02 July 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price chopped about ten dollars higher in Far East trading on their Friday — and continued to creep up in fits and starts through London and COMEX trading in New York. Then at 3 p.m. in the thinly-traded after-hours on a Friday going into the July 4th long weekend, the gold price popped another few dollars. That tiny rally was capped at 4:00 p.m. and sold off a hair into the close.
The low and high ticks in gold were reported by the CME Group as $1,323.10 and $1,347.00 in the August contract.
Gold was closed in New York at $1,341.90 spot, up $20.20 from Thursday. Net volume, which had been very heavy in Far East and early London trading, turned out to be heavy all day long, as it checked in at 186,000 contracts.
After trading flat until 9 a.m. HKT on their Friday morning, the silver price rallied until shortly before noon over there — and then traded more or less flat until 9 a.m. in New York. The rally really got serious between 3 and 3:25 p.m., but got capped before it could infringe on the $20 spot price mark. From there it was sold down a bit into the 5 p.m. close of after-hours trading.
The low and high ticks in silver were reported as $18.795 and $19.98 in the September contract.
Silver finished the Friday session in New York at $19.755 spot, up $1.06 from Thursday’s close. Net volume was very heavy at 82,500 contracts.
Platinum traded flat until just about 9 a.m. HKT — and then rallied until shortly before noon over there, in a pattern very similar to gold’s. The price chopped more or less sideways until 1 p.m. Zurich time, which was 7 a.m. EDT, then away it went to the upside. The high tick came around 3:15 p.m. EDT in after-hours trading in New York — and it moved sideways in price from there. Platinum finished the Friday session at $1,057 spot, up a chunky 36 dollars from its close on Thursday.
The palladium price didn’t do much until about 2 p.m. HKT –and then was sold down 10 dollars by the Zurich open. After doing not much of anything for the next four hours, the price began to rally at the same time as platinum, which was 1 p.m. Zurich time — 7 a.m. in New York. The rally, such as it was, topped out at the $605 spot mark at 1 p.m. EDT — and it traded flat from there. Palladium finished the Friday session at $604 spot, up 5 bucks on the day.
The dollar index closed very late on Thursday afternoon in New York at 95.96 — and hit the 95.80 mark a minute or so after 9 a.m. HKT on their Friday morning. From there it rallied to its 96.08 high tick — and that event occurred around 2:15 p.m. HKT. The index headed south from that point, with the 95.41 low tick coming around 9:30 a.m. in New York. An hour later it was back to the 95.77 mark before chopping slightly lower as the Friday session wound down. The dollar index finished the Friday session at 95.63 — down 33 basis points from Thursday’s close.
And here’s the 6-month U.S. dollar chart — and feel free to read into it whatever you wish because, as I said yesterday, this is a made-up number just like every other financial indicator you see out there.
The gold stocks gapped up 3 percent at the open — and then crawled about a percent higher as the Friday trading session unfolded. It then rallied strongly starting around 2:50 p.m. EDT when gold rallied — and after 3:10 p.m. the shares traded flat into the close, as the HUI finished the day up 5.02 percent.
The silver equities gapped up as well, hitting their morning highs at 10:30 a.m. in New York trading — and then didn’t do a lot until about 2:15 p.m. when the silver rally began in the after-hours trading session. The rally was done about an hour later — and they didn’t do much after that. Nick Laird’s Intraday Silver Sentiment Index closed higher by a very decent 6.33 percent. Click to enlarge if necessary.
And here are the three new charts from Nick that tell all. The first one shows the changes in gold, silver, platinum and palladium for the past week, in both percent and dollar and cents terms — and as of Friday’s closes in New York — along with the changes in the HUI and Silver Sentiment/Silver 7 Index. The Click to Enlarge feature really helps on all three charts.
This second chart shows the changes for the month of June, as of the close of trading on Thursday.
And here’s the year-to-date chart as of the close of trading on Friday, July 1.
I’m impressed all to hell — and let’s hope it lasts.
The CME Daily Delivery Report showed that 1,019 gold and 326 silver contracts were posted for delivery within the COMEX-approved depositories on Wednesday. In gold the big short/issuer was HSBC USA once again, with 959 contracts. ABN Amro was the ‘also ran’ with 55 contracts. Once again the big surprise was that JPMorgan stopped 618 contracts for its client account and nothing for itself. Ted was wondering out loud on the phone yesterday who this ‘client’ might be. In second and third place was Canada’s Scotiabank and ABN Amro with 160 and 116 contracts respectively. In silver, their were 7 short/issuers, with the biggest one being SG Americas with 227 contracts out of its client account. The three largest long/stoppers were HSBC USA with 173 for its own account; JPMorgan was second with 81 for its own account as well; and ABN Amro was in third place with 53 for its client account. Yesterday’s Issuers and Stoppers Report is worth a look if you have the interest — and the link is here.
