Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1186.90 down $16.00 (comex closing time)
Silver: $15.79 down 21 cents (comex closing time)
In the access market 5:15 pm
Gold $1187.16
Silver: $15.79
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 good delivery day, registering 54 notices served for 5400 oz. Silver comex filed with 150 notices for 750,000 oz .
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 246.107 tonnes for a loss of 57 tonnes over that period. Lately the removals have been rising!
end
In silver, the open interest rose by another 2926 contracts as Tuesday’s silver price was up by 12 cents. The total silver OI continues to remain extremely high with today’s reading at 181,633 contracts rising to multi-year record highs. The front April month has an OI of 173 contracts for a gain of 1 contract. 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 150 notices served upon for 750,000 oz.
In gold, the total comex gold OI rests tonight at 397,379 for a loss of 1139 contracts with gold up by $9.40 yesterday. We had 54 notices served upon for 5400 oz.
Today, we had no changes in gold inventory at the GLD/ Gold Inventory rests at 742.35 tonnes
Looks to me like London is out of gold.
In silver, / /we had a huge addition of 1.434 million oz in silver inventory at the SLV/ and thus the inventory tonight is 326.334 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 another huge 2926, contracts with the rise in price on Tuesday (14 cents). Not only that but the OI for the front month of May fell by only 3,826 contracts as we have only 6 trading days left before first day notice. The OI for gold fell by 1,139 contracts down to 397,379 contracts as price of gold rose by $9.40 on Tuesday.
(report Harvey)
2,Many important commentaries on Greece
i.The ECB is threatening Greece that they will cut off his emergency life-line: its ELA, as more citizens remove Euros from the banking system.
ii) Today the ECB increased the ELA by a huge 1.5 billion euros, up to 75.5 billion euros, as more depositors flee the Greek banking system. Also rumours that the ECB will have to increase the haircut on collateral already supplied as ELA to 50% would be a death knell to Greece. Remember that Greek banks have a huge amount of non performing loans and as euros leave, there is nothing backing those loans.
(Bloomberg, zero hedge)
3. Saudi Arabia after announcing yesterday the end of bombing in Yemen, resumed bombing today
zero hedge)
4. Oil inventories rise again
(zero hedge)
5. Yesterday we reported on the arrest of a single trader who acted alone on that famous flash crash in May of 2010. This trader resides in England. Today the farce continues as the trader will fight the extradition as he cites that many others are doing the same thing.
Zero hedge writes an open letter to the CFTC
(zero hedge)
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 fell by 1,139 contracts from 398,518 down to 397,379 with gold up by $9.40 yesterday (at the comex close). We are now in the active delivery month of April and here the OI fell by 661 contracts down to 525. We had 659 contracts filed upon on on Tuesday so lost 200 gold ounces or 2 contracts that will not stand for delivery in April. The next non active delivery month is May and here the OI rose by 4 contracts up to 454. The next big active delivery contract month is June and here the OI fell by 3434 contracts down to 261,646. 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 64,249. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 112,946 contracts. Today we had 54 notices filed for 5400 oz.
And now for the wild silver comex results. Silver OI rose by another 2926 contracts from 179,707 up to 181,633 as the price of silver was up by 12 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 by 1 contract up to 173. We had 0 notices filed yesterday so we gained 1 contract or an additional 5,000 oz will stand in this delivery month of April. The next big active delivery month is May and here the OI fell by only 3826 contracts down to 63,469. We have a little more than 1 week before first day notice on Thursday, April 30.2015. The estimated volume today was poor at 26,320 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 81,216 contracts which is excellent in volume. We had 150 notices filed for 750,000 oz today. The fact that very little silver contracts are leaving the May delivery month arena must scare the living daylights out of our banker friends.
