16 July 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
Although the gold price sold off in Friday morning trading in the Far East, it was back to unchanged by the COMEX open. Then the dollar index got ramped at the same moment that they hit the ‘sell’ button on gold — and its low tick of the day came at 9:30 a.m. EDT. It chopped unsteadily higher from there until around 12:40 p.m. before selling off a bit until 3:30 p.m. in the thinly-traded after-hours market. Then away the gold price went to the upside. In just over an hour it was back above unchanged, with the high tick coming right before the 5:00 p.m. close. Very strange, but a trading pattern that we’ve seen before on a Friday afternoon when nobody is around.
The low and high tick were reported as $1,322.60 and $1,339.50 in the August contract.
Gold finished the Friday trading session in New York at $1,337.10 spot, up $2.50 on the day. Net volume was just under 160,000 contracts.
Silver’s high tick came in the first two hours of trading after New York opened on Thursday evening — and then the price was engineered lower until the 10:30 a.m. BST morning gold fix in London. It began to rally from there and was pretty much back at unchanged until the dollar ramp drove silver down to it 11 a.m. low tick of the day. It didn’t do much after that but, like gold, began to rally with some real authority starting at 3:30 p.m. — and made it back to close to unchanged by the 5:00 p.m. close of trading.
The high and low ticks were recorded by the CME Group as $20.395 and $20.06 in the September contract.
Silver closed yesterday at $20.195 spot, down only 7 cents on the day. Net volume was just over 47,000 contracts.
Platinum’s sojourn above the $1,100 spot mark was over the moment that trading began at 6:00 p.m. EDT on Thursday evening in New York. Then after a 6-hour/$10 down/up move that took the price back to $1,100 spot by noon HKT, the price began to slide from there. It got slammed pretty good at the COMEX open on the dollar index ‘rally’ — and the price hit $1,080 a couple of times in late morning trading in New York, with a double bottom set at 12 o’clock noon. The price rallied from there, but was still closed down 9 bucks on the day at $1,092 spot.
Palladium made it up to $651 spot a couple of times during the Far East trading session on their Friday. But at 1 p.m HKT the price began to slide, with the $641 low tick coming thirty minutes or so either side of the London p.m. gold fix. It chopped quietly higher into the close from there, finishing the day at $647 spot — and down a dollar from Thursday.
The dollar index closed very late on Thursday afternoon in New York at 96.10 — and by shortly after 12 o’clock noon HKT, it slid back below the 96.00 mark. It spent the next eight hours or so wandering around both above and below that mark, but the ramp job at the COMEX open took the index far away from danger, as the ‘rally’ ran out of gas shortly before 12:30 p.m. in New York. It began to head lower with some conviction shortly before 2:30 p.m., but got saved shortly before 4 p.m., as the dollar index was closed on its high tick at 96.68 — up 58 basis points from its close on Thursday.
And after yesterday’s ‘performance’ in the dollar index/currency markets, now you should understand why I post the 6-month U.S. dollar index chart mostly for entertainment purposes.
The gold stocks opened down a percent and change, but by 10:20 a.m. in New York trading, they were back in the black. They began to slide from there — and by 11:30 a.m. EDT they were back in the red to stay. The HUI closed down 0.61 percent.
The silver equities opened down a percent — and after making a couple of brief forays into positive territory, rolled over at 10:30 a.m. — and then chopped lower until about fifteen minutes after the COMEX close. They recovered a bit from there, but Nick Laird’s Intraday Silver Sentiment Index still closed lower by 1.50 percent. Click to enlarge if necessary.
Without doubt the precious metal equities would have done better if trading had lasted another hour, as that’s when most of the day’s gains were posted.
And here are three 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, 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.
And this chart shows the month-to-date changes as of Friday’s close.
And here’s the year-to-date changes as of the close of trading yesterday.
