Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1193.80 up $6.20 (comex closing time)
Silver $16.56 up 14 cents (comex closing time)
In the access market 5:15 pm
Gold $1188.06
Silver: $16.40
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 had a poor delivery day, registering 0 notices serviced for nil oz. Silver comex filed with 3 notices for 15,000 oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 241.42 tonnes for a loss of 62 tonnes over that period. Lately the removals have been rising.
In silver, the open interest fell again by 2,436 contracts as Monday’s silver price was up by 31 cents The total silver OI continues to remain extremely high with today’s reading at 175,374 contracts maintaining itself near multi-year highs 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.
In silver we had 3 notices served upon for 15,000 oz.
In gold, the total comex gold OI rests tonight at 401,699 for a loss of 9002 contracts despite the fact gold was up by $12.30 yesterday. We had 0 notices served upon for nil oz.
Today, we no change in gold inventory at the GLD / Gold Inventory rests at 741.75 tonnes. There is now no question that London is out of gold as London gets deeper into backwardation. China’s major source of gold will now be the FRBNY. China’s demand for gold this week: 51 tonnes.
In silver, / /we had no change in silver inventory to the SLV/ and thus the inventory tonight is 327.673 million oz
We have a few important stories to bring to your attention today…
1. Today we had the open interest in silver fall by 2436 contracts despite the fact that silver was up in price yesterday. The OI for gold fell by 9002 contracts down to 401,699 contracts despite the fact that price of gold was up by $12.30 on yesterday. GLD and SLV remained constant with respect to the inventory levels.
(report Harvey)
2,Three important commentaries on Greece today:
The authorities are getting nowhere with respect to Greece. The IMF wants reforms on pensions, totally against the wishes of Greece/the EU is willing to listen to Greece. The EU wants a primary surplus/the IMF does not necessarily need one:therefore the stalemate/nobody wishes to budge.
(Bloomberg/zero hedge)
3. This caused a meltdown in stocks in Greece, and all of Europe. As I keep reminding everyone it is the derivatives underwritten by the major European and USA banks on Greece that can cause an avalanche of defaults everywhere
(Bloomberg/zero hedge)
4. Yemen rebels fire missiles into Saudi Arabia
(zero hedge)
5. Bill Holter’s commentary tonight on honest weights and measures.
6, USA trade deficit skyrockets to 51 billion USA. This will cause the first quarter GDP to now be negative.
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 a whopping 9002 contracts from 410,701 down to 401,699 despite the fact that gold was up by $12.30 yesterday (at the comex close). We must have had considerable short covering today. We are in our next non active delivery month of May and here the OI fell by 18 contracts falling to 209. We had 1 notice filed upon yesterday. Thus we lost 17 gold contracts or an additional 1700 ounces will not stand for gold in May. The next big active delivery contract month is June and here the OI fell by 8.185 contracts down to 250,236. 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 60,496. The confirmed volume yesterday ( which includes the volume during regular business hours + access market sales the previous day) was poor at 119,067 contracts. Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI fell by 2436 contracts from 177,810 down to 175,374 despite the fact that the price of silver was up in price by31 cents, with respect to yesterday’s trading. We are into the active delivery month of May. In our May delivery month the OI fell by 147 contracts down to 1101. We had 143 contracts filed upon with respect yesterday’s trading. So we lost 4 contracts or 20,000 oz will not stand for delivery in this May delivery month. The estimated volume today was poor at 16,849 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 49,224 contracts which is good in volume. We had 3 notices filed for 15,000 oz today.
may initial standings
May 5.2015
Gold
Ounces
Withdrawals from Dealers Inventory in oz
nil
Withdrawals from Customer Inventory in oz
578.700 oz (Manfra) 18 kilobars
Deposits to the Dealer Inventory in oz
nil
Deposits to the Customer Inventory, in oz
nil
No of oz served (contracts) today
0 contracts (nil oz)
No of oz to be served (notices)
209 contracts(20,900) oz
Total monthly oz gold served (contracts) so far this month
1 contracts(100 oz)
Total accumulative withdrawals of gold from the Dealers inventory this month
nil
Total accumulative withdrawal of gold from the Customer inventory this month
34,062.9 oz
Today, we had 0 dealer transactions
total Dealer withdrawals: nil oz
we had 0 dealer deposit
total dealer deposit: nil oz
we had 1 customer withdrawals
ii) Out of Manfra; 578.700 oz (18 kilobars0
total customer withdrawal: 578.700 oz
total customer deposit: nil oz
We had 0 adjustments:
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 0 contracts of which 0 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 May contract month, we take the total number of notices filed so far for the month (1) x 100 oz or 100 oz , to which we add the difference between the open interest for the front month of May (209) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.