April initial standings
April 22.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
100.31 oz (Scotia)
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
141,031.351 oz (HSBC,JPM)
No of oz served (contracts) today
54 contracts (5400 oz)
No of oz to be served (notices)
471 contracts(47,100) oz
Total monthly oz gold served (contracts) so far this month
2361 contracts(236,100 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
oz
Total accumulative withdrawal of gold from the Customer inventory this month
396,283.8 oz
Today, we had 0 dealer transaction
total Dealer withdrawals: nil oz
we had 0 dealer deposits
total dealer deposit: nil oz
we had 1 customer withdrawals
i) Out of Scotia: 100.31 oz
total customer withdrawal: 100.31 oz
we had 2 customer deposit:
i) Into HSBC: 132,322.563 oz ( a monstrous 4.11 tonnes)
ii) Into JPMorgan; 8708.788 oz
total customer deposit: 141,031.351 oz
We had 0 adjustments:
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 246.107 tonnes for a loss of 57 tonnes over that period. Lately the removals have been rising!
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 54 contracts of which 26 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 (2361) x 100 oz or 236,100 oz , to which we add the difference between the open interest for the front month of April (525) and the number of notices served upon today (54) 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 (2361) x 100 oz or ounces + {OI for the front month (525) – the number of notices served upon today (54) x 100 oz which equal 283,200 oz or 8.808 tonnes of gold.
we lost 200 gold ounces that will not stand 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: 567,927.751 or 17.66 tonnes
Total gold inventory (dealer and customer) = 7,912,357.942 oz. (246.107) tonnes)
end
And now for silver
April silver initial standings
April 22 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
555,071.85 oz (Delaware,JPMorgan,CNT,Scotia)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
631,802.155 oz (CNT,HSBC)
No of oz served (contracts)
150 contracts (750,000 oz)
No of oz to be served (notices)
23 contracts(115,000 oz)
Total monthly oz silver served (contracts)
493 contracts (2,465,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
884,245.2 oz
Total accumulative withdrawal of silver from the Customer inventory this month
11,123,108.9 oz
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 2 customer deposits:
i) Into CNT: 7999.800 oz
ii) Into HSBC: 623,802.355 oz
total customer deposits: 631,802.155 oz
We had 4 customer withdrawals:
i) Out of Scotia; 60,653.600 oz
ii) Out of CNT: 203,746.600 oz
iii) Out of Delaware; 2941.95 oz
iv) Out of JPMorgan: 287,729.700 oz
total withdrawals; 555,071.85 oz
we had 0 adjustments:
Total dealer inventory: 62.635 million oz
Total of all silver inventory (dealer and customer) 175.238 million oz
.
The total number of notices filed today is represented by 0 contracts for nil 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 (493) x 5,000 oz = 2,465,000 oz to which we add the difference between the open interest for the front month of April (173) and the number of notices served upon today (150) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the April contract month:
493 (notices served so far) + { OI for front month of April(173) -number of notices served upon today (150} x 5000 oz = 2,580,000 oz standing for the April contract month.
we gained 5,000 silver ounces standing in this delivery month of April .
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 22. no changes in gold inventory at the GLD/inventory at 742.35 tonnes
April 21.2015: a huge addition of 3.26 tonnes of gold inventory at the GLD/Inventory rests at 742.35 tonnes
April 20.2015: no change in gold inventory at the GLD/Inventory rests at 739.06 tonnes
April 17.2015/ we had a huge addition of 3.01 tonnes of gold inventory at the GLD. It looks like the raids at the GLD have stopped.
April 16.2015: no change in inventory at the GLD/total inventory at 736.08 tonnes
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 22/2015 / we had no changes in gold inventory at the GLD/Inventory stands at 742.35 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 : 742.35 tonnes.
end
And now for silver (SLV): April 22/no changes in silver inventory at the SLV/326.334 million oz of inventory
April 21.2015/we had another huge addition of 1.434 million oz of silver into the SLV
April 20/ no change in silver inventory tonight/SLV 324.900 million oz.
April 17.2015: no change in silver inventory tonight at the SLV.324.900 million oz
April 16.2015: no change in silver inventory tonight at the SLV/324.900 million oz
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 22/2015 we had no change in inventory at the SLV / inventory rests at 326.334 million oz
end
And now for our premiums to NAV for the funds I follow:
Central fund of Canada data not available today/
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 9.0% percent to NAV in usa funds and Negative 9.1% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.7%
Percentage of fund in silver:37.80%
cash .5%
( April 22/2015)
Sprott gold fund finally rising in NAV
2. Sprott silver fund (PSLV): Premium to NAV rises to + 1.07%!!!!! NAV (April 22/2015)
3. Sprott gold fund (PHYS): premium to NAV falls to -.37% to NAV(April 22/2015
Note: Sprott silver trust back into positive territory at +1.07%.
