12 April 2016 — Tuesday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Gold was only allowed to rise about 7 or 8 bucks at the open of trading in New York on Sunday evening—and once it made it up to the $1,250 mark around 9:30 a.m HKT, the price chopped sideways until 11 a.m. in London, which was twenty minutes before the COMEX open. The rally that began at that point was capped for good shortly before 11 a.m. in New York, which was the close of gold trading in London. The price wasn’t allowed to do much after that.
The low and high in gold were reported by the CME Group as $1,241.60 and $1,260.90 in the June contract.
Gold finished the Monday session at $1,258.10 spot, up $19.70 from Friday’s close. Not surprisingly, net volume was pretty decent at just under 143,000 contracts.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson—and as you can see, there was decent volume when there was big price movements—and as is always the case, the biggest volume starts at the COMEX open—which is 6:20 a.m. Denver time on the chart below—and Monday’s trading day was no different. The vertical gray line is midnight in New York, noon the following day in Hong Kong—and don’t forget to add two hours for EDT.
The ‘click to enlarge‘ feature still doesn’t work with Internet Explorer, but a right mouse click with Google Chrome or the Firefox browsers should allow you to view this chart full-screen size.
Silver opened up a nickel—and then didn’t do much until about 2:30 p.m. HKT on their Monday afternoon, which was thirty minutes before the 8:00 a.m. BST London opened. At that juncture it began to chop quietly higher—and then at the COMEX open it jumped another two bits. It then crawled higher until noon EDT—and traded pretty flat after that. It’s reasonable to assume that ‘da boyz’ weren’t going to allow silver to rally above $16 spot.
The low and high tick in this precious metal was reported as $15.37 and $15.935 in the May contract.
Silver was closed in New York yesterday at $15.905 spot, up 54.5 cents from Friday’s close. Net volume was way up there at just over 56,000 contract—and roll-over volume wasn’t overly heavy.
The platinum price chopped mostly higher until noon HKT—and then didn’t do much until the COMEX open. It then rallied a bit more until its $991 high tick, which came around 11:40 a.m. in New York. It was sold down about 5 bucks into the COMEX close—and then traded flat from there. It would have probably broken above $1,000 spot if allowed to do so. Platinum closed in New York yesterday afternoon at $989 spot, up 23 dollars on the day.
The price pattern in palladium was mostly the same as it was for platinum—and the high price spike got dealt with at, or shortly before, the London p.m. gold fix. Then, also like platinum, it was sold down into the COMEX close—and didn’t do a lot after that. Palladium finished the Monday session in New York at $545 spot, up 5 bucks from Friday.
The dollar index closed late on Friday afternoon in New York at 94.22—and then shed 10 basis points or so shortly after trading began at 2 p.m. EDT on Sunday afternoon. It was down to the 94.04 level by around 2:30 p.m HKT, but ‘gentle hand’s appeared—and the subsequent 94.34 high tick came a minute or so before 9 a.m. BST in London. It began to chop lower from there, with the 93.74 low tick coming a minute or two before 11 a.m. EDT. It rallied back to the 93.98 mark—and didn’t do much after that, as it finished the Monday session in New York at 94.01—94.006 to be precise—down 21 basis points from Friday. Here’s the 3-day chart so you can see all of the price action right from the Sunday afternoon open—and Friday’s as well.
Here’s the 2-year U.S. dollar index chart—and as you can tell, if the ‘gentle hands’ disappear, the index could be in a world of hurt in no time. Right now its looking very oversold—and we’ll find out relatively soon whether that means anything.
If the U.S. dollar ‘falls’ much further, a devaluation of the Chinese yuan would probably be the next shoe to drop in this ongoing currency war. I have a couple of stories about that in The Wrap.
The gold stocks were up about 4.5 percent by the London p.m. gold fix, which came a few minutes before 10 a.m. EDT—and after that it chopped quietly higher, adding another 1.6 percent onto the already impressive gains, as the HUI closed up 6.19 percent.
