27 August 2016 — Saturday
YESTERDAY in GOLD, SILVER, PLATINUM and PALLADIUM
The gold price was up a couple of bucks by noon Hong Kong/Shanghai time on their Friday — and then traded flat until around 9 a.m. BST in London. It began to creep higher from there — and was rallying decently until 10 a.m. in New York, which was the London p.m. gold fix. Yellen spoke, the algos got spun — and the vertical price spike after the short down dip was hammered back below unchanged by 12:10 p.m. EDT. The subsequent rally met the same fate — and from about 2 p.m. onwards, the price traded flat into the close.
The high and low ticks, which were two hours apart, were recorded as $1,346.00 and $1,321.20 in the December contract.
Gold was closed in New York yesterday afternoon at $1,320.50 spot, down $1.10 on the day. Net volume was sky high at just under 266,000 contracts, which includes October’s volume was well as December’s. ‘Da boyz’ pulled a Draghi yesterday, doing “whatever it took” to keep the gold price in the bottle.
Here’s the 5-minute gold tick chart courtesy of Brad Robertson. There were a couple of price spikes before Yellen speech, one at noon in London — and the other on the smallish rally after the COMEX open — 5 a.m. and 6:30 a.m. Denver time on the chart below. The volume after 10 a.m. was monstrous — and didn’t drop off to anything even resembling background levels until after noon MDT, which was 2 p.m. in New York.
The vertical gray line is 10:00 p.m. Denver time, midnight in New York — and noon the following day in Hong Kong and Shanghai—and don’t forget to add two hours for EDT. The ‘click to enlarge‘ is a must here.
The price pattern in silver was very similar — and even though the $19 spot mark was violated to the upside, it wasn’t by much and wasn’t allowed to last more than a few seconds. Despite their efforts, ‘da boyz’ couldn’t close silver down on the day.
The low and high ticks in this precious metal were reported by the CME Group as $19.035 and $18.47 in the September contract.
Silver was closed on Friday afternoon at $19.65 spot, up 14.5 cents from Thursday. Gross volume was an eye-watering 128,427 contracts, but once the roll-overs out of September were subtracted, net volume checked in at a bit under 35,000 contracts, which wasn’t overly heavy.
The platinum price crept higher in Far East trading on their Friday — and was up 2 or 3 dollars by the London/Zurich open. Then starting around 9:30 a.m. Zurich time, the price began to rally meaningfully, but half those gains were taken away shortly after COMEX trading began in New York. The 10 a.m. fireworks were a more subdued version of what happened in gold and silver — and its New York low tick [also like gold and silver’s low ticks] came at 12:10 p.m. EDT. The subsequent rally wasn’t allowed to get far — and JPMorgan et al allowed platinum to close up a buck on the day at $1,072 spot.
Palladium was forced to follow a price path virtually identical to the other three precious metals, so I shan’t repeat myself — and it was closed down a dollar on the day at $686 spot.
‘Da boyz’ were leaving nothing to chance with the Yellen speech.
The dollar index closed very late on Thursday afternoon in New York at 94.72 — and began to quietly edge lower once trading began in New York at 6:00 p.m. EDT on Thursday evening. The algorithms kicked in at a minute or so before 10 a.m. in New York on Friday morning — and within ten minutes it was obvious that the powers-that-be had hit the ‘ramp the dollar/smash the precious metals’ button. It worked like a charm, as the 95.59 high tick came shortly before 3 p.m. EDT — and it gave back a small handful of basis points during the rest of the Friday trading session. The index finished the day at 95.51 — up 79 basis points from Thursday’s close.
And here’s the 6-month U.S. dollar index — and as you already know, it’s a manufactured number just like every other index out there…all commodity prices included.
The gold stocks followed the gold price like a shadow yesterday, with their respective high ticks coming at 10:10 a.m. in New York trading. From there they were sold down to their respective lows just before 3 p.m. EDT — and a little ‘bottom fishing’ saved them a bit in the last hour or so of trading. The HUI closed down 0.80 percent.
The silver equities managed to hang in their with decent gains until about 11:35 a.m. in New York, but then gave up the ghost, with their low ticks of the day coming around 2:40 p.m. EDT. The ‘bottom fishing’ after that closed them almost, but not quite, in the green, as Nick Laird’s Intraday Silver Sentiment/Silver 7 Index closed down a tiny 0.28 percent. Click to enlarge if necessary.