Sprott physical gold trust is back into negative territory at -.37%
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)
China’s Stealth Gold Reserves To Quadruple as IMF Seek Answers
By Mark O’ByrneApril 22, 20150 Comments
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– Enter the Dragon – China Stealthily Accumulated Massive Gold Hoard
– IMF Seek Answers On China’s Mysterious Gold Reserves according to Bloomberg
– Major demand issue and bullish support for gold rarely covered in mainstream
– China may disclose its gold reserves by October in a bid to have the Yuan included in SDR currency-basket
– China has not made its gold holdings public since 2009
– Bloomberg estimates that reserves may be as high as 3510 tonnes, 2nd largest in the world
Enter the Dragon. China’s push to challenge U.S. dominance as the global economic superpower and to challenge the dollar as a global reserve currency involves gold – “a lot of gold.”
China may soon make public that it has quietly accumulated a massive hoard of gold in recent years. This was done in order to bolster their bid to have the yuan included in the basket of currencies that make up the IMF’s Special Drawing Rights (SDRs) according to an article by Bloomberg.
This is something Jim Rickards, ourselves and many analysts in the gold sector have said would happen for some time. The People’s Bank of China’s (PBOC) quiet ongoing accumulation of gold is something we frequently cover as we believe it is an important demand factor in the market that is largely ignored by most analysts and in most coverage of the gold market.
Currently the SDR is composed of dollars, euros, yen and sterling. It is further testimony to the new emerging order that the yuan is under consideration even as it establishes the AIIB which looks set to rival the IMF and World Bank.
China has not publicised its gold holdings since April 2009 when their holdings doubled to 1,054 metric tonnes. The announcement surprised most market participants at the time and was likely a factor in the higher gold price seen in 2009.
Bloomberg speculates that the PBOC may have increased its gold reserves three-fold since that time to over 3,000 metric tonnes.
“The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons”, says Bloomberg Intelligence, based on trade data, domestic output and China Gold Association figures.
China would therefore have the third largest gold reserves in the world – second only to the U.S. and Germany.
It is worth noting that the U.S. refuses to allow their gold reserves to be publicly audited and the Bundesbank is having difficulty repatriating much of its gold stored with the Federal Reserve. This has led many analysts to speculate that the U.S.’s gold reserves have been leased out or sold or are encumbered as part of an ongoing effort to manipulate gold prices.
Analysts who closely follow the gold market, believe that Chinese reserve holdings may be much higher. Shanghai and the SGE has superseded Hong Kong to become a major hub for trading in physical gold not just in Asia but globally.
It seems likely that the Chinese government have been accumulating gold by stealth using proxies in Shanghai.
China’s ambition to make the yuan a dominant, if not the dominant reserve currency is now beyond dispute. However, they have a long way to go yet. The IMF estimates that the dollar and the euro together currently make up 85% of global reserves.
If their IMF ambitions do force them to disclose their gold holdings it does not follow that they will make public their entire reserves unless they deem it politically expedient to do so.
So Bloomberg Intelligence estimates of China’s reserves may be accurate but they may be significantly understated.
This is unlikely, however. The secrecy with which China operates with regards to gold demonstrates the strategic importance that they, like Russia, place on gold.
Bloomberg reports,”In a rare comment on gold, Yi Gang, the central bank’s deputy governor, said in March 2013 that the country could only invest as much as 2 percent of its foreign-exchange holdings in gold because the market was too small.”
Elsewhere, Bloomberg reports that China’s foreign reserves “have surged more than fivefold in a decade and are the biggest in the world.”
Central banks globally are expected to add another 400 tonnes to their reserves this year indicating a degree of distrust in the current monetary order by the very entities that issue fiat currencies.