The CME Preliminary Report for the Friday trading session showed that gold open interest in July fell by 2,920 contracts. Since 3,000 were posted for delivery on Tuesday, another 3,000-2,920=80 contracts were added to the July delivery month. In silver, o.i. declined by 514 contracts. Thursday’s Daily Delivery report showed that only 122 silver contracts were posted for delivery on Tuesday, so it appears that 514-122=392 contracts held by the short/issuers were let off the hook by the long/stoppers because they didn’t have the physical metal to deliver — and the long/stoppers didn’t want to force them to come up with it, because it probably wasn’t available in the open market at anything near the current spot price. If it was available at all, that is.
So far this delivery month looks like a mad dash to scoop up all the available physical gold and silver by the long/stoppers.
There was a decent deposit in GLD yesterday, as an authorized participant added 124,129 troy ounces. And as of 10:17 p.m. EDT last night, there were no changes in SLV. It’s a very safe bet at this point that SLV is owed a lot of silver — and it’s equally obvious that the authorized participants are shorting SLV shares in lieu of depositing physical metal, which is just as obvious that they don’t have, and/or can’t buy without driving the price to the moon and the stars.
I would think that Ted Butler will have something to say about ‘all of the above’ in his weekly commentary this afternoon.
There was no sales report from the U.S. Mint yesterday.
It was another big day in gold over at the COMEX-approved depositories as 107,705 troy ounces were received on Thursday — and 32,135 troy ounces were shipped out the door. Of that amount, there was 91,630 troy ounces deposited in HSBC USA, which was their second big addition in as many days. One would assume that the 3,000 gold contracts that they were the short/issuers on, on Thursday, is coming from these two deposits. The balance of the ‘in’ amount — and all of the ‘out’ amount came from Canada’s Scotiabank. The other thing worth noting about gold is that there was 571,570 troy ounces transferred from the Registered to the Eligible category from three different depositories. Does it mean anything, you ask? It might, but it won’t be known until after the fact, because all the transfers from one category to another have meant absolutely nothing to date, despite the cheer-leading about it from the nut-ball lunatic fringe. A link to this action is here.
In silver, there was 255,548 troy ounces deposited — and 682,966 troy ounces were shipped out the door. The ‘in’ activity was at Brink’s, Inc. — and the ‘out’ activity was at HSBC USA. There was also a 1,090,266 troy ounces transferred from Eligible to Registered at Brink’s, Inc. as well. JPMorgan wasn’t involved in any of this movement. The link to that activity is here.
There was no activity over at the COMEX-approved gold kilobar depositories in Hong Kong on Thursday.
The Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, showed new record Commercial net short positions in both gold and silver. The deterioration wasn’t nearly bad in gold as both Ted and I were expecting — and since I had no real opinion on silver, the number didn’t surprise me, although Ted was expecting a bit more deterioration — and that’s what happened.
In silver, the Commercial net short position increased by 5,265 contracts. They accomplished this by purchasing 6,100 short contracts, plus the added 835 contracts to their long position as well. The difference between those two number is the net change for the week. The new record high Commercial net short position is 95,201 COMEX contracts, or 476 million troy ounces of paper silver. That works out to 207 days of world silver production.
Ted said the the Big 4 traders added about 1,800 contracts to their short position — and Ted pegs JPMorgan’s short position around 25,000 contracts, but doesn’t want to be held to that number until he sees what next Friday’s Bank Participation Report shows. The ‘5 through 8’ big traders added about 300 contracts to their short positions — and Ted’s raptors, the commercial traders other than the Big 8, reduced their rapidly dwindling long position by about 3,200 contracts.
Under the hood in the Disaggregated COT Report, the Managed Money traders only accounted for 2,084 contracts of the change in the Commercial net short position. The rest of the changed came from the ‘Other Reportables’ and Nonreportable/small trader category.
Here’s the 3-year COT chart for silver courtesy of Nick Laird as usual. As you can see from the blue bars, we’re at a record high net short position. Click to Enlarge.
In gold, the Commercial net short position increased by ‘only’ 14,184 COMEX contracts, or 1.42 million troy ounces of paper gold. They got to that number by increasing their short position [courtesy of the Managed Money traders] by 21,571 contracts, plus they bought 7,387 long contracts. The difference between those two numbers is the weekly change in the commercial net short position. The commercial net short position in gold is also at another new record high — and that number is 32.63 million troy ounces.
