paul was originally slated to speak, but the convention was cancelled for that day due to the threat of a “hurricane.” The hurricane turned out to be no more than a brisk rainstorm. Rachael and many other Ron Paul delegates braved it that morning and went to the convention center (the Tampa Bay Times Forum, a sports complex) and saw Republican National Committee Chairman Reince Priebus officially proclaim the delay. After the gavel had been struck and the chairman left the stage, the delegates found themselves watching a movie glorifying Mitt Romney. At the film’s conclusion, Rachael heard ear-splitting applause. But when she looked around, almost no one was cheering. The applause was “canned”—the type sports stadiums pipe in when the home team is losing and their spectators show low enthusiasm.
The next day at her hotel, Rachael’s husband called and said: “Hey, I watched it yesterday and the crowd was really diggin’ Romney.” Rachael had to break the news: what he (and the rest of America) heard on TV had been faked.
My first encounter with James Perloff was through his classic 2002 tome “The Shadows of Power: The Council on Foreign Relations and the American Decline“. Reading that was a “cross the Rubicon” moment for me. I was surprised and flattered when he reached out to me when I was writing for Casey Research, as I’d mentioned this book on several occasions over the eight years I was there. Since then, I’ve posted almost everything he’s written—and everything he writes is certainly worth reading. This longish essay is no different—and is especially important for any reader who is is in a position to cast a vote for the next President of the United States. Another link to this long commentary is here.
Former Senior CIA analyst Ray McGovern: Obama Scared of CIA and NSA
This interview of former senior CIA analyst Ray McGovern is not only interesting but inspiring as well.
McGovern, in addition to routinely presenting the President with his morning intelligence briefings during his 27 years with the CIA, chaired the National Intelligence Estimates. So he was by no means inconsequential.
After retiring, the Agency awarded him its Intelligence Commendation Medal. But as a measure of McGovern’s character, he explains in this interview why he felt he had to return that medal.
McGovern instils hope that there are good people such as him in such organizations, in spite of these organizations seeming to have become drunk on their power.
This 14:08 minute video interview was posted on the russia-insider.com Internet site a couple of weeks back—and it’s definitely a must watch, although I’m not overly impressed about the guy that’s interviewing him. I thank Larry Galearis for digging it up for us—and for obvious reasons, like the Perloff piece that precedes it, it’s one of those stories that had to wait for my Saturday column. Another link to this worthwhile interview is here.
The writing is on the wall for the European Union
The latest bomb attacks in Brussels are the clear proof that the attacks in Paris were not a fluke, but the first in what is likely to be a long string of similar terror attacks. Such attacks are really nothing new, this is exactly what Russia has to endure in the 1990s, from the same people and for the same reasons. But whereas Russia eventually succeeded in defeating both the Chechen Wahabi insurgency and the Chechen Wahabi terrorism, Europe appears to lack all the resources needed to prevail. What is even worse, E.U. leaders appear to be dead set in their current russophobic policies thereby cutting themselves off the much needed help Russia could offer.
There are objective reasons why Brussels was chosen: it is the capital of the European Union, of course, but it is also a “soft” target, much easier to hit than, say, the Supreme Headquarters Allied Powers Europe (SHAPE) in the Belgian city of Mons or the NATO H.Q. in city of Haren, near Brussels. But that is not the “really real” reason why Brussels was hit. The sad truth is that Europe has been setting itself up for exactly this kind of attack.
First, when the same people (Wahabi crazies) used the same methods (terror attacks) against the biggest neighbor of Europe (Russia), the European elites gave their full support to the terrorists, not only politically (by presenting them as freedom fighters) but even directly (MI6 and the CIA were both directly and heavily involved in the Chechen wars). At that time Russia was very much like the E.U. today – ruled by a completely corrupt elite totally sold out to the AngloZionist Empire, Russian security services were almost completely dismantled, the Russian general public mostly clueless about what was going on and the economy was in shambles. Russia was in easy (soft) target then just as Europe, all of it, is a easy (soft) target today.
This commentary appeared on thesaker.is Internet site this morning sometime—and it’s a must read, especially if you’re a serious student of the New Great Game. I thank Roy Stephens for sliding it into my in-box in the wee hours of this morning. Another link to this essay is here.