The CME Daily Delivery Report showed that 18 gold and 49 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. In gold, ABN Amro issued 16 gold contracts — and JPMorgan stopped 10 for its client account — and Scotiabank picked up 3 contracts as well. In silver, ABN Amro issued all 49 contracts. JPMorgan stopped 17 contracts for its own account, HSBC USA picked up 16 contracts for its own account as well — and ABN Amro stopped 13 contracts as well. The link to yesterday’s Issuers and Stoppers Report is here.
The CME Preliminary Report for the Friday trading session showed that gold open interest in July fell by 344 contracts, leaving 76 still open. Thursday’s Daily Delivery Report showed that 352 gold contracts were posted for delivery on Monday, so another 352-344=8 gold contracts were added to the July delivery month. In silver, July o.i. declined by 142 contracts, leaving 785 still around. Thursday’s Daily Delivery Report showed that 190 silver contracts were posted for delivery on Monday, so that means that a very decent 190-142=48 silver contracts were added to the July delivery month.
The scramble for physical gold and silver by ‘da boyz’ has become voracious — and one can only wonder what the August delivery month in gold holds in store for us. I would think that Ted will have something to say about all of this in his weekly review later today.
There were no reported changes in either GLD or SLV yesterday.
There was no sales report from the U.S. Mint.
Month-to-date the mint sales are the worst that I can remember in a very long time. So far this month only 18,500 troy ounces of gold eagles have been sold — 4,500 one-ounce 24K gold buffaloes — and a piddling 695,000 silver eagles. It sure makes a difference when Ted Butler’s ‘big buyer’ — a.k.a. JPMorgan — isn’t at the trough.
The only gold action at the COMEX-approved depositories on Thursday was 95,863 troy ounces received at HSBC USA — and it’s a reasonable assumption that they’re getting ready for more deliveries because, as Ted Butler has mentioned on numerous occasions, they have been the main short/issuer in June and July — and it appears that they are just a pipeline for physical gold to JPMorgan and their ‘customer[s]’. The link to that activity is here.
It was very busy in silver, as 1,759,317 troy ounces were received, with all of it ending up at Canada’s Scotiabank and CNT. There was also 858,631 troy ounces shipped out — of which 660,505 troy ounces came out of Scotiabank — and 198,126 troy ounces coming out of Delaware. The link to that activity is here.
There was more big movement in gold over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as 6,322 kilobars were reported received — and 1,447 were shipped out. All of the activity was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
The Commitment of Traders Report for positions held at the close COMEX trading on Tuesday showed an improvement in gold, but a slight deterioration in silver.
In silver, the Commercial net short position increased by a smallish 1,352 contract. They arrived at this number by decreasing their long position by 1,683 contracts, plus they also reduced their short position by 331 contracts. The difference between those two numbers is the net change for the week. Of course with this increase, a new record high net short position in silver was also set at 100,120 contracts, or 500.6 million troy ounces, which represents 218 days of world silver production.
The Big 4 traders actually reduced their short position during the reporting week by around 400 contracts — and the ‘5 through 8’ traders did the same, as they reduced their net short position by about 200 contracts. The heavy lifting was by the raptors, the commercial traders other than the Big 8, as they added around 2,000 contracts to their net short position. Ted pegs JPMorgan’s short position at 30,000 contracts.
Under the hood in the Disaggregated COT Report, it was all Managed Money traders on the other side, plus much more. They added 2,949 contracts to their already record long position, plus they covered 1,933 contracts of their rapidly disappearing short position, for a total weekly change of 4,882 contracts. It was mostly the ‘Other Reportables’ traders going the other direction, as they added about 3,000 contracts to their short positions — and the Nonreportable/small traders added 500 contracts to their short positions as well. It was every category taking the short side against the Managed Money traders during the reporting week.
Here’s the 9-year chart for the silver COT Report — and it’s as ugly as it’s ever going to get. Click to enlarge.
In gold, the Commercial net short position declined by 14,755 contracts, or 1.48 million troy ounces. They accomplished this by decreasing their net short position by 15,232 contracts, but they also decreased their long position by 477 contracts as well. The difference between these two numbers was the net change for the week. The Commercial net short position now stands at 32.55 million troy ounces.