Like in silver, it was “all for one, and one for all” in gold, as Ted said that the Big 4 added 9,800 contracts to their already gargantuan short position, the ‘5 through 8’ added about 3,900 short contracts — and Ted’s raptors, the commercial traders other than the Big 8, added only 500 contracts to their short positions.
Under the hood in the Disaggregated COT Report, it was mostly a Managed Money affairs as they increased their long positions by 10,959 contracts, but they also added 317 contracts to their short position, for a net change of 10,642 contracts. The rest of the changes came from the ‘Other Reportables’ — but especially the Nonreportable/small trader category.
Here’s the 3-year COT chart for gold — and as you can tell from the blue bars, it’s another week for the record books. Click to Enlarge.
But it’s what’s happened since Tuesday’s cut-off that is now in the crosshairs. I’m guessing that with the huge associated volumes and the big price increases, that this will translate into further deterioration in the Commercial net short positions in both gold and silver in next week’s report. Ted’s not quite so sure about that. Because of the July 4th holiday in the U.S. on Monday, there is only one more trading day before the Tuesday cut-off for that report. So we wait.
One thing that Ted did point out on the phone yesterday was the fact that Big 8 have never been this deep in the hole from a financial perspective — and he speculated that some of the smaller commercial traders in that category have to be hurting. And that desperate financial position would apply equally to any other short holder in silver or gold, commercial trader or otherwise.
Here’s Nick Laird’s “Days to Cover” chart updated with yesterday’s COT data for positions held at the close of COMEX trading on Tuesday. 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. Click to enlarge.
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.’ For the current reporting week, the Big 4 are short 159 days [more than 5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 72 days of world silver production—for a total of 231 days, which is almost 8 months of world silver production, or 531 million troy ounces of paper silver held short by the Big 8.
And it should be pointed out here that in the COT Report above, the Commercial net short position in silver is 476 million troy ounces. So the Big 8 hold a short position larger than the net position—and by a monstrous amount—55 million troy ounces!!! That’s how grotesque, twisted, obscene—and dangerous—this COT situation in silver has become—and gold’s not far behind, as is platinum.
And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 114 days of world silver production between the two of them—and that 114 days represents around 72 percent [almost three quarters] of the length of the red bar in silver in the above chart. The other two traders in the Big 4 category are short, on average, about 23 days of world silver production apiece.
Despite the increase in JPMorgan’s short position to 25,000 contracts in this week’s report, I’d still bet serious money that Canada’s Scotiabank is the King Silver Short by a decent amount. My estimate is about 5,000 contracts more.
The Big 8 traders in gold are short 45.9 percent of the entire COMEX futures market in gold, plus they are short 46.2 percent of the entire COMEX futures market in silver—and these positions are held against thousands of other traders in the COMEX futures market in these two precious metals. Ted pointed out that if you subtract out the market-neutral spread trades in both these precious metals, the Big 8 are actually short a hair more than 50 percent of the total open interest in both metals.
Here’s a chart that Nick Laird passed around just after midnight Denver time. It’s the 5-year chart of all the known gold holdings in the world — and as you can tell, it’s had quite a turnaround since the start of 2016. Click to Enlarge.
I have a decent number of stories today, including a handful of articles that I’ve been saving for today’s column for length and content reasons. I hope you can find the time to read them over the weekend.
CRITICAL READS
Hedge Funds Set for Worst First Half Since ’11 on Turmoil
Funds lost 1.1 percent this year through June 29, according to Hedge Fund Research Inc.’s Global Hedge Fund Index, on pace for the worst first-half performance since 2011, when they slid 2.1 percent. Firms will update investors on their June returns starting Friday.
Bill Ackman is among the losers, extending his slump after a dismal 2015. The publicly traded security of his activist fund dropped 21 percent through June 21, according to the Pershing Square Holdings Ltd. website. Lansdowne Partners, one of Europe’s largest hedge funds, fell about 14 percent through June 24 in its main pool, while its Developed Markets Strategic Investment Fund declined almost 16 percent, a client update shows.
Managers started on a bad footing as the yuan weakened sharply in January, leading to a 2.8 percent decline for the industry. Multimanager funds, some of which held similar positions, were hit hard in February as their tight risk controls forced them to sell securities at the same time, further depressing prices. Some of the most prominent managers were hurt in mid-March by their holdings in Valeant Pharmaceuticals International Inc. when the stock plunged anew.