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 the chart below shows the month-to-date changes as of Friday’s close.
And below are the year-to-date changes as of the close of trading yesterday.
The CME Daily Delivery Report showed that 54 gold and 4 silver contracts were posted for delivery within the COMEX-approved depositories on Tuesday. The two short/issuers of note were Goldman Sachs and Merrill, with 37 and 13 contracts out of their respective client accounts. JPMorgan stopped 49 for its ‘client’ account. And in silver, JPMorgan stopped 2 of the 4 contracts for its client account 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 August dropped by 45 contracts, leaving 116 left, minus the 54 mentioned in the previous paragraph. Thursday’s Daily Delivery Report showed that 45 gold contracts were posted for delivery on Monday, so one contract holder on the short side was let off the delivery hook by the party holding the other side of the trade on the long side. August o.i. in silver showed unchanged with 5 contracts still open, minus the 4 mentioned in the previous paragraph, so August deliveries in silver are just about done.
September open interest in gold fell by 291 contracts leaving 2,906 still open — and October o.i. in gold declined by 1,254 contracts. That leaves 45,206 contracts still around.
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 has sold 45,000 troy ounces of gold eagles — 7,500 one-ounce 24K gold buffaloes — and only 1,010,000 silver eagles. These sales numbers are worse than awful. Without JPMorgan as a buyer of last resort, this is proof that there is no retail silver demand to speak of.
There are unconfirmed reports, mostly showing up on fringe precious metal-related websites, that the Mint has curtailed or stopped producing silver eagles. It certainly sounds plausible, but until the mint itself has a press release on the subject, what you’re reading out there is hearsay.
There was very little activity in gold over at the COMEX-approved depositories on Thursday. They received nothing — and only shipped out 4,854.701 troy ounces. Of that amount, there was 1,639.701 troy ounces/51 kilobars [SGE kilobar weight of 32.151 troy ounces] were shipped out of HSBC USA — and 3,215.000 troy ounces/100 kilobars [U.S/U.K. kilobar weight of 32.150 troy ounces] were shipped out of Canada’s Scotiabank. I shan’t bother linking this activity.
It is becoming more and more obvious that the working stock in gold bullion on a world-wide basis is switching to the gold kilobar standard — and that change has become far more noticeable in the last year or so — and is accelerating. In China, it’s the only bar size of record — and that may become the case for the rest of the world in short order as well.
It was a little busier in silver, as 577,811 troy ounces were reported received — and all of that went into the vault over at HSBC USA. Only 60,060 troy ounces were shipped out — and all of that came from Canada’s Scotiabank. The link to that activity is here.
There was very decent activity in gold over at the COMEX-approved gold kilobar depositories in Hong Kong on their Thursday, as 1,828 were received — and 6,625 were shipped out the door for parts unknown. All of the action was at Brink’s, Inc. as per usual — and the link to that, in troy ounces, is here.
Well, the Commitment of Traders Report for positions held at the close of COMEX trading on Tuesday, was a disappointment. The Commercial net short position in silver improved, but not nearly as much as I expected — and in gold, the Commercial net short position actually rose during the reporting week. I was underwhelmed — and that’s being kind.
In silver, the Commercial net short position improved by a smallish 2,525 contracts, or 12.6 million troy ounces. They accomplished this by selling 1,574 long contracts, plus they reduced their short position by 4,099 contracts. The difference between those two numbers was the change for the week.
Ted said that there wasn’t much change in the short position of the Big 4, as they actually added about 100 contracts to their already grotesque short position. The ‘5 through 8’ traders reduced their short position by around 600 contracts — and Ted said that the bulk of the change was in the small commercial traders other than the Big 8, the raptors, as they added around 2,000 contracts to their long position. Ted says that JPMorgan’s short position still stands at around the 33,000 contract mark. The change in the Commercial net short position for the week was barely a rounding error — and it currently stand at 98,069 COMEX contracts, or 490.3 million troy ounces of paper silver.
Under the hood in the Disaggregated COT Report it was a little better, as the Managed Money traders sold longs and added to their short positions to the tune of 5,069 contracts. The rest of the big changes came from the ‘Other Reportables’ category, as they went net long to the tune of 3,283 contracts. The Nonreportable/small trader category followed the lead of the Managed Money traders and reduced their long position by 739 contracts. Doing the math…5,069+739-3,283=2,525 contracts, which was the change in the Commercial net short position for the week.
