Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1201.50 up $8.70 (comex closing time)
Silver: $16.27 up 12 cents (comex closing time)
In the access market 5:15 pm
Gold $1202.00
Silver: $16.33
Gold/silver trading: see kitco charts on the right side of the commentary.
Following is a brief outline on gold and silver comex figures for today:
At the gold comex today, we surprisingly had a poor delivery day, registering 2 notices served for 200 oz. Silver comex filed with 23 notices for 115,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 244.65 tonnes for a loss of 59 tonnes over that period. Lately the removals have been rising!
end
In silver, the open interest rose by a whopping 3,152 contracts with Tuesday’s silver price down by 13 cents. The total silver OI continues to remain extremely high with today’s reading at 177,877 contracts as at record highs. The front April month has an OI of 193 contracts for a gain of 18 contracts as somebody was in great need of silver. We are now at multi year high in the total OI complex despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.
We had 23 notices served upon for 115,000 oz.
In gold, the total comex gold OI rests tonight at 395,089 for a gain of 2916 contracts with gold down by a considerable $6.50 on Tuesday. We had 2 notices served upon for 200 oz.
Today, we had a huge addition of 1.79 tonnes of gold inventory at the GLD/ Gold Inventory rests at 736.08 tonnes
In silver, / /we had no change in silver inventory at the SLV/ and thus the inventory tonight is 324.900 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver rise by a huge 3152, contracts despite the fall in price on Tuesday (13 cents). The OI for gold rose by 2916 contracts up to 395,089 contracts as the price of gold fell by a considerable $6.50 on yesterday. Turd Ferguson believes that we will have a silver squeeze on the upcoming May contract month
(report Harvey/Turd Ferguson)
2.Greece paid the iMF on Thursday. On Friday, it was announced that the ECB increased its ELA to Greece by 1.2 billion euros up to 73.2 billion euros as more depositors fled. On Monday, the London’s Financial times has reported that Greece has decided that it will withhold the IMF payment in May and June so it can pay its pensioners. Also the reform package submitted by Greece is totally offside on its pension reform and on privatization. Contagion seems to be spreading as yields widen with the advanced risk of default. Also yesterday the ECB advanced another 800 million euros of ELA as more depositors fled. Today, it was announced that the Greek finance minister will visit a bankruptcy lawyer in the USA. Greek yields skyrocketed northbound .
London’s financial times/goldcore/zero hedge/Bloomberg.
3. China’s GDP tumbles to a gain of only 7%/another big miss:
zero hedge
4. Two big misses on data from the USA:
i.the NY Empire manufacturing index
ii USA industrial production
(zero hedge)
5. Bill Holter delivers a great paper on Chinese gold
(Bill Holter/Miles Franklin)
this is very important so you do not want to miss this.
6. German bonds reach negativity in yield out to 8 years. the 10 year German bund is now only 10 basis points to the positive side. The ECB s going to have trouble buying the number of bonds it needs for QE
(zero hedge
7. Two important commentaries on water shortages in the USA
1. Lake Mead
2. California
(Bloomberg/Greg Hunter/Ellen Brown)
we have these and other stories for you tonight
Let us now head over to the comex and assess trading over there today.
Here are today’s comex results:
The total gold comex open interest rose by 2916 contracts from 392,173 up to 395,089 with gold down by $6.50 yesterday (at the comex close). We are now in the active delivery month of April and here the OI fell by 250 contracts down to 2,148. We had 1 contract filed upon yesterday so we lost 249 contracts or 24,900 oz will not stand for delivery in April. This phenomenon where the amount of gold ounces standing for an active delivery falls throughout the month is totally unheard of. You can bet the farm that most of these have been cash settled. The next non active delivery month is May and here the OI rose by 43 contracts up to 549. The next big active delivery contract month is June and here the OI rose by 2205 contracts up to 265,828. June is the second biggest delivery month on the comex gold calendar. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 72,691 (Where on earth are the high frequency boys?). The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 172,452 contracts. Today we had 2 notices filed for 200 oz.
And now for the wild silver comex results. Silver OI surprisingly rose by a huge 3,152 contracts from 174,725 up to 177,877 despite the fact that silver was down by 13 cents, with respect to Tuesday’s trading. Somebody big is willing to take on JPMorgan. We are now in the non active delivery month of April and here the OI rose to 190 for a gain of 15 contracts. We had 5 notices filed on Tuesday so we gained 23 contracts or an additional 115,000 silver ounces will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by only 2236 contracts down to 77,394. We have 2 weeks before first day notice on Thursday, April 30.2015. The estimated volume today was poor at 21,745 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 59,252 contracts which is excellent in volume. We had 23 notices filed for 115,000 oz today.