The Dragon’s Gold Hoard
It is almost certain that the People’s Bank of China (PBOC) is accumulating more gold than they are declaring publicly and indeed officially to the IMF.
It is interesting as the PBOC is the only major central bank that has not been transparent with regard to gold reserves, even Russia has declared their gold purchases.
(As a side, one should note that there is little reason why Russia may not adopt the Chinese practice of not being transparent in this regard in the coming years given the deterioration in relations with the West.)
The Chinese government have been surreptitiously accumulating vast quantities of the precious metal in recent years and there is no reason to believe this buying will end in the coming months as geopolitical and monetary risks remain.
And yet this buying and the presence of the PBOC in the gold market is notably absent from most analysis about gold.
Figures from the Shanghai Gold Exchange (SGE) – which has overtaken Hong Kong as China’s main gold hub and which only deals in physical gold – suggest that some of the very high withdrawals may be going to the PBOC’s gold hoard.
This year has seen very high volumes passing through the SGE again. Last quarter alone, SGE withdrawals were a new record high at 623 metric tonnes.
It is likely that the PBOC accumulated some of these sizeable withdrawals.
It is worth noting that the PBOC’s gold reserves remain small when compared to those of the U.S. and indebted European nations. They are miniscule when compared with China’s massive foreign exchange reserves of more than $3 trillion.
The PBOC is almost certainly continuing to quietly accumulate gold bullion reserves. As was the case previously, they will not announce their gold bullion purchases to the market in order to ensure they accumulate sizeable reserves at more competitive prices.
They also do not wish to create a run on the dollar – thereby devaluing their sizeable reserves.
Based on the huge gold withdrawals seen on the SGE in recent years, we would not be surprised to see an announcement from the PBOC, sometime later in 2015 or in 2016, that they have more than quadrupled their reserves to over 4,000 metric tonnes.
However, speculation regarding the amount of an increase is far less important than the salient fact that there is a large ongoing buyer of gold in the market that is unacknowledged and most participants are aware of.
Total official central bank demand continues at roughly 100 tonnes every single quarter.
However, this does not include the ongoing clandestine and undeclared purchases by the PBOC. Conservative estimates put PBOC demand at 100 tonnes a quarter or at over 400 tonnes for the year. More radical projections are of demand of over 1,000 tonnes from the PBOC in recent years.
Only time will tell but awareness of this demand and the announcement itself are an important reason that we remain unashamedly bullish on gold.
Breaking Gold News and ResearchHere
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,202.40, EUR 1,113.44 and GBP 799.19 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,197.70, EUR 1,120.26 and GBP 804.58 per ounce.
Gold climbed 0.49 percent or $5.90 and closed at $1,201.80 an ounce yesterday, while silver rose 0.13 percent or $0.02 closing at $16.01 an ounce.
Spot gold in Singapore was relatively unchanged at $1,203.11 an ounce. Gold broke through the $1,200 an ounce barrier in London trading today on dollar weakness and continues to consolidate at the 1,200 level.
It is hoped that Greece will agree to the bailout structure by the end of the month. Meetings are set in Riga on Friday and the possibility of a Grexit is still on the cards which should support gold.
Mixed signals are abound as ECB vice president, Vitor Constancio, suggested that Greece might not be forced to leave the eurozone just because it defaults on its debt.
On Monday in a Wall Street Journal article Constancio said that he is convinced that Greece will remain in the eurozone, attempting to dampen concerns of a Grexit. “I am convinced” that there won’t be a Greek exit, from the eurozone, Vitor Constancio said in remarks to European parliamentarians in Brussels. “The treaty doesn’t foresee that a country can be formally legally expelled from the euro,” he said.
It brings to mind the old adage to “never believe anything until it is officially denied”.
In Japan equity markets are surging to a 15 year high on corporate earnings which have been reasonably good and cheap money.
Gold purchases in India began slow but increased momentum during the Akshaya Tritiya festival, usually one of the busiest gold buying days, industry officials said. Indians are the world’s number two buyer of gold, after China, and Akshaya Tritiya celebrated yesterday is one of the most auspicious times to buy gold along with Diwali and Dhanteras. Gold imports doubled in March to 125 tonnes from only 60 tonnes a year before.