Thus the initial standings for gold for the May contract month:
No of notices served so far (1) x 100 oz or ounces + {OI for the front month (209) – the number of notices served upon today (0) x 100 oz which equals 21,000 oz standing so far in this month of May. (.653 tonnes of gold)
Total dealer inventory: 571,168.307 or 17.76 tonnes
Total gold inventory (dealer and customer) = 7,761,692.243. (241.42) tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 241.42 tonnes for a loss of 62 tonnes over that period. Lately the removals have been rising!
end
And now for silver
May silver initial standings
May 5 2015:
Silver
Ounces
Withdrawals from Dealers Inventory
nil oz
Withdrawals from Customer Inventory
9,491.65 oz (Delaware,HSBC)
Deposits to the Dealer Inventory
nil
Deposits to the Customer Inventory
615,550.03 oz (CNT, Delaware,Scotia)
No of oz served (contracts)
3 contracts (15,000 oz)
No of oz to be served (notices)
1098 contracts (5,490,000 oz)
Total monthly oz silver served (contracts)
1929 contracts (9,645,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month
nil
Total accumulative withdrawal of silver from the Customer inventory this month
1,302,702.7 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 3 customer deposits: and 2 very suspect!!
i) Into CNT: 14,683.000 oz ??? exact oz
ii) Into Delaware: 1,000.000 oz ??? exact oz
iii) Into Scotia: 599,867.03 oz
total customer deposits: 616,550.03 oz
We had 2 customer withdrawals:
i) Out of Delaware: 4,672.50 oz
ii) Out of HSBC: 4819.15 oz
total withdrawals; 9,491.65 oz
we had 0 adjustments:
Total dealer inventory: 62.205 million oz
Total of all silver inventory (dealer and customer) 175.260 million oz
.
The total number of notices filed today is represented by 3 contracts for 15,000 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 (1929) x 5,000 oz = 9,645,000 oz to which we add the difference between the open interest for the front month of April (1101) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the May contract month:
1927 (notices served so far) + { OI for front month of April(1101) -number of notices served upon today (3} x 5000 oz = 15,135,000 oz of silver standing for the May contract month.
we lost 4 contracts or 20,000 oz will not stand for delivery.
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:
may 5/no change in gold inventory at the GLD/741.75 tonnes
may 4/no change in gold inventory at the GLD./741.75 tonnes
May 1/ we had a huge addition of 2.69 tonnes of gold into the GLD/Inventory rests tonight at 741.75 tonnes
April 30/ no change in gold inventory/739.06 tonnes of gold at the GLD
April 29/no change in gold inventory/739.06 tonnes of gold at the GLD
April 28/ no change in inventory/739.06 tonnes of gold at the GLD
April 27. we lost 3.29 tonnes of gold inventory at the GLD/Inventory rests tonight at 739.06 tonnes
April 24. no changes in gold inventory at the GLD/Inventory at 742.35 tonnes
April 23. no changes in gold inventory at the GLD/inventory at 742.35 tonnes
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
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).
May 5 GLD : 741.75 tonnes.
end
And now for silver (SLV):
May 5/no change in silver inventory at the SLV?327.673 million oz
May 4/ no change in silver inventory at the SLV/327.673 million oz
May 1/no change in silver inventory at the SLV/327.673 million oz
April 30/no change in silver inventory at the SLV/327.673 million oz
April 29/ we lost 2.963 million oz of silver inventory from the SLV/inventory tonight 327.673 million oz
April 28/another huge addition of 1.434 million oz to the SLV/Inventory stands tonight at 330.636 million oz
April 27.we had a huge addition of 2.976 million oz to the SLV/Inventory stands tonight at 329.202 million oz
April 24/ we had a small withdrawal of 88,000 oz of silver at the SLV/326.226 million oz
April 23.no changes in silver inventory at the SLV/326.334 million oz of inventory
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.
May 5/2015 we had no change in inventory at the SLV / inventory rests at 327.673 million
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 6.8% percent to NAV in usa funds and Negative 6.5% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.4%
Percentage of fund in silver:38.2%
cash .4%
( May 5/2015)
2. Sprott silver fund (PSLV): Premium to NAV rises to-0.16%!!!!! NAV (May 5/2015)
3. Sprott gold fund (PHYS): premium to NAV falls to -.25% to NAV(May 5/2015
Note: Sprott silver trust back into negative territory at -0.16%.
Sprott physical gold trust is back into negative territory at -.25%
Central fund of Canada’s is still in jail.
end
Early morning trading from Asia and Europe last night:
Gold and silver trading from Europe overnight/and important physical stories(courtesy Mark O’Byrne/Goldcore)
1. Jillian Tett discusses the Greek possible default
U.S. Fears a European “Lehman Brothers”
By Mark O’ByrneMay 5, 20150 Comments
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European complacency regarding Greek default and exit is high – Tett
Narrative to reassure investors that markets have already priced in effects of Greek default
U.S. Council on Economics is alarmed by risk being taken by European elites to bring Greece to heel
Greek default would cause a new and very “unpredictable” paradigm – huge uncertainty in markets
U.S. policy makers fear unforeseeable knock-on effects
Gillian Tett, markets and finance commentator and an Assistant Editor and former U.S. Managing Editor of the Financial Times, wrote an important and little noticed article last week questioning complacency on the part of European policy makers regarding a Greek default and potential exit or ‘Grexit’.