April initial standings
April 15.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
nil
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
2 contracts (200 oz)
No of oz to be served (notices)
2146 contracts(214,600) oz
Total monthly oz gold served (contracts) so far this month
689 contracts(68,900 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
oz
Total accumulative withdrawal of gold from the Customer inventory this month
219,997.0 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: nil oz
we had 0 customer withdrawals
total customer withdrawal: nil oz
we had 0 customer deposit:
total customer deposit: nil oz
We had 1 adjustment:
Out of Delaware:
192.90 oz was adjusted out of the customer and this landed into the dealer account at Delaware
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 2 contracts of which 1 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account
To calculate the total number of gold ounces standing for the March contract month, we take the total number of notices filed so far for the month (689) x 100 oz or 68,900 oz , to which we add the difference between the open interest for the front month of April (2198) and the number of notices served upon today (2) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the April contract month:
No of notices served so far (689) x 100 oz or ounces + {OI for the front month (2148) – the number of notices served upon today (2) x 100 oz which equal 283,500 oz or 8.18 tonnes of gold.
we lost 249 contracts or an additional 24,900 oz will not stand for delivery in this April contract month.
This has been the lowest amount of gold ounces standing in an active month in quite some time.
Total dealer inventory: 567,831.90 or 17.66 tonnes
Total gold inventory (dealer and customer) = 7,865,699.514 oz. (244.65) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 59 tonnes have been net transferred out. However I believe that the gold that enters the gold comex is not real. I cannot see continual additions of strictly kilobars.
end
And now for silver
April silver initial standings
April 15 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil
Withdrawals from Customer Inventory
1,109,691.210 oz (CNT,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
1,073,627.910 oz (JPM)
No of oz served (contracts)
23 contracts (115,000 oz)
No of oz to be served (notices)
170 contracts(875,000 oz)
Total monthly oz silver served (contracts)
343 contracts (1,715,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
548,169.5 oz
Total accumulative withdrawal of silver from the Customer inventory this month
10,453,655.5 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawals:
total dealer withdrawal: nil oz
We had 1 customer deposits:
ii) Into JPM: 1,073,627.910 oz * this is the 5th day out of 6 that JPMorgan has deposited a huge amount of silver in its customer account. Something is seriously happening behind the scenes.
total customer deposits: 1,073,627.910 oz
We had 2 customer withdrawals:
i) Out of CNT: 1,071,746.02 oz
iii) Out of Scotia; 37,945.19 oz
total withdrawals; 1,109,691.210 oz
we had 0 adjustment:
Total dealer inventory: 62.972 million oz
Total of all silver inventory (dealer and customer) 173.679 million oz
.
The total number of notices filed today is represented by 23 contracts for 115,000 oz. To calculate the number of silver ounces that will stand for delivery in April, we take the total number of notices filed for the month so far at (343) x 5,000 oz = 1,715,000 oz to which we add the difference between the open interest for the front month of April (193) and the number of notices served upon today (23) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the April contract month:
343 (notices served so far) + { OI for front month of April193) -number of notices served upon today (23} x 5000 oz = 2,565,000 oz standing for the April contract month.
we gained another 115,000 ounces standing in this non active delivery month.
for those wishing to see the rest of data today see:
http://www.harveyorgan.wordpress.com orhttp://www.harveyorganblog.com
end
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
April 15/ a huge addition of 1.79 tonnes of gold inventory added to the GLD/ Inventory tonight at 736.08 tonnes
April 14/ no change in gold inventory at the GLD/Inventory rests at 734.29 tonnes
April 13.2015: we had a withdrawal of 1.75 tonnes of GLD/Inventory at 734.29 tonnes
April 10/we had no change in inventory at the GLD/Inventory at 736.04 tonnes
April 9.2015 we have a huge addition of 2.98 tonnes of gold inventory/GLD inventory tonight stands at 736.04 tonnes
April 8.2015:no changes in the GLD/Inventory 733.06 tonnes
April 7. we had another withdrawal of 4.18 tonnes of gold at the GLD/Inventory rests at 733.06 tonnes
April 6. no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 2/no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 1/2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
march 31.2015/ no changes in gold inventory at the GLD/Inventory at 737.24 tonnes
April 15/2015 / we had an addition f 1.79 tonnes of gold inventory at the GLD/Inventory stands at 736.08 tonnes
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD : 736.08 tonnes.
end
And now for silver (SLV):
April 15.2015: no change in silver inventory tonight at the SLV/324.900 million oz is the inventory tonight.