Here’s the 9-year chart for the silver COT Report — and it’s still ugly in the extreme, as this past week’s changes [for the third week in a row] are barely a rounding error in the grand scheme of things. Click to enlarge.
In gold, the Commercial net short position actually rose by 6,482 contracts, or 648,200 troy ounces of paper gold. This came about as the Commercial traders sold 7,557 long contracts, plus the covered 1,075 short contracts — and the difference between these two numbers is the change for the week. The Commercial net short position in gold now stands at 31.75 million troy ounces of paper gold.
Ted said that Big 4 traders added around 3,600 contracts to their already monstrous short position…but the ‘5 through 8’ traders reduced their short position by about 3,700 contracts during the reporting week, so their respective changes in position came very close to cancelling each other out. The heavy lifting was done by Ted’s raptors, the commercial traders other than the Big 8, as they increased their short position by around 6,600 contracts.
Under the hood in the Disaggregated COT Report, it was all Managed Money traders, plus much more, as they added 7,398 long contracts, plus they covered 3,559 short contracts, with the the sum of those two…10,957 contracts…being the net change [increase in long positions] for the week, which far exceeded the change in the Commercial net short position for the reporting week. The ‘Other Reportables’ were basically unchanged this week — and it was the Nonreportable/small trader category that evened things out, as they went short to the tune of about 4,300 contracts on a net basis.
Here’s the 9-year COT chart for gold — and it’s still at nose-bleed levels no matter how you care to interpret it — and yesterday’s increase, although tiny, just made things more extreme. Click to enlarge.
Without a doubt, if there was a COT Report at the close of trading on Friday, it would likely show an improvement based on the Wednesday and Thursday price action, notwithstanding what happened during the Friday trading session.
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 144 days [almost 5 months] of world silver production—and the ‘5 through 8’ traders are short an additional 68 days of world silver production—for a total of 212 days, which is just over 7 months of world silver production, or 515 million troy ounces of paper silver held short by the Big 8. These numbers are almost exactly unchanged from what they were in the COT Report from a week ago.
And it should be pointed out here that in the COT Report above, the Commercial net short position in silver is 490.3 million troy ounces. So the Big 8 hold a short position larger than the net position—and by about 25 million troy ounces. That’s how grotesque, twisted, obscene—and dangerous—this COT situation in silver has become—and gold and platinum aren’t far behind.
And as an aside, the two largest silver shorts on Planet Earth—JPMorgan and Canada’s Scotiabank—are short about 105 days of world silver production between the two of them—and that 105 days represents around 73 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 20 days of world silver production apiece.
And based on Ted’s estimate of JPMorgan’s short position of 33,000 contracts, JPMorgan is short 69 days of world silver production all by itself. Because of that, the approximate short position in silver held by Scotiabank works out to around 36 days of world silver production, maximum.
In gold, the Big 4 are now short 76 days of world gold production — and the ‘5 through 8’ another 24 days of world production, for a total of 100 days. You don’t need a calculator to see that the Big 4 in gold hold 76 percent of the entire short position held by the Big 8. How’s that for a concentrated short position within a concentrated short position???
The Big 8 traders are short 49.2 percent of the entire open interest in the COMEX futures market in gold, plus they’re short 49.9 percent of the entire COMEX futures market in silver—and these positions are held against thousands of other traders in these two precious metals who are long the COMEX futures market. Ted pointed out that if you subtract out the market-neutral spread trades in both these precious metals, the Big 8 are actually short quite a bit more than 50 percent of the total open interest in both metals.
I have the usual number of stories for you today — and a goodly number of them are ones that I’ve been saving for today’s column for length and/or content reasons. There’s fair number of worthwhile/must reads as well, so I hope you have enough time in what’s left of your weekend to read the ones that interest you the most.
CRITICAL READS
Bill Gross: Yellen’s Economy “May Never Walk Normally Again, This is Not Capitalism“
It took the headline scanning algos several minutes to read Yellen’s speech, which the knee-jerk reaction was to deem as more hawkish than expected, before they stumbled on the key section we pointed out earlier, and which unleashed a surge of buying because it hinted at even more potential QE in the future (under a different Fed chair):
On the monetary policy side, future policymakers might choose to consider some additional tools that have been employed by other central banks, though adding them to our toolkit would require a very careful weighing of costs and benefits and, in some cases, could require legislation. For example, future policymakers may wish to explore the possibility of purchasing a broader range of assets.