Gillian Tett, FT Assistant Editor
Tett wrote that statements out of Germany that Europe could manage a potential Greek exit and that markets had already priced in that eventuality had alarmed certain policy makers in the U.S.
The German stance was a reflection of their frustration with the lack of progress made over three months of talks with Greece and a consequent hardening of tone. However, U.S. officials are alarmed by the risk they see in European complacency to a Greek exit.
Tett is highly respected both in journalism but also in financial and economic circles. In her previous roles, she was U.S. Managing Editor and oversaw global coverage of the financial markets. In March 2009 she was Journalist of the Year at the British Press Awards. In June 2009 her book ‘Fool’s Gold’ won Financial Book of the Year at the inaugural Spear’s Book Awards.
In 2007 she was awarded the Wincott prize, the premier British award for financial journalism, for her capital markets coverage. She was British Business Journalist of the Year in 2008.
Tett quotes Jason Furman of the U.S. Council on Economics as saying that a
“Greek exit would not just be bad for the Greek economy, it would be taking a very large and unnecessary risk with the global economy just when a lot of things are starting to go right”.
She adds that U.S. officials have privately expressed deeper concerns about the situation. She puts the difference in attitudes down to two main factors.
The first is that Germany, as a 30% stakeholder in Greek debt, has a lot to lose from leniency toward the Greeks while the Americans have first hand experience – with the Lehman Brothers crisis – of how quickly financial contagion can spread causing a crisis to spiral out of control.
Tett makes three key points regarding the Lehman’s crisis which she believes are pertinent to the current attitude towards the Greek situation.
Firstly, it is nigh on impossible for policy makers to predict and protect against every eventuality that crops up in a crisis. Tett reminds readers that in the wake of the Bear Stearns crisis regulators worked “obsessively” to avert a major crisis and yet could not contain Lehman Brothers catastrophe six months later.
This was because they were focussed on risks posed to the derivatives markets whereas it was an overlooked legal issue which precipitated the Lehman’s crisis, “namely that the UK bankruptcy code ringfenced investor assets differently from New York’s.”
Secondly, if Greece were to fail it would likely bring attention to bear on other debt-laden European economies. When the Greek finance minister made the comment that Italy’s debt was also unsustainable, it was met with hostility but not too many were willing to utterly refute it.
Tett argues that a Greek failure would lead, as Lehman’s did to“wider policy uncertainty: when Lehman failed, the entire paradigm for finance suddenly seemed unpredictable”.
The third point is that “political turmoil matters”. She argues that what really sent the markets into free-fall back in 2008 was the unexpected political decision by the U.S. not to bail out Lehman’s. Political uncertainty stemming from a Greek default and possible exit could cause a similar crisis in Europe and then globally.
Tett acknowledges that the economies of vulnerable countries like Ireland and Spain have been improving which may insulate the eurozone somewhat from contagion.
However, she argues that
“the sheer opacity of financial institutions still creates plenty of scope for nasty logistical and legal surprises” and adds that “there is no guarantee that political surprises would end with a Greek exit; as in 2008, it might initially create more policy uncertainty.”
She sums up by writing that while the Europeans may be able to handle the initial effects of a Greek default, the Americans are concerned by secondary knock-on effects
“Not least because there is a fourth lesson from Lehman Brothers: when a crisis hits, the value of afflicted entities tends to shrivel. The hole in Lehman’s balance sheet became much bigger than anyone imagined. And that is a scary thought to contemplate in relation to any Greek exit scenario — not just for Greece but the entire eurozone.”
Tett is one of the most insightful financial analysts today – she is highly respected and rightly so. She has written favourably ongold due to it being a tangible asset and this tangibility is important in a world where assets and money are increasingly forms of digits on computer screens.
Breaking Gold and Silver News and Research Here.
MARKET UPDATE
Today’s AM LBMA Gold Price was USD 1,187.40, EUR 1,070.94 and GBP 785.59 per ounce.
Friday’s AM LBMA Gold Price was USD 1,179.00, EUR 1,049.24 and GBP 771.04 per ounce.
Markets in London were closed yesterday but gold and silver saw price gains of 0.92 and 1.6 per cent respectively.
Last week, gold was flat and incurred a marginal 0.05 per cent loss but silver rose 2.8 per cent last week.
Gold in U.S. Dollars – 1 Week
In Asia overnight, Singapore gold prices ticked marginally higher but those gains were lost in London trading this morning.