Even though sales increased during the festival, Indian demand risks falling slightly for a second straight year in 2015. The reason for a potential drop is that unseasonable rain and low commodity prices have hurt rural buyers. It is these buyers that account for almost 60 percent of the country’s total demand.
Spot gold near noon in European trading is up 0.06 percent or $1,202.44 an ounce. Silver is up 0.15 percent at $16.05 an ounce while platinum is trading down 0.49 percent at $1,143.30 an ounce.
end
Looks like Dr Jordan (Switzerland’s head of SNB) is having his hands full with the rising Swiss Franc. Today he reduced the number of exemptions from negative interest rates. Basically now everybody is included and must pay to have a deposit in a Swiss bank account.
(courtesy GATA/Reuters)
Swiss central bank reduces exemptions from negative interest rates
Submitted by cpowell on Wed, 2015-04-22 14:23. Section: Daily Dispatches
By Alice Baghdjian and Joshua Franklin
Reuters
Wednesday, April 22, 2015
ZURICH, Switzerland — The Swiss National Bank said today it was considerably reducing the number of institutions exempt from negative rates on their cash deposits held at the central bank.
The SNB charges 0.75 percent on some Swiss franc deposits to try to deter speculative flows into the currency. This measure has also hit Swiss savers and the 673 billion Swiss franc ($700 billion) pension fund industry, which is subject to fees on its franc deposits.
At the bank’s March policy meeting, Chairman Thomas Jordan said exceptions to charges on franc deposits are not in the central bank’s interest because it undermines the effectiveness of monetary policy.
Negative interest will now also apply to the so-called sight deposit accounts held at the bank by enterprises associated with the Confederation, the Federal Pension Fund, and the SNB’s pension fund, the central bank said in a statement. …
… For the remainder of the report:
http://www.reuters.com/article/2015/04/22/us-swiss-snb-idUSKBN0ND1IG2015…
end
(courtesy Chris Powell/GATA)
BIS president in 1981: We’ve got to start rigging the gold market
Those who follow GATA may recall that Zijlstra, who was president of the Netherlands Central Bank simultaneously with his holding office at the BIS, wrote in his memoirs in 1992 that the price of gold long had been held down by central banks at the behest of the United States, which sought to minimize competition for the dollar as the international reserve currency:
http://www.gata.org/node/11304
In his speech at the IMF in 1981, Ziljstra said: “I feel that it is necessary for us, within the Group of Ten and Switzerland, to consider ways to regulate the price of gold, admittedly within fairly broad limits, so as to create conditions permitting gold sales and purchases between central banks as an instrument for a more rational management and deployment of their reserves.”
Ziljstra added: “On the occasion of the annual meeting of the IMF in Belgrade in 1979 this was brought up, but regrettably, insufficient agreement could be reached to make even a modest start with regulating the gold price in the free market. It is my conviction that relatively small-scale interventions, though not forestalling the subsequent explosion in the gold price, would at least have reduced it to more manageable proportions. Now that the turbulent emotions seem to have quieted down, we would be wise to reflect anew and without prejudice on these subjects.”
Western central banks seem to have heeded Zijlstra’s advice, as the BIS now functions largely as their gold broker, buying and selling not only gold but gold futures, options, and other derivatives on their behalf nearly every day for purposes never revealed to the public —
http://www.gata.org/node/12717
— but explained among themselves as “interventions” designed “to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful”:
http://www.gata.org/node/11012
http://www.gata.org/node/4279
Zijlstra’s speech is also notable for its candid wish that central bankers should be allowed to run the world without the interference of mere elected officials. Having served in the Netherlands parliament and even five months as the country’s prime minister before heading its central bank and the BIS, Zijlstra surely found central banking a lot easier than democracy.