A decent portion of the silver equities’ gains were in by shortly after 10 a.m. and, like their golden brethren, the chopped quietly higher for the remainder of the Monday trading session as well. Nick Lairds’ Intraday Silver Sentiment Index closed higher by 6.46 percent.
The CME Daily Delivery Report showed that 123 gold and zero silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. The biggest short/issuer by far was HSBC USA with 100 contracts out of its own account—and International F.C. Stone was an ‘also ran’ with 13 contracts. Not surprisingly, JPMorgan was the biggest long/stopper with 34 contracts for its own account, plus 33 contracts for its clients. Canada’s Scotiabank—and International F.C. Stone came in second and third with 31 and 18 contracts respectively. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Monday trading session showed that gold open interest in April fell by 101 contracts, leaving 3,474 still open. And because only 30 gold contracts are actually being posted for delivery today, JPMorgan obviously let 101-30=71 short contract holders in gold off the hook. April silver o.i. rose by 2 contracts, leaving 66 contracts still around.
I’m still waiting for the big short/issuers in gold to step forward, because there is one, or maybe two, that haven’t made themselves known as of yet.
There were no reported changes in either GLD or SLV yesterday but, after yesterday’s and Friday’s price action, more deposits in both should be expected.
There was no sales report from the U.S. Mint on Monday. I must admit that I was rather surprised that there wasn’t.
I’ve also been waiting for the Royal Canadian Mint to put up their 2015 annual report, because I want to take a look at their 4th quarter and total 2015 gold and silver maple leaf sales. But since it’s a government operation, you can only expect so much from their employees.
It was a nothing day for gold over at the COMEX-approved depositories on Friday. Nothing was reported received—and only 3 kilobars were shipped out of Manfra, Tordella & Brookes, Inc. I shan’t bother linking that ‘activity’.
It wasn’t that busy in silver, either, as only 215,066 troy ounces were received—and 186,724 troy ounces were shipped out the door for parts unknown. All of the ‘in’ activity was at Canada’s Scotiabank—and over half of the ‘out’ activity as well. The link to this action is here.
There was decent activity over at the COMEX-approved gold kilobar depositories in Hong Kong on Friday. They received 805 kilobars—and 3,339 were shipped out. All of the action was at Brink’s, Inc. as per usual—and the link to that, in troy ounces, is here.
Here are a couple of charts that Nick Laird passed around on Saturday. They show the transparent gold and silver holdings of all the known depositories on Planet Earth as of the close of business on Friday.
Despite my best editing attempts, I have more stories today that I would like, so that’s why [in cases like this] I’m always more than happy to leave the final edit up to you.
CRITICAL READS
The West’s central banks are ignoring the basic lessons of economic history
Far from “normalising rates” over 2016, as was promised in December when the Fed hiked borrowing costs for the first time in a decade, America’s central bank could soon employ yet more “extraordinary measures” – as some of us said at the time.
Financial markets are so fragile, and addicted to central bank stimulus, that higher US rates could provoke a cataclysmic crash. Instead, the money men are screaming for further “quantitative easing”, going beyond the massive $4,200bn (£2,990bn) Fed balance sheet expansion since late-2008.
No wonder the International Monetary Fund, in its latest quarterly Global Financial Stability Report, once again points the finger at “spillovers from China” and “policies in the emerging markets” as the cause of angst on global markets. The Western world needs an alibi if the Fed, and the Bank of England for that matter, are forced to resort to even more “funny-money”.
Rather than admit unconventional monetary policies aren’t working and, beyond the immediate emergency post-Lehman measures, have done far more harm than good, some of the world’s leading economies are preparing to take this crazy experiment still further. That’s happening even as financial markets increasingly question whether ever more stimulus is welcome, or a sign of deep panic.