Around the same time, manager Crispin Odey called markets a “battlefield” as his portfolio was rising and falling by more than 5 percent a day. In an April letter to clients, Dan Loeb said the business was in the first stages of a washout after one of the most “catastrophic” performances he’s seen since he started his hedge fund in the 1990s. Funds including Martin Taylor and Nick Barnes’s Nevsky Capital and Barry Wittlin’s WCG Management liquidated, while Brevan Howard Asset Management and Tudor Investment Corp. were hit with investor withdrawals.
This Bloomberg news item appeared on their Internet site at 4:52 p.m. Denver time on Thursday afternoon — and was updated about 16 hours later. I thank West Virginia reader Elliot Simon for finding it for us — and another link to this story is here.
World Biggest Pension Fund Seen Losing $43 Billion Last Quarter
Losses for the world’s biggest pension fund likely deepened in the quarter just ended, extending what may be its worst annual loss since the global financial crisis, brokerage estimates showed.
Japan’s Government Pension Investment Fund will probably post a ¥4.4 trillion ($43 billion) loss in the April-June quarter, according to calculations by Yohei Iwao, executive director of the institutional equities division at Morgan Stanley MUFG Securities Co. That follows what he estimates was a ¥5 trillion decline in the fiscal year ended March 31, which would amount to the worst performance since fiscal 2009 when the fund lost 9.7 trillion yen.
The calculations come amid criticism the government has put the public’s pension money at risk after the fund known as the whale for the size of its assets increased its equity allocations in 2014. That’s prompted the main opposition party to pledge GPIF will move investments back into safer ones in its manifesto ahead of elections this month.
“Looks like the scrutiny on GPIF will continue,” Morgan Stanley MUFG’s Iwao said.
This is the second Bloomberg story in a row — and this one showed up on their website at 3:20 a.m. MDT on Friday morning — and is courtesy of Elliot Simon as well. Another link to this news item is here.
Dollar’s share of global reserves slips, euro’s rises, in first quarter, IMF says
The U.S. dollar’s share of international currency reserves slipped in the first three months of the year as China’s economic slowdown and falling global stock markets prompted investors, including central bankers, to seek relief in other safe havens such as the yen.
The greenback’s share of allocated reserved dipped to 63.6 percent in the first quarter, equivalent to $4.57 trillion, from 64.3 percent in the last quarter of 2015, data from the International Monetary Fund showed on Thursday.
Not coincidentally, the dollar fell 4 percent against a basket of currencies .DXY in the first three months of 2016.
“There was a modest shift away from U.S. assets into one perceived as safer amid a heightened level of risk aversion,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
This Reuters news item was posted on their Internet site at 12:56 p.m. EDT on Thursday night — and I found it embedded in a GATA release very early on Friday morning MDT. Another link to this article is here.
Kyle Bass Shares the “Stunning” Thing a Central Banker Once Told Him
If you ever wanted to get a look inside the mind of Kyle Bass, founder and CIO of Hayman Capital Management, here is your chance. In a wide-ranging discussion with Grant Williams, author of Things that Make You Go Hmm and co-founder of Real Vision TV, he shared his thoughts on position-sizing, China, the appeal of holding gold, central banking, interest rates – and much, much more.
Predictably, the one topic that got the most attention was China, where as widely known Bass has made his next “career” wager, expecting a substantial devaluation of the currency, a process which had stalled out in recent months but has once again picked up speed.
Looking at recent data, and specifically something we pointed out two weeks ago, Bass said the country’s $3 trillion corporate bond market is “freezing up” amid rising defaults and canceled debt sales. “We’re starting to see the beginning of the Chinese machine literally break down.”
Bass reiterated that China’s lending binge in recent years is unsustainable and it is only a matter of time before this bubble, bigger than the US bubble of 2005/2006 which brought Bass fame and fortune, bursts. He expects bank losses of $3 trillion to trigger a bailout, with the central bank slashing reserve requirements, cutting the deposit rate to zero and expanding its balance sheet – all of which will weigh on the yuan, and lead to a dramatic devaluation.
This Zero Hedge piece is an executive summary of the video interview between Grant Williams and Kyle Bass — and it’s certainly worth reading/watching. It was posted on the ZH website at 6:28 p.m. EDT last night — and the first person through the door with it was Jim Gullo. Another link to this long ZH commentary is here.
U.S. Treasury Yields Hit New Record Lows
Finally.
With bond yields across the rest of the developed world already making new record lows every day, only the US had so far refused to take out all time lows set back in 2012. That finally changed overnight when the 10Y Treasury dropped -9 bps to 1.3784%, while the 30Y declined by the same amount, sliding as low as to 2.1914%.