Markets will focus on monthly jobs data on Friday which should give more clues on whether the Federal Reserve will be raising interest rates any time soon. We suspect not given the recent weak data; this should support gold.
A weak jobs number this week should see gold rise above the $1,200 an ounce level again.
The European Commission slashed Greek economic growth and primary surplus projections today. They forecast deeper price falls and a higher public debt as a result of uncertainty that has dogged Athens policy direction since late 2014.
ECB governing council member Christian Noyer said the spike in eurozone government bond yields in recent days was not a cause for concern.
Assets in gold exchange-traded products held near a six-week high. Gold ETFs holdings were at 1,626.81 metric tons on Monday from 1,627.3 tons on Friday, the highest since March 19, according to data compiled by Bloomberg.
In Europe in late morning trading gold bullion was flat at $1,188.44 an ounce. Silver was down 0.15 percent at $16.43 an ounce and platinum fell 0.29 percent at $1,147.49 an ounce.
Important Guide: 7 Key Gold Must Haves
end
(courtesy James Turk/Kingworldnews/Eric King)
Turk tells KWN when it’s easy and when it’s hard to suppress gold
Submitted by cpowell on Mon, 2015-05-04 23:29. Section: Daily Dispatches
7:30p ET Monday, May 4, 2015
Dear Friend of GATA and Gold:
When Chinese markets are closed, GoldMoney founder and GATA consultant James Turk tells King World News today, Western central banks have an easy time suppressing the gold price, but when the London market, where the Western central banks mainly operate, is closed, suppressing the gold price is hard. Turk adds that Greece can’t pay its debts under any circumstances and default is inevitable, with big consequences for the world financial system. An excerpt from Turk’s interview is posted at the KWN blog here:
http://kingworldnews.com/the-catalyst-for-the-next-global-crisis-is-abou…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
I reported on this to you on the weekend, the fact that 10 tonnes per month has been moving from the FRBNY:
(courtesy zero hedge/GATA)
Zero Hedge: Gold repatriation from NY Fed continued in March
Submitted by cpowell on Tue, 2015-05-05 19:24. Section: Daily Dispatches
3:25p ET Tuesday, May 5, 2015
Dear Friend of GATA and Gold:
Gold repatriation from the Federal Reserve Bank of New York continued in March, Zero Hedge reports today, bringing foreign custodial gold in the New York Fed’s vaults below 6,000 tonnes for the first time in many years:
http://www.zerohedge.com/news/2015-05-05/gold-withdrawals-fed-vault-refu…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(Reuters/GATA)
Even Brown Brothers Harriman admits rigging of gold market by central banks
Submitted by cpowell on Tue, 2015-05-05 17:36. Section: Daily Dispatches
1:40p ET Tuesday, May 5, 2015
Dear Friend of GATA and Gold:
Dating from 1818, Brown Brothers Harriman describes itself as the oldest private bank in the United States. It is also the newest recipient of a GATA tin-foil hat, on account of its acknowledgment that central banks are surreptitiously manipulating the gold market.
The acknowledgment is reported today by Ross J. Burland, editor of the FX Street Internet site, who excerpts comments made by BBH “analysts” about Venezuela’s recent pawning of its gold reserves —
http://www.gata.org/node/15292
http://www.reuters.com/article/2015/04/24/venezuela-cenbank-idUSL1N0XL0T…
— and the question of whether gold is better than dollars.
Among the “key quotes” from BBH as noted by Burland:
“One of the advantages for Venezuela of the gold swap is that by some accounting it may still count the gold as part of its reserves. This underscores that central bank reserves may not always be what they seem. Central banks have used a number of ploys to hide the extent of their intervention, like operating in the forward market or conducting off-balance-sheet operations, like Brazil’s currency swaps. Similarly, Russia had included its sovereign wealth funds in its reserve calculations, but they are not liquid or available.”
The FX Street report on the comments by the BBH analysts is headlined “Venezuela and Their Gold-vs.-Dollar Experience” and it’s posted here:
http://www.fxstreet.com/news/forex-news/article.aspx?storyid=9308f996-0c…
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
end
(courtesy Bill Holter/Miles Franklin)
Honest weights and measures …
A few weeks back I thought about writing an article on “honest weights and measures” and why they are important. There has been so much news recently, I almost forgot it as a topic. A funny thing happened since then. Last week while in church during the sermon, the pastor quoted from the Bible, Proverbs 20-10. This verse states “differing weight and differing measures, the Lord detests them both”. I thought this was quite a coincidence, my thinking of the topic and then being reminded of it in church.
The CIA of course says “there are no coincidences” but I assure you there are, or a much higher power at work here. You see, I began reading the Bible a few months back and just so happened to be reading “Proverbs” currently. I didn’t know where this quote regarding weights and measures was in the Bible so I called our pastor and asked him. Lo and behold, it was on the very next page where I had last left off reading!