This news item by Laim Halligan put in an appearance on the telegraph.co.uk. Internet site at 9:13 a.m. BST on their Sunday morning, which was 4:13 a.m. in New York—EDT plus 5 hours. It’s worth reading—and another link to this article is here. I thank U.K. subscriber Robert Jonathan Lewis for sending it our way.
Obama Announces Unexpected Meeting With Yellen Following Monday’s “Expedited Procedures” Fed Meeting
One of the more significant, if largely under-reported events from last Friday, was the Fed’s surprising announcement that it would conduct a closed meeting tomorrow, April 11, at 11:30am “under expedited procedures” during which the Board of Governors will review and determine advance and discount rates charged by the Fed banks.
This is notable because the last time such a meeting took place was on November 21, less then a month before the Fed’s historic first rate hike in years.
Moments ago things got even more interesting, when in yet another unexpected announcement, the White House said that both Obama and Joe Biden would meet with Janet Yellen on Monday to discuss the economy and Wall Street reform, the White House said late on Sunday. The meeting is expected to take place some time “in the afternoon.”
According to Reuters, the president and the Fed chair meet regularly to discuss economic issues. Still, one can’t help but wonder what will be said in these two back to back meetings, both of which will be closed to the public.
This Zero Hedge piece was posted on their Internet site very late on Sunday evening—and I thank Brad Robertson for pointing it out. Another link to this ZH article is here.
U.S., Goldman Sachs reach $5 billion settlement over risky mortgages
The Justice Department on Monday announced a roughly $5 billion settlement with Goldman Sachs over the sale of mortgage-backed securities leading up to the 2008 financial crisis, with the government accusing the bank of misleading investors about the quality of its loans.
The $5.06 billion deal resolves state and federal probes into the sale of shoddy mortgages in the run-up to the housing bubble and subsequent economic meltdown.
It requires the bank to pay a $2.39 billion civil penalty and an additional $1.8 billion in relief to underwater homeowners and distressed borrowers, along with $875 million in other claims.
“This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail,” Acting Associate Attorney General Stuart Delery said in a statement.
This AP story, filed from Washington, was picked up by the finance.yahoo.com Internet site late Monday afternoon EDT—and West Virginia reader Elliot Simon, who sent me this news item, called the fine a “licensing fee“—and that’s precisely what it is. Another link to this AP story is here.
Don’t Blame Panama. Tax Evasion Is a Global Problem
Despite their name, the Panama Papers are not mainly about Panama. They are not even primarily concerned with Panamanian companies. The more than 11 million documents, illegally hacked and released last week relating to previously undisclosed “offshore” corporations, is roiling the world with revelations of the vulnerability for rampant abuse of legal financial structures by the wealthy.
They are unfairly called the Panama Papers because this particular trove of documents came from a single law firm based in Panama. But the problem of tax evasion is a global one.
Panama does not deserve to be singled out on an issue that plagues many countries. But we are willing to accept the responsibility for fixing it, in part because greater transparency is ultimately a continuation of reforms we have recently undertaken. The world must tackle this problem collectively and with urgency, and Panama stands ready to lead the way.
The scope of the information is breathtaking: The files include information on more than 14,000 banks, law firms, corporate incorporators and other middlemen from more than 100 countries, which is just a small part of a worldwide industry that harbors trillions of dollars.
This op-ed piece surfaced on The New York Times website yesterdays sometime—and it’s the first contribution of many from Roy Stephens. Another link to this opinion piece is here.
Justin Trudeau could face his worst nightmare in Ted Cruz
Prime Minister Justin Trudeau may soon need to contemplate the possibility that, when he next meets the president of the United States, he will be facing Ted Cruz. With Cruz’s victory this week in Wisconsin, Donald Trump is all but certain to fall short of the 1,237 delegates he needs to secure the Republican nomination for president prior to the party’s convention in Cleveland in July.