Ted says that the Big 4 traders reduced their short positions by 11,200 contracts, but the ‘5 through 8’ large traders actually added 7,900 short contracts to their short positions during the reporting week. Ted’s raptors, the commercial traders other than the Big 8, decreased their short position by 11,500 contracts.
Under the hood in the Disaggregated COT Report it was almost entirely a Managed Money affair, as they reduced their long positions by 3,964 contracts, plus they added 9,983 short contracts — for a total change of 13,947 contracts. The 800-odd contract difference between that number and the change in the commercial net short position was made up by the traders in the ‘Other Reportables’ category.
Here’s the 9-year COT chart for gold — and despite the improvement this week, the numbers are still ugly. Click to enlarge.
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 161 days [more than 5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 69 days of world silver production—for a total of 230 days, which is almost 8 months of world silver production, or just under 529 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 500.6 million troy ounces. So the Big 8 hold a short position larger than the net position—and by just about 29 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 116 days of world silver production between the two of them—and that 116 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 26 days of world silver production apiece.
The Big 8 traders in gold are short 45.7 percent of the entire open interest in the COMEX futures market in gold, plus they are short 45.4 percent of the entire COMEX futures market in silver—and these positions are held against thousands of other traders 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 are two more charts that Nick Laird passed around yesterday afternoon. They show India’s gold and silver imports for April. According to Nick, India imported 31 tonnes of gold and 412 tonnes of silver that month.
I have a decent number of stories for you today, including a few that I’ve been saving for Saturday’s column.
CRITICAL READS
‘All-Time High’ Versus The Rot Beneath — Jim Quinn
The stock market has reached new all-time highs this week, just two weeks after plunging over the BREXIT result. The bulls are exuberant as they dance on the graves of short-sellers and the purveyors of doom. This is surely proof all is well in the country and the complaints of the lowly peasants are just background noise. Record highs for the stock market must mean the economy is strong, consumers are confident, and the future is bright.
All the troubles documented by myself and all the other so called “doomers” must have dissipated under the avalanche of central banker liquidity. Printing fiat and layering more unpayable debt on top of old unpayable debt really was the solution to all our problems. I’m so relieved. I think I’ll put my life savings into Amazon and Twitter stock now that the all clear signal has been given.
Technical analysts are giving the buy signal now that we’ve broken out of a 19 month consolidation period. Since the entire stock market is driven by HFT supercomputers and Ivy League MBA geniuses who all use the same algorithm in their proprietary trading software, the lemming like behavior will likely lead to even higher prices. Lance Roberts, someone whose opinion I respect, reluctantly agrees we could see a market melt up:
“Wave 5, “market melt-ups” are the last bastion of hope for the “always bullish.” Unlike, the previous advances that were backed by improving earnings and economic growth, the final wave is pure emotion and speculation based on “hopes” of a quick fundamental recovery to justify market overvaluations. Such environments have always had rather disastrous endings and this time, will likely be no different.”
This very long commentary by Jim Quinn from The Burning Platform Internet site, put in an appearance on the David Stockman website yesterday — and it comes courtesy of Roy Stephens. Another link to this news item is here.
Corporate bond defaults cross 100, highest level since crisis
Corporate bond defaults have just crossed an ominous milestone.
Fully 100 companies have defaulted on debt, 50 percent more than for the same period in 2015 and the highest level since 2009, according to S&P Global Ratings.
Low oil and commodity prices, along with financial market volatility in the United States and abroad, have been the primary problems for the bond market this year. While the actual ratio of distressed issues is on the decline, the level of defaults has climbed.
While the defaults have been weighted heavily to the energy sector, analysts at S&P said there’s no guarantee things will stay that way.
“Over the past year, we have seen a strong increase in both the number and percentage of defaults in the energy and natural resources sector,” the agency said in a note. “So far, there has been little spillover effect into other sectors, but we are not ruling this out in the coming quarters.”
This news item appeared on the cnbc.com Internet site at 3:26 p.m. EDT on Thursday afternoon — and it’s a story that I found in yesterday’s edition of the King Report. Another link to this story is here.