Syria, Brussels, the Ukraine and Russia: John Batchelor Interviews Stephen F. Cohen
If the active war is quieter in Syria, the active one seems to be increasingly moving to Europe in terrorist style. Brussels was the scene of a major bombing this week and our two pundits discuss the political impacts of this evolving escalation for NATO, the presidential race, Turkey and Syria. For Europe, Cohen explains, the whole of it is in virtual lock-down, and this rise of organized terrorism is a major element of change from the old world order to the new one. And the West has always been wrong footed in reacting to this by escalating its policies of regime changes and warfare in the M.E. and making the evolution much worse. Russia has reacted, of course and has called for cooperation with the West, but as Cohen points out, this is always ignored, and the media has even blamed Russia for the latest attack. But NATO and Washington cannot get beyond its anti-Russian policy even as privately E.U. politicians are grateful for what Russia has done, and it is obvious that many citizens know that cooperation with Russia is key to solving most of these problems. Politically the old guard, pro Washington E.U. establishment, is losing ground to a groundswell of common sense in the electorate.
Onwards to the Trump campaign where the pundits discuss Trumps understanding of what NATO is doing in Ukraine – that the U.S. was funding all of these activities more or less alone. But Trumps position is that NATO should not be proactive and that Washington should negotiate its way out of differences with countries. Essentially he questions NATO’s mission. But as Cohen points out, “he is the anti-Christ for to the establishment” for his willingness to change how Washington deals with adversaries – dare we say in a more profitable and more frugal way by negotiation? To that end Trump would like to do business in Russia, states Batchelor. Trump remembers the beginnings of this under Reagan and Gorbachev and wants a return to those opportunities for the United States. But Cohen welcomes Trump’s worldview because it begins debate about Russian-American relations that has been missing for Americans. Remarkably, Cohen ignores the statements of bigotry, Jerry Springer style fisticuffs as unimportant as compared to the plethora of topical ideas that accompanies all the noise. He may be right that the gains are worth it.
The discussion then shifts to the role of Turkey in stirring the pot in the Syrian Crisis, and Cohen states that Turkey is really the main problem for the E.U. The Europeans know it—and will pay off billions of dollars to Turkey to keep back the refugee swarms – and do so without a word of dissent or blame for Washington. In Moscow, where the Kremlin well understands this situation, the concerns are about the New Cold War and whom they must deal with as the new president in Washington. Hillary Clinton, who may have the lead, is a worry for them as she represents the war party and a guarantee that anti-Russian policies will remain in Washington. For this writer the only good news is that all the bad developments in the E.U. that Washington insists on supporting against European interests might see the E.U. with closer ties with Russia. As Cohen states, this will likely result in the Russian/E.U. sanctions ending and the American ones persisting indefinitely.
This 40-minute audio interview is an absolute must listen, even if you’re not a serious student of the New Great Game. I thank Ken Hurt for the link, but the largest thanks of all goes to Larry Galearis for the above executive summary. And if you don’t want to listen to the audio clip, then the above is a must read for sure. Another link to this interview is here.
The Real Likelihood of a Nuclear War — Paul Craig Roberts
Dr. Paul Craig Roberts, who served as an Assistant Secretary of the Treasury for Economic Policy in the Reagan administration, shares his view that there is a real likelihood of a nuclear war breaking out. Below are the main points covered in this radio programme.
“Firstly there is the Wolfowitz doctrine, which basically makes it clear that the United States should prevent the rise of any state that could present sufficient power to threaten American unilateral action. Russia has risen and has displayed such power. This is the reason for the constant demonisation of Russia’s leader. We have the number one candidate for the democratic nomination, Hillary Clinton, who now compares the President of Russia with Hitler. So what has happened is that every American president during my lifetime, especially Nixon and Reagan, worked to create trust between the two major nuclear powers. But beginning with the Clinton regime, the trust that had been achieved was progressively destroyed.”
“When you destroy trust between nuclear powers you recreate the possibility of nuclear war, either by intent, or miscalculation. So this is a reckless and irresponsible act on the part of Washington. The information war that is going on now is to prepare the American population and NATO allies for military conflict with Russia. We now have high level people in the U.S. government and military who go to Congress and say that Russia is an existential threat. This is rubbish! You have to remember that before the wars started in Afghanistan, Iraq, Libya, and Syria, it was the constant demonisation of the leaders of the governments, against the Taliban, Saddam Hussein, Gaddafi and Assad. When you see these kinds of demonisation it fits a pattern.”