If Trump fails to win a first-ballot victory, he will then almost surely lose many of the delegates involuntarily bound to him. The once seemingly invincible Trump has been faltering, losing all of the recent state contests for delegates and, for the first time in the weekly Reuters tracking poll, is losing nationally to Cruz. If delegates are freed up, Cruz — now a mere 225 delegates behind Trump — then becomes the odds-on favourite to scoop up the remaining delegates he needs to represent the Republicans. And with Cruz and Hillary Clinton (the likely Democratic nominee) statistically tied, come November of this year Trudeau could well be confronting his worst nightmare in a President-elect Cruz.
In contrast to his huggy romance with political soul mate Barack Obama, Trudeau would be matched up against a hard-edged ideological opposite his own age but with a history of jaw-dropping achievements. A legal scholar who was not only a repeat national debating champion representing Harvard and Princeton, but who also won an astonishing five times in cases argued before the Supreme Court of the United States.
In one area — the Keystone XL pipeline — Trudeau need not fear a loss of face. Although he failed to press for Keystone’s acceptance in Washington during his official dinner last month, Trudeau did publicly express his disappointment at Obama’s decision to reject Keystone last November. Cruz’s decision to approve Keystone would be an important area of agreement. But that’s pretty much where it would end.
This very interesting commentary showed up on the financialpost.com Internet site last Friday—and I thank Roy Stephens for sending it our way on Saturday. Another link to this article is here.
As Britain Contemplates Exit, Boris Johnson Prepares His Entrance
Boris Johnson, the mayor of London, was in full spat mode with the television journalist Andrew Marr on a prominent Sunday news program.
Mr. Marr wanted to move on from an earlier question. Mr. Johnson, in a jolly, blustery mood, said: “Well, I’m going to tell you what I’m going to cover.” Mr. Marr responded: “It’s not ‘The Boris Johnson Show.’ It’s ‘The Andrew Marr Show.’ I get to ask the questions.”
“All right, you have sovereignty,” Mr. Johnson conceded. “Unlike the U.K.”
Mr. Johnson, who made an early reputation as a journalist mocking the European Union, has shaken up the debate over British membership in the bloc — and jolted British politics more generally — by spurning Prime Minister David Cameron, a fellow Conservative, and backing the campaign to leave the European Union.
This story appeared on The New York Times website on Saturday sometime—and it’s the second contribution of the day from Roy Stephens. Another link to this news item is here.
Nuit debout protesters occupy French cities in revolutionary call for change
As night fell over Paris, thousands of people sat cross-legged in the vast square at Place de la République, taking turns to pass round a microphone and denounce everything from the dominance of Google to tax evasion or inequality on housing estates.
The debating continued into the early hours of the morning, with soup and sandwiches on hand in the canteen tent and a protest choir singing revolutionary songs. A handful of protesters in tents then bedded down to “occupy” the square for the night before being asked to move on by police just before dawn. But the next morning they returned to set up their protest camp again.
For more than a week, these vast nocturnal protest gatherings – from parents with babies to students, workers, artists and pensioners – have spread across France, rising in number, and are beginning to panic the government.
Called Nuit debout, which loosely means “rise up at night”, the protest movement is increasingly being likened to the Occupy initiative that mobilised hundreds of thousands of people in 2011 or Spain’s Indignados.
This very interesting news item was posted on The Guardian‘s website late on Friday afternoon BST—and it’s another offering from Roy Stephens. Another link to this story is here. Roy sent around another article on this headlined “Up All Night” Protests Spread to French Prime Minister’s House, Teargas Used; Comparisons to U.S. This story appeared on the mishtalk.com Internet site on Monday sometime.
Average German Bond Yield Crashes to Zero For First Time Ever
“You Get Nothing” is the message for German bond coupon-clippers as for the first time in history, the average yield across the entire bond complex tumbles to zero.
With the yield curve below zero to 9 years, and 1 month yields at -65bps, it is no surprise that asset managers are extending duration…
This 2-chart Zero Hedge article was posted on their Internet site at 7:40 p.m. EDT yesterday evening—and I thank Richard Saler for sliding it into my into my in-box soon after it was posted over there. The first chart is worth a quick look.