This section catalyzed such an aggressive buying impulse that it required Stan Fischer’s post-speech interview to pour cold water on the market’s enthusiasm, saying “Yellen’s comments are consistent with a possible September hike.” After all, as even Bullard admitted earlier, the Fed is perilously close to admitting stocks are in a bubble.
However, it was too late to appease one recently converted Fed critic, Bill Gross, who slammed Yellen’s suggestion that she could launch further asset purchases as the equivalent of “providing a walker or a wheelchair for an ailing economy.”
“She is opening the door to creating even greater asset bubbles as have the BOJ and ECB and SNB by purchasing corporate bonds and stocks,” Gross wrote Friday in an e-mail response to questions. “This is not capitalism. This is providing a walker or a wheelchair for an ailing economy. It may never walk normally again if monetary policy continues in this direction.”
This news item put in an appearance on the Zero Hedge website at 3:40 p.m. on Friday afternoon EDT — and I thank Richard Saler for today’s first story. Another link to it is here.
Service sector growth in U.S. remains sluggish in August
U.S. service providers indicated another month of lacklustre growth in August, with business activity, new orders and employment all rising at a slower pace than in July. Survey respondents generally cited subdued underlying demand conditions and uncertainty ahead of the presidential election as factors that had dampened growth in August. Nonetheless, the balance of service sector firms expecting a rise in business activity over the year ahead remained well above the survey-record low seen in June.
Softer business activity growth was mainly linked to muted new business gains in August. Reflecting this, latest data signalled that new work expanded at the slowest pace since May and remained much weaker than its post-crisis trend. This contributed to a renewed slowdown in job creation during August, with payroll numbers rising at the least marked rate since December 2014. Some firms reported that subdued demand conditions and the need to cut costs had led to more cautious staff hiring plans and the non-replacement of leavers.
Payroll numbers expand at slowest pace for 20 months [But July NFP are great!!!] GDP growth is failing to accelerate in the third quarter from the weak 1.2% pace seen in the second quarter.
And as Bill King said in the King Report yesterday…”Time to hope and pray for a new prop under the U.S. economy.” This economic news item appeared on the markiteconomics.com Internet site on Thursday — and another link to it is here.
The Federal Reserve Needs New Thinking — Former Fed board governor Kevin Warsh
The conduct of monetary policy in recent years has been deeply flawed. U.S. economic growth lags prior recoveries, falling short of forecasts and deteriorating in the most recent quarters. This week in Jackson Hole, Wyoming, the Federal Reserve Bank of Kansas City hosts the world’s leading central bankers and academics to consider monetary reform. The task is timely and consequential, but the Fed needs a broader reform agenda.
Policy makers around the world neither predicted nor can adequately explain the reasons for current inflation readings below their targets. So it is puzzling that so many academics are pushing to raise the current 2% inflation target to a higher target of 3% or 4%. In the telling of the economics guild, the Fed’s leaders should descend from the Grand Tetons with supreme assurance that their latest monetary policy invention will remedy the economy’s ills.
The Fed’s leaders should not take the bait. Raising the inflation target is a bad idea being considered at the wrong time for the wrong reasons.
A new inflation target would undermine the Fed’s commitment to any policy framework. It would please the denizens of Wall Street who pine for still-looser Fed policy. And households would be understandably miffed to receive a new lecture on unconventional monetary policy — this one on the benefits of higher prices.
This commentary by Fed governor Kevin Warsh was posted on The Wall Street Journal website at 6:03 p.m. EDT on Thursday evening — and it’s posted in the clear in this GATA release. It’s definitely worth reading. The above headline is courtesy of Chris Powell. The actual headline reads “The Federal Reserve Needs New Thinking” — and another link to it is here.
Doug Noland — Yellen Unveiling: Jackson Hole 2016
Bloomberg: “Yellen Says Rate-Hike Case ‘Strengthened in Recent Months.’” The Financial Times was almost identical to Bloomberg. It was hardly different at the WSJ: “Fed Chairwoman Janet Yellen Sees Stronger Case for Interest-Rate Increase.” And from CNBC: “Yellen says a rate hike is coming—but markets say not now.” And this from Zero Hedge: “Best Reaction Yet: ‘Yellen Speech a Whole Lot of Nothing.’”