The U.S. Housing Market Is Waving a Red Flag
Almost nine years after the housing-market bust helped trigger the most recent recession, RealtyTrac senior vice president Daren Blomquist sees the industry waving a red flag.
The same fervent speculation that abetted the housing bubble is showing up in the bloated share of foreclosures snapped up by third-party investors at auction — a record 31 percent in June, according to RealtyTrac data that starts in 2000.
Many of those third-party buyers are “mom and pop” investors with less experience, said Blomquist. At the same time, institutional investors, a subset of the third-party investors who purchase at least 10 properties a year, are ducking out of the market.
“It’s somewhat counterintuitive — as the market gets better and there are fewer foreclosures available, demand for those good deals, those bargains in the market goes up,” said Blomquist. “When you see this high percentage of the properties going to third-party investors, that is a sign that these speculators may be over-inflating the market.”
This Bloomberg story was posted on their Internet site at 6:27 a.m. MDT on Thursday morning — and it’s the second item in a row that I plucked from yesterday’s edition of the King Report. Another link to this article is here.
In 9/11 Document, View of a Saudi Effort to Thwart U.S. Action on Al Qaeda
The long-classified document detailing possible connections between the government of Saudi Arabia and the Sept. 11 terrorist plot released on Friday is a wide-ranging catalog of meetings and suspicious coincidences.
It details contacts between Saudi officials and some of the Sept. 11 hijackers, checks from Saudi royals to operatives in contact with the hijackers and the discovery of a telephone number in a Qaeda militant’s phone book that was traced to a corporation managing an Aspen, Colo., home of Prince Bandar bin Sultan, then the Saudi ambassador to Washington.
The document, 28 pages of a congressional inquiry into the Sept. 11, 2001, attacks, is also an unflattering portrayal of the kingdom’s efforts to thwart American attempts to combat Al Qaeda in the years before the attacks.
But it is also a frustrating time capsule, completed in late 2002 and kept secret for nearly 14 years out of concern that it might fray diplomatic relations between the United States and Saudi Arabia. Subsequent investigations into the terror attacks pursued the leads described in the document and found that many had no basis in fact. But the mythology surrounding the document grew with each year it remained classified.
This news item was posted on The New York Times website on Friday sometime — and it’s the second offering in a row from Roy Stephens. Another link to this story is here.
The Political Class vs. the Rest of Us
In the end, whatever she did really didn’t matter. Had a bank camera captured footage of her robbing a bank at gunpoint, James Comey would have declared that while Hillary Clinton did a bad thing, no federal prosecutor would have indicted her. (This is to assume that the Clintons need to use weapons when extorting money for themselves while, in reality, a simple speech or a political favor couched in political threats will do just fine.)
The Clintons have been through this before. They break the law, they do what they want, they walk, and American Progressives pour out their adulation for them and excoriate others for doubting the Clinton’s innocence. Don’t you know? The Department of Justice just EXONERATED the Clintons!
For all of the analysis that is being done in the wake of Comey’s announcement that no reasonable prosecutor would seek a criminal case against someone who (in Comey’s own words) broke the law with impunity and lied about what she had done, this one point stands out: no one should be surprised at the outcome. Hillary Clinton is an American political elite, and political elites always are handed a free get-out-of-jail card no matter what they may do; all others may not apply.
This worthwhile commentary showed up on the mises.org Internet site on Monday — and for content reasons had to wait for my Saturday column. Another link to this short essay, which is worth reading, is here. I thank West Virginia reader Elliot Simon for sharing it with us.
Decline of Empire: Parallels Between the U.S. and Rome, Part I — Doug Casey
As some of you know, I’m an aficionado of ancient history. I thought it might be worthwhile to discuss what happened to Rome and based on that, what’s likely to happen to the U.S. Spoiler alert: There are some similarities between the U.S. and Rome.
But before continuing, please seat yourself comfortably. This article will necessarily cover exactly those things you’re never supposed to talk about—religion and politics—and do what you’re never supposed to do, namely, bad-mouth the military.