April 14. we had another addition of .67 million oz of silver at the SLV/Inventory rests at 324.900 million oz
April 13.2015: a huge addition of 2.391 million oz of silver at the SLV/Inventory rests at 324.230 million oz
April 10/ no changes in silver inventory at the SLV/Inventory rests at 321.839 million oz
April 9/2015 no changes in inventory at the SLV/Inventory rests at 321.839 million oz/
April 8.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 7.2015: no changes in inventory at the SLV/Inventory rests tonight at 321.839 million oz
April 6. we had a small withdrawal of 136,000 oz/inventory tonight rests at 321.839 million oz
April 2/2015: no changes in inventory/SLV inventory rests this weekend at 321.975 million oz
April 1.2015: we had a huge withdrawal of 1.913 million oz of silver from the SLV vaults/Inventory 321.975 million oz
March 31.2015: no changes in inventory at the SLV/Inventory at 323.88 million oz
April 15/2015 we had nno change in inventory at the SLV / inventory rests at 324.900 million oz
end
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now for the first time into the negative to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 6.8% percent to NAV in usa funds and Negative 7.4% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.6%
Percentage of fund in silver:38.00%
cash .4%
( April 15/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV falls to + 0.26%!!!!! NAV (April 15/2015)
3. Sprott gold fund (PHYS): premium to NAV falls -.34% to NAV(April 15/2015
Note: Sprott silver trust back into positive territory at +0.26%.
Sprott physical gold trust is back into negative territory at -.34%
Central fund of Canada’s is still in jail.
end
And now for your more important physical gold/silver stories:
Gold and silver trading early this morning
(courtesy Goldcore/Mark O’Byrne)
Martin Armstrong – Gold Bullion To “Max Out At $5,000 Per Ounce”
By Mark O’ByrneApril 15, 20151 Comment
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– Fall 2015 turning point – civil unrest and riots globally says forecaster Armstrong
– Fed have to raise rates – due to pressure from congress and media
– By 2020 the cost of servicing U.S. debt will outpace defence spending
– European banks will collapse and “blood in the streets”
– Higher rates will also devastate emerging markets who have issued dollar-based debt
– Gold to “max out at $5000 per ounce”
– Advocates diversification and holding bullion coins familiar to public such as $20 gold coins
– “Your portfolio has got to include everything … including bullion”
Renowned financial analysts and trends forecaster Martin Armstrong has said that gold will “probably max out at $5,000 per ounce” as “people lose confidence in government” and that we will see riots and unrest globally in the coming months – the fall of this year.
It a very interesting interview with Greg Hunter of the excellentUSAWatchdog.com, Armstrong says :
“Gold rises when people lose confidence in government. It has nothing to do with inflation. So, when you start to worry about government is not going to survive or who’s going to win, that’s when gold rises. Short term, we still have the risk of it going under $1,000 per ounce. It’s going to flip when everything is right. It will probably max out at $5,000 per ounce. . . . You are really talking about a major reset coming. 300 years ago, that was the revolutions against monarchy. Today, it’s going to be revolution against . . . pretend democracy. We do not have a democracy.”
We would slightly disagree with this as research and the historical record shows that gold is a hedge against inflation – particularly virulent inflation as was seen globally in the stagflation of 1970s and the litany of hyperinflations seen in the last 100 hundred years.
Martin Armstrong was accused of running a $3 billion Ponzi scheme and served 11 years in jail under house arrest, including a possible record seven years for contempt of court in a dispute over gold and antiquities. He is a former financial adviser who was Chairman of an investment firm called Princeton Economics International and he is best known for his economic predictions based on the Economic Confidence Model, which he developed.
Armstrong says you can forget about the U.S. dollar crashing in value. Armstrong contends, “No, that’s absurd. The euro is in terrible shape. The yen is in terrible shape, and honestly, you can’t park money in yuan or Russian rubles yet. I mean, let’s be realistic here, but eventually– yes.”
He contends that the Fed will be forced to raise interest rates in the coming months which will have serious implications world wide.