As for the topic of weights and measures, of differing ones, this is the very core of the problems in the world today. I say this not so much because the weights and measures are “differing”, no, we are far far beyond that. The weights and measures are just outright FALSE and have been since 1971, or even as far back as the 1944 Bretton Woods agreement.
In ancient times, false weights and measures (stealing) was done in several manners. Coins could have their edges either shaved or clipped. They could also have lesser valued metal than gold or silver “mixed in” and no one would be the wiser until Archimedes discovered the “weight to volume” relationship. Then along came “fractional reserve” banking where a bank would hold only 10% (or not!) of the gold to back notes or currencies they had written.
Of course now in modern day, “money” really hasn’t anything to do with weights or measures. “Money” is printed (mostly digitally) in any amounts that central banks choose. Millions, billions, trillions, and then these amounts are levered even further …and further again …it doesn’t matter! Well, this is not true, it DOES matter, just not yet. There is a saying, “a fair day’s wage for a man’s work”. In today’s world this is no longer so from several vantage points. First, back in the day of “Leave it to Beaver”, Ward could go to work and provide comfortably for his family of four. This is not so today, both Ward AND June have to work, and in many cases this is still not enough to provide comfort.
The second vantage point is from that of “settlement”. A worker bee shows up to work for the week and then is paid in dollars, euros, pounds, yen or even yuan. None of these are actual settlement, they are all “liabilities” of the issuer and only considered an asset by the holder because he can trade it to someone else. All of these currencies have value because they are “accepted as payment”, what value would (will) they have if they are not accepted? Of what value do these notes or digits have on their own other than their “acceptance”? Is there any cost whatsoever to their creation? Ask yourself the most basic of questions, if something is “free” to create in any quantity, what then is its “value”?
“Manmade” money (fiat) has created the problems we have today and now after many years is coming to a head. The ONLY way for a fiat currency, or in the current case a fiat world to continue is to have inflation. If inflation were to cease or worse, deflation takes hold, then it is “system over” as in game over. The world has reached a point of debt saturation where more debt cannot be taken on and any new debt actually takes away from an already declining system. “Good inflation” (markets going up) is about to end, you can clearly see this as VOLUME is and has been drying up over the last 12 months. You can also see this in the real economy. The U.S. has been through the biggest inventory build in history while China’s trade seems to be going into a freeze mode.
This chart is particularly scary because China has been the economic engine pulling the world along since the financial crisis. A 20% drop in trade in just one quarter is ominous!
I mention China above because it is my belief they will ultimately inherit the financial throne. The Chinese have been voraciously accumulating gold because they realized the West’s “weights and measures” were becoming criminally out of control. I believe China will at some point (when there is no more gold for them to accumulate) will revalue their currency the yuan versus gold. This will be the heart of your reset and China will become the new arbiter of global weights and measures. My guess is that the yuan will have an honest relationship to gold for at least 25-50 years until they begin to face the same problems the U.S. did after the Bretton Woods agreement.
Before, during, or immediately after China announces their holdings or revalues their yuan to gold, the “paper” in the West will burn. We will see the “everything is worth nothing” moment and those who stored their labor in paper balances will be ruined. I will leave you with this thought, would you do business with or deposit your hard earned savings with a bank, broker or insurance company that refused to allow an audit? What if this institution has refused to an allow an audit for each of the last 60 years? How much confidence would this “bank” have left? It is for THIS very reason the Chinese have been “running” the gold bank, “trust” is about the only thing left in Fort Knox! Regards, Bill Holter
end
And now overnight trading in stocks and currency in Europe and Asia
1 Chinese yuan vs USA dollar/yuan strengthens to 6.2085/Shanghai bourse down 4%
2 Nikkei closed
3. Europe stocks well down/USA dollar index up to 95.51/Euro falls to 1.1142/
3b Japan 10 year bond yield: small fall to .36% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.37/
3c Nikkei still above 20,000
3d USA/Yen rate now well above the 120 barrier this morning
3e WTI 59.50 Brent 67.00
3f Gold up/Yen down
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. Last night Japan refused to increase it’s QE
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. German 10 yr bund rises to 45.0 basis points. German bunds in negative yields from 4 years out.
Except Greece which sees its 2 year rate rises quite a bit to 20.05%/Greek stocks down 3.46%/ still expect continual bank runs on Greek banks.
3j Greek 10 year bond yield: 10.59% (up 4 in basis point in yield)
3k Gold at 1192.50 dollars/silver $16.53
3l USA vs Russian rouble; (Russian rouble up 4/10 rouble/dollar in value) 51.37 , the rouble is still the best acting currency this year!!
3m oil into the 59 dollar handle for WTI and 67 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 can spell financial disaster for the rest of the world/China may be forced to do QE!! (last 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 93.28 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0372 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 4 year German bund remains in negative territory with the 10 year close to negativity at +.45/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 1.4 billion euros. The new maximum is 76.9 billion euros. The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially. The ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.