His speech to the IMF is posted at the Internet site of the Per Jacobsson Foundation here —
http://www.perjacobsson.org/lectures/1981.pdf
— and at GATA’s Internet site here:
http://www.gata.org/files/JelleZijlstra-PerJacobssonLecture-1981.pdf
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Submitted by cpowell on Wed, 2015-04-22 17:21. Section: Documentation
1:26p ET Wednesday, April 22, 2015
Dear Friend of GATA and Gold:
“Regulating the gold price in the free market” was recommended to central banks by the president of the Bank for International Settlements,” Jelle Zijlstra, in a speech at International Monetary Fund headquarters in Washington in September 1981.
The speech, located this week by gold researcher and GATA consultant Ronan Manly, was given as a lecture memorializing the former managing director of the IMF, Per Jacobsson.
end
Bill Holter lays out perfectly what is going on with respect to Greece:
(courtesy Bill Holter/Miles Franklin)
Greecing the world!
Soon to be front page news again will be Greece and their insolvency. The question will remain (for a time) whether or not they stay in the Eurozone, leave by choice or get “kicked out”. I am not even sure if being forced out is a legal option, we may see.
The latest pieces of news has been a claim that Greece will be funded with a monthly credit card payment of 5 billion euros by Russia …then denied by Russia. The other news was “federal Greece”, after raiding pension plans is now confiscating local reserves for the “good of the nation”. The populace is getting very antsy as demonstrations and violence have begun to erupt.
Let’s look at the second piece of news first as it was most predictable as was the reaction. Of course “confiscation” of balances were going to occur sooner or later. History is strewn with precedent where bankrupt governments scratch and claw at anything they can get their hands on, did anyone not expect this? Greece is mathematically broke and in the same boat as a homeowner who lost a job. They are digging into retirement balances, the credit cards are all maxed out, they have already borrowed from relatives and are in the process of selling their furniture and anything else not nailed down. They are broke, any monies lent to them might as well have been placed on a bonfire for the heat value because they will not be paid back.
Which leads us to the 5 billion euros Russia allegedly will “forward” or lend to Greece. If this is true, it’s another masterful move by Mr. Putin! NATO sanctions will run out within the next 60 days and must be renewed (voted on) in order to be renewed. NATO participants must vote unanimously to renew the sanctions, Mr. Putin may have pulled a page right out of American politics …just buy a vote and go on down the road? I suspected this would happen, if true, even though it buys a little time (maybe a month or two), it does not change the big picture at all. Greece is broke, they cannot nor will they ever pay back what has been borrowed (especially post 2012 debt). They will default one way or the other and sooner rather than later.
So why does tiny Greece matter to anything in the grand scheme. Going back to my last article “The Mother of All Margin Calls” is at the root of it. Greek debt even to this day when everyone knows Greece will not ever make good on their debt, is carried on the books of bank portfolios at 100%. It doesn’t matter that trades are done at less than 50% of par or much less, Greek debt is used as “tier one” capital …and HERE LIES THE PROBLEM!
Let’s look at this from two different angles. First from a “carrying” standpoint and then from “lending” standpoint. They both arrive at the same ugly destination but via different routes. French and German bank portfolios are stocked full with Greek sovereign debt, if they marked these even close to reality the losses will be staggering. Remember, this is “tier one” capital considered as “good as gold”. How will they replace the holes punched into their collateral structure? I would also remind you, The ECB itself hold 100 billion euros worth of Greek debt, how does the issuer of the currency account for a 50% haircut? Or even a complete wipeout? Where will the new capital come from? Remember, “margins” are already razor thin and in some cases undercapitalization exists even WITH this fake accounting!
Looking at this from another angle, since the Greek debt is tier one capital, banks can, and already have lent amounts up to ten times value …OFF of the Greek debt! The problem is not just the “writedown” and need to raise new capital, much of what has been lent out and levered off of the Greek debt will need to be “called in”. What does this do to the markets and the real economy? Obviously forced sales of financial instruments will occur as well as real businesses being closed as their funding structure is called in and pulled out from under them. A death spiral is caused both financially and economically which will not be stopped and will only spread like a wildfire!