There are good reasons for looking to Rome rather than any other civilization when trying to see where the U.S. is headed. Everyone knows Rome declined, but few people understand why. And, I think, even fewer realize that the U.S. is now well along the same path for pretty much the same reasons, which I’ll explore shortly.
Rome reached its peak of military power around the year 107, when Trajan completed the conquest of Dacia (the territory of modern Romania). With Dacia, the empire peaked in size, but I’d argue it was already past its peak by almost every other measure.
This longish, but very interesting commentary by Doug showed up on the internationalman.com Internet site yesterday — and it’s certainly worth your while if you have the time. Another link to this essay is here.
When Will They Learn? — Jeff Thomas
It will be no surprise to readers to say that collectivism is growing in the Western World. It matters little whether we refer to it as socialism, communism, Marxism, Fabianism, totalitarianism or any of its other names, the collectivist ideal is on the rise.
British conservatives worry over the extreme collectivist speeches of the new Labour leader, Jeremy Corbyn, who is far more to the left of the former leader, Ed Miliband, yet often fail to notice that Tory leaders are also becoming more collectivist in their rhetoric. Certainly the incoming Prime Minister, Theresa May, is further to the left than, say, Margaret Thatcher, yet we Britons often fail to notice that both of the primary parties are moving further to the left.
Across the pond, in America, we witness a similar development. Recent Democratic candidate for President Bernie Sanders is America’s first declared socialist candidate, something that would have been unheard of only a short while ago. In order to compete with him, the other Democratic candidate, Hillary Clinton, has been forced to spout more collectivist-sounding rhetoric to keep from losing votes to him. The many Republican candidates, whilst railing against socialism, all supported existing entitlements.
In Canada, the new Prime Minister, Justin Trudeau has already sold off the country’s gold and has promised to increase entitlements.
This interesting and right-on-the-money commentary by Jeff first appeared on the internationalman.com Internet site, but this iteration showed up on the swpcayman.com Internet site on Wednesday — and another link to it is here.
Up to 70% of people in developed countries ‘have seen incomes stagnate’
Half a billion people in 25 of the west’s richest countries suffered from flat or falling pay packets in the decade covering the financial and economic crisis of 2008-09, according to a report highlighting the impact of the Great Recession on household incomes.
Research by the McKinsey Global Institute found that between 65% and 70% of people in 25 advanced countries saw no increase in their earnings between 2005 and 2014.
The report found there had been a dramatic increase in the number of households affected by flat or falling incomes and that today’s younger generation was at risk of ending up poorer than their parents. Only 2% of households, 10 million people, lived through the period from 1993 to 2005 – a time of strong growth and falling unemployment – without seeing their incomes rise.
The MGI said governments had mitigated the impact of the squeeze on incomes through tax cuts and welfare spending, but that even when these were taken into account 20-25% of households were no better off in 2014 than they were in 2005.
This article appeared on theguardian.com Internet site one minute after midnight BST on their Thursday morning, which was 7:01 p.m. EDT on Wednesday evening. It’s another story that had to wait for today’s column. I thank Patricia Caulfield for finding it for us. Another link to it is here.
The Real “No-Go Zone” of France: A Forbidden No Man’s Land Poisoned by War
When you imagine France and its scenic countryside, you might think of the picturesque villages, vineyards a plenty and endless rolling green hills to drive through on a blissful summer road trip. But there’s one corner of this scenic country that no one has been allowed to enter for nearly a century, known as the “Zone Rouge” (the red zone).
Pictured above is an artist’s impression of the forsaken territory, originally covering more than 1,200 square kilometres (460 sq miles) in the years following the Great War. Today, around 100km2 (roughly the size of Paris), is still strictly prohibited by law from public entry and agricultural use because of an impossible amount of human remains and unexploded chemical munitions yet to be recovered from the battlefields of both world wars.
Step inside the real “No Go-Zone”…
After WWI, unable to keep up with the impossible task of removing endless undetonated weapons, human and animal remains, the French government decided on a forced relocation of residents which led to the creation of the Zone Rouge. Entire villages wiped off the map were considered “casualties of war”.