The underlying dynamic for the bond demand is the same as that which has pushed all other bond yields to record lows: yields are plunging to record-low levels from the U.S. and Japan to the U.K., as a result of expectations of more QE by central banks, something which was confirmed by the U.S. yesterday. “In the Tokyo market, there’s no interest rate, and there’s turmoil in the euro area,” said Yoshiyuki Suzuki, the head of fixed income in Tokyo at Fukoku Mutual Life Insurance Co., which has $63.4 billion in assets. “Money is escaping to the Treasury market.”
However, the specific catalyst which helped push both Bund and U.S. TSY yields higher, was a Reuters report that contrary to what Bloomberg reported yesterday, the ECB is not currently considering buying government debt out of proportion to euro zone countries’ shareholding in the bank and the hurdle for abandoning this capital key is high.
This Zero Hedge piece was posted on their website at 6:08 a.m. EDT on Friday morning — and I thank Richard Saler for sending it our way. Another link to this article is here.
This Is What Loretta Lynch Said When Cornered About Her Clinton Meeting
Having been forced to remove herself from the Hillary Clinton email probe, Loretta Lynch admitted that her shockingly ill-advised private meeting with Bill Clinton has “cast a shadow” over the investigations and questions on the meeting are “fair.” Her magnanimity was further expressed “I wouldn’t do it again,” while claiming that she had made the decision to ‘recuse’ herself days before her Bubba meeting.
Calls for Lynch to step aside — which had already been simmering for months — appeared primed to boil over Thursday following the attorney general’s unscheduled, private meeting with Clinton’s husband, former President Bill Clinton.
“Considering the ongoing criminal investigation of Hillary Clinton, this secret meeting between the Attorney General and Bill Clinton shows an astounding lack of judgment by Loretta Lynch,” House Majority Whip Steve Scalise (R-La.) said in a statement on Thursday calling for Lynch to recuse herself.
“Given the culture of unaccountability in the Obama Administration, it is unlikely that Attorney General Lynch will heed the growing calls for her resignation,” he said. “But at a minimum, Lynch should immediately recuse herself from the Justice Department’s criminal investigation into Hillary Clinton’s unlawful activities, and appoint a special prosecutor to handle the case, so the American people can know the truth about this secret meeting and finally rest assured the criminal investigation of Hillary Clinton is being conducted fully and impartially, without even the appearance of corruption.”
This Zero Hedge piece from 9:33 p.m. on Friday evening EDT comes courtesy of reader ‘aurora’ — and I thank him for passing it around yesterday. Another link to this news item is here.
He Was a Hacker for the NSA — and Was Willing to Talk. I Was Willing to Listen.
The message arrived at night and consisted of three words: “Good evening sir!”
The sender was a hacker who had written a series of provocative memos at the National Security Agency. His secret memos had explained — with an earthy use of slang and emojis that was unusual for an operative of the largest eavesdropping organization in the world — how the NSA breaks into the digital accounts of people who manage computer networks, and how it tries to unmask people who use Tor to browse the web anonymously. Outlining some of the NSA’s most sensitive activities, the memos were leaked by Edward Snowden, and I had written about a few of them for The Intercept.
There is no Miss Manners for exchanging pleasantries with a man the government has trained to be the digital equivalent of a Navy SEAL. Though I had initiated the contact, I was wary of how he might respond. The hacker had publicly expressed a visceral dislike for Snowden and had accused The Intercept of jeopardizing lives by publishing classified information. One of his memos outlined the ways the NSA reroutes (or “shapes”) the internet traffic of entire countries, and another memo was titled “I Hunt Sysadmins.” I felt sure he could hack anyone’s computer, including mine.
This essay was posted on theintercept.com website on Tuesday — and because of content and length reasons, had to wait for today’s column. It’s the first of many contributions from Roy Stephens — and another link to this long article is here.
British bonds go negative as Bank of England plans more money creation
The Bank of England is preparing to unleash another round of monetary stimulus as it battles to contain the economic fallout of The U.K.s decision to leave E.U.
In a stark warning to politicians, governor Mark Carney said a downturn was on its way and Britain was already suffering from “economic post-traumatic stress disorder.”
He said the central bank would take “whatever action is needed to support growth,” which probably included “some monetary policy easing” in the next few months, in an attempt to reassure the markets and the public.
But Mr. Carney also said that central bankers could do only a limited amount to mitigate the pain.
Sterling fell more than 1 percent to $1.32 as traders began preparing either for rates to be cut to historic lows, more quantitative easing, or a combination of both. The pound hit $1.50 just before the results of the referendum on EU membership last week. Equities rose, with the FTSE 100 index closing up 2.3 percent on the day.