3t Greece has to pay 200 million euros by tomorrow
3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function.
4. USA 10 year treasury bond at 2.13% early this morning. Thirty year rate well below 3% at 2.85%/yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy zero hedge/Jim Reid Deutsche bank)
Futures, Treasurys Flat After Chinese Stock Bubble “Incident”; Bunds Stage Feeble Rebound
If yesterday’s laughable lack of volume (helped by the closure of Japan and the UK) coupled with hopes that the end of the buyback blackout period was enough to send stocks surging if only to end with a whimper below all time highs despite what is now looking like three consecutive quarters of Y/Y EPS declines according to Factset, today’s ramp will be more difficult for the NY Fed and Citadel to engineer, not least of all due to the headwind of the overnight “incident” by China’s stock bubble which saw the Shanghai Composite tumble by 4%,the most since January.
In fact, if volume is anything but abysmal, it may be tough to push stocks higher at all, now that the only signal that matters is: if volume low then buy, if volume high then sell.
Asian stocks finished the session in the red despite the positive Wall Street close as the S&P 500 extended Friday’s gains, the biggest in more than a month. Shanghai Comp (-4%) was the session’s laggard amid liquidity concerns, with around CNY 2.34trl worth of IPO subscriptions officially opening today, as approved by the CSRC on April 23rd which will divert liquidity away from the stock market into new offerings.
In Europe, in an attempt to accelerate negotiations, the IMF threatened to cut off the lifeline it has been lending to Greece unless European partners write off large volumes of the country’s sovereign debt. Consequently, Bunds (+22 ticks) have been supported from the get-go as it continues to retrace last week’s sharp losses, although German 10y yields are still above 0.4% which is the level not seen since the start of ECB QE programme.
Speaking of bonds, USTs have taken a “crushing blow” from European govt bond selloff because of liquidity, not fundamentals, according to Tom di Galoma, head of rates and credit trading at ED&F Man. “The capitulation trade on European debt will soon come to an end and place U.S. Treasuries on more stable footing.” The only question is when.
Furthermore, the GR/GE spread is significantly wider than its European counterparts with Greek 10Y bonds wider by 67bps German 10Ys and Greek 2Y yields rose over 100bps.
Of note, Greece are set to pay the IMF EUR 200mln in interest payments tomorrow and a further EUR 780mln on May 12th. In addition, the ECB are holding a non-monetary policy meeting and may discuss the ELA. Meanwhile UST’s are unchanged on the day amid little fundamental news specifically driving US Treasuries.
Despite opening lower European equities (Eurostoxx50 +0.4%) reversed coursed after being lifted by a stellar earnings report from UK banking giant HSBC (-1.9%), although later retraced all of its upside. The UK bank holds a 7% weighting in the FTSE and boasts a GBP125bln market cap. This consequently resulted in European stocks shrugging off negative closes in China due to the CSRS tightening its grip on margin trading and investors booking profits and switch money into a flood of IPOs.
In FX markets, the USD-index (+0.2%) has continued this week’s trend and is firmer against the major pairs, with the EUR exhibiting broad-based weakness and EUR/USD maintaining a downward trend since Friday after finding resistance at its 100DMA at 1.1283. Elsewhere, the RBA cut its Cash Rate Target by 25bps to a record low 2%, as expected. AUD/USD initially came under selling pressure, falling by 65 pips, as the central bank further jawboned the currency. Nonetheless, the weakness was short-lived as the RBA hinted at a future neutral bias, saying that it views inflation consistent with its target over the forthcoming 1-2yrs which strengthened AUD. Moreover, the central bank failed to offer any form of forward guidance on monetary policy, with focus now turning to Friday’s quarterly SOMP release.
Heading into the North American open, WTI and Brent crude futures trade in the green with WTI continuing to eye the USD 60/bbl level to the upside. Despite the strength in the USD, prices have been bolstered by ongoing conflict in Libya which has subsequently led to the halting of flows to the nation’s Zeutina port. Meanwhile spot gold (-0.08%) has traded in a relatively tight range in the session so far.
Bulletin headline summary from Bloomberg and RanSquawk
Strong earnings from HSBC offer support to European equities shrugging off the negative closures in Asia
Greek concerns weigh on the EUR and help Bunds (+16 ticks) retrace some of its recent correction
Looking ahead sees the release of US Trade Balance, Service PMI, ISM Non-Manf. Composite, API crude oil inventories, New Zealand Employment Change, Milk Dairy Trade Auction, BoC Deputy Governor Wilkins and notable large cap earnings from Disney and DirecTV
Treasuries steady overnight, 30Y yields retreat from highest since December as EGBs stabilize; focus on Friday’s nonfarm payrolls report, est. +230k, unemployment rate to 5.4%.