I have a different take: Yellen provided more content for history books. In today’s short-term focused world, analysts and pundits remain fixated on clues to the next policy move. And while Yellen included language unbecoming of ultra-dovishness for the near-term, the Fed chair’s presentation was zany-dovish for the intermediate- and longer-term.
The Yellen Fed has begun methodically laying the analytical foundation for a Federal Reserve (and global central banks) balance sheet of unthinkable dimensions. It’s right there in her writing, as explicit as it is astounding. Before it’s too late, the Fed’s power – and their runaway policy experiment – need to be reined in. Contemporary Central bankers have been operating with blank checkbooks only because it was never contemplated that they would actually exploit their capacity to print “money” with reckless abandon. Who cannot see that these central bankers need clear rules and well-defined restraints? Their judgment is not trustworthy.
The WSJ’s Jon Hilsenrath penned an interesting pre-Jackson Hole piece, “Years of Fed Missteps Fueled Disillusion With the Economy and Washington.” “Once-revered central bank failed to foresee the crisis and has struggled in its aftermath, fostering the rise of populism and distrust of institutions. In the past decade Federal Reserve officials have been flummoxed by a housing bubble that cratered the financial system, a long stretch of slow growth they failed to foresee and inflation persistently undershooting their goal. In response they engineered unpopular financial rescues, launched start-and-stop bond buying and delayed planned interest-rate boosts. ‘There are a lot of things that we thought we knew that haven’t turned out quite as we expected,’ said Eric Rosengren, president of the Federal Reserve Bank of Boston. ‘The economy and financial markets are not as stable as we previously assumed.’”
Yellen’s above speech introduction refers to “lessons we learned.” It is, however, rather obvious that the Federal Reserve has completely failed to recognize how a flawed monetary policy framework was fundamental to a financial Bubble that collapsed into the “worst financial crisis since the Great Depression.”
Doug Noland’s Weekly Credit Bubble Bulletin appeared on his website around midnight Denver time last night — and it always falls into the must read category for me. Another link to his commentary is here.
American journalism is collapsing before our eyes
Donald Trump may or may not fix his campaign, and Hillary Clinton may or may not become the first female president. But something else happening before our eyes is almost as important: the complete collapse of American journalism as we know it.
The frenzy to bury Trump is not limited to the Clinton campaign and the Obama White House. They are working hand in hand with what was considered the cream of the nation’s news organizations.
The shameful display of naked partisanship by the elite media is unlike anything seen in modern America.
The largest broadcast networks — CBS, NBC and ABC — and major newspapers like The New York Times and Washington Post have jettisoned all pretense of fair play. Their fierce determination to keep Trump out of the Oval Office has no precedent.
This very interesting and right-on-the-money news item showed up on The New York Post website early on Sunday morning EDT — and for content reasons had to wait for my Saturday missive. I thank West Virginia Reader Elliot Simon for sending it along — and another link to this article is here.
The Empire Files: “This Ship is Sinking” Says Former Bush Official
Abby Martin interviews retired U.S. Army Colonel Lawrence Wilkerson, former national security advisor to the Reagan administration, who spent years as an assistant to Secretary of State Colin Powell during both Bush administrations. Today, he is honest about the unfixable corruption inside the establishment and the corporate interests driving foreign policy.
This 23:57 minute video interview appeared on the youtube.com Internet site way back on December 11, 2015 — and easily falls into the absolute must watch category. It also comes close to being the most important ‘story’ in today’s column. I thank David Caron for passing it around on Thursday — and it obviously had to wait for my Saturday column.
Obama’s chances to sign TPP sink as Senate majority leader says no to vote
The Trans-Pacific Partnership (TPP) may not be dead in the water, but it’s struggling to stay afloat now that Senate Majority Leader Mitch McConnell (R-Kentucky) has said he’s not willing to serve as its lifeguard.
McConnell said he will not bring the TPP up for a vote in the Senate this year.
“The current agreement, the Trans-Pacific [Partnership], which has some serious flaws, will not be acted upon this year,” McConnell said at the Kentucky State Farm Bureau breakfast on Thursday, The Hill reported.
The Obama administration’s signature trade deal to establish regulations between a dozen countries in the Pacific Basin has been largely negotiated in secret. Its opponents say these regulations would undermine jobs in the US and work to the benefit of corporations rather than the 12 nations’ workers.