This Financial Times news item showed up on their Internet site yesterday — and part of it is posted in the clear in this GATA release. Another link to this article is here.
As Britain Faces Uncertainty, Europeans Jockey for London’s Business
Within hours of Britain’s vote to leave the European Union, it started.
A Lithuanian lawmaker wrote to the chief executive of HSBC, trying to court the bank. A website promoting Frankfurt as an attractive location to invest went live. A Berlin start-up published an online how-to guide for anyone looking to move to the German capital.
Britons had only just begun to digest the results of their referendum when cities and companies across Europe leapt into action, all of them jockeying to lure businesses, entrepreneurs and investment from London, the region’s economic behemoth.
Much remains up in the air, as the country embarks on a years-long process to leave the 28-nation bloc. Britain hasn’t even officially filed for divorce, and there will be painful negotiations on matters including trade and whether people from European Union nations will have the freedom to work in Britain, as they do now.
Despite the high levels of uncertainty, others in Europe are, in effect, looking to gain from Britain’s pain.
This article put in an appearance on The New York Times website on Thursday sometime — and it comes courtesy of Patricia Caulfield. Another link to this news item is here.
Was Brexit fear a giant hoax or is this the calm before the next storm?
Let us separate matters. We face a political upheaval of the first order, but this is a necessary catharsis. Governments come and go. So do political parties.
We face a much more serious constitutional crisis. It is why some of us want a national unity government, keenly alert to the interests of Scotland and Northern Ireland.
As Professor Kevin O’Rourke from All Souls College argues here, most Leavers waltzed into Brexit with scarcely a moment’s thought for trauma inflicted on both sides of the Irish border. This carelessness must be rectified immediately.
What we do not yet face is a global financial crisis or a “Lehman moment”. The world’s central banks were ready for Brexit and have acted in unison.
This commentary by Ambrose Evans-Pritchard was posted on the telegraph.co.uk Internet site on Wednesday evening BST — and I thank Roy Stephens for sharing it with us. Another link to this article is here.
New Financial Milestone: Negative Yield on 50-Year Bonds and Entire Swiss Yield Curve
As of today, Switzerland’s entire stock of government debt is now trading at negative yields – with the last to go a bond that does not mature for almost 50 years.
Yields on the Swiss 2064 paper dropped below zero for the first time on Friday, meaning investors are willing to pay more to hold the bond than they will get back in interest and repayment of principal, writes Elaine Moore.
Around the world, government bond yields have fallen to new lows this week as investors anticipate years of ultra-low interest rates.
The yield on benchmark, 10-year UK gilts has reached a fresh low of 0.78 per cent following the UK’s vote to withdraw from the EU and Bank of England governor Mark Carney’s announcement on Thursday that monetary easing was possible in the summer. Swiss 10-year bonds are trading at minus 0.66 per cent.
This Financial Times news story from yesterday found a home over at the mishtalk.com Internet site — and it’s the second contribution in a row from Roy Stephens. Another link to this story is here.
Austria’s Constitutional Court Orders Rerun of Presidential Election
Austria’s Constitutional Court ordered a rerun of the final round of the country’s presidential election, giving Freedom Party candidate Norbert Hofer a second chance of becoming the first right-wing populist head of state in postwar Western Europe.
“The runoff presidential election must be completely repeated in all of Austria,” Gerhart Holzinger, the president of the Constitutional Court, said Friday in Vienna.
The court, acting on the Freedom Party’s challenge of the May 22 election result, ruled that 77,926 of the 4.5 million votes cast were affected by improprieties in how mail-in ballots were processed.
While the court established no instances of fraud, the judges said the improprieties alone were reason enough to annul the vote in light of the tight margin of victory. Independent, pro-refugee candidate Alexander Van der Bellen beat out Mr. Hofer 50.3% to 49.7%, a margin of 30,863 votes.
This Wall Street Journal article found a home over at the mishtalk.com Internet site on Friday afternoon EDT as well — and that make it three in a row from Roy. Another link to this story is here.
World Bank: Tales of the Missing Millions
“Corruptionˮ and “developmentˮ: two words that cast a long shadow over relationships between nations of the North and South. But the development community remains reluctant to talk openly about corruption in projects that cost millions.
This is partly to avoid disrupting the flow of donations – mostly from Western governments – but also stems from a fear of delaying the development agenda. In Washington the World Bank, the institutional leader in development aid, has long been criticised for showing an inclination to pay out without bothering too much about accountability. It wasn’t until 1996 that the Bank’s then president, James Wolfensohn, gave his revolutionary speech on what he called the “cancer of corruption” – a phrase that was not, until then, a part of the institution’s vocabulary. The Bank’s anti-fraud and corruption framework, the Integrity Vice Presidency or INT, now includes staff with law enforcement backgrounds, lawyers, prosecutors and forensic accountants – a new generation with a new ambition: eliminating transnational fraud and corruption.