“The Treasury market has taken a crushing blow from the European government bond sell-off due to liquidity rather than fundamentals. The capitulation trade on European debt will soon come to end and place US Treasuries on more stable footing,” ED&F Man head of U.S. rates Tom di Galoma writes
European Commission said that impasse over Greece’s fiscal crisis is strangling the economy, a forecast that will make it harder to meet bailout goals as talks to ease its liquidity squeeze drag on
IMF has warned eurozone creditors that it may cut off support to Greece unless European lenders write off “significant” amount of its sovereign debt, FT reported yesterday
Australia cut interest rates to a fresh record low and said there are signs of improving household spending, sending the currency and bond yields higher as markets bet policy makers won’t ease further
Two years of client withdrawals at Pimco’s Total Return Fund have cost it the title of the world’s biggest bond mutual fund, which now belongs to Vanguard’s Total Bond Market Index Fund
DoubleLine Capital’s Jeffrey Gundlach sees the same investment potential in the municipal debt of Puerto Rico as he did in mortgage markets in 2008 — so he’s buying
Texas and other states suing to overturn Obama’s immigration initiative asked an appeals court to keep in place a judge’s order blocking the program until a final decision on whether it’s legal
Sovereign bond yields mixed. Asian stocks mostly lower, European stocks gain; U.S. equity-index futures fall. Crude oil and copper higher, gold unchanged
DB’s Jim Reid concludes the overnight recap
If we carry on the recent price action by the time we get to next month’s conference we may have to encourage core European Government bond treasurers to speak as yields continue to go higher and higher. Yesterday saw another +8.4bp added to 10 year bunds after Friday’s holiday with 30yr Bund yields +10.9bps higher at 0.994% – back to levels not seen since early March. It wasn’t just Bunds which finished weaker. Both developed and peripheral markets sold-off as 10yr yields in France (+8.0bps), Netherlands, (+8.8bps), Switzerland (+3.7bps), Spain (+4.8bps), Italy (+3.4bps) and Portugal (+1.9bps) all closed wider. Greece was the lone outperformer as the 10yr yield finished 9.4bps tighter. It was a better day for European equity investors however as the Stoxx 600 (+0.55%), DAX (+1.44%) and CAC (+0.70%) all closed higher.
The S&P 500 (+0.29%) and Dow (+0.26%) both also closed higher after better than expected macro data and constructive earnings reports helped support a better tone. On the latter, results from Berkshire Hathaway (post Friday close), Comcast and Cablevision in particular beat on both the earnings and revenue front while Anadarko Petroleum (after market close) became the latest oil company to fall victim to the downturn in prices, reporting its biggest quarterly loss in more than a decade, lowering capex further and reporting an eye-watering $3.7bn write-down on a single field in Utah.
Markets in Asia this morning are generally weaker with the Hang Seng (-1.00%) and Shanghai Comp (-1.84%) in particular trading lower. Equity markets in Japan are still closed while credit is largely unchanged. The main news this morning is in Australia where the RBA has cut rates by 25bps to 2% as expected, with the central bank commenting that further Aussie Dollar depreciation seems likely and necessary. The Aussie Dollar has been volatile post the move, immediately declining -0.5% before then recovering and now trading +0.5% higher on the day.
In terms of the data yesterday, markets appeared to be buoyed by a better than expected factory orders print (+2.1% vs. +2.0% expected), while the ISM NY print for April bounced 8.1pts to 58.1. Treasuries were better offered yesterday and extended their recent decline with the 10y and 30y part of the curve finishing +3bps and +4.9bps wider on the day. The 30y yield is in fact now at its highest yield (2.877%) since December 8th last year although Fed Funds contracts were little changed with the Dec15, Dec16 and Dec17 contracts 0bps, -0.1bps and -0.1bps respectively.
Comments from the Chicago Fed’s Evans yesterday lent support to the doves camp after the more hawkish comments from Williams and Mester on Friday. Despite tending to believe that most of what we saw in the first quarter was transitory, Evans noted that ‘I see significant risks, but few benefits, to increasing rates prematurely’, focusing on the need for more wage growth in particular to support a change in his view to lifting rates sooner. Meanwhile San Francisco Fed President Williams reiterated his views on Friday saying that he is optimistic over the US economy and that ‘we’re finally coming into the light at the end of the proverbial tunnel’.
In Europe the final April manufacturing PMI readings were mixed. The Euro-area print was revised up one-tenth of a point to 52, while regionally we saw Germany (+0.2pts to 52) revised up but the France reading (-0.4pts to 48) revised down. Elsewhere, the Italian reading was revised up 0.5pts to 53.8 and the Spanish reading was revised down modestly (-0.1pts to 54.2). Finally the Sentix investor confidence reading for the Euro area came in higher than expected (19.6 vs. 19.1 expected).