This must read photo essay put in an appearance on the messynesschic.com Internet site. It showed up there more than a year ago, but that takes nothing away from it. I’d heard of these places in France before, but here’s the proof. Prepare to be educated! I thank Roy Stephens for finding it — and for obvious reasons it had to wait for Saturday’s column. Another link to it is here.
Nuclear-Tipped Cold War over the Warm Water Paradise of Crimea: John Batchelor Interviews Stephen F. Cohen
With the Warsaw Summit now behind us Cohen discusses the importance of it. Basically it formalizes a series of policy positions vis-à-vis the United States and Russia that Russia is the enemy and then justifying this position with patently ridiculous falsehoods. A glaring example was to formally blame Russia for the failure of Minsk2. The danger for the New Cold War [NCW] is that this cements the policy direction for the United States and NATO in Europe and places the escalation of NATO on Russia’s border now in the formal and public historical record. Propaganda lies of the past years now become a rigid foundation for the military confrontation with Russia. Cohen states that in effect, NATO is declaring an intention to go to war against Russia and that is serious, indeed.
This formalization of intent now has profound implications for both Syria and Ukraine. Cohen explains that Kiev and its President Poroshenko is still the epicentre of the NCW, and while the news of American military support is vague, there are rumours that Kiev is planning a new major offensive against the eastern rebels. If true, and the offensive would be necessarily directly supplied with war materiel from NATO (Kiev’s losses in arms has been profound), Cohen is sure that Putin would react strongly to this. Now that Washington and NATO formally consider Russia THE enemy the danger of military confrontation has risen. But given Obama’s concerns over his legacy of total failure in foreign policies this worrisome situation is seemingly offset by talk between Russia and Washington to cooperate in Syria against ISIS, and also open negotiations to reduce risks of nuclear war.
Reducing risks of nuclear war is the immense problem for Russia, NATO and the USA given those factions in NATO are expanding those risks with their missile emplacements on Russia’s borders – and remember that NATO is also Washington. And Crimea is once more brought into the discussion as suddenly during the Warsaw Summit NATO arbitrarily makes the return of Crimea to Ukraine part of the conditions for Minsk2 when Russia is not even a signatory to Minsk2. Essentially we have a completely cynical NATO re-writing history, falsifying history, into formal policy to go to war with Russia. Is it any wonder that Putin considers Western leaders quite mad? The good news about the summit, says Cohen, is that some European leaders are getting truly alarmed about NATO, and “that things are getting out of control”.
A final word: at this time a winnable conventional war with Russia with the few military resources for NATO at hand is completely absurd. All the players know this. We are still in the posturing stage for the West. What seems to be going on is a propaganda campaign with the goals of distraction against failing economies and more problems for European and USA citizens ahead. A conventional war is not winnable by NATO at any rate and Washington would know this. The real danger is that Washington is setting the stage for a nuclear war – and this would be what Putin (and any sane person anywhere) would really fear.
This 40-minute audio interview was posted on the audioboom.com Internet site on Tuesday, falls into the must listen category for any serious student of the New Great Game. I thank Ken Hurt for the link but, as always, the big THANK YOU goes out to Larry Galearis for providing the above executive summary. Another link to this interview is here.
President of Turkey Urges Resistance as Military Attempts Coup
A military coup attempt plunged Turkey into a long night of violence and intrigue on Friday, threatening its embattled president and injecting new instability into a crucial NATO member and American ally in the chaotic Middle East.
The coup attempt was followed hours later by an equally dramatic public appearance by the president, Recep Tayyip Erdogan, whose whereabouts was unknown for hours after the plotters claimed to have taken control. Flying into Istanbul Ataturk Airport from an undisclosed location early Saturday, Mr. Erdogan signaled the coup was failing.
“A minority within the armed forces has unfortunately been unable to stomach Turkey’s unity,” Mr. Erdogan said, after the private NTV television channel showed him greeting supporters. Blaming political enemies, Mr. Erdogan said: “What is being perpetrated is a rebellion and a treason. They will pay a heavy price for their treason to Turkey.”