Armstrong predictions are based on the theory that everything in the world happens in cycles. We are currently near the end of a major 300-year cycle. The end of the last cycle saw revolution against monarchies. This cycle will end in revolution against corrupt democracies. Indeed, he reckons that government corruption worldwide is now at an extreme.
He warns that “governments are run by lawyers” more concerned with reelection rather than “financial experts” … “thats our biggest problem …”
He suggests that capital inflows to the U.S., particularly from China, will continue to push up the stock markets and real estate in the U.S. This will cause congress and the media to blame the Fed for the bubbles with the consequence that the Fed will raise rates.
He warns of the bubbles in the bond markets:
“… this one looks like it’s going to be in the bond markets….it’s the peak, really, in government and you have interest rates going negative and you can’t have much lower than that. So this appears to be the peak in so far as government is concerned and bond markets are going to be turning down.
I mean, we’re in a lot of trouble with most of these governments. Our models are really showing that by 2020 the amount of interest we pay to roll the debt constantly will exceed the entire defense budget.
In the longer term this is clearly untenable and has obvious ramifications including much higher interest rates in the U.S. and a much weaker dollar.”
He refers to the culmination of previous cycles such as Russia in 1998, the dotcom bubble and the real estate bubble and postulates that this 8.6 year cycle will result in the collapse of the bond markets.
Raising rates will have a particularly devastating impact on emerging markets who have issued dollar based debt with the result that they will end up “like Greece” unable to pay the interest on their debt.
He sees little hope for European banks. The euro which assumes all participating countries are the same is untenable. He says that in Europe, people buying German assets and debt in the expectation of a collapse in the currency and in the hope of redeeming such assets in newly issued Deutsche Marks.
He says that gold may hit $5,000 in the U.S. but has the caveat that $5,000 would not have the spending power that it has today and says a week’s wages may be $5,000/oz.
We believe that this is unlikely. Workers being paid $5,000 a week would mean the U.S. is experiencing hyperinflation. This would likely result in gold rising parabolically to levels over $10,000 per ounce.
He advocates a well-diversified portfolio including precious metals. He adds that that people should include coins that are familiar to the wider public.
Greg Hunters asks Armstrong whether he would be a “holder or buyer of gold at some point?”
To which he replies that “your portfolio has got to include everything … including bullion” and says it should be bullion“familiar to the general public.”
“You have to realise that if you walked into a Starbucks, and you have a silver quarter you know what it is .. is the kid at the counter going to know what it is … he is going to say it is a quarter.”
Presumably alluding to fact that popular “recognisable” gold coins will remain in demand, may be used for payments, trade and barter and will remain liquid in an economic crash.
He warns against gold and silver bars due to the potential risk of counterfeiting and potential trust issues with some bars. He thinks “staying with recognisable gold coins is better” and gives the example of the “$20 gold pieces and things of that nature.”
Armstrong warns that gold could fall to $1,000 per ounce in the very short term, coming months, prior to surging to $5,000 per ounce.
Hunter is a good interviewer and asks the right questions and the interview is a worth a watch.
Find the Safest Ways to Own Gold: Comprehensive Guide to Investing In Gold
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,189.85, EUR 1,123.56 and GBP 808.58 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,191.45, EUR 1,127.95 and GBP 814.33 per ounce.
Gold fell 0.6 percent or $7.20 and closed at $1,192.50 an ounce on yesterday, while silver slipped 0.61 percent or $0.10 closing at $16.20 an ounce.
The March U.S. retail sales figure missed market estimates yesterday, but a strong U.S. dollar seems be keeping gold at bay for the moment.
Gold in Singapore remained steady at $1,193.42 an ounce near the end of day trading after hitting $1,183.68 an ounce on Tuesday, its lowest price in two weeks. Comex U.S. gold for June delivery was unchanged at $1,193.50
Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose by 1.8 tonnes yesterday, data from the fund showed, only its third daily inflow since mid-February.
China’s economy had its slowest growth in six years growing only 7 percent in the first quarter, which some analysts say may stifle their demand for bullion. However, it could lead to increased safe haven demand particularly if there are falls in Chinese stock and property market.
Premiums on the Shanghai Gold Exchange picked up to $3-$4 an ounce over spot price from a lower range earlier in the week.
As usual Fed committee members are making it difficult to get a clear reading on if and when the Fed may raise interest rates. Minneapolis Fed President, Narayana Kocherlakota, said raising rates this year, as most Federal Reserve officials expect, would be “inappropriate” because it would delay the return of too-low inflation and the Fed’s 2 percent goal.