This 14:24 minute audio interview is embedded in this brief executive summary that appeared on the sputniknews.com Internet site ten days ago—and I thank ‘aurora’ for sending it along yesterday morning Denver time. Another link to this interview is here.
Kerry in Moscow: Penny has dropped; isolating Russia was never going to work
In a single tweet, the head of Russia’s Foreign Affairs Committee Alexei Pushkov summed up John Kerry’s Moscow visit: “There’s nothing more powerful in politics than need. Under its influence, forgetting about isolating Russia, the US has begun to move.”
Washington’s policy of “isolating” Russia internationally was a non-starter from the very beginning. On this, Kerry’s third visit to the Russian capital in 10 months, it was abundantly clear that this fact has well and truly sunk in. After four hours of talks with his counterpart Russian Foreign Minister Sergey Lavrov and Russian President Vladimir Putin, Kerry emerged with a noticeably softer tone both on the conflicts in Syria and Ukraine.
In the case of Syria, perhaps the most striking comment was an admission by Kerry that he had “reached a better understanding of the decisions that President Putin has made of late.” For anyone who watches the relationship between Moscow and Washington closely, this kind of talk will sound like an almost revolutionary breakthrough.
This Russia Today news item was posted on their website at 4:12 p.m Moscow time on their Friday afternoon, which was 9:12 a.m. in Washington—EDT plus 7 hours. I thank Roy Stephens for sending it my way just before midnight Denver time last night. Another link to this story is here—and it’s certainly worth reading for any serious student of the New Great Game.
Japan still can’t generate inflation
Japan is still struggling to generate inflation three years into its extraordinary policy assault on low growth and deflation.
Consumer prices remained flat in February, while annual inflation rose by 0.3pc—still a far cry from the Bank of Japan’s official 2pc inflation target. Core inflation – which excludes fresh food and energy – rose by 1.1pc last month, unchanged from February.
Standing on the brink of its sixth recession in just seven years, Japan’s sluggish economy contracted by a bigger than expected 0.4pc in the last quarter of 2015.
Persistently low inflation has long been a scourge of the central bank, which unleashed the most ambitious set of monetary policy measures ever seen in a modern economy to lift Japan out of its malaise.
This story appeared on the telegraph.co.uk Internet site at 1:25 p.m. GMT on their Friday afternoon—and I thank Roy Stephens for finding it for us. Another link to this news item is here.
Doug Noland: All Is Not Well
Gross global economic imbalances and maladjustment are being exposed. The rank inequities of the existing structure are feeding social, political and geopolitical instability. Wall Street can continue to pretend that all is well – while the backdrop clearly turns more disconcerting by the week.
My thesis remains that the global Bubble has burst. Current risks are extraordinary, and global officials are at this point wedded to desperate measures. The ECB increased QE to over $1.0 TN annually, while adding corporate debt to its shopping list. Chinese officials have stated their intention to stabilize their currency, while spurring 13% system Credit expansion (to ensure 6.5% GDP growth). Market perceptions hold that the Bank of Japan is willing to boast QE, while the Fed would clearly not hesitate to again call upon QE as necessary.
Global markets have rallied strongly over the past month. Bear market rally or a springboard to another bull run? Or has it all regressed to a sullied game where only the timing of unfolding fiasco is unknown. Fundamental to the Bursting Bubble Thesis is that a most protracted global Credit Cycle has finally succumbed. “Terminal Phase” excess has left conspicuous wreckage throughout the Chinese economy and financial system – with momentous global ramifications. China – along with the global Bubble – now faces the dreaded day of reckoning. Confidence in Chinese policymaking has waned – just as faith is fading in the capacity of QE to rectify the world’s ills.
Doug’s must read Credit Bubble Bulletin appeared on his Internet site late last night sometime—and only when I was editing today’s column, that I remembered to check for it. Another link to this commentary is here.
Jim Rickards: Why Gold Is Going To $10,000
Bestselling author Jim Rickards sits down with Hedgeye CEO Keith McCullough to discuss his new book, “The New Case for Gold,” and why a cocktail of factors makes it more critical than ever for investors to protect their portfolios with gold.
This 52:54 minute video interview showed up on the hedgeye.com Internet site back on March 15—and I thank Ken Hurt for bringing it to our attention.
Barrick Gold to face U.S. group lawsuit over South American mine
A federal judge on Wednesday granted class certification for a U.S. class-action lawsuit filed against Barrick Gold Corp claiming that Barrick misstated facts of its now-halted Pascua-Lama gold-mine project on the border of Argentina and Chile.