Italy Seeks “Last Resort” Bailout Fund to “Ring-fence” Troubled Banks, Meeting Monday
Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan.
Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks, Monte dei Paschi di Siena, from contagion, according to people involved in the talks.
Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. Lenders’ profitability has been hit by a crippling three-year recession.
The plan being worked on, which could be officially announced as soon as Monday evening, recalls the Sareb bad bank created in 2012 by the Spanish government to deal with financial crisis in its smaller cajas banks, say people involved.
This Zero Hedge new item, via the mishtalk.com Internet site, showed up on the ZH website at 5:10 p.m. EDT on Sunday afternoon—and both ‘David in California’—and Roy Stephens contributed to this story. Another link to it is here.
Bank Bail-Ins Begin as E.U. Bank “Bailed In” in Austria
Bank bail ins in the E.U. are here after Austria’s financial markets regulator FMA imposed a hefty haircut on creditors in an Austrian bank. Creditors in the bank Heta Asset Resolution will receive less than half of their money back according to the country’s financial regulator, the FMA.
Senior bondholders in the so called “bad bank” could expect to receive around €0.46 for each euro which would be paid from the realisation of assets by 2020, according to the FMA statement. It said that this had been calculated using “very conservative” assumptions.
“This package of measures also ensures the equal treatment of creditors. Orderly resolution is more advantageous than insolvency proceedings,” the FMA said.
Bond maturities, however, will be extended to 31 December 2023 as “all currently outstanding legal disputes will realistically only be concluded by the end of 2023”. “Only at that point will it be possible to finally distribute the assets and to liquidate the company,” the regulator said.
This story put in an appearance on the goldcore.com Internet site yesterday—and I found it all by myself! Another link to this news item is here—and it’s certainly worth reading.
Ukraine PM resigns two months after narrowly dodging no-confidence vote
After weeks of political crisis in Kiev, Ukrainian Prime Minister Arseny Yatsenyuk has announced his long-expected resignation.
Yatsenyuk made his decision public on Sunday in a televised address, saying he would formally submit his resignation to parliament on Tuesday.
The prime minister has been a highly unpopular figure in Ukraine with his approval ratings languishing in the single-digit range. The public blames him for a ruined economy and the failure to implement reforms he had promised when taking office following the February 2014 coup.
This story put in an appearance on the Russia Today website at 1:23 p.m. Moscow time on their Sunday afternoon, which was 5:23 a.m. in Washington—EDT plus 8 hours. I thank Brad Robertson for finding it for us. Another link to this news item is here.
Goodbye Rupee? Iran Tells India to Pay for Oil in Euro
Iran has stopped selling oil to India for rupees and now demands payment in euros only, Shana news agency citied Iran’s Oil Minister Bijan Zangeneh as saying on Saturday.
“From now on, Iran will trade oil only in euros,” Bijan Zanganeh told reports on the sidelines of Iran-India business conference at Tehran Chamber of Commerce.
Earlier, Tehran and New Delhi inked new contracts for additional Iranian oil exports to India with Minister Zanganeh saying that Tehran was ready to increase oil exports to India.
“We hope that India’s imports of oil from Iran will increase now that the sanctions have been removed,” Bijan Zanganeh told his visiting Indian counterpart Dharmendra Pradhan in Tehran.
This article appeared on the sputniknews.com website at 5:54 p.m. Moscow time on their Sunday afternoon, which was 9:54 a.m. in Washington—EDT plus 8 hours. I thank Brad Robertson for his final contribution of the day—and another link to this article is here.
Shanghai wealth management firm comes crashing to earth as executives arrested
Zhongjin Capital Management made a splash in the past couple of years in Shanghai. The wealth management firm’s imposing branch office on Shanghai’s historic Bund pulled in many eager investors seeking the double-digit returns it promised on short-term financing products. It had a big profile, sponsoring popular Shanghai TV dating program “Saturday Date” and signed up domestic billiards star Pan Xiaoting as a spokesperson.