This is your real big read of the day and, like the story on the NSA hacker, for content and length reasons, it had to wait for today’s missive. This one appeared on the france24.com Internet site on Monday — and the contributions from Roy just keep on coming. Another link to this essay is here, but it’s waaay too long for any mobile devise you may want to read it on.
President Vladimir Putin addressed Russian Federation ambassadors and permanent envoys
President of Russia Vladimir Putin: Colleagues, it is a pleasure to greet you all at this traditional gathering at the Foreign Ministry. Let me start by thanking the Foreign Ministry’s heads and staff and everyone working in our missions abroad for their professionalism and devotion to their work. I am sure that you will all continue to work in the same well-coordinated and effective fashion.
Russia follows an independent foreign policy and seeks to develop open and honest relations with all countries, in the west, east, south and north. Russia seeks mutually advantageous and constructive ties in the broadest range of areas. We do not impose our will or our values on others and we fully comply with the provisions of international law and consistently uphold the key role of the United Nations and its Security Council in resolving global and regional problems.
As you know, the world today is far from stable and the situation is becoming less predictable all the time. Great change is taking place in all areas of international relations. Competition for influence and resources is increasing. At the same time, we see confrontation between different visions of how to build the global governance mechanisms in the 21st century, and attempts by some to throw aside all rules and conventions in general.
All of this makes it harder to organise effective multilateral efforts to resolve crises and helps to create new hotbeds of tension. The potential for conflict continues to grow. Security, economic and humanitarian risks are not lessening, but are growing, multiplying, and spreading further around the world.
It is my conviction that it is only through dialogue and joint work that we can avoid dangerous breakdowns and uncontrolled developments. The international community must make progress in establishing a fairer world order built on the principles of common and indivisible security and collective responsibility.
This speech, which is less than a 10-minute read, showed up on thesaker.is Internet site on Thursday. There’s also an embedded 21-minute video clip of the speech — and it’s in Russian of course. I thank ‘aurora’ for passing it around — and it’s another item that had to wait for my Saturday column. Another link to the speech is here.
Blaming Putin after BREXIT: John Batchelor Interviews Stephen F. Cohen
This 40-minute audio interview was posted on the audioboom.com Internet site on Tuesday. Larry Galearis wasn’t able to provide an executive summary this week — and I haven’t had a chance to listen to it, but certainly will before the weekend is out. I thank Ken Hurt for sending us the link. It’s a must listen for any serious student of the New Great Game.
Our bulldozers, our rules: China’s foreign policy could reshape a good part of the world economy
The first revival of the Silk Road—a vast and ancient network of trade routes linking China’s merchants with those of Central Asia, the Middle East, Africa and Europe—took place in the seventh century, after war had made it unusable for hundreds of years. Xi Jinping, China’s president, looks back on that era as a golden age, a time of Pax Sinica, when Chinese luxuries were coveted across the globe and the Silk Road was a conduit for diplomacy and economic expansion. The term itself was coined by a German geographer in the 19th century, but China has adopted it with relish. Mr Xi wants a revival of the Silk Road and the glory that went with it.
This time cranes and construction crews are replacing caravans and camels. In April a Chinese shipping company, Cosco, took a 67% stake in Greece’s second-largest port, Piraeus, from which Chinese firms are building a high-speed rail network linking the city to Hungary and eventually Germany. In July work is due to start on the third stage of a Chinese-designed nuclear reactor in Pakistan, where China recently announced it would finance a big new highway and put $2 billion into a coal mine in the Thar desert. In the first five months of this year, more than half of China’s contracts overseas were signed with nations along the Silk Road—a first in the country’s modern history.
Politicians have been almost as busy in the builders’ wake. In June Mr Xi visited Serbia and Poland, scattering projects along the way, before heading to Uzbekistan. Last week Russia’s president, Vladimir Putin, made a brief visit to Beijing; he, Mr Xi and Mongolia’s leader promised to link their infrastructure plans with the new Silk Road. At the time, finance ministers from almost 60 countries were holding the first annual meeting in Beijing of an institution set up to finance some of these projects, the Asian Infrastructure Investment Bank (AIIB). Like a steam train pulling noisily out of a station, China’s biggest foreign-economic policy is slowly gathering speed.