This story was posted on the Russia Today website at 6:00 p.m. Moscow time on their Friday evening, which was 10:00 a.m. in Washington — EDT plus 8 hours. It comes courtesy of Roy Stephens — and another link to it is here.
The Broken Chessboard: Brzezinski Gives Up on Empire — Mike Whitney
The main architect of Washington’s plan to rule the world has abandoned the scheme and called for the forging of ties with Russia and China. While Zbigniew Brzezinski’s article in The American Interest titled “Towards a Global Realignment” has largely been ignored by the media, it shows that powerful members of the policymaking establishment no longer believe that Washington will prevail in its quest to extent U.S. hegemony across the Middle East and Asia. Brzezinski, who was the main proponent of this idea and who drew up the blueprint for imperial expansion in his 1997 book The Grand Chessboard: American Primacy and Its Geostrategic Imperatives, has done an about-face and called for a dramatic revising of the strategy. Here’s an excerpt from the article in The American Interest:
“As its era of global dominance ends, the United States needs to take the lead in realigning the global power architecture.
Five basic verities regarding the emerging redistribution of global political power and the violent political awakening in the Middle East are signaling the coming of a new global realignment.
The first of these verities is that the United States is still the world’s politically, economically, and militarily most powerful entity but, given complex geopolitical shifts in regional balances, it is no longer the globally imperial power.” (Toward a Global Realignment, Zbigniew Brzezinski, The American Interest)
Repeat: The U.S. is “no longer the globally imperial power.” Compare this assessment to a statement Brzezinski made years earlier in Chessboard when he claimed the U.S. was ”the world’s paramount power.”
Wow! I never thought I’d live to see this day. This longish commentary by Mike appeared on the unz.com Internet site on Thursday — and certainly falls into the absolute must read category, especially if you’re a serious student of the New Great Game. I thank Vince Koloski for pointing it out — and another link to this must read article is here.
Pemex Collapse Threatens Biggest Banks in Mexico
These days, the trend is not Pemex’s friend. Mexico’s loss-leading, debt-swamped, state-owned oil giant company announced that in July it had imported 554,000 barrels of oil a day — its highest monthly volume of imports since public records began in 1990.
In total, two-thirds of all the oil Mexico consumed in July was imported — a staggering statistic for a country that until not so long ago was home to one of the largest oil fields in the world, the Cantarell. Pemex also acknowledged that its crude production fell a further 5% in July while its natural gas production shrunk 9%.
The export figures were just as ugly. In 2011, when the price of Brent crude averaged over $100, Pemex’s export revenues hit a historic peak of $49 billion, a monthly average of $4.11 billion. In the first quarter of 2016 the monthly average was just $893 million. That’s a plunge of 78%.
As Pemex’s exports dwindle, Mexico’s imports of oil and gas continue to grow. Petroleum accounted for two-thirds of last year’s $14.5 billion trade deficit, which was the widest since 2008. During the same year, Pemex managed to rack up $38.5 billion in losses, its biggest ever.
This article, which is definitely worth reading, was posted on the wolfstreet.com Internet site yesterday — and it’s the second contribution of the day from Roy Stephens. Another link to this very worthwhile new item is here.
Decrying Trump and Putin in the New Cold War: John Batchelor Interview Stephen F. Cohen
The topics for this podcast are NATO, the next G-20, Syria, Ukraine, the Paralympics, the chaos of the American presidential elections, and some questions about the fundamentals of the New Cold War (NCW). What is the reason for denial of the NCW by Washington? Cohen maintains that the reason is because they would have to explain it. I’ll go one more to that: they would have to deny the danger. And there are new Russian worries on the NATO front. Washington is wooing Finland to join NATO. Failing this there is an in-the-works bilateral agreement with Washington to station troops there that might accomplish the same strategic goal. But Cohen muses that if it does become a member, this shows that this NCW is worse than the last, and TPTB would be hard to deny what is going on. The Finland situation, if it happens, is still a very worrisome escalation for Moscow.
But right now “the most dangerous event is Syria”. The cooperation that Obama wanted with Russia against ISIS seems to be dead with the American MSM coming out strongly against cooperation with Russia. To underline this change we saw this week the recent near conflict between Syrian Air force jets and American ones during a bombing incident. Cohen correctly focuses on how conflict between Syrian jets and American ones would draw in a Russian defensive response under the agreement with the Assad government. (In my view most pundits failed to catch this as potentially a huge escalation). The hostile sortie against Syrian jets, IMHO, could reveal a policy change for American forces in Syria that it now seems willing to attack Syrian forces. Who is actually in charge in Washington? The question that just does not go away.