There is one more angle to look at and that angle is the derivatives created off of the Greek debt. Looking at credit default swaps, there is no doubt “someone” will have to pay when the “insurance” is claimed. CDS in many instances happens to be 10 times the underlying debt itself so these 350 billion euros may very well have insurance outstanding of 3.5 trillion euros. Who has this kind of money to pay up? In many cases (think Deutsche bank?), banks actually holding Greek debt in their portfolio are also issuers of CDS, this is called a “Texas hedge” with double or more exposure!
Going full circle, we looked at the Fed’s reverse repo agreements spiking in volume, this can only be explained by the need for “collateral” from the financial system. What will a Greek default do? Create the need for even more collateral, and LOTS OF IT to keep the façade of solvency intact. Though Greece is not a big player, think of them as a minor repair for the car of the couple who have maxed out all avenues of credit. Even a small hiccup is enough to upset this margined cart because of insufficient capital, Greece fits the description! They are by no means all by themselves, the entire financial system is Greece to one extent or another. Greece is only the canary that will expose and impose margin calls across the globe. I would like to mention one more canary in this coal mine, bookies are no longer taking bets on Greece’s default and exit from the Eurozone …it is now that obvious!
Regards, Bill Holter
end
Early morning trading from Asia and Europe last night:
1. Stocks all higher on major Chinese bourses as bubblemania is the name of the game in Shanghai and Hong Kong /Japan bourse higher /yen rises to 119.43/Shanghai to allow short selling to stop their bubble/China then cuts RRR by 1% and Chinese authorities sooth fears that they want to prick that huge bubble. Yesterday a huge electrical company’s bonds default. This could spell trouble as this company is a subsidiary of a state owned company
1b Chinese yuan vs USA dollar/yuan strengthens to 6.1947
2 Nikkei up by 224.81 or 1.13%
3. Europe stocks all down/USA dollar index down to 97.53/Euro rises to 1.0781
3b Japan 10 year bond yield .32% (Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.43/
3c Nikkei still above 20,000
3d USA/Yen rate now well below the 120 barrier this morning
3e WTI 56.25 Brent 61.81
3f Gold up/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 down for WTI and down for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to 10 basis points. German bunds in negative yields from 9 years out.
Except Greece which sees its 2 year rate falls a bit to 27.95%/Greek stocks up .17%/ still expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 13.54% (up 6 in basis point in yield)
3k Gold at 1203.30 dollars/silver $16.06
3l USA vs Russian rouble; (Russian rouble up 1/4 rouble/dollar in value) 53.25 , the rouble is still the best acting currency this year!!
3m oil into the 56 dollar handle for WTI and 61 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!! (on Monday they lowered its RRR it is effectively doing QE)
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning 95.46 as the Swiss Franc is rising against most currencies. Euro vs SF is 1.0278 well below the floor set by the Swiss Finance Minister.
3p Britain’s serious fraud squad investigating the Bank of England/ the British pound is suffering
3r the 9 year German bund now enters negative territory with the 10 year close to negativity at +.10/no doubt the ECB will have trouble meeting its quota of purchases and thus European QE will be a total failure.
3s Last week the ECB increased the ELA to Greece 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. Yesterday, the ECB is contemplating cutting off the ELA which would be a death sentence to Greece. Today they are considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.
3t Greece informally asked the IMF to delay its payment for May 1 and they refused.
3 u. With the big meeting in Riga this Friday, there is no new developments on Greece to provide new reforms/thus do not expect anything to develop by Friday. However Greece’s cash is running out.
If the ECB cuts off Greece’s ELA they would have very little money left to function.
4. USA 10 year treasury bond at 1.89% early this morning. Thirty year rate well below 3% at 2.57%/yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy zero hedge/Jim Reid Deutsche bank)
Asian Euphoria Sends Nikkei Above 20,000, Fizzles In Europe On More Greek Fears; US Futures Down
Whether it is in sympathy with the now relentless surge in the Shanghai Composite which tacked on another 2.44% overnight to close at a fresh multi-year high just shy of 4400, well more than double from a year ago, or because Mrs Watanabe was unable to read the latest Japan trade data whose first trade surplus in 3 years hinted that there will be no new easing by the BOJ any time soon