The class certification means the world’s largest gold producer will have to face the U.S. lawsuit.
U.S. District Judge Shira Scheindlin in Manhattan said that shareholders who purchased Barrick shares from May 7, 2009, through Nov. 1, 2013 are a part of the class-action lawsuit.
Investors who bought Barrick’s common stock during this period have said Barrick touted Pascua-Lama as a world-class project even as it became clear that the project would fall short of expectations.
This brief gold-related Reuters article, filed from Bengaluru, was posted on their website at 2:10 a.m. EDT on Thursday morning—and I found it embedded in a GATA release. Another link to this story is here.
Barrick Gold cuts executive chairman’s pay 76% after investor criticism
Barrick Gold Corp. awarded Executive Chairman John Thornton $3.08 million in total compensation, 76 percent less than last year, after he gave up his bonus in the wake of investor criticism of pay packages at the world’s largest gold producer.
Thornton, 62, received a salary of $2.5 million, $204,090 in other compensation and a pension value of $375,000, the Toronto-based miner said Thursday in a regulatory filing. Thornton forfeited $3.4 million of incentives for the year, the company said. The compensation compares with $12.9 million in 2014, which included $9.5 million of incentive pay.
Thornton “elected to forfeit all of the incentive compensation earned for 2015 in order to better reflect the experience of our shareholders last year,” Barrick said in the filing.
Barrick’s compensation and governance came under scrutiny after the company revealed in 2013 that Thornton, a former Goldman Sachs Group Inc. president, received an $11.9 million signing bonus. The company has already overhauled the way it determines senior executives’ pay, though last year it still drew the ire of three of Canada’s largest pension funds on executive pay and corporate governance.
Bad Boy Barrick again. The Darth Vader of gold companies it’s been called for at least a generation now—and for good reason, as it has a history that would curl your hair. This Bloomberg story put in an appearance on their website at 2:23 p.m. MDT on Friday afternoon—and was updated about forty-five minutes later. It’s the second story in a row that I found on the gata.org Internet site. Another link to this article is here.
The Gold Weighting in Stan Druckenmiller’s Portfolio is a Warning For Us All
When perhaps the best hedge fund manager ever puts 30% of his portfolio into one investment we get very interested here at Hedge Fund Insiders.
We focus exclusively on the investments being made by the best managers in the world. The most compelling opportunities to us are those where one of these great managers takes an extraordinarily concentrated position.
In this case the investor is Stan Druckenmiller who now has 30% of his portfolio in the SPDR Gold Trust.
This longish news item appeared on the kitco.com Internet site back on March 16—and I thank Jim Gullo for sending it our way very early yesterday evening Denver time. Another link to this article is here.
The PHOTOS and the FUNNIES
The first photo is of an American badger—and despite its cuteness, it’s not to be trifled with, as their family tree includes weasels and wolverines. It’s got a set of teeth to match those claws as well. I came across one when I was growing up on the prairies of Manitoba back in the very early 1960s when I was 13 or 14—and the encounter scared the bejesus out of me. The next two photos are of a male and female bobolink, which is a member of the blackbird family—and it’s obviously closely related to the yellow-headed blackbird, which is fairly common around here. And even though the distribution maps say that the bobolink makes it this far north during the summer months, I have never seen one.
The WRAP
There is no such thing as a forced cash settlement on a COMEX silver or gold contract that you read so much about. The next forced cash settlement on a COMEX contract would also be the first and last such settlement because should it occur, the exchange would cease to exist. That’s why these instruments are called contracts – they involve contractual obligations and responsibilities. An EFP is not a default because the buyer (and by extension, the seller) must voluntarily agree to take something other than metal in a licensed COMEX warehouse as the futures contract stipulates. If the buyer so agrees, no problem; if not, no EFP.
Why would a long contract holder agree to take other than designated metal in a COMEX warehouse? It would have to the buyer’s advantage. As an example, instead of taking the 50,000 oz of gold represented in 500 COMEX contracts in metal delivered as specified in the contract, it might be to the buyer’s benefit to arrange for delivery in London or Toronto and not New York if the seller agreed.
Many years ago, when I was a commodity broker, a customer arranged an EFP for on his long soybean meal futures contracts on the Chicago Board of Trade to be delivered to his chicken farms in Central America. This was done through the grain company Bunge. My customer had locked in his buy price when I bought him the soybean meal contracts originally and the EFP benefited him in lieu of having to make complicated transportation arrangements on his own.