But this week, the image of riches and success that it had cultivated came crashing down. Police said they arrested 21 executives linked to Zhongjin Capital on April 5 on suspicion of “illegal fundraising,” a loosely defined term applied to irregular behavior in China’s energetic but opaque shadow banking sector.
The only person named by Shanghai police so far has been top executive Xu Qin, who local media said had been arrested at the Shanghai airport on his way to get married in the Vatican.
This Reuters article, filed from Shanghai, was picked up by the businessinsider.com Internet site—and it’s a story that I found in yesterday’s edition of the King Report. Another link to this news item is here.
The New Middle Kingdom of Concrete: The Red Depression Ahead — David Stockman
No wonder the Red Ponzi consumed more cement during three years (2011-2013) than did the US during the entire twentieth century. Enabled by an endless $30 trillion flow of credit from its state controlled banking apparatus and its shadow banking affiliates, China went berserk building factories, warehouses, ports, office towers, malls, apartments, roads, airports, train stations, high speed railways, stadiums, monumental public buildings and much more.
If you want an analogy, 6.6 gigatons of cement is 14.5 trillion pounds. The Hoover dam used about 1.8 billion pounds of cement. So in 3 years China consumed enough cement to build the Hoover dam 8,000 times over—-160 of them for every state in the union!
Having spent the last ten days in China, I can well and truly say that the Middle Kingdom is back. But its leitmotif is the very opposite to the splendor of the Forbidden City.
The Middle Kingdom has been reborn in towers of preformed concrete. They rise in their tens of thousands in every direction on the horizon. They are connected with ribbons of highways which are scalloped and molded to wind through the endless forest of concrete verticals. Some of them are occupied. A lot, not.
Wow! The numbers simply boggle the mind. This longish, but must read commentary by David was posted on his Internet site yesterday sometime—and I thank Roy Stephens for bringing it to my attention, and now to yours. Another link to this must read article is here.
Beijing “must devalue yuan by 15pc” to avert crisis — Ambrose Evans-Pritchard
A top adviser to the Chinese government has warned that Beijing risks a currency blow-up akin to Britain’s traumatic ordeal in 1992, if it continues trying to defend its exchange rate peg amid a deepening deflation crisis.
Yu Hongding, a director of the Chinese Academy of Social Sciences, said China is caught in two concurrent “deflationary spirals” that are feeding on the other. A major devaluation and a blast of well-targeted fiscal stimulus will be needed to break out of the trap.
“They must stop intervening on the exchange market. China needs to devalue by 15pc. They are creating conditions for speculators,” he told the Daily Telegraph, speaking at the Ambrosetti forum of global policymakers on Lake Como.
Prof Yu, a former rate-setter for the central bank (PBOC) and currently a member of the national planning committee, said the government is making a serious mistake in trying to defend the yuan by burning through foreign exchange reserves, already down to $3.2 trillion from $4 trillion in mid-2014.
This story from The Telegraph arrived in my in-box [courtesy of Roy Stephens] at 9:27 a.m. Denver time on Sunday morning—and I read it as soon as it arrived. The URL hasn’t changed, but everything else has—the headline, the story—and the author. The headline used to read “China guru warns of ‘ERM-style’ currency crisis as deflation persists“—and the author is now Ambrose. I can’t remember who it was originally, but I don’t think it was him. It’s now datelined Monday, April 11 at 7:49 a.m. BST, which was 12:49 a.m. Denver time in the wee hours of Monday morning—BST plus 7 hours. Another link to this ‘new and improved?’ article is here.
BoJ Backfire Hangs Over Central Bankers as IMF Confab Starts
The world’s central bankers, already hitting limits of their effectiveness on growth and inflation, are now contending with another risk: that additional stimulus could produce lackluster results and undercut investor confidence.