There were indications that the coup’s leaders, at a minimum, did not have a tight grip on many parts of the country. Supporters of Mr. Erdogan took to the streets of Istanbul to oppose the coup’s plotters. More than 130 people have been arrested in connection with the coup attempt, Prime Minister Binali Yildirim said in comments to CNN Turk.
This New York Times story, filed from Istanbul, is being constantly updated since I received it from Patricia Caulfield at 3:08 p.m. Denver time on Friday afternoon. The situation over there is very fluid — and by the time you read this, the situation may or may not be more clear. Another link to this news story is here.
Doug Noland: Scary Times
Just another week of the “new normal”. Celebratory talk of “helicopter money,” a melt-up in stocks, another terrorist attack in France and a coup attempt in Turkey. Let’s start with Japan, with the preface that “Bubbles Go to Unimaginable Extremes – and Then Double!” and “Things Get Crazy Near the End – During ‘Terminal Phase’ Excesses.”
July 12 – Bloomberg (Emi Nobuhiro and Yoshiaki Nohara): “Japanese Prime Minister Shinzo Abe told former Federal Reserve Chairman Ben S. Bernanke at a meeting in Tokyo he wants to speed up the nation’s exit from deflation, underscoring his commitment to implementing fresh economic stimulus. ‘We are only halfway to the exit from deflation,’ Abe said at the start of the meeting… ‘We want to be steadfast in accelerating our breakaway from deflation.’ Abe’s remarks at the meeting, also attended by the Ministry of Finance’s top currency official Masatsugu Asakawa and adviser Koichi Hamada, came before he ordered Economy Minister Nobuteru Ishihara to compile stimulus measures this month.”
As global markets celebrate Japan’s reckless move to further ramp up fiscal and monetary stimulus, it’s important to place things into a little perspective. Japan has been sporadically ramping up stimulus for more than 25 years. Debt to GDP was about 65% back when the Japanese Bubble burst in 1990. Massive fiscal stimulus saw debt to GDP surge to 140% by the end of the nineties. By 2009, ongoing aggressive deficit spending pushed the ratio through 200%. Meanwhile, expanding $1.0 TN annually, the Bank of Japan’s (BOJ) balance sheet is rapidly approaching 100% of GDP. BOJ assets hovered between 30% and 40% of GDP in the ten-year period through 2012.
Prime Minister Abe must be an eternal optimist if he actually believes Japan is “halfway to the exit from deflation.” The Japanese government this week sharply lowered their fiscal 2017 CPI forecast to 0.4%. After three years of (egregious) “shock and awe” fiscal and monetary stimulus, CPI is now running below the 2013 level. And in the face of massive stimulus, the Japanese economy is forecast to expand less than 1% this year. It’s Scary Time.
Doug’s weekly Credit Bubble Bulletin showed up on his website around midnight Denver time last night — and certainly falls into the must read category. Another link to his commentary is here.
A Saudi Morals Enforcer Called for a More Liberal Islam. Then the Death Threats Began
For most of his adult life, Ahmed Qassim al-Ghamdi worked among the bearded enforcers of Saudi Arabia. He was a dedicated employee of the Commission for the Promotion of Virtue and the Prevention of Vice — known abroad as the religious police — serving with the front-line troops protecting the Islamic kingdom from Westernization, secularism and anything but the most conservative Islamic practices.
Some of that resembled ordinary police work: busting drug dealers and bootleggers in a country that bans alcohol. But the men of “the Commission,” as Saudis call it, spent most of their time maintaining the puritanical public norms that set Saudi Arabia apart not only from the West, but from most of the Muslim world.
A key offense was ikhtilat, or unauthorized mixing between men and women. The kingdom’s clerics warn that it could lead to fornication, adultery, broken homes, children born of unmarried couples and full-blown societal collapse.