But as Batchelor states, “Ukraine is not on the back burner either”. The most recent opportunity for discussion will be for members of the “Normandy Four” at the G-20 meeting next month. Putin will “meet on the sidelines” with Hollande (Fr) and Merkel (Ger) – significantly without Poroshenko – to discuss options. At least Putin is still talking about the Ukrainian problem in spite of the recent regressive hostile acts by Kiev against Crimea. Europe may be as tired of this as is Putin. Cohen notes in addition that the IMF may have written off Ukraine, and Sec. State, Biden is telling Kiev to “cool it” about attacks against Crimea. All this suggests to Cohen that Washington too is backing away from their Ukraine mess. The obvious question for this commentary now is what options are left to Kiev? It seems clear that Poroshenko will likely pursue the war against the east for as long as he can because his political future depends on it. And he will do it with ever decreasing support from his Washington minders. One might speculate that Washington may now be worried about image problems when inevitably the Kiev government continues to devolve into a more Nazi styled government, and becomes even more nihilistic running this country into an economic (and political) black hole. We should also be on the watch for Western troops to begin to withdraw from Ukraine, as that would reveal that Washington has finally written the country off as well. As always there are more details available to the listener of this podcast, including some interesting and related speculations about how each presidential candidate will perform if elected as president.
This 40-minute audio interview put in an appearance on the audioboom.com Internet site on Tuesday and, as always, for length and content reasons, it had to wait for today’s column. It’s a must listen for any serious student of the New Great Game — and I thank Ken Hurt for sending the link. But the biggest THANK YOU as always is for Larry Galearis for the always excellent executive review posted above. Another link to this extremely important interview is here.
Assessing the Russian military as an instrument of power — The Saker
It has been a quarter of a century now since the fall of the Soviet Union and yet the memory of the Soviet Armed Forces is still vivid in the minds of many of those who lived through the Cold War or even remember WWII. The NATO-sponsored elites of eastern Europe still continue to scare their citizens by warning of a danger of “Russian tanks” rolling down their streets as if the Soviet tanks were about to advance on Germany again. For a while, the accepted image of a Russian solider in the West was a semi-literate drinking and raping Ivan who would attack in immense hordes with little tactical skills and an officer corps selected for political loyalty and lack of imagination. Then the propaganda narrative changed and now the new Russian bogeyman is a “little green man” who will suddenly show up to annex some part of the Baltics to Russia. Putatively pro-Russian “experts” add to the confusion by publicly hallucinating of a Russian deployment in Syria and the Mediterranean which could wrestle the entire region away from Uncle Sam and fight the entire NATO/CENCOM air forces and navies with confidence. This is all nonsense, of course, and what I propose to do here is to provide a few very basic pointers about what the modern Russian military can and cannot do in 2016. This will not be a highly technical discussion but rather a list of a few simple, basic, reminders.
Russia is not the Soviet Union
The first and most important thing to keep in mind is that the Russian military is truly focused on the defense of the Russian territory. Let me immediately say that contrary to much of the Cold War propaganda, the Soviet military was also defensive in essence, even if it did include a number of offensive elements.
This long, but very excellent overview of Russia’s military was written by The Saker — and posted on his Internet site on Thursday sometime. For obvious reasons it had to wait for today’s missive — and I thank ‘aurora’ for passing it around. Another link to the very worthwhile essay is here.
The Russia-Iran Strategic Game-Changer — Pepe Escobar
Russian Tu-22M3 Backfire bombers – as well as Sukhoi-34 fighter bombers – leave from the Iranian Hamadan airfield to bomb jihadis and assorted «moderate rebels» in Syria, and immediately we’ve got ourselves a major, unforeseen geopolitical game-changer.
The record shows that Russia has not been present militarily in Iran since 1946; and this is the first time since the 1979 Islamic Revolution that Iran allowed another nation to use Iranian territory for a military operation.
Bets could be made the Pentagon would, predictably, freak out like a bunch of pampered, irate teens. They did not disappoint, complaining that Russia’s advance warning did not allow enough time to «prepare» – as in blaring all across the planet another episode of «Russian aggression», on top of it in cahoots with «the mullahs». Further desperation ensued, with Washington claiming Iran might have violated UN Security Council resolutions.