Away from the data, Greek headlines yesterday were focused on an article published in the FT which suggested that the IMF may cut off its support to Greece unless European lenders write down significant amounts of its sovereign debt. The article suggests that the IMF may hold back its portion (around half) of the €7.2bn tranche of bailout aid that Greece is in talks over. The article does appear to be somewhat backdated however, with the note referring to data arising from the eurozone finance ministers meeting in Riga last month which showed Greece would post a primary deficit of up to 1.5% of GDP, well below the 3% primary surplus target. More importantly however, a Reuters article yesterday reported that the ECB is unlikely to change the collateral policy this week and emergency liquidity assistance is set to be extended for another week. The article probably helps support some of the better performance in Greek assets as well as the moves wider in core rates after earlier worries that an increase to haircuts on Greek collateral was a possibility this week.
With negotiations between Greece and its creditors continuing today, Deputy Finance Minister Dragasakis is due to meet with Draghi today in Frankfurt while Finance Minister Varoufakis is due to meet French Finance Minister Sapin in Paris.
Wrapping up yesterday’s news, the Fed’s quarterly bank loan survey showed little change in lending standards for loans in the commercial and industrial sector and little change in demand for these loans. There were however some reports of easing on lending terms for a number of types of residential mortgages while demand for autos and credit cards rose. Perhaps more interestingly, there was also a special question on exposure to loans offered in the oil and natural gas drilling or extraction sector. The report commented that banks are expecting more delinquencies and charge-offs from the sector over the remainder of the year, however the report also noted that ‘exposures were small, and that they were undertaking a number of actions to mitigate the risk of loan losses’. The report showed the institutions are taking measures to protect themselves, ‘including restructuring outstanding loans, reducing the size of existing credit lines, requiring additional collateral, tightening underwriting policies on new loans or lines of credit, and enforcing material adverse change clauses or other covenants’.
Looking ahead to today’s calendar now, the European Commission economic forecasts will likely be closely watched this morning, while data wise its fairly quiet in the European timezone with just Euro-area PPI expected. It’s busier in the US this afternoon however with trade data, the final April composite and services PMI’s, the IBD/TIPP economic optimism survey and also the ISM non-manufacturing reading all expected today.
end
Chinese stock tumble 4%/most in 4 months. Australia cuts its interest rate to record lows
Trading in Asia overnight:
(courtesy zero hedge)
China Stocks Tumble Most In 4 Months; Australia Cuts Rates To Record Low
Yesterday, when we heard that China brokers may impose tighter margin requirements to contain what is now a laughable stock bubble we said that tonight’s Shanghai session could get exciting:
China may get exciting: Some China Brokers Raise Margin Trading Requirement: Sec. News
— zerohedge (@zerohedge) May 4, 2015
It did: overnight the Shanghai Composite tumbled by 4.1% to under 4300, the biggest one day drop since January 19.
Additionally, the Shanghai Stock Exchange Property Index falling 8% although keep in mind that the sub-index added 52% in 3 months to end-April on relentless hopes of central bank easing the worse the economic data got. The rout also spread to Hong Kong where the HSI dropped as much as 1.9%, down 4th day in longest loss streak since March 11.
While it is too early to know if the Chinese stock bubble has finally burst, it is just as unclear what precipitated the selloff. On one hand Reuters attributes the drop to the previously noted collateral concerns saying “media reports of tougher margin requirements by some brokerages added to concerns about market liquidity ahead of a new batch of share listings.” Specifically, brokerages such as CITIC Securities Co Ltd, Haitong Securities Co Ltd and Huatai Securities Co Ltd tightened requirements for margin financing this month in a bid to control risks, the Shanghai Securities News reported on Tuesday.
This is major concern for China where the unprecedented jump in margin debt coupled with an explosion in new accounts has been the primary driver behind the relentless rise in the Shanghai Composite. “The move could curb money inflows in a highly-leveraged stock market rally. The outstanding value of margin financing – the amount of money investors have borrowed to buy stocks – has exceeded 1.8 trillion yuan ($290 billion) and repeatedly smashed records in recent sessions.”
“I suspect the brokerages are doing so under the guidance of regulators, so this reflects regulators’ intentions,” said Zhang Chen, analyst at Shanghai-based hedge fund manager Hongyi Investment. “It gives an excuse for some investors to take profit.”
Additionally, liquidity has been soaked up by a flurry of new IPOs with the market grappling with short-term liquidity pressures as nine companies start taking subscriptions from investors on Tuesday with more scheduled to launch share sales later this week. Altogether, subscription for new batch of A-share IPOs is expected to peak today with a total of 25 IPOs in early May estimated to drain 2.34 trillion in yuan of liquidity according to Bloomberg calculations.
All of this follows a move by the RBA in which the Australian central bank cut rates as expected from 2.25% to 2.00%, a record low.
Rising property prices in Australia’s biggest city, Sydney, a strong currency and a drop in iron ore prices were among the reasons for the cut.
The cut is t