For years, Mr. Ghamdi stuck with the program and was eventually put in charge of the Commission for the region of Mecca, Islam’s holiest city. Then he had a reckoning and began to question the rules. So he turned to the Quran and the stories of the Prophet Muhammad and his companions, considered the exemplars of Islamic conduct. What he found was striking and life altering: There had been plenty of mixing among the first generation of Muslims, and no one had seemed to mind.
This interesting article, filed from Jidda in Saudi Arabia, showed up on The New York Times website last Sunday — and it’s courtesy of Roy Stephens. Another link to this commentary is here.
Harrods sells more gold in wake of Brexit
Upmarket store Harrods says its wealthy clientele have been buying more gold amid the uncertainty caused by Brexit – and it has now launched an online bullion service for those who cannot get to the Knightsbridge store in person.
While uncertainty has been one factor behind an increased demand for gold, its sharp recovery in price has also encouraged more buying.
The price of the precious metal has risen approximately 30pc this year, with demand from some of the biggest markets, such as China, growing fast.
Harrods’s service, which is run by the department store’s banking division, offers bars from 1g up to 12.5kg.
This gold-related news item showed up on the telegraph.co.uk Internet site at 1:51 p.m. BST on their Friday afternoon, which was 8:51 a.m. in New York — EDT plus 5 hours. It comes courtesy of “Roger in La La Land” — and another link to it is here.
The PHOTOS and the FUNNIES
Here’s a first for me. Juvenile coots with parent. There were three young ‘uns — and here’s a close up of one of them, complete with feet. I’ve never seen them come to humans for food before, but a little girl and her mom were feeding them, so I didn’t pass on the opportunity. I had the same 400mm lens as I’d just used on the black-crowned night herons a few minutes before, so I had to stand way back to get enough depth of field. I’ll have a couple more shot of these in my Tuesday column. The click to enlarge feature helps with these.
The WRAP
“In a June 27, 2016 Bloomberg interview, Alan Greenspan stated that as a result of Brexit, “we are in the early days of a crisis which has got a way to go,” and that the best solution would be a return to the gold standard that was the basis for international finance from 1870 to 1913. The former Fed chairman (1987-2006) was, in our opinion, an architect and intellectual predecessor for current radical central-banking activism. For him to make such a statement is an eye-opener, suggesting that this former policy insider no longer believes that the dollar-centric fiat currency system is workable.” — John Hathaway: Tocqueville Asset Management — 12 July 2016
Today’s pop ‘blast from the past’ dates from 1967. Wow, where the hell has all time gone??? This group had so many #1 singles that it’s hard picking one out that’s my favourite, but this one has to be in the top three for sure. It was one of the Beach Boys last big hits — and the link is here.
Today’s classical ‘blast from the past’ is somewhat more ancient of course — a hundred years more ancient to be exact. Max Bruch’s Violin Concerto No. 1 in G minor, Op. 26, is one of the most popular violin concertos in the repertoire.
The concerto was first completed in 1866 and the first performance was given on 24 April 1866 by Otto von Königslow with Bruch himself conducting. The concerto was then considerably revised with help from celebrated violinist Joseph Joachim and completed in its present form in 1867. The premiere of the revised concerto was given by Joachim in Bremen on 5 January 1868.
Here’s the incomparable, Sarah Chang doing the honours with the Orpheus Chamber Orchestra. It doesn’t get any better than this — and the link is here. Full screen is a must!
It took a soaring dollar index to do the precious metals in during the New York session yesterday. But as we’ve seen before, a mysterious buyer, probably short covering, appeared in the thinly-traded after-hours market on a Friday afternoon — and bid the prices up in both gold and silver — and platinum a bit as well.
This is all very mysterious — and it has occurred often enough in the last couple of months to really be noticed, especially on a Friday afternoon when most traders are long gone once the COMEX closes.
What it means isn’t known to me, or anybody else, I’m sure. But the normally quiet summer months in the precious metal market have been anything but, this year.
Since this is my Saturday column, I’m including the 6-month charts for the Big 6+1 commodities — and with the exception of gold, whose RSI trace is close to being in neutral territory, the other three precious metals are still overbought.
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