Moscow’s spin, in contrast, was a beauty; this was all about logistics and cost cutting. Admiral Vladimir Komoyedov, chair of the State Duma’s Defense Committee and a former commander of the Black Sea Fleet, gave a lovely explanation of the modus operandi….
This commentary by Pepe turned up on the strategic-culture.org Internet site last Saturday — and is certainly worth reading if you’re a serious student of the New Great Game. I thank Larry Galearis for pointing it out — and another link to this article is here.
Red Ponzi Ticking: China and the Dark Side of the Global Bubble, Part 2 — David Stockman
China’s Massive White Elephant——1.4 Billion Tons Of Steel Capacity
Stated differently, even at the peak of recent financial bubbles in London, NYC, Miami or Houston they did not build such monuments to sheer economic waste and capital destruction. But just consider the case of China’s mammoth steel industry.
Annual production grew from about 70 million tons in the early 1990s to 825 million tons in 2014. Beyond that 12X gain, it is the capacity build-out behind the chart below which tells the full story.
To wit, Beijing’s tsunami of cheap credit enabled China’s state-owned steel companies to build new capacity at an even more fevered pace than the breakneck growth of annual production. Consequently, annual crude steel capacity now stands at nearly 1.4 billion tons, and nearly all of that capacity—about 65% of the world total— was built in the last ten years.
Needless to say, it’s a sheer impossibility to expand efficiently the heaviest of heavy industries by 17X in a quarter century. And especially so when, as outlined below, China’s long-run sustainable demand for steel is in the order of 400 million tons or one-third of its current capacity.
This Part 2 is another excerpt from David’s upcoming book — and at the rate he’s going here, you won’t have to buy it, as you’ll have read everything in his column before it hits the book stores. This commentary appeared on his website yesterday — and it’s another offering from Roy Stephens. It’s certainly worth reading if you have the interest — and another link to this article is here.
Is any gold still stored at U.S. Mint in Denver? — Ronan Manly
Gold researcher Ronan Manly reports that the U.S. Mint has made a subtle change in its monthly reports, which now indicate that no gold is being stored at the Denver mint. Manly infers from this that all U.S. government gold now is being held at the army installations at Fort Knox in Kentucky and West Point in New York and that, as fund manager and geopolitical analyst James G. Rickards contends, all the gold is essentially under the Army’s control.
Manly’s report is headlined “Is There Any Gold Bullion Stored at the U.S. Mint in Denver?” and it was posted on the Singapore-based Internet site bullionstar.com on Friday sometime. I thank Scott Otey for the link — and Chris Powell for the above introductory paragraphs. Another link to this story is here.
Norway’s Central Bank Discloses Nearly $1 Billion in Gold and Silver Mining Stocks
Norway’s Central Bank, Norges Bank has filed with the United States Securities and Exchange Commission (the SEC) a request that its Form 13F* for the period ended June 30, 2016, be given confidential treatment. The Norges Bank filed its 13F** with the list of its security holdings redacted. A note on the cover page of the Norge Bank 13F filing reads:
“Norges Bank has submitted its Form 13F to the Securities and Exchange Commission pursuant to a request for confidential treatment. This action is consistent with discussions between Norges Bank and the Staff of the Securities and Exchange Commission to coordinate the reporting required under Section 13(f) with the extensive public disclosure requirements under Norwegian law applying to Norges Bank.”
On August 12, 2016, Norges Bank filed their Form 13F with a request for confidential treatment that included a blank information table. On the same date, the Norges Bank also filed an Amended Form 13 F for the period ended June 30, 2015. This Amended Form 13F contained a list of equity securities held by the Norges Bank at then end of the second quarter of last year.
This must read story, which bears the headlined “Norwegian Central Bank Files to Have 2nd Quarter 2016 U.S. Equity Positions Not Disclosed to the Public “, was posted on the smaulgld.com Internet site yesterday. One has to wonder what information is in the list of redacted securities that they don’t want the public to know about. More precious metal stock holdings perhaps? Another link to this news item is here.
The PHOTOS and the FUNNIES
These four shots show the 24-hour life cycle of a morning glory. Photo #1 and #3 were taken early in the morning — and photos #2 and #4 were taken in the evening of the same day. It’s not much of a life, is it?
The WRAP
Today’s pop ‘blast from the past’ dates back to 1982 — and I can hardly believe this tune is