The Greek debt sage continues as government representatives and the nation’s creditors continue talks in Athens. Gold should be supported by uncertainty regarding a potential Greek default.
In Europe in late morning trading, gold is trading in euros at €1,124.140 per ounce or up 0.24%. Silver is trading in euros at €15.25 or up 0.39% and platinum is at €1,075.88 or up 0.27%.
In U.S. dollars in Europe in late morning trading, gold is at $1,191.91 or off -0.17%. Silver in U.S. dollars is at $16.17 or off -0.02% and platinum is at $1,151.90 or down -0.06%.
Breaking Gold News and Research Here
end
This is fascinating!!
(courtesy GATA)
Gold Reserve makes push in Luxembourg to collect Venezuela award
Submitted by cpowell on Tue, 2015-04-14 11:59. Section: Daily Dispatches
By Alexandra Ulmer
Reuters
Monday, April 13, 2015
Gold Reserve Inc. has served banks in Luxembourg with the equivalent of writs of garnishment relating to around $700 million in interest payments on Venezuelan bonds and funds, cranking up its push to collect an arbitration award from the South American country.
“These banks were chosen because they are designated as paying agents or transfer agents in listing memoranda relating to various bonds issued by Venezuela and listed on the Luxembourg Stock Exchange,” the Toronto-listed gold mining company said in a statement on Monday.
“So far, the banks have denied holding funds for the account of Venezuela, which appears to contradict the information contained in the listing memoranda. As a result, the company intends to have the issue determined by the appropriate court or judge having jurisdiction in Luxembourg over such matters.”
The fresh push by Gold Reserve Inc. to collect its arbitration award is likely to worry cash-strapped Venezuela, which is struggling to foot hefty bond payments and seeking to delay payment of major arbitration awards. …
… For the remainder of the report:
http://www.reuters.com/article/2015/04/14/venezuela-goldreserve-idUSL2N0…
end
Craig (Turd Ferguson) believes we are in for a huge silver squeeze in 2 weeks i.e. when silver comes up for delivery in the May contract month
(courtesy Turd Ferguson/TF Metals/GATA)
TF Metals Report: Another silver short squeeze looms
Submitted by cpowell on Wed, 2015-04-15 18:06. Section: Daily Dispatches
2:10p ET Wednesday, April 15, 2015
Dear Friend of GATA and Gold:
The TF Metals Report’s Turd Ferguson is expecting a substantial short squeeze in silver futures in about two weeks. His commentary is headlined “Another Silver Short Squeeze Looms” and it’s posted at the TF Metals Report here:
http://www.tfmetalsreport.com/blog/6767/another-silver-short-squeeze-loo…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
The following is an extremely important discussion presented by Bill Holter. I urge you to read this very carefully.
(courtesy Bill Holter/Miles Franklin)
China’s gold?
Much speculation abounds regarding China’s gold holdings. They officially claim 1,054 tons as of April 2009. We suspected they might “re” announce their holdings again last year at this time as it was five years after their last announcement and China has a habit of “five year plans”. Alisdair Mcleod believes they have 20,000 tons or more which very well may be the case, I can easily make a case their holdings are far in excess of 10,000 tons just from the data since 2009. In the words of our newest presidential candidate, “at this point, what difference does it make?”. We’ll get to this shortly.
Before getting into the answer to this question, it might be better look at China’s “bubbles” first. Money supply:
As you can see, China’s money supply has gone from 30 trillion yuan to over 120 trillion yuan in 8 years. The growth rate compounds out to about 18% annually. The following chart shows their money supply growth slowing drastically, China will need to reflate soon!
Now let’s look at China’s Shanghai stock market, another bubble.
Their market has virtually doubled in over 90 days, is this “normal”? Could this be a function of the market anticipating a reflation in money supply …or maybe a devaluation of the yuan versus a marked up gold price? I’m not sure but putting their money supply together with market action tells me one of several things. Money supply must begin to grow more rapidly soon, the yuan will need to be devalued or their market values are unjustified, something must give. Add to this the fact China’s economy (maybe with slightly cooked numbers) is growing slower than any time in the last six years http://www.zerohedge.com/news/2015-04-14/china-gdp-tumbles-lowest-6-years-amid-quadruple-whammy-dismal-dataand it becomes even more clear, China must do something soon. It is my guess and has been for quite a while, China will pull a page from FDR’s playbook and revalue gold versus the yuan …and the yuan versus other currencies from top to bottom.