This article appeared on the economist.com Internet site datelined today. Patricia Caulfield sent it our way on Thursday. It’s worth your while if you have the time — and for obvious reasons it had to wait for today’s column. Another link to this short essay is here.
Northwest Territorial Mint Owner Ross Hansen Charged With Contempt of Court
The Chapter 11 Trustee, Mark Calvert, has filed a motion requesting the court enter an order holding Ross Hansen in contempt for his violation of the Court’s orders.
Among other things, it states that Mr. Hansen has informed Mr. Calvert that he intends to take control over NWTM’s assets through Medallic Art Company. It alleges that Mr. Hansen requested that an employee disable critical manufacturing equipment, destroy some records, and provide copies of the destroyed records to Mr. Hansen.
What seems most concerning is that if was is alleged is true, it sounds like Mr. Hansen really is interfering with the business (it states “Mr. Hansen is an intimidating presence for employees”). Hopefully, if it is true, he will stop and allow the bankruptcy process to take its course. The worst thing he could do is cause damage to NWTM.
This news item, along with the link to the motion, was something I found posted on Joshua Gibbons’ Internet site about.ag on Thursday. As I’ve said on a number of occasions, I met Ross once — and once was more than enough. Another link to this story is here.
China can and will confiscate gold when it suits it — Julian Phillips
By far the greater bulk of gold owned in China is under the control of the Shanghai Gold Exchange and it is controlled by the Chinese Central Bank, the People’s Bank of China. Should China wish to confiscate its citizens’ and institutions’ gold, it can be done overnight. This includes gold held in Hong Kong. We see Singapore bowing to the will of China in such an event too.
The Structure of the Chinese Gold Market
What is not appreciated by most analysts when commenting on China is the power of the Chinese government over its people! This country is not a Democracy, does not have a fragmented system of government where the banking system is separate from government, or where every four years the government is vulnerable to removal at election time. We at GoldForecaster.com are a-political and will not comment on the system. What we focus on is the impact such a government has on the gold price.
China’s government structure is entirely different from western democracies. It remains communist and totalitarian. In other words, what the government says happens. Every person in an executive position will, if they have to, ‘kow tow’ to the government. A bank executive that acts like the ‘caught’ corrupt dealers or bank executives in the U.S. or U.K. would be put in prison for a very long time, rather than the shareholders of the banks paying their fines. As a result, the government can impose monetary policy directly on institution’s executives as well as on the institution itself. Control over all aspects of policy in the financial world is absolute. There is no independent institution that can act free from government dominance — and their gold market is no exception.
I’m not sure how he knows this is true, but here’s his opinion on the subject. This longish commentary by Julian put in an appearance on the lawrieongold.com Internet site on Friday — and I thank Patricia Caulfield for pointing it out. Another link to this article is here.
Far From Home: Ancient and Medieval Coins that Traveled
Many ancient coins circulated in a narrow area, sometimes just a single city-state of a few thousand inhabitants. But there were also long-distance travelers, coins that passed from hand to hand–perhaps for decades–reaching faraway lands in the saddlebags of warriors, the strongboxes of pirates and the satchels of merchants.
The literature of numismatics is rich with stories of such coins, although (as far as I know) there has never been a systematic study of them. Finding coins that have traveled far from their place of origin has helped historians and archaeologists reconstruct ancient and medieval trade routes and patterns of commerce and conquest.
The Silk Road
“By the lowest reckoning, India, Seres [China] and the Arabian peninsula take from our Empire 100 millions of sesterces every year: that is how much our luxuries and women cost us.” — Pliny the Elder, Natural History 12.84
Rome’s insatiable demand for Chinese silk and Indian spices sent a steady stream of silver and gold coin flowing eastward. Much of it was melted down to make luxury objects, but some were retained as curiosities, souvenirs, or amulets and deposited in tombs.
This very interesting story about silver and gold coins showed up on the coinweek.com Internet site on Wednesday — and it’s courtesy of Elliot Simon. I though it best to save it for my Saturday column — and here it is. Another link to it is here.
The PHOTOS and the FUNNIES
I took these two jackrabbit photos about ten minutes before I shot the Richardson’s ground squirrel sequence that I posted earlier this week. The reason for the close crop in the first shot is because it was sitting up hard against a concrete curb, so I just cropped it out. I took that shot at point blank range leaning out the car window. I got out of the car for the next one — and he ran a bit, and the second shot is the result. In the first shot, it had been raining, so his fur is a bit disheveled. It’s in its summer outfit, but as you can see from the second photo, the back of the head and ears, plus its tail, remains white all-year round. The Click to Enlarge features helps on these photos.
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