The Bank of Japan’s decision in January to take interest rates negative has sent bond yields tumbling, while doing little to curb a surging yen that’s squeezing the world’s third-biggest economy just when it needs a weaker currency. That’s put even more monetary and fiscal stimulus on the agenda at a time when Japanese households and companies are increasingly doubting the program.
“Japan is bringing bad news to the world,” said Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG and a former BOJ official. “It’s demonstrating that massive monetary easing doesn’t work for everyone. Any additional stimulus may invite criticism from other central banks.”
The decline in credibility in Japan is a warning sign for central bankers and finance ministers who gather this week in Washington for spring meetings of the International Monetary Fund and World Bank, as well as a Group of 20 session.
This Bloomberg article appeared on their website at 9:01 a.m. MDT on Sunday morning—and was updated about 23 hours later. It’s worth reading—and I thank Roy Stephens for sharing it with us. It’s his last offering of the day as well—and I thank him for that. Another link to this story is here.
Olivier Blanchard eyes ugly ‘end game’ for Japan on debt spiral
Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned.
Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiralling upwards on an unsustainable trajectory.
“To our surprise, Japanese retirees have been willing to hold government debt at zero rates, but the marginal investor will soon not be a Japanese retiree,” he said.
Prof Blanchard said the Japanese treasury will have to tap foreign funds to plug the gap and this will prove far more costly, threatening to bring the long-feared funding crisis to a head.
Why anyone would hold the yen or a Japanese bond in their portfolio for themselves or their clients has some sort of death wish, as both Japan, along with their banking system, are insolvent. This is another Ambrose Evans-Pritchard offering—and this one appeared on the telegraph.co.uk Internet site at 5:59 p.m. BST on their Monday evening, which was 12:59 p.m. EDT in New York. It’s the final offering of the day from Richard Saler—and I thank him on your behalf. Another link to this story is here.
Triple Digit Silver in Two Years: Keith Neumeyer, CEO — First Majestic Silver
Keith Neumeyer, the outspoken CEO of First Majestic Silver and Chairman of First Mining Finance helps us dissect the current state of the global silver market. Keith notes that the current silver to gold ratio of 80 to 1 is absolutely unsustainable in a world where physical silver is being mined globally at a rate of 10 ounces of silver for every ONE ounce of gold that’s mined..
“How can you possibly trade at 80 to 1 and be mining at 10 to 1? That relationship cannot last,” Neumeyer says. “I think we’ll see triple digit silver for sure over the next couple of years.”
This 24-minute audio interview was done with Keith while he was in Hong Kong speaking at the same conference that GATA secretary/treasurer was. The audio quality is far from ideal, so I hope you can pick out most of what he has to say on this youtube.com video clip. I thank ‘Charley’ for bringing it to our attention yesterday.
Now, India’s very own gold coins
Indian Overseas Bank kicked off sale of Indian gold coins on Friday in its branches in Mumbai on the occasion of Gudi Padwa. The RBI had given the nod to banks in January to sell these coins.
These coins, minted in India, will have the national emblem of Ashok Chakra engraved on one side and the face of Mahatma Gandhi on the other and will join the global basket of national coins, including the American eagle coins (of the US), Panda coins (of China) and Maple Leaf coins (of Canada).
With a third of the gold demand in India (200-250 tonnes a year) coming from investors who buy coins/bars of gold, this new coin should see strong demand.
This very interesting gold-related news item showed up on thehindubusinessline.com Internet site on Sunday sometime—and I found it embedded in a GATA release.
The PHOTOS and the FUNNIES
The first photo is of a male horned lark —and even though they’re supposed to inhabit these regions of the world, I’ve never seen one. The second is an incredible photo of a grey-headed flying fox. It’s an Australian megabat with a wingspan of about a meter.