Commodity futures transactions, including COMEX gold and silver contracts, are about price and price change and generally do not involve physical deliveries. However, there must be a mechanism which both requires and allows for the conversion of futures into physicals and vice versa, otherwise there would be no legitimacy to the contracts. Yes, silver prices have been manipulated by COMEX futures positioning, but I have seen no evidence of a long holder being denied physical delivery—and an EFP represents no such denial. — Silver analyst Ted Butler: 23 March 2016
Today’s pop ‘blast from the past’ goes back a lot of years—and it’s a classic in every sense of the word—and the official music video falls into that category as well, as it’s been downloaded over 90 million times. The hit is from 34 years ago—and neither the group, nor the tune needs any introduction. The link is here.
And an even more incredible version of this pop ‘blast from the past’ is an a cappella performance by by the Slovenian group Perpetuum Jazzile—and the link to that is here—and it’s definitely worth your time, as it’s been downloaded almost 19 million times!
Today’s classical ‘blast from the past’ dates back about 400 years—and was composed by Gregorio Allegri for use in the Sistine Chapel during matins, as part of the exclusive Tenebrae service on Holy Wednesday and Good Friday of Holy Week.
It wasn’t long before Allegri’s Miserere was the only such work sung at these services. With its soaring soprano parts (sung for centuries by castrati) and compelling melodic style, this sacred work enjoyed almost immediate popularity. So impressed was some subsequent pope, that the work thereafter was protected—and a prohibition was placed on its use outside the Sistine Chapel at the appointed time. Chapel regulations forbid its transcription; indeed, the prohibition called for excommunication for anyone who sought to copy the work.
But the Vatican was not prepared for the arrival of 12-year old Wolfgang Amadeus Mozart in Rome on April 11, 1770, just in time for Easter. As with any tourist, he and his father visited St. Peter’s to celebrate the Wednesday Tenebrae and to hear the famous Miserere sung at the Sistine Chapel. Upon arriving at their lodging that evening, Mozart sat down and wrote out from memory the entire piece. Two days later on Good Friday, he returned, with his manuscript rolled up in his hat, to hear the piece again and make a few minor corrections. Leopold told of Wolfgang’s accomplishment in a letter to his wife dated April 14, 1770 (Rome):
“…You have often heard of the famous Miserere in Rome, which is so greatly prized that the performers are forbidden on pain of excommunication to take away a single part of it, copy it or to give it to anyone. But we have it already. Wolfgang has written it down and we would have sent it to Salzburg in this letter, if it were not necessary for us to be there to perform it. But the manner of performance contributes more to its effect than the composition itself. Moreover, as it is one of the secrets of Rome, we do not wish to let it fall into other hands….“
The above true story is one of the reasons that the vast majority of music scholars consider Mozart to be the greatest composer that ever lived—and a child prodigy unmatched to this day.
Here are the Tallis Scholars performing what I consider to be the definitive version of this a cappella composition. I’ve posted it before, but it’s been many years—and it’s more than appropriate for an Easter weekend. The link is here. Enjoy!
As Ted and I have been mentioning on and off this week—and late last week as well—is the fact that the crucial 50-day moving averages are now moving sharply higher with each passing day—and as Ted said on the phone yesterday, the current price is closer to those moving averages than they’ve been in months.
In gold, it’s now less than 25 bucks—and in silver, it’s less than 20 cents.
If there ever was an opportunity for JPMorgan et al to end one of these inevitable engineered price declines with one single downward price thrust—or a quick series of them—rather than the usual ‘death by a 1,000 cuts’ version—this is one of those times, as the set-up is perfect. And if that’s what indeed happens, then it’s a given that it was a scenario that was planned out well in advance. As Ted mentioned in his quote in Friday’s column—“Because so many technical fund contracts were bought on the price move up, that suggests nearly as many could be sold on the way down. Complicating matters is the role that JPMorgan plays in all this. If JPM covers enough of its short positions quickly, silver prices could surge before a complete technical fund flushing.”
At the moment, the above scenario is all speculation—and we’ll only know in the fullness of time.
So we wait some more.
That’s all I have for today—and I await the Sunday evening open with more than the usual amount of interest.
See you on Tuesday and, once again, Easter greetings to all who wish to receive them.
Ed
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