So, why exactly does it matter how much gold China has accumulated and what are the ramifications depending what the number is? First, if the number comes in “large” (it will), it means China “likes gold” and believes it to be a worthy monetary reserve asset. A large number would give gold China’s “stamp of approval” so to speak.
Next, we have the “mathematics” to the equation. If the number comes in anywhere near 10,000 tons, the natural question then becomes “where oh where did it all come from”? This is a VERY important question because as I’ve said many times before, gold can only come from current supply and also from above ground supplies in vaults. We know the total annual global supply (ex China and Russia) is about 2,200 tons of which China has chewed up a very large percentage over the last six years. Total global production has been 11,000 tons over the last six years, we know India and Russia have been importers, not to mention all the other geographical demand and jewelry. A number even close to 10,000 tons will raise the question of “how?”, how could China have accumulated this much gold if the world is not producing enough to make the math work? In other words, if China bought virtually all of the global supply, what was used to satisfy the rest of the world’s demand?
The answer is easy and so will be the reaction. The gold MUST have come from Western vaults, namely N.Y. and London. It would also explain the refineries working 24/7 to melt 400 ounce bars and create kilo bars …they were in fact heading to China! The big questions will be “which vaults?” and then of course “who’s gold was it?”. This really matters because a number of 10,000 tons or more would most likely mean the U.S. has dishoarded its gold …and/or sold gold which belonged to someone else. It will bring up the rule of law if the gold is someone else’s, it will bring up Constitutional law if the gold came from Ft. Know, West Point or another depository. Please remember that five years ago or so, gold on the market was turning up which had very similar, if not identical “fingerprints” to our own “coin melt” from the 1930’s. To me, this was as big a telltale sign as gold turning up in 1989 with the “Czar’s stamp” on it.
The report of 10,000 tons or more held by China will on its own drive gold prices exponential because of the logic that market participants will connect swiftly. Between the “stamp of approval” and “where did the gold come from”, people will understand the West were the sellers. Does selling one’s gold make your currency weaker? Of course it does. Does a weaker currency make it harder to accumulate gold? Again, yes. It is my contention that not only will a weaker currency (the dollar) make it harder to “catch up” and replenish the empty vaults, China will have incentive to “help this process along” by forcing the price higher and more difficult to accumulate.
As mentioned and illustrated above, China has not been immune to the bubblemania gripping the world. They are living their own bubble and have exploded their own money supply yet now have the need to goose it again. If this reverses and becomes an outright contraction, China will be faced with the same dilemma the U.S. was in 1932-1933, they will need to re price gold higher in an effort to devalue their currency and reflate their own system. It is for this reason I believe they will “set” a price and bid for any and all gold similar to what FDR did when gold was revalued to $35.
A holding’s announcement and higher bid will do much for China. It will cement their position of financial strength and also lock many buyers out …not to mention turn some holders into sellers. Thus increasing China’s holdings even more. The higher gold price will act as a “filler” for many of the losses China will surely take from paper financial holdings. A higher gold price will be their internal financial penicillin assuring the financial wounds heal rather than spread and infect the entire body. Quite oversimplified but please understand this has been the remedy many times before throughout history, either willingly or dragged by the ears! Regards, Bill Holter
end
Early morning trading from Asia and Europe last night:
1. Stocks lower on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong /Japan bourse slightly lower /yen rises to 119.49/
1b Chinese yuan vs USA dollar/yuan strengthens to 6.2049
2 Nikkei down by 38.92 or 0.20%
3. Europe stocks up/USA dollar index up to 99.16/Euro falls to 1.0591
3b Japan 10 year bond yield .33% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.94/
3c Nikkei still above 19,000
3d USA/Yen rate now just below the 120 barrier this morning
3e WTI 53.91 Brent 59.07
3f Gold down/Yen up
3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.
Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.
3h Oil up for WTI and up for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU
Except Greece which sees its 2 year rate rises to 23.72%/Greek stocks down huge 3.86%/ still expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 12.22% (up 75 in basis point in yield)
3k Gold at 1191.50 dollars/silver $16.15
3l USA vs Russian rouble; (Russian rouble up 5/8 rouble/dollar in value) 50.59 , the rouble is the best acting currency this year!!