The WRAP
The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary. — H. L. Mencken
Monday was just another day where the Managed Money traders poured in on the long side—and JPMorgan et al went short against all comers. Of course, that’s the way it appeared on the surface, but Ted and I were discussing the possibility that JPMorgan was covering silver short positions on that rally—and as I mentioned last week, Ted’s “double-cross” by JPM against the other short-holders in silver is still in play.
Whatever went on under the hood yesterday, won’t be posted in the public domain until this Friday’s Commitment of Traders Report—and I’ll be more than interested in what’s in it.
Here are the 6-month charts for all four precious metals—and as you can tell, yesterday’s price action lifted all four precious metals above their respective 50-day moving averages by decent amounts. In the case of silver, it was miles higher.
Once again it was a big day for the precious metal equities—and the momentum is really starting to build, as volumes have been rather impressive in Nick’s Intraday Silver Sentiment Index—and in the gold stocks as well. The HUI is now in overbought territory, but gold the metal is nowhere near that mark. Ditto for silver.
Everywhere Ted and I look we see signs that this price management scheme is about to come to a rather sudden end, but I’m certainly not going to predict the timing based on the treachery of the powers-that-be when they show up with their HFT traders and their algorithms.
As you may have noticed, I haven’t had any quotes from Ted for the last three or four columns—and the simple reason is that subscribers to my newsletter get to look over Ted’s shoulder for a fraction of the cost that he charges for his newsletter—and some of his subscribers who subscribe to both our publications, are starting to complain.
To the exclusion of all others, I’ve always considered Ted’s work to be definitive in the price-management scheme in the precious metals—particularly in silver—and the fact that you could read it for free in my column was something that I knew was going to come to an end at some point.
I’m working on a compromise with Ted, but I understand his position exactly—and I’ll keep you posted on developments.
I put some more money into the precious metal equity market yesterday—and that’s on top of my current ‘all in’ position. The money went into various junior silver producers, all of which I consider to be ten baggers minimum.
And as I type this paragraph, the London open is less than five minutes away—and I see that the gold price got sold down a few dollars in Far East trading on their Tuesday morning, but has gained back much of that loss in the last hour or so—and is currently down less than a buck. Silver got sold off more than a dime, but has now rallied back to unchanged. The same price trend was evident in platinum—and it’s now up 2 bucks on the day. Palladium chopped sideways until 10 a.m. HKT—and has chopped higher since—and is up 6 dollars at the moment.
Net HFT gold volume is just over 23,000 contracts—and that number in silver is pretty chunky at 9,000 contracts, with about 10 percent of gross volume being roll-overs out of the May contract. The dollar index has been chopping sideways all night long—and is currently down 3 basis points—and a hair below the 94.00 mark as London opens.
Today, at the close of COMEX trading, is the cut-off for this Friday’s Commitment of Traders Report—and unless the legerdemain that Ted and I discussed above actually occurred, I’m not looking forward to it at all. Of course there’s still one more trading day left in this reporting week—today—so I’ll reserve final judgement until my Wednesday missive.
And as I post today’s column on the website at 4:10 a.m. EDT, I see that gold rallied a bit at the London open, but got capped right away, but is now moving higher again—and it’s up about two dollars at the moment. It was the same price pattern in silver—and it’s up 7 cents. Ditto for platinum—and its off its London open high as well, but has now rallied anew—and is up 6 bucks. The same with palladium—and it’s up 8 dollars the ounce.
Net HFT volume in gold is now up to just under 30,000 contracts—and that number in silver is 10,900 contracts—and the roll-over activity still pretty light. The dollar index took a bit of a header going into the London open. It got as low as 93.82 before being rescued—and is currently down 10 basis points.
As for what may happen for the remainder of the Tuesday session, I haven’t a clue—especially after yesterday’s price/volume action. I’d like to see another nice up day like we had on Monday, but I’m not prepared to bet one red cent on that possibility.
These are interesting times—and I await what comes out of the IMF meeting in Washington this week with great interest.
That’s all I have for today—and I’ll see you here tomorrow.
Ed
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