3m oil into the 53 dollar handle for WTI and 59 handle for Brent/Saudi Arabia increases production to drive out competition.
3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This scan spell financial disaster for the rest of the world/China may be forced to do QE!!
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF
3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering
3r the 7 year German bund still is in negative territory with the 10 year close to negativity/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.
3s The ECB increased the ELA to Greece today by another large 800 million euros. The new maximum is 74.0 billion euros. The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially.
Greece repaid the IMF on Friday. There will be nothing left April 24..
3t ECB meeting today, Greece is a major topic. Unlikely a deal by April 24.
4. USA 10 year treasury bond at 1.89% early this morning. Thirty year rate well below 3% at 2.54%/yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy zero hedge/Jim Reid Deutsche bank)
Futures Jump Following Worst Chinese Eco Data In 6 Years
Today’s even highlight is the monthly ECB meeting day. Given we’re only a few weeks into a new policy that’s scheduled to last 18 months, expect a lot of questions on whether they can see out the term given the distortions its creating in European bond markets. Greece will also be a focus.
If yesterday stocks surged on the worst 4-month stretch of missing retail sales since Lehman, one which BofA with all seriousness spun by saying “it seems not unreasonable to suspect that the March 2015 reading on retail sales gets revised up next month”, then the reason why futures are now solidly in the green across the board even as German Bunds have just 14 bps to go until they hit negative yields and before the ECB is fresh out of luck on future debt monetization, is that overnight China reported its worst GDP since 2009 together with economic data misses across the board confirming China’s economy continues its hard landing approach despite a stock market that has doubled in the past year.
Unexpectedly the Shanghai Composite was down overnight despite what is “clearly” evidence of more PBOC easing, and even the bubbly Hang Seng could barely eek out a 0.2% increase. Elsewhere in Asia, stocks trade mostly lower led by Chinese bourses amid poor data, with the Shanghai Comp (-1.2%) on course to for its biggest drop in 6-weeks. Q1 GDP (7.0% vs. Exp. 7.0% (Prev. 7.3%) and March industrial production (Y/Y 5.6% vs. Exp. 7.0%) came in at their 6yr lows, while retail sales (Y/Y 10.2% vs. Exp. 10.9%) also tumbled to multi-year lows. ASX 200 (-0.6%) was weighed on by the Chinese data while the Nikkei 225 (-0.2%) was weighed on by a strong JPY.
European equities bounce back from yesterday’s negative close with the energy sector leading gains after API crude inventories printed a much smaller build than its previous reading, which had reported its largest build since February 18th. In stock specific news, the latest merger deal including Nokia and Alcatel Lucent was confirmed premarket, with the deal valued at EUR 15.6bln. However, Alcatel Lucent (-12.3%) underperform in Europe as the French telecommunications company are to receive 0.55 Nokia shares for one Alcatel Lucent share, which equates to 8% less than Alcatel’s closing price yesterday.
Fixed income markets have been relatively tentative ahead of todays’ ECB rate decision with Bunds ebbing higher and consequently printed fresh contract highs as the market seeks further clues on whether the central bank could alter the purchase programme in the future, while UST’s have tracked German paper amid little fundamental news in the session.
The USD-index has partially recovered some of yesterdays’ US retail sales inspired losses causing broad based EUR weakness which saw EUR/GBP make a technical break below 0.7200. Elsewhere, GBP/USD has also been subject to selling pressure with political uncertainty still lingering as the latest YouGov and Sun poll showed; Lab 35% vs. Con 33% compared to yesterdays’ poll which indicated Lab 34% vs. Con 33%. Separately, lacklustre data releases from China, in the form of Q1 GDP (7.0% vs. Exp. 7.0% (Prev. 7.3%) and March industrial production (Y/Y 5.6% vs. Exp. 7.0%) came in at 6yr lows, while retail sales (Y/Y 10.2% vs. Exp. 10.9%) also tumbled to multi-year lows which weighed on AUD/USD as the pair subsequently broke 0.7600 handle to the downside.
In terms of commodities, WTI and Brent crude futures have held onto yesterday’s gains following the release of the API crude inventories data, however upside was capped on the release of the IEA monthly oil report as it forecasted that Saudi Arabia are to increase oil production which would lead to OPEC supply rising to its highest level since 2011. Additionally, today’s DoE crude inventories data is expected to show a build of 3.6mln bbl compared to last weeks’ mammoth build of 10.949mln bbl. In precious metal markets, spot gold has traded